Business news in brief

QUOTE OF THE DAY

“They get credit for doing all they can on cutting costs. But at some point they will run

out of cost savings and will have to find a way to grow the business.” Brian Yarbrough, Edward Jones & Co. analyst, on Best-Buy’s quarterly report Article, 1D

Freddie Mac posts $8.6 billion profit

WASHINGTON - Mortgage giant Freddie Mac posted net income of $8.6 billion for the October through December period, its ninth straight profitable quarter. Earnings were helped by the continued rise in home prices, which reduced the amounts the company had to set aside to cover losses on mortgages.

Fourth-quarter profit reported Thursday nearly doubled from $4.5 billion in the last three months of 2012.

McLean, Va.-based Freddie Mac, the Federal Home Loan Mortgage Corp., said it will pay a dividend of $10.4 billion to the U.S. Treasury next month. Freddie Mac already had repaid its full government bailout of $71.3 billion after paying its third-quarter dividend.

The government rescued Freddie Mac and larger sibling Fannie Mae, the Federal National Mortgage Association, at the height of the financial crisis in September 2008. Together the companies received taxpayer aid totaling $187 billion.

Freddie Mac said its full-year profit of $48.7 billion for 2013 benefited from the increase in home prices, as well as the company having capitalized on the tax benefits of the sour loans it absorbed during the crisis.

Yellen says Fed likely to continue trims

Federal Reserve Chairman Janet Yellen said Thursday that the central bank is likely to keep trimming asset purchases, even as policymakers monitor data to determine if recent weakness in the economy is temporary.

“Unseasonably cold weather has played some role,” she said in response to a question Thursday from the Senate Banking Committee. “What we need to do, and will be doing in the weeks ahead, is to try to get a firmer handle on exactly how much of that set of soft data can be explained by weather and what portion, if any, is due to softer outlook.”

Yellen repeated the Fed’s statements that the central bank intends to reduce asset purchases at a measured pace, and she said in response to a separate question that the bond-buying program was likely to end in the fall.

N.Y.: Most charity cash goes to callers

For-profit telemarketers operating in New York kept 62 percent of the $249 million in charitable donations they raised in 2012, New York Attorney General Eric Schneiderman’s office said Thursday in a report on charity fundraising that may lead to further investigations.

The report showed that in 78 percent of 589 campaigns, charities received less than half of the funds raised. In 15 percent of the campaigns, charities actually lost money on the telemarketing effort, according to the report.

For-profit fundraisers used by nonprofits are tracked by Schneiderman’s office, which produces an annual “Pennies for Charities” report.

The report has served as a basis for investigations into charity fundraising in the past. The state said it expects more investigations to follow this year’s as well.

  • Bloomberg News

IBM starts U.S. job cuts in restructuring

NEW YORK - IBM Corp. began dismissing U.S. workers Thursday, part of a $1 billion restructuring to help the company meet profit goals as it adapts to shifts in the technology industry.

Workers in New York, Vermont, Minnesota and Iowa were fired Thursday, according to AllianceIBM, an employee group. The Armonk, N.Y.-based company had a headcount of 431,212 at the end of 2013, down 0.7 percent from a year earlier - its first decline in a decade.

IBM is aiming for $20 a share in adjusted earnings by 2015, up from $11.67 in 2010 - a target made more difficult by seven straight quarters of falling revenue. To get there, Chief Executive Officer Ginni Rometty has fired and furloughed workers, sold assets, cut IBM’s tax rate, and bought back shares.

The company has already begun eliminating positions this year in Europe, Asia and South America, according to AllianceIBM. Worldwide, this year’s job cuts could lead to the elimination of at least 13,000 employees, Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co., said in a Feb. 3 report.

  • The Associated Press

Mazda pins U.S. growth on Mexico plant

MEXICO CITY - Mazda Motor Corp., Japan’s most export-dependent automaker, is staking its U.S. future on the new factory in Mexico that will be its first wholly owned plant in North America.

The $770 million facility that opened Thursday will shield Hiroshima, Japan-based Mazda from exchange-rate swings between the yen and the U.S. dollar, consultant IHS Automotive said. Mazda will also be able to cut shipping costs to the U.S. and benefit from Mexico’s web of trade deals covering more than 40 countries.

Mazda joins a rush by Japanese automakers to expand in Mexico following plant openings by Nissan in November and Honda last week. Toyota has contracted to have 50,000 cars built each year at the Mazda plant in Salamanca, with Mazda2 and Mazda3 small cars making up the rest of the factory’s annual capacity of 230,000 vehicles.

  • The Associated Press

Durable-good orders slip 1% in January

WASHINGTON - American businesses ordered fewer durable manufactured goods in January, cutting demand for planes, autos and machines. But a key category that reflects business investment rebounded on the strength of demand for electronics and fabricated metals.

The Commerce Department said Thursday that orders for durable goods fell a seasonally adjusted 1 percent in January from December. Much of the decline was driven by a 20.2 percent drop in demand for commercial aircraft, a volatile month-to-month category. Orders for all transportation-related equipment fell 5.6 percent.

More encouragingly, orders rose 1.7 percent in a closely watched category, known as core capital goods, which excludes volatile transportation and defense orders. This category had dropped 1.8 percent in December.

Economists track this category to determine whether business investment is expanding. Last month’s rebound nearly erased all of December’s decline, a sign that companies might be anticipating more business during spring.

  • The Associated Press

Business, Pages 28 on 02/28/2014

Upcoming Events