UBS takes $3.4 billion subprime hit
Banking giant UBS AG said it will write down $3.4 billion in fixed-income assets, notably securities tied to subprime mortgages. UBS also said it will cut 1,500 jobs in its investment banking unit, and reported its first quarterly net loss in nine years. (MarketWatch) Rival Swiss bank Credit Suisse said it will pull a profit in the third quarter, despite being hit by the credit crunch. “It’s probably safe to say, UBS won’t be the last bank to announce something like this in the months ahead,” said Eamonn Hughes of Goodbody Stockbrokers. (Reuters) On Friday, the U.S. shut down online bank NetBank because of it exposure to mortgage defaults. (AP in CNNMoney.com)
UPS, Teamsters reach early pact
UPS and the Teamsters reached a tentative five-year-contract deal that has UPS paying $6.1 billion to withdraw from the underfunded Central States pension plan. The current contract doesn’t expire until next July, but the two sides rushed through a deal so that the Teamsters could approve the pact before new federal pension rules take effect Jan. 1. (The New York Times, free registration required) The new pension fund will be administered by the UPS board and the Teamsters. (AP in CNNMoney.com) The contract also increase wages and benefits by $9 an hour over five years. (Reuters)
Microsoft takes business online
Microsoft is unveiling a new subscription-based software service for large businesses and a free Web-based file-collaboration site. (Reuters) The free service, Office Live Workspace, will allow people to share documents online, but only let people with Office software on their computer modify them. (AP in BusinessWeek.com) Microsoft’s core Office software suite is facing challenges from free or low-cost Web-based alternatives from Google and other companies. “Microsoft’s nightmare scenario is a relevance shift to the Web, and it’s happening,” said Microsoft Watch editor Joe Wilcox. “Google is to Microsoft as Microsoft was to IBM.” (Los Angeles Times, free registration required)
Panamanian pedestrian, 1; China, 0
The worldwide recall of toxic Chinese-made toothpaste last summer—and the wider scrutiny of Chinese exports—was sparked by Eduardo Arias, a 51-year-old Kuna Indian who lives in Panama City. Arias noticed diethylene glycol in some toothpaste’s ingredients at a local discount store, and he alerted health officials. The chemical was known in Panama because of tainted cough syrup that killed dozens of people last year. “The whole questioning about Chinese goods began in Panama with our deaths,” said Dr. Jorge Motta, a prominent Panama City researcher. “A little butterfly in Panama beat her wings and created a storm in China.” (The New York Times, free registration required)
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