Electronics retailer RadioShack Corp. said Monday first-quarter profit fell 8.7% partly on Sprint postpaid wireless sales, but the results still topped analysts’ estimates.
For the period ended March 31, net income dropped to $38.8 million, or 30 cents per share, compared with $42.5 million, or 31 cents per share, a year earlier.
Analysts polled by Thomson Financial expected earnings of 29 cents per share.
RadioShack’s (RSH) quarterly sales declined 4% to $949 million from $992.3 million.
The results surpassed Wall Street’s estimate of $937 million creditreport.
Same-store sales slipped 4% during the quarter due mostly to lower Sprint (S, Fortune 500) postpaid wireless sales.
Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.
Chrissi Squires, 21, a mother of three from Fort Carson, Colorado, intends to pay off credit card debt. Cheryl Coon, 61, a homemaker from Franklin, Pennsylvania, has her eye on a new washing machine. Martha Hinson, 62, a teacher's aide in Conley, Georgia, said she's getting a new pair of dentures.
As the U.S. Treasury prepares to start issuing $117 billion in rebate checks this week, taxpayers in dozens of interviews around the country said they plan to spend the money rather than save it — exactly as policy makers hoped. Congress voted the money in February as part of a $168 billion package to stimulate an economy slowed by record mortgage foreclosures, job cuts and rising prices of food and fuel.
Payments will be as much as $600 for individuals who made $75,000 or less and $1,200 for married couples with household incomes as high as $150,000. Each eligible child is worth $300 more. Still, the total payout will be less than a third of the $389 billion Americans spent on gasoline last year.
“I am going to be paying oil bills, and that won't even cover that,'' said Kathleen O'Neill, 52, a waitress at the Miss Bellows Falls Diner in Bellows Falls, Vermont. “It's a no-win because you have to send it out to the oil company, the gas companies and now the mortgage companies.''
This is the 10th time since 1962 that the federal government has attempted to spur the economy through tax benefits aimed at businesses and individuals. Of those, four included cash rebates, according to the House-Senate Joint Committee on Taxation.
Past rebate programs — in 1975, 2001 and 2003 — “provided modest stimulus to consumption,'' causing a short-term boost, the committee said in a February report, citing analyses of seven studies. “Around one-third to two-thirds'' of the rebate amounts were spent, the panel found.
Stimulus Estimates
Some economists predict this year's rebate will produce similar results. Others, including J.D. Foster, a senior fellow at the Heritage Foundation in Washington, say the effect will be negligible.
“To the degree somebody spends the money, that raises consumption, and there's a multiplier that goes through the economy,'' said Jason Furman, a senior fellow at the Brookings Institution in Washington.
The rebates may add as much as 3 percentage points to economic growth during the 10-week payout period, today through July 11, Furman estimated. That's a view shared by John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, who said the temporary boost “will be the end'' of concerns over a recession.
`$64,000 Question'
“Economic growth in the third quarter will surely be higher than it would have been,'' said Chad Stone, chief economist for the Center on Budget and Policy Priorities, a nonpartisan Washington-based group. Whether the rebates trigger enough spending to end the economic slowdown, “that's the $64,000 question,'' he said.
Taxpayers interviewed last week were less interested in the underlying theory than using the rebates to offset increased costs of necessities such as food, gasoline and shelter.
“It can help out, but it's still not enough to do much with,'' said Scott Davis, 44, a tradesman on strike at auto parts maker American Axle & Manufacturing Holdings Inc free credit report.com. in Detroit. “I'm going to be using it to pay bills: rent, electricity, water.''
For Sally Hamler, 56, a mother of three in Marietta, Georgia, the rebate will go for clothes and food.
“I'm thinking, a laptop or home improvements,'' said Chad Thomas, 40, a commercial property manager in New Ulm, Minnesota.
Home Improvements
Mark Caswell, 43, director of a communications team for BI, a privately held business consulting company in Edina, Minnesota, said he plans to renovate his family's house in Maple Grove, a Minneapolis suburb.
“The market is tough to try to sell your home, so we're going to try to fix it up,'' he said. “It's better to make improvements as we need.''
