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Why Recalls Haven't Dented GM’s Sales


Justin Sullivan/Getty Images(NEW YORK) -- GM's 29 million recalled cars since January is costing the car company more than $1 billion, but the company's varying fleet of vehicles have prompted a steady sales growth, according to the company’s quarterly earnings.

Despite huge falling profits at the company largely due to the recall and legal expenses, customers are still buying lots of GM cars, according to the car manufacturer's report Thursday.

"GM would have had an outstanding quarter had it not been for the recall expenses," said Michelle Krebs, senior analyst for AutoTrader.com.

Here are some of the cars that are boosting the embattled American car company.

1. Chevy Silverado

Alec Gutierrez, senior analyst with Kelley Blue Book, called the Silverado a "tried and true favorite."

In GM's second quarter, there were 132,922 Silverado sales, an increase of 5.5 percent compared to the same period in 2013. In June, Silverado sales were up 1 percent compared to June 2013. It's not a huge sales bump, but the Silverado is still GM's best-selling model in its overall lineup and the most profitable by a fairly wide margin, Gutierrez said.

He said full-size pickup trucks provide car companies with anywhere from $3,000 to $5,000 in profit, depending on the model. Meanwhile, cars may yield manufacturers less than $1,000.

"That says while Silverado sales are not knocking anyone’s socks off, it’s an absolutely critical vehicle for GM," he said.

2. Buick Encore

GM's Buick brand had its best June since 2006, the company reported, and that surge was driven by an 82 percent increase in Encore sales, compared to June 2013.

The Encore is within the crossover utility vehicle category, a segment between cars and SUVs. That segment has been growing faster than any other in the car industry, Gutierrez said.

The category is so new that Ford doesn't yet have a vehicle in this category.

"I think that’s why GM is doubling down on that platform," Gutierrez said, pointing to the "fuel-efficient" and "really small" Encore that skews toward a younger demographic.

Jessica Caldwell, an Edmunds.com senior analyst, said this subcompact SUV segment is only going to grow in popularity in the next five to 10 years.

3. Chevrolet Suburban

Caldwell said trucks and SUVs like the Suburban, Tahoe and Silverado "have been doing very well for GM as the auto market has embraced them in a big way."

Sales of Chevrolet Tahoe increased 93 percent in June, while Suburban sales are up 73 percent, compared to June 2013.

Caldwell calls this the new "heyday for SUVs." For the past 10 months, light trucks have outsold cars. That's the longest streak since 2005, when a 31-month streak lasted from February 2003 through August 2005, she notes.

4. GMC Yukon

Gutierrez said SUVs, such as the Yukon, have seen sales, and thereby GM profitability, "growing at a pretty big clip."

GM's GMC brand had its best June since 2006, the company reported earlier this month, with sales up 11 percent compared to June 2013, driven by the redesigned Yukon, up a whopping 120 percent from June 2013.

5. Chevrolet Sonic


Caldwell said the Sonic is on the complete opposite side on the size spectrum, as one of GM's smallest products.

Sales of Sonic increased 36 percent in June 2014 compared to June 2013, GM reported earlier this month.

Gutierrez said the Sonic is an example of GM trying to diversify its fleet of cars.

While the subcompact category of cars hasn't been gaining in the industry, the Sonic is gaining traction and Sonic is only behind Nissan's Versa in that segment, Gutierrez said.

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Christian Louboutin Debuts $50 Nail Polish


Christian Louboutin(NEW YORK) -- Christian Louboutin is best known for his signature red-soled stilettos. But the most recent creation from the French designer delivers a different kind of lift.

Earlier this week, Louboutin revealed his first foray into the beauty industry. The craftsman announced a range of nail polishes in the pages of Women's Wear Daily.

Each bottle of Rouge Louboutin contains less than half an ounce of the luxury lacquer and will retail for $50.

But what the collection lacks in volume, it makes up for in height. Modeled after the heel of the impossibly arched ballerina shoe that Louboutin designed in 2007, the packaging that holds his standout scarlet hue measures eight inches tall.

