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The Honolulu Advertiser

Updated at 1:17 p.m., Monday, July 30, 2007

Business highlights: News Corp., diabetes drug, Verizon

Associated Press

NEWS CORP. MAY NOT CONTINUE WITH DOW JONES DEAL

NEW YORK — Rupert Murdoch's News Corp. media conglomerate is "highly unlikely" to proceed with its offer to buy Wall Street Journal publisher Dow Jones & Co. if support for the deal remains at its currently reported levels, a News Corp. spokesman said Monday.

News Corp. has offered $60 a share, or $5 billion, to buy the company. Dow Jones' controlling shareholders, the Bancroft family, are expected to decide by the close of business on Monday how many of them support the deal.

Dow Jones' shares have been wobbly in recent weeks, trading below Murdoch's offering price of $60 reflecting the risk that the deal may not go through. They took another tumble on Monday after the Journal posted its story, and were down $2.09, or 3.8 percent, at $52.36 in afternoon trading, having dipped as low as $49.49, a drop of 9 percent, earlier in the day.

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EXPERTS URGE TAKING DIABETES DRUG OFF MARKET

WASHINGTON — The widely used diabetes drug Avandia should be pulled off the market, federal health officials said Monday, urging action in response to studies linking the drug to an increased risk of heart attacks.

That risk, combined with the drug's lack of unique short-term benefits in helping diabetics control blood sugar, means continued sales are not justified, Food and Drug Administration scientist Dr. David Graham told the panel of outside experts.

The manufacturer, GlaxoSmithKline PLC, argued that there is no increased risk, citing its own analyses of studies of Avandia, also called rosiglitazone.

The FDA convened the experts to consider whether Avandia should be restricted to use in select patients and branded with prominent warnings or removed altogether from sale. Previously, the FDA had said information from dozens of studies pointed to an increased risk of heart attack.

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PROFIT RISES, REVENUE FALLS FOR RADIOSHACK

DALLAS — A yearlong turnaround effort at RadioShack Corp. appeared to falter Monday as the electronics retailer swung to a second-quarter profit but saw revenue decline 15 percent because of softening sales of cellular phones and other key products. Its shares sank 11 percent.

RadioShack reported net income of $47 million, or 34 cents per share, for the three months ended June 30 versus a loss of $3.2 million, or 2 cents per share, a year ago.

Revenue fell to $934.8 million from $1.10 billion in the previous year. Its same-store sales — sales at stores open at least a year — fell 8.9 percent during the quarter, hurt by its post-paid wireless business.

Shares plunged $3.25, or 11 percent, to $25.55 Monday after sinking as low as $24.63 earlier in the session.

RadioShack's stock price had more than doubled this year until early July, when it began slumping. Despite the recent drop, the shares were still up 72 percent for the year through Friday.

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WRIGLEY PROFIT BOOSTED BY INTERNATIONAL SALES

CHICAGO — Growing international sales and a weak U.S. dollar helped propel Wm. Wrigley Jr. Co.'s profit up 21 percent during the second quarter, the gum and candy maker said Monday.

The confectioner's net income rose to $169.8 million, or 61 cents per share, during the April-through-June quarter. That's up from $140.6 million, or 51 cents per share, in the year-ago period. Results included a penny-per-share charge related to supply chain restructuring.

Meanwhile, revenue surged a better-than-expected 14 percent to $1.38 billion from $1.21 billion last year, beating Wall Street forecasts.

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PROFIT DOUBLES FOR AGRICULTURAL PROCESSOR

CHAMPAIGN, Ill. — Agricultural processor Archer Daniels Midland Co. said Monday its fiscal fourth-quarter profit more than doubled, pushed up by more than $600 million in asset sales.

Earnings from continuing operations, however, were more modest, hurt by the high cost of the corn that Decatur, Ill.-based ADM processes into products ranging from ethanol to soft drink sweeteners.

But the company said lower corn prices should help its earnings going forward.

Profit for the quarter ended June 30 totaled $954.8 million, or $1.47 per share, from $410.3 million, or 62 cents per share, during the same period a year earlier. Results include $616 million in one-time gains on asset sales.

From continuing operations, ADM reported a profit of $418 million, or 65 cents a share, from up from $410.3 million, or 62 cents, a year earlier. Some analysts calculated the company's earnings from continuing operations at 58 cents a share, a figure that accounts for inventory costs.

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TYSON FOODS REPORTS HIGHER PROFIT

Tyson Foods Inc., the world's largest meat processor, reported a bigger-than-expected profit for its third fiscal quarter on Monday and raised its profit forecast for the year it rebounds from last year's losses.

Tyson credited higher average sales prices for chicken, beef, pork and prepared foods, export growth and a cost-cutting program that is ahead of a target of saving $200 million this year.

Those factors more than offset higher feed prices for animals, boosted by demand for corn for producing the alternative fuel ethanol.

Analysts said chicken, Tyson's second largest business by sales after beef, drove the quarter's gains on higher profit margins under the cost-cutting program, higher shelf prices in stores and export demand led by China.

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VERIZON EARNINGS SATISFY ANALYSTS

NEW YORK — Verizon Communications Inc. reported second-quarter earnings that satisfied analyst expectations Monday and said its wireless arm would buy a rural cell-phone carrier to expand its reach.

Investors found reasons to dislike the news, and the stock of the country's second largest telecommunications company fell 49 cents, or 1.2 percent, to $41.51, even as the broader market rebounded from last week's losses.

Verizon Wireless said it had agreed to buy Rural Cellular Corp., which provides cell phone service in 15 states under the Unicel brand, for $757 million, or $45 per share.

That's a stiff premium over the $31.81 closing price for Rural Cellular shares on Friday, but the stock hit a high of $46.34 in early July, fueled by acquisition speculation.

On Monday, the stock soared to $42.76.

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CHINA ORDERS BANKS TO LESSEN MONEY FOR LENDING

BEIJING — China tightened credit Monday in a new effort to cool its sizzling economy, ordering banks to shrink the pool of money for lending by increasing their reserves for a sixth time this year.

The move was widely expected after the economy grew by 11.9 percent last quarter, its fastest rate in 12 years despite earlier efforts to slow the expansion. Beijing raised interest rates on July 20 for a third time this year.

The amount of reserves that lenders must keep with the central bank was raised 0.5 point to 12 percent of their deposits, the central bank said. The increase takes effect Aug. 15.

China's communist leaders want to keep overall growth high to reduce poverty. But they worry that runaway investment in real estate and other industries could push up politically volatile inflation or spark a debt crisis if borrowers default.