GM: A mammoth loss heightens worries
General Motors added to the auto industry’s gloom last week, reporting a stunning $15.5 billion second-quarter loss, said John D. Stoll and Neal E. Boudette in The Wall Street Journal. The automaker was “hurt by the sharp drop in sales of trucks and sport utility vehicles” in North America. “The second-quarter report revealed many areas of concern, particularly about GM’s cash.” The company says it has $20.5 billion of cash on hand—enough to last it through 2009—“but that’s not particularly reassuring,” said industry analyst Mark Warnsman.
GM isn’t the only car company delivering bad news, said Bernard Simon in the Financial Times. BMW last week singled out “skyrocketing raw materials prices and the weak dollar” as the culprits behind a 58 percent quarterly profit decline. And Nissan blamed its 42 percent quarterly profit drop on the weak dollar and “a fall in the value of leased vehicles in the U.S.” With prices for formerly leased cars collapsing, Ford and GM said they were joining Chrysler in sharply curtailing leasing programs.
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Biotech: Infections could stall Tysabri’s comeback
Drugmaker Biogen last week disclosed that two patients taking its multiple sclerosis drug Tysabri had developed potentially fatal brain infections, said Todd Wallack in The Boston Globe. Biogen shares fell 21 percent on the news, amid worries that the company “could be forced to pull the drug from the market again.” Biogen withdrew Tysabri in 2004 after studies linked the drug to a rare brain infection. Since the drug was reintroduced in 2006, sales have soared. But the latest reports could “spook” doctors and patients.
Retailing: Wal-Mart warns on Democrats
Wal-Mart has told its managers that a Democratic victory in November would likely “make it easier for workers to unionize companies—including Wal-Mart,” said Ann Zimmerman and Kris Maher in The Wall Street Journal. The political talk during company meetings has angered some employees, who feel that Wal-Mart is pressuring them to vote Republican—a possible violation of federal law. “I am not a stupid person,” said a customer-service supervisor in Missouri. “They were telling me how to vote.” A Wal-Mart spokeswoman denied trying to influence employees’ political choices.
Management: Cheers for Yahoo’s Yang
Yahoo CEO Jerry Yang got a boost last week, when 85 percent of Yahoo shareholders voted during the company’s annual meeting to approve his re-election to the board, said Michael Liedtke in the Associated Press. Many observers had expected shareholders to withhold their votes from Yang, to protest Yahoo’s rejection of Microsoft’s $47.5 billion takeover offer. But many who favored a deal with Microsoft “had already made an emphatic statement about their feelings by dumping” their Yahoo stock—so therefore were not eligible to vote.
Banking: HSBC sounds bullish on the future
HSBC, Europe’s largest bank, said this week that business is looking up, even though bad U.S. real estate debts took a $6.4 billion bite out of its first-half profits, said Jonathan D. Epstein in The Buffalo News. In a statement accompanying its earnings report, HSBC described the global economy as “remarkably buoyant” and said that weakness in the U.S. was “not constraining economic activity elsewhere.” Still, many economists are predicting that the U.S. slowdown will spread to the rest of the world.
