Business Highlights

AP News
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Posted: Jul 20, 2011 7:14 PM
Business Highlights

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American Airlines orders 460 new planes from Boeing, Airbus

FORT WORTH, Texas (AP) _ American Airlines is buying at least 460 new planes over the next five years from Airbus and Boeing in a record order that breaks Boeing's exclusive grip on American's fleet.

American said Wednesday it will buy 260 planes from Airbus, 200 from rival Boeing Co., and take options to buy hundreds more. It expects the new jets to provide much-needed savings in fuel costs. American's current fleet is among the least fuel-efficient in the industry.

The deal is a major boost for Airbus, which hadn't won an order from American since the 1980s. Boeing did salvage one of its biggest sales ever _ a huge consolation considering that it was in danger of losing the whole order to its European rival.

The jets carry a sticker price of more than $38 billion, although big airlines regularly get discounts and routinely play one aircraft maker off the other to get better deals.

Analysts said American's bold strike would put more pressure on other airlines with aging fleets to buy new planes too.

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Blistering heat wave stressing nation's power grid

NEW YORK (AP) _ A lengthy, blistering heat wave that is blanketing the eastern half of the United States is putting significant stress on the nation's power grid as homeowners and businesses crank up their air conditioners.

Utilities say they're ready for high power demand, and widespread electricity shortages or outages are unlikely. Lines and equipment are not fully taxed and there is more generating and transmission capacity available than usual because of the weak economy. Also, not many major storms are in the forecast, meaning fewer downed power lines.

The heat wave began a week ago in the Plains states and is expected to spread east through the weekend. It is lasting longer than most heat waves and is spread over an unusually wide area, according to Travis Hartman, the Energy Weather Manager at MDA Earthstat, which proves forecasts for utilities and other weather-dependent businesses.

Hartman predicts 90- to 100-degree weather from Chicago to Boston from Wednesday through the weekend. The Midwest is expected to see peak heat on Thursday, while thermometers in eastern states will top out on Friday and Saturday. Philadelphia may break a 1957 record of 100 degrees on Friday, while Washington, D.C., is expected to reach 103, tying a record from 1926.

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Real estate website Zillow soars in IPO debut

NEW YORK (AP) _ Investors set aside housing market doldrums and rushed to grab shares of real estate website Zillow on Wednesday, valuing the company at as much as $1.6 billion.

Zillow Inc., which has never made a profit, is yet another beneficiary of strong investor demand for the latest crop of Internet stocks. Many of the recent market debutantes provide social networking, online games or search. Zillow's shares tripled in their trading debut on the Nasdaq stock market. Zillow had set a price of $20 for its stock late Tuesday. The shares rose as high as $60 before settling back to $38.80 in midday trading, valuing the Seattle-based company at about $1 billion.

The weak housing market did not hurt Zillow's IPO. Figures released Wednesday show that Americans are buying homes at the weakest pace in 14 years.

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Home sales on pace for worst showing in 14 years

WASHINGTON (AP) _ People are buying homes at the weakest pace in 14 years.

Sales of previously occupied homes fell in June for a third straight month to a seasonally adjusted annual rate of 4.77 million, the National Association of Realtors said Wednesday.

This year's pace is lagging behind the 4.91 million homes sold last year _ the fewest since 1997. In a healthy economy, people buy roughly 6 million homes per year.

Fewer first-time homebuyers are entering the market. Many can't obtain a loan or meet larger down payment requirements.

Another problem is that a growing number of contracts are being canceled before sales are finalized, many because of lower appraisals that are scuttling loans. And the slowdown in hiring is making people think twice about taking on extra debt.

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Intel's second-quarter numbers show PC industry's new approach

SAN FRANCISCO (AP) _ Intel Corp. said its results for the latest quarter were better than expected as it milked strong corporate demand for PCs and the need for new computer servers to handle Internet traffic on mobile devices.

But the second-quarter numbers, reported Wednesday, don't necessarily mean that the PC business, which Intel helped create three decades ago, is in great shape.

Consumer demand for PCs in the U.S. and Europe has been weak for the past year. Stacy Smith, Intel's chief financial officer, said in an interview that it is expected to remain "relatively soft" for the remainder of 2011.

