Business day: Bank sale blocked

Lawyers of the shareholders group VEB, Paul Coenen, left, and Jurjen Lemstra, right, embrace as they celebrate in the courtroom in Amsterdam, the Netherlands, A Dutch court blocked ABN Amro’s planned sale of a Chicago bank on Thursday, a ruling that makes it more likely a group led by Royal Bank of Scotland will capture ABN Amro in the industry’s largest takeover battle.

The court said ABN Amro must seek shareholder approval before it can sell its U.S. subsidiary LaSalle to Bank of America Corp. The ruling was was a major setback for ABN Amro management, which had planned to sell LaSalle for $21 billion and then sell the rest of the company to Britain’s Barclays PLC for about $91 billion. The ruling increases chances that a three-bank consortium led by Royal Bank of Scotland PLC will win the bidding war for the the Netherlands’ biggest bank. The group has suggested a purchse valued at $98.5 billion. AP

Automotive

GM reports 1Q profit slump

DETROIT — The troubled mortgage market spilled onto General Motors Corp.’s balance sheet Thursday as first-quarter profits dropped 90 percent from a year ago due mainly to losses at GM’s former financial arm.

But the fact that the nation’s largest automaker still lost money on its North American operations seemed to trouble industry analysts more than losses at GMAC Financial Services because GM is more than a year into a massive restructuring plan that includes cost cuts and multiple new products.

The net profit of $62 million, or 11 cents a share for the January-March period, was GM’s second consecutive quarterly profit, although it was down from $602 million, or $1.06 per share, a year ago.

GM said in Thursday’s report it had record vehicle sales of 2.26 million worldwide and showed improvements in its automotive operations in the latest quarter.

Its earnings excluding one-time items fell short of Wall Street expectations and its shares fell more than 5 percent in afternoon trading./AP

Loss widens

Martha Stewart Omnimedia sees loss, launches crafts line

NEW YORK — Martha Stewart Living Omnimedia Inc. said Thursday its first-quarter loss widened, weighed down by a charge associated with production of its syndicated TV program. The multimedia empire also announced it signed an agreement with Costco Wholesale Corp. to sell a cobranded line of frozen and fresh food.

The New York-based company said it lost $11.87 million, or 23 cents per share, in the three months ended March 31, compared with a loss of $6.84 million, or 13 cents per share, in the year-ago period.

Results included a $5.7 million, or 11 cent per share, non-cash compensation expense associated with the production of the syndicated TV program “Martha Stewart Show.” Excluding that expense, loss per share from continuing operations would have been 12 cents.

This week, it launched its new Martha Stewart Crafts line of paper-based crafting and storage products exclusively in more than 900 Michael’s Inc. stores, with plans to roll out the line to independent dealers later in the year. Last month, Martha Stewart Living — which scaled back its Web operation as a catalog/e-commerce business in 2005 — relaunched its Web site marthastewart.com as an information portal./AP

Economic light

S&P 500 moves past 1,500, first time since Sept. 2000

NEW YORK — Wall Street rose modestly Thursday amid a burst of enthusiasm about the economy that lifted the Standard & Poor’s 500 index past 1,500 for the first time since September 2000.

The S&P 500, the index most closely watched by market professionals, rose as high as 1,502.92 just over a week after the Dow Jones industrial average passed 13,000 for the first time. The S&P is now within striking distance of its closing high of 1,527.46, set March 24, 2000, just as the dot-com bubble began to burst and Wall Street began a three-year-long decline.

Stocks have soared in recent weeks as first-quarter earnings beat reduced expectations, and upbeat economic news added to the gains. With the Dow having piled on more than 700 points in April alone, there are concerns that investors may be getting a little too enthusiastic given the uncertainty in the housing market and other sectors of the economy.

On Thursday, the good news was about inflation: The Labor Department said wages, as measured by unit labor costs, rose at a tepid 0.6 percent rate in the first quarter. The news fed Wall Street’s hopes for an interest rate cut later this year.

