Finance & Business World

Mitsubishi Motors sprang back into the black for the fiscal first quarter as growth in emerging markets offset damage from the quake in northeastern Japan.

Mitsubishi Motors Corp. said Monday it posted a 4.3 billion yen ($55 million) profit for the April-June period, a reversal from 11.8 billion yen in red ink a year earlier.

Quarterly sales rose nearly 7 percent to 431.9 billion ($5.5 billion) from the previous year.

The Tokyo-based manufacturer of the i-MiEV electric car raised its first half forecast because of the better-than-expected quarterly numbers. But it left its annual forecast unchanged at a 20 billion yen ($256 million) profit, pointing to uncertainties in the global economy.

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Netflix Inc. is bracing for customer backlash that could result in its slowest subscriber growth in more than three years amid changes to its online video and DVD rental service that will raise prices by as much as 60 percent.

The sobering forecast issued Monday overshadowed the second-quarter earnings that accompanied the company’s outlook.

Netflix’s shares plummeted almost 10 percent, largely because the company expects its results for the current quarter ending in September to miss the targets set by stock market analysts.

The shortfall stems from an anticipated slowdown in Netflix’s subscriber growth amid the most radical change in the company’s pricing since it began renting DVDs through the mail 12 years ago.

Instead of offering packages that combine DVD rentals and Internet-delivered video for a single price, Netflix informed subscribers two weeks ago that it would sell the two entertainment options as separate plans. The change means customers will have to pay substantially more if they want to get both DVDs and Internet video from Netflix. For instance, a bundled plan that had been priced at $10 per month will now cost $16 per month, beginning Sept. 1, for existing customers. The prices of other popular bundled plans will rise by 20 percent to 33 percent.

Netflix expects many customers to pick between the DVD or streaming plan to avoid getting hit with a higher bill if they subscribe to both plans. The company said it anticipates another group of subscribers is so infuriated with the rate changes that they will stop being customers entirely.

Management didn’t estimate how many subscribers will cancel, but a large customer exodus appears to be factored into the company’s forecast for the current quarter.

Netflix expects to add as few as 190,000 subscribers or as many as 1.29 million subscribers in the current quarter. Either figure will be a falloff from the 1.9 million subscribers added in the April-June period to propel Netflix’s total customers to nearly 25.6 million. In last year’s third quarter, Netflix added nearly 2 million subscribers.

If the growth falls on the lower end of the range, it would represent the lowest number of subscribers that Netflix has picked up during a three-month stretch since the second quarter of 2008 when it added 168,000 customers. Back then, Netflix only operated in the U.S. It now has 1 million Canadian customers who subscribe to the Internet streaming service. The company plans to expand into Latin America later this year savings account payday advance.

“We are feeling great about the decision, as tough as it is,” Netflix CEO Reed Hastings told analysts about the new pricing plan in a Monday conference call.

Some of the numbers that Netflix released helped explain why the company felt compelled to change its rental plans, even though it knew the new prices would alienate man of its most loyal customers.

The company is trying to pay for increasingly higher bills for the rights to stream Internet video while still trying to cover the costs of shipping DVDs to millions of U.S. households that still want to watch movies on discs because movie studios insist on keeping the most recent theatrical releases on that format.

Netflix spent nearly $613 million on streaming rights in the second quarter, a more than nine-fold increase from the same time last year. The company so far has signed long-term contracts committing it to pay $2.44 billion for streaming rights.

Meanwhile, more than 15 million of Netflix’s subscribers were still renting DVDs through the mail, although they aren’t asking for as many discs each month as they once did.

Even before the rate changes, most of Netflix’s new subscribers have been signing up for a streaming-only plan that the company rolled out last year. About 75 percent, or 1.3 million, of the customers picked up in the second quarter opted for the streaming only-plan.

The company expects 12 million subscribers, or less than half of its customers, to be paying for both the DVD and streaming options at the end of September.

