AOL shares tumble on weak 1Q results

NEW YORK — AOL Inc. said Wednesday that its first-quarter net income jumped 23 percent, helped by an increase in global advertising revenue.

But its adjusted earnings fell short of Wall Street predictions and AOL shares slumped more than 9 percent in midday trading.

The New York-based internet company earned $25.9 million, or 32 cents per share, for the three months ended March 31, up from $21.1 million, or 22 cents per share, in the same quarter of 2012.

Excluding one-time items, the company said it posted an adjusted profit of 41 cents per share. Analysts surveyed by FactSet expected adjusted earnings of 44 cents per share, on average.

Revenue rose 2 percent to $583.3 million from $529.4 million. Analysts expected $542.6 million in revenue.

AOL split from Time Warner Inc. in 2009 and has been trying to increase revenue ever since by shedding unprofitable businesses and buying popular sites such as the Huffington Post and the technology blog TechCrunch.

The company said its advertising revenue increased 9 percent to $359.2 million, helped by higher display and search revenue, but that was mostly offset by a 9 percent drop in subscription revenue to $165.8 million.

Shares of AOL fell $3.91, or 9.4 percent, to $37.51 in midday trading. Its shares have traded in a 52-week range of $24.35 to $43.93.

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Freddie Mac posts $4.6B net income for Q1

WASHINGTON — Mortgage giant Freddie Mac earned $4.6 billion from January through March, helped by a stronger housing market. The government-controlled company has turned a profit in the past six quarters.

Freddie said Wednesday that it will pay a dividend of $7 billion to the U.S. Treasury next month and requested no additional federal aid for the fourth consecutive quarter.

The earnings compared with net income of $577 million in the first quarter of 2012.

The government rescued Freddie and larger sibling Fannie Mae during the financial crisis after both incurred massive losses on risky mortgages. The companies received loans about $170 billion, the costliest bailout of the crisis. So far, the companies have repaid a combined $62.2 billion.

The companies are benefiting from a housing recovery that began a year ago. Record-low mortgage rates and slow but steady job growth have helped bring buyers back to the market. Home sales and construction have increased. And home prices are rising at the fastest pace six years, driven by higher demand and a limited supply of homes for sale.

For Fannie and Freddie, a better housing market means fewer delinquent loans on their books. The improvement has also allowed the companies to charge mortgage lenders higher fees to guarantee the loans.

Under a federal policy adopted last summer, Fannie and Freddie must turn over any quarterly profits to the government.

Freddie, based in McLean, Va., earned $11 billion last year and paid $7.2 billion in dividends to the U.S. Treasury. It requested no government aid in the second, third and fourth quarters last year.

Fannie, based in Washington, reported last month that it earned $17.2 billion last year and said it expects to stay profitable for "the foreseeable future." It also paid $11.6 billion in dividends to the U.S. Treasury in 2012. Last year was also Fannie's first since its takeover by the government in 2008 that it asked for no federal aid.

Fannie and Freddie don't directly make loans. Rather, they buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. In doing so, they help make loans available and exert influence over the housing market.

Together, Fannie and Freddie own or guarantee about half of U.S. mortgages — nearly 31 million home loans worth $5 trillion. And along with other federal agencies, they back about 90 percent of new mortgages.

The Obama administration proposed a plan in 2011 to slowly dissolve Fannie and Freddie, with the goal of shrinking the government's role in the mortgage finance system. But Congress hasn't yet decided how far the government's role should be reduced.

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Ferrari to limit sales to boost brand exclusivity

MARANELLO, Italy — Ferrari will limit sales of its high-performance street cars this year to protect the brand's aura of exclusivity, Chairman Luca Montezemolo said Wednesday.

Wealthy people around the world are snapping up Ferrari's and the company is worried the brand might lose its appeal as a symbol of rarefied luxury. As a result, it will scale back production to below 7,000 units this year, compared with 7,318 last year.

"The exclusivity of Ferrari is fundamental for the value of our products," Montezemolo told journalists at the company headquarters near Modena, in northern Italy. "We don't sell a normal product. We sell a dream."

Ferrari sales were up 4 percent in the first quarter, to 1,800 units. Montezemolo said he will provide a detailed outlook in the coming months but estimated the drop in unit sales this year will be greater than 1 percent or 2 percent.

Revenues in the first quarter of the year were up 8 percent to 551 million euros (722 million euros), yielding a net profit of 80.5 million euros, which is an increase of 42 percent over the same period of last year.

