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The Honolulu Advertiser

Updated at 2:20 p.m., Tuesday, August 21, 2007

Business highlights: Credit crisis, Delta names new CEO

Associated Press

WASHINGTON — Treasury Secretary Henry Paulson attempted to soothe jittery investors on Tuesday, insisting the United States will safely get through a spreading credit crisis that has unhinged Wall Street.

Paulson commented as the Federal Reserve, trying to further stabilize the reeling markets, pumped another $3.75 billion into the financial system Tuesday. It was the latest in a series of cash transfusions that have topped more than $100 billion since last week.

In another development, Senate Banking Committee Chairman Christopher Dodd urged Federal Reserve Chairman Ben Bernanke to use "all the tools available" so that a spreading credit crisis doesn't undermine the national economy.

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ATLANTA — Delta Air Lines Inc. named former Northwest Airlines Corp. Chief Executive Richard Anderson as its new leader Tuesday, a move that could revive speculation about a possible merger between the two carriers.

Anderson, currently a board member at Delta and an executive at UnitedHealth Group Inc., will replace Gerald Grinstein as Delta's CEO. Grinstein has said previously that he would step down once his successor was named.

Anderson, 52, will become CEO effective Sept. 1, and Grinstein, 75, will retire from Delta and from its board.

Grinstein had lobbied Delta's board to tap an insider from the company as his replacement. The top internal candidates had been Chief Financial Officer Ed Bastian and Chief Operating Officer James Whitehurst.

Delta said Tuesday that Bastian will add the title president to his duties. The company did not say anything about Whitehurst.

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WASHINGTON — President Bush sought to calm nervous investors Tuesday as the Federal Reserve plowed $3.75 billion into the financial system, the latest efforts to stanch a spreading credit crisis that has unhinged Wall Street.

Wrapping up a summit in Montebello, Quebec, with the Prime Minister of Canada and the Mexican president, Bush took the opportunity to point out that the U.S. economy remains in good shape and should be able to weather the financial storm.

Treasury Secretary Henry Paulson also tried to strike a reassuring tone.

In another erratic session on Wall Street, the Dow Jones industrials finished down 30.49 points.

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CHICAGO — Tribune Co. shareholders consented to the $8.2 billion buyout of the media conglomerate on Tuesday, an expected but noteworthy milestone in a drawn-out transaction that still awaits federal approval and billions of dollars in promised financing.

The shareholder meeting in Tribune Tower, the last scheduled for the 160-year-old company, was marked by unions' complaints that employees of the soon-to-be employee-owned firm will have no formal role in running it. Some shareholders also voiced concerns about its ability to operate in a struggling newspaper industry under a mountain of debt.

But Tribune easily secured the backing of shareholders for the deal to take the company private under an employee stock ownership plan — a foregone conclusion since the $34-a-share transaction will pay them significantly more than the current value of the languishing stock.

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LOS ANGELES — The number of foreclosure filings reported in the U.S. last month jumped 93 percent from July of 2006 and rose 9 percent from June, the latest sign that homeowners are having trouble making payments and finding buyers during the national housing downturn.

There were 179,599 foreclosure filings reported during July, up from 92,845 during the same period a year ago, Irvine-based RealtyTrac Inc. said Tuesday. There were 164,644 foreclosure filings reported in June.

The national foreclosure rate in July was one filing for every 693 households, the company said.

The filings include default notices, auction sale notices and bank repossessions.

Some properties included in the survey might have received more than one notice, if the owners have multiple mortgages.

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MINNEAPOLIS — Target's profits were as good as analysts expected, and Saks lost less money than expected. These days, that's good news.

Investors have been nervously watching for Target's results since last week, when bigger rival Wal-Mart Stores Inc. posted a higher quarterly profit but cut its 2007 earnings forecast because of weak consumer spending.

Target wasn't totally immune to that weakness.

President Gregg Steinhafel said they'll be especially careful to manage inventory on discretionary goods like clothing and seasonal items.

Analyst Todd Slater of Lazard & Co. said it makes sense that any downturn in consumer spending would hit Wal-Mart harder.

For the quarter that ended Aug. 4, Minneapolis-based Target Corp. said it earned $686 million, or 80 cents per share, up 12.6 percent from $609 million, or 70 cents per share, a year ago.

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BOSTON — Staples Inc. on Tuesday said its second-quarter profit rose 11 percent as lower sales of items such as office furniture were offset by gains at its copy and print centers.

But the world's biggest office products supplier slightly pulled back its full-year earnings expectations amid a sluggish North American retail market. Its latest profit increase was largely driven by its overseas and product delivery businesses.

Its shares fell 1 cent to $23.30 Tuesday.

Framingham-based Staples reported net income of $178.8 million, or 25 cents per share for the three months ended Aug. 4 compared with a profit of $161.2 million, or 22 cents per share, a year earlier.

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NEW YORK — Crude oil prices dropped below $70 a barrel to an eight-week low Tuesday, after Hurricane Dean weakened and it appeared the storm would have no lasting effect on Mexican oil production.

Gasoline and natural gas prices also extended their sharp losses, with traders betting that demand is falling and supplies are safe.

There are two more months of hurricane season left to go, though. For now, energy prices are on the decline, but if a storm comes along that disrupts the oil or natural gas production along the Gulf Coast, it could mean U.S. consumers might have to pay more to fill their car's tanks and heat their homes.

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BOSTON — BJ's Wholesale Club Inc. said Tuesday its second-quarter profit rose 37 percent, the first quarterly boost in profits for the nation's No. 3 warehouse club since disappointing results last year toppled its chief executive.

The results, which beat Wall Street expectations, were driven by strong sales of perishable foods under Chief Executive Herb Zarkin's plan to reinvigorate BJ's product mix and merchandise presentation.

Natick, Mass.-based BJ's said net income grew to $36.3 million, or 55 cents per share, from $26.4 million, or 39 cents per share, a year ago.

The latest period's profit was boosted 9 cents per share by various one-time gains, compared with one-time charges of 2 cents per share in the year-ago period.

Not counting these items, the company would have earned 46 cents per share in the latest period, compared with 41 cents in the second quarter of 2006.