Tuesday morning headlines

Countrywide takes hit: This could be called subprime spillover. The Calabasas-based mortgage lender this morning reported a 33 percent drop in second-quarter net income and slashed its 2007 earnings outlook on expectations of "increasingly challenging" housing and mortgage markets. The earnings numbers were well below expectations. "During the quarter, softening home prices continued to affect many areas of the country and delinquencies and defaults continued to rise across all mortgage product categories as a result," said CEO Angelo Mozilo. From the WSJ:

Many consumers took out home-equity loans as a ready source of cash during the housing boom. But with home prices falling in many parts of the country, borrowers are finding it harder to cash out by refinancing or selling their houses. According to the American Bankers Association, late payments on home-equity loans climbed to 2.15 percent in the first quarter, up from 1.94 percent a year earlier and the highest rate in nearly two years.

Gas prices head downward: It seems a little wacky with oil at $75 a barrel – and headed upward – but for the week ended Monday L.A.-area gasoline prices fell to $3.076, from $3.121 a week earlier. The drop was based in part on the resumption of production at an important oil facility in Angola – or so they say. (LAT)

Northrop revenues slow: The L.A.-based defense contractor reported a 7 percent increase in second-quarter earnings, although a strike at the Ingalls shipyard in Pascagoula, Miss. slowed sales growth below estimates. Meanwhile, Northrop has cut a deal with some of its insurance carriers for recovering $466 million in damages caused by Hurricane Katrina. The company is still working to recover damages from another insurer under an insurance policy that covers losses under $500 million. Winds from the storm severely damaged Northrop Grumman's shipyards, with total damages of more than $1.2 billion. (Bloomberg)

Oxy CEO extends term: Talk about a guy who has the confidence of his board. Occidental Petroleum Corp. CEO Ray Irani, one of the nation's highest-paid corporate executives, just extended his contract that will keep him on the job past his 80th birthday in 2015 (the company's age limit for board members is 75, but it’s making an exception). L.A.-based Occidental also revamped its long-term compensation plans for Irani and other top executives that more closely link pay to performance benchmarks. Irani's contract wasn't set to expire for more than two years, which got corporate governance types wondering about the timing. Irani stands to gain more than $82 million in cash and stock if Occidental meets new three- and four-year performance goals. (LAT)

Amp'd Mobile reprieve: The L.A.-based wireless phone service did not shut down last night, as had been expected. Verizon Wireless, which carries calls and data from Amp'd on its network and is owed more than $33 million, agreed to continue handling calls through the bankruptcy auction, which buys another week of service. (LAT)

Levi's sues Ralph Lauren: The trademark infringement lawsuit filed in federal court in San Francisco alleges that Polo illegally copied the jeans maker’s pocket stitching design. Levi’s said that its “Arcuate Stitching Design Trademark” has been legally protected since 1873 (that's the oldest known apparel trademark in the country). Polo Ralph Lauren, says Levi's, manufactures stitching designs that are similar to the Levi Strauss trademark. (Women's Wear Daily)

Grocery recap: The new labor contract with the three major supermarket chains - Ralphs, Vons and Albertsons - essentially dismantles the controversial two-tier pay scale, which divides employees and doesn't always provide the kind of savings that companies expect. The two-tier plan had been one of the chief goals of the chains during the last contract talks. From the LAT:

The new agreement reverses a system established after a 141-day strike and lockout almost four years ago that paid new workers lower wages and benefits than veteran employees at the big supermarket chains in the region. About 33,000 of the 65,000 workers at 785 Albertsons, Ralphs and Vons stores from San Diego to Bakersfield fell into this lower-paid tier. Almost from the day the last contract kicked in, the two-tier system irritated workers and frustrated mid-level managers in the stores. It was a priority for union leaders to end the system with the new contract.

Port talks looking good: A deal between clerks and shippers is expected this week, according to the Press-Telegram's Kristopher Hanson. The two sides plan to meet today. The clerks have been threatening to walk off their jobs, which would effectively shut down port operations because longshoremen won't cross picket lines.

Lacter on radio: This morning's business chat with KPCC's Steve Julian covers local home prices, L.A. venture capital activity, and Steven Spielberg's future at Paramount.