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. Existing Home Sales Rise, But Miss Estimates; Boeing Shares Plummet; Automakers Get $8 Billion for Fuel Efficiency; Sprint CFO Not Concerned About Pre Shortages; Kroger Beats the Street; MySpace Lays Off 300 More; Best Buy Testing Used Game Waters; Madoff’s Lawyer Pleads for Leniency

• Existing home sales rose 2.4% to a seasonally adjusted rate of 4.7 million last month, the National Association of Realtors said yesterday. That compares to April’s rate of 4.6 million, but is still down from the same period last year, when it was 4.9 million. Economists surveyed by MarketWatch.com were expecting an increase to 4.8 million.

• Shares of The Boeing Company (NYSE: BA) tumbled more than 6% yesterday (Tuesday) after the aircraft maker said it will miss its June 30 first-flight target for its new 787 Dreamliner and a new delivery timetable won’t be available for weeks. Already two years behind schedule, the plane’s monitors on the body above the wing showed stresses beyond what models predicted and there was little point flying in a reduced test pattern, Chief Executive Officer Scott Carson said in a conference call. “The delay will probably lead to at least several months of push-out on first delivery,” J.B. Groh, an analyst at DA Davidson & Co. told Bloomberg News in an interview. “The best-case scenario for first delivery may be mid-2010.” He has a “neutral” rating on the stock. The aircraft is Boeing’s fastest-selling model with 865 orders.  

• The Obama administration has awarded three automakers $8 billion in loans to develop more fuel-efficient cars, with Ford Motor Co. (NYSE: F) getting the lion’s share of the funds: $5.9 billion. Nissan North America Inc. and Tesla Motors each got $1.6 billion and $465 million, respectively. “We have a historic opportunity to help ensure that the next generation of fuel-efficient cars and trucks are made in America,” said President Obama in a statement. "These loans – and the additional support we will provide through the Section 136 program – will create good jobs and help the auto industry to meet and even exceed the tough fuel economy standards we’ve set, while helping us to regain our competitive edge in the world market." The Department of Energy received more than 100 applications for fuel efficiency-related loans. 

• Shortages of Palm Inc.’s (Nasdaq: PALM) newly launched Pre will continue, but the smartphone has not felt any impact from last week’s launch of Apple Inc.’s (Nasdaq: AAPL) iPhone 3GS, Sprint Nextel Corp. (NYSE: S) Chief Financial Officer Bob Brust told investors at Wachovia Corp.’s Annual Mid-Year Equity Conference during a webcast. "We still have a backlog of subscribers but it's not unmanageable and we get shipments every week," Brust said. Analysts estimate between 50,000 and 100,000 Pres were sold in its opening weekend earlier this month, while Apple said Monday the new iPhone sold 1 million units in its opening weekend.

• Kroger Co. (NYSE: KR) beat analyst estimates for its first quarter, thanks to a higher-than-expected profit. For the quarter ended May 23, the largest U.S. supermarket chain posted a net income of $435.1 million, or 66 cents per share on revenue of $22.8 billion. That compares to a net income of $386 million, or 58 cents per share on revenues of $23.1 billion in the same period last year. The average analyst estimate for Kroger was 61 cents per share, according to Reuters estimates. The company’s full-year earnings forecast was unchanged from an estimated $2.00 to $2.05 per share.

• News Corp.’s (Nasdaq: NWS) social networking website MySpace.com will cut an additional 300 jobs outside the United States, The New York Times reported. The number represents two-thirds of its international staff of 450. The news comes less than a week after MySpace said it would cut 1,000 jobs due to sagging ad sales and lost share to rival Facebook Inc. “Facebook seems to have been better at opening up its appeal to more age groups, in more markets,” said Karin Von Abrams, an analyst at research firm eMarketer told The Times. “Once the momentum begins to build for one site, there’s a kind of self-fulfilling prophecy to it.”

• Best Buy Co. (NYSE: BBY) will begin testing kiosk-based used video game sales in the Dallas and Austin, Tex. markets starting this week, The Wall Street Journal reported, citing a blog posting by Chief Marketing Officer Barry Judge. The kiosks will scan the games to ensure functionality, and then dispenses a voucher for a Best Buy gift card based on the value of games traded in. The used video game market has proven to be lucrative for the world’s largest game retailer, GameStop Corp. (NYSE: GME). GameStop generated $165.5 million in profits from the sale of used games alone in its last quarter ended May 2, compared to $156.6 in the same quarter the previous year. Taking into account all of the used products it sells including consoles and accessories, GameStop turned a profit of $542.1 million in its last quarter, versus $473.4 million in the same quarter last year. Wedbush Morgan analyst Edward Woo told The Journal that GameStop owns about 90% of the used game market.

• Bernie Madoff’s lawyer has asked a federal judge for leniency in his sentencing, requesting that he serve as few as 12 and no more than 20 years in prison after he was convicted of orchestrating a massive Ponzi scheme, Bloomberg News reported. “We seek neither mercy nor sympathy. Respectfully, we seek the justice and objectivity that have been -- and we hope always will be -- the bedrock of our criminal justice system,” defense lawyer Ira Sorkin said in a letter filed in Manhattan federal court yesterday (Tuesday). The 71-year-old Madoff is facing a maximum 150 years in prison when he is sentenced on Monday.