AUTOMOTIVE

Ford plants to shift from trucks to cars

Ford Motor Co. is about to alter its focus drastically and build more small cars.

The struggling automaker, reacting to what it sees as a rapid and permanent shift brought on by high gas prices, plans to unveil its new direction on Thursday, when it will report quarterly earnings.

Among the changes, Ford is expected to announce that it will convert three of its North American assembly plants from trucks to cars, according to people familiar with the plans. They said it will realign factories to manufacture more fuel-efficient engines and produce six of its next European car models for the U.S. market.

The company will also end speculation about its Mercury division by making the brand an integral part of its small-car strategy, according to these people, who spoke on the condition that they not be quoted by name.

The sweeping changes are the result of months of strategic discussions by Ford executives. Ford sales are down 14 percent this year, and the industry is headed for its worst annual sales in more than a decade.

Nissan recalls 2007, '08 Sentras

Nissan Motor Co. is voluntarily recalling 169,202 Sentra sedans in the United States to replace a brake cylinder that may leak fluid. The recall involves 2007 and 2008 model Sentras, according to a letter from Tokyo-based Nissan on the Web site of the National Highway Traffic Safety Administration.

GM, utilities work on electric car

San Jose, Calif. —- General Motors Corp. has joined with more than 30 utility companies to help work out electricity issues that will crop up when it rolls out new electric vehicles in a little more than two years. The automaker said the partnership will deal with issues from tax incentives for the vehicles to where and when they can be plugged in for recharging. GM is working to bring the Chevrolet Volt rechargeable car to showrooms in late 2010.

DEALS

Groups bid for power company

Columbus, Ohio —- Two investment groups said Monday that they are making a $7.8 billion bid to take Canada's largest generator of wind power private. LS Power Equity Partners and Global Infrastructure Partners say they have offered $38.84 a share for Calgary, Alberta-based TransAlta Corp., a 21 percent premium over Friday's closing stock price of $32.13. TransAlta, which is nearly 100 years old, is a wholesale power generator whose customers include utilities and corporations in Canada, the United States and Australia. It has 50 power plants that can generate 9,000 megawatts of power, enough to run 7.3 million homes. Besides wind power, it has plants powered by coal, natural gas, hydro and geothermal.

EA extends offer for Take-Two

Redwood City, Calif. —- Video game publisher Electronic Arts Inc. has again extended the deadline for its $2 billion tender offer to buy smaller rival Take-Two Interactive Software Inc. The offer now is scheduled to end at 11:59 p.m. EDT on Aug. 18, an extension from this past Friday. EA said Monday it needed more time to allow regulators to continue their review. EA previously announced that it was in "substantial compliance" with the Federal Trade Commission's request for information. Based on its agreement with the FTC, EA said in a regulatory filing it will not close any acquisition until at least Aug. 21 or the FTC closes the investigation —- whichever is earlier. EA is trying to buy Take-Two, best known for the popular "Grand Theft Auto" series of games, for $25.74 per share, or about $2 billion. Take-Two has repeatedly rejected the offer as too low.

Brocade to buy Foundry Networks

Brocade Communications Systems Inc. says it is paying $3 billion in cash and stock to acquire Foundry Networks Inc., a deal designed to challenge industry behemoth Cisco Systems Inc. The melding of Brocade and Foundry signals the growing importance of the equipment used to shuttle data and Internet traffic.

FINANCIAL

Safeco chief: Firm was too small

Insurer Safeco Corp. needed to sell itself because it wasn't large enough to pay for national advertising, according to Chief Executive Paula Rosput Reynolds . Auto insurers need to advertise widely to gain market share because the industry as a whole grows only as fast as the U.S. economy, Reynolds told the CityClub in Seattle, where the company is based. "When you look at the national companies that sell property and casualty insurance, Safeco is really the bottom of the top," said Reynolds, the former CEO of Atlanta Gas Light Co. "We never had enough room for the big advertising reach. We couldn't grow big enough organically." Liberty Mutual agreed April 23 to buy Safeco for $6.2 billion.

Freddie Mac may raise capital

Freddie Mac, the second-largest U.S. mortgage finance company, may cut purchases of home loans from banks and bonds backed by housing debt to shore up its capital amid record delinquencies. The government-sponsored company is also considering selling securities and reducing its dividend while it prepares to issue $5.5 billion of stock, Freddie Mac said in a filing Friday with the Securities and Exchange Commission. "This just means much less credit availability for mortgage borrowers," said Paul Colonna of GE Asset Management. "They were teed up to be saviors of the mortgage crisis, but now they've got their own capital issues."

Interest rates fall in Treasury auction

Washington —- Interest rates on short-term Treasury bills fell in Monday's auction, with rates on three-month bills dropping to the lowest level since late April. The Treasury Department auctioned $24 billion in three-month bills at a discount rate of 1.520 percent, down from 1.610 percent last week. Another $23 billion in six-month bills was auctioned at a discount rate of 1.920 percent, down from 1.955 percent last week. Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, fell to 2.21 percent last week from 2.25 percent the previous week.

