Thursday, July 17, 2003

Business digest

From wire reports

UAW, DaimlerChrysler begin labor talks

AUBURN HILLS, Mich. - The next contract with the United Auto Workers could be critical in preventing the auto industry from following the same path as the battered steel industry, a DaimlerChrysler negotiator said.

As talks began Wednesday on new labor agreements between Detroit's Big Three automakers and the UAW, DaimlerChrysler negotiator John Franciosi acknowledged similarities between the steel industry a decade ago and the auto industry today.

"Certainly a lot of the characteristics are very similar," said Franciosi, the Chrysler Group's senior vice president for employee relations.

Greenspan warns of soaring deficits

WASHINGTON - Federal Reserve Chairman Alan Greenspan says that "substantial and excessive" federal budget deficits - if not reduced - will hurt the economy's ability to grow strongly enough to reduce unemployment.

Greenspan, testifying Wednesday before the Senate Banking Committee, was more pointed in his criticism of soaring federal deficits than he had been in an appearance before a House panel on Tuesday, the day the administration announced its new projections showing a serious worsening of the deficit outlook.

He also noted that 75 million baby boomers begin retiring at the beginning of the next decade. Those retirements will make severe demands on Social Security and Medicare.

Citigroup chairman giving up CEO title

NEW YORK - Citigroup chairman Sanford I. Weill announced Wednesday that he was giving up his job as chief executive of the nation's largest bank and named Charles O. Prince as his successor.

The selection of Prince, a 53-year-old lawyer, ended months of speculation about who would replace Weill. The changeover is to occur by the end of the year.

While relinquishing the CEO title, Weill, 70, will remain chairman of the board of Citigroup until the 2006 annual meeting.

Clayton Homes vote on Berkshire bid delayed

MARYVILLE, Tenn. - Even as the proxies were being tallied Wednesday on Berkshire Hathaway's $1.7 billion bid for Clayton Homes Inc., shareholders agreed to postpone the vote for two weeks in hopes of getting a better offer.

Two shareholders holding about 9 percent of the manufactured-home company's stock pushed the issue as the vote count was under way, said Clayton Homes president and CEO Kevin Clayton.

Clayton said he doubts the company will receive a better offer than Berkshire Hathaway's $12.50 per share bid.

Sears' credit sale cheered by experts

CHICAGO - Sears, Roebuck and Co.'s risky bet on a future without its most profitable business, credit cards, is being applauded by Wall Street and retail experts as a move the revamping retailer needed to make.

A day after Sears announced the sale of the credit unit to Citigroup for $3 billion in cash, its stock jumped $3.22 a share, or 9 percent, to $38.20 in trading Wednesday on the New York Stock Exchange.

It was the market's second big thumbs-up for Sears' shift in strategy - shares rose 13 percent when it announced its intentions in March - and lifted its stock to its highest level since last October.

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