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Hewlett-Packard Lowers Estimates on Consumers
By Aaron Ricadela - May 17, 2011 7:39 AM ET
Hewlett-Packard Co. (HPQ), the world’s biggest personal-computer maker, forecast third-quarter profit that missed analysts’ estimates after a slowdown in PC buying and reduced its full-year earnings projection.
Excluding some items, earnings will be $1.08 a share for the quarter through July, Palo Alto, California-based Hewlett- Packard said today in a statement. That missed the $1.23-a-share average projection of analysts surveyed by Bloomberg. Revenue will be $31.1 billion to $31.3 billion, compared with analysts’ $31.8 billion average estimate.
The results came a day after a downbeat memo from Chief Executive Officer Leo Apotheker surfaced, warning of “another tough quarter” in the period that ends in July. Apotheker urged deputies to “watch every penny and minimize all hiring” in the May 4 message. Following news of the memo, Hewlett-Packard moved up its earnings report to this morning, rather than the afternoon of May 18.
The pressures facing HP “aren’t going away soon,” Brent Bracelin, an analyst at Pacific Crest Securities in Portland, Oregon, said in an interview.
Full-year earnings will be at least $5 a share, excluding some items, HP said. The company had previously predicted earnings of at least $5.20 a share.
Apple Inc.’s iPad touch-screen computer and sales of smartphones are hurting demand for PCs, Bracelin said. The industry’s shipments declined 3.2 percent last quarter, research firm IDC reported in April.
In addition, HP’s technology-services business needs to prove it can tackle companies’ transition to cloud computing, in which applications and data are delivered through the Web, said Bracelin, who has a “sector perform” rating on HP shares.
Second Quarter
For the second quarter, which ended April 30, earnings excluding some items were $1.24 a share, while revenue was $31.6 billion. Analysts had estimated $1.21 a share and sales of $31.5 billion.
Net income rose to $2.3 billion, or $1.05 a share, from $2.2 billion, or 91 cents a share, the year earlier.
Apotheker, who joined as CEO on Nov. 1, saw his initial quarterly report in February marred by a forecast that missed estimates. The shares plunged 9.6 percent the next day.
Following the news of the memo yesterday, Hewlett-Packard dropped as much as 5.1 percent to $37.76 in extended trading. The shares had fallen 61 cents to $39.80 in regular New York Stock Exchange composite trading earlier in the day.
Dell Inc. (DELL), the second-largest U.S. PC maker, also reports its earnings today, in the afternoon.
Sony needs to do more for PSN customers
When a company's security system fails like Sony's PlayStation Network did, resulting in the second-largest data breach in U.S. history, there will be a lot of opinions shared of exactly how to make it up to customers.
A U.S. senator and at least one class-action lawsuit have called for Sony to provide free credit monitoring, and in the latter's case, monetary damages. But legal obligations aside, how does Sony make up for lost time for customers using their service, lost personal information, and lost trust?
This is what Sony has come up with so far: free identity theft monitoring service for a year, one to two months worth of free premium PlayStation or Qriocity service depending on your existing subscription status, some free downloaded content, and in-game bonuses for several popular titles. That free content, which was hinted at by Sony several weeks ago, was announced today: PlayStation 3 owners can choose from among five video games and pick one to download for free. PlayStation Portable owners can choose a free game from among four. And at a later date, PSN users will get one weekend of "select" free movie rentals.
But considering the deficit with customers Sony has to make up, that's not enough.
Here's what we know was lost: for just shy of four weeks, 77 million PlayStation 3 and PlayStation Portable owners were unable to access gaming and video hub PlayStation Network and Qriocity, a music and entertainment service. Sure, it's a free service, but one that enhances games that people have already paid for. So that's three weekends without playing games online with friends and downloading and watching movies, which are for some people primary leisure activities.
Does Sony's compensation package make up for the security breach of PSN?
Yes, they're obviously making a good faith effort.
Sure, it's a free service anyway.
No, what they're offering doesn't adequately address was lost.
Not sure yet.
Vote View results
And then there is the time, effort, and inconvenience of getting a new credit card number. There were only around 10 million credit cards on file with Sony, and Sony has said repeatedly it does not believe credit card numbers were stolen, but advised its customers to exercise caution. Many people will take the better-safe-than-sorry route and get a new one.
We don't know who might have all this personal information taken from Sony, but it's not outside the realm of possibility that whoever does have it will either use it for illegal purposes or sell it to someone who will. That could result in phishing attacks or outright fraud.
And what about trust? Sony's brand has taken a thrashing, not only for the breach itself, but the slowness to which they informed their customers that their information was stolen. How will Sony rebuild that?
