Tech: Dish Network bids on Sprint
Dish Network has offered $25.5 billion to buy Sprint Nextel, the nation’s third-largest wireless carrier, said Brian X. Chen and Mark Scott in The New York Times. The bid “is an effort to scuttle the planned takeover of Sprint Nextel” by SoftBank, a Japanese telecom firm that agreed in October to acquire a 70 percent stake in Nextel for $20 billion. The Colorado-based satellite TV provider’s cash-and-stock offer is worth about 13 percent more than Sprint’s recent stock price. Dish executives say the merger would offer customers “a convenient, fully integrated, nationwide bundle of in- and out-of-home video, broadband, and voice services.”
SoftBank “is now preparing to go on the offensive,” said Anton Troianovski, Shalini Ramachandran, and Sharon Terlep in The Wall Street Journal. The Japanese company hopes “to convince Sprint’s board and shareholders that Dish’s offer will create a company buried in debt that won’t be able to build out its network.” But despite SoftBank’s “considerable war chest,” it is not considering offering more money. Federal regulators have been wary of letting big carriers like Verizon or AT&T “control too much of the country’s spectrum.” But Sprint’s smaller size makes it unlikely that either Dish or SoftBank would “face many regulatory hurdles.”
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Airlines: Glitch grounds American Airlines
Computer glitches in American Airlines’ reservation system caused the carrier to temporarily ground its planes nationwide this week, said Aaron Cooper in CNN.com. Though the problems were resolved within a day, they “caused big delays and flight cancellations for the company,” which flies about 275,000 passengers daily. American CEO Tom Horton apologized to customers, blaming “a software issue impacting both primary and backup systems.” The delays came a day after American sought court approval to exit bankruptcy and proceed with plans to merge with U.S. Airways.
Cars: GM and Ford join forces
“General Motors and Ford are putting aside their long-standing rivalry,” said Tom Krisher in the Associated Press. The carmakers said last week that they would collaborate to develop new, fuel-efficient automatic transmissions for their cars and trucks. “Transmissions cost hundreds of millions of dollars to develop,” and the companies say the project will allow each of them to spend more on designing quieter rides and nicer interiors. “We will still fight every day in the marketplace over every sale,” a General Motors spokesman said.
Retail: J.C. Penney borrows $850 million
J.C. Penney is scrambling for cash, said Martinne Geller in Reuters.com. The troubled department store operator has borrowed $850 million from its $1.85 billion revolving credit line to buy inventory and meet other capital needs, causing some analysts to express concerns over the company’s solvency. Penney may also borrow against its real estate holdings to raise extra cash, possibly by selling or leasing its stores or inventory. The news comes a week after reinstalled CEO Myron Ullman replaced Ron Johnson as the chain’s chief executive.
Banks: Bank of America earnings disappoint
Bank of America reported first-quarter earnings of 20 cents a share this week, a vast improvement over a year earlier but still “well short of Wall Street’s expectations,” said Peter Eavis in The New York Times. The lender “has been hurt by large mortgage-related losses” since the financial crisis, but investors had bid up its shares recently as it seemed to “regain its footing.” While its profits have risen substantially in the last year, other banks have been able to exceed analysts’ expectations, and “Bank of America’s failure to do so may unnerve some investors.”
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