Cigarette Makers Turn to E-Cigs to Fire Up Profits

Apr 26, 2013 8:07am

Morning Business Memo….

Here’s a burning question for the tobacco industry. How do you pump up profits when cigarette sales are falling? The answer, as in so many other industries, may begin with an “e”. Marlboro maker Altria Group – the largest US cigarette manufacturer – says it will introduce its own version of e-cigarettes later this year. Altria is playing catch-up. Lorillard already has its Blue Ecigs brand, and Reynolds American is planning to expand sales of its Vuse brand, which was recently test marketed. Electronic cigarettes are powered with batteries and heat liquid nicotine in a disposable cartridge, making a vapor that smokers inhale. An industry research firm says sales of e-cigs are expected to double this year compared with 2012. They’re usually cheaper than regular cigarettes and may be less harmful, say scientists. Altria says traditional cigarette sales declined again in the first quarter.

Everything sounds great at Samsung, but the future might not be as bright. The world’s largest smartphone maker says first-quarter profits shot up 42 percent compared with the year earlier thanks to robust smartphone sales even during a typically slow season for electronics goods. Sales rose 17 percent as Samsung took a bigger share of the global market with its Galaxy S III smartphones and Galaxy Note 2 devices. But Samsung warns of stiffer competition ahead from lower-cost Chinese smartphone manufacturers.

Booming sales but a squeeze on profits. That’s the mixed picture for the world’s leading online retailer, Amazon. First-quarter earnings plunged 37 percent compared with the year before, but sales increased 22 percent. Expenses continue to grow as Amazon expanded into new businesses and built more local warehouses to speed delivery of goods to online customers.

Amazon plans to release a television set-top box that would stream video over the Internet into customers’ homes, sources tell Bloomberg News. The device, due later this year, will connect to televisions, according to the report. Many competing set-top boxes already give access to Amazon’s video catalog. Bloomberg says: “By building its own device, Seattle- based Amazon can put its content more directly in center of consumers’ living rooms, while giving developers another reason to create applications for Amazon’s digital ecosystem.

More economic misery in Europe, which is stuck in a recession with high unemployment. The European Central Bank says bank lending to companies remains weak. Corporate lending shrank 2.4 percent in March. The ECB says its current low interest rates are not getting through to companies in the form of credit that would enable them to expand their businesses.

Richard Davies Business Correspondent ABC News Radio abcnews.com Twitter: daviesabc

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