Business In Brief
Harry David acquires Wolferman's
Harry David Holdings, Inc. has acquired specialty food gifts company Wolferman's from Kansas-based Williams Foods, Inc.
Wolferman's is a privately held company well-known for its high-end breakfast products sold through its catalogs and online. Wolferman's generated sales of approximately $28 million in 2007, according to the companies.
Bill Williams, president and chief executive officer at Medford-based Harry David said the acquisition is a significant growth opportunity to expand business.
The value of the deal was not immediately disclosed.
Dow Jones drops another 306 points
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Wall Street extended its 2008 plunge Thursday, sending the Dow Jones industrials down 306 points and to their lowest level since last March after a regional Federal Reserve report showed a sharp and unexpected decline in manufacturing activity. Downgrades of key bond insurance companies added to the market's black mood, with investors fearing an escalation of months of credit market problems.
The Dow lost nearly 2.5 percent, giving the index its worst three-day percentage decline since October 2002. The Standard Poor's 500, the index closely watched by market professionals, fell nearly — percent Thursday. The Dow, SP 500 and the Nasdaq composite index have now given back all of the gains they achieved in 2007.
Bush favoring tax rebates for business
President Bush told congressional leaders privately on Thursday he favors personal income tax rebates and tax breaks for businesses to help avert a recession, officials said, as Federal Reserve Chairman Ben Bernanke joined in calls for an economic stimulus package.
Bush spoke with congressional leaders as top House aides worked on an economic rescue package that included more money for food stamp recipients and the unemployed as well as tax rebates and cuts.
Merrill Lynch tackles subprime
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John Thain, presiding over his first set of earnings on Thursday as the new leader of Merrill Lynch Co., cleared the decks with some $15 billion of subprime mortgage related write-downs that led to the largest quarterly loss since the brokerage was founded 94 years ago.
And, while it was among the most aggressive moves on Wall Street to deal with bad bets on subprime mortgages, Thain's still not ready to say the worst of the credit crisis is over.
Insurance stocks plunge
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Bond insurance stocks plunged Thursday after a ratings company said Ambac Financial Group Inc.'s plan to raise cash may not be enough to save its crucial credit rating.
Ambac shares fell 51.9 percent to $6.24, while shares of chief rival MBIA Inc. fell 31.2 percent to $9.22. Smaller competitors Security Capital Assurance and ACA Capital Holdings also fell substantially. The sector's woes helped dragged the broader market sharply lower as well, with the SP 500 closing nearly — percent lower.
Moody's Investors Service said Wednesday night it is considering cutting Ambac's "AAA" financial-strength rating, which would squelch the insurer's prospects for winning new business.
Housing slump intensifies
The steep slump in housing intensified at the end of last year, pushing home construction down by the biggest amount in nearly three decades.
Analysts forecast more bad news in the months ahead with the big question remaining whether the housing slump will be severe enough to push the country into a recession.
The Commerce Department reported Thursday that construction was started on 1.353 million new homes and apartments last year, down 24.8 percent from 2006. It was the second biggest annual decline on record, exceeded only by a 26 percent plunge in 1980.
Businesses request boost in estimates
International Business Machines Corp. told Wall Street to raise its 2008 estimates Thursday, further boosting a stock that was already buoyed by strong fourth-quarter earnings.
IBM's chief financial officer, Mark Loughridge, said earnings would be between $8.20 and $8.30 per share in 2008. Coming into Thursday, analysts polled by Thomson Financial were expecting $7.94 per share in 2008.
Investors responded by bidding IBM shares up 5 percent to $106.20 after hours. Before the earnings report, the stock had fallen 53 cents to close at $101.10.
Stock exchanges meet in agreement
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The New York Stock Exchange on Thursday agreed to buy the American Stock Exchange, ending a once intense rivalry that began in colonial times when brokers traded in outdoor markets.
Both exchanges have battled for corporate listings and bragging rights since the early 1900s, with their trading floors just a short walk away from each other in Lower Manhattan. Newspapers around the country all listed the stock swings on the nation's two dominant markets, until investors began paying more attention in the 1990s to technology issues on the upstart Nasdaq Stock Market.
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WAMU sees $1.87 billion loss
Washington Mutual Inc., the country's biggest savings and loan, said Thursday it swung to a $1.87 billion loss in the fourth quarter, hurt badly by the sinking value of its mortgage portfolio.
The quarterly loss was $2.19 per share, compared with a profit of $1.06 billion, or $1.10 per share in the same period last year.
Results included a write-down of $1.6 billion as the value of home loans whithered, which WaMu had previously disclosed.
GM to cut labor costs
General Motors Corp. plans to reduce its annual U.S. labor costs by another $5 billion by 2011, the company said Thursday.
Chairman and Chief Executive Rick Wagoner said a good chunk of the reduction will come from the new contract agreement reached last year with the United Auto Workers.
The contract shifts the obligation for about $46.7 billion in retired UAW worker health care from the company to the union, with the company pouring billions into a trust fund run by the union. The trust, called a voluntary employees beneficiary association, takes over the health care obligation in 2010.
Oil futures fall below $100 per barrel
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Oil futures fell Thursday after Federal Reserve Chairman Ben Bernanke said he expects slower growth in 2008, but no recession.
Bernanke's comments added to the negative economic sentiment that has been the market's dominant driver in recent days, pushing prices down nearly $10 from their record over $100 a barrel two weeks ago. Despite Bernanke's comments, many investors fear a recession is imminent.
Bernanke's comments caused oil prices to give up earlier gains of more than $1 that had come on a weaker dollar and forecasts of colder temperatures.
Lehman Brothers end lending practice
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Lehman Brothers Holdings Inc. on Thursday said it would cease wholesale mortgage lending in the U.S. because of the continued housing slump, a move that includes 1,300 jobs cuts and a $40 million charge.
The nation's fourth-largest investment bank had set up a wholesale lending business to purchase loans made by others and then package them into bonds. But, as the bottom dropped out of the subprime mortgage market, the business triggered steep losses for Wall Street's biggest banks.
Lehman has eliminated about 2,500 jobs already from its mortgage business, folding most of the operations into its Aurora Loan Services unit.
Mellon Corp. profits tumble 68 percent
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The Bank of New York Mellon Corp.'s fourth-quarter profit tumbled 68 percent due to its exposure to assets backed by mortgages and a tough comparison to last year, when the bank gained $1.4 billion after unloading its retail operations.
Its core businesses &
managing assets and providing middleman services between investors and other financial institutions &
performed well, though. The bank's stock fell almost — percent Thursday.
The trust bank, because it runs funds for companies and wealthy individuals rather than retail banks for the mass market, has avoided exposure to the consumer problems other banks have.