Business Highlights

Google's 1Q profit climbs 30 pct and tops analyst views

SAN FRANCISCO (AP) — Google Inc.'s first-quarter profit climbed 30 percent to surpass analysts' predictions in a performance that alleviated some of the economic worries that have hammered the Internet search leader's stock this year.

The news, released after the stock market closed Thursday, lifted Google's recently drooping shares almost 18 percent.

The Mountain View-based company said it earned $1.31 billion, or $4.12 per share, during the first three months of the year. That compared with $1 billion, or $3.18 per share, in the first quarter of 2007.

If not for expenses to cover stock given its employees, Google said it would have made $4.84 per share.

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Merrill Lynch posts steep first-quarter loss on write-downs

NEW YORK (AP) — Merrill Lynch & Co., the world's largest brokerage, on Thursday said it would cut another 3,000 jobs after more than $6.5 billion of fresh write-downs pushed it to a loss for the first quarter.

It marks the third straight quarterly loss for Merrill amid a global credit crisis that began last summer. Banks and brokerages have racked up nearly $200 billion of write-downs to date, with more feared to come.

John Thain, hired as chief executive four months ago to clean up the firm's books, cautioned that things were unlikely to improve in the next couple quarters. The New York-based brokerage lost about $2 billion during the most recent quarter, and has now written off about $29 billion worth of risky asset-backed securities and leveraged loans.

His comments echo those of rival investment banking chiefs, who in recent days have said the worst of the crisis is over — but that a resurgence might not happen until the second half of the year. Thain also said that April is so far shaping up to be a better month for the brokerage compared to previous months.

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Stocks end mixed after companies turn in uneven results

NEW YORK (AP) — Wall Street finished an erratic session mixed Thursday after an uneven batch of earnings reports made investors cautious about buying stocks. Disappointing economic readings added to the market's uneasiness a day after a big rally.

The market grew jittery after the Philadelphia Federal Reserve said regional manufacturing weakened further in April. The index of manufacturing activity fell to a negative 24.9 from a negative 17.4 in March. The survey found most manufacturing executives were "cautiously optimistic" about future activity, but a report of higher unemployment claims reinforced the market's recession worries.

Merrill Lynch & Co.'s report of a $2.14 billion first-quarter loss followed a larger-than-anticipated rise in IBM Corp.'s quarterly earnings, but there were also disappointing results from Nokia Corp., the world's biggest mobile phone company, and drug maker Pfizer Inc.

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Continental, Southwest will cut growth to handle fuel spike

DALLAS (AP) — High fuel costs that helped drive some marginal airlines into bankruptcy this spring are also taking a toll on two of the nation's healthiest carriers.

Continental Airlines Inc. slid to a first-quarter loss as fuel spending soared 53 percent, and Southwest Airlines Co. — which hasn't lost money since 1991 — saw its profit fall by two-thirds.

Both airlines say they will respond by slowing their once-ambitious growth plans, and they are raising fares.

Stubbornly high fuel prices are likely to mean billions in losses this year at the nation's airlines. Already this year, five smaller carriers have shut down or announced plans to do so, and analysts are tossing around the B-word — bankruptcy — even in talking about the major airlines.

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Teens turn to thrift as jobs vanish and prices rise

NEW YORK (AP) — The souring job market and rising costs of the usual teenage indulgences — a slice of pizza, a drive to the mall, the hottest new jeans — are causing teens to do something they rarely do: be thrifty.

It's a far cry from the freewheeling spending of recent years, when teens splurged on $100 Coach wristlet handbags, $60 Juicy Couture T-shirts and $80 skinny jeans from Abercrombie & Fitch.

Now jobs for teens are less plentiful, and parents who supply the allowances are feeling the economic pinch themselves.

The stalwart retailers of teen apparel, such as Abercrombie and American Eagle Outfitters Inc., are reporting sluggish sales, defying the myth that teen spending is recession-proof: It holds up longer, but can eventually fold.

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Student loan trouble may threaten Sallie Mae lending ability

WASHINGTON (AP) — Sallie Mae says it cannot write money-losing student loans indefinitely.

Top executives are holding "daily deliberations" about just how long the nation's largest student lender can afford to sacrifice its bottom line for the sake of college-bound Americans, Sallie Mae CEO Albert J. Lord said Thursday.

Experts said that, unless the government intervenes or market conditions rapidly improve, Sallie Mae could have no choice but to stop writing new federally backed loans.

House lawmakers on Thursday approved a measure to boost the availability of credit for Sallie Mae and other student lenders, and analysts believe the Treasury department could act as soon as next week.

Sallie Mae lost $104 million in the first quarter as it grappled with higher borrowing costs, restructuring charges and other factors, though Lord said in a conference call with analysts that the company would not lower its full-year earnings target.

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Gas prices pass $3.40 a gallon, are expected to rise higher

NEW YORK (AP) — Retail gas prices pushed past a record high $3.40 a gallon Thursday, fulfilling expectations that they'll keep climbing toward $4 as the summer driving season approaches.

Oil prices, meanwhile, fell slightly after setting yet another record high overnight. Analysts said investors were locking in gains from crude's ongoing rally.

At the pump, the average national price of a gallon of unleaded gas rose 1.9 cents overnight to $3.418 a gallon, according to a survey of stations by AAA and the Oil Price Information Service. Diesel fuel also hit a new record of $4.146 a gallon after jumping 1.7 cents overnight, the survey said.

The soaring cost of both fuels is pressuring consumers, who gas up their cars and buy goods that grow more expensive because of rising transportation costs. And their plight will only worsen; many analysts expect average national gas prices to peak close to $4 a gallon later in the spring. Prices are already that high in some parts of the country, including California.

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Economy sends signals of more weakness to come

NEW YORK (AP) — Higher unemployment claims and weak readings from two economic indexes reinforced recession worries Thursday.

The Labor Department said Thursday that applications for unemployment benefits rose to 372,000, an increase of 17,000 from the previous week.

Separately, the New York-based Conference Board's gauge of future economic activity rose 0.1 percent for March, reversing five months of decline. But the private business group's indicator has shown a 3.3 percent annual rate of decline since March 2007.

The Conference Board said another of its indexes, which measures current economic activity, has also deteriorated in recent months, with weakness becoming more widespread among the components of both.

By The Associated Press

The Dow Jones industrial average was little changed, edging up 1.22, or 0.01 percent, to 12,620.49, after fluctuating throughout the session.

Broader stock indicators were mixed. The Standard & Poor's 500 index advanced 0.85, or 0.06 percent, to 1,365.56, while the Nasdaq composite index fell 8.28, or 0.35 percent, to 2,341.83.

Light, sweet crude for May delivery fell 7 cents from Wednesday's close to settle at $114.86 a barrel on the New York Mercantile Exchange, the contract's first lower close in a week.

In other Nymex trading Thursday, May gasoline futures rose 1.88 cents to settle at a record $2.9578 a gallon after earlier rising to a trading record of $2.9749 a gallon. May heating oil futures fell 1.56 cents to settle at $3.2674 a gallon. May natural gas futures fell 5 cents to settle at $10.383 per 1,000 cubic feet.

In London, Brent crude futures fell 23 cents to settle at $112.43 a barrel on the ICE Futures exchange.