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.
New Home Sales Unexpectedly Collapse; US Airways Lays Off 1,000 Employees; Former AMD Chief Linked to Galleon Insider Trading Case; CIT Lives to Lend Another Day; Durable Goods Orders Up; Oil Prices Drop 2%; Goodyear Shares Nosedive After Negative Guidance; Motorola, Verizon Introduce Latest “Google Phone”
New home sales fell unexpectedly in September 3.6% to a seasonally adjusted annual rate of 402,000, compared to a downwardly revised pace of 417,000 in August, the Commerce Department said. Economists surveyed by Briefing.com expected the pace to pick up to 440,000 units. “We’re attributing most of the decline to the potential expiration of the new home-buyer tax credit,” Wells Fargo & Co. (NYSE: WFC) analyst Adam York told CNNMoney.com. “It’s getting harder to buy a house and no one wants to close after the credit expires.” The Senate is debating this week whether to extend an $8,000 tax credit for first-time homebuyers.
US Airways Group Inc. (NYSE: LLC) said it will cut 1,000 jobs and drop 44% of its daily flights from Las Vegas and end services to five European cities from Philadelphia to stop losses that have plagued the air carrier in seven of its past eight quarters. “These are difficult decisions to make because of the impact to some of our fellow employees,” Chief Executive Officer Doug Parker said. “They are, however, the right decisions. By focusing on our strengths and eliminating unprofitable flying we will increase the likelihood of returning US Airways to long-term profitability, which is in all of our best interests.” Once the restructuring is done next year, 99% of its capacity will be at its three hubs in Washington, D.C., New York and Boston. Stock in the company dipped slightly toward the end of the day to close at $3.13, down 0.32%.
Hector Ruiz, former chairman and chief executive officer at Intel Corp. (NYSE: INTC) rival Advanced Micro Devices Inc. (NYSE: AMD) allegedly shared confidential information about the chipmaker with Danielle Chiesi, one of six defendants facing insider trading charges that includes Galleon Group co-founder and hedge fund manager Raj Rajaratnam, Bloomberg News reported, citing a person familiar with the matter. Ruiz is neither a defendant nor was he named in the criminal case filed by the Manhattan U.S. Attorney’s office earlier this month. The complaint, filed in a New York federal court said an unnamed AMD executive shared confidential information with Chiesi about a 2008 reorganization of the chip maker.
Ailing commercial lender CIT Group Inc. (NYSE: CIT) said it has secured a $4.5 billion credit facility from a “diverse group of lenders” that includes many of its bondholders. The debt will be secured by the same assets as a $3 billion loan that the lender got last summer after the U.S. government refused to provide the company additional bailout money on top of the $2 billion already provided. Billionaire investor Carl Icahn, who says he’s the company’s biggest shareholder, tried to offer a similar deal yesterday (Wednesday), but that fell through after CIT said it was unable to get assurances that he would actually be able to fund the commitment.
Durable goods orders in the United States jumped in 1% in September, the Commerce Department said, meeting economists’ estimates. Excluding automobiles, orders gained 0.9%, slightly better than forecasts of 0.7%, The Associated Press reported. Orders for defense aircraft gained the most, rising 12.5%, followed by defense capital goods at 10.0%. The capital goods excluding aircraft category, considered a leading indicator for business spending, rose 3.7%.
Benchmark crude oil for December delivery dropped more than 2% to settle at $77.46 per barrel on the New York Mercantile Exchange (NYMEX) after the Energy Department reported a higher-than-expected jump in U.S. gasoline supplies and the dollar strengthened. Gas supplies rose by almost 2 million barrels though several analysts expected supplies to fall for the third week in a row, The Associated Press reported.
Shares in the The Goodyear Tire & Rubber Co. (NYSE: GT) plummeted after the company said it would suffer an operating loss in North America. While Goodyear more than doubled its profit to $72 million, or 30 cents per share on cost-cutting efforts, its guidance called for a North American loss of between $75 million and $125 million in the current quarter. The company cited fixed costs, seasonal sales trends and material expenses. Revenue fell to $4.4 billion from $5.2 billion a year ago. Goodyear closed at $13.46, down 19.59%.
Motorola Inc. (NYSE: MOT) and Verizon Communications Inc. (NYSE: VZ) formally introduced Droid, Motorola’s new smartphone that will run the new version of Google Inc.’s (Nasdaq: GOOG) mobile operating system, dubbed Android 2.0. Verizon has been running television ads for weeks that mock Apple Inc.’s (Nasdaq: AAPL) iPhone, mentioning the things Droid does that “iDon’t.” The phone is the latest of several on multiple carriers to feature Google’s Android, which has its own application store called the Android Market and is a distant second in terms of app quantity when compared to Apple’s App Store.