Others said they planned to use their payments to reduce credit card debt, which may hasten more spending later, according to economists including Stone.
“I am a poster child for the sub-prime mortgage mess,'' said Kim Souza 39, co-owner of Revolution, a clothing store in White River Junction, Vermont. “After Abu Ghraib, there was another stimulus check, and I felt really proud to endorse it over'' to the American Civil Liberties Union. “This time I'm going to endorse it over to Citibank or American Express.''
`Last Hurrah'
Squires, the wife of a soldier leaving for Iraq within months, tried starting a business to support her daughters, ages 3, 18 months and 4 months. The $1,200 rebate she expects will go to repay Mary Kay Cosmetics, a closely held London-based company, some of the $10,000 she owes for products she intended to sell — until her two older daughters “got into them.''
Other taxpayers said they would use the money for more discretionary spending.
Rachel Webber, 49, a legal analyst from Stockbridge, Georgia, said she will probably take her son, David, 17, to Walt Disney World on the family's first vacation since 2006. Fazy Kowsari, 36, a nurse from Maple Grove, Minnesota, said his rebate will help take the family to Iran to see relatives.
Fran Mannarino, 80, of West Windsor, Vermont, said she's heading for a vacation in North Carolina, calling it her “last hurrah at the beach,'' as long as the money “arrives in time.''
`A Pittance'
Carl Poole, 67, a retiree working part-time at an engineering company in Houston, said he'll get a new television. John Halsey, 41, an insurance agent in Macomb Township, Michigan, said he and his wife, Lisa, are planning to buy furniture for the first time in 10 years.
Several taxpayers said the rebates won't be large enough to make much difference to families or the economy, no matter how they are used.
“The government was what caused the problem, and they are going to bail themselves out with a pittance,'' said Bill Littles, 54, of Peterborough, New Hampshire, the owner of Steele's Stationery. “With all the billions and billions they are spending in Iraq and other places, and all they can do is throw the people a bone.''
A pipeline carrying nearly half of Britain’s oil was closed on Sunday as a strike over pensions began at the neighboring Grangemouth refinery in Scotland, operator BP (BP.L: Quote, Profile, Research) said.
The refinery, owned by international chemical company Ineos, produces a tenth of Britain’s petrol and diesel but also supplies vital steam to BP’s Kinneil plant that starts to process the crude oil coming ashore from 70 North Sea fields.
Unions have rejected pleas to operate the steam plant at the level necessary to keep Kinneil functioning during the two-day stoppage which began at 6 a.m. (1 a.m. EDT).
The company said that assuming it got power back as soon as the strike ended and Forties fields resumed production rapidly, the pipeline could be back in operation within 24 hours but might take a few more days to get back to full flow.
The strike is the first to close a British refinery in more than 70 years.
The Forties pipeline carries an average of 700,000 barrels per day (bpd), close to half the 1.5 million barrels the country produces daily pay day loans. One fifth of Britain’s gas supply also relies on the Forties system.
The Forties oil alone is worth 50 million pounds ($100 million) a day and the pipeline’s closure will make a significant dent in already stretched government coffers which take half of the revenues in tax.
Management at the 200,000 bpd Grangemouth refinery met officials of the UNITE union on Saturday but failed to get a deal that would allow the pipeline to continue operating.
Credit Suisse Group on Thursday posted a $2.1 billion net loss for the first quarter as the global effects of the U.S. subprime mortgage crisis continued to spread.
Switzerland’s second-largest bank said it also had net writedowns of $5.3 billion for big buyout loans and mortgage securities.
It was the first time the bank, Switzerland’s second largest, had posted a loss in the subprime crisis that has caused its crosstown rival UBS AG (UBS) to write down $37.4 billion in assets because of bad investments in U.S. mortgage securities.
For the fourth quarter of 2007 Credit Suisse (CS) posted a revised net profit of $536 million.
"Our first-quarter results are clearly unsatisfactory," Credit Suisse Chief Executive Brady Dougan said, but he said other operations of the bank did well.
Credit Suisse is the first of the major European investment banks to report the quarter, but others have warned investors to brace for more write-downs.