Free credit monitoring is a good and necessary gesture. But it does not seem exactly a great burden on Sony to offer games that are between two years and six months old. And why not free movies to own instead of just rentals? Or why not a hotly anticipated title? Many brand new games are not available immediately in digital download form, and Sony can't make partner game makers help them out. But Sony has plenty of its own game studios.
In a CNET poll on Friday we asked readers what they considered fair compensation from Sony. Out of more than 5,000 responses, 57 percent said "a free AAA game and free PlayStation Plus." A commenter named 1812dave thought even that wasn't enough, writing, "Sony should provide FULL REFUNDS to anyone who is the original owner of a PS3, along with FULL REFUNDS for the games primarily used for on-line play (which is most of them!)."
Related stories
PSN working after hiccups, says Sony
Hiccups dog PlayStation Network restoration
Sony begins relaunching PlayStation Network
While that may be unrealistic, it at least shows the range of customer expectations Sony is dealing with.
A reader named DaFees was particularly unmoved by Sony's offer for free PlayStation Plus service, which is a premium version of PSN, but with extra benefits. "To offer everyone a free month of PSN+ is a slap in the face and allow me to explain why. PSN+ offers gamers opportunities to own free games and enjoy additional services like cloud storage and such," DaFees wrote. "The big catch here is that once that month is up all said benefits are lost. You can no longer play those free games and can no longer access your cloud saves. Basically for that first month if someone asks you, 'Hey, how did Sony compensate you over that whole PSN fiasco?' you can answer them by showing them what you can do with your PSN+ membership, but once that month is up, what do you have to show to people? NOTHING, that's right."
When large companies experience a public relations disaster on the level that Sony has, it's not required but it certainly makes sense to go above and beyond their legal obligation to their customers to prove how important they are to the company.
When the iPhone 4 received bad press about its antenna reception, Apple initially tried to downplay it. When it ballooned into a story that dominated the device's first week of sales, the company ended up calling a press conference and making a gesture that surpassed their obligation: they offered everyone who bought an iPhone 4 a free phone case that normally would cost about $15 to $35 at retail. Sure, Steve Jobs wasa little grumpy about it, but it certainly shut everybody up. And people continued to buy iPhones.
The relief and excitement on Saturday when Sony announced PSN would restart was very apparent in reader comments here and on other sites. It's understandable--PSN users are very passionate about the product. Most people probably didn't spend much time questioning what they'd get in return form Sony, they just wanted to be able to play games on PSN again.
But there's something else that hasn't gotten a lot of attention in the U.S., which is understandable since it doesn't really affect PlayStation customers here. But it should probably give us pause that Sony's home country of Japan won't even allow the company to restart access to PlayStation Network because it hasn't satisfied some unspecified "measures." We can very easily imaging those measures have to do with privacy and security, and if PSN would withstand another attack on its network like the one we just witnessed.
So even though PSN is working again, it's not entirely clear that the security situation is completely fixed. Which makes free access to the network and free content an even more questionable tradeoff.
Read more: http://news.cnet.com/8301-31021_3-20063400-260.html#ixzz1MbyJhY13
Oil falls to below $97, extending 2-week sell-off
Oil falls to below $97 in Asia, extending 2-week sell-off, amid US demand concerns
SINGAPORE (AP) -- Oil prices fell below $97 a barrel Tuesday in Asia, extending a two-week fall amid investor concern slowing U.S. economic growth could undermine demand for crude.
Benchmark crude for June delivery was down 50 cents to $96.87 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.28 to settle at $97.37 on Monday.
In London, Brent crude for June delivery was down 34 cents to $110.50 a barrel on the ICE Futures exchange.
Crude has fallen about 16 percent from near $115 on May 2 as traders fret high fuel costs and tepid economic growth will hurt U.S. consumption. Crude surged 35 percent between February and the beginning of this month.
On Monday, traders shrugged off a weaker dollar, which makes crude cheaper for investors with other currencies and usually helps push oil prices higher.
Analysts are also eyeing the end next month of a Federal Reserve program to purchase treasury bonds, known as quantitative easing. It has helped boost money supply and asset prices while also weakening the dollar.
"The end of quantitative easing is the sea-change beneath the broader moves" in the oil price, Cameron Hanover said in a report.
In other Nymex trading in June contracts, heating oil fell 0.7 cent to $2.87 a gallon and gasoline dropped 2.0 cents to $2.91 a gallon. Natural gas futures slid 1 cent to $4.31 per 1,000 cubic feet.
