Business news in brief

30-year mortgage rate drops to 3.84%

WASHINGTON -- Average long-term U.S. mortgage rates dropped this week to their lowest levels since May, in a week marked by turmoil in global markets that was stoked by economic developments in China.

Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed-rate mortgage fell to 3.84 percent from 3.93 percent a week earlier. The benchmark rate hasn't been that low since May 21.

The rate on 15-year fixed-rate mortgages declined this week to 3.06 percent from 3.15 percent.

To calculate average mortgage rates, Freddie Mac, the Federal Home Loan Mortgage Corp., surveys lenders across the country at the beginning of each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.6 point. The fee for a 15-year loan also held steady at 0.6 point.

-- The Associated Press

Dole CEO, ex-president must pay $148.1M

Dole Food Co. Chief Executive Officer David Murdock and a former executive of the fresh-fruit producer were ordered Thursday to pay $148.1 million over allegations they drove down the value of the company so Murdock could take it private on the cheap in a $1.2 billion deal.

Murdock received an "improper personal benefit" from the deal, in which he paid $13.50 a share to regain control of one of the world's largest sellers of fresh fruit and vegetables, Delaware Chancery Court Judge Travis Laster ruled. The judge also found Michael Carter, Dole's ex-president, should be held personally liable for investors' losses on the buyout.

The two executives' actions "deprived shareholders of the ability to consider the merger on a fully informed basis," the judge ruled. Laster also cleared of any wrongdoing officials at Deutsche Bank AG who advised Murdock on the deal.

Morgan Evans, a Dole spokesman, said the company didn't have any comment on Laster's ruling.

Murdock, with a reported net worth of $3 billion, is the 190th richest American, according to Forbes magazine. The billionaire announced last year he would donate $15 million annually to a North Carolina-based research facility he founded that focuses on nutritional health.

Murdock, Dole's CEO from 1985 to 2007, returned to the role in 2013. He took the company private once before, in 2003, and then sold 60 percent to the public in 2009.

The 91-year-old Murdock, who has vowed to live to 125, testified at the trial in February that disgruntled investors were unfairly painting him "as a skunk" and that he didn't engineer the deal to enrich himself.

Subway's growth ebbs, competition grows

After years of explosive growth turned it into the world's largest restaurant chain by number of locations, Subway is in retreat.

The sandwich seller is adding fewer new locations, and U.S. revenue fell 2.7 percent to $1.16 billion last year, according to a franchisee document that parent company Doctor's Associates Inc. filed with the state of Minnesota in April. The company's cash balance also shrank, dropping by nearly half to $10.9 million as of Dec. 31.

Subway, seeing mounting competition, has tried to lure diners with guacamole and $6 sandwiches and has experimented with putting hummus on its subs.

"The sandwich business has generally gotten much more competitive than it was five years ago," said Ed Teixeira, founder of consulting firm FranchiseKnowHow in Stony Brook, N.Y. "There are more formidable competitors."

Subway's U.S. expansion has slowed in the past two years. It added 313 net restaurants last year, 638 in 2013 and 804 in 2012, the franchise document shows. All of the company's more than 27,000 U.S. locations were owned by franchisees as of the end of last year.

Tiffany profit misses analysts' estimates

Tiffany & Co., the luxury jewelry chain, posted second-quarter profit that missed analysts' estimates after currency fluctuations took a bite out of international revenue.

Excluding some items, profit was 86 cents a share in the period, the New York-based company said in a statement Thursday. Analysts had estimated 91 cents on average, according to data compiled by Bloomberg.

A strong U.S. dollar has lowered the value of the Tiffany's sales overseas, where the company gets most of its revenue. Currency fluctuations also have kept tourists from making purchases at U.S. stores, dealing a second blow to revenue.

"The adverse effects from the strong dollar have been even more significant than initially expected," Chief Executive Officer Frederic Cumenal said in the statement.

The shares fell $1.79, or 2 percent, to close Thursday at $83.29. They tumbled as much as 8 percent during the day after the results were released.

Google denies EU antitrust allegations

BRUSSELS -- Google has rejected a complaint by Europe's competition watchdog that the Internet giant is abusing its dominance in Web search to promote its own products.

The European Commission alleged in April that Google has improperly favored its shopping comparison service in its own search results.

Google Senior Vice-President Kent Walker said Thursday that the Commission's conclusions "are wrong as a matter of fact, law, and economics."

Google said it submitted a rebuttal of the EU executive's case of around 150 pages with economic, data and legal analysis to back up its position.

Critics contend that online consumers are unable to see compelling alternatives from other merchants who either refuse or can't afford to pay to be catapulted into a high spot in Google's shopping rankings.

-- The Associated Press

FDA warns tobacco makers of false labels

NEW YORK -- The Food and Drug Administration issued warning letters to the makers of Winston, Natural Spirit and Nat Sherman cigarettes over their "additive-free" and "natural" label claims.

The agency issued the warnings to ITG Brands LLC, Santa Fe Natural Tobacco Company Inc. and Sherman's 1400 Broadway N.Y.C. Ltd. The issue over the claims is that they may lead consumers to believe the products pose a lower risk. That claim has to be scientifically proven.

The warning letters come several days after a large group of anti-tobacco organizations sent the FDA a letter urging the agency to enforce marketing regulations against Santa Fe Natural Tobacco over the marketing claims.

There was no immediate response from the companies.

-- The Associated Press

Business on 08/28/2015

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