Business news in brief
In the Region
Merck outlook misses estimates
Merck & Co. Inc.
yesterday forecast lower profit and flat revenue in 2009 - far below Wall Street expectations - with management blaming the weak global economy, generic competition, slower sales of key products, and restructuring charges. Merck shares slumped on the news, falling $1.46, or 5.52 percent, to close at $25.00. The company has major operations in the Philadelphia area. Executives of the Whitehouse Station, N.J., company said they expect profit of $3.15 to $3.30 a share, excluding onetime items, on sales of $23.7 billion to $24.2 billion. Analysts surveyed by Thomson Reuters expected a profit of $3.52 a share and revenue of $24.59 billion in 2009.
Grid to get $1.6 billion in upgrades
PJM Interconnection L.L.C.
, which operates the region's electrical grid, has approved $1.6 billion in additions and upgrades to the electric-transmission systems for the grid that serves 51 million people in 13 states and the District of Columbia. The upgrades are required to maintain reliability of the power supply and keep the lights on in years ahead, PJM said. To accomplish this 15-year plan, PJM's board has authorized almost $13.3 billion in investments.
- Roslyn Rudolph
CVS sued, Rite Aid settles with N.Y.
CVS Caremark Corp.
was sued by New York for selling expired products, as the state announced the settlement of similar claims against Camp Hill, Pa., competitor
Rite Aid Corp.
for as much as $1.3 million. New York officials accused CVS of selling items that had expired as far back as 2006. As part of its settlement, Rite Aid agreed to conduct weekly inspections of its New York stores to ensure expired over-the-counter drugs, infant formula, milk and eggs are not offered for sale,
New York Attorney General Andrew Cuomo
said in a statement. Rite Aid will immediately pay a $1 million civil penalty and as much as $300,000 more if it fails to comply with the agreement during the next three years. Michael DeAngelis, a CVS spokesman, said the company had been cooperating with Cuomo's office and was disappointed he decided to file suit.
- Bloomberg News
IBC seeks sale of subsidiary
Independence Blue Cross
wants to sell its Puerto Rican subsidiary
La Cruz Azul de Puerto Rico Inc.
Triple-S Management Corp.
, a San Juan holding company that specializes in finance and insurance. The deal, which includes a transfer of licensing rights to the Blue Cross brand in Puerto Rico and the Blue Cross and Blue Shield brands in the Virgin Island, requires the approval of the Insurance Commissioner of Puerto Rico. Triple-S said it expected to pay cash and complete the deal in the first quarter of 2009. Annualized premiums for 2007 were about $88 million for La Cruz Azul, which was established in 1943. Triple-S is a managed-care company serving about one million members. Triple-S did not provide the acquisition price, but said it would once the deal is completed. A representative for Independence Blue Cross in Philadelphia was not immediately available for comment.
- Jane M. Von Bergen
J&J dividend increases 5.4%
J&J Snack Foods Corp.
announced that its next dividend, to be paid Jan. 7 to shareholders of record on Dec. 15, will be increased 5.4 percent, to 9.75 cents from 9.25 cents. The Pennsauken company's shares closed down 93 cents, or 3.08 percent, at $29.28.
- Roslyn Rudolph
Factory orders drop in October
Orders to U.S. factories plunged in October by the sharpest amount in more than eight years as a deepening recession caused big cutbacks in demand for steel, autos, computers and heavy machinery. Analysts expect the weakness will continue for some time. The
reported that factory orders dropped 5.1 percent in October, the largest decrease since an 8.5 percent fall in July 2000. It was larger than the 4 percent drop that economists had been expecting. They said they believed manufacturing would continue to be under pressure for many more months, reflecting a deepening recession that already is the longest slump in a quarter-century.
Mortgage rates at lowest since Jan.
Rates on 30-year mortgages plunged this week to the lowest level since January after the government launched a sweeping new effort to aid the U.S. housing market. Mortgage finance giant
reported that average rates on 30-year fixed-rate mortgages dropped to 5.53 percent this week. That was down from 5.97 percent last week, and the lowest since the week of Jan. 24, when it was at 5.48 percent. Rates on one-year, adjustable-rate mortgages dropped to 5.02 percent, from 5.18 percent last week.
Ebbers asks president for clemency
, the former
chairman imprisoned for accounting fraud, joined the growing ranks of disgraced executives and government officials asking
for clemency before he leaves office. Ebbers, 67, submitted a request to have his 25-year sentence commuted to the U.S. Department of Justice's Office of the Pardon Attorney, spokeswoman Laura Sweeney said in a statement. The Justice Department is also considering a clemency request from
, the former
Hollinger International Inc.
chairman and British Lord serving a sentence for fraud and obstruction.
- Bloomberg News
Ruling could mean end to Bratz dolls
Pouty-lipped Bratz will stay on store shelves until after the holidays, but their fate after that - and that of their parent,
MGA Entertainment Inc.
- was uncertain after a federal court ruling banning MGA from making the saucy Barbie alternative. MGA is appealing the ruling that, if upheld, is a severe blow for the company and an equal boon for Barbie maker
, which has been duking it out with MGA over Bratz for four years. "In the most dire scenario, MGA can't sell Bratz at all and a humongous chunk of their business disappears," said
Needham & Co. Inc.
. "But it's likely they will work out a way for MGA to stay in business but Mattel to profit."