April 2008 Archives

Soon all auto companies will be doing it, I figure.

Toyota simulation tries to keep you in one piece

(CNET) Toyota has developed a computer simulation dubbed Total Human Model Safety (THUMS), which re-creates high-speed accidents to examine the impact it has on human physiology, according to Fareastgizmos. The system is part of a new study conducted jointly with the FIA Institute that is designed specifically to examine high-speed rear-impact collisions at the FIA Formula One World Championship and Indy Racing League.

Driving an F1 car, as you might imagine, is unlike steering a conventional automobile. The seat is lower than usual and the driver is reclined with legs stretched to reach the pedals. For first-timers, this somewhat awkward position takes some getting used to, and it doesn't help that your vision is limited only to what is immediately ahead. There are also other things to consider, such as the G-force when traveling at speeds in excess of 186 miles per hour and the immense stress on the driver's spine during rear-impact collisions.

Read the full story.

DaVita Inc., the El Segundo-based provider of kidney dialysis services, said it was honored for the fourth consecutive year by Training Magazine as one of the Top 125 firms of employee-sponsored workforce training and development.

The recognition is awarded to organizations that demonstrate a deep commitment to enhancing the skills of their employees.

This year, DaVita ranked No. 77 on the list. The publication noted DaVita as one of the best among US for-profit healthcare companies.

"DaVita's teammate orientation and leadership training is top-notch," said Bill
Shannon, Chief Wisdom Officer at DaVita, in a statement. "We have spent many hours developing an education curriculum that emphasizes the importance of both personal and professional development. We believe each of our teammates has the potential to become a great leader, and our job is to empower them with the appropriate tools to succeed."

Economy grows by only 0.6 percent in 1st quarter of 2008

(AP) The bruised economy limped through the first quarter, growing at just a 0.6 percent pace as housing and credit problems forced people and businesses alike to hunker down.

The country's economic growth during January through March was the same as in the final three months of last year, the Commerce Department reported Wednesday. The statistic did not meet what economists consider the classic definition of a recession, which is a retraction of the economy. This means that although the economy is stuck in a rut, it is still managing to grow, even if modestly.

Many analysts were predicting that the gross domestic product (GDP) would weaken a bit more -- to a pace of just 0.5 percent -- in the first quarter. Earlier this year, some economists thought the economy would actually lurch into reverse during the opening quarter. Now, they say they believe that will likely happen during the current April-to-June period.

"The economy is weak but not collapsing," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. "A recession can't be ruled out, although the stars are not lined up at this point to definitively say one way or the other."

Gross domestic product measures the value of all goods and services produced within the United States and is the best measure of the country's economic health. Voters are keenly worried about the country's economic problems and so are politicians -- in Congress, in the White House and on the campaign trail.

The housing situation turned more bleak in the first quarter, as record-high foreclosures dumped more unsold homes on the market, adding to builders' headaches. Builders slashed spending on housing projects by a whopping 26.7 percent, on an annualized basis, the most in 27 years. That was the big drag on the economy.

Consumers -- whose spending is vital to the country's economic health -- turned much more cautious, also restraining overall economic growth in the first quarter. Their spending rose at just a 1 percent pace. That was down from a 2.3 percent growth rate and was the slowest since the second quarter of 2001, when the United States was suffering through its last recession.

Soaring energy and food prices are walloping people's pocketbooks, leaving them with less to spend on other things. The credit crunch also has made it harder for people to finance big ticket items, such as cars and homes. And, many homeowners -- watching their homes -- often their single-biggest asset -- slump in value, also are feeling less wealthy and less inclined to spend.

Another report from the Labor Department Wednesday showed that workers' compensation -- including wages and benefits -- grew 0.7 percent in the first quarter, the slowest pace in two years. Many economists were expecting a 0.8 percent rise. The report suggests that the weak labor market is making employers a bit less generous with their compensation.

Businesses, meanwhile, cut back spending on equipment and software at a 0.7 percent pace, the most since the final quarter of 2006. And, they trimmed spending on commercial construction at a 6.2 percent pace, the most since the third quarter of 2005.

However, businesses boosted their investment in building up stocks of supplies in the first quarter, a big force adding to GDP. Exports of U.S. goods and services also helped first-quarter growth. U.S. exports are being helped by the falling value of the U.S. dollar, which makes U.S. made goods and services less expensive to foreign buyers.

Spending by the government was another factor helping out GDP in the first quarter. That spending rose at a 2 percent pace for the second quarter in a row.

To bolster the economy, the Federal Reserve is expected to lower a key interest rate by one-quarter percentage point to 2 percent later Wednesday. That would mark a more moderate-sized rate reduction after a recent string of hefty cuts. Many economists believe the Fed, which started dropping rates last September, may be nearing the end of its rate-cutting campaign because policymakers don't want to aggravate inflation. Those rate reductions, which take months to affect economic activity, can sow the seeds of inflation down the road.

An inflation measure linked to the GDP report showed that prices grew at a rate of 3.5 percent in the first quarter, down from a 3.9 percent pace in the prior quarter.

Another gauge showed that the core prices excluding food and energy rose at a rate of 2.2 percent in the first quarter. That was a lower than the 2.5 percent pace registered in the fourth quarter but still outside the Fed's comfort zone. The upper level of the Fed's inflation tolerance is 2 percent.

Gas and food prices, however, have moved higher since the start of the year, adding to inflation pressures. Gasoline prices, which have recently set new record highs, have climbed to $4 a gallon in some parts of the country.

A growing number of economists believe the economy is in a recession and is indeed contracting now.

Under one rough rule, if the economy contracts for six straight months it is considered to be in a recession. That didn't happen in the last recession -- in 2001_ though. A panel of experts at the National Bureau of Economic Research that determines when U.S. recessions begin and end uses a broader definition, taking into account income, employment and other barometers. That finding is usually made well after the fact.

During the first three months of this year, job losses neared the staggering quarter-million mark. The unemployment rate has climbed to 5.1 percent and is expected to move higher in the coming months.

Fed Chairman Ben Bernanke, earlier this month, acknowledged for the first time that a recession this year was possible.

President Bush on Tuesday said the country was dealing with "difficult times." Bush said he understood Americans' anxiety over soaring gas prices, record-high home foreclosures and other economic woes.