Like his fashionable footwear, these formulations make a statement. Louboutin insisted that just two coats of his new polish are equal in intensity to 20 layers of more inferior -- and affordable -- brands.

The varnishes are now available at the flagship Saks Fifth Avenue in New York and will launch at select retailers nationwide on Aug. 6.

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Profits Plunge at General Motors


Joe Raedle/Getty Images(DETROIT) -- The troubles continue for General Motors, as the automaker on Thursday reported an 80 percent drop in second quarter profits from this time last year.

GM had previously announced it will pay $400 million to the victims of its defective ignition switches after a wave of lawsuits and $1.5 billion paid out in fines.

The company is now facing some immediate financial repercussions of the more than 29 million cars it has recalled since January. However, overall sales of its vehicles have not been greatly hampered as total revenues increased to $39.6 billion from $39.1 billion last year.

"Our underlying business performance in the first half of the year was strong as we grew our revenue on improved pricing and solid new vehicle launches," GM CEO Mary Barra said in a statement. "We remain focused on keeping our customers at the center of all we do, and executing our plan to operate profitably in every region of the world."

GM stock was down more than 2 percent in pre-market trading.

Meanwhile, in other earnings news, Ford Motor beat analysts’ expectations, posting a $2.6 billion profit in the second quarter -- up 6 percent from last year and setting a record for operating profit in North America.

American Airlines also had a record-breaking second quarter, reporting a profit of $864 million versus $220 million last year -- its highest quarterly profit in company history. The carrier's total revenue for the quarter also rose by 76 percent to $11.36 billion.

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Jobless Claims Down to Lowest Level in Eight Years


iStock/Thinkstock(WASHINGTON) -- Jobless claims fell last week, decreasing by 19,000, according to the latest figures released Thursday by the Labor Department.

For the week ending July 19, the number of people filing for benefits dropped to 284,000 -- the lowest level for initial claims since February 18, 2006. The previous week, claims stood at a revised level of 303,000.

The Labor Department said there were no "special factors" impacting this week's figures.

The four-week moving average fell to its lowest level in nearly seven years, decreasing by 17,000 to 2,542,250.

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Nostalgia Turns People into Bigger Spenders


moodboard/Thinkstock(NEW YORK) -- Nostalgia is a powerful emotion. So powerful that it can make us spend more money than if we didn’t feel sentimental.

Researchers from the U.S., Britain and France wanted to learn just why we are suddenly more apt to part with money when we feel nostalgic, so they conducted a number of experiments to prove their thesis.

In one case, they found that consumers who were told to think about pleasant events from the past seem to have no problem paying extra for the same set of products than others who did not dredge up old memories.

Pertaining to charities, those who wrote about a previous experience from the past were later inclined to give more money to others than the control group.

The researchers contend this information is especially valuable to corporations looking to boost promotions and products lines, as well as charities that are interested in filling their coffers.

Meanwhile, the use of nostalgia might also come in handy during periods of recession when people are less inclined to spend, the researchers surmised.

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No Wonder You Feel Weak at the End of the Workweek


iStock/Thinkstock(ATLANTA) -- The 9-to-5, 40-hour workweek. What a quaint concept.

If you’re fortunate enough to have a full-time job, you know that actually working 40 hours has gone the way of maps, landlines and movie rental stores.

Atlanta-based Premiere Global Services Inc. received more than 600 responses to its survey last month, and the most shocking -- yet least shocking -- finding was that 88 percent claimed to work more than 40 hours.

Another sign of the times: just over seven in 10 have to take work home at least once a week.

Want to feel more depressed? Two-thirds eat lunch at their desk, 60 percent commute more than 30 minutes each, with a quarter traveling over an hour, and 71 percent say they work more than they really want to.

Since the survey was called “Take Back 60,” two-thirds said they would either exercise or spend more time with their family if they could work 60 minutes less per week.
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General Motors Announces Six Recalls for Safety Issues


General Motors(DETROIT) -- Automaker General Motors announced another round of recalls Wednesday for more than 700,000 vehicles in the United States.

Newer models of Chevrolets and Buicks are affected, with the company citing them for safety issues. Many concerns include loose nuts and bolts, or welding on the seats.

