Business & Finance
DaimlerChrysler's US division is headed back into the red for the first quarter of 2003, the automaker warned, less than four months after reporting it had earned a $640 million profit last year. In a statement issued in Germany, the company said its Chrysler Group will lose about $1.17 billion, blaming fierce competition with General Motors and Ford that has forced it to offer rebates and cheap financing. The situation, it added, will make it "difficult to achieve the operating profit target of $2 billion for 2003." In a related development, the automaker canceled a planned five-year, $2.5 billion bond issue.
Without saying how or when, troubled Cable & Wireless PLC indicated it will cease operations in the US, where it has $652 million worth of property and communications network leases and almost 2,800 employees. The company announced it will refocus efforts in its home base, Britain, although that will involve 1,500 new layoffs and suspension of a dividend for shareholders this year, the first such decision since it was sold to private investors in 1981.
WellPoint Health Networks, the No. 2 US health insurer, agreed to buy Wisconsin HMO provider Cobalt Corp. for just under $1 billion in cash and stock, the companies announced Tuesday. The merger marks the latest in a series of regional acquisitions by WellPoint of Thousand Oaks, Calif. Cobalt is based in Milwaukee.
Auditing giant KPMG International's $125 million settlement with current and former investors in Rite Aid Corp. - who sued over its failure to detect $1.6 billion in misstated earnings by the pharmacy chain - was OK'd by a judge in Philadelphia. He also signed off on $31.7 million in legal fees for two firms that handled the case. Final approval had been held up by a stockholder who claimed the fees were excessive.