Business Today

By TIMES WIRES

© St. Petersburg Times,
published September 18, 2001

JULY INVENTORIES FALL: Businesses pared excess inventories in July for the sixth straight month, the Commerce Department reported, helped out by a solid gain in sales. Unsold goods on shelves fell by a seasonally adjusted 0.4 percent in July, following an even bigger 0.6 percent reduction the month before. At the same time, businesses' sales rose 0.4 percent, after having plunged by 1.5 percent in June. But some economists worried that stocks could pile up again if consumers, shaken by last week's attacks, close their pocketbooks.

FINANCIAL OUTLOOKS REDUCED: Citigroup said that losses stemming from the destruction of the World Trade Center would cut into third-quarter profits. The financial services company said insurance claims related to the disaster would reduce earnings about $500-million, or 10 cents a share. It also predicted the four-day closing of the U.S. stock markets would trim up to $200-million -- about 2 cents to 4 cents a share -- from third-quarter profits. Excluding the costs related to the attacks, the company said it expected to earn 77 cents per share in the third quarter. Before the attacks, analysts surveyed by Thomson Financial/First Call were expecting 75 cents per share. Shares of Citigroup fell $2.85, or nearly 7 percent, to $39.60. Separately, shares of American Express dropped $4.76, or nearly 14 percent, to $30.25 after it said it expects third-quarter earnings to be below the 38 cents that analysts projected.

GM TO ACQUIRE DAEWOO STAKE: General Motors has reached an agreement to buy most of Daewoo Motor Co. from Daewoo's creditors for about $1-billion, the New York Times reported. A GM spokesman said the deal at this point is in the form of a non-binding memorandum of understanding; GM is expected to sign the memorandum Friday along with the main creditors, led by Korea Development Bank.

SHARE BUYBACKS PLANNED: Dozens of companies announced plans to buy back their shares under recently loosened Securities and Exchange Commission rules aimed at steadying the markets. Among those companies planning buybacks are PepsiCo, FleetBoston Financial, Morgan Stanley and Compaq. General Electric said it would accelerate its current $2.8-billion repurchase program, while chipmaker Intel Corp. said it increased by 300-million the number of shares available under its ongoing repurchase program.

ORACLE ISSUES WARNING: Software giant Oracle Corp. warned that its depressed software sales will likely plunge further in the aftermath of last week's terrorist attacks. Oracle executives estimated that its sales of software licenses during the three months ending in November will decline by about 15 percent from the same time last year. "We don't think things are recovering and in light of last week's events, we think things will get slightly worse," Oracle chief executive Larry Ellison said. Despite the sales erosion, Ellison reassured industry analysts that the company's per-share profit will remain about the same as last year, when it earned 11 cents.

AUTO SALES SLIDE: The combination of emotional duress and slipping consumer confidence in the aftermath of terrorist attacks on the United States virtually stopped new and used vehicle sales last week, according to two industry reports. Sales plummeted 35 percent last Tuesday, the day of the attacks, compared with average sales over the previous four Tuesdays, and 26 percent below the same day a year ago, according to a study by the Power Information Network, an arm of J.D. Power and Associates. Another study, by CNW Marketing Research of Bandon, Ore., projected vehicle sales during for the first 15 days of September would be 6.6 percent below those during the same period a year ago.

BUYBACK DELAYED: The Treasury Department announced Monday that it would not buy back some of the national debt on Sept. 20 and Sept. 27 as originally planned. Treasury said it would resume its regular debt repurchase operations in October.

TREASURY AUCTION: Interest rates on short-term Treasury securities fell in Monday's auction. The Treasury Department sold $14-billion in three-month bills at a discount rate of 2.56 percent, down from 3.18 percent last week. An additional $12-billion was sold in six-month bills at a rate of 2.57 percent, down from 3.12 percent. The new discount rates understate the actual return to investors: 2.612 percent for three-month bills and 2.639 percent for a six-month bill. In a separate report, the Federal Reserve said Monday the average yield for one-year constant maturity Treasury bills fell to 3.02 percent last week from 3.43 percent the previous week.

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