Thursday morning headlines

Ralphs cutting prices: After trimming its coupon program, the grocery chain has dropped the other shoe by announcing a lower-price strategy that will reduce the cost of thousands of items. Ralphs also plans to overhaul its loyalty card program so shoppers can collect points based on purchases. It's an effort to beat back the discounters that range from Fresh & Easy to Wal-Mart. From the LAT:

A more aggressive pricing stance by Ralphs, which is the largest grocer in the region, could help lower prices across the market. "The other traditional supermarket chains can't just sit by and not respond if Ralphs begins to gain traction with this," said Andrew Wolf, an analyst at BB&T Capital Markets in Richmond, Va. What Ralphs is doing is sacrificing some near-term profit by lowering prices to get more people in its stores. "If your sales per store go up because you have more shoppers, your bottom-line dollars will go up," Wolf said.

Pushing sales tax hike: That would be L.A. Mayor Antonio Villaraigosa, who wants voters to approve a half-cent boost in the county sales tax. The increase from 8.25 percent to 8.75 percent would pay for more road and mass transit projects. It also would tie the county with several other localities for having the highest sales tax in the state. From the LAT:

Villaraigosa has made building a Wilshire Boulevard subway a top priority of his administration. But his efforts have made little headway largely because of the $5-billion to $7-billion price tag. Congress last year lifted a longtime ban on tunnel work under Wilshire -- but getting money to build a subway remains a major problem. Even if a tax goes on the ballot, it remains unclear whether it would pass. Some elected officials in the San Gabriel Valley and elsewhere have questioned whether the benefits of a subway are worth the costs. Transportation officials are considering a variety of new rail lines elsewhere, including extending the Gold Line, a second phase of the Expo Line from Culver City to Santa Monica, and a new line along Crenshaw Boulevard.

J.C. Penney scales back: Another sign of the times. The retail giant plans to drastically reduce the number of new store openings and renovations next year, figuring that 2009 might not bring much of a turnaround. All told, 20 new stores will open instead of the planned 50 and 10 to 15 stores will be renovated instead of the planned 65. The chain has already announced cuts for this year. (WSJ)

And yet…. Gross domestic product grew at a 1 percent annual rate in the first quarter, up from the previous estimate of 0.9 percent. Stronger gains in consumer spending and exports were the explanations. The revisions would seem to confirm that the U.S. did not enter a recession in the January-March period. The second quarter should be all right, too, what with folks starting to use those rebate checks. After that, it's dicey. (Reuters)

Angelo chokes up: The last shareholder meeting for Countrywide Financial - the one where the company's sale to Bank of America was approved - turned out to be an emotional occasion for CEO Angelo Mozilo, one of the two guys who built the Calabasas-based company into a financial giant. Now, of course, it's in tatters. At one point, Business Week's Chris Palmeri reports, Mozilo reached for a water bottle and said "Excuse me, this is one of the drawbacks to being Italian." Then after taking a drink, he added, "the only one." The entire meeting lasted 18 minutes.

Security was extremely tight at the event, held at Countrywide's campus-like headquarters in suburban Calabasas, Calif., northwest of Los Angeles. Security guards in dark suits and earpieces roamed the premises. Shareholders were asked to show identification before entering the small auditorium where the meeting was held. A memo sent to shareholders prior to the meeting said no cameras or sound equipment would be permitted, there would be no question-and-answer session, and "If any attendee becomes disruptive…we will ask Countrywide security to escort the attendee from the meeting." Mozilo entered the auditorium quickly from the side of the stage just before the meeting began.

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Mozilo, his dark bronze skin contrasting sharply with his white hair and shirt, gave a short speech as the votes were being tallied. "Despite widespread and often unfounded headlines of the past year, Countrywide has made a positive impact on the country," he said. He recounted how the company had invested early in new technologies that made mortgage processing quicker and more efficient. He said Countrywide was the first to open loan stores nationwide, the first to pass $500 billion in loans made in a single year, and the first to pass $1 trillion in loans being serviced.

Air Force missteps revealed: The Government Accountability Office finally detailed the faults it found with the Air Force selecting Northrop over Boeing for that big tanker contract - and it's a long list. The 67-page review concluded that the selection process didn't even follow the AF’s own evaluation criteria. It also miscalculated maintenance costs and the size and amount of fuel a plane could carry. From the Washington Post:

Along the way, the Air Force seemed to guide Northrop through some pitfalls. In one instance, the Air Force first told Boeing that it had satisfied one set of objectives, but later, after discussions had been closed, decided that it had not. But the Air Force told Northrop about objectives it had not met, allowing that company to change its proposal and meet the requirements. "It is a fundamental precept of negotiated procurements that discussions, when conducted, must be meaningful, equitable, and not misleading," the GAO said in its assessment. The GAO said the Air Force "treated the firms unequally" in holding discussions with one but not the other.

"This is a damning report," said David Berteau, a senior defense analyst at the Center for Strategic and International Studies. "It is baffling to me: how did so many smart people at high levels at the Pentagon come to the conclusion that the process was so well done and announce a winner, and then we see a GAO report that gives them a black eye in running a smooth, fair procurement process."

New SAG complaints: After spending several weeks taking apart the proposed AFTRA contract, leaders of the Screen Actors Guild now say that the last offer it received by the studios and networks isn't even as good as what AFTRA got. They may have a point – and it could mean that the companies haven't yet put a "last, best, final" offer on the table. The contract expires next week, though the real action might not unfold until results of the AFTRA ratification vote are announced the week after that. (Variety)

LAX workers to rally: Security officers, skycaps, baggage handlers and cabin cleaners will be pushing for higher wages and improved job conditions. Of course, many of these folks work for the airlines, which aren't likely to be raising wages anytime soon. The 1 p.m. event is expected to include Los Angeles City Council members Janice Hahn and Bill Rosendahl.