EWS AT A GLANCE
U.S. looking at Fannie, Freddie books
Treasury Secretary Henry Paulson said the Federal Reserve and the U.S. Comptroller of the Currency are inspecting the books of mortgage giants Fannie Mae and Freddie Mac. The two government-sponsored lenders own or back more than $5 trillion in mortgages. Paulson said Fannie and Freddie have adequate cash reserves to withstand further drops in the housing market, and that the audit will reassure the markets. (The New York Times) Separately, the Office of Federal Housing Enterprise Oversight, which oversees Fannie and Freddie, said the two firms may need to write down billions more, as the $217 billion in private-label subprime and Alt-A loans they hold get hit in the housing slump. (Bloomberg)
Apple tops estimates, drops on outlook
Apple, the No. 3 U.S. computer maker, reported a better-than-expected 31 percent rise in quarterly profit, to $1.07 billion. But its shares dropped 10 percent in extended trading as investors focused on Apple’s soft forecast for its fourth quarter, due to lower margins from aggressive educational discounts and rising component prices. (The New York Times) “Everyone knows Apple is typically very conservative in its guidance, but given the way the markets are now, people are taking it at face value and assuming the worst,” said American Technology Research analyst Shaw Wu. Apple sold a record 2.5 million Mac computers, up 41 percent from a year ago, and now has an 8.5 percent share of the U.S. PC market. (BusinessWeek.com)
Wachovia posts record $8.9 billion loss
Wachovia, the No. 4 U.S. bank by assets, reported a record $8.9 billion quarterly loss and cut its dividend by 87 percent, to 5 cents a share. The results were much worse than analysts had forecast. The loss follows Wachovia’s announcement last night that it is quitting the wholesale mortgage business. (AP in Yahoo! Finance) The changes are part of new CEO Robert Steel’s response to Wachovia’s financial problems, notably the fallout from its ill-timed purchase of Golden West. “This is Steel’s chance as the new guy to set the bar low so that he can increase the dividend going forward if their performance improves,” said David Dietze at Point View Financial Services. (Bloomberg)
Living off the earth, sort of
As the price of food soars, and jalapeños and tomatoes bring salmonella to our restaurants and supermarkets, growing your own vegetables is in vogue. And for people without the time or inclination to garden, a series of new businesses are sprouting up. In many places you can have locally grown food or meals delivered to your door—or wedding reception. In a new twist, you can now often hire a gardener to plant, tend, and even harvest your vegetables in your city backyard. Santa Fe business consultant Chase Ault is one such hands-off garden owner. “I am working 24-7 these days, but I wanted to have something growing in front of me,” she explains. (The New York Times)
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