Netflix earned $68.2 million, or $1.26 per share, in the most recent quarter. That marked a 57 percent increase from $43.5 million, or 80 cents per share, at the same time last year.

Revenue climbed 52 percent from the same time last year to $789 million.

The earnings per share were well above the average estimate among analysts surveyed by FactSet. The revenue fell about $2 million below analyst forecasts.

Investors though were more concerned about management’s third quarter forecast. That calls for Netflix’s earnings per share to range from 72 cents to $1.07 per share on revenue of $800 million to $829 million. Analysts had projected earnings of $1.11 per share on $845 million in revenue.

Netflix shares plunged $27.16 to $254.25 in Monday’s extended trading.

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A big earnings miss from Caterpillar halted a stock rally that brought the Dow Jones industrial average close to its highest level of the year.

Caterpillar fell nearly 6 percent after the equipment maker earned less than analysts projected last quarter. The company, which is often seen as a bellwether for the global economy because it sells equipment all over the world, told analysts in its earnings call that it expects the U.S. economy to grow moderately.

The weaker results from Caterpillar and a continuing deadlock over raising the U.S. borrowing limit capped the stock market’s gains and left the U.S. out of a broad rally in overseas markets. Stocks gained worldwide after European leaders reached a deal aimed at containing the region’s debt crisis.

The Dow Jones industrial average fell 20 points, or 0.2 percent, to 12,704. The broader Standard & Poor’s 500 index gained 2, or 0.1 percent, to 1,346.

A strong earnings report from Advanced Micro Devices Inc. helped push technology stocks higher. The Nasdaq composite rose 17 points, or 0.6 percent, to 2,851.

AMD jumped nearly 19 percent after the chip maker said it expects more earnings gains in the third quarter. Flash memory card maker SanDisk Corp. rose 10 percent after its earnings rose sharply. And Microsoft Corp. gained 0.3 percent after beating analyst’s income estimates.

Traders kept close watch on negotiations in Washington over a deal to raise the nation’s debt ceiling ahead of an Aug no credit check payday loans. 2 deadline. The impasse has overshadowed an agreement in Europe Thursday to give Greece a second financial lifeline and broaden the powers of a regional bailout fund.

Republicans and Democrats continue to search for a deal to cut the government deficit that would combine cuts to social programs with revenue increases through an overhaul of the tax code.

Concerns that the debt ceiling won’t be raised before the August deadline are becoming more widespread, said Brian Gendreau, market strategist for Cetera Financial Group. “But the background is a growing economy and fairly strong earnings news.”

McDonald’s Corp. rose 3 percent, the most of any stock in the Dow average, after the company’s income and revenue came in higher than analysts were expecting thanks to strong sales in Europe. CEO Jim Skinner said the company’s low prices helped bring in more customers as the economic recovery stumbled. Oil services company Schlumberger Ltd. rose 4 percent after its profits increased on a pickup in drilling in North America.

The Dow has gained more than 200 points this week. It opened Friday 86 points below its high for the year of 12,810.54, which came on April 29.

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An intensifying voicemail hacking and police bribery scandal cut closer than ever to Rupert Murdoch and Scotland Yard on Sunday with the arrest of the media magnate’s former British newspaper chief and the resignation of London’s police commissioner.

Though the former executive, Rebekah Brooks, and the police chief, Paul Stephenson, have denied wrongdoing, both developments are ominous not only for Murdoch’s News Corp., but for a British power structure that nurtured a cozy relationship with his papers for years.

Brooks, the ultimate social and political insider, dined at Christmas with Prime Minister David Cameron. His Conservative-led government is now facing increasing questions about its relationship with Murdoch’s media empire.

The arrest of the 43-year-old Brooks, often described as a surrogate daughter to the 80-year-old Murdoch, brought the British police investigations into the media baron’s inner circle for the first time. It raises the possibility that Murdoch’s old friend Les Hinton, who resigned Friday as publisher of The Wall Street Journal, or his 38-year-old son and heir apparent, James, could be next.

