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Economic Plan Gets the Presidential Seal; Cash-Poor Alitalia's Bleeding Balance Sheet; UnitedHealth Subsidiary Under Investigation; ABB CEO Resigns; News Corp Circles Around Yahoo!; Morgan Stanley Sheds 1,000 Jobs; Emirates NBD Banks on Growth; Germany Shelters IKB From Subprime Storm
- President George W. Bush signed into law yesterday (Wednesday) the bipartisan economic stimulus package approved by the U.S. House of Representatives and Senate, calling the plan a "booster shot" for the U.S. economy. The final package includes cash rebates of $300 to $600 for individuals and $1,200 for married couples, plus $300 for each dependent child. "This package gets money into the hands of Americans struggling to make ends meet, helps families with children, cuts taxes for small businesses that will create new jobs and stimulates our slowing economy," said House Speaker Nancy Pelosi.
- Italian airline Alitalia Linne Aeree (PINK: ALAIF) announced full-year losses yesterday (Wednesday). The airlines pre-tax loss narrowed to 363.9 million euros in 2007, from a loss of 605.2 million euros the year prior. Its 2007 operating loss also narrowed to 202.9 million euros from a loss of 465.7 million euros a year earlier. The struggling carrier estimates it needs a 750 million euro cash infusion by mid-year to continue operating normally, Reuters reported.
- New York State's Attorney Andrew Cuomo has charged Ingenix Inc., a subsidiary of UnitedHealth Group Inc. (UNH), with fraud. The charges allege that Ingenix underestimated costs for out-of-network patient expenses, thereby lowering the amount of patient reimbursements. "We believe Ingenix systematically reduced the amount of money for which consumers should be reimbursed," Cuomo said at a press conference, MarketWatch reported. United Healthcare shares tumbled more than 3% the day (Wednesday) the charges were announced.
- Fred Kindle, Chief Executive Officer for ABB Ltd. (ABB), resigned from his post after disagreements with the board. Chairman Hubertus von Gruenberg, cited "irreconcilable differences" with Kindle and declined to elaborate. However, analysts say the "differences" were obvious. "The biggest question ABB faces is the use of its $10 billion excess capital and maybe this was partly responsible" for Kindle's departure, JPMorgan analyst Andreas Willi told Bloomberg. ABB releases its fourth-quarter earnings today.
- News Corp. (NWS) has thrown its name into the hat of Yahoo! Inc. (YHOO) suitors, The Wall Street Journal reported, citing people familiar with the matter. The companies are reportedly in discussions about combining MySpace and other News Corp. online properties with Yahoo – not a full-scale buyout of the popular, yet struggling search-engine company. The WSJ reported that News Corp. would be looking for a 20% or more stake.
- Morgan Stanley (MS) announced yesterday (Wednesday) that it would cut 1,000 jobs, shut down a U.K. mortgage unit and scale back its home-lending business in the United States. The job cuts will affect employees who generate home loans through brokers and third parties, Reuters reported. Since October, the company has laid off 2,900 people in mortgages, wealth management, investment banking and capital markets.
- Emirates NBD PJSC, the largest bank in the Arabian Gulf, said full-year profit rose 35% and revenue climbed 50% because of regional economic growth and subsequent demand for loans, Bloomberg reported. UAE's GDP is projected to grow 7% in 2008.
- Germany's government will give IKB Deutsche Industriebank AG a $2.2 billion rescue package to help the bank as it recovers from losses from U.S. subprime investments, Bloomberg reported. The lender will get $1.45 billion from the government and the rest will come from other banks.