Merck is buying Schering-Plough for $41 billion. The deal would give Merck key new businesses, access to a promising pipeline of new products and the chance to cut costs by $3.5 billion more per year. That includes eliminating about 16,000 jobs. Merck hopes the cash-and-stock deal helps it better compete in a drug industry facing slumping sales, tough generic competition and intense pricing pressures. The deal would unite the maker of asthma drug Singulair with the maker of allergy medicine Nasonex and form the world’s second-largest prescription drug maker. Merck and Schering are already partners in a pair of popular cholesterol fighters, Vytorin and Zetia, although concerns about their safety and effectiveness have hurt sales for the past year. The news comes only a few weeks after Pfizer agreed to pay $68 billion for Wyeth.
Federal work-safety officials are investigating the weekend death of a contract worker at the Total petrochemical refinery in Port Arthur. Refinery spokesman Pat Avery says an object of some sort apparently fell from a crane and struck the worker in the head Saturday afternoon. He was airlifted to Christus St. Elizabeth hospital in Beaumont, where he died Sunday. The French oil company total hasn’t released the identity of the worker nor the company that employed him. But Avery said the U.S. Occupational Safety and Health Administration and the company are conducting separate investigations.
Circuit City‘s 567 stores across the nation closed permanently this past weekend. Some stores had already closed because of depleted merchandise. Going-out-of-business sales began January 17th to clear $1.7 billion in inventory.
McClatchy says it plans to eliminate 1,600 jobs, or 15 per cent of its work force, as it contends with declining revenue and a deepening recession. Sacramento, California-based McClatchy says the job cuts, which will start by the end of the first quarter, will come through attrition, consolidating and outsourcing some functions and will include about $30 million in severance costs. The company owns the Fort Worth Star-Telegram, Miami Herald and other properties. The newspaper publisher also plans to lower salaries across its operations, with Chairman and Chief Executive Gary Pruitt taking a 15 per cent base pay cut. Last month Pruitt decided to forgo his 2008 and 2009 bonuses. No executives will receive 2009 bonuses.
The FBI is seeking victims of alleged wrongdoing by the Houston-based Stanford Financial Group or its affiliated companies. The FBI advisory comes amid the investment fraud investigation of some companies founded by Texas billionaire Robert Allen Stanford. The Securities and Exchange Commission has accused Stanford of leading a massive ponzi scheme. The FBI wants to hear from alleged victims in the investigation to determine what it calls “the extent of the potential fraud.” Information came be e-mailed to: firstname.lastname@example.org. Hard copy documentation can be mailed to: FBI Victim Assistance Program, P.O. Box 924427, Houston, TX 77292-4427.
Venezuelan authorities have begun the process of putting up for sale a bank controlled by Stanford. Authorities temporarily seized control of Stanford Bank last month after panicked withdrawals on news of U.S. fraud charges against Stanford and three of his companies. A board overseeing the sale opened the process by starting to receive information from prospective buyers. The government banking regulator will close the list on Thursday. Would-be buyers will present their offers at an auction on March 20th. The Venezuelan bank is part of the Texas billionaire’s Antigua-based empire — but was not named in the fraud complaint by U.S. regulators. Clients who made a run on the bank withdrew an estimated $93 million, or nearly 37 per cent of its deposits, before the government intervened February 19th.
The settlement reached by Whole Foods Market with the Federal Trade Commission is on public record for a 30-day comment period. Whole Foods reached the settlement with the FTC over the commission’s antitrust challenge to the Austin-based company’s 2007 acquisition of Wild Oats Markets. A third-party divestiture trustee will market 19 Wild Oats stores and intellectual property. Employees at stores being sold will receive a guaranteed job offer in another store or an enhanced severance package. Whole Foods operates five stores in the Houston area, with plans for two more.
