BC-Business News Digest


Associated Press

Posted on October 17, 2012 at 5:30 AM

Business News at 5:30 p.m.

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Vikram Pandit abruptly steps down as CEO of Citigroup, the country's third-largest bank, after steering it through the 2008 financial crisis and the choppy years that followed. The news shocks Wall Street, a day after the bank easily beat analyst expectations for its quarterly earnings. Citi is far more stable than it was during the crisis years, but Pandit's successor faces plenty of challenges. By Business Writer Daniel Wagner.

AP Photos.


NEW YORK — In picking Michael Corbat to take charge of the sprawling bank, Citigroup's board handed the reins to a veteran insider, instead of an outsider, as Pandit was. Corbat has held a wide variety of roles in his nearly 30 years at Citi and its businesses, including commercial banking and wealth management. During the 2008 financial crisis, he ran Citi Holdings, a "bad bank" created to help manage the conglomerate's many tentacles, and oversaw the sale of more than $500 billion in assets and more than 40 businesses. By Matthew Craft.


NEW YORK — Michael Corbat takes over a bank that got its first big break by helping the U.S. cover debts after the War of 1812. The bank is responsible for major innovations — it experimented with rudimentary ATMs in 1939 and reshaped modern banking with its 1998 merger with Travelers Group — but it is still recovering from the 2008 financial crisis that nearly led to the bank's collapse. By Jonathan Fahey.


— CITIGROUP-PANDIT TENURE, an extended glance at highlights and lowlights of Pandit's five-year tenure as CEO.

— CITIGROUP-PANDIT MEMO, text of the memo sent by Pandit to Citigroup employees.

— CITIGROUP-CORBAT MEMO, text of the memo sent by Corbat to Citigroup employees.

— BIO BOX-PANDIT, biographical details of Pandit.

— BIO BOX-CORBAT, biographical details of Corbat.

— CITIGROUP-BREAKDOWN, key statistics on the bank and how it makes money.


WASHINGTON — The outlook for the U.S. economy brightened a little Tuesday after reports that consumer prices stayed tame and homebuilder confidence rose to the highest level in six years. Low inflation could give consumers more incentive to spend at a time when their confidence is at a five-year high. Stronger consumer spending could boost growth and help lift American manufacturers out from their slump. A third report showed factory output grew only modestly in September. By Economics Writer Christopher S. Rugaber. Incorporates BC-US--Consumer Prices and BC-US--Industrial Production.

AP Photos.


WASHINGTON — More than 56 million Social Security recipients will see their monthly payments increase by 1.7 percent in January. The increase is among the lowest since automatic annual adjustments were adopted in 1975. By Stephen Ohlemacher.

AP Photos, Video, Graphic, Interactive.


LOS ANGELES —Since its founding 37 years ago, Microsoft has had a mutual understanding with computer hardware companies: Microsoft makes software. Companies such as Dell, HP, Acer and Lenovo build machines and pay Microsoft a licensing fee to place the Windows operating system on desktop PCs, notebooks and other gadgets they market to consumers. Now, Microsoft is complicating the cozy relationship by manufacturing its own tablet computer. The company announced Tuesday that the Surface will start at $499 when it goes on sale Oct. 26. The new tablet is set to invigorate an already hotly contested market for touch-screen computers. But, for the first time, the Redmond, Wash. software maker will be in direct competition with its longtime friends. By Ryan Nakashima.

AP Photo.


DETROIT— Short of cash and hurting from weak sales of electric cars, battery maker A123 Systems Inc. filed for bankruptcy protection on Tuesday and quickly sold its automotive assets. The moves came one day after the company warned it likely would miss debt payments and could be headed for restructuring under Chapter 11. Auto parts maker Johnson Controls Inc. will buy the company's automotive business for $125 million. The Chapter 11 filing is likely to spawn more criticism of the Obama administration's funding of alternative energy companies. By Auto Writer Tom Krisher.

AP Photos.



LOS ANGELES — Confidence among U.S. homebuilders remains at its highest level in six years, reflecting improved optimism over the strengthening housing market this year and a pickup in visits by prospective buyers to builders' communities. The National Association of Home Builders/Wells Fargo builder sentiment index rose to 41 this month, up from 40 in September. That's the highest reading since June 2006, just before the housing bubble burst. By Real Estate Writer Alex Veiga.

