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Time Warner Mingling in Facebook's Business; Chrysler Plans Two-Week Shutdown; EA Takes On Take-Two; AOL Buys Out Bebo; Nestle Raises Annual Outlook; Retail Sales Drop; S&P Says Subprime End in Sight; Yahoo Gamble; Toyota Slowdown
- Time Warner Inc.'s (TWX) AOL Internet division will buy Bebo Inc. for $850 million, all cash, Reuters reported. Bebo is the world's third-largest social-network site – behind News Corp's (NWS) MySpace and Facebook Inc. Bebo is most popular in England, Ireland and New Zealand, but hasn't established itself as a competitive force in the United States.
- Chrysler LLC said it would halt all operations – sans its most essential – for two weeks in July in effort to cut costs and preserve cash, Reuters reported. Chief Executive Officer Bob Nardelli said the move was necessary to create "efficiency across organizational lines and boost productivity." The No. 3 U.S. automaker is in the midst of a restructuring plan that calls for reducing vehicle lines and buyouts of its hourly workers.
- Video game maker Electronic Arts Inc. (ERTS) said yesterday (Thursday) that it has launched a hostile $2 billion tender offer for rival Take-Two Interactive Software Inc. (TTWO), the publisher of "Grand Theft Auto" and other video games. The move takes the offer directly to Take-Two's shareholders after it was rejected by company brass last month, the . The $26 per share cash offer from an Electronic Arts' is a 4% premium to Take-Two's Wednesday closing stock price of $24.91.
- Nestle SA, the world's biggest food company, raised its sales forecast for the year, citing strong demand and pricing. Revenue growth excluding acquisitions in 2008 should be "close" to last year's rate of 7.4% and clearly above the group's long-term target of 5% to 6%, the company said in a statement. The unexpected news from the maker of Nescafé coffee and KitKat chocolate bars added 4.3% to its shares.
- Retail sales dropped 0.6% in February, the Commerce Department announced yesterday (Thursday). The decline followed a 0.4% increase in January and was due mostly to drops in auto dealers and restaurants, Bloomberg News reported. "No wonder the consumer stopped spending," said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. "Confidence is at recession-type lows."
- Standard & Poor's believe that more than half of subprime-related losses for the financial industry, currently at $150 billion, have already been disclosed and the final total will only reach $285 billion. "The positive news is that, in our opinion, the global financial sector appears to have already disclosed the majority of valuation writedowns" on subprime debt, S&P credit analyst Scott Bugie, said in a statement released yesterday (Thursday), Bloomberg News reported.
- Yahoo! Inc. (YHOO) could be in trouble as its first quarter draws to a close. If the Internet firm fails to meet analyst expectations, it could risk Microsoft Corp. (MSFT) withdrawing its $31 per share offer and submitting a lower bid. "Unless Yahoo management has an alternative plan or is expecting stellar results, either of which we see as a remote possibility, this strategy opens up a risk that Microsoft could withdraw its bid and reinstate it later at a lower price," analyst Jeffrey Lindsay of Bernstein Research told MarketWatch.
- Toyota Motor Corp. (TM) announced it would reduce production of heavier trucks and sport utility vehicles due to lower U.S. consumer demand for such vehicles, The Wall Street Journal reported. "We are slowing down the assembly to reflect the market," Toyota spokesman Mike Goss said yesterday (Thursday), before confirming that the reduction would not result in layoffs at the affected plants.