Business Highlights

AP News
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Posted: May 11, 2011 6:01 PM
Business Highlights

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Hedge fund founder convicted in inside-trade case

NEW YORK (AP) _ A former Wall Street titan was convicted Wednesday of making a fortune by coaxing a crew of corporate tipsters into giving him an illegal edge on blockbuster trades in technology and other stocks _ what prosecutors called the largest insider trading case ever involving hedge funds.

Raj Rajaratnam was convicted of five conspiracy counts and nine securities fraud charges at the closely watched trial in federal court in Manhattan. The jury had deliberated since April 25, and at one point was forced to start over again when one juror dropped out due to illness.

Prosecutors alleged the 53-year-old Rajaratnam made profits and avoided losses totaling more than $60 million from illegal tips. His Galleon Group funds, they said, became a multibillion-dollar success at the expense of ordinary stock investors who didn't have advance notice of the earnings of public companies and of mergers and acquisitions.

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AIG, Treasury offering 300M shares worth $9B

NEW YORK (AP) _ Bailed-out global insurance company American International Group Inc. and the federal government are offering to sell a total of 300 million AIG shares to the public.

The stock sale would be a big step by the government toward disentangling itself from the company. The government stepped in to rescue AIG from collapse with $182 billion in 2008 _ the biggest bailout of the financial crisis.

AIG and the government didn't specify a price for the shares in a regulatory filing on Wednesday. But 300 million shares of AIG were worth about $8.89 billion at Tuesday's closing price of $29.62.

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Little advantages have Macy's beating competition

NEW YORK (AP) _ Macy's Inc. is dominating its competition and bouncing back from the recession by doing many little things well: adding local flavor to its stores, snagging hit exclusives like Madonna's clothing line and keeping its own costs under control.

All that contributed to soaring first-quarter earnings that crushed Wall Street forecasts, boosted its outlook and doubled the dividend it pays shareholders. Macy's stock price rose nearly 8 percent Wednesday.

The department store's results are among the first in a pile of retail earnings reports over the next two weeks. They could put more pressure on competitors like Kohl's Corp. and J.C. Penney Co., both of which cater to shoppers on tighter budgets and are consequently more vulnerable to escalating costs of household basics.

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Philip Morris Int. CEO: Cigs not that hard to quit

RICHMOND, Va. (AP) _ The head of cigarette maker Philip Morris International Inc. told a cancer nurse Wednesday that while cigarettes are harmful and addictive, it is not that hard to quit.

CEO Louis C. Camilleri's statement was in response to comments at the company's annual shareholder meeting in New York. Executives from the seller of Marlboro and other brands overseas spent most of the gathering sparring with members of anti-tobacco and other corporate accountability groups.

The nurse, Elisabeth Gundersen from the University of California-San Francisco, cited statistics that tobacco use kills more than 400,000 Americans and five million people worldwide each year. She is a member of The Nightingales Nurses, an activist group that works to focus public attention on the tobacco industry.

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US trade deficit widens in March on pricier oil

WASHINGTON (AP) _ U.S. companies in March sold the most goods and services overseas in nearly two decades. But a big jump in oil prices pushed the nation's trade deficit higher.

The trade deficit rose 6 percent to $48.2 billion, the Commerce Department said Wednesday. That's the highest level since June 2010.

Exports increased to $172.7 billion, the most in records dating back to 1992. A weaker dollar has made U.S. goods cheaper overseas. Exports have also risen because of rapid growth in developing countries. U.S. companies exported more autos, chemicals, and agricultural goods in March.

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Demand for corn falls, could slow food inflation

ST. LOUIS (AP) _ The fast rise in food prices could begin to taper off later this year.

The government's latest crop report estimates that the domestic supply of corn, which was forecast to shrink, will grow in the months ahead. The Department of Agriculture report suggested the high price of corn is prompting ranchers and feed makers to use less and farmers to plant more.

Analysts expect these trends to push corn prices lower. That could ultimately make everything from beef to cereal to soft drinks less expensive.

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Job openings rise to highest level since Sept. `08

WASHINGTON (AP) _ Companies in March advertised the most jobs since the peak of the 2008 financial crisis, a sign that hiring is likely to remain healthy in the months ahead.

Job openings rose by 99,000 to 3.1 million in March, the Labor Department said Wednesday. That's the highest level of openings since September 2008 and the second straight monthly increase.

