Business news in brief

QUOTE OF THE DAY

“What’s becoming increasingly clear is that this isn’t a normal recovery.”

Dan Greenhaus, chief economic strategist at Miller Tabak,

referring to a report that requests for unemployment benefits rose last week Article, 1D

Low mortgage rates holding steady

NEW YORK - Rates on 30-year mortgages this week were unchanged from the previous week, staying slightly above the lowest level in decades.

The average rate for 30-year fixed loans this week was 4.37 percent, mortgage buyer Freddie Mac said Thursday.

Earlier this month, the rate dipped to 4.32 percent, which was the lowest level on records dating back to 1971.

The average rate on 15-year fixed loans also was unchanged at 3.82 percent. That is the lowest on records dating back to 1991.

Rates have fallen since spring as investors poured money into the safety of Treasury bonds, lowering their yields.

Mortgage rates tend to track those yields.

Would-be buyers remain sidelined because of job uncertainty, falling home prices and tough credit standards. Two government tax credits helped buoy home sales this spring until they expired at the end of April.

To calculate average mortgage rates, Freddie Mac, the Federal Home Loan Mortgage Corp., collects rates from lenders around the country Monday through Wednesday of each week. Rates often fluctuate significantly, even within a given day.

Rates on five-year adjustable-rate mortgages averaged 3.54 percent, down from 3.55 percent a week earlier. Rates on one-year adjustable-rate mortgages rose to an average of 3.46 percent from 3.4 percent.

GM shrinking IPO expectations, 2 say

SOUTHFIELD, Mich. - General Motors will probably seek to raise $8 billion to $10 billion in an initial public offering in November, a smaller sale than the automaker originally targeted, said two people familiar with the matter.

The Treasury Department, which owns 61 percent of GM, is more interested in fetching a higher share price to eventually recoup its $49.5 billion investment than in cashing out a bigger portion of its position, said the people who asked not to be identified because the discussions are private.

A larger deal at a lower price would place more pressure on the government to win higher prices in future offerings, the people said. GM and its investment banks have been considering a deal as large as $16 billion, people familiar with the plans said in August.

“They’re taking a more sober view,” said Joe Phillippi, principal of AutoTrends Inc., a consulting firm in Short Hills, N.J. “The real question is, what’s the price? There are questions in people’s minds about the market and the world’s economies.”

Noreen Pratscher, a spokesman for Detroit-based GM, declined to comment.

The department could offer as little as $6 billion in shares, though that is unlikely because the government and GM want investors to have more shares available for trading, the people said. Later offerings will be used to sell bigger portions of the government’s position, the people said.

Avis tops Hertz in Dollar Thrifty bid

PARSIPPANY, N.J. - Avis raised its offer for Dollar Thrifty to $1.52 billion in cash and stock Thursday, one week before a scheduled vote by shareholders on a bid from rival car-rental company Hertz.

The latest offer from Avis values Dollar Thrifty at $53 per share, compared with a $50 per-share offer from Hertz.

The rental-car rivals are fighting for control of Dollar Thrifty to gain additional access to vacationers and premium business travelers.

The industry has been hammered by a drop-off in business car rentals and that has created an urgency to capture leisure travelers and others who are still spending money to travel.

Avis’ prior offer was worth $1.36 billion and included $40.75 per share in cash, and the same stock portion.

A larger bid from Avis had been expected ever since Dollar Thrifty Automotive Group Inc. accepted the Hertz bid earlier this month. That offer was worth $1.56 billion including restricted stock and stock options and cash of $43.60 per share.

Dollar Thrifty, with headquarters in Tulsa, has scheduled a special shareholders meeting for Thursday to vote on the Hertz offer.

Shares of Dollar Thrifty rose on the news, trading at a new 52-week high of $53 before closing up 97 cents at $52.34.

Shares of Avis Budget Group Inc. fell 44 cents or 4 percent to $10.58, while shares of Hertz Global Holdings Inc.

fell 42 cents, or 3.9 percent, to $10.45.

Verizon CEO indicates iPhone far off

NEW YORK - Comments from Verizon Communications Inc. CEO Ivan Seidenberg on Thursday left little room for the possibility of a Verizon version of the iPhone any time soon.

Speaking to investors at a Goldman Sachs conference, Seidenberg said nothing about an iPhone for the company’s current network, but said he hopes Apple Inc. will come around and allow Verizon to sell the phone for a new network it is building. The “4G” network hasn’t yet opened for service and won’t be complete next year.

Reports regularly surface of a future iPhone version for Verizon’s network, but so far AT&T Inc. has kept its exclusive right to sell the phone in the U.S. Verizon Wireless, meanwhile, has been promoting phones from Motorola Inc.

and HTC Corp. that run Google Inc.’s Android software as an alternative to the iPhone.

Verizon shares fell 22 cents to close at $32.17. AT&T shares fell 8 cents to $28.51.

Rite Aid posts bigger 2nd-quarter loss

NEW YORK - Drugstore operator Rite Aid Corp. on Thursday reported a bigger loss for its fiscal second quarter as its revenue slipped 2.5 percent and it refinanced some of its debts.

The Camp Hill, Pa., company said it expects a bigger loss this year because of weaker sales and charges related to debt refinancing, which reduces its interest expenses. It cut its revenue estimate by about $200 million.

Rite Aid is the third-largest drugstore chain in the U.S., behind Walgreen and CVS.

Its shares dropped 15 cents, or 14 percent, to close at 95 cents, approaching its 52-week low of 86 cents a share.

Rite Aid said it had a net loss of $199.3 million, or 23 cents per share, after paying preferred dividends in the quarter that ended Aug. 28. Its net loss was $120.4 million, or 14 cents per share, a year ago.

The company said revenue fell to $6.16 billion from $6.32 billion a year ago. Analysts expected $6.19 billion.

Revenue at stores open at least a year, which is considered a key measurement of retailer health, fell 1.5 percent.

Business, Pages 28 on 09/24/2010

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