Montezemolo said Ferrari's engine business — which supplies motors to Maserati, which is also owned by Fiat SpA — will help keep revenues on track as it scales back unit sales. Ferrari recently invested 40 billion euros in a new V6 engine plant to supply Maserati. The plant began work in January with 100 workers, and there are plans to add another 100 as production builds up.

The strength of the Ferrari brand, besides generating more demand than Ferrari cares to supply, also has boosted merchandizing, which last year generated 52 million euros in profits. But the chairman dismissed any notion that Ferrari would become a "shirt and polo" company.

Montezemolo said that Fiat, Ferrari's main shareholder, supports the move to limit production. And he ruled out an IPO for Ferrari, a possibility that analysts have floated as Fiat looks to merger with its unit Chrysler.

Global demand is helping Ferrari buck the ongoing Italian recession. The company is hiring 250 blue collar workers this year as it boosts engine production for Maserati, which has launched the new Quattroporte and will follow soon with the smaller Ghibli as part of Fiat's plans to focus on higher-margin luxury cars to return its European operations to profitability.

Montezemolo said Ferrari will invest another 100 million euros in 2013-2015 on new facilities.

In all, Ferrari employs 3,000 people to produce five production models based on V-8 and V-12 engines. It also makes limited edition exclusives, like the hybrid La Ferrari shown this year at the Geneva Motor Show and which has already sold out to a selected 499 clients, in addition to the Formula 1 program. All of it, from the foundry for engine heads to an 'atelier' where clients customize their Ferrari's down to the stitching on the leather seats, is located on a leafy green complex that employees can navigate on bicycle.

The factory produces 32 cars a day, with one 8 a.m. to 5 p.m. shift on the assembly line.

"In all of our 7,000 cars a year, there doesn't exist one that is like any other," Montezemolo said. "For me, exclusivity is the strength of the brand. I don't like to speak of luxury. I like to speak of beauty and taste."

The United States remains Ferrari's main market in terms of unit sales, followed by Chinese-speaking nations, Germany and then Britain. Currently, Europe and the Middle East contribute 52 percent of revenues, America 20 percent and Asia 30 percent. By 2017, Montezemolo wants to shift the distribution to 30 percent each from America and Asia and 40 percent from Europe and the Middle East.

Montezemolo said there are two things that Ferrari will never do as long as he is running the show: make a smaller Ferrari or an all-electric vehicle.

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Some hospitals charge vastly more for same care

WASHINGTON — Hospitals within the same city sometimes charge tens of thousands of dollars more for the same procedures, according to figures the government released for the first time Wednesday. The federal list sheds new light on the mystery of just how high a hospital bill might go — and whether it's cheaper to get the care somewhere else.

There are vast disparities nationally. The average charges for joint replacement range from about $5,300 at an Ada, Okla., hospital to $223,000 in Monterey Park, Calif.

It's not just national or even regional geography. Hospitals within the same city also vary wildly. In Jackson, Miss., average inpatient charges for services that may be provided to treat heart failure range from $9,000 to $51,000, the Department of Health and Human Services said.

Hospitals usually receive less money than they charge, however. Their charges are akin to a car dealership's "list price." Most patients won't be hit with these bills, because they are paid by private insurance, Medicare or Medicaid. The government and insurance companies routinely negotiate lower payments with hospitals.

"These charges really don't have a direct relationship with the price for the average person," said Chapin White of the nonprofit Center for Studying Health System Change. "I think the point is to shame hospitals."

But the charges do show up on the bills of people without medical coverage, many of whom try to negotiate smaller fees for themselves. And they could affect people paying for care that is outside their insurance company's network. Hospitals say they frequently give the uninsured discounts.

Some people still pay full price, or try to, because they don't know they can bargain for a discount, White said.

For them, "this is the opening bid in the hospital's attempt to get as much money as possible out of you," he said.

The department released a list of the average charges at 3,300 hospitals for each of the 100 most common Medicare inpatient services. The prices, from 2011, represent about 60 percent of Medicare inpatient cases.

The Obama administration says consumers and businesses can use the information to make better choices and pressure hospitals to set reasonable prices. Hospital charges are typically confusing and unpredictable.

"Currently, consumers don't know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city," said Health and Human Services Secretary Kathleen Sebelius. The list will help fill that gap, she said.

The department also is making $87 million in federal money available as grants to states to improve their hospital rate review programs and get more information about health care charges to patients.

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Coke takes anti-obesity campaign global

NEW YORK — Coca-Cola says it will make lower-calorie options and clear calorie labeling more widely available around the world, intensifying a push against critics who say its drinks pack on the pounds.

