Pacific Northwest Starbucks may see its debt ratings cut by Moody's Investors Service over concerns the sluggish U.S. economy will continue to...
Starbucks may see its debt ratings cut by Moody’s Investors Service over concerns the sluggish U.S. economy will continue to hurt sales.
Starbucks’ senior unsecured debt rating of Baa1 is three levels above noninvestment grade.
On Tuesday, the Seattle-based coffee-shop chain said it would shut 600 U.S. locations because of declining earnings.
“A persistently weak economic and consumer environment will continue” to hurt Starbucks’ operating performance and same-store sales, Moody’s said Thursday in a statement.
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Standard & Poor’s Ratings Services said Wednesday that it may lower its BBB+ long-term and A-2 short-term ratings on Starbucks’ debt.
S&P said it will reassess the company’s risk profile “in light of lower consumer spending, the company’s revised growth plans, and the increased competition from other coffee retailers and quick-service restaurants.”
Starbucks stock fell 12 cents to $15.56 Thursday.
Nearly 7-year high for plane deliveries
Boeing posted its highest quarterly plane shipments in almost seven years as airlines sought updated 737s to ease fuel costs.
Its stock rose Thursday for the first time in 10 days, snapping the longest run of declines since 1983.
Boeing delivered 126 planes from April through June, an 11 percent rise from the year-ago quarter and the most since 144 in the final quarter of 2001.
The latest total included 100 of the 737 model as Boeing works off a record order backlog.
“They’re on pace to exceed the guidance for the year” in terms of deliveries, said Brian Nelson, a Morningstar analyst in Chicago. The 737 total is “a lot better than I was looking for.”
Boeing shares rose 57 cents to $64.47 Thursday. The stock fell in the past two weeks “because people are concerned that there will be deferrals” as airlines collapse and cut capacity amid record oil prices, Nelson said.
“But Boeing has such a large backlog that they can bring forward deliveries to offset any deferrals,” he said. “We still think Boeing is undervalued at these levels.”
Former scientist pleads guilty
A former Boeing scientist pleaded guilty to taking secret documents home from work without authorization, prosecutors said.
Abraham Lesnik, 62, admitted Wednesday to unauthorized possession of defense data, U.S. Attorney Thomas O’Brien in Los Angeles said in a statement. He faces up to 10 years in prison at his Oct. 6 sentencing, the statement said.
Lesnik worked at a Boeing facility in El Segundo, Calif., until last year, prosecutors said. He had unauthorized possession of 10 secret documents, including some related to space radars, and one top-secret document on “national defense satellite threat mitigation,” court documents said.
Oil continues to set trading records
Soaring fuel costs are taking some of the celebration out of this holiday weekend.
Oil prices headed into the busy Fourth of July break by racing past $145 a barrel for the first time Thursday. The story was no different at the gas pump, where the national average soared to within a whisker of $4.10 a gallon.
Light, sweet crude for August delivery settled at a record $145.29 Thursday on the New York Mercantile Exchange (Nymex), up $1.72 from the previous day. Earlier in the session, the contract rose to $145.85 a barrel, also a new high.
Oil has set trading or closing records in each of the last six trading sessions.
Chrysler may be one to file bankruptcy
Faced with soaring gas prices, a sputtering economy and a rapid U.S. market shift away from trucks, the U.S. auto industry’s weakest player, Chrysler, may have to file for bankruptcy or sell its storied Jeep and Dodge Ram brands as early as next year, JPMorgan said Thursday.
But rivals GM and Ford are likely to get through the rough patch and turn a profit in 2010.
JPMorgan auto analyst Himanshu Patel dismissed the possibility of an imminent bankruptcy at GM, saying in a conference call that such fears “are completely overblown.”
The day before, GM shares slid to a 54-year low after Merrill Lynch auto analyst John Murphy wrote in a note to investors that a GM bankruptcy “is not impossible if the market continues to deteriorate and significant incremental capital is not raised.”
Patel said the situation at Chrysler is far more perilous because it has limited assets to raise cash and is more heavily reliant on trucks and on the North American market.
EU bank raises interest rate
Wary of higher energy and commodity prices, the European Central Bank (ECB) raised its benchmark interest rate Thursday by a quarter percentage point to 4.25 percent, a move it hopes will help curtail rising inflation in the 15 countries that use the euro.
The move comes despite worries in some quarters that it could dampen growth, but ECB President Jean-Claude Trichet said at a news conference that the fundamentals of Europe’s economy “are sound” and that the bank was focused on inflation — which he said could remain high “for a more protracted period than previously thought.”
Compiled from The Associated Press and Bloomberg News