“These recalls signify how we’ve enhanced our approach to safety,” said Jeff Boyer, vice president of Global Vehicle Safety. “We are bringing greater rigor and discipline to our analysis and decision making. If we identify an issue – large or small – that might affect the safety of our customers, we will act decisively.”

The recent addition of recalls comes on the heels of criticism over faulty ignition switches in numerous cars from the company -- defects blamed for dozens of deaths. The automaker reportedly knew about the defects for years before they acted upon them. In light of this, the spotlight remains on GM, said Edmunds analyst Jessica Caldwell, prompting them to recall vehicles over the smallest of issues.

"I think it just shows that GM is really looking at everything with a fine tooth comb and if there's any issue whatsoever, they're going to recall it," Caldwell added. "So they're looking just really closely at anything that could go wrong, because they're really not in a position to be flippant about anything."

The list of affected models can be found on the GM website.

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Officials: More than 1,600 StubHub Users Affected in International Cybercrime Scheme


iStock/Thinkstock(NEW YORK) -- Six people have been indicted for their roles in an international crime ring involving online ticket-reseller StubHub, officials announced Wednesday.

In a scheme spanning from Russia to New York, cyber thieves allegedly stole StubHub login credentials for more than 1,600 accounts by hacking into other websites or using malware.

The individiauls accessed credit card information to log into the website and stole more than $1 million in tickets, including those to Justin Timberlake and Jay Z concerts, Broadway shows, and sports events. Victims' data were used to make fraudulent e-ticket purchases, according to Manhattan District Attorney Cyrus Vance Jr., and the proceeds were transferred through a "global network of accomplices" in the United States, United Kingdom, Russia, and Canada.

“Cybercriminals know no boundaries – they do not respect international borders or laws,” Vance said in a statement. “...Regardless of where the case originates, nearly every cybercrime case begins with similar breaches: a stolen password, unauthorized use of a credit card, or unaccountable charges on a personal statement, for example. In this case, StubHub discovered evidence of fraud and immediately reported it to law enforcement."

While StubHub reported the incident and implemented security measures, hackers were still able to work around such protocols. An investigation tracked the exchanges to IP addresses, PayPal accounts, and bank accounts used by the indicted individuals.

The six defendants face charges of money laundering, grand larceny, and identity theft, among others.

 

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Stocks Boosted by Corporate Earnings


iStock/Thinkstock(NEW YORK) -- Wall Street stocks ended mostly higher Wednesday, following corporate earnings reports that provided a boost for investors.

The Dow Jones Industrial Average lost 27 points to finish the day at 17086.63, the Nasdaq Composite gained 18 points at 4473.70, and the S&P 500 added 4 points, ending at 1987.01.

Aircraft maker Boeing reported numbers that fell short of expectations before the opening bell, while social networking giant Facebook released its second quarter earnings after the close, with numbers better than anticipated.

General Motors announced another round of recalls, citing 700,000 vehicles for a number of safety issues. German-based Mercedes-Benz maker Daimler had better news, announcing an increase of 12 percent in second quarter profits.

“Our strategy is paying off,” Daimler AG CEO Dieter Zetsche said on a conference call. "We’re growing and, what’s more, we’re growing profitably.”

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GM to Add Jobs, Invest $800M in Michigan


General Motors(DETROIT) -- General Motors is planning to add up to 1,750 jobs and invest $800 million in Michigan over the next several years, according to the Michigan Economic Development Corp.

“GM’s prospects are bright, and we want Michigan to play an important part in the company’s growth,” the automaker said in a statement. “We are pleased with the state of Michigan’s action which makes a strong business case for potential future jobs and investment at GM facilities across Michigan.”

It’s unclear where the jobs will be made available but GM said it planned to add locations throughout the state. Most of the jobs are expected to be offered at its technical center in Warren.

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Comcast Exec Says Infamous Service Rep Was Following Training


Justin Sullivan/Getty Images(NEW YORK) -- In a leaked memo from cable giant Comcast, a top executive expresses contrition for the now-infamous behavior of a service agent that led to a nearly 20-minute recorded call that went viral, but at the same time he conceded that the agent "did a lot of what we trained him and paid him" to do.