Germany’s Deutsche Bank AG has said it expects to post $3.98 billion in markdowns for buyout loans and mortgage securities, while UBS expects a net loss of $12.36 billion because of its subprime exposure.
Credit Suisse said it has continued to reduce exposure to risk in the market and that other areas of its operations performed well
The bank posted a net profit of $2.7 billion in the first quarter of 2007.
Credit Suisse shares, which have slid 43% in the last 12 months, closed at $52.16 Wednesday, giving the bank a market capitalization of $61.1 billion.
"Other than the areas affected directly by the credit crisis, most of our businesses performed well, with revenues near, or in some cases above, those in the first quarter of 2007," Dougan said.
He said the bank "remains well positioned in an extremely challenging environment."
Credit Suisse’s capital position is strong, Dougan said, adding that the bank would continue to manage its liquidity conservatively.
"I am confident that we will continue to serve as a safe haven for clients in uncertain and volatile markets, and to seize the opportunities that arise in times of market dislocation to create long-term value," Dougan said.
Credit Suisse took the bulk of its writedowns - $2.64 billion - for collateralized debt obligations.
But it also marked down $1.67 billion for buyout loans granted but failed to sell to investors and $937 million for mortgage securities.
Credit Suisse trimmed its exposures to the troubled areas during the quarter payday advances. Leveraged loans outstanding fell to $20.6 billion. Subprime CDOs shrank to $695 million from $1.6 billion.
Business confidence in Germany and France, which account for about half the euro-region economy, slumped in April as record oil and food prices stoked inflation.
The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, fell to 102.4 from 104.8 in March. That's the lowest since January 2006. In France, sentiment among 4,000 manufacturers slid to a 16-month low of 106 from 108, Insee, the Paris-based national statistics office said.
The euro fell more than a cent against the dollar on the reports, which reinforced concern that the fastest inflation in 16 years is curbing purchasing power and also preventing the European Central Bank from lowering interest rates. With the euro's 9 percent gain against the dollar this year threatening exports and the U.S. housing recession pushing up credit costs worldwide, the International Monetary Fund this month cut its growth forecast for Europe.
“Everything is worrying for executives: raw material prices climbing almost uncontrollably, the euro's rise, the global slowdown that's shaping up,'' said Bruno Cavalier, an economist with Oddo & Cie. in Paris. “There's every reason for growth to deteriorate.''
The euro-region economy will expand just 1.4 percent this year after 2.6 percent growth last year, the Washington-based IMF said April 9. That would be the slowest expansion since 2003.
Worse Than Forecast
The euro fell to $1.5748 at 1:40 p.m. in Frankfurt from $1.58.47 this morning. Economists had predicted a smaller decline in the Ifo index to 104.3, while the gauge of French optimism was expected to hold at 108.
Italian consumer confidence held near the lowest level in four years and Dutch consumer sentiment declined to the lowest in more than two years, reports showed today. In Belgium, business confidence dropped to a two-year low.
A sharp slowdown in Europe will damp inflation and force the ECB to cut interest rates within six months, the IMF's European Director, Michael Deppler, said in an interview on April 21.
The ECB is reluctant to follow the U.S. Federal Reserve in cutting borrowing costs to bolster the economy after inflation accelerated to 3.6 percent in March. The Frankfurt-based central bank aims to keep the rate below 2 percent.
Food-price inflation in Europe accelerated to 6.2 percent in March from 5.8 percent in the previous month. That's the highest since the European Union's statistics office, Eurostat, began the current data series in 1997. The prices for rice, soybeans, wheat and corn have all risen to records this year.
Higher Rates?
Crude oil reached a record of $119.90 a barrel on April 22 bad credit payday advance.
Policy makers including Germany's Axel Weber and Juergen Stark have suggested the ECB's current benchmark rate of 4 percent may not be high enough to combat inflation.
Today's reports “will dampen those remarks that an interest- rate increase will be needed,'' said Matthew Sharratt, an economist at Bank of America Corp. in London. “They are evidence of a moderation in euro-region growth.''
