Business News in Brief

Posted: June 20, 2012


Split decision on bid for ResCap

Warren Buffett's company scored a split decision when it was named the lead bidder for Residential Capital's loan portfolio in a bankruptcy court auction. But Berkshire Hathaway Inc. lost to another firm in serving that role for ResCap's mortgage division. ResCap has operations in Fort Washington. A New York bankruptcy court judge picked Berkshire's $1.442 billion bid on Tuesday as the lead bidder, or stalking horse, for ResCap's loan portfolio. Nationstar Mortgage, owned by Fortress Investment Group L.L.C., is the lead bidder for ResCap's mortgage unit with its $2.446 billion bid. The judge also approved Berkshire's request to have an outside expert review Residential Capital's dealings with its parent company, Ally Financial, before it sought to reorganize.   — AP

Building efficiency grant awarded

A federal institute on Tuesday awarded a $455,000 grant to the Delaware Valley Industrial Resource Center (DVIRC) to train building operators so that they can more efficiently operate their facilities by "retuning" their building systems. The National Institute of Standards and Technology Manufacturing Extension Partnership gave the money to DVIRC on behalf of the Energy Efficient Buildings Hub, based in the Navy Yard. The grant will pay to prepare trainers to lead retuning teams from the Philadelphia school district, Liberty Property Trust, DVIRC and others.   — Andrew Maykuth


Dimon speaks at House panel

JPMorgan Chase & Co. CEO Jamie Dimon had a much tougher reception Tuesday when he returned to Capitol Hill for a second round of questions over the bank's $2 billion trading loss. House lawmakers from both parties asked: Did JPMorgan manage risk properly? Why was the bank trading so much out of its London office? Has the bank become too large and complex to control? The hearing before the House Financial Services Committee was far more combative in tone than Dimon's appearance last week before the Senate Banking Committee. Dimon defended the bank's risk strategy ahead of the loss. The bank did its best to update investors on the risk and trusted its methods for assessing those risks, he said. The models used provided the best information at the time and are frequently updated, he said. — AP

Employers post fewer openings

Employers in April posted the fewest job openings in five months, suggesting hiring will remain sluggish in the months ahead. The Labor Department said Tuesday that job openings fell to a seasonally adjusted 3.4 million in April, down from 3.7 million in March. The March figure was the highest in nearly four years. The decline could mean employers are growing more cautious about adding workers in the face of financial turmoil in Europe and slower growth in the United States. Job openings can take one to three months to fill. There were 12.5 million unemployed people in April. That means an average of 3.7 people competed for each open job. In a healthy job market, the ratio is usually around 2-1. The drop in openings was concentrated in the private sector, and was particularly steep in professional and business services. — AP

Consumer agency starts card database

The Consumer Financial Protection Bureau is launching a database that tracks which large banks have had the most complaints about their credit cards and how they were resolved. The goal of the searchable database is to provide more information to consumers, businesses and advocacy groups about an important financial product, said Richard Cordray, the agency's director. It will be limited at first to credit card complaints received since June 1 for banks with more than $10 billion in assets. The beta version of the Consumer Complaint Database was made available Tuesday at the agency's website, The goal is to expand it by year's end to include more of the thousands of credit card complaints for large banks that the agency has received since it opened in July, Cordray said. Eventually the agency wants the database to include complaints about mortgages and other financial products.  — Los Angeles Times

FedEx predicts pinched earnings

FedEx Corp. said that slow global economic growth would crimp its earnings over the next 12 months. The company vowed to make significant cost cuts to counter any drop in package shipments. The package delivery company is closely watched for signs about the health of the economy. It forecast moderate growth for both the U.S. and global economies, citing the debt crisis in Europe and slowing growth in Asia. The company's results for the fourth quarter did top Wall Street estimates when a charge for retiring planes is excluded. FedEx faces a number of speed bumps, including higher salaries and pension costs, as well a shift by customers to cheaper shipping options to save money. The company predicts fiscal year 2013 earnings of $6.90 to $7.40 per share. That excludes the major cost reductions it plans to announce in the fall. Wall Street analysts expect earnings of $7.39 per share. — AP

Bookseller's loss narrows

Barnes & Noble said that its fiscal fourth-quarter loss narrowed as the company continues to invest in its Nook e-reader business and adjust to the evolving book business. Nook sales fell 11 percent to $164 million during the quarter as the company took back its Nook Simple Touch e-reader from retailers to make room for new inventory. But for the fiscal year, Nook sales rose 34 percent to $933 million. Barnes & Noble said its net loss totaled $57.6 million, or $1.08 per share, for the three months ended April 28. That's smaller than its loss of $59.4 million, or $1.04 per share, a year ago. A tax charge hurt results by 10 cents per share. It had 1 percent more shares outstanding in the latest quarter than a year ago. Revenue was nearly flat at $1.38 billion. Excluding Nook sales, revenue in stores open at least one year rose 7 percent for the quarter.  — AP

Facebook allowing new fee

Facebook Inc. is letting app developers charge subscription fees, in addition to existing onetime payments, for games and other applications on its site. Facebook said on its developer blog Tuesday that the subscription feature would be available in July. The changes open up a new revenue stream for developers as well as for Facebook, which takes a 30 percent cut from all payments on its site. People will still be able to make payments on a onetime basis. — AP

Walgreen buying stake in Europe chain

Walgreen Co. will pay $6.7 billion in cash and stock to buy a stake in European health and beauty retailer Alliance Boots in the first international venture for the U.S. drugstore chain. Walgreen plans initially to spend about $4 billion in cash and contribute more than 83 million shares for a 45 percent ownership stake in Swiss-based Alliance Boots, which runs more than 3,300 health and beauty retail stores in 11 countries. It also has a pharmaceutical wholesale business that supplies pharmacies, doctors and other health-care providers in 21 countries. Walgreen has an option to buy the rest of Alliance Boots in about three years in a deal valued at around $9.5 billion.  — AP

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