Editor’s Note: This is the Paw Print Rewind, a daily recap of the top news headlines.
GM spending $1.4 billion to modernize Arlington SUV factory
General Motors is planning to spend $1.4 billion to modernize its SUV factory in Arlington, TX that builds the Cadillac Escalade, Chevrolet Suburban, and GMC Yukon.
Wells Fargo profit drops for second straight quarter as costs rise
Wells Fargo, the U.S.’ largest mortgage lender, reported a drop in profit for the second straight quarter as employee costs and other expenses rose as the company is struggling with slow revenue growth.
The San Francisco-based company’s net interest income rose four percent in the second quarter that ended on June 30th.
Net interest margin, the difference between the rates at which the bank borrows and lends, fell to 2.9% from 3.15% a year earlier.
Non-interest expenses rose 2.3% to $12.47 billion, accounting for about 58.5% of revenue.
Mortgage banking revenue, which account for 17% of its non-interest income, fell one percent.
“Mortgage banking was a little weaker than I had thought … that was a little bit of a disappointment.”
-Scott Siefers, Sandler O’Neill analyst
Net income applicable to Wells Fargo’s common shareholders fell to $5.36 billion from $5.42 billion.
Total revenue fell about one percent to $21.3 billion.
Uber settles San Francisco wrongful death lawsuit
Uber has reached a tentative settlement in a lawsuit brought by the family of six-year-old Sofia Liu, who died in a San Francisco car accident, according to court filings.
Liu died after she, her younger brother, and their mother were hit by a car in a cross-walk on New Year’s Eve 2013. At the time of the crash, the driver was logged on to the Uber X smartphone app, and was available to provide rides, according to the lawsuit.
“The settlement is confidential and the family will only say that while nothing will ever bring Sofia back, they are grateful to the American Judicial System for providing them a way to resolve the legal issues raised by Sofia’s death.”
-Christopher Dolan, Liu family attorney, in a statement
Netflix subscriptions up
Netflix’s net subscriber additions rose about 94 percent year over year to about 3.3 million in Q2 2015, beating the company’s 2.3 million forecast.
“Subscriber growth was huge domestically and internationally. The technology, the breadth of content, and the quality of content is really working in their favor.”
-Barton Crockett, FBR Capital Markets analyst
The Los Gatos, CA company added 2.4 million subscribers internationally in the quarte,r taking its total to over 65 million users worldwide.
Revenue jumped 22.7% to $1.64 billion in the quarter that ended June 30th, from $1.34 billion a year earlier, according to the company.
Netflix’s net income fell to $26.3 million ($0.06/share), from $71 million ($0.16/share) a year earlier, because of its overseas expansion.
Intel revenue, profit improving as data center business grows
Intel reported growth in its data centers and Internet of Things businesses that offset weak demand for PCs that use the Santa Clara, CA-based company’s chips.
Revenue from Intel’s data center business, its second-largest, grew 9.7% to $3.85 billion in Q2 2015 from a year earlier, helped by continued adoption of cloud services and demand for data analytics.
“We continue to forecast robust growth rates of the data center group, Internet of Things group, and NAND businesses, which we expect to mostly offset the PC decline.”
-Stacy Smith, Intel CFO
Revenue from Intel’s PC business fell 13.5% to $7.54 billion in the quarter that ended June 27th.
“Our expectations are that the PC market is going to be weaker than previously expected.”
The company’s net income fell to $2.71 billion from $2.80 billion a year earlier. Earnings per share were flat at $0.55 as the number of outstanding shares fell.
Net income fell 4.6% to $13.19 billion.
Bank of America profit soars as costs fall to lowest level since 2008
Bank of America, the U.S.’ second-largest bank by assets, reported its biggest quarterly profit in nearly four years as expenses fell to their lowest level since the financial crisis.
Bank of America, which has paid at least $70 billion in legal expenses since 2008, had its legal costs fall for the second straight quarter.