A gauge measuring German executives' assessment of the current business situation declined to 108.4 in April from 111.5 in March, Ifo said. An indicator measuring expectations for future business dropped to 96.8 from 98.4.
European companies are also grappling with the euro's appreciation, which is making exports less competitive just as the U.S. economy, one of Europe's biggest trading partners, teeters on the brink of a recession.
The U.S. housing slump has resulted in losses and writedowns at the biggest financial institutions of about $290 billion so far. That's made banks reluctant to lend, pushing up the cost of credit and threatening to curb global growth.
German Resilience
“Of course, we're in an environment where one or the other order is pushed back,'' Karl-Heinz Streibich, chief executive officer of Software AG, Germany's second-largest software maker, said in an interview on April 22. “Overall, German manufacturers are not yet feeling any spill-over effects from the U.S. crisis.''
The BDI industry federation, representing companies such Siemens AG, Europe's largest engineering company, said April 21 the German economy, Europe's largest, will expand about 2 percent this year after 2.5 percent growth in 2007.
The BGA exporters association yesterday reiterated its forecast for 5 percent growth in German sales abroad in 2008 even after the euro reached $1.60 for the first time.
“It's remarkable how robust the German economy is,'' BGA President Anton Boerner said. “Order backlogs are well filled into the second half.''
German companies are benefiting from booming demand for their goods in emerging economies. Volkswagen AG, Europe's largest carmaker, said yesterday that first-quarter profit rose 26 percent on rising sales in markets including China and Brazil.
Chief Executive Officer Martin Winterkorn said he's “optimistic'' VW will achieve targets for 2008 “even if conditions remain difficult.''
European officials said they are concerned the euro's advance risks damping economic growth after the currency rose past $1.60 to the dollar for the first time.
“I don't like the way things are developing,'' Luxembourg Finance Minister Jean-Claude Juncker, who leads a group of counterparts from the euro area, told reporters in Luxembourg today. “Financial markets should pay higher attention to developments to come and should be concentrating less on short- term'' data.
The euro has climbed more than 9 percent against the dollar this year as the European Central Bank has kept its key interest rate on hold to fight inflation while the U.S. Federal Reserve cut borrowing costs in an effort to stave off a recession. The currency reached $1.6019 against the dollar yesterday, the highest since its debut in 1999.
French European Union Affairs Minister Jean-Pierre Jouyet joined Juncker in signaling that the euro's gains against the U.S. currency will hurt Europe's economy, saying “exchange-rate evolutions and the euro topping $1.60 is a worrying phenomenon.'' Speaking on LCI television, Jouyet urged greater coordination with the U.S., Japan and China to stem the European currency's advance.
Finance chiefs from the Group of Seven nations this month signaled concern on the dollar's decline for the first time in 13 years by saying recent “sharp fluctuations'' in exchange rates risk hurting the world economy same day payday loans.
`Sharp Moves'
At the G-7 meeting, “we did express the view that the excessive volatility is undesirable for the economic growth and that we didn't like sharp moves as far as the exchange rates are concerned,'' Juncker said. “It was not the intention of the G-7 to lead to the result we are noting today.''
The G-7 statement is “crystal clear,'' he said, adding that the finance chiefs were referring to volatility in foreign- exchange markets, not to particular currency rates “as being excessive.''
“We are observing an excessive volatility for the moment,'' said Juncker, who also is Luxembourg's prime minister.
Jouyet also called for a “close'' dialogue among euro-area finance ministers, the ECB and the European Commission because the “current situation'' of the euro is hurting economic growth.
The euro pulled off its all-time high against the dollar today, trading at $1.5961 at 11:45 a.m. Brussels time, down 0.2 percent on the day.
Mercedes-Benz gave a peek preview of the GLK350 on Saturday, intended to challenge BMW’s (BMWG.DE: Quote, Profile, Research) X3 as the two German luxury carmakers take their fight to the booming Chinese market.
Both hope China offers enough wealthy clients to offset a general slowdown in the European and U.S. car markets.
“China is the second biggest market for the S-Class,” Ulrich Walker, chairman of Daimler Northeast Asia, said of the top-line passenger car of the Mercedes brand.