Meanwhile, Comcast reported Tuesday that it gained 203,000 high-speed Internet customers in its second quarter, the strongest for a typically slow second quarter in six years. The company reports having 21.3 million high-speed Internet customers.

Dave Watson, chief operating officer of Comcast Cable, wrote in a memo to employees on Monday that the "painful" experience of the customer who recorded the call and posted it on the Internet last week wasn't representative of the "good work" its employees are doing.

"That said, it was painful to listen to this call, and I am not surprised that we have been criticized for it. Respecting our customers is fundamental, and we fell short in this instance. I know these Retention calls are tough, and I have tremendous admiration for our Retention professionals, who make it easy for customers to choose to stay with Comcast," Watson wrote, according to the memo published by Consumerist.

Comcast apologized last week to the customer Ryan Block, co-founder of tech site Engadget. Comcast did not respond to a request for comment by ABC News about Watson's leaked memo.

"The agent on this call did a lot of what we trained him and paid him -- and thousands of other Retention agents -- to do," Watson wrote. "He tried to save a customer, and that’s important, but the act of saving a customer must always be handled with the utmost respect."

While Comcast retention agents may be particularly aggressive to stop losing customers, business has been good. While the company lost 144,000 cable video customers in the second quarter, that was mostly attributed to seasonal losses. It still has 22.5 million video customers. In the same period a year ago, the company lost even more cable subscribers (162,000), which was preceded by two quarters of growth.

Comcast is still a very profitable company. It reported $1.99 billion in profit and $16.8 billion in revenue, both up from the same period a year ago, as its high-speed Internet service grows.

"Comcast's second-quarter results again demonstrated the strength of the cable business in general and the firm’s solid execution in particular. Customer metrics were solid, as the firm posted the strongest second-quarter Internet access customer growth in six years," Morningstar analyst Michael Hodel wrote in an investment note.

"Television customer losses totaled 144,000, reflecting the seasonal weakness of the quarter within a very mature business," he wrote.

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Kentucky City Battles High Gas Prices with Public Fuel Center


iStock/Thinkstock(SOMERSET, Ky.) -- City officials in Somerset, Kentucky, about 70 miles south of Lexington, have responded to "big business" by opening a taxpayer-supported gas station for the public with the stated purpose of driving down pump prices.

The Somerset Fuel Center opened last weekend with 10 nozzles and a sale price of $3.36 a gallon for regular gas. The price is only a few cents cheaper than nearby private gas stations, but reports indicate that the competitors have lowered their prices in response.

Mayor Eddie Girdler told ABC News affiliate WBKO that gas prices traditionally increase 20 to 30 cents on the weekend in his city.

"If government doesn't do it to protect the public, then who does it?" Girlder told WBKO. "It's the role of government to protect us from big business."

Girdler could not be reached for further comment.

He told the Washington Post, “We don’t care if we don’t sell a drop of gasoline. Our objective is to lower the price.”

The city's investment included $200,000 to buy a fuel storage facility and less than $75,000 to convert it into a retail business, Girdler told the Post.

While some Somerset drivers applauded the move to lower gas prices, others criticized it as overreaching the government's authority.

“They’ve used the taxpayer money that I have paid them over these years to do this, to be against us,” Duane Adams, a convenience store owner in Somerset, told the Post. “I do not see how they can’t see that as socialism.”

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The Best Toy for a Kid on a Plane Is Not an iPad


iStock/Thinkstock(NEW YORK) -- Many parents with young children avoid flying on planes because they worry about keeping their kids entertained in a small enclosed space for hours on end.

Most parents grab the iPad and hope for the best. But a new study from British Airways suggests children might be occupied longer, and stay happier, with far simpler toys. Plus a little adult interaction.

The airline placed children -- aged 2 to 10 -- on a two-hour flight and were observed by scientist and TV personality Robert Winston and a team of educational psychologists.

"You can't expect any child to just be involved in solitary play whether it's an iPhone, iPad for the duration of the flight," said Dr. Vivian Hill, an educational psychologist. "If you mix up the activities and recognize that sometimes you will need to interact with the young person to make it more interactive and more interesting for the young person, you will prolong their period of engagement."