The government's $168 billion economic-stimulus package -- including tax rebates that started flowing to bank accounts on Monday -- should help energize the economy in the second half of this year, the Bush administration and Federal Reserve officials say. Democrats in Congress insist more relief needs to be provided, including additional unemployment benefits to cushion the pain of joblessness. The administration has resisted, saying the rebates and other stimulative efforts should be sufficient once they fully kick in.

But will anyone notice?

Watch a video.

Clinton-McCain gas tax holiday slammed as bad idea

(AP) A gas tax holiday proposed by U.S. presidential hopefuls John McCain and Hillary Clinton is viewed as a bad idea by many economists and has drawn unexpected support for Clinton rival Barack Obama, who also is opposed.

"Score one for Obama," wrote Greg Mankiw, a former chairman of President George W. Bush's Council of Economic Advisers. "In light of the side effects associated with driving ... gasoline taxes should be higher than they are, not lower."

Republican McCain and Democrat Clinton, who is battling Obama for their party's nomination, both want to suspend the 18.4-cents-per-gallon federal gas tax during the peak summer driving months to ease the pain of soaring gas prices. The tax is used to fund the Highway Trust Fund that builds and maintains roads and bridges.

Economists said that since refineries cannot increase their supply of gasoline in the space of a few summer months, lower prices will just boost demand and the benefits will flow to oil companies, not consumers.

"You are just going to push up the price of gas by almost the size of the tax cut," said Eric Toder, a senior fellow at the Urban-Brookings Tax Policy Center in Washington.

Obama criticized the plan as pure politics and said the only way to lower the price of gas is to use less oil.

Read the full story.

The trickle of bad economic news has become a gusher.

US home price drop deepened in February-S&P index

NEW YORK (Reuters) - Prices of existing U.S. single-family homes extended their slump in February, with 17 of the 20 measured regions posting record annual declines, according to the Standard & Poor's/Case Shiller home price index on Tuesday.

The composite month-over-month index of 20 metropolitan areas fell 2.6 percent to 175.94 in February for an annual 12.7 percent drop. It has slumped 15.8 percent from its June 2006 peak.

S&P said its composite month-over-month index of 10 metro areas slid 2.8 percent in February to 190.58, for a record annual 13.6 percent decline. The index is now 14.8 percent below its highest level in July 2006.

"There is no sign of a bottom in the numbers," David Blitzer, chairman of the index committee at S&P, said in a press release.

Read the full story.

I'll try to shed a tear for the millionaires ... until I become one.

Millionaires see economy as weak, but expect rebound in 2009

(AP) NEW YORK -- Even millionaires are feeling the economic squeeze, with many saying they don't even "feel" wealthy. But as a group, they are optimistic that things will improve in the next year.

The Fidelity Millionaire Outlook, a survey of 1,000 people with at least $1 million in assets to invest, found that you don't have to be a laid-off worker in a rust belt state to have a negative view of the nation's economy.

Using a scale ranging from minus 100 as the worst to 100 as the best, the survey found that high net-worth individuals have a minus 50, or "very weak," view of the economy right now. But when asked where things will be next January, the grade rises to a positive 18.

That could mean millionaires see "today's problem as tomorrow's opportunity," said Jack Callahan, president of Fidelity Institutional Wealth Services, the unit that sponsored the survey, which was conducted by an independent research firm.

People with more than $10 million to invest other than their home and retirement savings -- what Fidelity called "deca-millionaires" -- have a more pessimistic view than those with less than $2.5 million.

Tellingly, about 19 percent of the people surveyed do not consider themselves wealthy, even though they have, on average, $3 million to invest and earn at least $270,000 a year.

Callahan suggested that reflects people in this category struggling to maintain a lifestyle their income can't support. "It says these folks are spending beyond their means," he said.

Overall, 31 percent of those surveyed intend to put more money in the next year into fixed-income vehicles -- typically bonds or preferred stocks that carry lower risk and guaranteed returns. Some 27 percent plan to buy more individual stocks, with about half that, 14 percent, planning to increase real estate investments.

"As they look at the future and look at the markets, they see fixed-income as the best," Callahan said. While fixed-income investments are usually considered safer, he noted that many have lost value in the last year because of the subprime housing crisis and credit crunch. Three-quarters of those surveyed said the subprime fallout hurt their investments, with 42 percent saying the effect has been at least moderate.

The 2008 survey, taken in January by Burke Inc., did not identify Fidelity as the sponsor. It has a margin of error of plus or minus 3 percentage points.

The outlook is the second such survey Burke did for Fidelity. Last year's results found a score of positive 41 for the economy a year ago, but just a positive 6 for where things would be at the beginning of this year.

While that didn't quite predict the recession many economists say the country is in now, it does indicate that millionaires saw a slowdown on its way. In particular, millionaires last year expected difficulties in the stock market and in real estate.

"It will be an interesting indicator to track over the years," Callahan said. "Millionaires, as business people, look to the future."

I will try to shed a tear for the millionaires ... until I become one.

Millionaires see economy as weak, but expect rebound in 2009

(AP) NEW YORK -- Even millionaires are feeling the economic squeeze, with many saying they don't even "feel" wealthy. But as a group, they are optimistic that things will improve in the next year.

The Fidelity Millionaire Outlook, a survey of 1,000 people with at least $1 million in assets to invest, found that you don't have to be a laid-off worker in a rust belt state to have a negative view of the nation's economy.

Using a scale ranging from minus 100 as the worst to 100 as the best, the survey found that high net-worth individuals have a minus 50, or "very weak," view of the economy right now. But when asked where things will be next January, the grade rises to a positive 18.

That could mean millionaires see "today's problem as tomorrow's opportunity," said Jack Callahan, president of Fidelity Institutional Wealth Services, the unit that sponsored the survey, which was conducted by an independent research firm.

People with more than $10 million to invest other than their home and retirement savings -- what Fidelity called "deca-millionaires" -- have a more pessimistic view than those with less than $2.5 million.

Tellingly, about 19 percent of the people surveyed do not consider themselves wealthy, even though they have, on average, $3 million to invest and earn at least $270,000 a year.

Callahan suggested that reflects people in this category struggling to maintain a lifestyle their income can't support. "It says these folks are spending beyond their means," he said.

Overall, 31 percent of those surveyed intend to put more money in the next year into fixed-income vehicles -- typically bonds or preferred stocks that carry lower risk and guaranteed returns. Some 27 percent plan to buy more individual stocks, with about half that, 14 percent, planning to increase real estate investments.

