By DEE-ANN DURBIN, AP Auto Writer
DETROIT - General Motors Corp. struggled to a $3.3 billion first-quarter loss, due in part to a weak U.S. market, a strike at a major parts supplier and plummeting sales of sport utility vehicles and pickups.
The nation’s biggest automaker also cut its industrywide U.S. sales outlook for the year. GM disclosed earlier this week it was cutting production of some of its slow-selling trucks and SUVs.
But its earnings excluding one-time items beat Wall Street expectations, and GM shares rose more than 13 percent.
GM’s loss reported Wednesday for the January-March period amounted to $5.74 per share and also reflected one-time charges. It compares with a profit of $62 million, or 11 cents per share, in the first quarter of 2007.
The company said a two-month strike at American Axle and Manufacturing Holdings Inc. has cost it $800 million and 100,000 vehicles. The strike has affected 30 GM plants.
Fritz Henderson, GM’s president and chief operating officer, said despite the costs GM is trying to stay out of the talks between the United Auto Workers and American Axle.
“What we’ve tried to do is be helpful where we could be with the UAW and American, but we really do not want to be involved,” Henderson said in a conference call.
In light of the results, GM cut its U.S. sales outlook for the year. The Detroit-based automaker now expects total U.S. sales in the high 15-million range, down from the low 16-million range at the beginning of this year.
“We want to run our business conservatively. We want to be realistic,” said Ray Young, GM’s chief financial officer.
Young said GM expects the second quarter to be a tough one for the industry. He said the company still predicts a recovery in the second half of 2008, although it will not be as robust as believed at the beginning of this year.
GM’s loss included a $1.45 billion charge to reflect a change in the value of its interest in GMAC Financial Services and $731 million to increase its liability in Delphi Corp.’s ongoing bankruptcy.
Excluding the one-time items, GM lost $350 million, or 62 cents per share, beating Wall Street’s expectations. Analysts surveyed by Thomson Financial had expected a loss of $1.60 per share. Its shares rose $2.79, or 13 percent, to $23.94.
Analysts expressed concern about GM’s $3.9 billion cash burn for the quarter. Calyon Securities analyst Mark Warnsman said the company entered the year too optimistically and failed to manage its production. He also said GM isn’t holding its own in North America, where its market share dropped from 22.5 percent to 21.7 percent in the quarter.
“It has become increasingly clear that GM is caught in a quagmire of its own making in North America,” Warnsman said in a note to investors.
GM lost $812 million in North America, compared with a loss of $208 million in the year-ago quarter. Its U.S. market share remained flat at 22 percent. The company said earlier this week that it is cutting production of some trucks and SUVs at four U.S. plants, resulting in 3,500 layoffs.
GM’s total revenue for the quarter was $42.7 billion, down from $43.4 billion a year ago. GM said revenues were up 20 percent outside North America thanks to strong growth in China, Russia, Brazil and India. Total revenue was hurt by the slowdown in North America and losses at GMAC.
Young said analysts may be underestimating GM’s overseas growth. He also said GM is making progress in cutting costs in North America. Young said the company isn’t giving any earnings guidance in the near term.
“The North American turnaround is occurring,” he said.
GM reported a gain of $600 million due to hedging on the price of platinum, copper, aluminum, natural gas and other commodities. Jonathan Steinmetz, an analyst with Morgan Stanley, said such gains inflate GM’s earnings but are likely unsustainable. Young said GM can’t predict whether it will see similar gains in future quarters.
GM lost $276 million in the first quarter due to its minority stake in GMAC, which was hurt by losses in its ResCap residential mortgage division. Young said GM revalued its stake in GMAC because it doesn’t expect the mortgage market to recover soon.
GM sold 2.25 million vehicles worldwide in the first quarter, down less than 1 percent from a year ago. GM said a record 64 percent of those sales came outside the U.S.
“We continue to leverage our global product portfolio to take advantage of tremendous growth in key emerging markets, while at the same time taking the appropriate actions to deal with the challenging economic conditions in the U.S.,” GM Chairman and Chief Executive Rick Wagoner said in a statement.
Source:news.yahoo
By JEANNINE AVERSA, AP Economics Writer
WASHINGTON - The bruised economy limped through the first quarter, growing at just a 0.6 percent pace as housing and credit problems forced people and businesses alike to hunker down.
