McDonald's chief cuts spending by $700M
Pledging to make McDonald's Corp. "better, not just bigger," the burger chain's new CEO disclosed plans Monday to sharply reduce capital spending and open fewer restaurants this year amid an unprecedented slump.
Jim Cantalupo, under pressure to revive McDonald's sagging sales and stock price, also unveiled a new marketing effort and said the company will improve its menu but overall "do fewer things and do them better."
Revealing more specifics of his turnaround strategy, Cantalupo told analysts in New York that his plan relies on improving sales at existing restaurants rather than more rapid expansion for the world's largest restaurant chain.
Cantalupo said the company now expects to spend $1.2 billion on capital expenditures this year - $700 million less than previously announced and $800 million below last year's total.
The remainder, he said, will be used to strengthen the balance sheet and return cash to shareholders through higher dividends and share repurchases.
Investors embraced the news. McDonald's shares surged to their highest level since Jan. 20 after the announcement, finishing up $1.25, or 8.6 percent, at $15.80 on the New York Stock Exchange.
The Oak Brook, Ill.-based company had posted its first-ever quarterly loss - $344 million - for the fourth quarter of 2002.
OPEC to consider production cut
The Organization of Petroleum Exporting Countries will hold a special meeting to consider a production cut, after a 28 percent drop in oil prices from a month ago caused by allied progress in Iraq.
"The market is facing a glut, not a shortage," OPEC President Abdullah bin Hamad al-Attiyah, who is also Qatar's oil minister, told reporters in Paris after meeting with French Industry Minister Nicole Fontaine. "The market is full of oil," he said in announcing the April 24 meeting.
The Brent crude-oil futures contract on the International Petroleum Exchange fell 10 cents to close at $24.58 a barrel. Prices are down from $34.10 on March 7 and are down 9 percent from this time last year.
Rates rise in Monday's Treasury bill auction
WASHINGTON - Interest rates on short-term Treasury securities rose in Monday's auction.
The Treasury Department sold $15 billion in three-month bills at a discount rate of 1.135 percent, up from 1.100 percent last week. An additional $16 billion was sold in six-month bills at a rate of 1.135 percent, up from 1.090 percent.
Both the three-month and six-month rates were the highest since March 24, when each type of bill sold for 1.150 percent.
FAO set to emerge from bankruptcy
KING OF PRUSSIA, Pa. - Up to $77 million in financing and court approval of its reorganization plan will pave the way for FAO Inc. to emerge from bankruptcy, the toy store operator said Monday. The reorganization plan, approved by U.S. Bankruptcy Judge Lloyd King, is expected to become effective this month, when FAO will formally emerge from Chapter 11, said David Levene, an attorney for the company.
The upscale toy retailer, struggling to compete with discount stores, filed for bankruptcy protection Jan. 13. The company kept open its FAO Schwarz stores during bankruptcy, including its flagship store on New York's Fifth Avenue that draws tourists from around the world.
Maker of Beanie Babies loses appeal
Ty Inc., the maker of Beanie Babies, lost a U.S. Supreme Court bid to stop a second-hand seller of the plush toys from calling her business "Bargain Beanies."
The justices declined to hear Ty's argument that the second- hand seller was infringing its trademark by using the Beanies name. A lower court refused to force her to change the name of her business and Internet address.
Ty sued under a federal trademark-dilution law that lets companies protect their established brands against other companies' use of a similar name. Someone who resells a well-known product shouldn't have the right to use the trademark in their own business name, Ty argued.
AT&T Corp., in a court brief supporting Ty, said the lower court's ruling was a "dramatic narrowing of the rights of those who own famous trademarks."
Buffett lauds Amazon, buys its junk bonds
Billionaire investor Warren Buffett praised Amazon.com Inc. last July for its decision to account for stock options as an expense, saying it took "particular courage" and would be "recognized and remembered." A week later, Buffett bought $98.3 million of the company's junk bonds.
Buffett's Geico Corp., the auto insurance unit of his Berkshire Hathaway Inc., stands to make a $16.4 million profit on the investment in high-risk, high-yield debt if Amazon.com, the world's largest Web merchant, repurchases the 10 percent senior notes next month, as some analysts predict. That would be an almost 17 percent return for an investor who avoided Internet investments during the 1990s boom in technology shares.
Toyota's European sales rise 4 percent
Toyota Motor Corp., the world's third-largest carmaker, sold 4 percent more cars in Europe in the first quarter than a year earlier, helped by demand for the Corolla compact and Rav4 sport-utility vehicles.
Sales totaled 212,069 cars and light trucks in Europe in the first quarter, a company record.
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