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NATIONAL BRIEFING

Saturday, July 8, 2006; D02

MANUFACTURING

3M Profit Falls Short of Estimates

3M said that excluding special items, it expects to report a second-quarter profit below its previous forecast because of lower-than-expected sales and higher-than-anticipated start-up costs in its optical-systems division. The company said 8 to 10 cents a share of special items would help push its profit into its originally estimated range of $1.14 to $1.17 a share. It releases second-quarter figures July 25. 3M said it expects to report revenue of $5.7 billion for the period, 7.5 percent to 8 percent more than its revenue for 2005's second quarter.

TELECOM

Verizon Considers Spinoff

Verizon Communications registered with the Securities and Exchange Commission for a possible spinoff of Verizon Information Services, which includes the Superpages.com site. The business is highly profitable, but Verizon has decided to focus on its fast-growing cellular unit and rewiring its traditional phone network with fiber-optic lines that can deliver cable TV and faster Internet connections. A decision on the issue is expected by year-end.

Settlement Near in Gabelli Case

A lawyer for money manager Mario Gabelli said he expects to conclude by Tuesday a settlement of a lawsuit claiming Gabelli defrauded the U.S. government by using phony companies to win cellphone licenses. In U.S. District Court in New York, attorney Lanny Breuer said Gabelli has not decided whether he will pay the original plaintiff's legal fees when he pays the United States to settle the matter. The government was preparing to take control of the case when Gabelli agreed to settle private claims that he used "sham" start-ups to acquire cellphone licenses at government auctions.

MERGERS & ACQUISITIONS

Vote Set for North Fork Deal

Shareholders of McLean-based Capital One Financial and North Fork Bancorp are to vote Aug. 22 on Capital One's proposed $14.6 billion acquisition of North Fork. The stock-and-cash deal is expected to close in the fourth quarter.

CONGRESS

Boeing May Face Ethics Hearings

Boeing may face congressional hearings into its $615 million settlement of ethics charges with the government if the company is allowed to take a tax deduction for the fine, three Republican senators told the Justice Department.

"We are very concerned about the possibility that this settlement may be structured in a way that allows for payments made by the settling company to be tax deductible, thereby leaving the American taxpayer to effectively subsidize its misconduct," Sens. Charles E. Grassley of Iowa, John W. Warner of Virginia and John McCain of Arizona wrote in a letter to Attorney General Alberto R. Gonzales, dated June 29.

The letter asks Gonzales for an analysis of the tax treatment of the settlement and whether the costs may be covered by Boeing's insurers. The information will "help us to determine the appropriateness" of hearings, the letter said. It requests a response by Wednesday or before the settlement is executed, whichever is sooner.

CREDIT

Fitch Backs Freddie Mac Ratings

Fitch affirmed its ratings of Freddie Mac's debt and removed the federally chartered mortgage finance company's subordinated debt and preferred stock from a negative watch list, citing Freddie's steady business performance and improved financial controls. The rating service also gave Freddie a "1" support rating, reflecting an opinion that the company would receive external help if it had trouble meeting its senior debt obligations. Fitch rates Freddie's issuer default status and long-term senior debt AAA and its subordinated stock and preferred stock AA-.

RETAIL

Gore to Give Talk at Wal-Mart

Former vice president Al Gore is to speak Wednesday to Wal-Mart Stores managers at corporate headquarters in Bentonville, Ark., seeking to make the world's largest retailer more environmentally friendly. Gore is to speak about global warming, the subject of his recent documentary film, "An Inconvenient Truth," at a conference of managers working on ways to implement chief executive H. Lee Scott Jr.'s plans to make the retailer a leader in cutting emissions, energy use and solid waste and selling more environmentally friendly products.

Home Depot to Lose Executive

Tom Taylor, who started in 1983 as a part-time employee in the outside garden department of a Florida Home Depot store, plans to step down as the Atlanta-based home-improvement retailer's executive vice president of merchandising and marketing by the end of 2006. Taylor is to help choose his successor and receive a long-term consulting contract after his departure.

Compiled from reports by Washington Post staff writers, the Associated Press and Bloomberg News.

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