March's figure is much higher than the 2.1 million job openings posted in July 2009, one month after the recession ended. But it is still significantly below the 4.4 million openings recorded in December 2007, when the recession began.

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Medtronic picks GE's Omar Ishrak as next CEO

Medtronic Inc., the world's largest medical device maker, has selected the head of GE Healthcare to become its chief executive as it tries to re-energize sales in the midst of an industrywide slump.

The Minneapolis-based company said Omar Ishrak will join the company as chairman and CEO on June 13.

Ishrak, 55, had been the president and CEO of General Electric Co.'s health care systems business. He has worked at the company for 16 years. The unit specializes in medical imaging devices, including ultrasound and magnetic resonance machines. He will replace outgoing Chairman and CEO Bill Hawkins, who announced plans to retire in December after three years with the company.

Ishrak takes the reins as Medtronic and other device makers face a daunting set of challenges: sluggish sales, reduced reimbursement from insurers and tighter regulation by the federal government.

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Intel boosts dividend for 2nd time in 6 months

SAN FRANCISCO (AP) _ Intel Corp. has raised its quarterly dividend by 16 percent, boosting what was already one of the highest-yielding shareholder payouts in technology.

Wednesday's hike demonstrates Intel's confidence in the personal computer market, which is still large and growing despite a threat from tablet computers such as Apple Inc.'s iPad. Intel CEO Paul Otellini said rapid growth in worldwide computing demand is putting the company on track to boost revenue by more than 20 percent over last year's $43.6 billion.

More than 1 million PCs are sold every day. Intel's microprocessors _ the "brains" of computers _ are inside 80 percent of the world's PCs.

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Cisco earnings down 18 percent in 3Q

NEW YORK (AP) _ Cisco, the world's largest maker of computer networking gear, says net income declined nearly 18 percent in the latest quarter, as costs kept pace with a sales increase.

The company earned $1.8 billion, or 33 cents per share, in the fiscal third quarter, which ended in April. That compared with earnings of $2.2 billion, or 37 cents per share, a year ago.

Excluding the cost of stock-based compensation, amortization and asset impairments, earnings were 42 cents per share, unchanged from last year. Analysts polled by FactSet expected earnings of 37 cents per share on that basis.

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Toyota quarterly profit slides on quake disruption

TOKYO (AP) _ Toyota's quarterly profit dropped more than 75 percent after the March earthquake and tsunami wiped out parts suppliers in northeastern Japan, severely disrupting car production.

The maker of the popular Prius hybrid gave no forecast for the current fiscal year through March 2012, citing an uncertain outlook because production continues to be hampered by shortages of parts. Toyota is expected to lose its spot as the world's top-selling automaker to General Motors Co. this year because of the disasters.

The automaker's president Akio Toyoda said he and others at Toyota are "gritting our teeth" to keep jobs in Japan. He promised to disclose earnings forecasts by mid-June.

Toyota Motor Corp. reported Wednesday that January-March profit slid to 25.4 billion yen ($314 million) from 112.2 billion yen a year earlier. For the fiscal year ended March 2011, Toyota's earnings doubled, showing that the Japanese automaker had been on the way to recovery from its recall crisis when the magnitude-9 earthquake struck on March 11.

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Toyota plants to raise production in June

DETROIT (AP) _ Toyota Motor Corp. will begin cranking up its North American factories faster than expected, returning to 70 percent of normal production in June as it rebounds from parts shortages caused by the earthquake in Japan.

The company cut production to about 30 percent of normal in May by idling factories for several days or reducing their hours. It warned dealers to expect shortages of some models well into the summer.

But Toyota said Wednesday that the parts situation is improving as supply companies take measures to counter the effects of the quake.

A March 11 earthquake and tsunami damaged auto parts plants in northeastern Japan, causing shortages that have affected nearly all automakers but have hit Toyota and Honda especially hard.

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By The Associated Press(equals)

The Dow lost 1 percent to close at 12,630.03. The S&P 500 fell 15.08, or 1.1 percent, to 1,342.08. The Nasdaq composite lost 26.83, or 0.9 percent, to 2,845.06.

Benchmark crude dropped $5.67, or 5.5 percent, to settle at $98.21 per barrel on the Nymex. In London, Brent crude lost $5.06, more than 4 percent, to $112.57 per barrel on the ICE Futures exchange.

In other Nymex trading for June contracts, heating oil lost 10.29 cents to settle at $2.8983 per gallon and natural gas lost 6.2 cents to settle at $4.241 per 1,000 cubic feet.