Here is a look at more of Friday's top business stories:
Merrill Lynch to simplify its stock rating system
NEW YORK, June 7 (UPI) -- Merrill Lynch & Co., the nation's largest brokerage, said it will simplify its stock rating system beginning in September, and will compensate its analysts without banking input.
The changes follow Merrill's settlement last month with New York Attorney General Eliot Spitzer, who accused the firm's Internet analysts of making overly bullish calls in order to win investment-banking business.
Merrill Lynch agreed to pay a $100 million fine, and to restrict how it conducts its stock research.
Merrill Lynch said it plans to replace its current four-category system of stock picks with a three-category system of "buy," "neutral," and "sell."
The firm also said it will pay analysts based on their industry expertise and performance, how their stock picks benefit investors, and other competitive factors.
"We're taking these steps to reinforce investor confidence in the quality, independence, and insights of what we believe is the finest research team in the industry," said Robert J. McCann, the head of Merrill's global securities research group.
The new rating system will show three dimensions that are important for investors to consider when assessing a stock including, the 0-to-12-month investment recommendation, the projected risk as measured by potential price volatility, and the dividend outlook.
The changes, which implement terms of the company's recent agreement with the New York State attorney general, are just the beginning of a series of modifications to the research process.
During the coming months, Merrill Lynch said it would also roll out several other initiatives to help clients gauge performance.
"Achieving research excellence is our singular mission, and these changes are just the beginning of a series of modifications to the research process," McCann said.
"We cannot, of course, guarantee that our recommendations will always turn out to be correct. But we do promise that honesty is our guidepost, and that clients' interests will come first. That is our tradition of trust. That is our commitment to our clients," McCann added.
Biogen issues earnings warning
CAMBRIDGE, Mass., June 7 (UPI) -- Biogen Inc. said its earnings this year will be substantially below expectations because sales of its multiple sclerosis drug Avonex are slowing.
Biogen cut its second-quarter sales forecast for the drug, Avonex, by $20 million to between $170 million and $180 million.
The projected decline will cut Biogen's earnings by 9 cents a share to between 28 cents and 32 cents in the second quarter.
Analysts on Wall Street had expected the company to post a net income of 40 cents a share, down from 47 cents a year earlier, according to Thomson Financial/ First Call.
For the full year, the company said it expects Avonex revenue to be between $730 million and $755 million, down from an April forecast of $1.1 billion.
The company said it expects operating earnings for the full year of $1.50 to $1.60 a share. Analysts had expected $1.72 a share, which was already down from $1.90 in 2001.
James C. Mullen, president and chief executive officer, said, "We carefully reviewed market growth, distribution channel inventories and Avonex demand to understand the sales shortfall.
"The overall market growth in the U.S. is five percent below our forecast. Our market share according to IMS data changed from 57.4 percent in December to 56.9 percent in April. Wholesalers have reduced inventory levels from about 15 days to 10 days, which represents $11 million of sales. Our revised guidance assumes this new inventory will not change over the balance of the year," Mullen said.
Sales improve at Longs Drug Stores
WALNUT CREEK, Calif., June 7 (UPI) -- Longs Drug Stores Corp., an operator of pharmacies mainly in the western United States, said its preliminary May sales at stores open at least a year, or same-store sales, rose 1.9 percent from a year ago.
Pharmacy same-store sales rose 3.3 percent during the period while same store sales of other merchandise were up 0.8 percent from a year ago.
Total sales rose to $343.1 million for the four-week selling period ended May 30 from $329.1 million a year ago.
Pharmacy sales were a smaller percentage of total sales during the period, falling to 44.3 percent from 44.4 percent a year earlier.
