Obama says companies can help bottom line and nation
WASHINGTON (AP) — Pushing his jobs agenda, President Barack Obama made the case Friday that companies can make money and build up the country at the same time. He cited chip maker Intel Corp. as a model of smart investing in education.
Though Republicans in Washington are balking at Obama’s call for more spending on education, the president said Intel’s example has shown that spending on education and worker training is a good investment — even in difficult financial times.
The president spoke during a West Coast swing designed to highlight his vision of making the U.S. more competitive globally. Before the visit, the White House announced that Obama had picked Intel CEO Paul Otellini, who at times has criticized the administration, to serve on a presidential competitiveness council.
Intel last year announced a 10-year, $200 million commitment to promote math and science education; Obama was impressed with the projects of the students he met during his visit. The company is among those working to help meet Obama’s goal of having the U.S. lead the world in science and math education in a decade.
Bernanke urges nations to help ease trade gaps
PARIS (AP) — Federal Reserve Chairman Ben Bernanke on Friday urged countries with large trade surpluses, like China, to let their currencies rise in value to help prevent another global financial crisis.
He also called on nations with persistent trade deficits, like the U.S., to narrow their budget shortfalls and save more.
Both steps would help balance trade and investment flows among countries, Bernanke said in a speech at the G-20 conference in Paris. Many countries worry about speculative money flooding their economies and inflating assets like real estate or stocks.
The flow of capital and global trade imbalances will be on the table at the Group of 20 industrialized and emerging nations meeting in Paris Friday and Saturday. Bernanke and Treasury Secretary Timothy Geithner represent the U.S.
China raises bank reserves to curb lending
BEIJING (AP) — China ordered its banks Friday to hold back more money as reserves in a new move to curb lending and cool a spike in inflation.
The order raising reserves by 0.5 percent of deposits was the second such move this year by the central bank and followed six reserve increases in 2010. Reserves vary by institution but are about 20 percent for China’s biggest state-owned lenders.
Beijing is using a series of repeated, gradual hikes in interest rates and reserve levels to stanch a flood of lending that helped China rebound quickly from the global crisis but now is fueling higher prices.
Inflation is politically dangerous for China’s communist leaders because it erodes economic gains on which they base their claim to power. Poor families are hit hardest in a society where some spend up to half their incomes on food, and millions have seen little benefit from three decades of economic reform.
Consumer inflation in China climbed to 4.9 percent in January, driven by a 10.3 percent jump in food costs. Analysts expect the inflation rate to continue to rise through midyear as demand outstrips food supplies.
Beijing has raised interest rates three times since October. Economists say more rate hikes are needed and it will be months before the effect is seen.
UK retail sales rebound from December slump
LONDON (AP) — U.K. retail sales rebounded strongly in January following a bad-weather slump in December.
The Office for National Statistics said retail sales rose 1.9 percent in volume compared with December and were 3 percent higher in value. In December, the volume of sales fell 1.4 percent compared with November.
Compared to a year earlier, when winter weather cut into sales in January, sales were up 8.2 percent in value and 5.3 percent by volume.
Vicky Redwood, analyst at Capital Economics, says the one-month trend is probably deceptive. Assuming that January’s results were boosted by pent-up demand, she says sales are likely to drop back in February.
Campbell says sales, profit dip; cuts guidance
PHILADELPHIA (AP) — The Campbell Soup Co. sold more cans of soup in its fiscal second quarter, but at such deep discounts it drove down the company’s profit.
The quarterly decline was expected, but it came with other bad news from the food maker. Campbell lowered its full-year earnings and revenue guidance for the second time in about three months.
The Camden, N.J., company said Friday that its income fell 8 percent and sales were down 1 percent.
Campbell says it now expects full-year revenue to be essentially flat — between a 1 percent decline and 1 percent growth. Earnings per share should fall by 1 to 3 percent. To reach that, Campbell will have to have a stronger performance between now and the end of July than it’s had over the past six months.
Previously the company said it expected earnings for the year to be up by 2 to 4 percent, or between $2.52 and $2.57 per share for the full year. The revised guidance is for profit between $2.40 and $2.45 per share.
The second-quarter result matched Wall Street expectations.
Campbell President and CEO Doug Conant said the company used heavy promotions to sell a higher volume of soup in the U.S. The company still didn’t sell as much as it had hoped — and promotional spending was so high that it wiped out any gains in revenue. Conant said that was the right strategy to keep customers.
Ford plans to team with Sollers in Russia
DETROIT (AP) — Ford Motor Co. is teaming up with Russian automaker Sollers to make and distribute cars in Russia, one of the fastest growing auto markets.
Under a deal announced Friday, Sollers will build Fords at Russian plants, helping to boost a struggling local industry. Ford will have access to a huge market that could bolster its revenues.
Financial details weren’t disclosed, but the automakers said they will have equal stakes in their joint venture called Ford Sollers. Ford declined to give production or sales targets for the venture.
The announcement came shortly after Italian automaker Fiat SpA backed out of a potential partnership with the same Russian company. The unraveling of the Fiat Sollers venture gave Ford an opportunity to step in.
Ford and Sollers are expected to finalize their deal in June. The venture’s operations could start by year’s end.
The Dearborn, Mich., company began selling cars directly to Russians in 2002, and like many car makers Ford is eager to expand business there as demand improves.
While domestic auto companies in Russia have been struggling, the market itself has been getting stronger. Car sales in Russia rose by 30 percent last year to 1.9 million, according to the Moscow-based Association of European Businesses. Nine of the 10 best-selling models were produced locally, while Ford Focus was in the top five best-sellers.
Southwest blames fuel for latest fare increase
DALLAS (AP) — Southwest Airlines Co. is raising fares by $10 for a round trip, saying it needs the money to offset higher fuel costs.
The move Friday was the latest in a series of price increases from major U.S. airlines, most of which are making money after a two-year slump.
Jet fuel prices have risen about 50 percent to around $2.80 per gallon in the past year. Southwest CEO Gary Kelly says fuel is the only worrisome factor in the airline’s outlook for 2011.
In 2010 Southwest spent $3.6 billion on fuel. That was one-third of its budget and barely behind labor as the Dallas company’s biggest expense.
Fortunately for airlines, the higher fuel costs come at a time when they are enjoying more power to raise prices. Passenger planes are flying at record occupancy levels because airlines have limited new flights while travel demand has picked up.
The airlines, including Southwest, have raised fares on leisure travelers several times since December. They’ve also twice tried to raise fares even more sharply on high-priced tickets favored by corporate travelers. One such increase stood, but a second attempt to boost fares by up to $120 per round trip failed this week when US Airways balked.
Fare increases can collapse if a major airline refuses to go along because other carriers fear losing customers if their prices are even a few dollars higher.