Perhaps giving the S&P its final push, the Institute for Supply Management said its index of non-manufacturing business rose to 56.0 in April from 52.4./AP

Sluggish results

Bank of America struggles to continue growing

NEW YORK — The $21 billion deal to buy LaSalle Bank fills in one of the few major gaps in Bank of America Corp.’s nationwide banking network, but doesn’t change the fact that the nation’s second-largest bank seems to be struggling to grow on its own.

For the first time in a year, the quarterly earnings Bank of America disclosed Thursday weren’t pumped up by an acquisition. The results were uninspiring: across-the-board sluggishness, with lower profits in each of its main business lines.

The move announced Monday to buy LaSalle from Amsterdam-based ABN Amro Holding NV won’t necessarily help. LaSalle operates in Chicago’s highly competitive market and is heavily exposed to the weakening economy in Detroit. Bank of America’s shares, which fell 1.8 percent Thursday after the disappointing earnings report, closed down 1 percent Monday.

The deal, expected to close late this year or early in 2008, does make sense strategically. Bank of America until now has lacked a sizable presence in Chicago, the nation’s third-largest city. The deal will vault Bank of America to the head of the pack, with nearly 200 branches and $15.7 billion in retail deposits. It also will immediately add to the bank’s revenue and earnings./AP

Drug get OK

FDA approves generic versions of insomnia drug Ambien

WASHINGTON — The first generic versions of the insomnia drug Ambien won federal approval Monday.

The Food and Drug Administration said it approved versions of the immediate-release tablets made by 13 drug companies for the short-term treatment of insomnia. A patent held by Paris-based Sanofi-Aventis on the drug, also called zolpidem tartrate, expired Saturday.

The approvals of generic versions of the drug come a month after the FDA asked makers of it and similar sleep aids to beef up warnings about their potential risks. The risks of the sedative-hypnotic drugs include severe allergic reactions and complex sleep-related behaviors, like sleep-driving.

The FDA said Ambien was the No. 13 brand-name drug by sales last year./AP

Layoffs

Subprime lender unable to get anyone to buy loan operations

LOS ANGELES  — Financially strapped subprime mortgage lender New Century Financial Corp., failed to receive any bids for its mortgage loan origination business, forcing it to shut down the unit and lay off around 2,000 employees, the company told employees Thursday.

The Irvine-based company, which has been preparing to sell off its assets under Chapter 11 bankruptcy protection since last month, notified employees during a conference call that they would be laid off effective Friday.

Speaking on the call, New Century President and Chief Executive Brad A. Morrice said despite a number of potential buyers for its wholesale and consumer-direct operations, “none of those potential deals have come to pass.”

The deadline for bids for the business unit was Wednesday. New Century’s request to extend the deadline was not supported by its creditors committee, Morrice said, adding that efforts to sell the unit had stopped.

New Century will retain only service personnel and about 250 members of its corporate team as the company continues efforts to liquidation, Morrice said./AP

Coffee dealings

Starbucks nears deal on licensing pact with Ethiopia

SEATTLE — Starbucks expects to complete a licensing, distribution and marketing deal with Ethiopia this month that would settle a dispute over trademarks for three coffees produced in the African nation.

In a joint statement Thursday, neither the Seattle-based coffee retailer nor the Ethiopian government released details about an agreement in principle that both said they signed after two days of talks in Seattle.

Ethiopia wants to secure rights to three coffee names — Harar, Sidamo and Yirgacheffe — through the U.S. Patent and Trademark Office. So far it has trademarked the name Yirgacheffe, but a final decision has yet to be made on the others.

“Ethiopia is recognized as the historic birthplace of coffee and the source of some of the finest coffee in the world,” Starbucks Chairman Howard Schultz said in the statement. “We’re extremely excited to continue to deepen our relationship with the Government of Ethiopia.”

Getachew Mengistie, director general of the Ethiopia Intellectual Property Office, said his country is “committed to work in partnership with all international specialty coffee companies and distributors.”

Starbucks Corp., the world’s largest specialty coffee retailer, has opposed Ethiopia’s trademarking efforts, saying instead that it wants to help officials establish a geographic certification for the coffee bean names, as is done with Washington state apples or Kona coffee./AP

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