Posted at 4:07 p.m., Friday, August 3, 2007
Business highlights: Wall Street, Chrysler, Toyota
Associated PressSTOCKS FALL SHARPLY AMID CREDIT FEARS
NEW YORK Wall Street plunged anew Friday, hurtling the Dow Jones industrial average down more than 280 points after comments from a Bear Stearns executive reinvigorated the market's fears of a widening credit crunch.
The drop of more than 2 percent in major stock market indexes was a fitting end to two volatile weeks on Wall Street and followed back-to-back late-day triple digit gains in the Dow. This time, the catalyst for a sharp skid was Bear Stearns Cos. Chief Financial Officer Sam Molinaro, who described turmoil in the credit market as the worst he'd seen in 22 years.
According to preliminary calculations, the Dow fell 281.42, or 2.09 percent, to 13,181.91.
Broader stock indicators also fell. The Standard & Poor's 500 index dropped 39.14, or 2.66 percent, to 1,433.06, and the Nasdaq composite index fell 64.73, or 2.51 percent, to 2,111.25.
JOBLESS RATE EDGES UP TO 4.6 PERCENT
WASHINGTON The nation's unemployment rate inched up to a six-month high of 4.6 percent in July as hiring simmered down. Workers' wages, meanwhile, grew modestly. Wall Street tumbled.
The latest snapshot of conditions around the country, released by the Labor Department Friday, showed that new job creation has slowed. Employers increased payrolls by 92,000 last month, down from 126,000 in June. It marked the fewest add-ons in a month since February.
Hefty job cuts by the government were a big factor in the subdued employment picture. Jobs also were eliminated by construction companies, factories and retailers _ in part reflecting the toll of the sour housing market and the struggles of the U.S. auto industry. Employment in health care, food services, architecture and engineering, computer design and in other industries expanded.
BERKSHIRE HATHAWAY'S PROFIT JUMPS 33%
OMAHA, Neb. Billionaire Warren Buffett's holding company Berkshire Hathaway Inc. reported Friday that its net income jumped nearly 33 percent during the second quarter because of strong performance from its insurance division.
Berkshire said it earned $3.1 billion, or $2,018 per Class A share during the quarter which ended June 30. That's up from $2.3 billion, or $1,522 per share, last year.
Berkshire said its companies and investments generated $27.3 billion in revenue for the quarter, up from $24.1 billion in the same period a year ago.
Berkshire Hathaway's Class A shares fell $100 Friday to close at $109,900 before the report was released. Its Class B shares gained $11 to close at $3,599.
Berkshire owns more than 60 subsidiaries including insurance, clothing, furniture, and candy companies, restaurants, natural gas and corporate jet firms and has major investments in such companies as Coca-Cola Co., Anheuser-Busch Cos. and Wells Fargo & Co.
CERBERUS TAKES CONTROL OF CHRYSLER
DETROIT Chrysler became an American company again Friday as Cerberus Capital Management gained a controlling share from Chrysler's German owners and started on the long road to restoring the 82-year-old automaker's luster _ and profits.
DaimlerChrysler AG transferred an 80.1 percent stake in Chrysler to New York-based Cerberus, one of the world's largest private equity firms, in a $7.4 billion deal. The German automaker retained a 19.9 percent interest in the new company, Chrysler LLC.
With the closing, Chrysler becomes the first U.S. automaker in private hands since Ford Motor Co. went public in 1956. Chrysler, which plans a company-wide celebration Monday where it will revive its five-sided star logo, will be free of the short-term quarterly earnings pressures that public companies face, since there will be no Chrysler shares.
TOYOTA EARNS HIGHEST QUARTERLY PROFIT EVER
TOKYO Booming sales of fuel-efficient cars helped lift Toyota to its biggest quarterly profit and put the maker of the Prius hybrid on pace to beat General Motors as the world's No. 1 automaker this year.
