Posted on Fri, Jun. 27, 2008
Business news in brief
In the Region
Rite Aid reports a large first-quarter loss
Rite Aid Corp., Camp Hill, said it swung to a big loss in its first quarter as it continued to spend heavily to absorb more than 1,850 newly acquired stores and offered promotions on items such as food and toiletries that hurt profit margins in its non-pharmacy operations. Its shares tumbled to a 52-week low. The nation's third-largest drugstore chain also said it had turned around the declining sales in the Brooks and Eckerd stores it acquired last year, and is several months away from full integration. The loss by Rite Aid after paying preferred stock dividends was $162.8 million, or 20 cents a share, compared with a profit of $19.5 million, or 4 cents a share, in the same period a year ago. Shares of Rite Aid closed down 40 cents, or 23 percent, at $1.35. - AP
Vishay raises $125 million from 3-year loan
Vishay Intertechnology Inc., Malvern, said it raised $125 million in a three-year term loan and would repurchase from investors certain notes convertible into stock for $500 million rather than issuing almost 50 million shares. Vishay, which makes electronic components, said it would use the new term loan, $250 million in cash on hand, and $125 million of a revolving loan to pay for the repurchase. - Harold Brubaker
Dept. of Justice awards task orders to Unisys
Unisys Corp. said it had been awarded three task orders by the U.S. Department of Justice to provide services to the government's asset-forfeiture program. The orders are part of a $475 million multi-vendor contract awarded in March. The Blue Bell firm will provide technical services including investigative services, training, consulting and program analysis. - Linda Loyd
Harrisburg taking brunt of airline cutbacks
Harrisburg International Airport is taking a hit on daily flights, as airlines trim flights because of record high fuel prices. American Airlines had said Wednesday that its regional carrier, American Eagle, would no longer serve Harrisburg as of November. US Airways Group Inc., Philadelphia International Airport's dominant airline, on Sept. 3 will drop its two daily nonstop flights from Harrisburg to Pittsburgh. US Airways will still have daily nonstop service out of Harrisburg to Philadelphia, Boston, and Charlotte, N.C. "American is pulling out of Harrisburg after nearly 25 years of service," airport deputy director Scott Miller said. "The challenge is the cost of fuel: At $135 a barrel, they can't afford to fly long-haul flights on 70-seat airplanes." - Linda Loyd
Elsewhere
Anheuser-Busch rejects takeover bid
Anheuser-Busch Cos. Inc.'s board is unanimously rejecting a Belgian-Brazilian brewer's takeover bid, saying the $46 billion offer undervalues the maker of Budweiser. The St. Louis brewer calls InBev's $65-a-share price "financially inadequate" and not in the best interests of its shareholders. The move may still not keep Anheuser-Busch Cos. from being sold. The company will likely face intense shareholder pressure to seek a higher price or take other actions to bolster its share price, and InBev has filed suit seeking a judgment to confirm that Anheuser-Busch's shareholders can remove without cause the company's board of directors. - AP
Wall St. firms pare borrowing from Fed
Wall Street companies have scaled back their borrowing from the Federal Reserve's emergency-lending program over the last week, while commercial banks stepped it up. A Fed report said the investment firms averaged $6.1 billion in daily borrowing for the week ending June 25. That compared with $8.6 billion the previous week. The investment houses were given similar loan privileges as commercial banks in March after a run on Bear Stearns pushed the investment bank to the brink of bankruptcy and raised fears that other Wall Street firms might be in jeopardy. Banks, meanwhile, averaged $14.7 billion in daily borrowing for the week. That compared with $13.4 billion in the previous week. - AP
High court doesn't side with Calif. utilities
The Supreme Court made it difficult for utility companies to successfully challenge costly, long-term energy-supply contracts negotiated during the West Coast energy crisis seven years ago. The justices said in a 5-2 decision that the contracts must be presumed to be just and reasonable, absent serious harm to the public interest. Writing for the majority, Justice Antonin Scalia nonetheless ruled in favor of the utilities on one point, saying the Federal Energy Regulatory Commission must provide a more complete explanation of why it upheld the agreements. - AP
Delta pilots vote in favor of tentative contract
Delta Air Lines Inc. pilot leaders approved a tentative contract agreement with the carrier and their peers at merger partner Northwest Airlines Corp. The accord includes a plan to create a single union seniority list, clearing a hurdle in a tie-up that will create the world's largest airline. Delta has said it expects to complete its all-stock purchase of Northwest by the end of 2008. - Bloomberg News
Yahoo reshuffles chain of command
Yahoo Inc. is setting up a new chain of command in hopes of restoring order amid the turmoil triggered by the embattled Internet icon's snub of Microsoft Corp.'s $47.5 billion takeover bid. Yahoo executive vice presidents Hilary Schneider and Ash Patel are being given expanded responsibilities over the company's products and sales teams. Yahoo also is reorganizing its technology division in an effort to use its computing power more effectively and improve the coordination between its product developers and engineers. This is the third time in 19 months that Yahoo has redrawn its management chart as it tries to snap out of a financial malaise that has ravaged its stock price, jeopardized its independence and demoralized employees. - AP
Fuel costs sour driver satisfaction in survey
Drivers of new cars were less satisfied with their vehicles this year for the first time in at least five years due mainly to rising fuel prices, according to an annual survey released yesterday. The survey by the J.D. Power & Associates marketing and consulting company saw the industry average drop by two points to 770 this year from 772 in 2007. The survey measures owner satisfaction with the design, layout and performance of new vehicles. It was the first drop in at least five years, said Neal Oddes, J.D. Power's director of product research and analysis. Gas prices rose 27 percent in the period between the 2007 and 2008 surveys, he said, but the latest survey found that fuel economy stayed the same at an average of 21 miles per gallon. - AP
Panel endorses using combination vaccines
The U.S. Advisory Committee on Immunization Practices yesterday approved adding two new combination vaccines to the recommended schedule to reduce the number of needle sticks young children must endure. GlaxoSmithKline's four-in-one shot protects against diphtheria, tetanus, pertussis and polio; it costs $45 and is given once to preschool-aged children. Sanofi Pasteur's five-in-one shot is for diphtheria, tetanus, pertussis, polio and illness due to Haemophilus influenzae type b, or HiB; it costs about $69 and is given in four doses by age 2. Both were recently approved by the Food and Drug Administration. - AP
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