The Atlanta-based company, which makes Sprite, Fanta and Minute Maid, already offers diet drinks in most markets. But there's no consistency in their availability, particularly in emerging markets such as China and India.

Coca-Cola also said Wednesday that it would support programs that encourage physical activity and no longer market to kids younger than 12. The company did not say in which countries it currently markets to children.

With sugary drinks often blamed as a culprit for making people fat, Coca-Cola Co. has been more aggressive in trying to convince customers its products can be part of a healthy lifestyle. Earlier this year, the company aired its first TV ad addressing the matter in the U.S. and has since been rolling out the spot to other countries.

The ad touts Coca-Cola's wide range of lower-calorie offerings. But executives have also made a point of standing by the company's full-calorie drinks, saying that physical activity plays an important role in fighting obesity.

"There is a place for all of our beverages in a healthy lifestyle," CEO Muhtar Kent said in a call with reporters.

The announcement from Coca-Cola comes as packaged food companies across the industry look for growth in emerging markets, where middle-class populations are growing rapidly. As more people head to cities and see their incomes increase, they're more prone to eating convenient packaged foods that critics say have fueled obesity rates in developed nations.

The shifting populations around the world nevertheless represent an enormous opportunity for companies. For example, Coca-Cola has noted that Americans on average drink 403 servings of its various beverages a year. That compares with just 12 servings per year in India and 38 in China.

And the company's diet options aren't nearly as popular in such countries as they are back at home. In the U.S., where soda consumption has been declining for years, diet drinks now account for 41 percent of sales for the flagship Coke brand. That's up from single-digits in the 1980s.

Even in major Chinese cities, by contrast, the percentage of sales that diet options account for is in the "high single digits," Kent said.

Coca-Cola Co. says its goal is to have diet options available wherever regular versions are sold. But that doesn't mean there would be a diet alternative for every particular brand. For example, if a store in India sells Coke it might also offer Sprite Zero, which doesn't have any calories, to meet the goal.

The company also says it's working to have cans and bottles around the world display calories counts on the front of labels, as it does in the United States.

But the company didn't have a timeline for when it hoped to achieve its goals.

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Follow Candice Choi at www.twitter.com/candicechoi

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McDonald's sales hit by weakness in Asia, Europe

NEW YORK — McDonald's says a key sales figure slipped again in April, with the world's biggest hamburger chain citing fears over a new strain of avian flu for weakness in China.

The Oak Brook, Ill.-based chain, which had warned of a decline last month, says the figure fell 0.6 percent globally. That reflected an increase of 0.7 percent in the U.S., where it recently introduced its chicken McWraps to attract more customers in their 20s and 30s.

But it fell 2.4 percent in Europe, its biggest market by sales. The company said it's working to improve results in the region by emphasizing "everyday affordability" and keeping stores open longer.

In the region encompassing Asia, the Middle East and Africa, it was down 2.9 percent. The chain blamed the impact of the avian flu in China for the decline, as well as softness in Japan and Australia.

Yum Brands Inc., which owns KFC and is China's biggest Western fast-food company, has been slammed by the new strain of avian flu as well. It warned late last month that sales at established restaurants in China were down about 30 percent in April. Yum is also trying to recover from a controversy over its chicken suppliers that surfaced late last year.

After years of outperforming rivals, McDonald's has been struggling to boost sales as it faces intensifying competition, changing eating habits and weak growth in the broader restaurant industry. Late last year, the company reported a decline in its monthly sales figure for the first time in nearly a decade. Soon after, the company ousted the head of its U.S. division.

CEO Don Thompson, who took over the top spot this summer, has said repeatedly that the company will focus on emphasizing value to capture market share in the tough environment. Analysts have raised concerns that the strategy could eat into profit margins. But McDonald's executives say that short-term sacrifice is necessary to build customer loyalty and ensure the long-term health of the company.

The chain is also working to make its food more relevant to shifting tastes. Its chicken McWraps, for example, are intended to cater to people who are seeking out fresher, healthier items. The company also recently introduced a lower-calorie version of its Egg McMuffin made with egg whites and a whole grain muffin.

Sales at restaurants open at least 13 months is a key metric because it strips out the impact of newly opened and closed locations.

McDonald's, which was more than 34,000 locations around the world, noted that it had one less Sunday and one more Tuesday in April of this year compared with April of last year. Sales are generally stronger on weekends.

Shares of Mcdonald's fell 84 cents to $101.45.