Despite concerns in the industry about sluggish auto sales in the U.S. and Japan, Toyota Motor Corp. got help from a weak yen and cost cuts in its earnings announced Friday for its first fiscal quarter.
Japan's biggest automaker posted a 32.3 percent jump in profit to 491.54 billion yen ($4.1 billion) for the April-June quarter.
Surging gas prices have proved a big plus for Toyota as drivers flock to its fuel-efficient models, including the Camry, the best-selling model in the U.S., and the Prius gas-electric hybrid.
SERVICE SECTOR GROWTH SLOWS
WASHINGTON The U.S. service sector expanded in July more slowly than in June, a trade group said Friday, the latest in a series of reports suggesting economic growth is moderating.
The Tempe, Ariz.-based Institute for Supply Management said its index measuring change in the non-manufacturing sector, which accounts for 80 percent of U.S. economic activity, registered 55.8 in July.
That's the lowest level since March and down from 60.7 in June, according to ISM, an organization of corporate purchasing executives.
July's decline is consistent with economists' expectations that the economy will slow in the second half of this year from last quarter's 3.4 percent annual growth rate.
PROCTER & GAMBLE 4Q PROFIT UP
CINCINNATI Procter & Gamble Co., boosted by strong sales of new Gillette shavers and by new products in longtime brands such as Tide and Crest, reported profits for its fourth quarter and the full year each rose 19 percent.
P&G also announced plans to step up stock buybacks. But after topping Wall Street expectations for the quarter, the company issued guidance for the current quarter and year a little below analysts' expectations.
Its shares fell 42 cents to $62.88 Friday. Its shares have ranged from $58.13 to $66.30 over the past 52 weeks.
Net income for the quarter ended June 30 rose to $2.27 billion, or 67 cents per share, from $1.9 billion, or 55 cents per share, a year earlier.
Sales rose 8 percent to $19.27 billion from $17.84 billion, led by double-digit increases in blades and razors, fabric and home care, and health care businesses.
WEYERHAEUSER 2Q PROFIT SLIPS
FEDERAL WAY, Wash. _ Weyerhaeuser Co., one of the world's largest lumber and paper producers, said Friday its second-quarter profit dropped sharply due to hefty charges and weakness in the housing construction markets.
But its earnings excluding one-time items beat Wall Street expectations.
Net income fell to $32 million, or 15 cents per share, in the three months ended June 30, compared to $298 million, or $1.19 per share, a year ago.
Excluding several charges and gains, the company earned $104 million, or 48 cents per share, in the latest quarter, compared with $273 million, or $1.09 per share, in the year-earlier period.
ENERGY FUTURES FALL ON JOBS DATA
NEW YORK Energy futures fell Friday as news of a cooling U.S. job market outweighed concerns about tight oil supplies.
The Labor Department reported that the unemployment rate rose to 4.6 percent in July, a six-month high. That suggests the economy might be slowing, which could lower demand for oil and gasoline.
Partly offsetting the impact of the jobs data were fresh comments from OPEC suggesting the oil cartel won't boost production when it meets next month.
Light, sweet crude for September delivery fell $1.38 to settle at $75.48 a barrel on the New York Mercantile Exchange. While crude futures set new price records above $78 this week, they ended the week $1.54 a barrel, or 2 percent, lower.
WASHINGTON POST REPORTS DECLINES
McLEAN, Va. The Washington Post Co. reported a 13 percent drop in quarterly earnings Friday, as declining revenue from its flagship paper continued to cancel out gains in the company's education unit.
For the second quarter, the Washington-based company reported earnings of $68.6 million, or $7.19 per share, compared with $78.5 million, or $8.17 per share, in the year-ago quarter.
The results included several one-time tax-related items that cumulatively resulted in a loss of 31 cents per share. Setting those aside, earnings of $7.50 per share still came in lower than the $8.33 per share estimate of analysts surveyed by Thomson Financial.