"As they look at the future and look at the markets, they see fixed-income as the best," Callahan said. While fixed-income investments are usually considered safer, he noted that many have lost value in the last year because of the subprime housing crisis and credit crunch. Three-quarters of those surveyed said the subprime fallout hurt their investments, with 42 percent saying the effect has been at least moderate.

The 2008 survey, taken in January by Burke Inc., did not identify Fidelity as the sponsor. It has a margin of error of plus or minus 3 percentage points.

The outlook is the second such survey Burke did for Fidelity. Last year's results found a score of positive 41 for the economy a year ago, but just a positive 6 for where things would be at the beginning of this year.

While that didn't quite predict the recession many economists say the country is in now, it does indicate that millionaires saw a slowdown on its way. In particular, millionaires last year expected difficulties in the stock market and in real estate.

"It will be an interesting indicator to track over the years," Callahan said. "Millionaires, as business people, look to the future."

The trickle of bad economic news has become a gusher.

US home price drop deepened in February-S&P index

NEW YORK (Reuters) - Prices of existing U.S. single-family homes extended their slump in February, with 17 of the 20 measured regions posting record annual declines, according to the Standard & Poor's/Case Shiller home price index on Tuesday.

The composite month-over-month index of 20 metropolitan areas fell 2.6 percent to 175.94 in February for an annual 12.7 percent drop. It has slumped 15.8 percent from its June 2006 peak.

S&P said its composite month-over-month index of 10 metro areas slid 2.8 percent in February to 190.58, for a record annual 13.6 percent decline. The index is now 14.8 percent below its highest level in July 2006.

"There is no sign of a bottom in the numbers," David Blitzer, chairman of the index committee at S&P, said in a press release.

Read the full story.

112 percent is too much to ignore.

The story is at the bottom. Here's a CNN video on the topic.

Homes facing foreclosure more than doubled in 1Q from 2007

(AP) The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many homeowners powerless to prevent homes from being auctioned to the highest bidder, a research firm said Monday.

Among the hardest hit states were Nevada, Florida and, in particular, California, where Stockton led the nation with a foreclosure rate that was 6.6 times the national average, Irvine, Calif.-based RealtyTrac Inc. said.

Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year, RealtyTrac said.

The latest tally also represents an increase of 23 percent from the fourth quarter of last year.

RealtyTrac monitors default notices, auction sale notices and bank repossessions.

All told, one in every 194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but four states.

The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity, RealtyTrac noted.

"What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again," said Rick Sharga, RealtyTrac's vice president of marketing.

However, the unavailability of loans for people without perfect credit and a significant down payment is slowing the process, he said.

"It's a cycle that's going to be difficult to break, and we're certainly not at the breaking point just yet," Sharga added.

The surge in foreclosure filings also suggests that much-touted campaigns by lawmakers and the mortgage lending industry aimed at helping at-risk homeowners aren't paying off.

Hope Now, a Bush administration-organized mortgage industry group, said nearly 503,000 homeowners had received mortgage aid in the first quarter. Most of the aid was temporary, however.

Pennsylvania was a notable standout in the latest foreclosure data. The number of homes in the state to receive a foreclosure-related filing plunged 24.4 percent from a year earlier.

Sharga credited the decline to the state's foreclosure relief measures, noting that cities such as Philadelphia put in place a moratorium on all foreclosure auctions for April and implemented other measures aimed at helping slow foreclosures.

Nearly 157,000 properties were repossessed by lenders nationwide during the quarter, according to RealtyTrac.

The flood of foreclosed properties on the market has contributed to falling or stagnating home values, yet lenders have yet to implement heavy discounts on repossessed homes, Sharga said.

Nevada posted the worst foreclosure rate in the nation, with one in every 54 households receiving a foreclosure-related notice, nearly four times the national rate.

The number of properties with a filing increased 137 percent over the same quarter last year but only rose 3 percent from the fourth quarter.

California had the most properties facing foreclosure at 169,831, an increase of 213 percent from a year earlier. It also posted the second-highest foreclosure rate in the country, with one in every 78 households receiving a foreclosure-related notice.

California metro areas accounted for six of the 10 U.S. metropolitan areas with the highest foreclosure rates in the first quarter, RealtyTrac said.

Many of the areas -- including Stockton, Riverside-San Bernardino, Fresno, Sacramento and Bakersfield -- are located in inland areas of the state where many first-time buyers overextend themselves financially to buy properties that have plunged in value since the market peak.

"California still hasn't hit bottom," Sharga said. "We have a lot of California homes that are in early stages of default that may not be salvageable because either there's no market or financing available, or both."

Arizona had the third-highest foreclosure rate, with one in every 95 households reporting a foreclosure filing in the quarter. A total of 27,404 homes reported at least one filing, up nearly 245 percent from a year ago and up 45 percent from the last quarter of 2007.

Florida had 87,893 homes reporting at least one foreclosure filing, a 178 percent jump from the first quarter of last year and a 17 percent hike from the fourth quarter last year. That translates into a foreclosure rate of one in every 97 households.

The other states among the top 10 with the highest foreclosure rates were Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut.

112 percent is too much to ignore.

Homes facing foreclosure more than doubled in 1Q from 2007

(AP) The number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier, as weakening property values and tighter lending left many homeowners powerless to prevent homes from being auctioned to the highest bidder, a research firm said Monday.

Among the hardest hit states were Nevada, Florida and, in particular, California, where Stockton led the nation with a foreclosure rate that was 6.6 times the national average, Irvine, Calif.-based RealtyTrac Inc. said.

Nationwide, 649,917 homes received at least one foreclosure-related filing in the first three months of the year, up 112 percent from 306,722 during the same period last year, RealtyTrac said.

The latest tally also represents an increase of 23 percent from the fourth quarter of last year.

RealtyTrac monitors default notices, auction sale notices and bank repossessions.

All told, one in every 194 households received a foreclosure filing during the quarter. Foreclosure filings increased in all but four states.

The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity, RealtyTrac noted.

"What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again," said Rick Sharga, RealtyTrac's vice president of marketing.

However, the unavailability of loans for people without perfect credit and a significant down payment is slowing the process, he said.

"It's a cycle that's going to be difficult to break, and we're certainly not at the breaking point just yet," Sharga added.

