NEW YORK — The traditional excuse for disappointing retail sales in February — cold weather — may not be enough to explain sluggish results posted by U.S. merchants from Gap Inc. to AnnTaylor Corp. Unappealing fashions may also have something to do with it.

As merchants reported their sales results Thursday, the disappointments went beyond the usual stragglers like Gap and included stores like teen stalwart Abercrombie & Fitch Co. Bebe Stores Inc. reported its first monthly decline in 46 months, blaming the weakness on not having enough trendy tops.

Wal-Mart Stores Inc., which reported continuing problems with its apparel offerings, had sales below analysts' estimates.

VONAGE OWES VERIZON $58M

ALEXANDRIA, Va. — Internet phone company Vonage must pay Verizon Communications $58 million for infringing on three patents that enable the upstart's low-cost telephone service, a jury ruled today.

The judgment is far less than the $197 million that Verizon had requested, and it was more in line with what Vonage had suggested — if the Holmdel, N.J.-based company was found liable.

Still undetermined is whether Vonage will be barred from using Verizon's technology. Following the verdict, attorneys for New York-based Verizon requested a permanent injunction barring Vonage from further use of the patented technology.

A hearing on the request was scheduled for March 23 in U.S. District Court in Alexandria.

CVS UPS BID FOR CAREMARK RX

NASHVILLE, Tenn. — CVS Corp. boosted its offer for Caremark Rx Inc. for a third time today, just a day after rival bidder Express Scripts Inc. upped its offer for the pharmacy benefits manager.

Each of the bids, which include stock and cash, is now valued at roughly $26.5 billion based on afternoon stock prices.

The bidding began last November when the drugstore operator CVS offered $21.2 billion in stock for Caremark while Express Scripts joined the fray in December.

The two companies are vying to join forces with Caremark, the second-largest U.S. pharmacy benefits manager, to increase their bargaining power with drug makers and edge out competitors like Wal-Mart Stores Inc. and Medco Health Solutions Inc., the largest benefits manager.

VERDICT IN ON FRAUD AT GATEWAY

IRVINE, Calif. — A federal jury ruled that two former Gateway Inc. executives manipulated earnings to meet analysts' expectations, the Securities and Exchange Commission said today.

The jury in the civil trial found former Chief Financial Officer John J. Todd and former Controller Robert D. Manza liable for violating anti-fraud and record-keeping laws and for making false statements, according to the statement.

The ruling was handed down Wednesday in U.S. District Court in San Diego, where the computer maker was based until it moved its headquarters to Irvine in 2004.

A message left with Todd's attorney was not immediately returned. No one answered the phone at the offices of Manza's attorney.

COSTCO PROFIT FALLS AMID NEW RETURN POLICY

SEATTLE — Warehouse retailer Costco Wholesale Corp. said today its fiscal second-quarter profit dropped 16 percent, hurt in part by costs associated with revamping its consumer electronics return policy.

Net income for the quarter ended Feb. 18 fell to $249.5 million, or 54 cents per share, from $296.2 million, or 62 cents per share a year ago.

Last week, Costco announced a new return policy for consumer electronics devices including televisions, computers, cameras, camcorders, digital music players and cell phones. In the past, the company gave customers unlimited time to return those items, but the new policy shortens that window to 90 days.

In a conference call with investors today, Costco Chief Financial Officer Richard Galanti said the company conducted a detailed review of when customers were returning items such as televisions, which he said bring in about $2.5 billion in revenue each year.

JOBLESS CLAIMS FALL TO LOWEST LEVEL IN MONTH

WASHINGTON — The number of laid-off workers filing claims for unemployment benefits declined last week, providing a slight break from a recent rise in layoffs.

The Labor Department reported that applications for jobless benefits totaled 328,000 last week, the lowest level in a month and down a better-than-expected 10,000 from the previous week.

However, the four-week average for claims rose to 339,000, the highest level since layoffs spiked in the fall of 2005. Layoffs have been increasing this year, reflecting weakness in such hard-hit industries as housing and auto manufacturing.

In other economic news, the nation's big retailers reported disappointing sales results for February as unseasonably cold weather put a damper on go-shopping moods.

EUROPEAN CENTRAL BANK HIKES INTEREST RATE

FRANKFURT, Germany — With Gallic sangfroid the European Central Bank's president Jean-Claude Trichet signaled to markets that the bank's quarter-point interest rate hike today likely was not its last.

In a move aimed at keeping growth in check and inflation at bay, the European Central Bank raised its key interest rate a quarter of a percentage point to 3.75 percent today.

Trichet listed some of the worries that could prompt the 13-nation central bank to move again, maybe not next month, but probably in the next couple of months: oil prices, wage increase demands and volatile markets.

While he did not use the term "strongly vigilant" — a term often interpreted to mean a rate hike is imminent — he said the bank was not relaxing its stance of monitoring inflation risks. The central bank has raised the key rate seven times since December 2005, when it was 2 percent.

CLEARWIRE SHARES SLIGHTLY SLIP

KIRKLAND, Wash. — After an initial pop, shares of Clearwire Corp., a wireless Internet service provider, slipped a bit today after raising $600 million in an initial public stock offering.

The IPO values the entire company, founded by cellular phone pioneer Craig McCaw, at more than $4 billion.