AP Photo.


Inflation is low, earnings are high, investors are happy. Stocks shoot higher, giving the market its biggest gain in a month. Results at Mattel, Goldman Sachs, and Johnson & Johnson were all above expectations. By Business Writer Joshua Freed.

AP Photo.

— OIL PRICES — The price of oil finishes slightly higher, just above $92 a barrel, following a day of wavering between small gains and losses as traders mulled mixed economic data.

— FOREIGN HOLDINGS — Foreign demand for U.S. Treasury securities rose to a record level in August, further evidence that most nations see U.S. debt as a safe investment.



NEW YORK — Goldman Sachs turns in third-quarter earnings that easily beat analysts' estimates, but the bank's mood seems more cautious than celebratory. By Business Writer Christina Rexrode.

AP Photo.

— EARNS-PNC FINANCIAL — The PNC Financial Services Group Inc.'s net income rose solidly in the third quarter, boosted by a one-time gain from a sale of Visa shares and higher fees from corporate clients.



Johnson & Johnson's net income falls 7 percent in the third quarter, as litigation and acquisition costs and factory upgrade expenses related to its consumer product recalls offset higher medicine and medical device sales. J&J raises its 2012 profit forecast, but again pushes back its timeline for all its recalled nonprescription medicines returning to stores. By Linda A. Johnson.

AP Photos.


UnitedHealth Group Inc.'s third-quarter earnings jumped 23 percent, thanks in part to Medicare and Medicaid business growth that helped the nation's largest health insurer beat analyst expectations. By Business Writer Tom Murphy.

AP Photo.

— SWITZERLAND-SALES-ROCHE — Powered by demand for its cancer drugs, Swiss drugmaker Roche reported a 7 percent increase in sales of its pharmaceutical products for the first nine months of 2012. AP Photo.



SAN FRANCISCO — In a case seeking to stop California's first-in-the-nation mandate requiring fuel producers to reduce greenhouse gas emissions, federal justices focus their questions on whether the law discriminates against out-of-state businesses. By Jason Dearen.


ABU DHABI, United Arab Emirates — Airport security needs to undergo a radical overhaul or else passengers will become further disgruntled, lines will grow and terminals will be overwhelmed, airline executives say at a global aviation conference. By Airlines Writer Scott Mayerowitz.

AP Photos.

— HCP-ACQUISITION — HCP Inc. says that it is buying 133 senior housing communities for $1.73 billion from a joint venture between Emeritus Corp. and an affiliate of The Blackstone Group.

— MURPHY OIL-SPIN OFF — Murphy Oil is splitting in two in order to better focus on the separate tasks of exploration and production, and the sale of gasoline and other goods through its retail locations.

— ELECTRIC CADILLAC— General Motors says production is set to begin late next year on a luxury version of its Chevrolet Volt hybrid. AP photo.

— FORD-FIESTA RECALL — Ford is recalling more than 154,000 Fiesta subcompacts to fix a problem with the side air bags.

— EARNS-CSX — CSX Corp. says both its third-quarter profit and revenue slipped 2 percent because the railroad delivered fewer carloads of coal and crops, and fuel surcharge revenue declined.

— EARNS-APOLLO — Lower enrollment at University of Phoenix drives down revenue, net income at Apollo Group.

— RUSSIA-SMOKING — Russia's Prime Minister Dmitry Medvedev called for a ban on all tobacco ads, as the government prepares a bill that would also phase out smoking in public. AP photos.



NEW YORK — The Coca-Cola Co. has a formula for growth in the volatile economic climate: sell more of its drinks in emerging markets and evolve its stable of products at home, where concerns over sugary drinks are intensifying. By Food Industry Writer Candice Choi.

AP Photos.


— COCA-COLA-BEAUTY DRINKS — The Coca-Cola Co. and Sanofi are partnering to launch a line of "beauty drinks" in France.


EL SEGUNDO, Calif. — Mattel says that cost cuts and higher revenue from toys including Monster High dolls and Fisher-Price helped send net income up 22 percent in the third quarter, providing a bit of early holiday cheer for the largest U.S. toy maker. By Retail Writer Mae Anderson.