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Late-payment rate on mortgages tumbled in 1Q

LOS ANGELES — A resurgent housing market, rising home values and steady job gains are helping more U.S. homeowners stay on top of their mortgage payments.

The percentage of mortgage holders at least two months behind on their payments fell by 21 percent in the first three months of this year versus the same period in 2012, credit reporting agency TransUnion said Wednesday.

The sharp annual decline in the mortgage delinquency rate represents the biggest quarterly drop on record for TransUnion, whose data go back to 1992.

"We certainly expected improvement this quarter, as the housing sector is in recovery, but the magnitude of the improvement was unexpected," Tim Martin, TransUnion's group vice president of U.S. housing, said in a statement.

All told, the mortgage delinquency rate was 4.56 percent in the first quarter. That's down from 5.78 percent in the prior-year quarter, TransUnion said.

The first-quarter rate also fell 12 percent compared with the last three months of 2012, when it was 5.19 percent, a four-year low.

Even so, the mortgage delinquency rate is still above the 1 percent to 2 percent average historical range, an indication that many homeowners still are struggling to make their payments.

Before the housing bust, mortgage delinquencies were running at less than 2 percent nationally. They peaked at nearly 7 percent in the fourth quarter of 2009.

The rate has been trending down since then, aided by a rebound in home sales and rising home prices that began gaining traction about a year ago.

U.S. home prices rose 10.5 percent in March compared to a year earlier, the biggest gain since March 2006, according to real estate data provider CoreLogic. March marked the 13th month in a row that home prices have increased on an annual basis nationwide.

Rising home values make it easier for borrowers to refinance their mortgages or sell their homes if they lose their jobs or otherwise become unable to make payments. They also help bring down the number of homeowners who are underwater on their mortgage, or owe more on their home loan than their homes are worth.

Last year, 1.7 million homeowners who had been underwater on their mortgage were moved into positive equity, according CoreLogic. That left another 10.4 million, or nearly 22 percent of all homes with a mortgage, still in negative equity at the end of last year.

Steady job growth also has helped.

Employers have now added an average of 208,000 jobs per month from November through April. That's much higher than the average of 138,000 in the previous six months. And the national unemployment rate, while still elevated, fell last month to 7.5 percent from 7.6 percent in March.

Every state and the District of Columbia posted an annual decline in the late-payment rate of home loans in the first quarter, with Arizona leading the way. The state's mortgage delinquency rate was 4.3 percent, down nearly 38 percent from a year earlier, TransUnion said.

California, with a rate of 4.2 percent, and Colorado (2.7 percent) also had steep annual declines in the rate of late payments.

Florida, a foreclosure hotbed throughout the housing downturn, clocked in with the highest mortgage delinquency rate in the nation for the January-March quarter at 11 percent — but that's down nearly 21 percent from the same period last year, the firm noted.

Nevada (9.1 percent), New Jersey (6.9 percent) and Delaware (6.3 percent) rounded out the top four states with the highest late-payment rate.

Meanwhile, mortgage debt per borrower dipped about 1.2 percent to $186,018 in the first quarter from a year earlier, and was essentially flat with the previous quarter, the firm said.

TransUnion, which draws its data from a sample of 27 million consumer records, anticipates the national mortgage delinquency rate will continue to decline in the current quarter to about 4.5 percent.

"There is no reason to believe the decline in mortgage delinquencies will not continue," Martin said. "We do not know if the first quarter was a blip, or if it's the beginning of a more rapid decline."

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UK gov't agenda focuses on immigration, economy

LONDON — The message was one of thrift and austerity, but the messenger was opulence incarnate.

Britain's Conservative-led government on Wednesday announced a modest program of legislation to tighten immigration rules, curb welfare expenses, encourage business and invest in infrastructure — in a speech read by a monarch on a gilded throne wearing a crown studded with 3,000 diamonds.

The contrast was part of the state opening of Parliament, an annual pageant of pomp and politics centered on the Queen's Speech, a legislative program written by the government but read out by the monarch before a crowd of lawmakers, ermine-robed peers and ceremonial officials in bright garb evoking centuries past.

The event's mix of extravagant surroundings and prosaic content was starker than usual at a time of spluttering economic growth. Britain's economy has been through two periods of recession since the global financial crisis hit in 2008, and grew by only 0.3 percent in the first quarter of this year.

Prime Minister David Cameron told lawmakers that the measures in the speech would make Britain more competitive and "back aspiration and those who want to get on."

But Ed Miliband, leader of the opposition Labour Party, called it "a no-answers Queen's Speech from a tired and failing government."