The Great Recession's lost generation
The brutal job market brought on by the recession has been hard on everyone, but especially devastating on the youngest members of the labor force.
About 60% of recent graduates have not been able to find a full-time job in their chosen profession, according to job placement firm Adecco.
And for those just entering the workplace, a bout of long-term unemployment can affect their career plans for years to come.
Meghan O'Halloran was one of those who had her career derailed by the timing of her graduation.
She left Cornell University with a degree in architecture and six summers of internships at top firms in New York, Milan and London.
"I thought getting a job would be a snap," she said.
But after graduating in December 2008, just as job losses in the economy were reaching a high point, she was confronted with a very cold reception into the labor force.
She followed her boyfriend to China for a year, and found architecture work plentiful in the building boom there. But when she returned home at the end of 2009, not much had improved, and no one was hiring.
"I've applied for temporary work," she said. "The answer is always the same, 'We wish we could hire you.'"
She's decided to leave behind her hopes for a career as an architect and has started her own business making custom fabric, carpets and furniture.
O'Halloran's experience is not unique. Last year, the unemployment rate for college graduates age 24 and younger rose to 9.4%, the highest since the Labor Department began keeping records in 1985.
One reason is because recent hires with limited experience have the toughest time competing in a job market flooded with experienced candidates.
"We know that young people coming out of college have the least experience," said Kathy Kane, senior vice president of talent management at Adecco. "And these entry-level jobs can be the easiest for companies to reduce."
But long stretches of unemployment are only part of the problem young job seekers face.
Adecco also found that 18% of recent grads have been forced to turn to full-time jobs outside their field of study, often jobs for which a college degree is not required.
Many others are underemployed, or working part-time or temporary jobs and internships.
And the lack of steady income can also delay the start of their lives as independent adults. About a third of recent graduates are still living with their parents, Adecco found, with 17% saying they are financially dependant on their parents. Almost one in four say they are in debt.
Brittney Winters, 23, graduated from Princeton University in 2009 and can't find a teaching job, despite graduating from a top school.
"When you go to an Ivy League school, you figure this degree will mean something -- that it will guarantee you a job," she said.
Winters has taken on other "survival" jobs to get by, including working at a video rental store.
She now works for a public relations firm in Chicago. But the job is a long commute from her parents' home, and she's struggling to fill the gas tank each week.
A long recovery
With hiring on the rise, this year's college grads will find a somewhat better job market awaiting them after graduation. But those already hurt by the recession might not bounce back so quickly.
According to one study performed by Till von Wachter, an economics professor at Columbia University, the drag on income lasts for 10 years, on average.
The outlook could be even worse for the class of '09 or '10, von Wachter said, since the worse the recession, the longer it takes to get earnings and a career back on track.
"In the bad recessions in the past, the graduates recovered in 10 to 15 years. But we've never had such a strong recession," he said.
Princeton grad Winters said she's finding an increasing number of job openings she can apply for this year, but she's still having trouble explaining her résumé of the last two years.
But she's hopeful she'll soon have her career back on track.
"I like to think it was only a minor detour, not a roadblock," she said.
Wal-Mart 1Q earnings rise 3 pct; US still slumping
Wal-Mart's 1Q earnings up 3 pct, powered by overseas stores; US Walmart results still weak
Anne D'Innocenzio, AP Retail Writer, On Tuesday May 17, 2011, 8:04 am
NEW YORK (AP) -- Growing overseas business and strict cost controls helped Wal-Mart Stores Inc.'s net income rise 3 percent in the first quarter, beating Wall Street expectations.
But the world's largest retailer's U.S. Walmart stores posted their eighth straight quarter of revenue declines at stores open at least a year compared with the same quarter a year earlier. That's a key measure of a retailer's health.
The company also offered a cautious earnings outlook because of worries that higher prices for gasoline and groceries could put more strain on its low-income customers.
"We are monitoring the economic environment carefully, as significant changes in gas prices and inflation during the quarter will influence our actual performance," Bill Simon, Walmart U.S. president and CEO, said in a statement.
Wal-Mart reported net income of $3.39 billion, or 97 cents per share, in the three months ended April 30. That compares with $3.3 billion, or 87 cents per share, in the same period last year.
Revenue, excluding revenue from membership fees from Sam's Club warehouse stores, rose 4.4 percent to $103.41 billion.
Analysts expected earnings of 95 cents on revenue of $102.76 billion, according to FactSet.
Wal-Mart's US division posted a 0.3 percent drop in revenue at stores open at least a year, dragged down by a 1.1 percent drop at its namesake stores. That measure rose 4.2 percent at Sam's Clubs.
