Business News in Brief, July 25

Transportation
US Government Officially Exits Auto Industry

Italian automaker Fiat S.p.A. has officially become Chrysler Group’s majority shareholder after buying out both the U.S. and Canadian governments’ stake in the firm last week. The next steps for Fiat seem to be either a full merger of the two companies, or an initial public offering for Chrysler in the U.S. markets. While the market for IPOs is currently hot, General Motors’s shares have declined following a successful IPO earlier this year. The other option is a merger, but that depends on whether Fiat has the financial means to buy out Chrysler in full given the economic realities of the automobile market and the European economy. The U.S. Treasury lent Chrysler $12 billion in 2008, as part of its $80 billion bailout of the U.S. auto industry following the financial crisis of 2008. After emerging from an assisted bankruptcy in 2009, Chrysler and Fiat formed a partnership with Fiat CEO Sergio Marchionne assuming leadership at the firm.

Global Markets
US Stocks Eke Out Weekly Gain

U.S. shares were mixed last Friday after Caterpillar’s missed profit estimates, but were able to eke out a gain last week. On the week, the Dow Jones Industrial Average was up 1.6 percent, while the S&P 500 Index had a rise of 2.2 percent. Technology firms were the biggest winners last week as well as last Friday, with the Nasdaq Composite gaining 2.47 percent on the week and 0.86 percent on last Friday. Caterpillar, the world’s biggest manufacturer of heavy machinery, saw its shares decline by 5.8 percent after the company’s profits missed analysts’ estimates. Verizon Communications Inc. also shed 2.2 percent, however, the company announced earnings, which exceeded expectations.

Conglomerates
GE’s Q2 Profit Rises

General Electric Co., the U.S.’s biggest conglomerate, said last Friday that its second-quarter earnings increased by 21 percent. Net income was $3.76 billion for the quarter, compared with $3.11 billion during the same period last year. That translates to earnings per share of 35 cents, which is in line with Wall Street expectations. The biggest news occurred in the company’s GE Capital arm, which suffered during the financial crisis. GE Capital contributed earnings of $1.66 billion during the quarter, a substantial increase over prior periods for GE’s lending and financing arm. GE also said that its international operations grew at a fast pace, especially its operations in India and China.