AP
Business Highlights
Wednesday September 10, 6:33 pm ET

Lehman tries to soothe Wall Street with asset sale

NEW YORK (AP) -- Lehman Brothers, in a desperate bid to survive, announced plans Wednesday to sell a majority stake in its prized investment management business and said a sale of the entire company was possible.

Lehman said it would spin off a troubled real estate unit and slash its dividend. Those moves come as the nation's fourth largest investment bank reported an almost $4 billion third-quarter loss, boosting its losses so far this year to about $6.5 billion.

The plan was aimed at raising capital and regaining investor confidence in the 158-year-old firm.

At OPEC, cooling rivalries, extending a hand

VIENNA, Austria (AP) -- OPEC said Wednesday it would trim overall output by more than 500,000 barrels of oil a day by adhering closer to production quotas -- a compromise meant to avoid a backlash from the biggest petroleum consuming nations and stop the rapid decline in oil prices.

Also coming out of the meeting in Vienna was a new agreement between Russia and OPEC intended to improve bilateral cooperation in energy issues.

Stocks rise modestly as Street mulls Lehman plan

NEW YORK (AP) -- Stocks ended a temperamental session moderately higher Wednesday as investors bought up the stocks of energy, materials and consumer-staple companies, but remained cautious about the beleaguered financial sector.

Bank and brokerage stocks finished mostly lower after Lehman Brothers Holdings Inc. said it plans to sell a majority stake in its investment management business and spin off its troubled mortgage assets.

Pentagon delays $35B Air Force tanker decision

WASHINGTON (AP) -- The Defense Department has again delayed plans to award a $35 billion contract for Air Force refueling planes, handing a victory to defense contractor Boeing Co. and leaving the politically charged decision for the next president.

Defense Secretary Robert Gates told lawmakers Wednesday that he ended the current round of bidding on the tankers because the Pentagon's plan to pick a winner by the end of the year no longer seemed possible given the complexity of the project and the rancor between Boeing and rival Northrop Grumman Corp.

The decision represents a major win for Boeing in its lengthy and bitter struggle with Northrop.

Oil prices slip even after US inventories shrink

NEW YORK (AP) -- Oil prices closed slightly lower in jittery trading Wednesday, as the strengthening dollar and signs of a slowing economy outweighed inventory drops and word that OPEC would cut production.

The Energy Department's Energy Information Administration said that crude inventories fell by 5.9 million barrels last week compared to the previous week, and that gasoline inventories fell by 6.5 million barrels.

The EIA also reported, however, that inventories of distillates -- which include heating oil and diesel fuel -- fell by a lower-than-anticipated 1.2 million barrels.

Bank of America settles securities probe

BOSTON (AP) -- Bank of America Corp. said Wednesday it will buy back about $4.5 billion worth of auction-rate securities held by roughly 5,500 customers nationwide as part of a settlement agreement with Massachusetts regulators.

The auction-rate securities market involved investors buying and selling instruments that resembled corporate debt, except the interest rates were reset at regular auctions, some as frequently as once a week. The market for the securities collapsed in February.

The Charlotte, N.C.-based bank said it continues to cooperate fully with ongoing investigations by the Securities and Exchange Commission and the New York Attorney General's Office.

Icahn says he has $70-per-share offer for Imclone

TRENTON, N.J. (AP) -- Biotechnology company ImClone Systems Inc. said Wednesday it is considering a buyout offer worth $70 per share from an unidentified large pharmaceutical company, and rejected a $60-per-share bid from partner Bristol-Myers Squibb Co.

ImClone said Chairman Carl Icahn has been in talks with the chief executive of the pharmaceutical company that made the new offer, which would be worth about $6.1 billion. ImClone's board will allow the potential buyer two weeks to do due diligence. ImClone said it has not decided if the offer is adequate.

The new offer would be a premium of 10 percent to ImClone's Tuesday closing price of $63.65. On Wednesday, ImClone stock jumped $4.29, or 6.7 percent, to $67.94.

Berkshire tightens insurance for bank deposits

CHARLOTTE, N.C. (AP) -- A Kansas company that is part of Warren Buffett's Berkshire Hathaway Inc. has stopped selling private bank deposit insurance above the amount guaranteed by the federal government, signaling that billionaire investor Buffett may be worried about future bank failures.

Kansas Bankers Surety Co. confirmed Wednesday that it has ceased soliciting new clients for their "bank deposit guaranty bonds," a product that backs deposits above the $100,000 limit that is guaranteed by the Federal Deposit Insurance Corp. for many bank accounts.

It also plans to cancel existing policies in coming months.

Ford to cut 500 workers at Ontario crossover plant

NEW YORK (AP) -- Ford Motor Co. said Wednesday it will eliminate 500 employees at its crossover assembly plant in Oakville, Ontario, as sales of the vehicles designed to woo SUV and truck buyers continue to slump.

Ford of Canada spokeswoman Lauren More said the company will phase out the third shift in the plant's body and paint work areas over the next several weeks.

Ford is offering additional retirement incentives to eligible workers at the plant as a way to achieve the cuts.

Former UnitedHealth CEO settles options lawsuit

Former UnitedHealth Group Inc. Chief Executive William McGuire will pay $30 million and return stock options representing more than 3 million shares to settle a class-action lawsuit.

The litigation was led by the California Public Employee Retirement System, also known as CalPERS, and the parties involved had been preparing for a trial later this month in U.S. District Court in Minnesota, where UnitedHealth is headquartered.

A statement from McGuire says the former CEO will pay the money to a fund for the benefit of the class, and he'll return options for 3.7 million shares to UnitedHealth.

The $30 million will be added to the $895 million UnitedHealth agreed to pay earlier this year to settle the lawsuit. UnitedHealth and McGuire were among several defendants named in the case.

By The Associated Press

The Dow Jones industrial average rose 38.19, or 0.34 percent, to 11,268.92, after dipping briefly into negative territory, rising by nearly 150 points, and then pulling back again.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 7.53, or 0.61 percent, to 1,232.04, and the Nasdaq composite index rose 18.89, or 0.85 percent, to 2,228.70.

Light, sweet crude for October delivery fell 68 cents to settle at $102.58 a barrel on the New York Mercantile Exchange, after initially jumping on the EIA's report. It was crude's lowest close since April 1. The contract fell by more than $3 a barrel in the previous session.

In other Nymex trading, heating oil futures fell 2.23 cents to settle at $2.9024 a gallon, while gasoline prices gained about a penny to settle at $2.6616 a gallon.

In London, October Brent crude fell $1.37 to settle at $98.97 a barrel on the ICE Futures exchange.

Natural gas for October delivery fell 14.2 cents to settle at $7.393 per 1,000 cubic feet; the EIA is scheduled to release its weekly reading on natural gas in U.S. storage on Thursday.