Bank of America drops loan lines

  • Wednesday, August 15, 2001 9:00pm
  • Business

Bank of America Corp. is getting out of the car leasing and subprime real estate lending businesses, taking a $1.25 billion charge in the third quarter to cover its costs. The nation’s No. 3 bank holding company said Wednesday it plans to liquidate its $26.3 billion subprime portfolio over the next seven to nine months. The bank said it will abandon the car leasing business immediately, although it said it planned to manage its $9.7 billion portfolio to the end of the term. The charge is more than half of what the bank earned in its second quarter.

Motorola Inc. announced plans Wednesday to phase out two semiconductor manufacturing lines in Arizona, continuing its consolidation and adding more job cuts to the sweeping reductions already made. The move comes with worldwide semiconductor sales off sharply and Motorola on the slide from the world’s fourth-biggest chipmaker a year ago to No. 7. The Schaumburg, Ill.-based company, which already has announced 30,000 job cuts this year – 20 percent of its workforce – said the action continues its policy of shutting down older plants and investing more heavily in advanced technology.

Federated Department Stores Inc. turned in a 75 percent increase in second-quarter profits, due in part to a one-time tax benefit. But a sluggish economy caused Federated to pare down the top range of its full-year earnings forecast for the second time in less than two months. The results, announced Wednesday, beat Wall Street expectations by 2 cents. The company, which operates such department store chains as The Bon, Bloomingdale’s and Macy’s, earned $110 million, or 55 cents a share, for the three months ended Aug. 4, up from $63 million, or 30 cents a share, a year ago.

Coca-Cola and Procter &Gamble are scaling back their planned $4 billion joint venture that would have combined brands such as Minute Maid juice and Pringles potato chips. The companies will now focus on a smaller business to create and market new products. Coke made the announcement in a filing Tuesday with the Securities and Exchange Commission. In February, Coke and P&G announced the venture that would result in more than $4 billion in sales. Atlanta-based Coke would contribute its Minute Maid juices, Fruitopia and Hi-C beverages, while P&G, based in Cincinnati, offered Pringles chips and Sunny Delight juice. Coke executives were excited about tapping into Procter &Gamble’s vast research on consumer products, while P&G would gain access to Coke’s marketing and distribution resources.

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