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BUS BRIEFS Luxury home builder cuts sales forecast

PHILADELPHIA -- In a possible sign of trouble for the housing industry, luxury home builder Toll Brothers Inc. cut its sales forecast for fiscal 2006 Tuesday, citing delayed openings for new developments and weakened demand in several markets.

Toll Brothers' shares tumbled nearly 14 percent in trading Tuesday and the news pushed down share prices for many large homebuilders as Wall Street, already nervous about the health of the housing sector, was rattled by the news. KB Home fell 5.5 percent and Pulte Homes Inc. lost 8.9 percent.

The strong housing market is widely credited for having supported the economy for some time, but concerns about its sustained health have been increasing along with the upward creep of mortgage rates.

High oil and gas prices raise cost of snacks

CHICAGO -- Some cookies, crackers and pizza just got more expensive as a result of sky-high oil and gas prices.

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Kraft Foods Inc., the nation's largest food manufacturer, confirmed Tuesday it's increasing prices on many of its products by an average 3.9 percent because of rising energy and packaging costs.

The maker of Oreo cookies and Kraft Macaroni &; Cheese sent a memo to retailers about the action on Friday, spokeswoman Kris Charles said.

Most of the price increases were to take effect immediately, she said, although those on direct-store delivery products such as pizza won't be put in place until Jan. 2.

Elimination of late fees hurts Blockbuster

DALLAS -- Blockbuster Inc., the nation's largest movie-rental chain, posted a $491.4 million third-quarter loss as the elimination of most late fees continued to chip away at revenue and the growth of the company's online service stalled. The company's shares tumbled more than 5 percent in trading after the report was released.

Executives said Blockbuster would cut spending and raise at least $100 million through a private placement of convertible preferred stock.

In a filing Tuesday with the Securities and Exchange Commission, Blockbuster said "a very large majority" of its assets are already pledged as collateral on loans and that trade creditors were imposing stricter terms.

Internet-based software services a 'sea change'

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SEATTLE -- Microsoft Chairman Bill Gates wants his managers to "act quickly and decisively" to offer more Internet-based software and services so the computer giant can beat its competition.

Gates compares the push toward such services -- ranging from online business software offerings to free Web-based e-mail -- to the changes he saw nearly a decade ago. Then, he wrote a now-famous memo, called "The Internet Tidal Wave," that prompted a massive shift at Microsoft toward Internet-based technology.

"The next sea change is upon us," Gates wrote in an e-mail to top executives, dated Oct. 30 and obtained late Tuesday by the Associated Press.

Gates also warned the company must be thoughtful in building the right technology to serve the right audience.

Gates included a memo from Ray Ozzie, one of Microsoft's three chief technical officers, which outlined ideas for broad companywide changes that can address the growing competitive threat.

Ozzie concedes in the memo dated Oct. 28 that Microsoft has not led the pack on Internet-based software and services, and now faces intense competition from companies like Google Inc.

Ozzie said Microsoft needs to focus on key tenets of the new model, including a shift toward offering free, advertising-supported offerings and more sophisticated, Internet-based methods of delivering products.

Last week, Microsoft announced plans for Windows Live and Office Live, two Web-based offerings that aim to help the company compete with Google, Yahoo Inc., Salesforce.com and other companies that are already seeing success with such Web-based offerings.

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Microsoft has recently faced criticism that its model, which still relies mostly on delivering software in traditional packaging, could grow antiquated.

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