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RJR Tobacco cuts 2,600 jobs

WINSTON-SALEM, N.C. >> In a massive restructuring designed to retreat from stiff discount-brand competition, R.J. Reynolds Tobacco announced yesterday the elimination of 2,600 jobs -- about 40 percent of the company's work force.

RJR, the nation's second-largest cigarette maker, said it will focus future spending on premium brands Camel and Salem and will only invest enough in the cheaper Winston and Doral brands to try to optimize profits. The company plans to trim spending $1 billion by the end of 2005, Chairman and Chief Executive Andrew Schindler said.

Wall Street applauded the move, sending the company's shares soaring by $4.67, or 13.7 percent, to $38.86 on the New York Stock Exchange.

Visa, MasterCard lose appeal

NEW YORK >> In a defeat for Visa and MasterCard, a federal appeals court yesterday upheld a lower court ruling designed to give their competitors more access to consumers.

The 2001 ruling by a federal court in Manhattan required Visa and MasterCard to drop rules that prohibit their member banks from also issuing American Express or Discover cards.

A three-judge panel of the 2nd U.S. Circuit Court of Appeals upheld the decision, finding that Visa and MasterCard's "exclusionary rules" harmed competition.

The rules "have absolutely prevented Amex and Discover from selling their products at all," the court found.

About 20,000 banks issue cards through Visa and MasterCard. The exclusion rules put them in direct competition with American Express and Discover, which issue cards directly to individuals.

Sun Micro will cut up to 1,080 jobs

Santa Clara, Calif. >> Sun Microsystems Inc., which has had nine straight quarters of falling sales, will eliminate as many as 1,080 jobs, or about 3 percent of its work force, to concentrate on products and services that are doing well.

The maker of server computers will cut jobs in all regions, spokeswoman May Goh Petry said. "The bulk of changes will occur in the current fiscal quarter though some units will have action" in the second and third quarters," Petry said. She declined to say which units will be affected. Sun had about 36,000 employees as of June, she said.

Chief Executive Scott McNealy, who has cut 7,300 jobs in the past two years, is seeking to help Sun adjust to reduced spending by customers and lower-cost products from competitors including Dell Inc. Sun hasn't said when the revenue slide might end.

Housing starts hold near 17-year high

WASHINGTON >> Housing construction slowed last month but still remained close to a 17-year high, a sign that a recent upward swing in mortgage rates has done little damage to the resilient housing market. Builders broke ground on 1.82 million housing units at a seasonally adjusted annual rate in August, a 3.8 percent drop from the previous month, the Commerce Department reported yesterday.

Housing construction had boomed in July, clocking in at a rate of 1.89 million units, the strongest monthly level of activity seen since April 1986. In the middle of June, rates on benchmark 30-year mortgages slid to 5.21 percent, the lowest level in more than four decades. But shortly after that, they began a fairly steady rise. But last week rates on 30-year mortgages dropped to 6.16 percent.

Merrill Lynch execs charged in Enron case

HOUSTON >> Three former Merrill Lynch executives were charged with conspiracy yesterday for allegedly helping Enron Corp. inflate earnings with a loan disguised as a sale of Nigerian barges. Daniel Bayly, Robert Furst and James Brown became the first Wall Street bankers to be hit with criminal charges in the scandal. The criminal charges do not involve Merrill Lynch, which reached a side agreement that would allow the brokerage to avoid any corporate culpability if it implements "a series of sweeping reforms."

In other news ...

>> On track for a record deficit, the government has produced $400.5 billion in red ink in the first 11 months of the 2003 budget year -- twice the total for the same period a year earlier.