The country’s economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday. The statistic did not meet what economists consider the classic definition of a recession, which is a retraction of the economy. This means that although the economy is stuck in a rut, it is still managing to grow, even if modestly.
Many analysts were predicting that the gross domestic product (GDP) would weaken a bit more — to a pace of just 0.5 percent — in the first quarter. Earlier this year, some economists thought the economy would actually lurch into reverse during the opening quarter. Now, they say they believe that will likely happen during the current April-to-June period.
“The economy is weak but not collapsing,” said Lynn Reaser, chief economist at Bank of America’s Investment Strategies Group. “A recession can’t be ruled out, although the stars are not lined up at this point to definitively say one way or the other.”
Gross domestic product measures the value of all goods and services produced within the United States and is the best measure of the country’s economic health. Voters are keenly worried about the country’s economic problems and so are politicians — in Congress, in the White House and on the campaign trail.
The housing situation turned more bleak in the first quarter, as record-high foreclosures dumped more unsold homes on the market, adding to builders’ headaches. Builders slashed spending on housing projects by a whopping 26.7 percent, on an annualized basis, the most in 27 years. That was the big drag on the economy.
Consumers — whose spending is vital to the country’s economic health — turned much more cautious, also restraining overall economic growth in the first quarter. Their spending rose at just a 1 percent pace. That was down from a 2.3 percent growth rate and was the slowest since the second quarter of 2001, when the United States was suffering through its last recession.
Soaring energy and food prices are walloping people’s pocketbooks, leaving them with less to spend on other things. The credit crunch also has made it harder for people to finance big ticket items, such as cars and homes. And, many homeowners — watching their homes — often their single-biggest asset — slump in value, also are feeling less wealthy and less inclined to spend.
Another report from the Labor Department Wednesday showed that workers’ compensation — including wages and benefits — grew 0.7 percent in the first quarter, the slowest pace in two years. Many economists were expecting a 0.8 percent rise. The report suggests that the weak labor market is making employers a bit less generous with their compensation.
Businesses, meanwhile, cut back spending on equipment and software at a 0.7 percent pace, the most since the final quarter of 2006. And, they trimmed spending on commercial construction at a 6.2 percent pace, the most since the third quarter of 2005.
However, businesses boosted their investment in building up stocks of supplies in the first quarter, a big force adding to GDP. Exports of U.S. goods and services also helped first-quarter growth. U.S. exports are being helped by the falling value of the U.S. dollar, which makes U.S. made goods and services less expensive to foreign buyers.
Spending by the government was another factor helping out GDP in the first quarter. That spending rose at a 2 percent pace for the second quarter in a row.
To bolster the economy, the Federal Reserve is expected to lower a key interest rate by one-quarter percentage point to 2 percent later Wednesday. That would mark a more moderate-sized rate reduction after a recent string of hefty cuts. Many economists believe the Fed, which started dropping rates last September, may be nearing the end of its rate-cutting campaign because policymakers don’t want to aggravate inflation. Those rate reductions, which take months to affect economic activity, can sow the seeds of inflation down the road.
An inflation measure linked to the GDP report showed that prices grew at a rate of 3.5 percent in the first quarter, down from a 3.9 percent pace in the prior quarter.
Another gauge showed that the core prices excluding food and energy rose at a rate of 2.2 percent in the first quarter. That was a lower than the 2.5 percent pace registered in the fourth quarter but still outside the Fed’s comfort zone. The upper level of the Fed’s inflation tolerance is 2 percent.
Gas and food prices, however, have moved higher since the start of the year, adding to inflation pressures. Gasoline prices, which have recently set new record highs, have climbed to $4 a gallon in some parts of the country.
A growing number of economists believe the economy is in a recession and is indeed contracting now.
Under one rough rule, if the economy contracts for six straight months it is considered to be in a recession. That didn’t happen in the last recession — in 2001_ though. A panel of experts at the National Bureau of Economic Research that determines when U.S. recessions begin and end uses a broader definition, taking into account income, employment and other barometers. That finding is usually made well after the fact.
During the first three months of this year, job losses neared the staggering quarter-million mark. The unemployment rate has climbed to 5.1 percent and is expected to move higher in the coming months.
Fed Chairman Ben Bernanke, earlier this month, acknowledged for the first time that a recession this year was possible.