Until her resignation Friday, Brooks was the defiant chief executive of News International, Murdoch’s British newspaper arm, whose News of the World tabloid stands accused of hacking into the phones of celebrities, politicians, other journalists and even murder victims. In the tumultuous last two weeks, she had kept her job even as Murdoch shut down the 168-year-old News of the World and tossed 200 other journalists out of work.

On Sunday she showed up for a prearranged meeting with London police investigating the hacking and was arrested. She was being questioned on suspicion of conspiring to intercept communications _ phone hacking _ and on suspicion of corruption, which relates to bribing police for information.

Brooks’ spokesman, David Wilson, said police contacted her Friday to arrange a meeting and she voluntarily went “to assist with their ongoing investigation.” He claimed that Brooks did not know she was going to be arrested.

Hours after Brooks’ arrest, Stephenson said he was resigning as commissioner of London’s force because of “speculation and accusations” about his links to Neil Wallis, a former News of the World executive editor who was arrested last week in the scandal. Wallis worked for the London police as a part-time PR consultant for a year until September 2010.

Stephenson said he did not make the decision to hire Wallis and had no knowledge of allegations that he was linked to phone hacking, but he wanted his police force to focus on preparing for the 2012 London Olympics instead of wondering about a possible leadership change.

“I had no knowledge of the extent of this disgraceful practice and the repugnant nature of the selection of victims that is now emerging,” Stephenson said. “I will not lose any sleep over my personal integrity.”

Brooks’ arrest was the latest blow for Murdoch, the once all-powerful figure courted by British politicians of all stripes. Now Murdoch is struggling to tame a scandal that has already destroyed News of the World, cost the jobs of Brooks and Hinton and sunk the media baron’s dream of taking full control of a lucrative satellite broadcaster, British Sky Broadcasting.

Deputy Prime Minister Nick Clegg said Murdoch “needs to come absolutely clean about what he knew, about what his senior executives knew, and why this culture of industrial-scale corruption _ so it is alleged _ appeared to have grown up without anyone higher up in the food chain taking any real responsibility for it.”

Rupert and James Murdoch are to be grilled by U.K. lawmakers Tuesday over the scandal. Brooks also had agreed to be questioned before a parliamentary committee, but her arrest throws that appearance into doubt.

“Obviously this complicates matter greatly,” said Wilson, her spokesman. “Her legal team will have to have discussions with the committee to see whether it would still be appropriate for her to attend.”

Lawmaker Adrian Sanders said if Brooks did not appear, “that is not going to go down very well with my fellow committee members.”

When Brooks stepped down Friday, she said she was going to “concentrate on correcting the distortions and rebutting the allegations about my record.”

She was editor of News of the World between 2000 and 2003, when some of the phone hacking took place, but has always said she did not know it was going on, a claim greeted with skepticism by many who worked there.

At an appearance before U.K. lawmakers in 2003, Brooks admitted that News International had paid police for information. That admission of possible illegal activity went largely unchallenged at the time and lawmakers are keen to ask her about it again.

Police previously arrested nine other people, including several former News of the World reporters and editors, over allegations of hacking and bribery. Those include Andy Coulson, a former News of the World editor who became Cameron’s communications chief before resigning in January. No one has yet been charged.

Even more senior figures could face arrest, including James Murdoch, chairman of BSkyB and chief executive of his father’s European and Asian operations. James Murdoch did not directly oversee the News of the World, but he approved payments to some of the paper’s most prominent hacking victims, including 700,000 pounds ($1.1 million) to Professional Footballers’ Association chief Gordon Taylor.

James Murdoch said last week that he “did not have a complete picture” when he approved the payouts.

Hinton, too, could face questioning over wrongdoing at the News of the World during his 12 years as executive chairman of News International. But Hinton is an American citizen living in the U.S., so British authorities would have to seek his extradition if he refused to come willingly.

Chandrashekhar Krishnan, executive director of Transparency International UK, said British prosecutors seeking to prove that bribes that were approved at a high level would have to uncover strong evidence such as memos or minutes of a meeting.

