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Selling the House, Buying GE
The House takes up the Senate-approved Wall Street rescue plan, but markets are still uneasy. Warren Buffett buys $3 billion worth of GE, and GE sighs with relief. And prepare yourself for the return of the Veg-O-Matic infomercial.
 

NEWS AT A GLANCE

Bailout advances, U.S. car sales tank

The $700 billion financial rescue plan heads to a new vote in the House, probably Friday, after the Senate passed it Wednesday night, 74-25. The $100 billion in tax breaks aimed at attracting House Republicans could drive away some fiscally conservative Democrats. (AP in Yahoo! Finance) The Senate’s passage of the bill was not enough to buoy Asian markets, most of which closed down. Japan’s Nikkei 225 was also rattled by a new report of U.S. car sales, which fell below 1 million in September for the first time in 15 years; Toyota, whose U.S. sales dropped 32 percent, saw its stock drop 3.4 percent. (AP in CNNMoney.com) Meanwhile, U.S. small businesses are unable to get bank loans, as the credit crisis spreads from Wall Street. (The New York Times)

GE raises $15 billion from Buffett and others

General Electric sold $3 billion in preferred shares to Warren Buffett’s Berkshire Hathaway and said it will raise an additional $12 billion through a public offering of common stock. Buffett’s shares pay an annual 10 percent dividend, and GE can buy them back in three years at a 10 percent premium. GE, with a top AAA rating, is raising capital as credit-default swaps treated its debt as below junk grade. (Bloomberg) The deal comes eight days after Buffett reached an equally advantageous deal to invest in Goldman Sachs. Analysts say the Buffett premium is worth it. “Warren Buffett has become the new triple-A credit rating system,” said independent investment strategist Edward Yardeni. “It’s a big endorsement for GE.” (The New York Times)

UBS reports modest profit

Swiss banking giant UBS said it will post a “small profit” this quarter, after four consecutive quarterly losses, and had “substantially” reduced its exposure to U.S. residential and commercial mortgages. UBS won’t report its full results until Nov. 4, but the news was enough to send its battered shares sharply higher in Swiss trading. (Bloomberg) “We regard this as marking a turning point for UBS, in terms of market perception, but also in terms of client perception,” said Deutsche Bank analyst Matt Spick, who upgraded UBS after the announcement. UBS has written down more than $40 billion and raised $30 billion from investors since the credit crisis hit. (MarketWatch)

Reviving the Veg-O-Matic empire

A group of investors bought Ronco, the company behind the Veg-O-Matic and other infomercial successes, from founder Ron Popeil in 2005, for $54 million. Then they started fighting amongst themselves, and declared bankruptcy two years later. Now, with the help of vintage footage of Popeil, Ronco is once again exclaiming “But wait, there’s more!” on TV as it hawks the Veg-o-Matic and a new product, the Grillwave. The new spots will intersperse old footage of Popeil with new material featuring current host Mark Solley. The sets will be updated, says Ronco CEO Larry Nusbaum, but as nostalgia is part of the Ronco pitch, the infomercials will still have that “Bob Barker look and feel.” (The New York Times)

 

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