BNET Daily Dispatch: DaimlerChrysler, U.S. Service Sector, Federated, and Best Buy
- DaimlerChrysler's chief executive, Dieter Zetsche, confirmed today that the company is negotiating with "potential partners who have shown clear interest" in buying its Chrysler division, which lost $1.5 billion last year. Dr. Zetsche did not guarantee the talks would end in a sale, and remarked that the company needs to keep all options open. With $20 billion in health-care obligations to employees, analysts expect Chrysler to be a hard sell, with some valuations as low as $7 billion.
- Growth in the U.S. service industries slowed unexpectedly last month to the lowest rate in almost four years. The Institute for Supply Management's (ISM) index of non-manufacturing businesses fell to 52.4, lower than economists expected. Index levels above 50, however, indicate the service sector is still expanding. The ISM employment index fell to the lowest level since July 2004, and inventories and backlogs increased.
- Federated Department Stores, owner of Macy's and Bloomingdale's, plans to invest $100 million in its direct marketing business. Terry Lundgren, Federated chairman and chief executive, said he expects the direct-to-consumer business to exceed $1 billion in annual revenue by 2008, up from $620 million in 2006. The company's investment is a move to take advantage of the exceptional growth it has seen in online markets, especially on the Macy's website.
- Strong flat-panel TV sales helped Best Buy exceed expectations this quarter, with revenue jumping 21 percent to $12.9 billion and profit up 18.5 percent to reach $763 million. Best Buy's struggling rival, Circuit City, posted a loss of $12 million. The price of both companies' stock fell this morning, however, as analysts believe consumer electronics forecasts are overly optimistic.