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The Honolulu Advertiser

Updated at 2:14 p.m., Friday, April 20, 2007

Business highlights: McDonald's, Clear Channel, Pfizer

Associated Press

MCDONALD'S SEES 22% JUMP IN EARNINGS

CHICAGO — McDonald's Corp. extended its hot streak to four years with a 22 percent jump in first-quarter earnings, and also said Friday it will sell nearly 1,600 restaurants in Latin America and the Caribbean to a franchisee — a gain it pledged to return to shareholders.

The announcement sent the fast-food leader's shares briefly to an all-time high of $49.70 before they dipped in profit-taking. The once-stagnant stock has quadrupled since falling to $12.12 in March 2003.

The planned transaction involving restaurants in 18 countries will result in a non-cash impairment charge of $1.6 billion in the second quarter. But it reduces the company's financial exposure in a challenging region and will net McDonald's about $700 million in cash, which it said will be used to increase share buybacks and dividends.

Analysts hailed the sale, which had been expected as McDonald's pares the number of company-owned restaurants worldwide, and said they saw no signs the company's resurgence is running out of steam.

H&R BLOCK SELLS MORTGAGE LENDING BUSINESS

KANSAS CITY, Mo. — After three weeks of speculation, H&R Block Inc. made good on a promise to offload its struggling mortgage lending business, agreeing Friday to sell Option One Mortgage Corp. to a private equity firm.

But the continuing decline of the subprime mortgage market, which provides money for people with poor credit, will cost Kansas City-based H&R Block.

Cerberus Capital Management LP's newly formed subsidiary, OOMB Acquisition Corp., will buy Option One for the value of Option One's net assets minus $300 million.

The final price of the sale won't be determined until the deal closes in H&R Block's second quarter, ending Oct. 31.

H&R Block Chief Executive Officer Mark Ernst told analysts that even at the discounted price, he was glad to have reached a deal.

Investors pushed H&R Block shares up as much as 8.2 percent to $23.62 before profit-taking took over Friday. Shares, which have traded in a 52-week range of $18.31 to $24.95, rose 73 cents, or 3.3 percent, to close at $22.56 on the New York Stock Exchange.

XEROX PROFITS SOAR IN FIRST QUARTER

HARTFORD, Conn. — Xerox profits jumped nearly 17 percent in the first quarter of the year to $233 million, the company announced Friday, on the strength of solid revenue gains and cost-cutting measures.

Earnings per share were 24 cents, up from 20 cents in the first quarter of 2006. Analysts polled by Thomson Financial predicted profit of 20 cents per share.

Revenue was up by 4 percent, to $3.8 billion, a reversal from a 2 percent loss in the same quarter last year.

The Stamford-based copier and office equipment manufacturer also said per-share earnings for the year are expected to come in at the high end of a $1.12-$1.16 range.

Shares of Xerox rose 52 cents, or 2.9 percent, to close at $18.60 on the New York Stock Exchange.

Revenue from post-sales activities yielded a "huge gain for Xerox," Larry Zimmerman, chief financial officer, said in an interview.

CLEAR CHANNEL TO SELL 56 TV STATIONS

SAN ANTONIO — Clear Channel Communications Inc., the nation's largest operator of radio stations, said Friday it agreed to sell its 56 television stations to a private equity firm for $1.2 billion.

The company had announced it would sell the stations last November, part of a divestiture that includes the possible sale of 448 radio stations. So far, the company has reached agreements to sell 161 radio stations for a total of about $331 million.

Clear Channel owns more than 1,100 radio stations nationwide and plans to retain about 675, mostly in larger markets.

The divestiture plan was announced at the same time the company first disclosed that it agreed to be acquired by a group of private equity investors, led by Bain Capital Partners LLC and Thomas H. Lee Partners LP.

That plan ran into some resistance from several large shareholders who argued the sale price was too low. The equity groups on Wednesday sweetened their buyout offer to $39 per share, or $19.35 billion, plus the assumption of about $8 billion in debt, in an effort to win over skeptical shareholders.

PFIZER PROFITS FALL ON DISAPPOINTING SALES

NEW YORK — Pfizer Inc., the world's largest drug maker, said Friday its profit fell 17.5 percent in the first quarter, hurt by one-time charges and disappointing sales of diabetes drug Exubera. Adjusted results beat Wall Street expectations by a wide margin.

Net income fell to $3.39 billion, or 48 cents per share, from $4.11 billion, or 56 cents per share, a year ago. Excluding one-time items, the company reported adjusted profit of $4.8 billion, or 68 cents per share, up from $4.35 billion, or 59 cents per share, last year. Pfizer, which early in the quarter announced it would trim its work force by 10 percent, reported restructuring costs of $812 million, up from $299 million a year ago.

Revenue rose 6 percent to $12.47 billion from $11.75 billion last year. Sales of the company's best selling drug, cholesterol reducer Lipitor, grew 8 percent to $3.36 billion, topping most Wall Street estimates. Price increases, fewer rebates and favorable foreign-exchange rates made up for declining U.S. prescriptions of Lipitor, which has come under heavy competition from cheaper, generic cholesterol drugs.

SHAREHOLDER VOTE IN CORPORATE PAY PASSES HOUSE

WASHINGTON — The House voted Friday to give shareholders at public corporations a voice in executive pay packages that typically equal 500 times the salaries of workers at those companies.

The shareholder vote under the bill would be advisory only. But Democratic backers of this provision said that investors need a say when companies losing money or laying off workers are paying executives eight- and nine-figure salaries and retirement packages.

The bill, which passed 269-134 and now goes to the Senate, was opposed by the White House and most Republicans. They argued that the Securities and Exchange Commission has recently taken steps to make corporate pay packages more transparent and that Congress should stay out of corporate affairs.

President Bush earlier this year questioned the extravagant pay of some company managers and directors, but said it was not a matter for government involvement.

OIL PRICES TOP $63 A BARREL

NEW YORK — Oil prices rose above $63 a barrel Friday ahead of the weekend presidential election in Nigeria, where gunmen attacked a boat carrying oil workers near the nation's southern oil region and gunfire broke out in a state capital.

A report of refinery reductions also boosted prices on Friday.

The electoral period in Nigeria — Africa's largest oil producer and a main supplier to the United States — has been chaotic. At least 49 people have died in violence since April 14 and many more were reported dead in political violence before last weekend's state vote.

Officials said Friday that gunmen attacked a boat carrying oil workers to an offshore rig in waters off Nigeria's unruly south, wounding six, officials said. Security forces drove off the attackers, a private security official said.

Later Friday, gunfire could be heard in Yenagoa, the capital of the oil-rich Yenagoa state, where the ruling party's vice presidential candidate serves as governor.