Early Briefing: Georgetown's Bad Call

*Sometimes refs make bad calls, sometimes it's universities. For Georgetown, it was borrowing through auction-rate securities, says columnist Steven Pearlstein. While the school isn't in immediate financial danger, others who used the securities are. See his column here.

*"Nanking," a project produced by Ted Leonsis of AOL and Caps fame, has hit movie theaters. See Stephen Hunter's review

*Marriott's profit fell in the fourth quarter, meeting expectations. But it lowered its forecast for 2008, saying it expects a slowdown in consumer spending. See story.

*A bill in Congress on nursing-home regulation and one in the California legislature on pension-fund investing could pressure Carlyle Group, owner of nursing-home operator Manor Care. And California's CalPERS pension fund owns a stake in Carlyle. See story.

*Mayor Adrian Fenty said he'd support public spending on a professional soccer stadium if the team agrees to invest in it as well. See story

*There was a taxi driver strike yesterday, but not all drivers participated and it was unclear how many people were affected. See story

*Northrop Grumman of Los Angeles and General Dynamics of Falls Church received separate contracts valued at a combined $2.8 billion to start building a new destroyer fleet, the Pentagon said. The Navy estimates each of the first two DDG-1000 Zumwalt class of destroyers will cost $3.1 billion. The contracts are the first installment on those costs, and the Navy said it plans to buy seven of the ships through 2013. Each company's award was valued at $1.4 billion.

*Facing cost overruns of nearly 50 percent, the Air Force is scaling back a Lockheed Martin engine-replacement contract to $7.7 billion from $11.1 billion.

The Pentagon will abandon plans to replace aging engines in 62 C-5A Galaxy transport planes, said John Young, an undersecretary of defense. The Air Force will proceed with engine replacements in 47 C5-B planes and two C5-C planes.

In November 2001, the Air Force awarded Lockheed an $11.1 billion contract to replace old engines in all 111 planes. The cost reached $17.5 billion in September 2007, the Air Force said.
Under the new contract, Lockheed's costs cannot exceed $123 million per plane, Young said.

*Freddie Mac of McLean said it would purchase loans covered by mortgage insurers that do not meet its standards for the amount of capital backing their policies. Freddie Mac's move applies to insurers downgraded below AA- or Aa3. The insurers will be required to submit a remediation plan within 90 days of a downgrade.

*Billionaire investor Warren Buffett's Berkshire Hathaway increased its stake in CarMax, the biggest U.S. used-car retailer, by 50 percent, to 21 million shares, Berkshire disclosed in a regulatory filing. Berkshire's 9.6 percent stake makes it the second-largest shareholder in the Richmond-based company.

*Axa, Legg Mason's largest shareholder, sold most of its stake in the Baltimore-based money manager as the shares posted their biggest annual decline in two decades. Paris-based Axa and affiliates held 194,285 shares on Dec. 31, less than 1 percent of outstanding common stock, compared with 11.8 million shares Sept. 30. Legg Mason suffered $10.6 billion in investor withdrawals from stock funds in the fourth quarter.

*A Polish manufacturer of mattresses and upholstered furniture plans to build a plant in Danville, Va., creating 813 jobs. Gov. Timothy M. Kaine's office said Com.40 will invest more than $36 million for the plant, which will supply mattresses and upholstery to Ikea stores in North America. Kaine approved $1.5 million from the Governor's Opportunity Fund to assist with the Com.40 project.

By Terri Rupar  |  February 15, 2008; 5:00 AM ET  | Category:  Morning Brief
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