Morning Money Memo …
The crisis over recalls at General Motors may be far from over.
America’s biggest auto manufacturer faces more legal and regulatory questions. GM’s stock price is down 20% this year, and it dropped 3.5% Tuesday after more recalls were announced involving 2.4 million cars and trucks.
The company is in the middle of a safety review across its line-up of cars and trucks. More recalls are expected. GM spokesman Alan Adler said the company is making progress on reviewing older investigations, “but work is continuing.” More federal and state regulatory investigations are underway.
So far GM has announced 29 recalls, but they don’t appear to have had a big impact on sales, which rose 7% in April.
Akshay Anand, an industry analyst with Kelley Blue Book, said Tuesday’s order to dealers to stop selling the 2015 Cadillac Escalade and 2014 Buick Enclave, Chevrolet Traverse and GMC Acadia until they’re repaired could give more buyers pause.
The initial recalls covered older models, such as the discontinued Cobalt; now they’re affecting newer models. GM expects to take a $400 million charge in this quarter to pay for the cost of repairs. That’s twice as much as the company announced last week.
Another big retailer reported disappointing earnings. Thanks largely to a tax change, first quarter profits rose 16% at Lowes, America’s second-largest home improvement chain.
But adjusted profit and revenue missed analysts’ estimates as bad weather kept customers from stores. Weak retail results pushed Wall Street stock averages down Tuesday. The Dow Jones Index dropped 137 points. The Nasdaq fell 23 points. But stock futures are higher this morning and the big stock S&P 500 is still up more than 1% for the year.
Citigroup wants to boost its mortgage business, reversing a recent slide in mortgage share. “We think today we are below our natural market share,” said Jane Fraser, head of the giant bank’s home loan division. Citi, which scaled back lending after the housing crisis, will be “extremely careful” about the quality of its lending, Fraser said in a speech.
Netflix is expanding into 6 more European nations, including Germany and France. The company ended March with 48 million video subscribers — including nearly 13 million outside the U.S.
Google also has overseas expansion plans. Following questions from government regulators, Google revealed that $20 billion to $30 billion is being set aside for the acquisition of foreign companies and technology rights held outside the U.S.
Richard Davies is a business correspondent for ABC News Radio