BUSINESS BRIEFS
Retail sales up slightly amid economic woes
Associated Press
WASHINGTON — Consumers, beset by a credit crunch, rising energy and food costs and a prolonged housing slump, stayed away from the malls in March. Retail sales posted only a small increase after a big drop in February.
The Commerce Department reported yesterday that retail sales edged up 0.2 percent in March after a 0.4 percent decline in February. The March gain primarily reflected higher costs for gasoline, which climbed to record highs. Excluding a big 1.1 percent rise in sales at gasoline service stations, retail sales would have been flat last month.
The new report did nothing to dispel worries that consumers will cut back so sharply on spending that the country will tumble into a recession. Consumer spending accounts for two-thirds of total economic activity.
WACHOVIA POSTS 1ST QUARTER LOSS
CHARLOTTE, N.C. — Wachovia Corp. is getting a lesson in "timing is everything."
The nation's fourth-largest bank reported a $393 million first quarter loss and has been forced to cut its dividend and seek a $7 billion cash injection to make up for a poorly timed expansion of its mortgage business.
The company also said it plans to cut 500 jobs in its corporate and investment bank. It's the second time this year the Charlotte-based bank has gone to the well for cash, a move analysts say more banks will do to brace themselves against further loan losses.
As the housing market worsens and the credit crisis deepens into mortgages beyond subprime consumers to include even prime borrowers and commercial real estate, Donn Vickrey, an analyst with Gradient Analytics Inc., said others, such as Midwestern bank National City Corp. and regional bank holding company Chemical Financial Corp., are at risk for an earnings miss due to the rate of growth in nonperforming loans and charge-offs.
MGM MIRAGE FIRES 400 STAFFERS
LAS VEGAS — MGM Mirage Inc., the largest casino operator on the Las Vegas Strip, told more than 400 middle management employees yesterday they would be terminated immediately in a cost-saving move, the company said.
The decision will save $75 million annually and came after the company saw weakness since August at its properties, which include Bellagio, MGM Grand, Mirage and Mandalay Bay, spokesman Alan Feldman told The Associated Press.
The move is the largest and swiftest by a casino operator in the current economic downturn, although the use of so-called "extra board" employees such as dealers and busboys who take fill-in shifts as needed has been down citywide.
"We were able to see the signs of trouble on the economic horizon last August," Feldman said. "The economy was beginning to worsen and clearly was not going to get better in the immediate term."
PHILIPS' PROFITS FALL 75 PERCENT
AMSTERDAM, Netherlands — The television age appears to be fading for Philips, the Dutch company that carries a global reputation for its home electronics: Philips' first-quarter profit fell 75 percent.
Sagging TV sales, especially in the United States, dragged down first-quarter profits, as Royal Philips Electronics NV reported net income of $347 million, nearly 20 percent lower than the $433 million analysts had forecast.
Net profit was $1.386 billion in the same period last year — a quarter boosted by receiving $1.161 billion for part of its stake in Taiwan Semiconductor Manufacturing Co. Ltd.
Chief Financial Officer Pierre-Jean Sivignon said there was stiff competition in the TV market.
"The U.S. remains the black spot, but when we look at the quarter it was tough all across," he said in a conference call.
Philips last week announced that it would license Funai Electric Co. Ltd. of Japan to market the Philips and Magnavox brands in the U.S. and Canada for five years.