He was speaking at a presentation ahead of the start of the Beijing Auto Show on Sunday where BMW, the world’s biggest luxury car group, will also be out in force.
Walker said the Chinese market was set to top 10 million cars in 2008 after over 9 million in 2007 cashadvance.
The GLK350 is a sports utility vehicle marketed as dealing with bad roads while offering its occupants a cocoon of luxury.
The main German SUV lineup includes the X3, Audi (NSUG.DE: Quote, Profile, Research) Q7, Porsche (PSHG_p.DE: Quote, Profile, Research) Cayenne and Volkswagen (VOWG.DE: Quote, Profile, Research) Touareg.
Among the SUVs, the GLK350 is a bit smaller and some media have described a concept of the model, the GLK Vision Freeside, as a baby-SUV.
Frustrated by an internal dispute over seniority, US Airways pilots on Thursday ousted their union of 59 years and agreed to be represented by another group.
The rare decertification election, supervised by the federal National Mediation Board, gave the fledgling US Airline Pilots Association the right to represent the 5,300 pilots in US Airways’ system.
The group was created and supported mostly by pilots from the former, Virginia-based US Airways (LCC, Fortune 500) who clashed with other pilots after their carrier was acquired by America West in 2005.
Their struggles have become a cautionary tale as a new wave of combination talks sweep through the industry.
Though the Tempe, Ariz.-based carrier’s profit surged in the first year after the combination, problems among its pilots have continued to fester.
Settling the argument in parking lots: Pilots have said that disagreements over seniority have led to shouting matches in airport terminals. Supporters of rival pilot unions, the Air Line Pilots Association and the US Airline Pilots Association, have sent each other threatening e-mails, engaged in at least one shoving match and called each other to the parking lot to settle their arguments.
Seniority is extremely important for pilots guaranteed cash advance loan. Their place in the company pecking order decides what planes they can fly, what routes they’ll take, and when they can go on vacation.
Northwest Airlines Corp. (NWA, Fortune 500) and Delta Air Lines Inc. (DAL, Fortune 500) hoped their pilots would agree on seniority before announcing plans to join forces earlier this week. But Northwest pilots refused to go along and the companies moved ahead without a pilot agreement.
US Airways Group Inc. has agreed to contracts with all of its employee groups except pilots, flight attendants and baggage and ramp employees. The baggage and ramp employee union signed off on a tentative agreement last week.
U.S. consumer prices rose in March, driven by higher food and fuel expenses that indicate Americans will spend less on other goods.
The consumer price index climbed 0.3 percent, after no change the prior month, the Labor Department said today in Washington. So-called core prices, which exclude food and energy, increased 0.2 percent, also after no change. Both readings matched median forecasts in a Bloomberg survey of economists.
Inflation, combined with falling home values and mounting job losses, is leading to cutbacks in consumer spending that may push the economy into a deeper recession. Federal Reserve policy makers will likely lower the benchmark interest rate again this month as reviving growth remains their highest priority.
“Their primary focus has to be on the downside risk to growth,'' said Brian Bethune, director of financial economics at Global Insight Inc., in Lexington, Massachusetts. “There is very little ability for companies to pass on price increases.''
The Commerce Department reported separately that housing starts in the U.S. dropped twice as much as forecast in March to a 17-year low. Work began on 947,000 homes at an annual rate, down 11.9 percent from February and the fewest since March 1991.
Treasury notes were little changed, while the dollar fell to a record low against the euro and weakened versus the yen.
Economist Estimates
Monthly inflation estimates in a Bloomberg News survey of 78 economists ranged from gains of 0.2 percent to 0.7 percent.
Prices rose 4 percent in the 12 months to March, after a year-over-year gain of 4 percent in February. The core rate increased 2.4 percent from March 2007, after a 2.3 percent year- over-year gain.
Today's report showed energy expenses jumped 1.9 percent, the most since November, after a decrease of 0.5 percent the prior month. Gasoline prices rose 1.3 percent, fuel oil costs jumped 10.1 percent and natural gas prices were up 4.6 percent.