The surge in foreclosure filings also suggests that much-touted campaigns by lawmakers and the mortgage lending industry aimed at helping at-risk homeowners aren't paying off.

Hope Now, a Bush administration-organized mortgage industry group, said nearly 503,000 homeowners had received mortgage aid in the first quarter. Most of the aid was temporary, however.

Pennsylvania was a notable standout in the latest foreclosure data. The number of homes in the state to receive a foreclosure-related filing plunged 24.4 percent from a year earlier.

Sharga credited the decline to the state's foreclosure relief measures, noting that cities such as Philadelphia put in place a moratorium on all foreclosure auctions for April and implemented other measures aimed at helping slow foreclosures.

Nearly 157,000 properties were repossessed by lenders nationwide during the quarter, according to RealtyTrac.

The flood of foreclosed properties on the market has contributed to falling or stagnating home values, yet lenders have yet to implement heavy discounts on repossessed homes, Sharga said.

Nevada posted the worst foreclosure rate in the nation, with one in every 54 households receiving a foreclosure-related notice, nearly four times the national rate.

The number of properties with a filing increased 137 percent over the same quarter last year but only rose 3 percent from the fourth quarter.

California had the most properties facing foreclosure at 169,831, an increase of 213 percent from a year earlier. It also posted the second-highest foreclosure rate in the country, with one in every 78 households receiving a foreclosure-related notice.

California metro areas accounted for six of the 10 U.S. metropolitan areas with the highest foreclosure rates in the first quarter, RealtyTrac said.

Many of the areas -- including Stockton, Riverside-San Bernardino, Fresno, Sacramento and Bakersfield -- are located in inland areas of the state where many first-time buyers overextend themselves financially to buy properties that have plunged in value since the market peak.

"California still hasn't hit bottom," Sharga said. "We have a lot of California homes that are in early stages of default that may not be salvageable because either there's no market or financing available, or both."

Arizona had the third-highest foreclosure rate, with one in every 95 households reporting a foreclosure filing in the quarter. A total of 27,404 homes reported at least one filing, up nearly 245 percent from a year ago and up 45 percent from the last quarter of 2007.

Florida had 87,893 homes reporting at least one foreclosure filing, a 178 percent jump from the first quarter of last year and a 17 percent hike from the fourth quarter last year. That translates into a foreclosure rate of one in every 97 households.

The other states among the top 10 with the highest foreclosure rates were Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut.

Could GM's problems lead to layoffs for Toyota and Honda in Torrance?

GM to lay off 3,500 at 4 pickup truck and SUV factories

DETROIT (AP) -- Sagging pickup truck and sport utility vehicle sales have forced General Motors Corp. to shut down one shift each at four North American factories and lay off about 3,500 workers.

The world's largest automaker by sales said Monday that the cuts, to take effect starting this summer, were brought on by weak demand due to high gasoline prices and an economic downturn.

The cuts will affect pickup factories in Pontiac and Flint, Mich., and Oshawa, Ontario, as well as the full-size SUV plant in Janesville, Wis. The layoffs represent just over 4 percent of GM's hourly manufacturing work force of about 80,000 in North America.

The company said the cuts mean it will make about 88,000 fewer pickups and 50,000 fewer large SUVs this calendar year.

GM said the exact number of layoffs will be worked out with its unions. Workers will get unemployment benefits and supplemental pay that total 80 percent of their normal 40-hour gross pay, said GM spokesman Dan Flores.

"With rising fuel prices, a softening economy and a downward trend on current and future market demand for full-size trucks, a significant adjustment was needed to align our production with market realities," GM North America President Troy Clarke said in a statement.

For about the past three years, the U.S. auto market has been shifting away from pickup trucks and SUVs to cars and crossover vehicles, but the trend accelerated in recent months due to gas prices that have topped $3.50 per gallon across the nation.

The company expects the layoffs to take place starting July 14 at the Flint, Janesville and Pontiac plants, and Sept. 8 at Oshawa. Most of the factories had already seen layoffs and production cuts due to a parts shortage from a two-month strike at American Axle and Manufacturing Holdings Inc.

GM spokesman Tony Sapienza said the company will eliminate shifts with 750 workers each at Flint and Janesville, 1,150 workers in Pontiac and 900 workers in Oshawa.

"Those are the people that we believe will be impacted based on what the shifts are," he said. "We'll be working with our partners to determine how that's brought to fruition."

Greg Gardner, an analyst with the Oliver Wyman Group, said the cuts look like "a realistic assessment."

"The full-size pickup and SUV market is not going to rebound anytime soon," he said. "It looks like that they don't plan on making up very much of the production loss due to the American Axle strike."

Gardner said GM's announcement reflects the industry's overall production forecast this year, down to about 15 million light vehicles from an earlier forecast of 15.5 million.

"Obviously, the larger, heavier vehicles are taking the biggest hit," he said.

The Flint, Pontiac and Oshawa plants make the Chevrolet Silverado and GMC Sierra pickups, while Janesville manufactures the Chevrolet Tahoe and Suburban and GMC Yukon big SUVs.

GM said pickup sales overall are down 15 percent through March, while sales of large SUVs are off 26 percent. Dealers in much of the country say the bigger vehicles aren't selling because of the economy and gasoline prices.

George Tasker, the top salesman at Martin Chevrolet in Torrance, Calif., said buyers are sitting on the sidelines for most vehicles mainly due to economic uncertainty and declining home values.

"Everybody's going to drive a little bit longer until we can figure out where this thing is going," he said.

Los Angeles-area dealers still can get just about any truck or SUV a customer wants by trading with each other, despite curtailed production from the American Axle strike, he said.

Jesse Toprak, chief industry analyst for the auto information site Edmunds.com, said GM has a 92-day average supply of large trucks. A 60-day supply is considered optimal in the business.

He said the automaker will lose about $4.4 billion in gross sales because of the production cuts, but it's nearly impossible to determine the impact on GM's net profits.

The production cuts should help GM keep its inventory under control, said Catherine Madden, an analyst with the consulting firm Global Insight.

"They're not going to put themselves in a position where they're going to overbuild and sell at any costs," she said.

"They take the hit now instead of being forced with their back up against the wall in September."

GM said it did not forecast how many of those vehicles it expected to make this year, but it sold about 1.1 million of them in the U.S. last year, according to Autodata Corp.

