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The Honolulu Advertiser

Posted at 1:20 p.m., Tuesday, April 10, 2007

Business highlights: Alcoa, gas prices, Chrysler

Associated Press

STUDENT LOAN CORRUPTION PROBE EXPANDS

ALBANY, N.Y. — Cozy arrangements between colleges and the companies that lend their students billions of dollars are far more widespread than anticipated, New York Attorney General Andrew Cuomo told The Associated Press Tuesday, even as another college financial aid officer was suspended amid a probe into the $85 billion industry.

Cuomo would not divulge where the burgeoning investigation is headed next, including whether more subpoenas are on the way. But he said the investigation could lead to criminal charges against high-ranking officials at both lending companies and universities.

Cuomo is investigating alleged kickbacks to school officials who steered students to certain lenders. His investigators say they have found numerous arrangements that benefited schools, financial aid officers and lenders at the expense of students.

Investigators found that many colleges have established "preferred lender" lists and entered into revenue sharing and other financial arrangements with those lenders. Some colleges have "exclusive" preferred lender agreements with the companies.

U.S. FILES PIRACY COMPLAINTS AGAINST CHINA

GENEVA — The United States filed two new complaints against China at the World Trade Organization on Tuesday over copyright policy and restrictions on the sale of American movies, music and books, trade officials said.

The filing comes a day after U.S. Trade Representative Susan Schwab said American companies were losing billions of dollars annually from piracy levels in China that "remain unacceptably high."

The Chinese Commerce Ministry on Tuesday expressed "strong dissatisfaction" at the U.S. action.

The formal requests for consultations were not immediately made available.

The U.S. submissions Tuesday trigger a 60-day consultation period during which trade negotiators from both countries will try to resolve the two disputes. If that fails, the U.S. can ask for the WTO to establish investigative panels. It would likely take years for any retaliatory sanctions to be authorized.

One case contends that Beijing's lax enforcement of copyright and trademark protections violates WTO rules, Schwab told reporters in Washington on Monday. The other argues that Beijing has erected illegal barriers to the sale of U.S.-produced movies, music and books in China.

ALCOA REPORTS 9% JUMP IN PROFIT

PITTSBURGH — Aluminum producer Alcoa Inc. said Tuesday its first-quarter profit rose nearly 9 percent as favorable metal prices and strong sales boosted results.

The Pittsburgh-based company earned $662 million, or 75 cents per share, during the first three months of the year compared with $608 million, or 69 cents per share, during the same period last year.

Revenue climbed 11 percent to $7.9 billion, from $7.1 billion a year earlier, due to higher metal prices and sales to the aerospace, industrial product, and building and construction markets, according to the company.

Analysts polled by Thomson Financial on average expected earnings of 76 cents per share on revenue of $7.65 billion.

Alcoa is the first Dow Jones Industrial Average component to report quarterly earnings.

Shares of the company climbed 13 percent during the quarter and closed up 3 cents at $34.90 Tuesday on the New York Stock Exchange. Alcoa shares have traded between $26.39 and $36.96 in the past 52 weeks.

NET SALES ORDER FALLS FOR D.R. HORTON

DALLAS — The peak spring home-selling season is off to a slow start, builder D.R. Horton Inc. said Tuesday, another sign that bad times in the housing market may last longer than expected.

Horton, the nation's largest homebuilder by deliveries, said Tuesday that its sales order in the most recent quarter fell 37 percent, led by even steeper declines in California and the Southwest.

The grim report trumped recent indications that sales of homes, especially existing houses, had been improving.

Horton's founder and chairman, Donald R. Horton, said that conditions for selling homes "continue to be challenging in most of our markets," as the supply of unsold new and existing homes remained high.

The Fort Worth-based company said net sales orders for the quarter ended March 31 totaled 9,983 homes, down from 15,771 a year ago. The value of the orders dropped 40 percent, to $2.6 billion from $4.4 billion a year ago.

The decline in orders was sharpest in California, plunging 59 percent to 1,107 from 2,697 a year earlier.

GAS PRICES MAY BE BIT CHEAPER THAN LAST SUMMER

WASHINGTON — Drivers may find gasoline a little cheaper this summer compared to last, despite a 64-cent-a-gallon jump since January.

The Energy Department said Tuesday that the recent sharp rise in gasoline costs is likely to slow in the coming weeks with prices averaging $2.81 a gallon over the vacation driving season, about 3 cents lower than last spring and summer.

But the Energy Information Administration forecast is anything but assured.

Only a month ago, the agency said it believed the cost of regular-grade gasoline would peak in June, averaging $2.67 for the month, a price already eclipsed last week.

The latest forecast calls for prices to peak with an average $2.87 a gallon for the month of May, then decline. Last summer's peak was an average of $2.98 for the month of July.

Prices have soared beyond $3 dollar in each of the last two summers: During Hurricane Katrina in 2005 that disrupted Gulf Coast supplies and last July when the Israeli invasion of Lebanon caused crude prices to spike to $76 dollar a barrel with $3-plus gasoline quick to follow.

TRIAL STARTS IN INDUSTRY'S CHALLENGE OVER AUTO EMISSIONS

BURLINGTON, Vt. — A General Motors Corp. executive told a federal judge Tuesday that vehicle carbon emission reductions ordered by California and 10 other states would require average fuel economy standards for cars and the lightest category of trucks of 43.7 miles per gallon.

The testimony came as a federal trial got under way in which automakers are trying to block states from adopting new standards aimed at lowering emissions of carbon dioxide, a greenhouse gas tied to global climate change.

The trial, which involves a suit filed by the auto industry, centers on rules adopted by California in 2005 and afterward by Vermont and other states.

The non-jury trial is the first of a series of court fights expected in the states. It is being heard by U.S. District Judge William Sessions III.

CANADIAN AUTO WORKERS TO FIGHT BID FOR CHRYSLER

DETROIT — The head of the Canadian Auto Workers says he will try to thwart billionaire investor Kirk Kerkorian's bid for Chrysler, fearing Kerkorian will cost thousands of workers their jobs.

CAW President Buzz Hargrove said Tuesday that Kerkorian's Tracinda Corp., as well as private equity investors who are studying Chrysler, have a history of hurting workers.

The CAW represents about 11,000 Chrysler workers in Canada. Its contract with the U.S.-based wing of DaimlerChrysler AG doesn't expire until September 2008, a year later than its U.S. counterpart, the United Auto Workers.

A UAW spokesman declined comment on Kerkorian.

Hargrove said the CAW is most interested in suitors who would keep Chrysler intact and honor the terms of its contract.