GM to Sell $55 Billion in Loans
General Motors will sell as much as $55 billion in car and truck loans over five years to Bank of America through GM's auto finance unit. The bank will initially buy $5 billion and will purchase as much as an additional $10 billion in each of the five fiscal years from July 2005 to June 2010, the companies said in a statement.
The agreement with Bank of America will let GM write more car and truck loans without holding the assets, GMAC Chief Financial Officer Sanjiv Khattri said in the statement. The finance unit will continue to service the loans with customers, the statement said.
Martha Stewart's Discovery Deal
Martha Stewart Living Omnimedia is developing a home-improvement television program that will feature women coming back from financial and personal problems and air on a Discovery Communications cable channel. The companies also reached an agreement to rebroadcast Stewart's upcoming daytime TV show, "Martha," on Discovery's The Learning Channel on the evening of the day of its original broadcast on NBC.
The companies did not disclose financial terms of the deal, which also gives Silver Spring-based Discovery the right to distribute some of Martha Stewart Living Omnimedia's existing shows.
Amtrak Service Cuts Urged
Amtrak should eliminate first-class and dining services on its long-distance trains, a new Department of Transportation Inspector General report said.
The passenger rail system loses as much as $366 for every passenger who books a ticket on Amtrak's sleeper car service on some lines and $286 for every coach-class passenger, the report found. Amtrak said it is reworking its contract with Gate Gourmet, its food service provider. A previous report found that Amtrak loses $2 for every $1 it spends on food service.
The inspector general report said Amtrak could save $75 million to $158 million annually on operating costs and avoid $79 million in annual capital costs if it cut its sleeper- and dining-class amenities.
Shelton Facing Up to 13 Years
A federal judge said he is considering a prison sentence of 10 to 13 years for former Cendant vice chairman E. Kirk Shelton, who was convicted in January on 12 counts of conspiracy, fraud and making false statements. U.S. District Judge Alvin Thompson said Shelton could also face restitution of $3.275 billion to cover investors' stock losses, the judge said.
Prosecutors said Shelton inflated revenue by $500 million at Cendant's predecessor, CUC International, to drive up the stock price. The fraud was reported in 1998, causing Cendant's market value to drop by $14 billion in one day. Shelton's sentencing is scheduled for Aug. 3.
Amerindo Founders Indicted
A federal grand jury indicted Gary Tanaka, along with Alberto Vilar, on charges accusing the two founders of Amerindo Investment Advisors of stealing millions of dollars from a client. Vilar was indicted last month, and Tanaka was accused of using client funds to buy thoroughbred horses. Yesterday's indictment adds Tanaka to the case. Both men are charged with conspiracy, securities fraud, investment adviser fraud, mail fraud, wire fraud and money laundering.
Consumer Index Drops Slightly
U.S. consumer confidence eased in July as gasoline prices surged and concern over job prospects increased, although economists said confidence remains relatively strong. The Conference Board's consumer confidence index fell to 103.2 in July from a revised 106.2 in June.
One-Time Gains Aid DuPont
DuPont's said its second-quarter profit more than doubled, to $1.015 billion from $503 million in the comparable quarter a year earlier, with the help of $118 million in one-time gains. Revenue grew 5 percent, to $8.12 billion from $7.73 billion. But without the one-time gains, the results missed analysts' forecasts. DuPont said its North American corn seed sales were hurt by limited supplies of seeds that resist common corn pests and allow the use of a popular herbicide.
Countrywide Profit Drops 28%
Countrywide Financial's second-quarter profit fell 28 percent, to $566.5 million, as it kept more home loans on its books instead of selling them to generate future interest income and smooth future earnings. The mortgage investment company's revenue fell 7 percent, to $2.31 billion.
Northwest Airlines' Loss Widens
Northwest Airlines' second-quarter loss widened to $225 million from $182 million as the carrier warned that it needs pension reform and $1.1 billion in labor cost cuts to stay out of bankruptcy protection. Revenue climbed 11.3 percent, to $3.2 billion.
Medco Profit Rises
Medco Health Solutions said its second-quarter profit increased 8 percent, to $137.4 million. Sales at the manager of prescription-benefit programs rose 2 percent, to $9 billion.
Compiled from staff and news service reports.