The announcement was made after the close of regular trading. GM shares gained 56 cents, or 2.6 percent, to close at $21.94, and were unchanged in after-hours trading.

The cuts come as 74,000 U.S. workers represented by the United Auto Workers face a May 22 deadline to decide on GM's latest round of buyout and early retirement offers.

GM won't say how many workers it hopes to shed, but under its new contract with the UAW, it will be able to replace up to 16,000 workers doing nonassembly jobs with new employees who will be paid half the old wage of $28 per hour.

Story is below. Also, here's a link to the latest South Bay real estate story.

Vacant homes set new record high in first quarter

WASHINGTON (AP) -- The percentage of vacant homes for sale in the U.S. set a new record high in the first quarter of this year, the government said Monday.
The Census Bureau report shows that 2.9 percent of U.S. homes -- excluding rental properties -- were vacant and up for sale, compared with 2.8 percent in the fourth quarter of 2007. It was the highest quarterly number in records going back to 1956.

That works out to 2.28 million properties, up from 2.18 million in the same quarter last year, according to the report.

The West had the biggest gain in vacancy rates among homeowners, rising to 3.2 percent in the January-March period from 2.6 percent in the same quarter a year earlier. Vacancy rates inched up in the Northeast and remained steady in the Midwest and South. The national vacancy rate, including new and existing homes, has been steadily rising since mid-2005.

Global Insight economist Patrick Newport called the report "worrisome."

"The inventory problem has not gotten any better," Newport said. Although glut-fighting home builders have reined in construction, "they still will have to cut back more."

The Census Bureau's report also said that the U.S. homeownership rate remained at 67.8 percent in the first quarter, down from a peak of 69.2 percent at the end of 2004.

The housing market's five-year boom is quickly becoming a faint memory, as sales and home prices have fallen dramatically over the past two years in once hot areas such as California and Nevada.

Last week, a Commerce Department report said sales of new homes plunged in March to the slowest pace in 16 1/2 years.

Centex Corp., Pulte Homes Inc., Hovnanian Enterprises Inc. and other builders have been caught with unsold properties over the past year as mortgages became harder to get, sales slowed and the economy soured.

Builders have slashed prices, but the discounts have done little to lure buyers who are holding out, uncertain about when the price-drop will stop.

The National Association of Realtors reported last week that sales of existing homes also fell in March, dropping by 2 percent, with prices declining on a year-over-year basis by 7.7 percent.

Can it get any clearer than this?

Buffett says recession may be worse than feared

NEW YORK (Reuters) - Warren Buffett, the world's richest person, said on Monday the U.S. economy is in a recession that will be more severe than most people expect.

Buffett made his comments on CNBC television after his Berkshire Hathaway Inc agreed to invest $6.5 billion in the takeover of chewing gum maker Wm Wrigley Jr Co by Mars Inc in a $23 billion transaction.

"This is not a field of specialty for me, but my general feeling is that the recession will be longer and deeper than most people think," Buffett said. "This will not be short and shallow.

"I think consumers are feeling gas and food prices," he added, "and not feeling they've got a lot of money for other things."

He was not immediately available for further comment. Known for his frugality, the 77-year-old Buffett has lived in the same 10-room Omaha, Nebraska, house for a half-century, despite being worth an estimated $62 billion.

Read the full story.

Here's today's At Work profile.

He's whole-hog on bike parts
By Muhammed El-Hasan, Staff Writer

In 2002, Bryan Singer returned to his Redondo Beach home from an Air Force tour of duty in Qatar near Iraq.

Singer, an avid Harley Davidson rider, soon started using eBay to sell Harley parts out of his garage. His garage was so full of motorcycle parts that Singer could barely fit inside.

So in February of last year, he opened a shop called Hog Ties in Redondo Beach.

Singer, 36, runs the store with a laid-back manner fitting of Harley enthusiasts.

Q. What does your job entail?

A. I own the place. I do everything. Customer service, shipping, receiving, buying, selling.

Read the full story.

Here's today's story.

Waterworks
By Joanna Lin, Staff Writer

When driving by Mike Garcia's Redondo Beach house, people tend to stare.

They gawk, ogle and rubberneck - so much so that Garcia says the street could use a stop sign in front of his house. ("I don't want to cause accidents," he reasons.)

What's slowing traffic is a waterfall in Garcia's front yard. It's one of the more than 500 ponds and waterfalls Garcia and his company, Enviroscape, have built over the past decade.

Based in Redondo Beach, Enviroscape is a contractor specializing in residential and commercial landscapes and ponds. Enviroscape is one of only eight or nine certified pond builders in the world, according to the International Professional Pond Contractors Association.

"It's a very select group. ... We're more interested in quality than quantity," said Dave Jones, executive director of the Woodstock, Ga.-based IPPCA, which has 120 members throughout the U.S., Canada and Australia, and began certifying pond builders in 2004.

Read the full story.

Despite the Fed cuts' ability to spur the flagging economy, cutting too much will just make inflation even worse.

Fed likely to cut U.S. rates, could signal pause

CHICAGO (Reuters) - The U.S. Federal Reserve is expected to put an exclamation point on its string of interest- rate cuts with a small reduction this week and may signal that its rate-cutting cycle is done for now.

Rising global inflation and the Fed's hope that a blend of monetary and fiscal stimulus will shore up the anemic U.S. economy suggest the central bank is ready to pause in the sharp easing cycle it kicked off in mid-September.

Fed Chairman Ben Bernanke and his colleagues have lowered benchmark overnight lending rates 3 full percentage points to 2.25 percent over that span.

Read the full story.

The South Bay is not on the list.

(Forbes) Miami-area home sellers looking to unload their properties might want to make sure they have comfortable couches.

It looks like they're going to be there a while.

That's because Miami tops our list of the nation's most sedentary housing markets. These 10 spots feature a potent mix of dropping prices and sluggish sales rates. Also on the list: Denver, San Diego, Baltimore and Chicago.

Here's a slideshow.

(MarketWatch) -- Through his preset stock-trading plan, Mattel Chairman and Chief Executive Bob Eckert exercised stock options during the final two weeks of the toy maker's first quarter, resulting in the sale of 1 million company shares.

The sales, completed in separate transactions between March 20 and March 26, occurred when El Segundo-based Mattel's stock price was near its highest levels of the quarter. This week, the shares tumbled, hurt by the toy maker's disappointing earnings report.

