Pacific Northwest Weyerhaeuser expects to book a pretax impairment charge of as much as $325 million in the second quarter after lowering...
Weyerhaeuser expects to book a pretax impairment charge of as much as $325 million in the second quarter after lowering prices and abandoning projects because of the deteriorating housing market.
The Federal Way company has been selling assets and closing mills amid falling U.S. demand for lumber used in homebuilding. The company in May reported a wider-than-expected first-quarter loss of $148 million.
Separately, Weyerhaeuser said Thursday that its mill in Cedar Rapids, Iowa, which has been shut down for two weeks because of flooding, will restart production early next month.
Most Read Business Stories
- Amazon sued by Black cloud-computing manager over alleged racial discrimination and sexual harassment
- The penthouse atop Smith Tower is on the rental market for the first time
- Costco, Whole Foods rise in Greenpeace rankings of grocery chains' plastic use
- Screening to detect prior coronavirus infections launched by Adaptive Biotech, with Microsoft's help
- Downtowns will be back, but Seattle has choices to make
Microsoft releases final Hyper-V
Microsoft released a final version of Hyper-V, the virtualization feature of Windows Server 2008, ahead of schedule on Thursday.
The technology allows more efficient use of server hardware by running multiple “virtual” machines on a single physical machine. The technology can offer significant IT efficiency and flexibility.
Microsoft had hoped to release Hyper-V by late summer.
The product will challenge market leader VMWare.
Memory chip slide at Micron
Chip-maker Micron Technology posted a wider third-quarter loss after prices plunged for semiconductors used to store pictures and music in portable devices.
The net loss expanded to $236 million, or 30 cents a share, from $225 million, or 29 cents, a year earlier. Sales rose 16 percent to $1.5 billion in the period ended May 29, the Boise, Idaho, company said Thursday.
Prices are dropping for memory chips that are the main storage in devices such as Apple’s iPhone, just as Micron reaches full production in a joint venture with Intel. That glut is outweighing improvements in the price of Micron’s main product, personal-computer memory.
Analysts on average had anticipated a net loss of 33 cents a share on sales of $1.47 billion, according to estimates compiled by Bloomberg.
Wall Street firms take less from Fed
Wall Street companies scaled back their borrowing from the Federal Reserve’s emergency lending program over the past week, while commercial banks stepped it up.
A Fed report released Thursday 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 nation’s fifth-largest 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.
The identities of commercial banks and investment houses are not released.
In the broadest use of the central bank’s lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans. The program will continue for at least six months. Commercial banks and investment companies now pay 2.25 percent in interest for the loans.
Economy grows, but not briskly
The fragile economy improved slightly at the beginning of the year and could grow a bit stronger in the current quarter as extra cash from tax rebates spurs people to buy more. Still, it’s not out of danger yet.
The economy grew at a 1 percent annualized rate in the first quarter, helped in large part by stronger sales of U.S. products overseas, the Commerce Department reported Thursday.
That was a tad stronger than the government’s previous estimate of 0.9 percent growth for the quarter. And, the new reading was better than the anemic 0.6 percent growth rate logged in the final three months of last year.
Nonetheless, the two quarters together marked the slowest growth in five years. The economy has been bruised by housing, credit and financial problems. That led consumers during the first quarter alone to boost their spending at the weakest pace since the 2001 recession.
Belgian buyout offer rejected
Anheuser-Busch rejected an unsolicited $46 billion purchase offer from InBev Thursday, just hours after the Belgian brewer appeared to set the stage for a hostile takeover bid.
Anheuser-Busch Chief Executive August Busch IV sent a letter to InBev Chief Executive Carlos Brito saying the offer greatly undervalued the largest U.S. brewer, calling the $65-a-share price “financially inadequate” and not in the best interests of its shareholders.
Earlier in the day, InBev filed a suit in Delaware court, where Anheuser-Busch is incorporated, seeking to officially declare that shareholders can remove all 13 members of Anheuser-Busch’s board. Such a declaration could be the first step to rally Anheuser-Busch shareholders to accept InBev’s offer, even if management is opposed to it.
In most acquisitions, a rejection from the target company’s board of directors might draw out a sweeter offer. InBev’s move suggests it’s not interested in a lot of bartering, said Douglas Cogen, a mergers and acquisitions attorney with the Fenwick & West law firm in San Francisco.
Credit business not credited for profit
Discover posted a healthier quarterly profit Thursday than Wall Street expected — no thanks to the lending business, however.
The card company benefited between March and May not from issuing credit, but rather from milking its third-party-payments business — which processes ATM and debit transactions and other banks’ cards — and selling its British card business.
The trend toward plastic, whether it’s credit or debit, appears to be the saving grace right now for companies like Discover, as customers fall behind on their debt payments and trim their spending.
Discover’s third-party-payments segment produced transaction volume of $29.4 billion, up 33 percent from a year ago. Since then, Discover has signed on many new financial institutions to use its card network. The company also saw transaction volumes rise at existing issuers.
Homebuilder has bleak ’08 outlook
Homebuilder Lennar said Thursday it managed to narrow its second-quarter loss, but CEO Stuart Miller gave a dour outlook for the industry, saying the housing market has yet to hit bottom and ruling out the prospects of a recovery this year.
“The housing market has continued to deteriorate throughout the first half of 2008. We expect that this trend is going to continue for at least the remainder of the year,” Miller told analysts in a conference call after the builder disclosed its financial report card.
Faced with the prospect of ongoing housing doldrums, Miller echoed the building industry’s call for the federal government to step in to help break the cycle of rising foreclosures, stagnating home sales and skidding home prices.
CEO links growth to services, software
Chief Executive Howard Stringer said Sony will win back its electronic leadership by improving its Internet-linked gadgets, wiping out losses in video games and TVs and pushing services and software, not just hardware.
“This is not your father’s Sony,” he said Thursday at Sony’s Tokyo headquarters, outlining a strategy for growth.
Stringer vowed the company will become profitable in its TV and video-game businesses during this fiscal year, which ends March 2009. He said he wants to beef up networking gadgets, making sure 90 percent of Sony’s electronics products wirelessly connect to the Net by March 2011.
Stringer said Sony has rebounded from a bottom in 2005 by exiting or downsizing 15 product categories, shedding 10,000 global workers and shutting down 11 manufacturing sites.
Koya Tabata, analyst at Credit Suisse in Tokyo, said it was good news Sony will be networking its products, noting that Sony products, including mobile phones, TVs and game machines, total 200 million worldwide — about double Apple’s iPod players, iPhone and other devices combined.
“There is potential for growth because of the scale of Sony’s platform.” he said. “But I’m assessing it as neutral so far,” he added, saying more time was needed to see how the strategy will play out.
Shares hit 33-year low; Ford drops too
Shares of General Motors plunged to their lowest price in more than 33 years, and Ford shares hit another 52-week low Thursday as analysts continued to speculate about just how bad things will get for U.S.-based automakers.
GM shares fell $1.38, or 10.8 percent, to close at $11.43, after tumbling as low as $11.21 earlier in the session.
Ford shares hit a 52-week low of $4.94 in early trading before recovering to close at $5.07, still down 17 cents, or 3.2 percent. They have traded as high as $9.70 over the past year.
GM’s drop came after a Goldman Sachs analyst cut his rating to “Sell” from “Neutral” and his price target to $11 from $19, saying things could still get worse for the North American automotive industry as a whole.
Compiled from The Associated Press, Bloomberg News and Seattle Times staff