Shipments into those markets are actually decreasing, according to market research IDC and Gartner Inc. released last week.

But Intel's latest numbers provide a map for how the industry plans to find its way out.

Intel's net income rose just 2 percent to $2.95 billion, or 54 cents per share, from $2.89 billion, or 51 cents per share, a year ago. Excluding some expenses, Intel earned 59 cents per share, ahead of analyst expectations for 51 cents per share, according to FactSet.

Revenue rose 21 percent to $13.03 billion, also ahead of analyst projections for $12.8 billion.

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EBay second-quarter profit falls on acquisition charges

SAN FRANCISCO (AP) _ EBay Inc.'s second-quarter results beat analyst expectations Tuesday with growth in its PayPal online payment service and marketplace business _ although profit fell 31 percent on charges from its recent purchase of e-commerce retail site operator GSI Commerce.

For the quarter ended June 30, eBay earned $283.4 million, or 22 cents per share, compared with $412 million, or 31 cents per share, in the year-ago quarter.

The company finished its acquisition of GSI in June in a deal valued at $2.4 billion. As a result, its operating expenses for the quarter rose 32 percent to $1.5 billion.

Excluding one-time items, the company earned 48 cents per share _ 2 cents more than what analysts polled by FactSet expected.

Revenue climbed 25 percent to $2.76 billion from $2.22 billion a year earlier, as the number of people using PayPal and eBay.com rose. Analysts forecast $2.60 billion.

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Wells Fargo settles mortgage-abuse case for $85M

WASHINGTON (AP) _ Wells Fargo & Co. has agreed to pay $85 million to settle civil charges that it falsified loan documents and pushed borrowers toward subprime mortgages with higher interest rates during the housing boom.

The fine is the largest ever imposed by the Federal Reserve in a consumer-enforcement case, the central bank said Wednesday.

Wells Fargo, the nation's largest mortgage lender, neither admitted nor denied wrongdoing as part of the settlement. The bank agreed to compensate borrowers who were steered into higher-priced loans or whose income was exaggerated.

The Fed said a unit of Wells Fargo inflated borrowers' incomes on loan documents to qualify for mortgages they otherwise couldn't afford from 2004 until 2008. Sales personnel also pushed borrowers toward higher-interest, subprime loans, even though they were eligible for lower-interest mortgages, the central bank said.

Between 3,700 and roughly 10,000 people could be compensated under the settlement, the Fed said. The payments will likely range from $1,000 to $20,000.

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FTC paying nearly $108M to Countrywide borrowers

WASHINGTON (AP) _ Hundreds of thousands of homeowners who took out mortgages with Countrywide Financial Corp. will soon receive their slice of a $108 million settlement over claims that the lender charged outsized fees to borrowers facing foreclosure.

The Federal Trade Commission said Wednesday that it will mail refund checks to 450,177 borrowers starting Thursday.

The action is part of a settlement agreement the agency reached last year with Bank of America Corp., which acquired Countrywide in 2008.

The FTC claimed Countrywide hit borrowers who were behind on their mortgages with fees of several thousand dollars at times. The fees were for such services as property inspections and landscaping that far exceeded market rates. Countrywide created subsidiaries to hire vendors, which marked up the price for such services, the agency said.

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By The Associated Press(equals)

The Dow Jones industrial average fell 15.51 points, or 0.1 percent, to close at 12,571.91.

The S&P 500 index dropped 0.89 point to 1,325.84. The Nasdaq fell 12.29 points, or 0.4 percent, to 2,814.23.

Benchmark West Texas Intermediate crude for September delivery rose 54 cents to settle at $98.40 a barrel Wednesday on the New York Mercantile Exchange. The August contract, which expired Wednesday, rose 64 cents to settle at $98.14 a barrel. In London, Brent crude gained $1.09 to settle at $118.15 per barrel on the ICE Futures exchange.

In other Nymex trading for August contracts, heating oil rose 2.04 cents to settle at $3.1184 per gallon, gasoline futures gained 3.21 cents to settle at $3.1470 per gallon. Natural gas lost 4.2 cents to settle at $4.469 per 1,000 cubic feet.