Billionaire Warren Buffett says the economy has “fallen off a cliff” over the past six months and consumers have changed their habits in remarkable ways. Buffett said during a live appearance on CNBC that current economic turmoil has basically followed the worst-case scenario he envisioned. Buffett said consumers have changed their habits to an extent that he hasn’t seen before because of fear and confusion about the economy. Buffett said he’s seen the changes showing up in the results of Berkshire Hathaway‘s subsidiaries. He says Berkshire’s jewelry companies have suffered, but more people have been willing to switch to Geico to save money on car insurance.
One of the big consumer tracking agencies says the number of people three months behind on bankcard payments fell 11 per cent in the fourth quarter of 2008 from a year ago. People also added less than two per cent to their balances during the holiday shopping season. More on-time payments came even in the face of worsening job losses, the continuing foreclosure crisis and tighter credit, according to Transunion. Another sign of consumer responsibility: shoppers didn’t spend as much on gifts they couldn’t afford during the holidays as in years past. But while the numbers are positive for individuals who are running up less debt and potentially paying fewer late fees on their credit cards, they also reflect difficult economic issues, like the sharp decline in retail sales and the tight credit market.
Industry figures show that more Americans took mass transit amid record-high gas prices and drove less on the nation’s highways. Experts can’t agree on whether the number of riders indicates Americans’ travel habits are changing or if the shift away from cars is temporary because of fuel costs and the recession. People made 10.7 billion trips on public transit in 2008–a four per cent increase over 2007, according to the American Public Transportation Association. That’s the highest number since 1956, when Americans made nearly 11 billion public transit trips. However, the percentage was much higher because the country had far fewer people and not as many cars.
A record $9.1 billion in goods traveled between Texas and Mexico by freight rail in 2008, according to the U.S. Bureau of Transportation. The Houston Business Journal says the value of freight-rail trade, including vehicles, iron, steel and plastics, beat 2007 imports and exports by $1 billion. Using all methods of transportation, the total value of trade between the state and Mexico approached $130.8 billion last year. The North American Free Trade Agreement took effect 15 years ago.
Interior Secretary Ken Salazar wants to create renewable energy zones to spur solar and wind energy projects, and build power lines to get the electricity to markets. In an interview with the Associated Press, Salazar said that while some regions of the country as well as offshore areas have great potential for wind energy and solar, there isn’t a clear plan to develop the resources. He also said he will use some of the economic stimulus money to put young people to work on federal land in what he called a “21st century Civilian Conservation Corps.” Salazar also promised to take another look at objections that have been raised about issuing leases for oil drilling off Virginia and in Alaska’s Bristol Bay.
The head of the agency that insures bank deposits says it has plenty of money to cover any failures but it would like “a bigger cushion.” Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, said the agency has set aside $22 billion to cover any projected losses over the next year, leaving $19 billion. Bair said, however: “we’d like a bigger cushion. We’d like to be prepared for all contingencies.” She said the agency is increasing its reserves through a hike in insurance premiums paid by U.S. banks and thrifts. Just two and a half months into the year, 17 federally insured banks have failed. The FDIC believes U.S. bank failures will cost the deposit insurance fund more than $65 billion over the next four years. The FDIC insures bank accounts for up to $250,000. Bair was interviewed on CBS’ Early Show.
Two Texas lawmakers are pushing proposals they say will make electricity more affordable. Representative Jim Keffer, an Eastland Republican, and Senator Wendy Davis, a Fort Worth Democrat, said their legislation would affect the wholesale and retail markets. One proposal would prevent a company from owning more than 20 per cent of generation in a smaller market. Currently, that limit applies to the whole state. The lawmakers also they want to let local governments enter into low-rate electricity deals. Texas approved its deregulation law in 1999, but Keffer and Davis say changes are needed to make the deregulated market work well. Electric industry officials say the competitive market is working.
Houston-based Hunton Energy has received an environmental air permit from the Texas Commission of Environmental Quality for a synthetic natural gas plant in Freeport. It will be the first large-scale SNG project to utilize the gasification of petcoke, coal and biomass. All CO² produced in the gasification process will be captured, compressed and sold for enhanced oil and gas recovery. The proposed plant will produce 180 million cubic feet per day of SNG and generate 400 MW of additional power from its byproduct stream. Completion is expected in 2015.
