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The Honolulu Advertiser

Updated at 5:04 p.m., Friday, October 5, 2007

Business briefs: Jobs report, Topps Meat closing down

Advertiser Staff

WASHINGTON — Fears that the country could slide into a recession eased in September as employers created the most jobs in four months and workers' wages grew solidly. The unemployment rate crept up to 4.7 percent, the highest in over a year but still low by historical standards.

Wall Street breathed a sign of relief and pushed the Dow Jones industrial average up more than 125 points in afternoon trading.

The tally of 110,000 net new jobs generated in September clearly heartened investors and analysts. Yet what they really took comfort in was the revelation that the job market — a main pillar for the economy— didn't crack under the pressure of a painful credit crunch and housing slump in August after all.

The Labor Department's fresh snapshot of employment conditions around the country released Friday showed that the economy actually created 89,000 jobs in August.

That was a huge and crucial turnaround from the loss of 4,000 jobs — the first decline in four years — reported a month before. At the time, that news had sent Wall Street into a nosedive, stoked fears the economy was heading toward recession and was seen as cementing the Federal Reserve's decision to lower interest rates.

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AMSTERDAM, Netherlands — A consortium led by Royal Bank of Scotland PLC is all but certain to acquire ABN Amro Holding NV in the largest takeover in the history of the financial industry, signaling the likely end for one of Europe's largest banks.

An $88.1 billion cash-and-share offer from rival Barclays PLC was withdrawn Friday in a widely expected concession after the British bank garnered only a fraction of the Dutch bank's shares.

The RBS-led group is expected to cut up the 183-year-old ABN Amro in a $99.9 billion deal. Fortis NV of Belgium wants the bank's Dutch operations, Banco Santander Central Hispano SA of Spain wants its Brazilian and Italian arms, and RBS wants the rest, including ABN's investment banking arm.

Barclays was expected to keep the bank largely intact.

The takeover fight, which began in March, lasted through the fire sale of ABN Amro's U.S. arm, a flurry of lawsuits, legal challenges and turmoil in global credit markets that many thought would alter the deal substantially.

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NEWARK, N.J. — Topps Meat Co. on Friday said it was closing its business, six days after it was forced to issue the second-largest beef recall in U.S. history and 67 years after it first opened its doors.

The decision will cost 87 people their jobs, Topps said.

On Sept. 25 Topps began recalling frozen hamburger patties that may have been contaminated with the potentially fatal E. coli bacteria strain O157:H7. The recall eventually ballooned to 21.7 million pounds of ground beef.

Thirty people in eight states had E. coli infections matching the strain found in the Topps patties, the Centers for Disease Control and Prevention reported. None have died.

"This is tragic for all concerned," said Topps chief operating officer Anthony D'Urso, a member of the family that founded the company in 1940.

The Topps recall raised questions about whether the U.S. Agriculture Department should have acted quicker to encourage a recall. On Thursday, top USDA officials said they would speed warnings in the future.

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NEW YORK — Investment bank Merrill Lynch & Co. said Friday credit and mortgage woes will lead it to post a third-quarter loss, as it takes almost $5 billion in writedowns in the wake of a credit crunch that paralyzed Wall Street this summer.

The bulk of the losses will come from marking down the value of complex instruments known as collateralized debt obligations or CDOs, and from declines in subprime mortgages — loans given to customers with poor credit history.

The $5 billion writedown essentially erases more than half of Merrill Lynch's net income during the prior 12 months. The credit problems have not been limited to just Merrill Lynch though — the world's largest financial institutions collectively lost well more than $20 billion this summer as investors pulled back from all but the safest propositions.

Financial analysts and credit rating agencies agreed the unexpectedly large writedown would hurt Merrill Lynch's image and call into question its ability to manage risk.

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SEATTLE — Washington Mutual Inc. said Friday that the weak housing market and the recent mortgage crunch will lead to a 75 percent drop in its third-quarter net income, making it the latest financial institution to warn investors it took a major hit over the summer.

WaMu, the nation's largest savings bank, reported net income of $748 million in the third quarter of 2006, meaning third-quarter 2007 net income is likely to be somewhere around $187 million.

The decline in third-quarter income will mostly come from rising provisions for loan losses and write-downs of mortgages Washington Mutual currently holds.

Washington Mutual said its loan loss provision for the quarter will total $975 million. The provision exceeds net charge-offs — loans written off as having no chance of being recovered — by $550 million. Loss provisions, on top of paying current charge-offs, are used to cover future losses.

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SEATTLE — Bungie Studios, the "Halo" video game developer acquired by Microsoft Corp. in 2000, is once again operating as an independent company, Microsoft said Friday.

The software maker will maintain close ties with privately held Bungie LLC and own a minority stake in it, the companies said.

Bungie will develop games exclusively for Microsoft's Xbox 360 and Windows PC platforms "for the foreseeable future," said Harold Ryan, Bungie's president and studio head, in an interview.

The two companies said they will continue to work together to support the "Halo" franchise — including "Halo 3" released Sept. 25 — and will expand their partnership to include new games. Executives declined to comment on the size of Microsoft's stake or other financial terms of the deal, which was effective Friday.

Microsoft acquired Chicago-based Bungie and its "Halo" concept in 2000, ensuring that the Xbox would be the only game console to run the multiplayer first-person shooter game. Bungie moved from Chicago to Kirkland, Wash., a few miles from Microsoft's Redmond headquarters, and the first installment of the trilogy went on sale simultaneously with the first Xbox console in November 2001.

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