Business Highlights

AP Online
11-25-1998
NEW YORK (AP) _ America Online Inc., the computer online service that naysayers once said would surely be crushed by Microsoft or the Internet, has emerged as a newly formidable competitor with its deal to buy Netscape Communications Corp.

The $4.2 billion merger announced Tuesday, combining AOL's consumer-focused service and Netscape's strength with business customers, could fundamentally alter the balance of power on the Internet.

While AOL is already the world's largest Internet access and online service provider, the deal gives the company important advantages in its battle with Microsoft Corp. Together, Netscape's and AOL's sites reach a staggering 70 percent of all people who access the Internet, according to NetRatings, a research firm.

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MOUNTAIN VIEW, Calif. (AP) - Netscape Communications Corp. on Tuesday reported a quarterly profit of $2.7 million, meeting Wall Street expectations on the day it agreed to be bought by America Online Inc. for $4.2 billion.

Netscape credited stronger sales from its World Wide Web site and its business software. Revenues rose to a record $162 million for the quarter, compared with $152 million in the final quarter of 1997.

Netscape's profit came to 3 cents a share on a diluted basis in the three months ended Oct. 31, compared with a profit of $10.2 million, or 10 cents a diluted share, in the quarter ended Sept. 30, 1997. Analysts surveyed by First Call had predicted earnings of 3 cents a share.

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WASHINGTON (AP) - The government reported the worst drop in corporate profits in nearly nine years on Tuesday, even as stock prices hovered near record highs.

Economists predict earnings could fall again next year and say they fear the market is vulnerable to another downturn, perhaps worse than the Dow's 19 percent plummet between July 17 and Aug. 31.

So why did the Dow Jones industrial average begin the week by shooting to a record high? Many attribute the market's startlingly swift recovery since early October to a shortsighted focus on recent interest-rate cuts and on a spate of corporate mergers, including Tuesday's announcement that America Online will buy Netscape for $4.2 billion.

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WASHINGTON (AP) - Fairness in home mortgage lending to blacks and Hispanics has improved in recent years, but a survey indicates that much of the new lending to blacks appears to come from subprime mortgages, loans with higher interest rates.

Officials of the National Community Reinvestment Coalition, in releasing the study Tuesday, said they were concerned that after a few years of progress starting in 1994, the gap between minorities and whites being denied home mortgages widened again in 1996-97.

The study was based on data submitted to the federal government by banks, thrifts and mortgage companies. It is consistent with a government survey issued last summer showing that financial institutions are turning down blacks, Hispanics and American Indians for home mortgage loans more often than whites, no matter what their income.

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PLANO, Texas (AP) - In a move that will bolster its already profitable Eckerd drug store division, J.C. Penney Co. Inc. will buy Genovese Drug Stores for $432 million in stock and assume $60 million of debt.

The deal announced Tuesday will give Penney a greater presence in the New York area, where Melville, N.Y.-based Genovese operates 141 drugstores. The Genovese stores will be renamed Eckerd.

The deal adds another strong drug chain to its Eckerd division, which have be a good source of profits for the Plano, Texas-based retailer since it was acquired last year. Its department stores, meanwhile, have been struggling.

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NEW YORK (AP) - Former Nickelodeon boss Geraldine Laybourne is enlisting some A-list partners in her new company's first television venture - a cable channel aimed exclusively at women.

Laybourne's Oxygen Media announced Tuesday it will team with Oprah Winfrey and ``Roseanne'' producer Marcy Carsey's company to create the Oxygen channel, which will provide entertainment, news and sports for women. Oxygen will compete with Lifetime, the only established cable channel that caters directly to women. Lifetime, which is already seen in 72 million homes, has consisted mainly of movies and reruns but recently added women's basketball and original programs to broaden its appeal. Oxygen hopes to attract younger working women and teen-agers.

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WASHINGTON (AP) - Exxon has recalled shipments of aviation fuel used for prop planes and helicopters after learning that it failed to meet certain specification standards, company officials said Tuesday.

The fuel problem will not cause plane engines to fail, but the company decided to recall it in an ``abundance of precaution,'' said Dave Gardner, spokesman for the Houston-based Exxon USA.

Exxon officials would not reveal how many airports were affected by the recall, but some municipal airports in the Washington area grounded their planes after receiving word that the fuel did not meet Exxon specifications.

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MIAMI (AP) - Philip Morris Inc. ended some experiments aimed at producing safer cigarettes when the tests showed promise, a former company scientist testified Tuesday.

Ian Uydess said that after three months of research, the nation's largest cigarette maker terminated one effort aimed at removing nitrates from tobacco. The project used bacteria to get rid of nitrates, a major component of nitrosamines, which may cause cancer.

``We were told it was shelved, that the company wasn't going to use it for product quality reasons or whatever, which really surprised me,'' Uydess testified in a $200 billion class-action lawsuit brought by sick Florida smokers against six tobacco companies and two industry groups.

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BEVERLY HILLS, Calif. (AP) - Hilton Hotels Corp. shareholders have voted to spin off the company's casinos in a move that will enable Hilton to focus on its more lucrative lodging business.

Shareholders on Tuesday approved the plan to make the casino unit a separate company. They also voted to merge the new gambling entity, to be called Park Place Entertainment Corp., with the Mississippi operations of Grand Casinos Inc.

In a separate vote on Tuesday, Grand Casinos shareholders also approved the merger.

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MOSCOW (AP) - The International Monetary Fund is still critical of Russia's approach to tackling its economic crisis and is reluctant to release billions of dollars in crucial loans, officials said Tuesday.

Meanwhile, the deputy chairman of the Central Bank said the bank could only provide $1.7 billion to bail out the crippled banking sector. The money could save a few hundred banks, but hundreds more are likely to fold.

Prime Minister Yevgeny Primakov's Cabinet has been pushing the IMF to release the next installment of a frozen $22.6 billion aid package that the government says it needs to pay off huge domestic and foreign debts.

--- By The Associated Press

Stocks pulled back Tuesday as investors locked in some gains from Monday's rally, which lifted the Dow to its first record high since July. The Dow Jones industrial average fell 73.12 to 9,301.15.

Pork futures rose sharply, crude and its products continued their slide, while cocoa also fell.


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