Litigation expenses fell to $175 million from $4 billion a year before, allowing the bank to reap the benefits of the cost cuts introduced by CEO Brian Moynihan after assuming the top job at the bank in 2010.
At the same time, net interest income rose 4.7% to $10.49 billion – the first rise in five quarters.
“We also benefitted from the improvement in the U.S. economy, where we are particularly well positioned.”
-Brian Moynihan, Bank of America CEO
Net income attributable to shareholders more than doubled to $4.99 billion ($0.45/share) in the quarter from $2.04 billion ($0.19/share) a year earlier.
The results were helped by a one-time accounting adjustment on mortgage bonds linked to rising interest rates.
Obama launches project for more broadband in public housing
U.S. President Barack Obama has announced a pilot project aimed at expanding broadband access for people who live in public housing, part of an effort to close the “digital divide” between rich and poor.
Eight Internet service providers, including Google and Sprint, have signed on to make the Internet cheaper and more accessible in 27 cities and the Choctaw Tribal Nation in Durant, OK.
Private and public institutions have pledged to invest $70 million in the plan. The federal government is contributing $50,000, according to Secretary of Housing and Urban Development Julian Castro.
The initiative will reach 275,000 households, and almost 200,000 children.
“While high-speed Internet access is given for millions of Americans, it’s out of reach for far too many.”
-Barack Obama, U.S. president
The Choctaw Tribal Nation is working with four local providers to bring the Internet to 435 homes.
In Atlanta, Durham, Kansas City, and Nashville, Google will provide free Internet connections in some public housing areas.
In select markets, Sprint will offer free wireless broadband access to families and kids in public housing. In Seattle, CenturyLink will provide broadband service for public housing residents for $9.95/month in the first year.
Cox Communications is offering home internet for the same price to families with school-age children in four cities in Georgia, Louisiana, and Connecticut.
The program also includes free training and technical support from providers like Best Buy, according to the White House.
Solar-powered plane grounded for nine months in Hawaii because of battery damage
The single-seat Solar Impulse experimental aircraft will be grounded in Hawaii for at least nine months because of battery damage sustained during its 118-hour flight to Oahu from Japan, according to the project’s team.
The plane isn’t expected to take off on the next leg of its journey – a four-day, four-night flight to Phoenix – until late April or early May 2016, according to the team.
Additional time is needed to repair the plane’s four batteries, which store energy from the sun during daylight hours to keep the aircraft powered overnight, allowing it to remain aloft around the clock on extreme long-distance lights.
The repairs and testing will then push the next available window for completing the plane’s trans-Pacific crossing to next spring, in terms of weather conditions and sufficient daylight hours.
The batteries became overheated during the aircraft’s initial climb after takeoff on June 29 from Nagoya, Japan to Hawaii, according to the team.
Wells Fargo wins dismissal of Los Angeles predatory lending lawsuit
Wells Fargo won the dismissal of a lawsuit by the city of Los Angeles that accused the company of violating the Fair Housing Act by engaging in predatory lending practices.
The “undisputed facts” show that Wells Fargo did not violate the FHA during the two-year statute of limitations period, according to U.S. District Judge Otis Wright.
Boeing taking big U.S. tanker charge, will affect profit
Boeing will take a $536 million after-tax charge in its second quarter results to deal with problems in the fuel system of the KC-46A aerial refueling tanker it is developing for the U.S. Air Force.
The charge will result in lower full-year earnings, according to the Chicago-based company. Added funds were needed to cover higher development, certification and initial tanker aircraft production cost, while keeping the $49 billion, 179 aircraft program on track for the initial 18 tanker delivery by August 2017.
“While we have more heavy lifting coming up, we believe it is achievable and do not see any technical showstoppers.”
-Duke Richardson, U.S. Air Force brigadier general
The extra spending is needed to fix the tanker’s integrated fuel system, which delivers fuel to the aircraft and is also used for refueling other aircraft in mid-air, after problems emerged in testing, according to Boeing.
Testing of non-fuel system components is 90% complete, according to the company, and it is making progress on its overall ground and flight test program.