“That usually proves to be very, very difficult,” he said.

Rupert Murdoch is eager to stop the crisis from spreading to the United States, home of many of his most lucrative assets _ including the Fox TV network, 20th Century Fox film studio, The Wall Street Journal and the New York Post. The FBI has already opened an inquiry into whether 9/11 victims or their families were also hacking targets of News Corp. journalists.

On Sunday, Murdoch took out full-page ads in British newspapers promising that News Corp. would make amends for the phone hacking scandal, with the title “Putting right what’s gone wrong.” News Corp. vowed there would “be no place to hide” for wrongdoers.

That followed a full-page Murdoch ad Saturday declaring, “We are sorry.”

Murdoch’s critics say that is not enough. Labour Party leader Ed Miliband said Sunday that Murdoch has “too much power” in Britain and his share of media ownership should be reduced.

Murdoch still owns three national British newspapers _ The Sun, The Times and The Sunday Times _ and a 39-percent share of BSkyB.

At Tuesday’s committee hearing, which will be televised, politicians will seek answers about the scale of criminality at the News of the World. The Murdochs will try to avoid incriminating themselves or doing more harm to their business without misleading Parliament, which is a crime.

Police, meanwhile, are under pressure to explain why their original hacking investigation several years ago failed to find enough evidence to prosecute anyone other than News of the World royal reporter Clive Goodman and private investigator Glenn Mulcaire. Detectives reopened the investigation earlier this year and now say they have the names of 3,700 potential victims.

Records show that senior officers had numerous meals and meetings with News International executives in the past few years.

Stephenson, who became police chief in 2009, said he had “no knowledge of, or involvement in, the original investigation into phone hacking in 2006.” He said he was “unaware that there were any other documents in our possession of the nature that have now emerged.”

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Germany’s Volkswagen AG, Europe’s largest automaker, says it set a new first-half group sales record, as strong growth in the Asia-Pacific region boosted deliveries.

The Wolfsburg-based company said Friday it sold 4.09 million vehicles in the first six months of 2011, up 14.1 percent over the same period last year.

Asia-Pacific saw a 19.5 percent increase to 1.26 million vehicles, primarily in China. North American sales were up 21.2 percent to 319,100, while South American sales were up 10.9 percent to 455,200.

Europe remained the single biggest market, posting growth of 9.3 percent to 1.9 million vehicles, bolstered by robust 28.9 percent growth in Eastern Europe sales to 253,700 vehicles.

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Moody’s Investors Service on Tuesday downgraded Ireland’s government bond ratings to junk, dealing a further blow to the eurozone as it struggles to contain a worsening debt crisis.

Moody’s said it cut Ireland’s rating by one notch to Ba1 from Baa3, because it sees a growing risk the debt-ridden country will need a second bailout once its current rescue package expires at the end of 2013. The outlook for Ireland remains “negative,” Moody’s added.

Banks and other private investors will likely be asked to contribute to any new bailout, for instance by giving Ireland more time to repay its bonds, Moody’s said. Such private sector involvement is currently being negotiated for Greece, the first eurozone country that had to be bailed out and which now is negotiating its second rescue package within a little over a year.

The downgrade of Ireland follows a similar move last week, when Moody’s cut the rating of Portugal, the third victim of the eurozone’s debt crisis. It comes at a difficult time for the 17-country currency union, which in recent days has seen the crisis threatening to engulf big countries like Spain and Italy, which are too big to be bailed out.

A two-day meeting of finance ministers in Brussels, which concluded earlier Tuesday, opened the door for lower interest rates and longer maturities for the rescue loans of already bailed out countries _ a move that should take some pressure off Ireland. The ministers said they would also discuss wider powers for the eurozone’s bailout fund, such as the right to buy distressed bonds on the open market and thereby lower a country’s debt load.

However, the concessions, which remained very vague, came as ministers for the first time acknowledged that they are prepared to accept a temporary default rating for Greece as part of their efforts to get banks and investment funds to share the burden of a second bailout.

