Investment News Briefs

With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.

Fed Keeps Rates, Language the Same; U.S. Services Slow, But Still Growing; ADP: Private Sector Job Losses at Slowest Pace Since July 2008; Microsoft Lays Off 800; Berkshire Could Lose AAA Rating; N.Y. Files Antitrust Suit Against Intel; Google’s Lobbying Budget Up 50% in Q3; Better Garmin Results Can’t Stop Stock Selloff

• The U.S. Federal Reserve will keep key interest rates at their record low range of zero to 0.25%, it said yesterday (Wednesday) following the conclusion of the two-day Federal Open Market Committee (FOMC) meeting. It also kept its language about when it may start to increase the rate the same, saying that current economic conditions are “likely to warrant exceptionally low levels of the federal funds rate for an extended period.” While it generally wasn’t expected the Fed would raise the rates, close attention was being paid to the language as analysts looked for indications on a rate increase.

• The Institute for Supply Management’s services index for the United States dipped slightly in October to 50.6, but was above the growth/contraction threshold of 50 for the second straight month. Still, the October index fell short of economists’ forecast of a rise to 51.5. “It’s disappointing that it didn’t hit the consensus number but the good news is that the index stayed above 50,” John Canally an economist with LPL Financial told Reuters.

• Private sector companies in the United States last month reduced jobs at the slowest pace since July 2008, eliminating 203,000 positions, Automatic Data Processing Inc. (NYSE: ADP) said yesterday (Wednesday). That’s down from a revised 227,000 jobs lost in September. “There are still a lot of people out there feeling pain,” Macroeconomic Advisers Chairman Joel Prakken told Reuters. “But we are heading in the right direction.”

• Microsoft Corp. (Nasdaq: MSFT) will lay off 800 of its employees, a spokesman told Dow Jones Newswires yesterday (Wednesday). That’s in addition to the 5,000 job cuts the company announced in January. The grand total of 5,800 represents about 6.3% of Microsoft’s total workforce. The company did not say in which areas of its business the job losses would occur, but its entertainment and devices division, which includes its Windows Mobile, Zune and Xbox teams has been hit especially hard amid tough competition and the recession. The January layoffs were the first in the company’s history since it went public 34 years ago.

• Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) is more likely to have its AAA rating by Standard & Poor’s now that it has agreed to buy railroad Burlington Northern Santa Fe Corp. (NYSE: BNI) in a $44 billion deal. “This transaction will decrease the liquidity and capital adequacy of [Berkshire's] insurance operations” the ratings company said in a statement placing Buffett’s firm on “CreditWatch with negative implications.” Berkshire will have more than $20 billion in cash after the purchase of Burlington. Buffet said earlier this year his company needs at least $10 billion in cash for any catastrophe claims, Bloomberg News reported. Investors weren’t fazed by the news, sending Berkshire’s class A shares up 1.08% to close at $101,530.00, and its class B stock up 1.67% to close at $3,381.00 yesterday.

• The state of New York has filed an antitrust lawsuit against microprocessor giant Intel Corp. (Nasdaq: INTC), alleging Intel engaged in a “systematic worldwide campaign of illegal, exclusionary conduct to maintain its monopoly power” in the market starting in 2001. The complaint accuses Intel of paying hundreds of millions and sometimes billions of dollars in rebates to PC manufacturers to try and limit their use of chips from rival Advanced Micro Devices Inc. (NYSE: AMD). If Intel perceived PC makers to be getting too close to AMD, it would threaten them with retribution by withholding payments, the complaint said. “Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market,” New York Attorney General Andrew Cuomo said. “Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices. These illegal tactics must stop and competition must be restored to this vital marketplace.”

• Google Inc. (Nasdaq: GOOG) boosted its third-quarter lobbying expenses by 50% to almost $1.1 million, The Associated Press reported, citing a recent disclosure statement. This came despite the fact that the search giant’s overall expenses declined by 2% in the quarter. Google will likely face more antitrust scrutiny as it expands its business into the mobile phone, software and book publishing arenas.

• Navigation device maker Garmin Ltd.’s (Nasdaq: GRMN) lower costs help its profit grow 24% despite a drop in revenue. The company reported a net income of $215 million, or $1.07 per share in the third quarter, compared to a profit of $171.2 million, or 82 cents per share in the same period last year. Sales fell 10% to $781.3 million from $870.4 million a year ago. Garmin’s shares have been slowly eroding since Google Inc. (Nasdaq: GOOG) announced last week it would bring a free navigation program to its Android operating system, found on several mobile phones. Garmin stock plummeted 14.55% in trading yesterday (Wednesday), closing at $26.84.