Tuesday, March 24, 2009
Moody's Cuts GE's Credit Rating
General Electric lost its top credit rating from Moody's Investors Service because of higher risks at the conglomerate's struggling GE Capital lending unit. The expected move follows a similar downgrade of GE this month by ratings agency Standard & Poor's.
Moody's lowered its ratings for GE and GE Capital two notches to "Aa2" from "Aaa." It said the outlook for both is stable. The downgrades mean GE will likely pay higher costs to borrow money.
GE Capital, which recently made up nearly half of GE's overall earnings, has been hammered by the financial crisis. GE said last week that the finance unit could end up just breaking even this year because of higher losses on loans for credit cards, overseas mortgages, big equipment and commercial property.
Shares of GE rose 89 cents, or 9.3 percent, to $10.43.CONTRACTING
Lockheed Gets Second Ship Deal
Lockheed Martin received a contract to build its second Navy Littoral Combat Ship, the Defense Department said.
Most of the work will be performed in Marinette, Wis., the Pentagon said on its Web site. Lockheed and General Dynamics are competing for orders to build the ships, and the Navy may buy as many as 55.
The ships are designed for mine clearance, submarine hunting and other missions in shallow coastal waters called littorals. The Navy is buying the vessels in phases, and which contactor wins the next set of orders for three ships in fiscal year 2010 will be based on the pricing the companies submit for orders in 2009.TRANSPORTATION
Amtrak's Acela Ridership Falls
Amtrak said ridership on its high-speed Acela train line plummeted 17 percent in February from a year earlier, a fifth straight monthly decline, as the recession eroded business travel. The number of passengers on the fastest U.S. passenger rail service, which runs between Boston and Washington, dropped to 226,551.
The number of passengers for all Amtrak trains on the Northeast Corridor between Boston and Washington fell 15 percent, Amtrak spokesman Cliff Black said. Demand fell 14 percent for regional trains on the route.
The plunge is partly attributable to the extra day in February 2008, which was a leap year. That accounted for as much as 6 percent of the falloff, Black said.LABOR
AT&T Union Authorizes Strike
Union workers at AT&T are giving their leaders the authority to call a strike as part of negotiations for a new contract covering 112,500 employees. Several contracts covering workers at the phone company's landline division are due to expire April 4. AT&T is trying to make the employees pay more for their health care, among other concessions. Communications Workers of America said 88 percent of members covered by the contracts voted in favor of a possible strike.
AT&T spokesman Walt Sharp said the strike authorization is "expected and routine at this stage in the negotiations."
Walgreen reported that its second-quarter profit fell 7 percent because of restructuring costs as cash-strapped shoppers cut discretionary purchases. The drugstore chain said it earned $640 million in the period ended Feb. 28, compared with $686 million a year ago. The figures include restructuring expenses of $93 million. Sales grew 7 percent, to $16.48 billion.TREASURY BILLS
T-bill rates fell. The discount rate on three-month Treasury bills auctioned yesterday fell to 0.225 percent from 0.25 percent last week. Rates on six-month bills fell to 0.39 percent from 0.445 percent. The annualized return to investors is 0.228 percent for three-month bills, with a $10,000 bill selling for $9,994.31, and 0.396 percent for a six-month bill selling for $9,980.28. Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, fell to 0.64 percent last week from 0.70 percent two weeks ago.
Compiled from Associated Press and Bloomberg News reports.