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The Honolulu Advertiser

Updated at 2:26 p.m., Tuesday, August 7, 2007

Business highlights: Former executive convicted

Associated Press

SAN FRANCISCO — Former Brocade Communications Systems Inc. CEO Gregory Reyes was convicted Tuesday of defrauding investors in the first stock options backdating case to go to trial.

The guilty verdict on all counts is an important validation of the Justice Department's options backdating probe, which has so far led to criminal charges against at least 10 executives. Reyes' case was seen as an important test of whether a jury considers it a crime deserving of jail time.

Reyes wiped his forehead with a handkerchief and glared at the jury as the verdict was announced. His wife, Penny, sobbed. They embraced afterward and left the federal courthouse in San Francisco without commenting.

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WASHINGTON — The productivity of American workers rebounded in the spring while wage pressures eased, favorable economic developments that analysts worried might prove only temporary.

The Labor Department reported Tuesday that worker efficiency rose at an annual rate of 1.8 percent in the April-June quarter, more than double the 0.7 percent pace of the first three months of the year.

Meanwhile, unit labor costs rose at a 2.1 percent rate, marking the second consecutive quarter that wage pressures have eased. While higher wages are good for workers, if wages rise too quickly they can spur unwanted inflation.

Fed policymakers, who were meeting Tuesday, were expected to keep interest rates unchanged for the ninth consecutive meeting.

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WASHINGTON — Consumers boosted their borrowing more than expected in June, reflecting another hefty jump in credit card debt.

The Federal Reserve reported Tuesday that consumer credit rose at an annual rate of 6.5 percent in June. It marked the second straight sizable gain. Consumer credit rose by an even larger 7.9 percent in May.

The increase was led by an 8.4 percent rate of increase for revolving credit, the category that includes credit card debt. The category that includes auto loans rose at a 5.3 percent rate, the same as in May.

Total consumer credit rose by $13.2 billion in June to a record $2.459 trillion. The increase was double what economists had been expecting.

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WEST WINDSOR, N.J. — Tyco International Ltd. said Tuesday it fell to a fiscal third-quarter loss due to hefty charges primarily related to a legal settlement, but adjusted results managed to top Wall Street's expectations.

The diversified conglomerate agreed to set up a $3 billion cash fund in May to satisfy shareholder claims arising from actions by ex-chief executive L. Dennis Kozlowski and other top officers convicted of looting the company and inflating its value.

Tyco completed spin-offs of its health care and electronics units on June 29.

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CHARLOTTE, N.C. — Duke Energy Corp., one of the largest electric power companies in the United States, said Tuesday its second-quarter profit fell 17 percent after it spun off its natural gas business at the beginning of the year.

Duke earned $293 million, or 23 cents per share, in the second quarter of 2007, down from $355 million, or 28 cents per share, during the same period in 2006.

Excluding special items and discontinued operations, the company said it earned 25 cents per share in the period.

Analysts polled by Thomson Financial forecast a profit of 20 cents per share. Thomson estimates usually exclude special items.

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HOUSTON — Higher natural gas production and an expanding pipeline network helped El Paso Corp. post a nearly 11 percent increase in second-quarter earnings, and the pipeline owner and gas producer said it was on target to meet year-end financial goals.

Quarterly profit for the April-June period was $156 million, or 22 cents a share, versus $141 million, or 21 cents per share, a year ago. The most-recent period included an 8-cent charge for debt repurchases.

Revenue rose 1 percent to $1.2 billion from $1.1 billion last year.

Analysts, on average, predicted a profit of 24 cents a share on revenue of $1.1 billion, according to a Thomson Financial poll.

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LAS VEGAS — Harrah's Entertainment Inc., which is being taken private in a $17.1 billion deal, said Tuesday its second-quarter profit surged 85 percent, as visitor volume powered growth in Las Vegas and a new race track casino in Pennsylvania offset weak results in Atlantic City, N.J.

The world's largest casino company posted an increase in net profit to $237.5 million, or $1.25 per share, versus $128.6 million, or 69 cents per share, in the prior-year period.

Income from continuing operations rose to $195.5 million, or $1.03 per share, compared with $128.7 million, or 69 cents per share, a year earlier.

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LOS ANGELES — Warner Music Group Corp., one of the world's largest recording companies, said Tuesday its fiscal third-quarter loss widened as more people bought digital music, rather than CDs.

The loss for the quarter ended in June was $17 million, or 12 cents per share, versus a prior-year loss of $14 million, or 10 cents per share. Excluding nonrecurring items related to a corporate restructuring and settlement, the loss in the 2007 quarter was $29 million, or 20 cents per share.

Revenue declined 2 percent year over year to $804 million from $822 million. On a constant-currency basis, revenue fell 5 percent.

On average, analysts surveyed by Thomson Financial forecast a quarterly loss of 14 cents per share on revenue of $836 million.

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DENVER — Molson Coors Brewing Co., one of the world's largest brewers, said Tuesday its second-quarter profit rose 18 percent fueled by strong sales of Coors Light in the U.S. and Canada.

The Denver-based brewer's operations in Europe, however, turned in a weaker performance compared with the year-ago quarter due to the timing of the World Cup soccer tournament in 2006 and poor weather.

The results beat Wall Street estimates, although some analysts noted the company benefited from shifts in inventory in North America and a lower tax rate.

In an interview with The Associated Press, President and Chief Executive Officer Leo Kiely said he was pleased with the results overall, but he acknowledged the brewer faces challenges in the United Kingdom, where the pub industry is declining as more consumers favor take-home products.