BUSINESS BRIEFS
Mortgage crisis slams biggest U.S. savings and loan
Associated Press
SEATTLE — Washington Mutual Inc., the nation's largest savings and loan, said problems in the mortgage and credit markets are forcing it to close offices, slash more than 3,100 jobs, and set aside far more than expected for loan losses in its fourth quarter.
The company also said it was slashing its dividend 73 percent. Additionally, WaMu announced a $2.5 billion offering of convertible preferred stock.
The company said that it now expects to set aside between $1.5 billion and $1.6 billion for loan losses in its fourth quarter. That estimate is about twice the level of expected-fourth quarter net charge-offs, WaMu added. The company said higher loan loss provisions could continue through the end of 2008.
CHIP MAKER HIKES PROFIT OUTLOOK
DALLAS — Texas Instruments Inc., which makes chips used in more than half the world's cell phones, narrowed its fourth-quarter outlook, saying it expects sales and profits to be toward the higher end of its previously announced expectations.
The company said it expects to earn 50 to 54 cents per share from continuing operations, compared with the previous range of 48 to 54 cents per share. Analysts were expecting 51 cents per share, according to a survey by Thomson Financial.
The Dallas-based company said sales would range between $3.50 billion and $3.66 billion, compared with the prior range of $3.40 billion to $3.68 billion. Analysts had been predicting $3.56 billion.
CASH INFUSION LIFTS MBIA INC. SHARES
NEW YORK — Bond insurer MBIA Inc. said it will receive a cash infusion of up to $1 billion from private equity firm Warburg Pincus to help bolster its capital reserves as it braces for mounting losses and writedowns in the fourth quarter.
The news helped lift MBIA shares by more than 13 percent in trading. The investment comes as MBIA faces deteriorating credit markets that are likely to further strain its earnings and cash flow.
Armonk, N.Y.-based MBIA also said that it will set aside reserves of $500 million to $800 million in the fourth quarter to cover estimates of probable losses related to residential mortgage-backed securities, particularly those backed by prime home equity lines of credit and close-end home equity loans.
BANK'S MONEY FUND LOSES $28B
CHARLOTTE, N.C. — Bank of America Corp. is liquidating an enhanced money fund amid withering losses on complex asset-backed securities, the bank said.
The Columbia Strategic Cash Portfolio fund for institutional investors that was worth $40 billion only a couple of months ago currently has about $12 billion in assets, the Charlotte-based bank said. The fund will be closed off to new investors, it added.
The loss is related to the subprime-mortgage crisis that has rippled across the globe, Bank of America spokesman Jon Goldstein said.
The enhanced money fund was a short-term investment pool that offered higher yields than a traditional money-market fund.
MCD'S SAME-STORE SALES ARE UP 8.2%
OAK BROOK, Ill. — McDonald's Corp., the world's No. 1 hamburger chain, said global same-store sales rose 8.2 percent in November.
Same-store sales, or sales at restaurants open at least 13 months, is a key indicator of retailer performance since it measures growth at existing restaurants rather than newly opened ones.
Every global region contributed to the strong sales performance. U.S. same-store sales rose 4.4 percent, boosted by sales of coffee, breakfast items and Dollar Menu selections. In Europe, same-store sales grew 10.8 percent, helped by sales of premium burgers and chicken products in Germany, the U.K. and France.