Energy costs continue to climb this month. Crude oil yesterday topped $114 a barrel, the highest since futures began trading on the on the New York Mercantile Exchange in 1983. The average cost of regular gasoline, which rose to $3.40 yesterday, is about 55 cents higher than a year earlier, according to AAA.
The consumer price index is the government's broadest gauge of costs for goods and services. Almost 60 percent of the CPI covers prices that consumers pay for services ranging from medical visits to airline fares and movie tickets.
New vehicle prices dropped 0.1 percent and clothing costs declined 1.3 percent, the biggest decrease since 1998. Airfares rose 3 percent, the most since 2002.
Food Costs
Food prices, which account for about a fifth of the CPI, rose 0.2 percent after a 0.4 percent increase the previous month.
Rents which, make up almost 40 percent of the core CPI, increased in February. Owners equivalent rent rose 0.2 percent, compared with a 0.1 percent gain the month before.
The cost of medical care rose 0.1 percent for a second month.
The Fed has lowered its benchmark rate 3 percentage points since September, to 2.25 percent, and investors are betting officials will lower the rate by at least a quarter percentage point when they next meet on April 29-30. The cumulative decline in borrowing costs is already the biggest in two decades.
The threat of a recession overshadowed concerns about inflation when policy makers met last month. “Many participants thought some contraction in economic activity in the first half of 2008 now appeared likely,'' minutes of the Fed's March 18 meeting showed.
At the same time, policy makers considered that “readings on inflation had generally been elevated,'' according to the minutes. “On balance, most participants still expected inflation to moderate later this year and in 2009.''
Raw Materials Costs
Some companies are being pushed into passing higher raw materials expenses on to consumers. Southwest Airlines Co., the biggest low-fare carrier, said on April 11 it raised round-trip fares by as much as $12, following a larger rival for the first time in boosting prices after jet-fuel reached a record.
“We are up against record-breaking fuel costs,'' Marilee McInnis, a Southwest spokeswoman, said in an interview.
Price pressures are building. Producer prices rose almost twice as much as forecast in March, according to figures reported yesterday, and the cost of goods imported into the U.S. climbed a greater-than-forecast 2.8 percent.
The consumer-price and wholesale-price reports reflect differences in timing. In calculating wholesale prices, the government asks survey participants to report costs as of the Tuesday of the week that includes the 13th. Consumer prices are based on average costs over the entire month.
South Korea plans to reallocate money from this year's budget to develop subway stations and create more jobs in a move to spur economic growth.
The government will divert 2.5 trillion won ($2.5 billion) from this year's planned budget for the projects, the Finance Ministry said in a statement in Gwacheon.
The announcement comes less than a week after the Grand National Party won a majority in a legislative election, giving President Lee Myung Bak the power to push through policies to lift growth. Lee said April 13 that domestic demand may shrink and the government will encourage companies to invest more.
“It's a positive move that the government is looking to do something to help the domestic economy,'' said David Kim, an economist at Woori Investment & Securities Co. in Seoul. “Export growth is likely to slow so South Korea needs a boost from domestic demand.''
The plans include 272.6 billion won to rebuild a Seoul train station that's more than 20 years old. The government will also build escalators and elevators in 25 subway and train stations to improve access for disabled and elderly commuters.
“We will use the money saved from other projects on new initiatives that will help stimulate the economy and stabilize people's lives,'' the Finance Ministry said http://payday-z.com.
Lee's Pledge
Lee, who won the presidency in December on a pledge to boost growth and income, said he will “accelerate the process so companies can invest freely, create more jobs and stimulate the economies of ordinary people.''
Evidence is mounting that the economy's nine-year expansion is slowing: consumer confidence fell to a one-year low in March, retail sales growth eased in February and factory production declined for a second month.
Rising costs of food and energy have stoked inflation in Asia, eroding companies' profits and households' disposable income. Economies across the region are bracing for a slowdown amid concerns that a U.S. recession will crimp overseas sales.
Lee promised to increase South Korea's growth to 7 percent and double per capita income to $40,000 by 2017. The economy expanded 5 percent last year and the government aims for growth to quicken to about 6 percent in 2008.
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