Wal-Mart's U.S. business is hurting because of mistakes the company made on price and selection. Wal-Mart also faces increasing price competition from dollar chains, Amazon.com and other online retailers.
Wal-Mart is trying several strategies to revive U.S. growth, bring back disaffected customers and draw new ones. It is restoring thousands of items it had stopped carrying in an overzealous bid to streamline its stores, from fishing supplies in Dallas to snow blowers in Minneapolis. The company is highlighting the returning items with flags on store shelves trumpeting "It's Back."
Wal-Mart also is hammering its return to the "Every Day Low Price" message of founder Sam Walton with a new ad campaign. And it plans to open smaller stores store under a concept it calls Walmart Express.
Wal-Mart's international business, which produces 26 percent of company revenue, has been a bright spot.
The international division's revenue rose 11.5 percent to $27.9 billion in the first quarter.
"Walmart International remains the key growth driver for our company and the segment is seeing continued growth through a combination of comp sales and new stores," Wal-Mart CEO Mike Duke said in a statement.
Sam's Club revenue rose 9.4 percent. It accounts for about 12 percent of company revenue. Wal-Mart's U.S. division eked out a 0.6 percent increase in total revenue because it opened more stores.
For the second quarter, Wal-Mart expects earnings per share between $1.05 per share and $1.10 per share. The estimates assume that currency exchange rates remain at current levels. Analysts forecast $1.08 per share. Wal-Mart also predicted that revenue at stores open at least a year at its Walmart U.S. stores would be anywhere from down 1 percent to up 1 percent for the second quarter.
Futures rebound modestly; data, earnings eyed
On Tuesday May 17, 2011, 7:28 am
By Angela Moon
NEW YORK (Reuters) - U.S. stock index futures rose in a modest rebound on Tuesday from the previous session's losses and before major tech companies release earnings.
Dell (NasdaqGS:DELL - News) reports earning, along with rival Hewlett-Packard (NYSE:HPQ - News), which is set to bring forward its earnings release after reports its chief executive had warned of a tough July quarter.
Wal-Mart Stores Inc (NYSE:WMT - News) said that sales at its U.S. discount stores open at least a year fell 1.1 percent during its first quarter, marking its eighth straight quarterly decline as it works on bringing shoppers back to its biggest chain.
Housing starts data is scheduled for release at 8:30 a.m. (1230 GMT), with economists predicting a rise to around 568,000 in April compared with 549,000 a month earlier.
Other data set for release includes April's industrial output figures at 9:15 a.m (1315 GMT).
S&P 500 futures rose 4 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures gained 43 points and Nasdaq 100 futures rose 5 points.
The Nasdaq (Nasdaq:^IXIC - News) fell 1.6 percent on Monday as investors, worried about the U.S. economic outlook, sold stocks that had been recent gainers.
The Dow Jones industrial average (DJI:^DJI - News) and the S&P 500 (^SPX - News) were off 0.4 and 0.6 percent after a report on manufacturing in New York state added to worries about the outlook.
Home Depot Inc (NYSE:HD - News) reported weaker-than-expected quarterly sales as inclement weather hurt demand for seasonal goods at the start of the spring selling season.
New York Attorney General Eric Schneiderman is investigating Bank of America Corp (NYSE:BAC - News), Morgan Stanley (NYSE:MS - News) and Goldman Sachs (NYSE:GS - News) about packaging of toxic mortgage loans into securities, the Wall Street Journal said, citing sources.
Mining equipment maker Joy Global (NasdaqGS:JOYG - News) is to buy Rowan Cos Inc's (NYSE:RDC - News) drilling and mining gear unit for $1.1 billion in cash as a way to enter the lucrative oil and gas drilling business.
(Reporting by Angela Moon, Editing by Kenneth Barry)
Tuesday May 17, 2011 News
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IMF head denied bail in sexual assault case; France in shock
Dominique Strauss-Kahn will remain in custody in New York as he faces charges that he sexually assaulted a chambermaid. In France, some speculate the case could be a set-up to torpedo the Socialist leader's political career. Others say they have faith in American justice.
By Nathaniel Popper and Kim Willsher, Los Angeles Times
May 17, 2011
Reporting from New York and Paris
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As Dominique Strauss-Kahn was denied bail on sexual assault charges in New York City, the International Monetary Fund head's native France, and European financial markets, continued to reel over the lurid allegations that could result in a 25-year prison sentence.
The French Socialist Party leader, ordered Monday by a Manhattan judge to remain in jail until his next court hearing, faces a probable end to his aspirations to seek the French presidency.
