Business briefing, Oct. 7

The Rocky

Published October 7, 2008 at 12:05 a.m.

Text size

More Money & Markets

A growing number of economists believes that the country is on the brink of - or already in - its first recession since 2001 and that it will be longer lasting.

That's part of the latest outlook from forecasters in a survey released Monday by the National Association for Business Economics, also known by its acronym NABE.

Close to 69 percent of the economists think the economy has started or will enter a recession this year. That's up from 56 percent in a survey in May.

"The general view is . . . that this recession will be longer than the last two - lasting roughly one year, but relatively mild," the survey concluded. The 2001 recession started in March and ended in November. The one before that began in July 1990 and ended in March 1991.

Under one classic definition, a recession happens when the economy shrinks for two quarters in a row. The National Bureau of Economic Research, the recognized arbiters for dating recessions, uses a formula that takes into account employment and income growth.

For all of this year, the economy's growth is expected to slow to 1.8 percent, down from 2 percent last year, the NABE said.

NATIONAL

Cost of advanced mobile phones falls 36% after iPhone

The cost of advanced mobile phones with e-mail and Internet access fell 36 percent in the three months ended in August as handset makers tried to match the $199 price tag on Apple Inc.'s iPhone.

The average price of U.S. smart phones fell to $174 from $236 in the same period last year, researcher NPDGroup Inc. said Monday. Apple began selling the new iPhone 3G in July for $199, two-thirds less than the original model.

Falling prices and the popularity of the iPhone is curbing profitability at phone makers such as Research In Motion Ltd., seller of the BlackBerry. The company said last month that its gross margin, or the percentage of sales left after production costs, will drop to 47 percent in the current period, from 50.7 percent last quarter.

LILLY ACQUISITION Eli Lilly & Co. has agreed to spend more than $6 billion to fortify its cancer treatment portfolio by acquiring the biotechnology firm ImClone Systems Inc. in a deal that tops earlier offers from competitor Bristol-Myers Squibb Co.

Indianapolis-based Lilly said Monday it will pay $70 per share for ImClone. New York-based Bristol-Myers then said it would not increase its latest offer of $62 per share.

MARS BUYS WRIGLEY Mars Inc. has closed a $23 billion deal to purchase chewing-gum giant Wm. Wrigley Jr. Co., the companies said Monday, making the combined business the world's largest candy maker.

Wrigley shareholders will receive $80 for each share after they approved the deal last month. Shares closed at $79.97.

BANK OF AMERICA Bank of America Corp. on Monday reported its third-quarter results earlier than planned, revealing a 68 percent profit drop and plans to boost capital by selling stock and halving its dividend.

Profit fell to $1.18 billion, or 15 cents a share, for the July-to-September period from $3.7 billion, or 82 cents a share, in the same period last year. That was much lower than analysts' estimates of 62 cents per share, according to Thomson Financial.

KRAFT CUTS JOBS Foodmaker Kraft Foods Inc. said Monday it is cutting 400 jobs in North America to reduce costs.

Kraft spokeswoman Renee Zahery said the layoffs will represent a cut of about 1 percent in the company's North American work force.

Zahery said the layoffs will take place across the board in all regions but will mainly affect employees in its Chicago; Madison, Wis.; Tarrytown, N.Y.; East Hanover, N.J.; and Toronto, Canada offices.

GRANT TO FORD Ford Motor Co. is receiving a $10 million grant from the U.S. Energy Department to develop plug-in hybrid vehicles.

The funding being announced today will help the automaker continue to develop its demonstration fleet of 20 plug-in hybrid vehicles. The project costs $20 million, so the government is funding half of the program.

GAWKER LAYOFFS Gawker Media, the network of culture, politics and industry Web logs, laid off 14 percent of its editorial staff and will end performance bonuses, publisher and founder Nick Denton confirmed Monday.

Gawker eliminated 19 of the company's 133 editorial jobs in anticipation of a recession that would hurt advertising revenue.

Savings from layoffs and bonus cuts will allow the company to hire 10 new employees and bolster the editorial staff of sites such as Gizmodo.com, a technology review blog, and Kotaku.com, which covers video games.

* The Governor's 2008 Colorado Tourism Conference honored Mayor John Hickenlooper with The Chairman's Award, Ilene Kamsler with the Outstanding Individual Contribution to Colorado Tourism Award, Beth Slifer with the Outstanding Tourism Volunteer Award and The Roaring Fork Valley Rio Grande Trail with the Outstanding Community Tourism Initiative Award.

* Citywide Banks of Colorado Inc. hired Tracey Wilson as vice president of Citywide Exchange.

* Valen Technologies added Greg Penn as vice president of engineering.

* Daniel G. Steele will lead FreeWave Technologies' business development efforts in the Rocky Mountain region.

* Lowe Enterprises named Shirli J. Sensenbrenner as a shareholder in Denver.

* Denver-based Cactus was recognized by the Art Directors Club of Denver with 15 awards, including best of show and judge's choice.

* Tarah Harpstreith joined the National Association of Women in Construction Metro Denver Chapter as president.

* OptTek Systems Inc. was awarded a Phase II Small Business Innovative Research contract by the United States Department of Army's Research Development and Engineering Command's Army Research Office.

* Denver-based EnZed Design won a Bronze Award in the brand and corporate identity design category at the Art Directors Club of Denver 2008 annual show.

* Entrepreneur and venture capitalist Dinesh Patel will host Secrets for Funding Your Business at the PPA Event Center in Denver on Oct. 28. Information: rockies.tie.org

* Knight added Donald Bishop, Jerry LaFour and Mark Pester as corporate account representatives.

* The Denver Housing Authority will host its 11th Annual Vendor and Contractor Open House on Friday at the Denver Athletic Club. Information: 720-932-3070

* Barnhart Communications was selected to provide communications services for Denver Public Library, the Regional Transportation District, Educause, Pagosa Springs Town Tourism Committee, Scotts Bluff County Tourism and the Rangeview Library District.

* The Denver Northwest Market Center of Keller Williams Realty added Realtor Aimee Quaratino.

* Douglas A. Dennis, medical director of the Porter Center for Joint Replacement, was elected 2008-09 president of The Knee Society.

* Denver-based SpireMedia hired Haley Baroody as office manager and Matt Gudmundson and Tom Harshenberger as Web developers.

Subscribe to the Rocky Mountain News