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Originally published October 18, 2006 at 12:00 AM | Page modified October 18, 2006 at 12:47 AM

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Business Digest

Microsoft to spend $7.5 billion in FY 2007

Microsoft will spend about $7.5 billion in research and development in its 2007 fiscal year, Chief Executive Officer Steve Ballmer said Tuesday in Madrid.

Pacific Northwest

Microsoft will spend about $7.5 billion in research and development in its 2007 fiscal year, Chief Executive Officer Steve Ballmer said Tuesday in Madrid.

"I would estimate off the top of my head approximately half a billion of that will be spent in Europe," Ballmer said. The Redmond company's fiscal year ends in June.

Met Mortgage

Lawyers made $17.3 million

Lawyers involved in the Metropolitan Mortgage & Securities bankruptcy have made $17.3 million over the last 2 ½ years, court and company records show.

The fees are part of $19.4 million paid to lawyers, accountants and other professionals sorting through the business dealings of the former insurance and investment companies.

According to bankruptcy law, the lawyers are paid first and on an as-you-go basis before the remaining assets are paid to investors and creditors.

The collapse of Spokane-based Met Mortgage, once a $2.7 billion conglomerate of insurance companies and investment services, cost more than 10,000 investors an estimated $450 million.

Boeing

Buyer of 747-8s is plane lessor

Boeing on Tuesday identified the buyer of four 747-8 jumbo freighter aircraft ordered earlier this month as U.S.-based airplane lessor Guggenheim Aviation Partners.

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The order is valued at about $1.12 billion at list prices. Boeing will deliver the 747-8s beginning in 2009. Guggenheim has an option to order two more.

Investment funds managed by Guggenheim currently own a fleet of 30 Boeing jets.

Starbucks

Company recalls coffee brewers

Starbucks has voluntarily recalled about 73,000 stainless-steel eight-cup coffee brewers sold at its coffee shops due to defective electrical wiring that could pose a fire hazard, the Consumer Product Safety Commission said Tuesday.

The Starbucks Barista Aroma 8-Cup Coffee Brewers were sold at Starbucks stores between March 2005 and September 2006.

For a refund, call the company at 800-453-1047 or visit www.starbucks.com.

Regarding any financial impact on Starbucks: "I'm guessing this is a drop in the bucket," said Sasha Kostadinov, an analyst for Shaker Investments in Cleveland.

KLA-Tencor / Sapient

Investigation leads to broad shake-up

Kenneth Levy, founder and chairman of computer-chip supplier KLA-Tencor, retired Tuesday in the midst of a stock-option-accounting mess expected to cost up to $400 million.

Levy, 64, will be replaced as nonexecutive chairman by Edward Barnholt, 63, a member of KLA's board since 1995.

KLA shares fell $1.22, or 2.46 percent, to close at $48.32 Tuesday.

As part of its stock-option remedy, KLA severed its ties with a former chief executive officer, Kenneth Schroeder, who had been acting as a special adviser, and accepted the resignation of its general counsel, Stuart Nichols.

Separately, Sapient co-founder Jerry Greenberg resigned as chief executive and co-chairman on Tuesday, part of a broad management shake-up at the business consulting firm due to an investigation of its past stock options grants. The shake-up also included the resignation of Sapient's interim chief financial officer.

Shares of the Cambridge-based company fell 76 cents, or 13 percent, to close at $5.06.

Sapient said it will restate financial results to record additional charges after an internal review found accounting discrepancies involving options grants from 1997 through 2001. Sapient also will delay releasing third-quarter earnings until the investigation is finished sometime before the year's end.

Greenberg will be replaced by Alan Herrick, current executive vice president.

Trubion Pharmaceuticals

IPO gets $52 million, low end of forecast

Seattle's Trubion Pharmaceuticals raised $52 million Tuesday with an initial public offering that priced at the bottom of a forecast range, according to an underwriter.

The 4 million-share offering, about a 24 percent stake in the company, sold for $13 a share compared with a $13 to $15 forecast.

The pricing gives the company an initial market capitalization of almost $220 million.

The drug maker plans to use net proceeds from the offering and a private placement with Wyeth for general corporate purposes, including clinical trials, research and development, manufacturing and possible acquisitions.

Wyeth has agreed to buy 800,000 shares of common stock at the IPO price in a private placement, concurrent with the public offering, according to a document filed with the U.S. Securities and Exchange Commission.

In January, Wyeth reached an agreement with the company to develop and co-market Trubion's treatments for inflammatory diseases and cancer.

Underwriters, led by Morgan Stanley, will have the option to buy another 600,000 shares to cover overallotments.

Nation / World

IBM

Lower tax bill helps profits jump

Third-quarter earnings jumped nearly 50 percent to $2.22 billion at IBM, thanks largely to a lower tax bill. The results topped expectations by a wide margin as sales of software and hardware helped offset continued weak growth in the key computer services business.

Net income for the three months ended Sept. 30 amounted to $1.45 per share. Wall Street analysts expected a per share profit of $1.35. IBM shares gained 24 cents to $86.95 Tuesday

Intel

Profit, revenue fall in third quarter

Intel reported a 35 percent decline in third-quarter profit and a 12 percent decline in revenue Tuesday, but the chip maker beat Wall Street's tepid expectations and shipped record numbers of microprocessors for mobile devices and computer servers.

Shares in Intel dropped 71 cents in regular trading to close at $20.90. After the earnings were released, shares gained 22 cents in extended trading.

Motorola

Lower-than-forecast sales hurt revenues

Cellphone giant Motorola reported a 45 percent decline in third-quarter profit Tuesday on revenue that came in well below analysts' expectations. Its after-hours stock price tumbled.

The earnings met Wall Street's estimates, but sales of the company's hot-selling Razr phones left total revenue still nearly half-a-billion dollars lower than forecast.

Shares in Motorola sank $1.89 in extended-hours trading after closing down 64 cents at $24.85 during the regular session.

They touched a six-year high of $26.30 Friday.

Yahoo!

Expectations met, but doubts arising

Yahoo!'s third-quarter profit slid 38 percent amid slowing revenue growth that has raised investor doubts about the Internet bellwether's strategy and execution.

Management also dimmed the outlook for the current quarter.

Still, the results matched analyst expectations, according to Thomson Financial.

Revenue for this year's quarter totaled $1.58 billion, a 19 percent increase from $1.33 billion last year.

Yahoo! shares gained $1.15 in extended trading after slipping 3 cents to $24.15 in regular trading.

Compiled from Bloomberg News, Seattle Times staff, The Associated Press and Reuters

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