The news at a glance
General Motors: A return to profitability; Health care: Universal buys mental-health chain; Drugs: Japan’s Astellas buys American; Privacy: Google snooped on Wi-Fi networks; Insurance: Prudential nearly set to buy AIA
General Motors: A return to profitabilityGeneral Motors this week announced it earned $865 million in the first three months of the year, its first quarterly profit in three years, said Sharon Terlep in The Wall Street Journal. The automaker said strong sales in North America offset weakness in Europe and China. The company also reaped cost savings from “layoffs, factory closings, and billions in debt shed through bankruptcy.” Since the company emerged from bankruptcy 10 months ago, global sales have increased by 24 percent. But GM Chief Financial Officer Chris Liddell warned that first-quarter results “aren’t necessarily stable for the rest of the year.”
GM says it would be doing even better if credit weren’t so tight, said Dan Strumpf and Tom Krisher in the Associated Press. The carmaker’s main lender, Ally Financial (formerly known as GMAC), “has little appetite for risky loans, having spent the last few years cleaning up its own financial mess caused mainly by its failing mortgage-lending business.” As a result, GM has a harder time than its rivals selling to people without good credit. Honda, for instance, gets 20 percent of its sales from customers with less than prime credit, compared with only 1 percent at GM.
Health care: Universal buys mental-health chainUniversal Health Services has acquired Psychiatric Solutions, a fast-growing chain of mental-health clinics, for $3.1 billion, said Alan Rappeport in the Financial Times. The two companies had combined revenues of $7 billion last year. In acquiring Psychiatric Solutions, Universal gains 94 behavioral-health centers in 32 states to add to the 25 hospitals and 102 clinics it already operates in the U.S. When the deal is complete, mental-health care will account for about half of Universal’s annual revenue.
Drugs: Japan’s Astellas buys AmericanJapan’s Astellas Pharma has acquired OSI Pharmaceuticals, maker of Tarceva, a leading lung-cancer treatment, for $4 billion, said Kanoko Matsuyama and Elizabeth Lopatto in Bloomberg.com. It’s the second-largest U.S. acquisition ever by a Japanese drugmaker. Astellas is counting on OSI’s promising lineup of cancer drugs in development and its experienced oncology sales force to “help buffer the impact of competition from cheaper generic medicines.” In the past three years, Japanese drugmakers have poured nearly $17 billion into acquisitions of U.S.-based companies.
Privacy: Google snooped on Wi-Fi networksInternet search giant Google is scrambling to placate privacy advocates after it admitted that it had snooped on Internet communications by wireless computer users, said Jacqui Cheng in ArsTechnica.com. The company said its Google Street View cars, which drive around cities logging snapshots for integration into Google Maps, had “sampled” users’ communications over unlocked wireless networks. The company blamed a programming oversight and said an independent third party would confirm that the data collected had been destroyed.
Insurance: Prudential nearly set to buy AIABritain’s Prudential this week announced plans to sell $21 billion in new stock to finance the purchase of AIA, AIG’s Asian insurance unit, said Paul Davies in the Financial Times. Prudential, which is not related to the big U.S. insurer of the same name, said it would give existing shareholders the right to buy four new Prudential shares for every one they already own. The takeover of AIA will make Prudential the biggest foreign player in Asia’s fast-growing insurance market.