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    Philip Morris Raises Cigarette Prices

    New York office for cigarette maker remains closed due to anthrax scare.


    Philip Morris Cos. Inc., the world's leading tobacco company, is increasing its wholesale cigarette prices by a smaller-than-expected 5 cents per pack largely to cover a tax increase, effective Jan. 1, the company confirmed.

    "The company has increased wholesale cigarette prices by 5 cents per pack effective with shipments on Monday, October 29," said spokesman Brendan McCormick.

    The increase, widely expected by industry watchers, is partly due to a 5-cent increase in the federal excise tax and partly because the industry still has the power to raise prices despite a long-term trend of declining consumption, analysts said earlier this month.

    "I don't think this will have a material impact on cigarette consumption or volumes, and certainly not on earnings," Martin Feldman, analyst with Salomon Smith Barney, told Reuters.

    Analyst Bonnie Herzog of Credit Suisse First Boston, among others, had forecast an increase of about 10 cents per pack toward the end of October or November. Weeks ago, some began to call for a slightly smaller increase.

    Herzog said she expects other manufacturers to follow the move. The industry already raised prices by 14 cents a pack in April, the report said.

    A premium pack of cigarettes like Marlboro currently costs about $3.12, including discounts by manufacturers. But prices vary greatly because of local taxes.

    Philip Morris said it is continuing tests at its New York headquarters after an anthrax scare last week, according to AdAge.com.

    The company's corporate media affairs department received an envelope containing a white powder. According to a recorded message at Philip Morris' toll-free security number, all employees on that floor have been tested for anthrax exposure and given prescriptions for the antibiotic Cipro as a precaution, although no results have yet to be released.

    The company said it was waiting for test results before reopening the building, one of two it operates in New York, the report said. The second Philip Morris building remains open.

    Also as a precaution, the building's ventilation system was shut down and the hazardous materials unit of the New York Police Department examined and cleaned the building. The suspicious envelope is being tested by the New York Department of Health.

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