He also faces the prospects of additional sexual assault investigation, into a 2002 encounter with a French writer and journalist, Tristane Banon, three decades his junior. A lawyer for the woman said she would file an official complaint charging that she had to fight him off and that now "she knows she'll be heard."
Meanwhile, stocks fell in Europe, where Strauss-Kahn has been a key player in helping the continent work its way through the debt crisis involving nations such as Greece, Portugal and Spain. He had been scheduled to attend an important meeting of European finance ministers in Brussels beginning Monday.
Instead, Strauss-Kahn, 62, was in a Manhattan courtroom, looking grim as he stood next to his lawyer in his first court appearance since his arrest Saturday on charges of assaulting a maid in his Sofitel hotel suite near Times Square.
The burgeoning scandal, involving a longtime politician who has been known both as a brilliant economist and a womanizer, has led to soul-searching among some in France over the nation's seemingly laissez-faire attitude toward its leaders' sexual peccadilloes.
"Politicians and artists enjoy a particular tolerance on this subject," wrote Nicolas Demorand, editor of the Liberation daily newspaper. "Part of the shock comes also from the unusual scene, until now unthinkable here: police arresting a top-level politician on a matter of morals."
Others in France said they could easily imagine Strauss-Kahn having sex with a 32-year-old chambermaid in his $3,000-a-night hotel suite, but could not believe he would force himself on her.
"Seduction, yes, but no way would he use constraint or violence," said Jean-Marie Le Guen, a Socialist Party lawmaker who has known him for 25 years. "A certain number of facts, and certain aspects of the story we are hearing from the press make this not credible," he told France-Inter radio.
Le Guen said his friend knew he would be the target of mudslinging when he suggested he might run for president, but added: "What they are asking us to believe... it's just hallucinations. I'm a doctor and I know this can happen."
At the 27-minute court hearing, Strauss-Kahn's lawyer, Benjamin Brafman, entered a not-guilty plea on four felony counts, including sexual abuse and attempted rape, and three misdemeanor accounts, including unlawful imprisonment. The defendant did not speak.
Brafman, in seeking bail, rejected any possibility of Strauss-Kahn being a flight risk, even though he had been arrested on an airplane about to leave for France at John F. Kennedy Airport. The lawyer said his client's departure had been long scheduled and "there is no indication, nothing, nothing that he intends to flee."
But the prosecution convinced Judge Melissa C. Jackson otherwise. Assistant District Atty. John A. McConnell contended that Strauss-Kahn had "a substantial incentive to flee" and that the maid had provided "a very powerful and detailed account" that was corroborated by forensic evidence.
The next court hearing is expected to be held later this week.
In Paris, some politicians and commentators said the affair was a "disgrace" and a "humiliation" to the nation, describing France as the "real victim." Others launched a vigorous defense of Strauss-Kahn, saying the incident may have been a set-up by political rivals.
Conspiracy theories swept the nation after it was revealed that the person who broke the news in France via Twitter, was a member of Nicolas Sarkozy's ruling center-right party. Jonathan Pinet said he got the information from "a pal in the United States," but some web users accused him of being part of a smear operation "orchestrated in minute detail" by the country's leaders.
Strauss-Kahn himself broached the possibility of a looming set-up in an interview with the left-wing daily paper Liberation three weeks ago, the paper reported. He said he thought he was under surveillance and cited three difficulties he might face if he were to run for president: "Money, women and the fact I am Jewish."
"Yes, I like women...so what?" he said, adding that he might fall victim to an invented scandal.
"A woman raped in a car park and who's been promised 500,000 or a million euros to invent such a story..."
Strauss-Kahn's lawyers in Paris claimed that he had left the Sofitel hotel in midtown Manhattan about midday on Saturday, an hour before the attack was said to have taken place. They told journalists that he had lunch with his daughter, a student at Columbia University, before heading for JFK airport. En route, he realized he had left a cellphone at the hotel and called reception to ask employees to find it for him.
New York police were able to track Strauss-Kahn and arrest him thanks to the phone call he made to the hotel, according to this account.
The maid has said that when she entered Strauss-Kahn's room to clean it, he came out of the bathroom naked, pushed her onto a bed and assaulted her, New York police said. At Monday's hearing, prosecutor McConnell said that Strauss-Kahn attempted to rape her and when that failed, he forced her to perform oral sex.
McConnell also said that Strauss-Kahn had a history of improper sexual behavior, referring to "at least one" other incident that occurred abroad, leading observers to conclude it was the complaint by the French writer, Banon, goddaughter to one of Strauss-Kahn's former wives,
The maid later picked the IMF head out of a lineup at a Harlem police precinct. Local news reports said the woman was a 32-year-old single mother from Ghana. DNA samples taken from the maid and Strauss-Kahn were brought to the Manhattan Special Victims Unit in Harlem for testing.
