Buffett's big bet: $34B on 2nd-largest railroad
NEW YORK (AP) -- The biggest
name in investing is making what he calls an "all-in wager" on the
U.S. economy -- $34 billion to own a railroad that hauls everything from corn
to cars across the country.
The acquisition of
Burlington Northern Santa Fe, the nation's second-largest railroad, would be
the biggest ever for Warren Buffett's Berkshire Hathaway investment company.
Berkshire Hathaway Inc.
already owns a 22 percent stake in Burlington Northern and would buy up the
rest under the deal, for a total value of $34 billion. It still needs approval
from Burlington shareholders and antitrust regulators, both expected early next
year.
Factory orders rise 0.9
percent in September
WASHINGTON (AP) -- Orders to
U.S. factories rebounded in September, helped by strength in autos, heavy
machinery and military aircraft.
The fifth increase in six
months bolstered hopes that a revival in manufacturing will help support an
overall economic recovery. The worry is that if consumer spending falters in
coming months, orders will slump again.
The Commerce Department said
Tuesday that orders rose 0.9 percent in September, slightly better than the 0.8
percent gain economists had expected. Demand increased for both durable goods,
and nondurable goods such as chemicals and energy products.
Auto sales show industry
beginning to stabilize
DETROIT (AP) -- After months
of roller coaster-like sales, the auto industry offered signs of recovery from
its yearlong slump on Tuesday, as most automakers reported higher levels of
U.S. sales in October.
GM, the largest U.S.
automaker, reported its first monthly sales gain in almost two years, while
Hyundai and Subaru were huge winners thanks for their popular models and
fuel-efficient sedans. Other top automaker -- Toyota, Ford, Nissan --also posted
higher sales.
The mood was in contrast to
a year ago, when consumers were frightened away from showrooms by the early
effects of the financial meltdown, plunging stock markets and the credit
freeze.
Rising commodities,
dealmaking lift stocks
NEW YORK (AP) -- Investors
sidestepped some of their doubts about the economy and bought energy and
industrial stocks as commodity prices rose.
Stocks ended back-and-forth
trading mostly higher Tuesday as a spike in the price of gold and corporate
dealmaking extended an advance from Monday. The gains in commodity prices
helped stocks pare early losses. The Dow Jones industrial average slipped 18
points, while broader indexes rose modestly.
Investors took some cues
from commodities including gold, which jumped to a new high after India's
central bank bought $6.7 billion worth of the metal from the International
Monetary Fund.
Britain puts more money in
banks, imposes breakup
LONDON (AP) -- The British
government moved Tuesday to break up the country's two biggest retail banks,
imposing a major shakeup on the financial sector as it exacts payback for last
year's massive state bailout at the height of the financial crisis.
The government also injected
billions of pounds more of taxpayer funds into Royal Bank of Scotland PLC and
Lloyds Group PLC, underscoring worries the banking sector is not out of trouble
yet.
The change effectively pump
almost 40 billion pounds ($65 billion) more into the two banks and could result
in the creation of as many as three new commercial banks.
Oil prices rise as Fed meets
on interest rates
Oil prices rose Tuesday as
the Federal Reserve began a two-day policy meeting on interest rates.
The U.S. government stepped
in to bail out faltering banks and other giant businesses over the past year,
which has helped send the dollar tumbling and the price of oil sharply higher.
Since oil is largely bought
and sold in dollars, investors holding stronger currencies can buy more crude
for less and have done so in recent months, sending the price of benchmark crude
above $80 near the end of October.
The central bank isn't
expected to take any action on interest rates, yet statements issued after such
meetings can hint at the Fed's take on the state of the economy.
Madoff's longtime auditor
pleads guilty to fraud
NEW YORK (AP) -- Bernard
Madoff's longtime auditor pleaded guilty to securities fraud charges Tuesday,
saying he failed to do his job to verify the disgraced money manager's
financial records but did not know Madoff was running history's biggest Ponzi
scheme.
David Friehling, 49, entered
the plea in U.S. District Court in Manhattan, apologizing to the thousands of
victims who lost billions of dollars while he audited Madoff's financial
records between 1991 and 2008. The plea was part of a cooperation deal with
prosecutors.
He said if he had known that
investor money was not properly invested, he would not have poured his family's
savings, including the college funds for three children ages 17, 20 and 24,
into Madoff's investment business.
Stanley sees cost savings in
Black & Decker deal
CHICAGO (AP) -- Tool makers
Stanley Works and Black & Decker Corp. are betting that together they can
wring out more profit and better position themselves for a housing market
recovery than they could apart.
In an all-stock deal that
would create the largest tool maker in a fragmented market, Stanley Works on
Monday agreed to pay $3.46 billion for rival Black & Decker.
The deal will cut costs by
$350 million within three years, likely in part through an unspecified number
of job cuts, and increase earnings per share by $1 within three years, the
companies said. Executives said most of the savings will come from reducing
corporate overhead and consolidating business units.
Johnson & Johnson sets
restructuring, plans charge
NEW YORK (AP) -- Johnson
& Johnson said Tuesday it will cut up to about 8,000 jobs and streamline
its operations in an effort to cut costs as it braces for changes in the health
care industry.
The New Brunswick, N.J.,
company said the cuts will affect 6 to 7 percent of its global work force of
roughly 118,700 workers. The restructuring is one of Johnson & Johnson's
biggest ever and will prompt a restructuring charge of up to $1.3 billion
pretax in the fourth quarter.
Johnson & Johnson plans
to simplify its business structure and projects that it will save between $800
million and $900 million next year and $1.4 billion and $1.7 billion annually
after the restructuring is complete in 2011.
Viacom 3Q profit jumps 15
pct on strong box office
NEW YORK (AP) -- G.I. Joe
and the Transformers came to Viacom Inc.'s rescue in the third quarter, helping
boost the company's earnings 15 percent with strong box office returns.
Viacom, the media
conglomerate controlled by billionaire Sumner Redstone, owns a wide range of
media properties including the MTV and BET cable networks and the "Rock
Band" video-game franchise.
The industrywide advertising
slump and shifting consumer habits have hurt the company as it takes in less
money from selling commercial time and DVDs. But Viacom's film studio,
Paramount Pictures, has been slashing costs and focusing on a smaller slate of
films. It also saw strong ticket sales for "Transformers: Revenge of the
Fallen" and "G.I. Joe: The Rise of Cobra."
By The Associated Press
The Dow fell 17.53, or 0.2
percent, to 9,771.91, after being down as much as 86 points.
The broader Standard &
Poor's 500 index rose 2.53, or 0.2 percent, to 1,045.41. The index is up 54.5
percent from a 12-year low in early March. The Nasdaq composite index rose
8.12, or 0.4 percent, to 2,057.32.
Benchmark crude for December
delivery gained $1.47 to settle at $79.60 a barrel Tuesday on the New York
Mercantile Exchange.
In other Nymex trading,
heating oil rose 2.73 cents to settle at $2.0733 a gallon. Gasoline for
December delivery gained 1.32 cents to $2.0035 a gallon. Natural gas for
December delivery gained 9.8 cents to settle at $4.922 per 1,000 cubic feet.
In London, Brent crude for
December delivery added $1.56 to settle at $78.11 on the ICE Futures exchange.