Philip Morris profits up 17.6%
Philip Morris Cos. Inc. posted a second-quarter profit increase of 17.6 percent yesterday as its domestic tobacco business led by Marlboro turned in its best performance since last year's cigarette price war.
Philip Morris ignited a domestic price war in the spring of 1993 when it effectively cut the price of the world's best-selling brand by about 40 cents a pack to discourage smokers from switching from Marlboros to cheaper smokes.
The price battle sapped profits industrywide last year, but is now producing the intended results for Philip Morris and its most popular cigarette, Marlboro. The company's stock closed down 75 cents, at $53.125, as many investors were looking for the earnings to be even higher.
Macy's inches closer to merger
A merger of Federated Department Stores Inc. and R. H. Macy & Co. inched closer to becoming reality yesterday, but the two companies and Macy bondholders continued to haggle over questions standing in the way of a deal.
The official bondholders creditor committee met yesterday to discuss Federated's latest offer. Robert Miller, the lawyer representing the bondholders, said that while the committee did not pledge its allegiance to a merger proposal, "the momentum is moving in Federated's favor."
Consumer credit keeps climbing
Consumer credit soared $10.4 billion in May, rising for the 14th straight month under a revised system for calculating debt, the Federal Reserve said yesterday.
The increase was 15.1 percent at an annual rate over April and included a 16 percent jump in credit card borrowing, which climbed $4.1 billion to a seasonally adjusted annual rate of $308.4 billion.
Costs to rise in fraud scandal
Prudential Securities' projected cost for its limited partnership debacle has surpassed $1.1 billion, which would make it the costliest fraud scandal for any investment house in Wall Street history.
The increased cost was announced yesterday by Prudential Securities, which said it was adding $305 million to its reserves for settlements involving the partnership sales. That money would then be used to settle claims by clients who said they were fraudulently sold the investments, which have since soured.
Alliant studies Hercules deal
Alliant Techsystems Inc. of Hopkins, Minn., said yesterday that it had signed a letter of intent to acquire the aerospace business of Wilmington, Del-based Hercules Inc. in a deal valued at $465 million in cash and stock.