Emirates take flight, Merrill cleans house

NEWS AT A GLANCE

Mideast airlines step up

Airlines around the world are struggling with high fuel costs, cutting jobs and services, but Middle Eastern airlines are expanding to fill the void. Middle Eastern carriers, like Emirates, have ordered 700 new planes over the past three years, at a cost of $140 billion, and airports in the region are spending $54 billion to expand. The airlines hope to turn the centrally located Middle East into a global hub, and their new, advanced aircraft could allow them to fly passengers farther and more comfortably for less money. (The New York Times) Billionaire Richard Branson, in his quest to extend commercial travel to outer space, unveiled a catamaran-like aircraft yesterday that will launch an as-yet built space ship from 48,000 feet. (Los Angeles Times)

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Merrill sets $8.5 billion share sale, takes a haircut

Merrill Lynch will raise $8.5 billion by issuing new shares and sell most of its collateralized debt obligations (CDOs), with a $30.6 billion face value, for $6.7 billion, or 22 cents on the dollar. The firm will take a $5.7 billion writedown. (Reuters) Singapore sovereign wealth fund Temasek, already Merrill’s largest shareholder, will buy $3.4 billion of the new shares; $2.5 billion of that will come from Merrill, as payment for the decline in Temasek’s previous share buys. Altogether, Merrill’s current shares will be diluted by about 40 percent. (The New York Times) The sales do “mark an attempt at curing the problem, but at a tremendous cost to existing shareholders,” said analyst Charles Peabody at Portales Partners. (Bloomberg)

Sony profit drops on electronics weakness

Sony, the world’s No. 2 consumer electronics maker, reported a 47.4 percent drop in quarterly profit, to $327 million, missing analysts’ forecasts. Sony also cut full-year earnings guidance by 17 percent. The company blamed lower prices on digital cameras and other electronics for much of the drop. (MarketWatch) The strong yen and weak results from its joint Sony Ericcson cell phone business also hit earnings. A bright spot was its video games unit; sales of PlayStation 3 consoles doubled. (AP in Yahoo! Finance) “I can’t become bullish on Sony until I see further expansion in the company’s game business to offset a slowdown in consumer electronics,” said Mitsushige Akino at Ichiyoshi Investment Co. (Bloomberg)

Burger battle takes a toll in small-town Sweden

The Swedish town Boraas has hosted a rivalry between international burger heavyweight McDonald’s and local contender Max for 35 years, but now it’s spilling out of the ring and into the stadium. UEFA, Europe’s governing body for soccer, has pulled Boraas from its list of towns that will host the Under-21 championship finals, because Max won’t shut down its stand in the Boraas stadium and McDonald’s is sponsoring the tournament. Not surprisingly, Swedes are rooting for Max. “This is David versus Goliath,” says Johannes Haeggstroem, a manager at the Bishops Arms pub in Boraas. But others mourn the loss of publicity for the fading textile center of 65,000 people. (Bloomberg)