Some French commentators criticized American media coverage of the case, alleging that the presumption of innocence had been repeatedly breached by photos taken as he was led in handcuffs out of a New York police facility.
The pictures amounted to "unsupportable cruelty", said Manuel Valls, one leading French Socialist.
Another French politician, Jean-Pierre Chevenement, said Strauss-Kahn was the victim of a "horrifying international lynching" based on weak evidence.
Not all agreed with such assessments. "I have confidence in American justice," said French ecology and transport minister, Nathalie Kosciusko-Morizet. "It's so French to see conspiracies everywhere, it's something I believe that's in our culture."
Strauss-Kahn will be held alone, segregated from other inmates for his own protection, at New York City's Riker's Island prison, on the East River. The prison is used primarily for short-term detainees and is a far cry from Strauss-Kahn's chic $4 million Paris apartment, the brick mansion he uses in Georgetown, near IMF headquarters in Washington, and the hotel suite on West 44th Street where the alleged attack took place.
Stocks Ended Lower, as Tech Slumped (AAPL, AXP, CSCO, GOOG, HPQ, ICE, JCP, LOW, MSFT, NDAQ, NYX, QQQ, SLV, VLO)
New York, May 16th (TradersHuddle.com) – Stocks ended lower, as technology shares were dumped, with investors worrying about continuing woes over the European debt crisis, which could dampen economic recovery and spurring a move away from riskier assets. The Dollar finished lower, but trimmed its losses, with the U.S. Government reaching its legal debt ceiling.
The Dow Jones Industrial Average fell 47.38 points, or 0.38%. The S&P 500 index lost 8.30 points, or 0.62%, while the NASDAQ tumbled 46.16 points or 1.63%.
The market started modestly lower, as the Dollar gave up some of its earlier gains. The weak opening followed poor overseas performance in equity markets around the world on renewed European Sovereign debt concerns.
Asian markets finished lower after Japan provided mixed economic data, with machine orders much higher than expected, but consumer confidence much lower. Meanwhile China and Hong Kong also moved to the downside on inflation fears, as some economists predict that China has not seen a CPI peak yet.
European markets finished lower on news the IMF Chief was detained and was waiting arraignment. The CAC underperformed the other major bourses, as Mr. Strauss-Kahn was also rumored to be a leading French Presidential Candidate. There is little indication that the IMF activities will be curtail by his arrest, however jitters on the sovereign crisis increased, as it came very near talks on how to handle the euro zone crisis, as finance ministers are already discussing the next round of help for Greece and Portugal’s bailout.
The market actually made an attempt to move into positive territory, with the Dow moving into the green for some time midday, as the Dollar weakened and the euro regained some of the lost ground, but an upturn in the greenback and weakness in technology, the biggest sector by weight, dragged the market lower. The tech heavy NASDAQ was the notable underperformer with the index falling to a 1-month low and just above its 50day moving average. PowerShares QQQ Trust (NASDAQ:QQQ), the ETF that seeks to provide investment results that generally correspond to the price and yield performance of the NASDAQ-100 Index, fell 1.73% to $57.40, closing just above its 50day moving average at the $57.26 area.
Among the S&P 500 sectors, healthcare was the only sector finishing in positive territory with a fractional gain, while technology, consumer discretionary, and energy led the declines.
Technology as a group tumbled 1.5% during the session, with big cap tech among the weakest areas in the sector, with investors moving away from riskier assets. Apple (NASDAQ:AAPL), the maker of iPads and iPhones, dropped 2.11% to $333.30, closing lower than its pre-earnings close on April 19th and giving back more than its gap up after the spectacular quarterly earnings. The stock broke below its 50day moving average last week, spurring downward momentum on the stock, with next level of support at $320.16.
In the Dow Jones Industrial Average, technology also dragged the index lower, with the top three decliners coming from big tech companies. Microsoft (NASDAQ:MSFT), the world’s largest software publisher, lost 1.84% to $24.57, closing 3.22% from its calculated support at $25.36. Cisco (NASDAQ:CSCO), the world’s largest networking equipment maker, fell 1.66% to $16.60, closing below calculated support at $16.64, while Hewlett-Packard (NYSE:HPQ), the world’s largest PC maker, slid 1.51% to $39.80, closing 1.61% above calculated support at $39.16.
Google (NASDAQ:GOOG), the owner of the largest search engine, was another tech heavy weight out of favor in today’s session. Google fell more than 2% to $518.42, closing below its April low and trading at levels not seen since September. The company today also filed a mixed securities shelf offering for an indeterminate amount.