Wachovia to end brokered loans

Wachovia Corp. will stop accepting home loans made by mortgage brokers, continuing the fallout from its 2006 acquisition of Golden West Financial Corp. The move takes effect Friday, spokesman Don Vecchiarello said. The company, which ranked seventh among U.S. home lenders last year, will still make the loans through its own offices.

WellCare Health to restate earnings

WellCare Health Plans Inc., the U.S. managed care provider being investigated over possible fraud, said it will restate earnings going back to 2004. The Tampa-based provider of government-backed health plans for the elderly and the poor will revise calculations in several areas, according to a filing with the Securities and Exchange Commission.

MANUFACTURING

Hasbro to raise its prices again

Hasbro Inc., maker of Star Wars and Indiana Jones action figures, said Monday that it will raise prices for a second time this year to counter the higher costs of making the toys. A "mid-single-digit" percentage price increase will go into effect Sept. 1 even after second-quarter revenue exceeded analysts' estimates, the Rhode Island-based company said on a conference call. Last week, Mattel Inc. said it implemented "mid-to-high-single digit" price increases on June 1.

MEDIA

Netflix abandons investments in film

Netflix Inc. is shutting down a division that invested in low-budget films and documentaries, saying the Red Envelope Entertainment unit competed with its main suppliers, Hollywood studios. Red Envelope has as many as 50 employees and "a few folks will be moving on," spokesman Steve Swasey said. California-based Netflix is the world's largest Web-based video rental store, with 8.2 million subscribers. The division was set up to let Netflix seed the market for films aimed at niche audiences, Chief Executive Reed Hastings said in a 2006 interview. With the closing, the company will rely more on rental histories to help customers find pictures they might enjoy.

Death Row Records sale appealed

Eagle Rock Entertainment Ltd., a London-based music and entertainment company, asked a judge to block the court-approved sale of Death Row Records while it appeals. Eagle Rock is a creditor in Death Row's bankruptcy that claims international licensing rights for the company's music catalog. The sale of Death Row's assets, for $24 million in cash to Global Music Group, was approved July 9 by the U.S. Bankruptcy Court in Los Angeles.

RETAILING

Mervyns faces cash crunch

Mervyns LLC, a low-end department store chain that has been languishing for several years, could be the latest casualty of the fiercely competitive retail climate. The privately held company, which operates about 175 stores in seven states but primarily in California, is facing bare shelves and a cash crunch as vendors are delaying shipments and key lenders have stopped approving orders. "We are advising clients to hold off shipments primarily due to lack of communications from management," said Bob Carbonell, chief credit officer at Bernard Sands LLC, a credit-monitoring company. Carbonell, who said he's working with several dozen clients that sell to the chain, noted that Mervyns had been providing financial updates until about a week ago.

TECHNOLOGY

Apple nearly out of new iPhone

Apple Inc.'s iPhone 3G was sold out at almost all the company's U.S. retail outlets 10 days after Chief Executive Steve Jobs put the faster, cheaper upgrade of the mobile handset on the shelves. Out of Apple's 188 shops, only three had phones available Monday, according to a tally posted on Apple's Web site. The short supply may hinder Apple's efforts to challenge Research in Motion Ltd.'s BlackBerry for the lead in the U.S. market for smartphones, devices that offer Internet access, e-mail and computer functions. "Apple and its partners can only make them so fast," said Andy Hargreaves, an analyst at Pacific Crest Securities. He expects the shortage to ease in the next few weeks as Apple expands production. "The current shortage is only negative if Apple isn't able to increase production in the coming weeks."

Apple: Jobs' health 'a private matter'

Apple Inc. said Monday that Chief Executive Steve Jobs has no plans to leave the company and that his health is "a private matter." Shares fell 10 percent in after-hours trading. "Steve loves Apple," finance chief Peter Oppenheimer said when asked about Jobs' health on an earnings conference call. "He serves as CEO at the pleasure of the board. He has no plans to leave Apple. Steve's health is a private matter." Since Jobs, 53, took the stage in San Francisco last month to introduce the newest iPhone, speculation among attendees and bloggers has run rampant that he may be sick again after successful surgery for a form of pancreatic cancer in August 2004.

TRADE

Commerce chief pushes free trade

Savannah —- U.S. Commerce Secretary Carlos Gutierrez pressed Congress on Monday to approve three free-trade agreements backed by the president, saying legislators are costing exporters millions of dollars. "Every day that goes by is a missed opportunity," Gutierrez told reporters in a dockside news conference at the Port of Savannah. President Bush has been lobbying Congress to approve free-trade pacts with Colombia, Panama and South Korea. Congress hasn't shown any sign of complying, saying such deals could hurt U.S. workers —- particularly during lean economic times.