President Bush on Tuesday said the country was dealing with “difficult times.” Bush said he understood Americans’ anxiety over soaring gas prices, record-high home foreclosures and other economic woes.
The government’s $168 billion economic-stimulus package — including tax rebates that started flowing to bank accounts on Monday — should help energize the economy in the second half of this year, the Bush administration and Federal Reserve officials say. Democrats in Congress insist more relief needs to be provided, including additional unemployment benefits to cushion the pain of joblessness. The administration has resisted, saying the rebates and other stimulative efforts should be sufficient once they fully kick in.
Source:news.yahoo
By CATHERINE TSAI, AP Business Writer
DENVER - Frontier Airlines sought bankruptcy protection Friday, the fourth carrier to do so in the past several weeks as exorbitant fuel prices eat into earnings and a weak U.S. economy keeps more people grounded.
Frontier says it will continue operations as it reorganizes.
The low-fare carrier said it was forced into bankruptcy after its principal credit card processor said it would begin withholding a greater share of proceeds from ticket sales.
The Chapter 11 filing in U.S. Bankruptcy Court in New York prevents the credit card processor from increasing its “holdback,” Frontier CEO Sean Menke said.
“By filing for Chapter 11, we will now have the time and legal protection necessary to obtain additional financing and enhance our liquidity. Fortunately, we believe that we currently have adequate cash on hand to meet our operating needs while we take steps to further strengthen our company,” Menke said in a statement.
ATA Airlines, Skybus and Aloha Airgroup all have filed for bankruptcy in the past two weeks, but Menke said Frontier’s reasons for doing so were different.
“Unfortunately, our principal credit card processor very recently and unexpectedly informed us that, beginning on April 11, it intended to start withholding significant proceeds received from the sale of Frontier tickets,” he said. “This change in established practices would have represented a material change to our cash forecasts and business plan. Unchecked, it would have put severe restraints on Frontier’s liquidity and would have made it impossible for us to continue normal operations.”
He said Frontier Holdings Inc. was prepared to litigate, if necessary.
The creditor listed in bankruptcy court documents as having the largest general unsecured claim against Frontier by far was Wells Fargo, with $93.5 million. Frontier said it had fewer than 50 creditors.
At the end of last year, Frontier said, it had assets of $98.3 million and debts of $92.2 million.
A Frontier spokesman said earlier this week the airline had “no concerns about bankruptcy” but added that it was working on strengthening its cash position.
Last month, Frontier said it had agreed to sell four planes to counter rising fuel costs.
Frontier opened in 1994 with less than 200 employees and two planes that flew between its home base of Denver and three cities in North Dakota.
The airline now has about 350 flights to dozens of cities and employs about 6,000 people.
Menke took over Frontier last year and said the airline, like other struggling in the rough economic climate, would seek to boost revenues in new ways.
Menke said earlier this year that he would look into a la carte pricing, charging more for specific services.
Frontier competes with Delta Air Lines, Northwest Airlines, American Airlines, United Airlines and Southwest Airlines. Almost all of the carriers have sought new revenue sources, such as additional fees for checking a second bag.
Frontier shares lost most of their value in premarket trading Friday, tumbling $1.27 to 30 cents each.
TRADING on the Karachi wholesale commodity markets during the previous week resumed on a higher note but mid-week steady arrivals of some of the essential items triggered a good bit of selling and pushed the prices modestly lower. The notable feature of the week was an all-time rise in prices of til, which was one of the major export items having firm foreign market outlets. But weekend selling at inflated levels pushed its price down from the peak levels.
During the week it was quoted as high as Rs6,000 per 40 kg, the total cumulative increase being Rs2,500 during the last about two months. However, it finished around Rs5,500 per 40kg on weekend selling triggered by reports of steady arrivals from Sindh markets, dealers said.
The price flare-up is attributed partly to a short crop and partly to strong world demand, private sector exporters said.
Equally important was the price decline in some varieties of rice, which had attained peak levels owing to higher exports. Brokers expect further fall in prices as some local stock holders were selling their stock at the current levels amid fears of fresh fall in prices.
Unlike previous week, when the activity fell to low ebb on most of the essential counters, both commercial traders and brokers were back on the market but played on both sides of the fence, dealers said.