Consumer discretionary stocks also came under sharp pressure. The sector's 1.4% decline came as Lowe's Companies (NYSE:LOW), the second largest home improvement retailer, tumbled 3.57% to $24.84, a three-month low, following a disappointing quarterly report, which featured an earnings miss and disappointing forecast, as the retailer trimmed its full year earnings forecast.
JC Penney (NYSE:JCP), the department stores operator based in Plano, TX, was tumbled 3.20% to $37.21, after gapping up to a 2-year high at $41 following an upside earnings surpris, but the stock quickly rolled over.
Meanwhile, financials had lagged last week, but in today’s session the sector traded with relative strength for much of the session, finishing with a fractional loss. The sector received a boost from card metrics that showed improvements for credit card issuers from March to April.
American Express American Express (NYSE:AXP) gained 1.17% to $50.07, as the company said that its April U.S. Managed Net write-off rate was 3.5%, an improvement over the 3.7% rate in March, while April loans 30 days past due were 1.7%, showing a slight improvement from the 1.8% rate in March. American Express actually gapped up earlier in the session, with the stock posting a new 52-week high at $50.61.
Capital One (NYSE:COF) also was a notable outperformer in the sector and in the broad market index, as it gained 2.18% to $53.48 after significant improvements in its April Card Metrics. Capital One said that the April Domestic Annualized Net Charge-Off Rate was 4.97%; April Delinquency rate of 3.41% versus 3.59% in March.
Also on the financial sector, the NYSE Euronext (NYSE:NYX) plunged 12.62% to $35.73 on news that the NASDAQ OMX (NASDAQ:NDAQ) and the IntercontinentalExchange (NYSE:ICE) withdraw their proposal to acquire NYSE Euronext, following discussions with the Antitrust Division of the U.S. Department of Justice, which made it clear that the deal will not be successful in securing regulatory approval. Shares of NASDAQ OMX also suffered, falling 2.53% to $26.23, meanwhile InterncontinentalExchange jumped 3.30% to $122.22.
A drop in crude oil prices and gasoline futures pressured the energy sector. Crude oil settled lower by 2.3% to $97.37 per barrel. A selloff in gasoline futures, to the tune of 4.5%, weighed on crude oil throughout the afternoon session. A weaker Dollar had little bearing on crude's movement after it was unable to trade above the flat line.
Valero (NYSE:VLO), the independent refiner, fell 1.50% to $26.23, closing just above its calculated support at $26.18. Gasoline prices pressured the stock, as traders sold the futures on reports the opening of the Morganza Spillway, was reducing the risk of flooding in the refineries along the Mississippi River in Louisiana.
Weakness in the greenback initially helped precious metals move higher, but both metals pulled back, after trading to their respective highs, despite continued weakness in the greenback. June gold shed 0.2% to close at $1490.60 per ounce, while July silver fell 2.5% to end at $34.11 per ounce. The iShares Silver Trust ETF (NYSE:SLV), the fund that corresponds to the price of silver owned by the Trust less expenses and liabilities, tumbled 4.48% to $32.85, with the trust trimming its year to date gains to 8.85%, while extending its losses for May to 29.9%.
Urban Outfitters Inc. (Nasdaq: URBN) Q1 Sales Rise 9 Percent
Urban Outfitters Inc. (Nasdaq: URBN: 33.2, 0.58) reported first quarter fiscal 2011 net income of $39 million, or $0.23 in earnings per diluted share, for the three months ended April 30. The financial highlights of the quarter are:
Net sales rose by 9 percent over the same quarter last year to $524 million from $480 million in the comparable period last year.
Comparable retail segment net sales, which include direct-to-consumer channels, decreased 1 percent to $391 million from $368 million in the prior year's quarter.
Direct-to-consumer comparable net sales increased 15 percent from $86 million in the first quarter of 2010 to $102 million in the first quarter of fiscal 2011.
Wholesale segment net sales rose 22 percent to $30.56 million from $25 million in the same period last year.
Gross profit margin percentage declined by 493 basis points versus the prior year's comparable period.
Gross profit for the period amounted to $193 million as compared with $201 million in Q1 of 2010.
Total inventories grew by $42 million, or 19 percent, on a year-over-year basis, primarily due to the acquisition of inventory to stock new retail stores, as well as, inventory to support growth in the direct-to-consumer channel.
Selling, general and administrative expenses, expressed as a percentage of net sales, increased by 96 basis points, to $134 million from $118 million in Q1' 10.
