McDonald's sees slow growth in a tough economy; Facebook's facial recognition feature draws regulatory scrutiny in Europe; and more
McDonald's: Slow Growth in a Tough Economy
Same-store sales at McDonald's (MCD) restaurants rose 3.1 percent in May, falling shy of analysts' median estimate of 3.6 percent. It was the fast-food chain's slowest growth in more than a year. Weak consumer spending and a national unemployment rate of 9.1 percent contributed to the sluggish sales. Analysts also cited rising gas prices and the fact that there were fewer weekends this May than last year. At the same time, the cost of ingredients jumped because of rising grain and meat prices over the past year. Meat prices may rise 7 percent this year, according to the U.S. Agriculture Dept. McDonald's is trying to lure customers this summer with new products, including frozen-strawberry lemonade.
Medco Health Solutions: Looking to Buy
Medco (MHS), the largest pharmacy benefits manager, may lose its top client, forcing it to seek acquisitions to make up for lost revenue. Medco has lost $3.5 billion in contracts since March. UnitedHealth says it is considering bringing its benefits management in-house when its $11 billion contract with Medco expires next year. If it does, Medco would likely drop from the largest pharmacy benefits manager to the smallest, says Helene Wolk, an analyst at Sanford C. Bernstein. She says Cigna's (CI) pharmacy unit is a potential acquisition target.
Capital One/GE: Two Bids to Buy ING's Online Bank
General Electric (GE) and Capital One (COF) both submitted offers to buy ING's (ING) online bank for up to $9 billion, according to people with direct knowledge of the matter. ING is selling its online-only bank—the largest in the U.S.—as part of a restructuring plan mandated by European regulators after the bank received state aid during the financial crisis. GE, which offered cash, wants the bank to gain its large deposit base. Capital One's offer included stock and would make Amsterdam-based ING one of the credit-card company's largest shareholders.
GE/Nucor: China Ends Wind Power Subsidies
Responding to a complaint filed with the World Trade Organization, China agreed to end subsidies for win power manufacturing totaling hundreds of millions of dollars. China has aided local manufacturers with as much as $22.5 million each if they used parts made in China. The U.S. Trade Representative's office, supported by groups representing manufacturers such as General Electric (GE) and Nucor (NUE), submitted a complaint to the WTO, saying the practice violated international trade laws and harmed component manufacturers outside China.
Facebook: EU Probes Facial Recognition Feature
European regulators said they will investigate Facebook's use of facial recognition technology, which does not ask permission from users. A privacy group in the U.S. plans to ask the Federal Trade Commission to examine the issue, too. When users upload photos, Facebook's feature, called Tag Suggestions, analyzes the images and suggests people's names to tag in the pictures. Privacy watchdogs say the feature should require prior consent. Facebook says users add 100 million tags each day and people can easily opt out.
On the Move
• Procter & Gamble (PG): Charles Bergh, global male grooming president, to leave in September.
• Chrysler: Reid Bigland named CEO of Dodge brand and U.S. sales.
• New York Times: Jill Abramson named first female executive editor