The subprime mortgage meltdown continues to take its toll on automakers. Shrinking home equity and higher rates made car buyers nervous in August as U.S. sales dropped 1% from the year before. That puts the industry on pace to sell just over 16 million vehicles—almost 1 million fewer than what carmakers sold in 2000. Toyota Motor (TM) may have outsold Ford Motor (F), which saw sales plunge by 14%, but even the surging Japanese carmaker saw sales slip 3%. General Motors (GM) boasted that it bucked the trend with a 6.1% jump, but discounted pickups and rental car sales accounted for some of that spark.
Meanwhile, Renault-Nissan (NSANY) CEO Carlos Ghosn grabbed some help in his efforts to rouse Nissan from its malaise. On Sept. 17, Alain Dassas, 61, will take over as the first CFO in four years. Dassas currently heads the Formula One racing team at parent Renault. Maybe he can help get Nissan's stock out of the pits. It's down 23% this year.
See "Alan Mulally's Report Card"
The latest sign that credit turmoil is far from over: Major banks have hoisted the rate on their short-term loans to each other, known as the London interbank offered rate, or LIBOR. The banks are hoarding money in case they have to make big loans to strapped customers with lines of credit. On top of that, they're worried that the borrowing banks might not pay them back. On Sept. 7 the 30-day dollar LIBOR rate shot up to its highest spread over the federal funds rate since Dec. 31, 1999.
One big firm got a lifeline and another barely kept its head above water. Thornburg Mortgage (TMA) on Sept. 4 said it used a pool of home loans as collateral for a $1.44 billion loan to shore up operations. The deal comes on the heels of a $500 million sale of a special class of stock, which raised enough cash to let Thornburg keep writing mortgages. The news doesn't look so good for NovaStar Financial (NFI), a subprime lender that was forced on Sept. 4 to cancel a $100 million stock sale after the firm's lender cast doubt on its ability to stay in business.
See "Thornburg: Out of the Woods?"
In a snub to EU regulators who want to break up powerful energy companies, French utilities Suez and Gaz de France announced a government-brokered merger to create the world's fourth-largest energy group. President Nicolas Sarkozy rammed through the $123 billion deal, which gives the state a nearly 40% stake in the new GDF Suez.
This hasn't exactly been the summer of love for Apple (AAPL) CEO Steve Jobs. First, Universal Music, No. 1 in its industry, said on Aug. 9 that it will supply protection-free music to every outlet but Apple's iTunes service. Then, on Aug. 31, Apple said it had reached an impasse with NBC (NBC) and wouldn't offer its shows. NBC said on Sept. 5 that it will offer downloads through Amazon.com (AMZN), though talks with Apple continue. Jobs, of course, isn't standing still. On Sept. 5 he unveiled three new iPods, announced a deal under which iPod jockeys can download songs they hear at Starbucks (SBUX), and cut the price of the most costly iPhone by $200.
See "Apple's Content Quarrel"
Look out, China, someone's gaining on you. India said on Aug. 31 that for the quarter ended in June, GDP growth came in at a 9.6% annual rate—despite the nearly 10% appreciation of the rupee since January. The key contributors: fiery domestic demand and the emergence of a consumer culture.
Two regional players may take on the big boys together. Little MetroPCS (PCS) on Sept. 4 publicly offered to buy rival Leap Wireless (LEAP) for more than $5 billion in stock. The two have been talking about joining up for years. The merger would create a new player with 6.2 million mostly low-margin, prepaid users.
See "MetroPCS: A Leap into the Big Time?"
Standard & Poor's (MHP) announced on Aug. 30 that its president, Kathleen Corbet, would step down and be succeeded by Deven Sharma. S&P, like BusinessWeek, is a unit of The McGraw-Hill Companies. McGraw-Hill stock has dropped 26% this year, in part because of criticism of S&P's role in rating bonds backed by subprime mortgages.
This time, "personal reasons" may actually mean just that. On Sept. 4, Sony Ericsson President Miles Flint resigned, saying he'd like to try new things. His departure caught the mobile industry by surprise, since he transformed the five-year-old Swedish-Japanese joint venture from a money-losing basket case to the world's fourth-largest cell-phone manufacturer. His successor, Hideki "Dick" Komiyama, chairman of Sony Electronics, now faces the challenge of breaking into the smart-phone market.
In the geeky world of technical standards, Microsoft (MSFT) lost a key battle on Sept. 4. The International Organization for Standardization said the software giant failed to persuade enough countries to back a proposal to have a document format recognized as a standard. That could lead governments to use other programs, giving rival applications entrée. But the vote is preliminary, and Microsoft didn't lose by much. The company figures it can still win the final vote next year.
Corn isn't the only grain as high as an elephant's eye. Wheat futures soared to a record $8.10 a bushel on Sept. 4 while supply is at a 25-year low. Experts blame everything from global warming and floods to the surge in biofuel production. Look for higher prices on staples like bread, flour, and noodles.
That cute little doggie in Barbie Dream Puppy House? Don't put it in your mouth. On Sept. 4, Mattel (MAT) announced its third major recall this summer of Chinese-made products that pose health risks. The company recalled 848,000 parts on 11 toy models. Among them: Some 746,000 accessories for Barbie, the company's mainstay brand. Chairman Robert Eckert said the toys had been colored with paint that contained lead. No illnesses have been reported. Mattel says the toys were painted by subcontractors working on behalf of the company's main suppliers in China. All three of the subcontractors have been terminated or gone out of business.
But the drumbeat of recalls has analysts wondering if parents will put fewer playthings under the tree this Christmas. "The toys people are going to buy this holiday season are safe, and we're working hard to ensure that," Eckert told the Los Angeles Times.