The stock sales were Eckert's first since joining Mattel eight years ago. They were carried out in accordance with his 10b5-1 trading plan, approved by Mattel's board Feb. 20 and disclosed in a Securities and Exchange Commission filing at the time.

Senior executives at public companies use 10b5-1 trading plans to make prearranged trades at specified prices or dates in the future. So as not to run afoul of insider-trading laws, the plans are set up when an executive is not in possession of material nonpublic information that could affect the value of that executive's holdings.

At least we beat out LA County.

South Bay home price slide continues
By Muhammed El-Hasan, Staff Writer

The South Bay housing market continued its skid in March, with every local city and community cited in a new report seeing a drop in median home price.

The South Bay, excluding the Palos Verdes Peninsula, experienced an 8.5 percent year-over-year drop in median home price to $599,500 in March, the Los Angeles-based California Association of Realtors reported Friday.

The Hill saw a drop of 1percent to $1,225,000 in March.

The median price refers to the middle figure where half of homes sold for more and half for less.

Housing prices have been dropping statewide and across the nation as fewer buyers are able to qualify for home loans amid a tightening of standards and a souring economy.

"It hasn't been this tough in the South Bay for a while," said Adolph James, a Realtor with Shorewood Realtors in Manhattan Beach.

Read the full story.

Here's part of tomorrow's housing story:

The South Bay housing market continued its skid in March, with every local city and community cited in a new report seeing a drop in median home price.

The South Bay, excluding the Palos Verdes Peninsula, saw an 8.5-percent year-over-year drop in median home price to $599,500 in March, the Los Angeles-based California Association of Realtors reported Friday.
The Hill saw a drop of 1 percent to $1,225,000 in March.

The median price refers to the middle figure where half of homes sold for more and half for less.
Housing prices have been dropping statewide and across the nation as fewer buyers are able to qualify for home loans amid a tightening of qualification standards and a souring economy.

“It hasn’t been this tough in the South Bay for a while,” said Adolph James, a Realtor with Shorewood Realtors in Manhattan Beach.

James said he recently took a “knockout listing” in Rancho Palos Verdes off the market after about four months because the seller gave up.

Most South Bay cities cited in the report posted double-digit losses.
Hawthorne’s median home price plunged 27.4 percent to $429,500 in March. Carson’s median dropped 16.6 percent to $417,000.

San Pedro, Inglewood and Torrance also fell by double digits. Torrance saw a drop of 10.6 percent to $532,500.

Because of the relatively low number of homes sold during a single month in any individual South Bay city, the median price can skew up or down depending on what types of homes are selling during that period.

Last month, Redondo Beach was the only South Bay city in the report to post a tiny drop in the median price, down a mere 0.8 percent to $774,000.

The South Bay's median home price dropped 8.5 percent in March, compared to the same month in 2007, the California Association of Realtors reported Friday.

Also in March, Redondo Beach made the state’s top 10 list of communities with the highest median home price.

However, that was likely because many higher priced cities like Manhattan Beach did not qualify to be considered for the list because they had so few home sales in March.

What would happen if we invaded?

Oil prices up on word US ship fired on boats in Persian Gulf

NEW YORK (AP) -- Oil prices rose sharply Friday on news that a ship under contract to the U.S. Defense Department fired warning shots at two boats in the Persian Gulf. Retail gas prices as expected rose further into record territory, nearing $3.60 a gallon.

Crude prices rose on initial reports that a U.S. ship had fired on two Iranian boats; the news raised concerns that a conflict between U.S. and Iranian forces could cut oil supplies from the region. A Navy spokeswoman said the origin of the boats was unclear.

The news was enough to send light, sweet crude for June delivery up to $119.55 before the contract retreated to settle up $2.46 at $118.52 a barrel on the New York Mercantile Exchange.

The incident worried investors because at first it appeared to be the latest in a series of encounters between U.S. forces and Iranian boats in the Gulf. Early this month, the USS Typhoon fired a flare at an Iranian boat that came within about 200 yards of the ship. In January, several Iranian boats made what the Navy described as provocative moves near a U.S. ship in the Strait of Hormuz. And in December the USS Whidbey Island fired warning shots at a small Iranian boat officials said was rapidly approaching the ship.

On Friday, oil prices were already up before the report on news of a pipeline attack in Nigeria and a looming refinery strike in Scotland.

In Nigeria, the Movement for the Emancipation of the Niger Delta, or MEND, said its fighters hit an oil pipeline late Thursday, the fourth conduit the group has attacked in the past week. MEND said the pipeline belongs to a Royal Dutch Shell PLC joint venture. A Shell spokesman confirmed one of its pipelines had been hit, but provided no additional details.

Earlier this week, Shell said an earlier attack cut its Nigerian oil production by about 170,000 barrels a day.

Separately, workers at an ExxonMobil Corp. joint venture in Nigeria cut production by an unspecified amount to demand more pay.

Adding to the supply concerns, BP PLC said it will shut down a 700,000 barrel-a-day pipeline system that carries oil from the North Sea to refineries in the U.K. on Saturday in anticipation of a strike at Scotland's Grangemouth refinery expected to begin Sunday. The refinery supplies power and steam to the pipeline; if it shuts down, the pipeline can't operate.

Oil's rise came as the dollar strengthened. A stronger dollar typically encourages selling by making commodities such as oil less effective hedges against inflation, and by making oil more expensive to overseas investors. Analysts say the dollar's steady decline over the past year is the chief culprit behind this year's rapid rise in oil prices.

But, notes Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Ill., "that connection between oil and the dollar can be broken easily by supply issues," which drove trading on Friday.

At the pump, meanwhile, gas prices rose another 2.1 cents Friday to a record national average of $3.577 a gallon, according to AAA and the Oil Price Information Service. Gas prices have been following oil futures higher, but are also rising due to concerns about whether gasoline supplies are adequate to meet peak summer driving demand.

Analysts expect gas prices to continue rising for at least another month to $3.70 to $4 a gallon. To a large extent, how high gas prices peak depends on what oil does.

Lately, analysts have recently raised their oil price predictions to $125 to $130 a barrel. Earlier this week, the expiring May crude contract rose as high as $119.90 as investors scrambled to square positions.

