AP
Business Highlights
Thursday October 30, 7:11 pm ET

Economy jolts into decline; bad recession seen

WASHINGTON (AP) -- The government reported Thursday that the economy shrank in the summer, sending the strongest signal yet that a recession may have already begun.

The Commerce Department reported that gross domestic product, the broadest measure of economic health, fell at an annual rate of 0.3 percent in the July-September period, a significant slowdown after growth of 2.8 percent in the prior quarter.

Consumer spending, which accounts for two-thirds of the economy, dropped by the largest amount in 28 years in the third quarter.

American Express to cut 7,000 jobs

NEW YORK (AP) -- In a stark acknowledgment of the tough times ahead in the credit card industry, American Express Co. said Thursday that it plans to cut 7,000 jobs, or about 10 percent of its worldwide work force, in an effort to slash costs by $1.8 billion in 2009.

The New York-based credit card issuer -- which has reported four straight quarters of profit declines as an increasing number of consumers struggle to pay off debt -- said it is also suspending management-level salary increases next year and instituting a hiring freeze.

The job cuts will be across various business units, but will primarily focus on management positions, the company said.

Exxon Mobil posts biggest US quarterly profit ever

HOUSTON (AP) -- Exxon Mobil Corp., the world's largest publicly traded oil company, reported income Thursday that shattered its own record for the biggest profit from operations by a U.S. corporation, earning $14.83 billion in the third quarter.

Yet numbers contained within the company's most recent financial report revealed production numbers that continue to sag.

The Irving, Texas-based company has reported unprecedented back-to-back quarters, the end of the most recent coinciding with a rapid plunge in crude prices.

Exxon said net income jumped nearly 58 percent to $2.86 a share in the July-September period. That compares with $9.41 billion, or $1.70 a share, a year ago.

Stocks up on GDP report in relatively calm session

NEW YORK (AP) -- Wall Street showed some welcome signs of stability Thursday, taking a downbeat gross domestic product report in stride and driving the Dow Jones industrial average up nearly 190 points in relatively calm trading.

Even the last half-hour of the session, lately a period of turbulent activity, was comparatively quiet.

The market that a week ago was reeling from fears about recession was more composed after the Commerce Department's report that GDP fell at an annual rate of 0.3 percent during the third quarter -- its worst showing in seven years. Analysts expected a 0.5 percent decline in GDP, the broadest measure of economic growth or contraction, but while the report was better than expected, it still pointed to an economy that is shrinking.

Banks asking for credit card debt forgiveness

WASHINGTON (AP) -- With defaults on credit card debt spiraling amid a global financial downturn, banks already reeling from the mortgage crisis are losing billions more from unpaid credit card bills.

Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy.

The new pilot program -- which the banks hope will become permanent -- could involve as many as 50,000 people struggling with credit card debt. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower's financial situation, up to a maximum of 40 percent.

Electronic Arts posts larger loss, cuts jobs

NEW YORK (AP) -- Video game publisher Electronic Arts Inc., whose titles include "Rock Band," posted a wider quarterly net loss Thursday and said it is laying off about 6 percent of its work force to cut costs as it heads into the most lucrative season for the games industry.

Higher development and marketing costs led to the bigger loss for the July-September period. The quarter's revenue surpassed Wall Street's forecast thanks to the success of games like "Spore" and "Madden NFL 09," but the company did not exude the cheery optimism that has characterized the video game industry in the past few months even amid the economic turmoil. The company's shares, which have been trading at their lowest level more than five years, tumbled in after-hours trading.

The company lost $310 million, or 97 cents per share, in the quarter, the second in its fiscal year. That was worse than the loss of $195 million, or 62 cents per share, a year earlier.

6 governors ask feds for help for US automakers

LANSING, Mich. (AP) -- The governors of six states have asked the treasury secretary and Federal Reserve chairman to take "immediate action" to help the troubled domestic automakers.

General Motors Corp. and Chrysler LLC are in talks to combine in order to survive, but financing is one of the biggest obstacles.

GM is lobbying the Bush administration and some members of Congress for $10 billion to $15 billion in aid to help keep the company going and possibly to make the Chrysler deal work. GM could use some of the money to shut down redundant Chrysler operations.

Motorola posts $397M 3Q loss; more job cuts

NEW YORK (AP) -- Motorola Inc. posted a hefty loss in the third quarter Thursday, citing the continued troubles of its cell phone division. The company will postpone the planned spin-off of the unit, and cut more jobs.

The maker of communications gear said it would get rid of 3,000 jobs by April, with about 2,000 of them coming from the cell phone unit. The company last announced 2,600 job cuts in April.

Motorola lost $397 million, or 18 cents per share, in the July-September period. It had earned $60 million, or 3 cents per share, in the same period a year ago.

Sales fell 15 percent to $7.48 billion.

Sun posts $1.7B loss for fiscal 1Q

NEW YORK (AP) -- Sun Microsystems Inc. posted a $1.7 billion loss for its latest quarter Thursday as the maker of servers and business software wrote down the value of the company because of the slow economy and a huge decline in its stock price.

Even excluding the goodwill write-down, Sun's results came in at the low end of its own forecast, which was lowered last week, and below analyst expectations.

The Santa Clara, Calif.-based company lost $1.68 billion, or $2.24 per share, in its fiscal first quarter, which ended Sept. 28. In the same period last year, it earned $89 million, or 10 cents per share.

Oil drops on weak GDP report

COLUMBUS, Ohio (AP) -- The latest U.S. economic report to suggest the nation has fallen into recession pushed oil prices lower on a strengthening conviction that the rest of the globe will follow.

Governments, businesses and consumers cut back on energy consumption during slow economic times and there is ample evidence to suggest that they already have.

Gasoline costs 30 percent less per gallon than it did just one month ago as thousands of people have lost jobs, stopped commuting, or are instead using mass transit and conserving money.

By The Associated Press

The Dow rose 189.73, or 2.11 percent, to 9,180.69.

Broader stock indicators also finished higher. The S&P 500 index rose 24.00, or 2.58 percent, to 954.09, while the Nasdaq composite index rose 41.31, or 2.49 percent, to 1,698.52.

Light, sweet crude for December delivery fell $1.54 to settle at $65.96 a barrel on the New York Mercantile Exchange. Oil prices have fallen 55 percent since peaking above $147 a barrel in mid-July.

In other Nymex trading, gasoline futures fell 8.6 cents to $1.467 a gallon, while heating oil fell nearly 2 cents to fetch $1.9841 a gallon. Natural gas for December delivery rose by 0.4 cent to $6.435 per 1,000 cubic feet.

In London, December Brent crude fell $1.76 to $63.71 a barrel on the ICE Futures exchange.