Business recap: Business news from the week of March 23

March 29

Facebook will acquire two-year-old Oculus VR, a maker of virtual-
reality glasses for gaming, for $2 billion, buying its way into the fast-growing wearable-devices arena with its first hardware deal. ¶ The acquisition, which comes hot on the heels of its $19 billion deal for messaging service Whats­App, marks a big bet by Facebook to anticipate the next shift in an evolving tech industry. ¶ “We’re making a long-term bet that immersive, virtual and augmented reality will become a part of people’s daily life,” Facebook chief Mark Zuckerberg said. ¶ Zuckerberg stressed that Facebook’s plans for Oculus extend well beyond games. ¶ Oculus co-founder Palmer Luckey promised its passionate fans that not much would change in the company’s day-to-day operations. Still, many protested the move.

Business

Rep. Fred Upton (R-Mich.), whose House panel is investigating GM’s belated recall of 1.6 million Chevrolet Cobalts and other small cars, said an auto-safety law passed in 2000 required the automaker to inform regulators about the problem within five business days or face as much as $35 million in civil penalties.

Bank of America will spend $9.33 billion to resolve a dispute over mortgage securities with the Federal Housing Finance Agency, the regulator that oversees Fannie Mae and Freddie Mac. The agency sued 18 financial institutions in 2011 over their sales of mortgage securities to Fannie and Freddie. It alleges many banks falsely represented the mortgage loans behind the securities. These soured after the housing bubble burst and lost billions of dollars in value.

Separately, New York’s attorney general said Bank of America and its former chief executive, Kenneth Lewis, reached a $25 million settlement to end an investigation into their actions in the 2008 acquisition of Merrill Lynch. The bank will pay $15 million. Lewis, 67, is prohibited for three years from serving as an officer or director of a public company. He will pay $10 million.

Lehman Brothers Holdings’ creditors will receive $17.9 billion next month in the fifth distribution since the company filed the biggest U.S. bankruptcy at the peak of the financial crisis.

Bernard L. Madoff’s five former aides were convicted of charges that they helped their boss conceal his billion-dollar Ponzi scheme for years. Madoff, 75, is serving a 150-year prison sentence after pleading guilty in March 2009.

Carlyle Group named Michael J. Cavanagh, a protege of Jamie Dimon at JPMorgan Chase, and Glenn A. Youngkin, a 19-year Carlyle veteran and its chief operating officer, to be co-presidents of the private-equity firm.

Bitcoins will be treated as property, not currency, the IRS said, leaving questions for bitcoin holders filing their taxes.

Tera Group created a framework for buying and selling swaps linked to bitcoins that would let investors hedge risk from trading the digital currency.

Cisco said it plans to spend more than $1 billion during the next two years to build up its cloud-computing network.

J.C. Penney’s reinstalled chief executive Mike Ullman is poised to get a big pay increase as the retailer shows signs of a turnaround. His base salary could rise to $1.5 million, from $810,606. He could get $5.5 million in stock awards and is eligible for a $3 million bonus.

Google has partnered with Italian eyewear company Luxottica Group, the makers of Ray-Ban and Oakley frames — in an effort to make its Internet-connected eyewear more stylish.

BP’s Whiting refinery in Indiana leaked oil into Lake Michigan after a malfunction at a recently upgraded processing unit. About 500 gallons of crude oil spilled into the lake.●

Former Goldman Sachs Group director Rajat Gupta’s conviction and two-year prison term for securities fraud and conspiracy were upheld by a federal appeals court. It rejected Gupta’s claim that wiretap evidence should not have been admitted to show that he leaked news about Goldman’s finances by phone to Galleon Group hedge fund founder Raj Rajaratnam.

Google cut prices on some ­Internet-based services for businesses by 30 percent or more, stepping up a challenge to Amazon.com and Microsoft in cloud computing.

Amazon.com will drop prices on most of its cloud computing services starting April 1, the largest U.S. online retailer said a day after Google announced a similar price cut. The company also said the Defense Department deemed that Amazon’s cloud computing service is secure enough to be used more broadly within the department. (Amazon chief executive Jeffrey P. Bezos owns The Washington Post.)

Facebook will not face a class-action suit accusing the company of misappropriating the names and likenesses of minors who use the social network after a judge ruled that the minors gave their consent when they signed up for Facebook under a “statement of rights and responsibilities” that governs the site.

Creditors of bankrupt bitcoin exchange Mt. Gox asked a federal judge in U.S. Bankruptcy Court in Dallas to order the firm’s principal, Mark Karpeles, to come to the United States to face questioning as they seek permission to pursue a fraud lawsuit.

Microsoft unveiled Office for the iPad, a software suite that includes such programs as Word, Excel and PowerPoint, and works on rival Apple’s hugely popular tablet computer. The app will allow reading and presenting of documents for free but will require a $100-a-year subscription to Office365 to enable writing and editing.

Comcast’s Executive Vice President David Cohen will testify at a U.S. Senate hearing April 9 about his company’s plans to buy Time Warner Cable in a $45.2 billion merger.

Duke Energy shareholders called on the company’s board to launch an independent investigation into issues surrounding a massive coal ash spill that coated 70 miles of a North Carolina river in toxic sludge.

Deals

Intel bought Basis Science, the start-up behind the fitness tracker by the same name, for an undisclosed sum. The deal comes as the market for wearable gadgets is heating up. The Basis band tracks users’ activity level, heart rate, sleep patterns and other data.

Economy

The U.S. economy grew at a 2.6 percent annual rate in the fourth quarter, slightly more than the 2.4 percent estimate, as consumer spending rose at the fastest pace in three years. For 2013, the economy grew at a lackluster 1.9 percent after growth of 2.8 percent in 2012.

The Federal Reserve hasn’t significantly changed its intentions for raising interest rates despite a faster-than- expected drop in unemployment, a key Fed official said.

The average 30-year fixed-rate mortgage increased to 4.40 percent from 4.32 percent last week. The average 15-year mortgage rose to 3.42 percent from 3.32 percent.

U.S. home prices dipped in January for a third month, probably because of slower sales in recent months caused by cold weather, a limited supply of homes and higher mortgage rates.

Washington

Federal agents tipped off 3,000 companies last year about cyber­attacks, White House officials have told industry executives.

Transitions

Northwestern University football players can unionize, a National Labor Relations Board official ruled.

Paying welfare benefits by debit card instead of cash caused a 10 percent drop in crime, a study found.

The Washington Monument is set to reopen May 12 after $15 million in repairs of earthquake damage.

The Affordable Care Act hit a symbolic target — 6 million sign-ups and counting in the program’s first year. What’s still unclear is the health status of those joining the exchanges. Insurers say adding a cheaper level of coverage would help attract healthier people, who might not feel that strongly about their need for health insurance.

— From news services and staff reports

$7.09 billion
King Digital Entertainment value

The maker of the Candy Crush smartphone game raised $500 million in its initial stock offering. It suffered a steep 16 percent first-day decline in share value. King’s core title accounted for a stunning 78 percent of all of its revenue in the final quarter of 2013. And 95 percent of its revenue comes from three titles: Candy Crush Saga, Pet Rescue and Farm Heroes Saga.

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