However, the Federal Reserve is expected to cut interest rates less sharply next week than originally thought. Because rate cuts tend to weaken the dollar, a smaller than expected cut could push the dollar higher, and send oil prices down.

In other Nymex trading Friday, May gasoline futures rose 3.51 cents to settle at $3.0537 a gallon after earlier rising to a new trading record of $3.0815, and May heating oil futures rose 4.45 cents to settle at $3.3028 a gallon. May natural gas futures rose 17.3 cents to settle at $10.963 per 1,000 cubic feet.

Associated Press writers Lolita C. Baldor in Washington, Sebastian Abbot in Cairo, Egypt, Edward Harris in Lagos, Nigeria, and Gillian Wong in Singapore contributed to this report.

But will it get even worse?

Consumer sentiment at a 26-year low

NEW YORK (Reuters) - Consumer confidence fell for a third straight month in April, hitting its weakest in 26 years, on heightened worries over inflation and the sagging housing market, a survey showed on Friday.

The Reuters/University of Michigan Surveys of Consumers said its final index of confidence for April fell deeper into recessionary territory, to 62.6 from 69.5 in March and below economists' median expectation of 63.2 in a Reuters poll.

The April result is the lowest since March 1982's 62.0, when the "stagflationary" period of low growth and high inflation was still an issue for many Americans.

This morning, I filled up my 2001 Toyota Corolloa at a Redondo Beach 76 gas station.

I heard that if you fill up in the morning, it's cheaper because the gasoline inside the tanks are cooler and therefore take up less volume. So you get more for your money.

I don't know if I saved anything from filling up in the morning, but I do know that I paid more per gallon than I ever have. For regular unleaded, I paid $3.959 a gallon, or $34.32 for 8.67 gallons.

I'm not sure how much of a dent a tax rebate check will put into the rising cost of gas (and food).

It's a sign of the times.

And not a minute too soon.

Bush says rebates going out Monday should help economy

(AP) President Bush said tax rebates will start going out Monday, earlier than previously announced, and should help Americans cope with rising gasoline and food prices, as well as aid a slumping economy.

"Starting Monday, the effects of the stimulus will begin to reach millions of households across our country," Bush said Friday in remarks on the South Lawn of the White House.

The Internal Revenue Service had been saying direct deposits wouldn't start until next Friday. Bush said paper checks would begin going out on May 9, a week earlier than previously announced.

"The money is going to help Americans offset the high prices we're seeing at the gas pump, the grocery store, and also give our economy a boost to help us pull out of this economic slowdown," Bush said.

Bush's emphasis on fuel and food prices differed from other comments he's made since signing the economic stimulus legislation, intended to aid the economy by boosting overall consumer spending — which accounts for roughly two-thirds of the nation's economic activity.

Bush suggested the rebates could trigger a spending spree. "When the money reaches the American people, we expect they will use it to boost consumer spending," he said last month.

By saying expressly that people could use these one-time checks to pay for such necessities as food and gas, Bush underscored the deepening challenges facing the economy.

As he had earlier in the week, Bush used the word "slowdown" to describe the state of the economy. He has denied that the nation is in a recession, although many economists say it is.

"It's obvious our economy is in a slowdown. But, fortunately, we recognized the signs early and took action," Bush said.

The rebates — up to $600 for an individual, $1,200 for a couple and an additional $300 for each dependent child — are the centerpiece of the government's $168 billion stimulus package, enacted in February. Roughly 130 million households are expected to get them.

Bush made the comments before boarding his helicopter at the start of a day trip to Connecticut.

People must file a tax return for their 2007 income to be eligible for a rebate check.

The IRS now says all checks for those who filed tax returns on time are scheduled to be deposited or mailed by July 11.

The economy — burdened by the collapse of home prices, a financial and credit crisis, and now rising energy and food prices — grew at an anemic 0.6 percent in the final three months of last year and is believed to have gotten even weaker in the first three months of this year.

The government will report on the first quarter's performance next week.

With the economy faltering, the nation's unemployment rate has climbed to 5.1 percent, the highest since September 2005, when it suffered from the devastating blows of the Gulf Coast hurricanes. Job losses in the first three months of this year neared the quarter-million mark.

Foreclosures have surged to record highs and financial companies have taken multibillion losses on mortgage investments that soured. The situation has sent a tremor through Wall Street and has sent the administration, Congress and presidential contenders looking for ways to provide relief.

The new headquarters is scheduled to open this summer in Manhattan Beach.

I'm sure they'll keep the unusual hamburger shape.

Arby's owner buying Wendy's for $2.34 billion stock deal

COLUMBUS, Ohio (AP) — After at least two rejections, billionaire Nelson Peltz has finally succeeded in landing Wendy's in a $2.3 billion deal that would add the chain known for its square burger and chocolate Frosty dessert to his ownership of Arby's and its roast beef sandwiches.

Now, the investor known for agitating corporations to boost their stock price has to figure out how to make both profitable while the economy slumps and more Americans are saving money on food and fuel by staying home to eat.

Atlanta-based Triarc Companies Inc., owned by Peltz, said Thursday it will pay about $2.34 billion in an all-stock deal for the nation's third-largest hamburger chain started in 1969 by Dave Thomas. Wendy's had rejected at least two buyout offers from Triarc.

Thomas' daughter Pam Thomas Farber said the family was devastated by the news.

"It's a very sad day for Wendy's, and our family. We just didn't think this would be the outcome," said Farber, 53.

If her father were alive to hear news of the buyout, "he would not be amused," she said.

Triarc will pay about $26.78 per share for the company, which has about 87 million shares outstanding. Wendy's shares rose 4 percent to $26.39 in trading Thursday. They traded as high as $42.22 last summer, not long after Wendy's announced the formation of a special committee to boost its stock price.

The offer is well below the $37 to $41 per share that Peltz said last summer that he was ready to offer for Wendy's.

Under the terms of the deal, expected to close in the second half of the year, Wendy's shareholders will receive 4.25 shares of Triarc Class A stock for each share of Wendy's stock. Triarc said its shareholders will have to approve a charter amendment in which each share of its Class B stock will be converted into Class A stock.

Peltz has pushed for change at Wendy's — including the spinoff of the Tim Hortons coffee-and-doughnut chain and cutting corporate expenses — since 2005 to increase the company's stock price. His Trian Fund and his allies own 9.8 percent of Wendy's stock.

It's a similar tactic Peltz has used at other companies where Trian has become a significant investor, such as Cadbury Schweppes PLC and H.J. Heinz Co. Trian also owns shares of Tiffany & Co. and the Cheesecake Factory Inc., according to regulatory filings.

The deal comes as Wendy's struggles with declining profits and weak sales compared with rivals McDonald's Corp. and Burger King Holdings Inc.

Wendy's said Thursday that its first quarter profit was down 72 percent to $4.1 million, or 5 cents a share, in part because of expenses tied to the work of a special board committee that has been studying ways to boost the company's stock. Revenue fell to $513 million from $522 million a year ago.

Sales at company-owned stores opened at least a year, considered a key indicator of a retailer's strength, fell 1.6 percent in the quarter and 0.1 percent at U.S. franchise restaurants.

Wendy's also has failed to connect with consumers in several advertising campaigns that have been tried since Thomas' death in 2002 and it has limited success in adding new products and with its breakfast menu. Thomas, always wearing a white short-sleeved shirt and red tie, became a household face when he began pitching his burgers and fries in television commercials in 1989.

"It's a company that's sort of lost its way," said Bob Goldin, executive vice president of Technomic Inc. in Chicago.

Still, even with a slumping economy in which other restaurant chains have seen sales decline recently, there is value, analysts say.

"We've always felt Wendy's had a decent chance of a turnaround in its business," said John Owens, an investment analyst with Morningstar, citing its new chicken wrap sandwich and the addition of breakfast at many restaurants.

Improved cost controls over food, labor and other expenses should generate $100 million a year in operating profits over time, Triarc said in the statement announcing the deal.

Eliminating duplicate corporate functions and streamlining support services are expected to eventually save $60 million, said Triarc, which operates 3,700 Arby's restaurants.

Triarc also said expansions for both brands are planned for the U.S. and overseas and that the company will look at a dual-concept unit in high-cost real estate markets. Triarc said it will also change its name to include the Wendy's name.

Wendy's deferred comment to Triac, which had nothing further to say right away.

Several lunchtime customers at a Wendy's in Columbus wondered how Thomas would have reacted to the news, were he still alive.

"I think he's probably rolling over in his grave right now," said John Knape, 36. "But it's business, and that's what you need to do to survive, right?"

The deal caps two chaotic years for Wendy's in which it has sold or spun off operations, slashed its corporate staff and had its wholesome image tarnished by a woman who falsely claimed she found part of a finger in her chili.

Farber said the family didn't think much of Peltz' and Triarc's tactics.

"They came after them (Wendy's) and came after them and came after them. They spun Tim Hortons off, they did this, they did that. They did everything they asked but it wasn't enough."

Thomas opened his first restaurant in a former steakhouse on a cold, snowy Saturday in downtown Columbus on Nov. 15, 1969. He named the chain after his 8-year-old daughter Melinda Lou — nicknamed Wendy by her siblings.

Wendy's, based in suburban Dublin, operates about 6,600 restaurants in the United States and abroad. It trails McDonald's and Burger King Holdings Inc. in the burger business.

Northrop has huge operations in Redondo Beach and El Segundo.

(AP) Century City-based Northrop Grumman Corp. said Thursday first-quarter earnings fell 32 percent as the company was forced to take a charge due to rising costs and delays with an amphibious assault ship program it is building for the U.S. Navy.

The Los Angeles-based company also lowered its profit estimates for the full year, although it beat Wall Street estimates for the quarter, boosting its shares.

Northrop Grumman (nyse: NOC - news - people ) reported net income of $264 million, or 76 cents per share, in the quarter ending March 31. That compares to earnings of $387 million, or $1.10 per share, in the year-ago period.

Revenue for the quarter rose 6 percent to $7.72 billion from $7.34 billion.

Analysts expected the company to post earnings of 63 cents a share on sales of $7.7 billion, according to a Thompson Financial poll.

Its shares rose $2.73, or about 3.9 percent, to $72.21 in afternoon trading.

Results were hurt by a pretax charge of $326 million, or 61 cents per share, related to the problems with the LHD-8 amphibious assault ship program. The company had previously warned that wiring problems with the ship would delay delivery by six months.

The LHD-8 ship, the Makin Island, is being built in Pascagoula, Miss., and has been plagued by costly delays. The company took a $55 million charge in the second quarter of 2007 due to problems with the project.

Management said it expects the LHD-8 to be ready for delivery in the second quarter of 2009.

"Although the LHD-8 charge is deeply disappointing, the remainder of our first quarter performance was strong," Chief Executive Ronald D. Sugar said during a conference call with Wall Street analysts. "Looking ahead, we are winning major competitions, generating report backlog, growing our sales, expanding our margins and executing our balanced cash deployment strategy."

Northrop Grumman estimated its full-year profit will range between $4.90 and $5.15 per share, down from prior estimates. The company reiterated its 2008 sales would hit $33 billion.

Northrop said it received $12.1 billion in funded contracts during the quarter. That brought its total backlog of funded and unfunded orders to $68.1 billion as of the end of March.

Higher defense contract volume from established Northrop programs, such as the remotely piloted Global Hawk aircraft, and newer offerings, such as the KC-45 refueling tanker, helped drive sales growth during the quarter.

Excluding the company's Gulf Coast shipyard operations, Northrop saw growth across all business segments.

Northrop's information and services division generated sales of $3.1 billion, a 6 percent jump from the year-ago quarter.

Growth in the segment was driven by an increase in sales for intelligence, surveillance and reconnaissance programs, among others.

Sales in its aerospace unit rose 4 percent to $2.1 billion, while the electronics division saw sales increase 2 percent to $1.5 billion.

The aerospace segment's sales were led by increased demand for programs such as the Global Hawk and the KC-45, offsetting weaker sales for other programs, including the F-35 aircraft and E-10A radar.

The company's shipbuilding division generated sales of $1.3 billion, up 9 percent from a year earlier largely due to higher demand for surface combatant and fleet support programs.

The segment recorded a $218 million operating loss during the quarter compared to income of $79 million a year earlier.

Among the new contracts won by Northrop during the quarter was a $35 billion order from the U.S. Air Force for 179 of Northrop's KC-45 tanker aircraft. Northrop beat out Boeing (nyse: BA - news - people ) Co., which has filed a formal protest of the Air Force decision with the Government Accountability Office. A ruling on the matter is expected by June 19.