Business News You Need Today: Aug. 6, 2010
Postal Service Posts Loss: While many companies are reporting upbeat quarterly profits this earnings season, the United States Postal Service isn't one of them. The quasi-governmental agency Thursday delivered a $3.5 billion loss in its fiscal third quarter, driven down by reduced mail volume and retiree health-benefit costs. USPS said it lost $1.1 billion more than it did in the same quarter a year ago, and warned it could run out of cash next year unless relief sought from Congress is approved.
Fannie Mae Seeks More Aid: Mortgage-giant Fannie Mae (FRE) has requested another $1.5 billion in federal aid after reporting a $1.2 billion loss in the second quarter. The additional funds would raise the total assistance to Fannie Mae to $86.1 billion, the company said in its earnings report.
Target CEO Regrets Donation: Target (TGT) CEO Gregg Steinhal has apologized for making a $150,000 donation to a Minnesota group running ads on behalf of Tom Emmer, the Republican candidate for governor who opposes same-sex marriage. The Minneapolis-based retail giant prides itself on embracing diversity, and has achieved a perfect "100" score on the Human Rights Campaign's Corporate Equality Index, a measure of gay-friendly employment policies. Steinhal sent a message to employees Thursday saying he was "genuinely sorry" that the donation had disappointed some workers and the public. Target said it plans to review the way it decides making political contributions. But a spokeswoman wouldn't say the company would end its support of Emmer.
Obama Economy Chief Quits: Less than two years into her post as the chair of the President's Council of Economic Advisers, Christina Romer is leaving the White House to return to academia. The administration said in a statement that Romer is stepping down to return to her family. But sources inside the White House said privately that Romer has been "frustrated" in the job, due in part to tension caused by the nation's slow pace of economic recovery.
BP Completes Cement Plug: BP (BP) said Thursday it has finished pumping cement into the broken Macondo well, marking a milestone in efforts by the company and the government to stop oil from flowing into the Gulf of Mexico. Oil began leaking after a BP-leased drilling rig exploded on April 20, killing 11 workers and unleashing some five million barrels of crude into Gulf waters, threatening wildlife and livelihoods. BP will next plug the well from the bottom, said retired Coast Guard Adm. Thad Allen.
GM To File IPO ASAP: Eager to get out from under federal oversight, General Motors expects to sell its stock in one big lump when the company goes public later this year. Speaking yesterday at an auto industry conference in Michigan, CEO Ed Whitacre told reporters he anticipates shares will be rolled out "all at once." Last year's $50 billion government bailout of GM has caused ill-feeling among some consumers, and Whitacre wants Uncle Sam out. "We don't want to be known as Government Motors," Whitacre said.
Investors Await Jobs Data: Wall Street had a fairly quiet day Thursday as investors sat tight ahead of the government's latest report on employment. Shares ended the day down just slightly. The jobs report, due this morning at 8:30 a.m. Eastern time, is expected to show nonfarm payrolls fell by 70,000 in July, according to consensus estimates compiled by Bloomberg. The nation's overall unemployment rate is expected to have ticked up one-tenth of a percent to 9.6%.
Drought Causes Soaring Grain Prices: Shares in European brewers and food producers were hit hard Friday as traders fretted over soaring grain prices following Russia's move to temporarily halt grain shipments, Reuters reports. U.S. wheat futures jumped 6%, pushing weekly gains to more than 25%. A drought in central Russia has led Prime Minister Vladimir Putin to place a ban on grain and flour exports beginning in mid-August and lasting until the end of the year.
China OKs iPhone WiFi: Apple's (AAPL) partner in China, China Unicom (CHU), will begin selling WiFi-enabled iPhones as early as Monday, according to reports. The communist nation had banned the smartphone's WiFi function, which comes standard in the U.S. and in other markets, in an effort by the government to develop its own WiFi standard.
Google, Verizon Deny Pact: Google (GOOG) and Verizon Communications (VZ) have denied a report saying the two companies were nearing a tiered-service agreement that would provide big content providers greater bandwidth than smaller players. The supposed agreement, first reported by The New York Times, would violate the Internet protocol known as net neutrality, which treats all legal Web traffic equally. Google said the talk is bunk, reports DailyFinance's Nikhil Hutheesing. On Twitter, the search-engine giant released a statement that the Times article was all wrong and that it remains committed to an open Internet.
Social Security Sees Red: After years of prognostication, the nation's social safety net for seniors is forecast this year to take in less money than it pays out, federal officials said Thursday. Trustees who oversee the Social Security system say the recession and layoffs caused by the economic downturn have exacerbated the shortfall, which is expected to continue into next year. Experts have long anticipated the entitlement program would sink into the red as the nation's 78 million baby boomers advance into their retirement years. Long term, however, finances for Social Security, as well as Medicare, the federal health program for seniors, are expected to get a boost from recently passed health-care overhaul legislation. Cost savings are forecast to keep Medicare solvent until 2029, 12 years longer than previously thought.