GM: Casting off Hummer and Saturn
In the wake of last week’s bankruptcy, General Motors immediately began selling its unwanted assets, said Tina Wang in Forbes.com. The first brand to be jettisoned was the Hummer line of SUVs, as GM signed a tentative deal to sell Hummer to China’s Sichuan Tengzhong Heavy Industrial Machinery. The Chinese company, which has no experience making passenger cars, “will keep Hummer’s core management and operations team and existing dealer network.” Tengzhong is under heavy pressure to keep most manufacturing in the U.S., “but that would inhibit Tengzhong from making Hummers more affordable by switching to cheaper Chinese labor.”
GM also struck a deal to sell Saturn’s sales operation to car dealer and racing mogul Roger Penske, said Dan Strumpf and Tom Krisher in the Associated Press. Penske says his 350 Penske Automotive Group dealers will sell Saturns, but that the group will not be involved in manufacturing. “He is in talks with global automotive groups about building Saturn cars in the future.” Saturns are currently built at GM plants around North America.
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Bankruptcies: High court clears Chrysler deal
The sale of Chrysler Corp. to Italy’s Fiat has been finalized, after the U.S. Supreme Court rejected a last-minute appeal by creditors opposed to the government’s restructuring plan, said Justin Hyde and Greg Gardner in the Detroit Free Press. The sale was allowed to proceed after the court declined to hear the appeal by three Indiana state pension funds “that contended the deal shortchanged secured investors.” Chrysler can now resume operations after shutting down for a month. Separately, a bankruptcy judge approved Chrysler’s plan to close 789 of its U.S. dealerships.
Mortgages: SEC sues Countrywide’s Mozilo
The Securities and Exchange Commission has sued former Countrywide Mortgage Chairman Angelo Mozilo for fraud and insider trading, said David Scheer and Karen Gullo in Bloomberg.com. The SEC charged Mozilo and two other former Countrywide executives with misleading investors about the riskiness of its lending strategy and selling shares based on inside information. All three defendants say they will contest the charges. Countrywide, which Mozilo founded in 1969, helped “trigger the subprime bubble by offering loans to customers with below-average credit scores.” It was acquired last July by Bank of America Corp.
Consumer electronics: Apple unveils new iPhone
Apple’s annual Worldwide Developer Conference is usually a showcase for the company’s latest gadgets, and this year is no exception, said Jordan Robertson and Jessica Mintz in the Associated Press. Apple this week unveiled two new models of its iPhone that “sport a faster processor and sought-after features like an internal compass, a video camera, and an improved photo camera.” The 32-gigabyte model will retail for $299; the 16-gigabyte model will go for $199. A stripped-down entry-level model is priced at $99.
Toys: Mattel pays record fine
The Consumer Product Safety Commission slapped toymaker Mattel and its Fisher-Price division with a $2.3 million fine for violating a federal lead-paint ban, said Parija Kavilanz in CNNmoney.com. The CPSC said Mattel imported millions of Barbie and Dora the Explorer dolls, among other toys, knowing they had been decorated with lead-based paints. Discovery of the contaminated toys led to a massive recall in 2007. Mattel and Fisher-Price agreed to the fine, but denied knowingly breaking the law.
