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Gas Fuels Factory Orders; Borders Cuts Jobs to Cut Costs; Starbucks Serves Up Free Wi-Fi; Kenya Inflation Soars 32%; Chevron to Invest $5 Billion in Africa; Staples Raises Bid for Corporate Express; Lehman Looking for Cash Infusion; Oil Slides
- U.S. factory orders increased 1.1% in April, an unexpected gain that was boosted by the high cost of gas and other petroleum products, the Commerce Department announced yesterday (Tuesday). Economists had expected a smaller gain of just 0.1% after an upwardly revised 1.5% gain in March, MarketWatch reported.
- Borders Group Inc. (BGP) announced yesterday (Tuesday) it would reduce 20% of its corporate positions in an ongoing effort to cut costs. The No. 2 U.S. bookseller will eliminate 156 positions at its Ann Arbor, Mich. Headquarters and 118 corporate positions at other locations, Reuters reported. The reductions represent less than 1% of Borders total staff.
- In a bid to lure new customers to purchase reloadable cards, Starbucks Corp. (SBUX) will offer free AT&T Inc. (T) wi-fi service to patrons who buy a minimum $5 on a reusable Starbucks Card. "Customers have let us know they want to be recognized for choosing Starbucks," Brad Stevens, vice president of customer relationships, told USA Today. Particularly, he says, at a time when "budgets are tight."
- Annual inflation in Kenya soared 31.5% higher in May, Bloomberg reported, citing the country's National Bureau of Statistics reported yesterday (Tuesday). May's numbers are even steeper than April, when soaring food prices pushed inflation up 26.6%.
- Chevron Corp.'s (CVX) vice chairman told Bloomberg that the company will spend up to $5 billion in African oil projects – including nearly $5 billion for a gas-to-diesel conversion plant in the Niger Delta – to boost production and help accommodate global demand. "The world is saying it needs it," said Peter Robertson.
- Staples Inc. (SPLS) yesterday (Tuesday) raised its hostile bid for Dutch office supplies distributor Corporate Express NV (ADR: CXP) to $2.6 billion. Rather than accepting two previous overtures from Staples, Corporate Express last month struck a surprise deal to buy a French competitor, Lyreco SAS, which would create an international competitor to Staples, the Associated Press reported. Lyreco may be entitled to a $46.8 million break-up fee if Corporate Express shareholders pursue the Staples deal.
- Lehman Brothers Holdings Inc. (LEH), set to report its first quarterly loss since going public, is considering raising billions of dollars in fresh capital to help shore up its balance sheet, the Wall Street Journal reported. The exact amount isn't known, but analysts estimate it is likely to be between $3 billion and $4 billion. Lehman will probably reveal the details of the plan with its quarterly results, due the week of June 16.
- Oil prices fell sharply yesterday (Tuesday), at times slipping more than $3 a barrel on the New York Mercantile Exchange. The drop came after Federal Reserve Chairman Ben S. Bernanke indicated that more interest rate cuts are unlikely. His comments sent the dollar higher and raised questions about oil's ability to reach new highs in the short term.