One little boy said he loved the top toy on the list because "they can keep you occupied for hours." Another said he wanted to stay on the plane forever.

“Although the temptation is for parents to play a film in the hope that their child falls asleep, activity based toys, such as Lego, sticker books and travel games are also a great way to keep them engaged," Winston said. "Bringing out a different toy at regular intervals is guaranteed to keep them quiet for longer than 90 minutes.”

Here are British Airways' top 10 toys to take on a plane:

  1. Loom Bands
  2. Playdoh
  3. Lego
  4. Top Trumps
  5. Uno
  6. Usborne Activity Cards
  7. Magnetic travel game
  8. Aquadoodle!
  9. Finger puppets
  10. Sticker book

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Android Wear Handles Everything from Pizzas to Your Love Life


ABC News(NEW YORK) -- It turns out Android Wear can even help you figure out your love life.

Tinder is among the three dozen and counting apps that are available on the smart watch, which was unveiled last month at the annual Google developer’s conference in San Francisco.

Android Wear acts as a personal assistant that users can simply sync with their Android phones and wear on their wrists.

Using verbal commands, users can then carry out a variety of tasks, including ordering a pizza or scheduling a car service with Lyft.

With every interaction, Android Wear better understands the context of what you care about, making every interaction even more smooth.

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What to Expect from Amazon's Fire Phone


Amazon.com, Inc.(NEW YORK) -- Amazon's Fire phone has ignited interest and imaginations since it was announced last month -- and starting later this week, consumers will be able to get their hands on the 3-D devices.

The Fire phone is available to customers in the United States through AT&T and starts at around $200 with a contract.

Customers who purchase the phone can also take advantage of a limited time introductory offer, snagging them one free year of Prime, Amazon's subscription service that gives members free two-day shipping on music, movies and TV shows, among other perks.

Firefly

While the smartphone boasts plenty of features that make it stand out from products from Apple and Samsung, there's nothing more telling about Amazon's hopes for the phone than a button that CEO Jeff Bezos introduced as "Firefly."

The new feature, which is similar to Google Glass, will allow users to identify almost any product -- from a book to a game or a container of kosher salt. The Fire phone will then be able to direct users to Amazon to make purchases, making impulse buys even easier.

In a nutshell: Amazon has created a pocket shopping machine that happens to also operate as a phone.

Dynamic Perspective

The Fire phone is also different from its competitors because it offers "dynamic perspective," a sensor system that recognizes where a user's head is relative to the Fire phone. This allows the person using the phone to auto-scroll through a book or long webpage without ever having to touch the screen or to take on a character's viewpoint in a game, creating what Amazon describes as an immersive experience.

Apps and Games

Developers have been creating apps and games at a frenetic pace for the phone since it was announced in June. Submissions have more than doubled since the Fire phone was unveiled, according to Amazon.

For the Fandango app, users can look up movie times, but can easily tilt their phones to scope out movie reviews.

Gamers may like the phone because they can also use their gestures to play. In Magmic’s Rubik’s Cube, players can tilt their device to rotate the Rubik's Cube and use their head to peek at other sides of the cube.

Photography


Photography fanatics will also be interested in the Fire phone's high-end camera specs, which include optical image stabilization and tiny motors that can adjust for natural hand tremors as a way to decrease the blurriness of photos.

The Fire phone also boasts front- and rear-facing cameras that can record 1080p high-definition videos.

The phone's shutter also excels at low-light photography. When Bezos showed off the phone last month, he noted that the lens stays open four times longer to capture more light.

Bezos also described how the team at Amazon "obsessed over outdoor viewing" and created a device that can easily be read, even in bright outdoor light.

Durability

The Fire phone is built with Gorilla Glass 3, aluminum buttons and has a rubberized grip area to bolster its durability.

Previous Amazon device customers may recognize some of the other features it will come equipped with, such as a Mayday button for tech support, X-Ray, which allows users to get more from their media, and ASAP, which predicts what movies and television shows a person will want to watch before they even hit play.

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