The leaders were kicking off a lively six-day debate in the House of Commons on the proposals.

In a ritual she has enacted dozens of times during her 61-year reign, the queen was driven from Buckingham Palace to Parliament in a horse-drawn carriage, escorted by mounted members of the Household Cavalry in scarlet tunics and gleaming breastplates.

Dressed in an ivory gown and wearing the diamond-encrusted Imperial State Crown, she delivered the speech from a gilded throne in the House of Lords.

The speech is written on parchment whose ink takes three days to dry, but it took the queen only seven minutes to read it.

It promised "an economy where people who work hard are properly rewarded," with laws to "reduce the burden of excessive regulation on businesses" and enshrine consumer rights.

There was no hint of deviation from the government's commitment to deficit-reducing spending cuts, but the speech announced infrastructure investment in energy and the water system, and a bill to start building a high-speed rail link from London to England's second city, Birmingham, and northern England.

The government also threw a few nuggets to taxpayers wearied by rising prices and stagnating salaries. It promised better and cheaper childcare, a simpler state pension system and a cap on long-term care bills so the elderly don't have to sell their homes to meet care bills.

On immigration, the speech said the government would make Britain a country that "accepts people who will contribute and deters those who will not."

Proposed immigration measures would limit newcomers' access to health care, fine businesses that employ people without the legal right to work in Britain, and make it easier to deport foreign citizens convicted of crimes.

The measures are intended to counter impressions that some migrants get a free ride on the welfare state — a perception that has fueled support for the anti-Europe U.K. Independence Party, a threat to Cameron's Conservatives.

The speech also said the government would press ahead with plans for a new school curriculum, intended to raise standards but criticized by opponents as back-to-basics rote learning.

The legislative schedule was also notable for its absences.

There was no mention of contentious plans to allow police and spy agencies to snoop on email traffic, Web browsing and social media sites. The measures were announced last year in the draft Communications Data Bill, but sparked an outcry from civil liberties campaigners.

Instead, the queen announced unspecified new measures to fight crime in cyberspace.

The government also disappointed public health advocates by shelving plans for a minimum alcohol price and logo-free cigarette packaging.

The annual pageant draws heavily on the history of the power struggle between the monarchy and Parliament. Lawmakers were summoned from the House of Commons to listen to the queen by Black Rod, a security official — but only complied after first slamming the door in his face to symbolize their independence.

Since King Charles I tried to arrest members of the House of Commons in 1642 — and ended up deposed, tried and beheaded — the monarch has been barred from entering the Commons.

In another symbol of the traditional hostility between Commons and crown, a lawmaker was held at Buckingham Palace as a "hostage" during the ceremony to ensure the monarch's safe return.

This year, Prince Charles and his wife Camilla, Duchess of Cornwall attended the state opening alongside the queen.

It is being seen as another sign of the heir to the throne's increasingly prominent role as he takes over more duties from the 87-year-old monarch. Buckingham Palace announced Tuesday that Charles would attend a Commonwealth heads of government conference in Sri Lanka in November in place of the queen, who is cutting back on long-distance travel.

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Jill Lawless can be reached at http://Twitter.com/JillLawless

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Incoming WTO director seeks 'negotiating pillar'

GENEVA — The incoming head of the World Trade Organization says his first priority will be to try to rescue its credibility as a forum for trade negotiations.

Brazilian Ambassador Roberto Azevedo told a packed room of reporters at Brazil's WTO mission Wednesday that "the negotiating pillar of the WTO is clearly stuck."

At the WTO, diplomats and officials congratulated Azevedo on his selection as WTO director general for the next four years.

Azevedo also said it is important to close "the gap" between the WTO's rules and how things really are between trading nations.

Azevedo is to take over the organization on Sept. 1 from Pascal Lamy of France, who has been the director general for eight years.

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Warren bill would ease student loan interest rates

BOSTON — U.S. Sen. Elizabeth Warren is calling on Congress to stop student loan interest rates from doubling this summer.

The Massachusetts Democrat introduced a bill Tuesday which would let students pay the same interest rate on their government loans as banks.

Student loan interest rates are set to jump from 3.4 to 6.8 percent in July. Warren said banks can borrow from the Federal Reserve at an interest rate of less than 1 percent.

In a speech on the Senate floor, Warren said supporting college graduates is critical to a strong economy and is as much of a priority as providing banks with cheap access to credit.

Warren said her bill would let students borrow funds at the same rate as banks borrow from the Federal Reserve for one year.

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