A senior Kuwaiti oil official says an OPEC production cut of a million barrels a day would raise prices over $50 a barrel by the third quarter of 2009. Supreme Petroleum Council member Moussa Marafi told the Kuwait News Agency that high oil inventories in consumer nations are pressing crude prices, which have fallen from mid-2008 highs of $147 per barrel to around $47. Marafi says the Organization of Petroleum Exporting Countries’ compliance with earlier 4.2 million bpd in cuts has been “very high,” at 80 per cent and would reach 90 per cent by the time the group meets March 15th. Some OPEC members suggest that further cuts are possible at the meeting. The SPC is Kuwait’s highest oil policy-making body.
Southwest Airlines expects to stick with its current plans to reduce capacity by four per cent this year rather than cut deeper. Chairman and Chief Executive Gary Kelly said the carrier will continue to be cautious. Kelly was in Minneapolis to kick off Southwest’s new service from there to Chicago, which began on Sunday. Southwest is shrinking capacity overall even as it adds airports like Boston and New York-LaGuardia by cutting flights elsewhere. Kelly says southwest hasn’t yet parked any of its Boeing 737s, but it could. He says he’s also worried that fuel prices could spike again. Spot prices are low but he says he wants to make sure Southwest is hedged in case an economic recovery sends prices higher again.
The chief executive of Texas Instruments received compensation valued at $9.6 million in 2008. That’s down 6.6 per cent from the previous year as the Dallas-based semiconductor maker faced fierce competition for chips that power cell phones. And a TI filing with the Securities and Exchange Commission says much of Richard K. Templeton’s compensation came in stock options that currently have little value. TI says Templeton’s salary was three per cent higher than in 2007 at $960,780, reflecting an expected increase for CEOs at other companies. But his performance-related bonus dropped from $2.4 million to $1.6 million. Bonuses for Templeton and other top executives fell about 35 per cent because Texas Instruments’ performance was “below the median” of its competitors.
Whether or not you file an income tax return is partly determined by your level of income. A married couple, both of whom are under age 65, usually doesn’t have to file a return unless joint income is $17,900 or more. So when might you consider filing a tax return, even if you are not required to do so? One big reason is when you have money coming back to you. If you had federal income tax withheld, but weren’t required to pay any income tax, you should file a return to get the refund due. You could also qualify for a tax refund if you qualify for the earned income tax credit. This can apply if you worked, but didn’t earn a lot of money. Also, you should consider filling out a tax return if you have an additional child tax credit, or if you qualify for the first-time homebuyer credit.
Barbie turned 50 today. And to mark the occasion, Mattel threw a birthday bash in a specially outfitted Malibu dream house. The doll’s maker commissioned interior decorator Jonathan Adler to deck out a real-life house overlooking the Pacific Ocean. The Malibu property is one that’s often rented for film and photo shoots. Adler lined Barbie’s bedroom with wall-to-wall pink carpeting emblazoned with her initial. The closet is filled with 50 pairs of pink peep-toe heels while her kitchen is stocked with cupcake-making ingredients. The garage contains a pink Volkswagen new Beetle with a motorized pop-up vanity in the trunk. Following the festivities, most of the Barbie decor will be shipped to the Palms Casino Resort in Las Vegas to furnish a special pink-tinted Barbie suite.
Marathon Oil Chief Executive Clarence Cazalot, Jr., saw his total compensation fall 36 per cent to $8.34 million in 2008. The Associated Press reports his bonuses and the value of stock options were less than the previous year. Details are in an AP analysis of a proxy statement filed with the Securities and Exchange Commission. Cazalot’s pay package fell from the $13.1 million he got in 2007. Cazalot, who’s 58, received performance and other bonuses totaling $3.78 million in 2008. That’s down from the $6.26 million he was awarded the year before, when the company’s stock price rose 26 per cent. AP calculations of total pay include an executive’s salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don’t include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC.