The biggest indictment of a financial firm in more than a decade tops our roundup of the day's top business news stories.
SAC “Magnet for Market Cheaters”: Indictment
SAC Capital Advisors, one of Wall Street’s biggest and most successful hedge fund companies, "trafficked in inside information on a scale without any known precedent in the history of hedge funds," prosecutors allege. A criminal indictment unsealed Thursday claims the firm earned hundreds of millions of dollars illegally, over an 11-year period ABC News reports. Billionaire owner Steven A. Cohen , the 40th richest man in America, was not named as a defendant, but the indictment alleges that he “enabled and promoted” insider trading practices. This is the biggest indictment of a financial firm since auditor Arthur Andersen was charged in 2002. In a statement released Thursday, SAC Capital said it "has never encouraged, promoted or tolerated insider trading and takes its compliance and management obligations seriously."
Amazon Reports Surprise 2nd Quarter Loss
Despite consistently strong sales, Amazon.com Inc. on Thursday reported a surprise loss in the second quarter, CNN reports. Stock in the Seattle-based company fell $8.20, or 2.7 percent, to $295.20 in extended trading after the results came out. The loss comes despite the fact that sales at the the world’s largest retailer rose 22 percent to $15.7 billion from the same quarter last year. The growth in sales was just shy of analysts' expectations of $15.73 billion. Amazon has long focused on reinvesting the money it makes to grow its business and expand into new areas from movie streaming to e-readers and even grocery delivery. The 2nd quarter loss stems from these costly investments. CEO Jeff Bezos' long-term vision is to steer Amazon into digital products like the Kindle tablet devices and digital content for its Amazon Prime video streaming service. "This past quarter, our top 10 selling items worldwide were all digital products -- Kindles, Kindle Fire HDs, accessories and digital content," Bezos said in a prepared release.
Oil Prices Fall
Concerns over Chinese economic conditions plus the continued high output of American oil dropped oil prices Friday, according to Reuters. The price remained just above $107 per barrel because of the weak U.S. dollar and several supply disruptions, but Brent crude oil futures for September dropped 50 cents. U.S. light crude for September was down 75 cents to $104.74 a barrel.
Starbucks Profits “Perc” Up
Starbucks profits in the latest quarter climbed 25 percent, exceeding Wall Street expectations, The Associated Press reports. Starbucks' shares were up almost 7 percent in aftermarket trading. The Seattle-based chain, which has more than 19,000 locations around the world, reported global sales rose 8 percent at cafes open at least 13 months, with every region posting growth. In its flagship U.S. market, the figure rose 9 percent, driven by an uptick in customer visits, AP said. Among Starbucks’ initiatives to drive sales have included newly packaged and revamped sandwiches as well as higher priced salads and grain bowls. The company is also benefiting greatly from lower coffee costs, which are expected to continue for at least another year and half. Starbucks nevertheless instituted price hikes in the U.S. last month, a move that should help widen its operating margins even further.
Toyota Back on Top Among Automakers
Toyota announced Friday its groupwide global sales for the first six months totaled 4.911 million vehicles, and that pushed it past General Motors and Volkswagen to the No. 1 spot among carmakers in the world. Toyota’s total was actually down 1.1 percent from a year earlier due to weaker Japan sales, which came about because of the end of subsidies for green cars. But Toyota sales in the United States were strong, pushing its half-year totals up. General Motors’ sales rose 4 percent to more than 4.85 million cars and light trucks. Toyota had dropped to third overall in 2011 when its supply chain was hit by natural disasters in Japan and Thailand and after a series of recalls affected sales.
Greece to Get Its Next Big Stimulus
Reuters reports that Euro zone officials have approved the transfer of 4 billion euros of funding to Greece, with disbursement could take place on Monday. The European Commission Friday said the money is 4 billion euros split between 2.5 billion from the euro zone’s temporary bailout fund and 1.5 from income generated from national central banks’ holdings of Greek government bonds.