Harold Maass of The Week The Best of Today's Business

NEWS AT A GLANCE

Starbucks sets big store and staff cuts

Coffee giant Starbucks said it will close 600 company-operated stores in the U.S., including 100 closures announced in January, as the slowing economy and store saturation hit at its bottom line. About 12,000 employees, or 7 percent of Starbucks' global workforce, will be cut or moved to another location. (AP in Yahoo! Finance) Starbucks has doubled in size since 2004, and 70 percent of the targeted stores are less than three years old. They were siphoning 25-30 percent of sales from nearby Starbucks locations, the company acknowledged. "They're basically the victim of their own success," said Oppenheimer & Co. analyst Matthew DiFrisco, and now "they've admitted that." (Bloomberg)

UnitedHealth settles suits, lowers forecast

UnitedHealth Group, the largest U.S. health insurer, cut its earnings forecast for the second time this year, and said it will pay $912 million to settle two class-action lawsuits concerning stock option backdating. UnitedHealth blamed the earnings warning on an "intensely competitive" health care benefits industry and lower-than-expected margins from the Medicare prescription drug program. (MarketWatch) The company now expects full 2008 adjusted profit to be $2.95 to $3.05 a share, compared with an average analyst forecast of $3.52. (AP in CNNMoney.com) The lowered forecast doesn't include the payouts from the legal settlements. (Bloomberg)

Microsoft explores new joint bid for Yahoo

Microsoft is in talks with Time Warner, News Corp., and other firms about buying and dividing up Yahoo, The Wall Street Journal reported. In the deal, Microsoft would buy Yahoo's search business. Yahoo's stock dipped below $20 a share yesterday for the first time since Microsoft announced a hostile bid in January. (MarketWatch) Its shares rose 3.5 percent in Germany, to the equivalent of $20.90 a share, on the report of Microsoft's renewed interest. (Bloomberg) Meanwhile, the U.S. Justice Department opened a formal antitrust investigation into Yahoo's ad deal with Google, the fruit of Microsoft's bid. (The Washington Post, free registration)

For airports, profit in a layover

Airline passengers generally dislike flight delays, but airports don't share the negative feelings. Airports have turned the ever-growing number of delays into another revenue stream, through a combination of old and new services for stranded passengers. Delays are so long now, for example, that grounded fliers can often watch an entire DVD between flights, for a rental fee. And with airlines cutting food service, passengers have more reason to visit the airport food court, or bar. Sales at U.S. airport shops, restaurants, and bars rose to $6.5 billion last year, from $6.1 billion in 2005. The "forced" time at aiports is "much, much longer" now, says airline consultant Robert Mann Jr. "We're talking hours longer." (CNNMoney.com)

BEST COLUMNS OF THE DAY

The Chevy Volt's target audience

General Motors finds itself unprepared for a gas-driven consumer shift to smaller, more fuel-efficient cars, says Holman Jenkins in The Wall Street Journal, for at least the third time since 1958. One lesson from this is that planning your fleet on "a 'permanent' shift in auto tastes based on a quantum as volatile as the price of gasoline is nuts." Well, GM executives aren't nuts, so who do they expect to buy the $45,000, limited-range electric Chevy Volt when it comes out? The answer: Washington. GM is seeking "a whopping $7,000 tax credit" for Volt buyers, among other favoritism. U.S. automakers have spent years as "whipping boys" of Capitol Hill, and "the Volt is GM's vehicle for making a bailout of GM politically acceptable."

Chrysler's public crisis

Chrysler "has been engaged in a vanishing act" ever since Cerberus took it private last year, says Jim Jelter in MarketWatch, and it's hard to believe CEO Bob Nardelli when he says that the sputtering automaker isn't headed for "the chop shop." Its greater-than-expected 36 percent drop in June sales is one hint that the company, which doesn't have to open its books, is in dire straits. But it's private, "so who cares?" Well, Chrysler just cut 2,400 auto plant jobs, which means five times as many jobs will be slashed at publicly traded auto parts factories, transport companies, and other related industries. Nardelli says things are fine, but the downstream job "carnage" will give us a peek behind the curtain.

GOOD DAY FOR: Woman's best friend, after notorious hotelier Leona Helmsley reportedly left instructions to set aside $5 billion to $8 billion of her fortune for a charitable trust dedicated to the care and welfare of dogs. Helmsley, who died in August, famously left $12 million to her own dog, Trouble. The new trust would consume virtually all of her estate, but the directions to create it may not be legally binding. (The New York Times, free registration)

BAD DAY FOR: Blockbuster deals, after the world's largest video rental chain dropped its bid for Circuit City after examining the electronics retailer's books. Blockbuster had offered up to $1.35 billion for Circuit City, which has lost money the past two years. After the news broke, Circuit City shares dropped 14 percent in extended trading. (Bloomberg)

NOTED: U.S. auto sales dropped to a 15-year low in June, as consumers shunned trucks and SUVs and automakers were unable to meet demand for smaller cars and hybrids. GM posted an 8 percent drop in sales, avoiding losing its No. 1 seller ranking to Toyota, which saw a 21 percent drop in June sales. Ford sales dropped 28 percent and Chrysler sales, 36 percent. Honda reported a 1 percent gain. (Reuters)

This column was written by Peter Weber and edited by Harold Maass of TheWeekDaily.com.