BriefCase

| Tuesday, October 14, 2008 7:26 PM PDT ∞

Volcker warns of hard recession

SINGAPORE (AP) ---- Former U.S. Federal Reserve Chairman Paul Volcker said Tuesday that the U.S. and Europe face a "considerable recession" as a global financial crisis begins to hurt consumer demand and industrial production. "I've seen a lot of crises, but I've not seen anything quite like this one," Volcker said in a speech in Singapore. "I don't think we can escape damage to the real economy."

Volcker, 81, said pledges this week by U.S. and European governments to pump hundreds of billions of dollars into ailing banks has helped boost investor confidence. "These kinds of measures ---- government guarantees and interventions ---- are really distasteful," said Volcker, who was Fed chief from 1979 to 1987. "However distasteful, I'm afraid they were necessary in this emergency to restore some sense of stability and confidence."

Pepsico cutting jobs, closing factories

NEW YORK (AP) ---- PepsiCo Inc. is cutting jobs and closing factories to give it some "breathing room" to navigate the volatility that has permeated the global economy. The maker of Pepsi-Cola, Doritos and Sun Chips said Tuesday that it plans to eliminate 3,300 jobs and shutter six plants in an effort to save $1.2 billion over three years. It plans to use the savings primarily to revive lagging U.S. soft drink sales.

The announcement came as the global snacks and drinks company reported a 9.5 percent drop in third-quarter profit, missing Wall Street expectations. The job cuts amount to roughly 1.8 percent of PepsiCo's global work force of about 185,000 employees, and will affect managerial and factory jobs in and outside the U.S. Most will be eliminated in the coming months, Chief Financial Officer Richard Goodman said.

Pepsico is the nation's second-largest drink-maker; it also owns the Frito-Lay, Tropicana and Quaker brands. The company said the cuts will generate savings of $350 million to $400 million in 2009.

Johnson & Johnson earnings jump

TRENTON, N.J. (AP) ---- Health care giant Johnson & Johnson on Tuesday posted a 30 percent jump in third-quarter profit and beat Wall Street expectations, mainly because the year-ago results were weighed down by a $745 million restructuring charge.

Higher sales of consumer products and medical devices, boosted overseas by the weak dollar, also helped the New Brunswick, N.J.-based maker of contraceptives, baby care items, medical devices and prescription drugs. It reported net income of $3.31 billion, up from $2.55 billion in the year-ago period.

Revenue climbed 6.3 percent, to $15.9 billion, from $14.97 billion, but was boosted 3.1 percent by favorable currency exchange rates.

Iceland resumes trade on exchange

REYKJAVIK (AP) ---- Crisis-stricken Iceland's central bank said Tuesday that it has drawn more than a half-billion dollars from a swap facility set up with fellow Nordic nations to give it access to euros as it restarted trade on its buffeted stock exchange after a three-day halt.

Icelandic officials also began talks in Moscow on the terms of a hoped-for $5.5 billion loan from Russia.

Nasdaq OMX Iceland had halted equities trading for three days in a bid to prevent large falls on the exchange after a turbulent week in the Nordic island nation, where the government has taken control of the country's three major banks.

Supplies of foreign currency have also dried up as the Icelandic krona plummets in value, prompting the central bank, Sedlabanki, to call in its swap facility deal with the central banks of Denmark and Norway, tapping each for $273.5 million. That works out to a total of $546.8 million.

Group: Germany near recession

BERLIN (AP) ---- A group of leading German economic think tanks said Tuesday that Europe's largest economy is on the "brink of a recession" and has scaled back its 2009 growth prognosis to 0.2 percent.

The four institutes held to their previous prognosis of 1.8 percent growth for 2008 and named global financial markets' reaction to recent rescue packages "the largest questionable factor" in the prognosis.

In the report issued in Berlin, the four institutes praised the pledge from Chancellor Angela Merkel's government of much as $671 billion to shore up the nation's banks on Monday.

Analysts: GM likely to cut more factories

DETROIT (AP) ---- Industry analysts say General Motors Corp.'s plant closure announcements earlier this week probably aren't the last for the giant automaker as it races to cut costs, bring its factory capacity in line with shrinking U.S. auto sales and shore up its share price.

GM said Monday that it will shutter its metal parts stamping factory near Grand Rapids, Mich., by the end of next year, costing 1,520 jobs. It also sped up the end of sport utility vehicle production at its Janesville, Wis., plant to Dec. 23, eliminating an additional 1,200 positions.

"They have some capacity issues on the parts plants. There's no question about that," said James Rubenstein, a geography professor at Miami University in Oxford, Ohio, who has studied the placement of auto plants around the country.

U.S. car sales overall are down 13 percent this year, with predictions that automakers will sell 2 million fewer vehicles than they did last year.

Qualcomm claims court victory

WASHINGTON (CNS) ---- The U.S. Court of Appeals on Tuesday vacated an International Trade Commission ban on the importation of some 3G cellular telephones containing Qualcomm chips. The court held that the ITC lacks the statutory authority to ban products made by downstream users of Qualcomm's chips who were not named in Broadcom Corp.'s lawsuit, noting that Broadcom knew the identities of all of Qualcomm's customers, but chose not to name them in its complaint.

The court also ruled that Qualcomm was liable for inducing infringement of a patent held by Broadcom. The patent involved battery-saving technology.

"In effect, the court has disapproved Broadcom's tactic of attacking the wireless industry, including handset manufacturers and wireless operators, without providing them with the opportunity to defend themselves in the action," said Dan Rosenberg, executive vice president and general counsel of Qualcomm.

Broadcom said it was pleased that the appeals court affirmed the validity of its patent and that Qualcomm's custom