Once-mighty Motor City files for bankruptcy
DETROIT (AP) – Once the very symbol of American industrial might, Detroit on Thursday became the biggest U.S. city ever to file for bankruptcy, its finances ravaged and its neighborhoods hollowed out by a long, slow decline in population and auto manufacturing.
The filing, which had been feared for months, put the city on an uncertain course that could mean laying off municipal employees, selling off assets, raising fees and scaling back basic services such as trash collection and snow plowing, which have already been slashed.
Kevin Orr, a bankruptcy expert hired by the state in March to stop Detroit's fiscal free-fall, made the Chapter 9 filing in federal bankruptcy court.
Dell delays buyout vote, signaling lack of support
ROUND ROCK, Texas (AP) – Michael Dell believes he can revive the company bearing his name, if his group of investors can buy it for $24.4 billion. But that deal is in danger of falling apart, increasing the chances that the personal computer giant's founder might not be CEO much longer.
The formidable challenges already facing Dell Inc. and its CEO became more daunting Thursday with the slumping company's decision to delay a vote on Michael Dell's proposed buyout.
The postponement until next Wednesday signals that a five-month campaign by Michael Dell and the company's board hasn't overcome the staunch resistance of billionaire Carl Icahn and other shareholders, who argue that the buyout price is too low and discounts the company's long-term prospects.
Google stumbles in 2Q as slump in ad rates deepens
SAN FRANCISCO (AP) – Google views the computing shift to smartphones and tablets as a golden opportunity, but the Internet search leader's second-quarter performance served as an unsettling reminder that it poses a nagging financial challenge, too.
A report released Thursday showed Google's average ad rate fell from the previous year for the seventh consecutive quarter. In an unexpected turn, the decline deepened for the first time in a year.
The average ad rate, or "cost per click," fell by 6 percent during the three months ending in June. The magnitude of the declines had eased in each of the previous three quarters, raising hopes that the worse was over. Instead, things deteriorated from the 4 percent decline in ad rates during the first three months of the year.
Microsoft 4Q profit misses; books Surface charge
LOS ANGELES (AP) – Microsoft Corp.'s foray into the tablet computer market proved costly in the fourth quarter. The world's largest software company booked a $900 million write-down to account for the deep price cut it applied to its Surface RT tablet this week, a move to spur sales amid sluggish demand.
The Redmond, Wash.-based software giant cut the Surface RT's price to $349. The $150-per-device cut contributed to fourth quarter earnings that fell short of Wall Street forecasts, but even without the charge, earnings would have missed expectations.
Microsoft also saw revenue from its flagship Windows operating system decline 6 percent after excluding the late recognition of revenue from last year when it offered discounted upgrades to users of older systems.
UK investigators: Disable locator beacon on 787s
LONDON (AP) – U.K. air accident investigators recommended Thursday that aviation authorities temporarily disable a Honeywell emergency transmitter on all Boeing 787 aircraft following a fire on one of the planes last week at London's Heathrow Airport.
The Air Accidents Investigation Branch also recommended that the U.S. Federal Aviation Administration and other regulators carry out a safety review of lithium-battery powered emergency locator transmitter systems in other types of aircraft.
In a report issued Thursday, the investigators said that the greatest damage to the parked Ethiopian Airlines 787 occurred around the aircraft's Rescu406AFN emergency locator transmitter near the plane's tail.
Barbie fights for her life
NEW YORK (AP) – As far as catfights go, this is a doozy.
Barbie, long the reigning queen in the doll world, has suddenly been thrust into the battle of her life.
But Barbie's competitors look nothing like the blue-eyed, blond-haired, long-legged fashion icon. And they don't have the same old standards of beauty as the aging diva either.
Monster High dolls, vampy teens that are patterned after the offspring of monsters like Dracula and Frankenstein, have neon pink and green streaks in their hair. They wear platform heels and mini-skirts with skulls on them. And the dolls that go by names like Draculaura and Ick Abbey Bominable are gaining on Barbie.
Senators ready to restore lower college loan rates
WASHINGTON (AP) – A bipartisan compromise on student loans promises better deals for students and parents over the next few years but could spell higher rates as the economy improves.
The Senate deal pegs the interest rates on new loans to the financial markets and was expected to come to a vote next week, well before students returning to campus this fall have to sign their loan agreements.
Under the deal, undergraduates this fall could borrow at a 3.9 percent interest rate. Graduate students would have access to loans at 5.4 percent, and parents would be able to borrow at 6.4 percent. Those rates would climb as the economy improves and it becomes more expensive for the government to borrow money.
Parent of American Airlines posts $220 million profit
The parent of American Airlines posted a $220 million second-quarter profit as cost-cutting from its bankruptcy reorganization kicked in.
It's the first time in six years that American has reported a profit during the April-June quarter. During the same period last year, it lost $241 million, mostly because of bankruptcy related expenses.
Revenue was steady at about $6.45 billion.
AMR Corp. has been operating under bankruptcy protection since late 2011. It has cut worker pay and other expenses. Spending for wages was 18 percent lower than a year ago. Fuel expenses fell 3 percent as the price of fuel dropped.
Morgan Stanley, feeling confident, buys back stock
NEW YORK (AP) – Morgan Stanley is feeling good about its future.
The New York bank said Thursday that it will buy back up to $500 million of its own shares, news that surprised investors and helped boost the share price by more than 4 percent. It also reported higher earnings and revenue for the second quarter, helped by gains in both its investment bank and wealth management. And it's fresh off closing its purchase of brokerage firm Smith Barney from Citigroup, a yearslong process that has been central to CEO James Gorman's plan to reshape Morgan Stanley. In a call with analysts, Gorman called the purchase "a game changer" and promised it would benefit the bank "now and for decades to come."
Verizon to introduce installment plans for phones
NEW YORK (AP) – Verizon Wireless, the country's largest cellphone carrier, on Thursday said it's joining AT&T and T-Mobile in providing an installment plan for its phones, aiming to satisfy customers who want to upgrade their devices faster or avoid paying the upfront cost of their phones.
The plan, dubbed Edge, will be introduced Aug. 25, and allows the buyer to spread the full retail price of the phone, without subsidies, over 24 months. A buyer who has paid off 50 percent of the cost of the phone can upgrade to a new phone after six months.
Now that nearly every adult American has a cellphone, easy growth in the wireless industry has ended, and carriers are looking to other avenues for growth. One way to do that is to boost phone sales, but most phones are sold at a big loss, so any gains in phone sales under the traditional model are counterproductive. The phone companies subsidize the cost of, for example, an iPhone, by hundreds of dollars to get the retail price down to $200.
By The Associated Press(equals)
The Dow Jones industrial average rose 78.02 points, or 0.5 percent, to 15,548.54. The Standard & Poor's 500 index climbed 8.46 points, or 0.5 percent, to 1,689.37. The Nasdaq composite edged up 1.28 points, or 0.04 percent, to 3,611.28.
Benchmark crude for August delivery rose $1.56 to finish at $108.04 a barrel, the highest close since March 19, 2012. In London, Brent crude rose 9 cents to $108.70 a barrel on the ICE Futures exchange.
Wholesale gasoline was flat at $3.11 a gallon. Heating oil rose 3 cents to $3.10 a gallon. Natural gas added 18 cents to $3.81 per 1,000 cubic feet.