Business Highlights

AP News
Posted: Jun 04, 2012 6:02 PM
Business Highlights


US economic outlook darkens after jobs report

WASHINGTON (AP) _ Faced with a fizzling job market, many economists have turned more pessimistic and no longer think U.S. economic growth will accelerate later this year.

Friday's surprisingly bleak jobs report for May followed a spate of weak U.S. economic data last week. Manufacturing activity slowed, an index of home contracts fell and consumer confidence tumbled. Mounting troubles in Europe and elsewhere have heightened economists' concerns.

Julia Coronado, an economist at BNP Paribas in New York, now expects growth of 2.2 percent this year, down from her previous forecast of 2.4 percent. She also revised down her estimate of growth in the April-June quarter to a 2.2 percent annual rate, from a 2.5 percent rate.


A mixed close on Wall Street as calm returns

Calm returned to the stock market Monday after a spasm of fearful selling last week. Major indexes closed mixed after trading modestly lower for most of the day.

The Dow Jones industrial average opened at its lowest level since December after a 275-point sell-off on Friday ignited by grim economic signals, especially a dismal report on the U.S. labor market.

Randy Frederick, managing director of active trading and derivatives at the brokerage Charles Schwab, expects trading to remain slow and steady unless traders are moved by positive news, like a surprisingly strong economic report, or fresh fears about Europe's financial stability.


Kids could someday get on Facebook, without lying

NEW YORK (AP) _ Though Facebook bans children under 13, millions of them have profiles on the site by lying about their age.

Now, the company is testing out ways to allow younger kids on its site without needing to lie. It would be under parental supervision, such as by connecting children's accounts to their parents' accounts. That would allow Facebook to comply with federal regulations regarding children under 13 online.

The Wall Street Journal reported on the development in Monday's editions. It could be a long way off, or never implemented, as happens with many features that Facebook tests.


Wal-Mart's proxy vote shows dissent against executives

NEW YORK (AP) _ Wal-Mart's final shareholder vote for its board of directors showed unprecedented dissent against key executives and board members, including CEO Mike Duke, in the wake of allegations of bribery in Mexico.

All of the company's nominees were re-elected. But the rise in votes against key leaders underscores how the bribery case could distract the world's largest retailer as it tries to continue its sales momentum in the U.S. and overseas.

According to results released by Wal-Mart Monday, 13 percent of the 3.4 billion shares were voted against the re-election of Duke to the company's board. Nearly 13 percent were against Chairman Robson Walton, the son of founder Sam Walton, and 15.6 percent went against former CEO Lee Scott. A little over 13 percent of the shares were cast against Christopher Williams, The Williams Capital Group chairman and CEO, who serves as chairman of Wal-Mart's audit committee.


Obama win could cost Romney $5 million in personal taxes

WASHINGTON (AP) _ To see where the presidential candidates stand on taxing the rich, just look at how they'd tax themselves. Under his own proposal, Mitt Romney would pay half what he would under President Barack Obama's tax plan. For a man of Romney's means, that could save almost $5 million a year.

For Obama, not as loaded as Romney but still well-off, losing re-election could provide a tax windfall. He'd save as much as $90,000 a year if Romney's plan were enacted rather than his own tax-the-rich vision.

Two nonprofit research groups, the liberal-leaning Citizens for Tax Justice and conservative-leaning Tax Foundation, did the calculations, based on the most recent completed tax returns released by the candidates. Compared with what they owed in April, both men would be dinged in 2013 under Obama's proposal, along with other wealthy taxpayers. They could expect savings under Romney, depending on which tax breaks the former Massachusetts governor decides to oppose.


MF Global trustee threatens suit against Corzine

NEW YORK (AP) _ Former New Jersey Gov. Jon Corzine could face a lawsuit from a trustee trying to recover $1.6 billion in customer money from the collapse of the brokerage MF Global.

James Giddens, the trustee overseeing the liquidation of the company, said in a bankruptcy court filing Monday that he may sue Corzine for breach of fiduciary duty and negligence.

Giddens said his investigation found that Corzine, who took over as MF Global CEO in March 2010, led the company to trade in unsafe securities and take on far greater risk than comparable companies did.


Chesapeake to replace 4 directors in nod to Icahn

OKLAHOMA CITY (AP) _ Just weeks after taking a stake in Chesapeake Energy Corp., activist shareholder Carl Icahn has helped orchestrate a shake-up at the nation's No. 2 natural gas producer.

Chesapeake said Monday it plans to replace four of its existing board members in the next few weeks. The board has been under fire for recent corporate governance controversies and the company's stock has plunged as natural gas prices hover near 10-year lows.

Chesapeake said the decision follows extensive talks with Icahn and the company's biggest shareholder, Southeastern Asset Management.


Starbucks buys bakery to improve food offerings

NEW YORK (AP) _ Starbucks Corp. is looking to expand its food business with a $100 million cash deal to buy a small bakery chain.

The Seattle-based coffee shop chain says baked goods from La Boulange will start replacing its current lineup early next year, starting with iconic French pastries such as the croissant.

Starbucks also says it plans to make the San Francisco-area bakery into a national presence in the years ahead.


Health insurer WellPoint to buy 1-800 Contacts

INDIANAPOLIS (AP) _ WellPoint Inc. plans to buy contact lens retailer 1-800-Contacts Inc. in a deal that would give the insurer its first direct-to-consumer business outside of selling individual health coverage.

Terms of the deal with private equity firm Fenway Partners were not disclosed.

WellPoint, based in Indianapolis, said Monday that the eyewear company will help diversify its revenue sources with a high-margin business. The insurer typically generates an after-tax profit margin of around 4 percent. 1-800 Contacts can generate margins in the double-digit range, said Ken Goulet, WellPoint's president of commercial and specialty companies.


5 US carriers to sell new Samsung Galaxy in June

NEW YORK (AP) _ Samsung's new flagship smartphone, the Galaxy S III, will be launched by all of the Big 4 national U.S. wireless carriers this month, starting at $199, the phone maker said Monday.

The phone will be carried by Verizon Wireless, AT&T Inc., Sprint Nextel Corp. and T-Mobile USA, as well as regional carrier U.S. Cellular, South Korea-based Samsung Electronics Co. said.

T-Mobile and Sprint said they will start selling the phone on June 21. Sprint said the version with 16 gigabytes of memory will cost $200 with a two-year contract. T-Mobile did not say what it would charge. Samsung said the other phone companies will announce specific launch dates and prices later.


By The Associated Press(equals)

The Dow Jones Industrial average closed down 17.11 points, or 0.1 percent, at 12,101.46. The Standard & Poor's 500 index rose a fraction to 1,278.18. The Nasdaq composite index rose 12.53, or 0.5 percent, to 2,760.01.

Benchmark U.S. oil rose 75 cents to $83.98 per barrel in New York. Brent crude, which is used to price a variety of crudes imported by U.S. refineries, rose 42 cents to $98.85 in London.

Natural gas rose 8.9 cents, or 3.8 percent, to $2.415 per 1,000 cubic feet.

Heating oil was unchanged at $2.627 per gallon and gasoline futures rose 1.39 cents to $2.671 per gallon.