The debate over the new Greek package has rocked markets and undermined investor confidence in other struggling countries like Ireland. It has also pushed the European Union and other eurozone countries to attack the rating agencies, which they say are unfair in their assessments of countries that have already been saved.

The European Commission, the EU’s executive and one of the institutions overseeing Ireland’s exiting bailout, immediately came out against the downgrade.

“It contrasts very much with the recent data, which support a return to GDP growth this year, and the determined implementation of the (bailout) program by the Irish government, which has taken strong ownership of it,” the Commission said in a statement.

Moody’s acknowledged that the Irish government has slashed its budget deficit _ the EU’s largest by far last year _ and met the targets set out in its program, which on top of cuts also includes tax increases and economic reforms.

However, Moody’s warned that “implementation risks remain significant, particularly in light of the continued weakness in the Irish economy.”

It also cited “the shift in tone among EU governments towards the conditions under which support to distressed euro area sovereigns will be made available.”

The EU has been locked in a battle with rating agencies for the past week, after it slammed Moody’s decision to downgrade Portugal. The bloc has already implemented new rules for rating agencies following their failure to predict the credit crisis of 2007-08. It is set to propose a new round of regulation in November, in which it may introduce new requirements for sovereign debt ratings, such as a longer warning period for governments, allowing them to point out flaws with the data. It is also considering to stop ratings for countries that have an international support program, saying that the agencies have so far not taken proper account of European solidarity and that those countries are already under sufficient surveillance from their public creditors.

Debt inspectors from the European Commission, the European Central Bank and the International Monetary Fund are currently in Dublin, checking on the implementation of the bailout program before the next loan installment can be transferred. Their mission is set to end on Thursday.

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A new report says Japan’s tsunami-ravaged nuclear plant was so unprepared for the disaster that workers had to bring protective gear and an emergency manual from distant buildings and borrow equipment from a contractor.

The report by plant operator Tokyo Electric Power Co. was released over the weekend and is based on interviews of workers and plant data. It portrays chaos amid the desperate and ultimately unsuccessful battle to protect the Fukushima Dai-ichi nuclear plant from meltdown Faxless payday loans.

The report shows that workers struggled with unfamiliar equipment and fear of radiation exposure.

TEPCO has been criticized for dragging its feet on venting and sea water cooling _ the two crucial steps that experts say could have mitigated the damage.

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Referendums that would block the return of nuclear power to Italy and revoke a law mandating the privatization of the water supply appear headed for the 51 percent turnout necessary to validate the vote.

Turnout Sunday night when the polls closed was 41 percent. Voting was continuing Monday.

Passage of the referendums would be a blow to Premier Silvio Berlusconi, who has pushed to reintroduce nuclear energy and privatize tap water. A final referendum would revoke legislation that provides Berlusconi with a partial legal shield from prosecution guaranteed payday loan.

Analysts expected the Japan nuclear meltdown, following the March 11 quake and tsunami, to motivate voters. Italy’s nuclear power plants were shut down by a 1987 referendum after the Chernobyl disaster.

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If you’re thinking of buying a car soon, here’s some advice: Don’t.

“If you can wait, wait,” says Jeremy Anwyl, CEO of Edmunds.com, the car-buying website.

The Japanese earthquake is raising prices and cutting selection

J.C. Penney Co. says its first-quarter net income rose nearly 7 percent because of cost-cutting and strong reception to its exclusive merchandise.

The company says it earned $64 million, or 28 cents per share, for the three months ended April 30. That compares with $60 million, or 25 cents per share, in the same period last year.

Revenue edged up to $3.94 billion from $3.93 billion. Penney’s revenue at stores open at least a year rose 3 cash advance america.8 percent. The gauge is a key indicator of a retailer’s health.

Analysts had predicted earnings of 26 cents on revenue of $3.94 billion, according to FactSet.

The company also issued profit guidance in line with analysts’ projections.

J.C. Penney is based in Plano, Texas.

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