- Countrywide Financial Corp. tapped its entire $11.5 billion credit line to offset a surge in loan defaults and to address the company’s liquidity crunch. CFC plans to originate mostly conforming loans, which are backed by government-sponsored entities like Fannie Mae, from this point forward, nearly eliminating its riskier mortgages. CFC hopes this move will save the company from bankruptcy despite its difficulty securing funding sources.
- Biotech leader Amgen has begun restructuring, planning a $1.9 billion reduction in spending and 2,600 layoffs, to compensate for reduced sales of anemia drug Aranesp after recent studies found harmful side effects of overuse of this and other red-blood-cell-boosting drugs. Although the company has significantly increased its spending on R&D since 2000, Aranesp and other anemia drugs account for half of the company’s revenue and only one new drug is scheduled to be released in 2009. The layoffs will cut into the R&D staffing, so Amgen hopes to partner with other firms to develop new products while limiting its expenditures.
- Netflix is testing lower prices with some of its existing customers after reducing prices for all subscribers last month. The double reductions for current customers may help the company reduce its churn rate, which increased slightly last quarter as the company faces increased competition for subscribers from Blockbuster’s Total Access service
- J.C. Penney raised its yearly profit outlook after a second-quarter increase citing back-to-school and new private-label clothing sales. Competitors feeling the retail strain may want to look to Penney’s website for the key to its success. Instead of fighting the web for sales, J.C. Penney forged a strong online presence — offering three times as many products online as it sells in stores, thereby increasing sales of slower-moving items. Penney also provides Internet access at its checkout registers, allowing customers the convenience of online shopping without the hassle.
