Circuit City Files for Bankruptcy, Starbucks, GM Continue Downward Skid
- Nov 11, 2008
Looking for good news on the economy? It is still hard to find. Aside from McDonald’s, there are few companies making a profit. American Express Co. added 15 cents to $24.13 in Germany after the company won U.S. Federal Reserve approval to become a commercial bank, gaining access to government funds as credit- card defaults climb with economies slowing around the world. The Fed waived a 30-day waiting period on the application because of “the unusual and exigent circumstances affecting the financial markets,” Bloomberg reported. Circuit City and 17 of its affiliates filed for bankruptcy Monday. Both Starbucks Corp., which posted a 96 percent drop in fourth-quarter profit, and General Motors Corp. continued to skid as U.S. stock-index futures fell again, according to Bloomberg. Bloomberg predicted that only federal aid can prevent a collapse by General Motors as the shares plunged to a 59-year low. Reorganizing in court protection also may not be possible, because the credit crunch has dried up financing. Third-quarter earnings shrank 17 percent for S&P 500 companies that reported results, according to Bloomberg data. Profits for 2008 will decrease an average 8.5 percent and rise 12 percent next year, based on a survey of analysts’ estimates. The Associated Press reported that Asian stock markets fell sharply today, following Wall Street lower as economic fears sapped enthusiasm over China’s nearly $600 billion package to boost growth. European markets also opened lower. Efforts to avoid defaulting on loans that may force the company into bankruptcy, the Las Vegas Sands Corp. anticipates selling debt or equity this week as well as getting a loan from a Chinese bank to raise $2.14 billion in capital while suspending construction in Macau to conserve cash after a third-quarter loss, Bloomberg reported. The company’s $4 billion Singapore project still moves forward, the report stated. Norway’s StatoilHydro plans to pay $3.375 billion for a 32.5 percent stake in Chesapeake Energy’s shale gas assets in the northeastern United States with $1.25 billion in cash and $2.125 billion in drilling costs, according to Reuters.On the real estate investment side, the Idaho Statesman reported that Boise-based real estate investment firm DBSI and more than 100 of its affiliates – which had grown to $2.6 billion this year – filed for bankruptcy Monday after allegations for fraud and lawsuits filed by investors.