- - Wednesday, October 5, 2011

FEE HIKE

Costco will increase fees, as profits are up

Costco Wholesale Corp. is raising its membership fees 10 percent as the wholesale club operator tries to keep its prices on products low to keep drawing value-focused shoppers.

All retailers are struggling to balance soaring costs against shoppers’ continuing demand for low prices.

Costco has hesitated to raise its prices, for fear of losing its appeal with consumers who are willing to pay a membership fee to get a good a deal on everything from milk to televisions. But that made it less profitable in its fiscal fourth quarter than analysts anticipated.

Costco said Wednesday that its net income climbed 11 percent to $478 million, or $1.08 per share, for the quarter that ended Aug. 28. That’s up from $432 million, or 97 cents per share, a year earlier. The quarter included a “last in, first out” charge of 4 cents per share, an accounting measure that companies use to revalue their inventory when prices rise or fall notably.

SERVICE FIRMS

Report: Service firms cut workers last month

Service companies cut workers last month for the first time in 13 months, according to a private survey. The decline is a pessimistic sign two days before the government reports on job growth in September.

The Institute for Supply Management said its measure of hiring for service firms, which employ 90 percent of the workforce, fell below 50 for the first time since August 2010.

Any reading below 50 suggests companies laid off workers. The economy lost jobs for two straight months the last time the gauge was below that level.

The service industry did expand in September for the 22nd straight month, according to the trade group of purchasing managers. But growth was slightly slower than the previous month. The trade group’s growth index dipped from 53.3 to 53. Any reading above 50 suggests expansion.

TECHNOLOGY

India announces cheap computer for rural poor

NEW DELHI | India introduced a cheap tablet computer Wednesday, saying it would deliver modern technology to the countryside to help lift villagers out of poverty.

The computer, called Aakash, or “sky” in Hindi, is the latest in a series of “world’s cheapest” innovations in India that include a 100,000 rupee ($2,040) compact Nano car, a 750 rupee ($15) water purifier and $2,000 open-heart surgery.

Developer Datawind is selling the tablets to the government for about $45 each, and subsidies will reduce that to $35 for students and teachers. Datawind says it can make about 100,000 units a month at the moment, not nearly enough to meet India’s hope of getting its 220 million children online.

AUTOS

Ford, GM may qualify for higher credit ratings

NEW YORK | Credit rating agencies are looking to upgrade the credit worthiness of both General Motors and Ford, citing the stability and cost savings they expect the automakers’ new labor contracts to bring.

Moody’s Investors Service said Wednesday that it’s reviewing its ratings for Ford Motor Co., after the Dearborn, Mich., automaker reached a deal with the United Auto Workers for a new four-year contract.

The automaker’s ratings under review include “Ba2” for corporate family and probability of default, and “Ba3” for senior unsecured debt, both of which are so-called junk status. They also include “Baa3” for secured bank debt, the lowest level of investment grade.

Investment grade debt ratings allow companies to borrow money at lower interest rates.

Under agreements struck with Ford and GM, most of the companies’ factory workers will get profit-sharing checks instead of annual raises. They’ll also get a signing bonus. In turn, the automakers will increase their workforces and invest billions more in their factories.

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