Some of them rolled positions from essential counters to others as supply position improved, mainly of wheat which came in for renewed selling and steadily maintained its downward drift, they said. Apart from a sizable import of wheat, harvesting of the crop in the wheat belt and steady arrivals form the interior triggered a good selling from the local stock holders easing its prices, they added. However, as expected, decline in wheat prices over the week did not have any sympathetic impact on other essential counters, which either stayed unchanged or showed rising trend.
Although official procurement of the commodity in some areas has resumed at Rs510 per 40kg, brokerage houses and commercial dealers are said to be offering a rate of Rs600.
Reports say some of the growers are selling their produce at higher rates to private traders, which market sources said, could lead to another crisis on the wheat front.
The market advance was led by sugar sector following reports that arrivals from mills had shown a substantial fall. It was also owing to reports that Indian sugar was being sold on the market in an effort to keep prices higher.
Prices of white sugar were quoted higher by Rs50 to Rs220 per bag of 100 kg and so did gur and desi sugar, which also rose in sympathy.
Pluses, on the other hand, showed mixed trend. While gram whole and dal rose by Rs125 to Rs150 per 100 kg, masoor whole and beetle suffered fresh fall ranging from Rs50 to Rs125, while other varieties were held unchanged at previous levels.
After initial fall owing to selling by local stockists, new crop of wheat was quoted higher by Rs20 followed by reports that the private sector buyers were purchasing it at around Rs600 per 40 kg as against official rate of Rs510.
Rice sector showed mixed trend and while fine varieties including sela and kernel types were held unchanged, IRRI-6 and broken declined modestly on selling by local dealers.
Cereals also showed divergent trend amid alternate bouts of buying and selling, leading loser among them being jowar, off by Rs100 to Rs150 per bag of 100 kg. Maize and bajra were firmly held unchanged at previous levels.
On the oilseed counter, prices of rapeseed were quoted further lower by Rs125 to Rs150 per 40kg on selling triggered by reports of higher new crop arrivals from Sindh markets, cottonseed rose by Rs35.
Oilcakes showed gains of Rs10 to Rs20 for cottonseed cakes, while rapeseed cakes fell by Rs25 to Rs30 in sympathy with fall in rapeseeds.
CHICAGO -(Dow Jones)- Drug-coated stents did not increase the risk of death or another heart attack when used to treat heart attack patients, in comparison with bare-metal stents, and performed better when it came to avoiding renarrowing in arteries, according to a study released Sunday.
Data from the study were presented at the Society for Cardiovascular Angiography and Intervention’s annual conference, which is being held here alongside the American College of Cardiology’s conference.
The study included two-year, risk-adjusted data from more than 7,200 patients who were treated with stents in Massachusetts hospitals to prop open heart arteries following a heart attack. Among coated stents, which use medication to combat renarrowing, first-generation devices have been associated with a slightly elevated risk for triggering dangerous clots - to which heart attack patients already have an elevated risk.
But the data from the Massachusetts study, which included 4,016 patients with coated stents and 3,200 with bare-metal stents, did not show a higher rate of death or repeat heart attacks in patients who received a coated stent.
Dr. Laura Mauri, an interventional cardiologist at Brigham and Women’s Hospital in Boston and lead investigator on the study, said in a release that the results were reassuring. “I would feel comfortable considering drug-eluting stents on the basis of these results - with the caveats that treated patients must be able to take antiplatelet therapy and that we definitely want to see even longer-term term follow-up,” Mauri said in an SCAI release.
Patients typically take courses of antiplatelet drugs to guard against clots forming around the stent after it’s implanted, and long courses if they have a coated stent. Mauri, who is also chief scientific officer at the Harvard Clinical Research Institute, has received honoraria from the big coated stent makers, which are Boston Scientific Corp. (BSX), Johnson & Johnson (JNJ) unit Cordis, Medtronic Inc. (MDT) and Abbott Laboratories Inc. (ABT).
The Massachusetts study found that coated stents performed as designed when it came to avoiding repeat procedures in heart attack patients - the rate of such procedures was significantly lower in coated stent patients, at 15.5% verses 20.8% for patients with bare-metal stents.
On the measure of death, the rate was 10.4% with coated stents verses 13.2% with bare-metal stents. Repeat heart attacks occurred 9.5% of the time in coated-stent patients, and 11% of the time in bare-metal patients.
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