Associated Press

Business Highlights

Associated Press, 04.22.09, 05:49 PM EDT

Morgan Stanley loses $578M in 1st quarter

NEW YORK (AP) - Morgan Stanley posted a bigger-than-expected quarterly loss to common shareholders of $578 million, hurt partly by the deteriorating commercial real estate market.

The bank was also hit, counterintuitively, by an improvement in the value of its own debt in the first quarter. This improvement essentially increased the amount of debt on Morgan Stanley's books.

The New York-based bank posted a loss of 57 cents per share for the January to March period, after paying more than $400 million in dividends to preferred shareholders.

SEATTLE (AP) - Strong sales of the iPhone helped Apple Inc. lift its quarterly profit 15 percent, well ahead of Wall Street's expectations Wednesday despite the global economic downturn.

For the three months ended March 28, Apple's fiscal second-quarter earnings rose to $1.21 billion, $1.33 per share. In the same period last year Apple earned $1.05 billion, or $1.16 per share. Analysts surveyed by Thomson Reuters had forecast a per-share profit of $1.09.

Sales increased 9 percent to $8.16 billion, topping analyst expectations for $7.96 billion.

"Gee, given what's going on around us, we couldn't be happier," said Apple Chief Financial Officer Peter Oppenheimer in an interview.

Falling bank stocks unravel stock rally

NEW YORK (AP) - Nagging worries about banks upended a stock market rally Wednesday.

Financial stocks steered the overall market for the third straight day after Morgan Stanley and credit card issuer Capital One Financial Corp. posted lackluster quarterly reports. Investors have been worried about rising levels of souring debt on bank balance sheets.

A late-session drop in banks left Wall Street's major benchmarks mixed. The Dow Jones industrial average fell 83 points to 7,886.57, while the technology-heavy Nasdaq composite index ended modestly higher ahead of a quarterly report from eBay Inc. and following earnings from Yahoo Inc.

Global recession worst since Depression, IMF says

WASHINGTON (AP) - The global economy is expected to lurch into reverse this year for the first time since World War II with appalling consequences for nations large and small - trillions of dollars in lost business, millions of people thrust into hunger and homelessness and crime on the rise.

And the pain won't stop this year, the International Monetary Fund declared Wednesday, for what it said was "by far the deepest global recession since the Great Depression." To cushion the blow and head off further damage next year, the IMF is calling for more stimulus projects from the word's governments, including major spending for public works projects.

Police investigating death of Freddie Mac official

WASHINGTON (AP) - The chief financial officer of money-losing mortgage giant Freddie Mac was found dead in his basement early Wednesday morning in what police said was an apparent suicide.

David Kellermann, 41, apparently hung himself, said a law enforcement official familiar with the investigation.

Kellermann's death is the latest in a string of blows to Freddie Mac since it was seized by the government last September. The company, which owns or guarantees about 13 million mortgages, has been criticized for financing risky loans that fueled the real estate bubble and are now defaulting at a record pace.

Wells Fargo 1Q results in line with forecast

NEW YORK (AP) - Wells Fargo & Co.'s first-quarter report on Wednesday had few big surprises, as results fell in line with the bank's forecast and easily beat Wall Street's estimates. But like most of its peers, the bank continues to post higher credit costs.

Wells Fargo is among a number of the largest U.S. banks to have reported better-than-expected profits. Like the others, Wells Fargo attributed much of its profit growth to a surge in mortgage revenue, thanks in no small part to historically low interest rates.

Wells Fargo originated $101 billion of mortgage loans during the quarter - the highest level since 2003. The bank had $83 billion in applications in the month of March alone.

GM may skip $1B bond payment due to exchange offer

DETROIT (AP) - General Motors says it may not make a $1 billion bond payment on June 1 if it doesn't finish a debt-for-equity exchange by then.

The troubled auto giant plans to make the exchange offer soon to bondholders. General Motors Corp. has $28 billion in unsecured bond debt. The offer could come as early as next week.

GM says in a statement it would not make the payment if the exchange is still in progress June 1. The company also could miss the payment if it enters bankruptcy protection.

AT&T earnings fall, but iPhone cushions the blow

NEW YORK (AP) - Cost-cutting and the lure of the iPhone softened the effect of the weak economy at AT&T Inc., helping the country's biggest telecommunications carrier beat analyst estimates for the first quarter.

AT&T said Wednesday it earned more than $3.1 billion, or 53 cents per share, in the first three months of 2009, down 10 percent from almost $3.5 billion, or 57 cents per share, a year earlier.

The earnings were reduced by 5 cents per share for increases in pension and retiree expenses. Excluding that item, the earnings were 58 cents per share. The average estimate of analysts polled by Thomson Reuters, which generally excludes one-time items, was for earnings of 48 cents per share.

Continental posts loss, AirTran makes profit in 1Q

DALLAS (AP) - Continental Airlines Inc. posted a smaller loss than expected and AirTran reported a profit as falling fuel prices helped offset a sharp downturn in travel during the first quarter.

The results at both airlines Wednesday beat Wall Street's expectations, although Continental's stock fell after an analyst downgraded the shares.

The $136 million loss at Houston-based Continental followed even bigger losses reported in the past week by Delta Air Lines Inc., American Airlines parent AMR Corp., and United parent UAL Corp.

McDonald's 1Q profit rises nearly 4 percent

NEW YORK (AP) - McDonald's Corp., which has been thriving during the economic downturn, saw its first-quarter profit climb nearly 4 percent as more customers worldwide came to the Golden Arches for a cheap meal.

Sales of chicken, breakfast and beverages were particularly strong, McDonald's said.

The nation's No. 1 hamburger chain said it is capturing a bigger bite of the market in nearly every part of the world as consumers cut back on their spending and look for a less-expensive alternative to sit-down restaurants.

Geithner says crisis unprecedented in modern times

WASHINGTON (AP) - Treasury Secretary Timothy Geithner said Wednesday the United States bears a substantial share of responsibility for a global economic crisis that could cost the world up to $4 trillion in lost output this year alone.

While the crisis started in the U.S., Geithner said its damage has spread widely with serious challenges facing much of the globe.

The Group of 20 major industrial countries and developing nations earlier this month pledged to boost the resources of the IMF and other international lending institutions by $1.1 trillion, while supporting sizable stimulus programs of tax cuts and spending increases in their own countries.

By The Associated Press

The Dow fell 82.99, or 1 percent, to 7,886.57.

Broader market measures were mixed. The Standard & Poor's 500 index fell 6.53, or 0.8 percent, to 843.55, while the Nasdaq composite index rose 2.27, or 0.1 percent, to 1,646.12.

Benchmark crude for June delivery rose 30 cents to settle at $48.85 a barrel on the New York Mercantile Exchange.

In other Nymex trading, heating oil lost 1.8 cents to settle at $1.3299 a gallon, while gasoline for May delivery was down 2.4 cents to settle at $1.3906 a gallon. Natural gas prices rose 2.1 cents to settle at $3.532 per 1,000 cubic feet.