AP Photos.

— TARGET-CONFERENCE — Target Corp. says that for the first time it will match prices that customers find on identical products at select online competitors this holiday season.

— KROGER-GUIDANCE — Kroger is forecasting stronger growth in the years ahead, as the nation's biggest traditional supermarket operator adjusts the format of its stores to fend off competitors and keep up with changing shopping habits.

— GAP-MANAGEMENT RESTRUCTURING— Gap has announced a management overhaul aimed at enabling the retailer to respond more quickly to customers' needs across the globe.

— BRITAIN-BIEBER — Teen superstar Justin Bieber has teamed up with the Adidas NEO Label to be its new global style icon. AP Photo.



NEW YORK — Intel Corp., the world's largest chipmaker, says its net income fell 14 percent from last year in the latest quarter, and it's looking at tough conditions in the new quarter. By Technology Writer Peter Svensson.


ARMONK, N.Y. — IBM's third-quarter earnings held steady, despite the economic jitters that contributed to a steeper decline in revenue than Wall Street anticipated.


— IBM-BOARD — IBM President and CEO Virginia Rometty is taking on the added role of chairman, as Samuel Palmisano prepares to retire at the end of this year.


TOKYO — The Japanese billionaire behind a deal that will create the world's third-biggest mobile company spent his childhood in a slum, where he proudly rode in a stinking wheelbarrow filled with pig feed, pushed by his grandmother, a Korean immigrant. The unlikely success story of Masayoshi Son. By Business Writer Yuri Kageyama.

AP Photos.


BEIJING — The company that manufactures Apple's iPhone says it found underage interns as young as 14 working at one of its factories in China. Foxconn Technology Group said the interns were found by a company investigation at its factory in the eastern city of Yantai and were sent back to their schools. China's minimum legal working age is 16. By Business Writer Joe McDonald.

— APPLE-EVENT — Apple is sending out invites to reporters for an event next Tuesday, where it's expected to announce the release of a smaller iPad.

— EUROPE-GOOGLE — European regulators are asking Google to clarify its new privacy policy and make it easier for users to opt out of it.

— AMAZON-SEASONAL HIRING — Amazon.com Inc. says it's hiring 50,000 temporary workers at order-fulfillment centers across the U.S. this holiday season.

— NEWS CORP-SHAREHOLDERS — Shareholder proposals to dilute Murdoch family control of News Corp defeated.



FRANKFURT, Germany — Investor optimism in Germany rose in October, sending an upbeat signal about Europe's largest economy. By Business Writer David McHugh.


— SPAIN-FINANCIAL CRISIS — Spain raises €4.9 billion ($6.4 billion) at slightly lower interest rates in a debt auction that saw strong demand.

— BRITAIN-INFLATION — Inflation in Britain has fallen to 2.2 percent in September, its lowest annual rate in nearly three years.


BATUMI, Georgia — A few years ago, a vacation in Batumi would have been, well, the last resort. The best hotel was infested with rats, unreliable electricity left the city pitch-dark at night, running water was scarce and potholes were plentiful. Today, the city on the stunning Black Sea coast glitters with neon, luxury high-rise hotels form its skyline, and the city boasts some Las Vegas-style excesses — including a 24-hour marriage registry and, soon, a fountain flowing with Georgian grappa. The transformation of Batumi, a city of 180,000 near the border with Turkey, is a vivid example of Georgia's drive to capitalize on its tourism potential in a bid to boost the economy in a nation where 20 percent of the population is estimated to live in poverty. By Maria Danilova.

AP Photos.

— IRAQ-CENTRAL BANK — Iraqi officials say they have begun an investigation into allegations of financial impropriety involving the longtime governor of the central bank and other senior bank officials.


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Citigroup: the Pandit era

Vikram Pandit abruptly resigned from Citigroup after steering the bank through the financial crisis. A look back at what Pandit's tenure has meant for Citigroup investors.


Goldman Sachs earnings soar

Goldman Sachs posted strong numbers in the third quarter, bouncing back from a loss in the same period a year ago. The investment bank beat financial analysts' estimates for both earnings and revenue.