During the quarter, the company repurchased and retired 4.8 million common shares for approximately $149 million. These repurchases completed the company's 2006 share repurchase program leaving 5.7 million shares available for repurchase under the 2010 share repurchase program. The company opened a total of 10 new stores including: 5 Free People stores, 2 Urban Outfitters stores and 3 Anthropologie stores.
Shares last traded at $32.29, down 1.01 percent with a 52-week range of $29.03 to $39.26.
Dealpolitik: Nasdaq Flopped. Let the Blame Game Begin..
Nasdaq OMX didn’t just lose in its negotiations with the Department of Justice. It was an ugly shutout. Now, the real game begins: assigning blame.
You didn’t need to be a rocket scientist to predict that the deal would have antitrust difficulties. A merger of the only two major exchanges in the U.S. sounds anticompetitive. And the DOJ outlined three other related markets which a NYSE/Nasdaq combination would have cornered if the deal had gone through.
Moreover, the argument that somehow the merger was necessary to keep the U.S. competitive as it loses listings to offshore exchanges always struck me as make-weight. The companies who list overseas don’t go there because there is something deficient with the competitiveness of NYSE or Nasdaq. Foreign companies need to list where their potential investors are. NYSE and even Nasdaq are still the gold standard for prestige, but foreign companies can balk at a U.S> listing because of our disclosure requirements or our litigation system. Combining Nasdaq and NYSE wouldn’t solve that.
Ok, so did the lawyers blow it? I doubt it.
Here is how a deal like this works: The antitrust lawyers would have been among the first advisers brought into the deal. Nasdaq and ICE each had top-flight lawyers in their camp seasoned in the ways of the DOJ. Undoubtedly they threw up the caution flag almost immediately. Nevertheless, those lawyers would have brought in economists to help spin the deal as pro-competitive. The team certainly developed some arguments to use with the DOJ, but I would be shocked if they did not warn that Nasdaq could lose the antitrust argument.
It is equally obvious that the lawyers and economists didn’t say a takeover was hopeless. With hindsight, perhaps they should have pushed back harder, but when arguing with the government, very few matters are utterly hopeless. The lawyers were probably promised political help with the flag waving arguments about making the U.S. more competitive, and help from Capitol Hill to keep Germans from controlling our flagship stock market.
It appears that those arguments ultimately fell flat on their face once Congress realized how much blood-letting would be involved in Nasdaq’s integration of the NYSE employees. But that is not the antitrust lawyers’ fault.
European Pressphoto AgencyWith the potential legal arguments and a promise of political pressure, the deal probably got a bright orange caution light. One where with enough spackle—divestiture of certain businesses and undertakings to limit anti-competitive behavior—antitrust holes could be filled to the ultimate satisfaction of the DOJ.
The gambit obviously didn’t work. Nasdaq spent $5 million on the proposal before its announcement of the NYSE takeover offer on April 1, so probably will now have a charge in the tens of millions of dollars, particularly if it actually paid for the bank financing commitments Nasdaq said it had.
And the costs could have been much, much higher. If NYSE actually had agreed to the rival deal, Nasdaq now might be out $700 million. Half of the payments in Nasdaq’s proposed agreement was to reimburse NYSE for its breakup fee owed to Deutsche Börse, and the other half for the reverse breakup fee of $350 million Nasdaq offered. That just proves there is always a way to fall on your face even harder.
The spiked takeover offer is a giant black eye for Nasdaq. But lawyers don’t tell clients what to do unless it is clear they are violating the law. Lawyers tell clients what the law is and how they propose to argue the case. This debacle falls directly at the feet of Nasdaq management and the board.
But there is a silver lining for Nasdaq in this otherwise dark cloud.
The worldwide consolidation of securities exchanges is not over. Indeed, the combined NYSE and Deutsche Börse have the balance sheet power to make further acquisitions. And it is not inconceivable that Nasdaq was in their sights.
By making its proposal, Nasdaq has largely inoculated itself from a future hostile bid by NYSE/DB. After NYSE’s weeks of railing about the antitrust perils of the Nasdaq-NYSE combination, it will be very hard for NYSE in the near future to flip flop and argue it should be allowed to swallow Nasdaq.
And given that Nasdaq has so far been left out in the cold in this wave of consolidations, that fact alone may prove to be particularly valuable to Nasdaq as it continues on its lonely way.
(Note: the author owns shares in Nasdaq OMX and NYSE Euronext.)
although I made the switch to an iphone, I still think there's a hard core blackberry following so doubt they'll go under anytime soon.
going to watch to see how much more beaten down it gets.
I was going to ask that but see you answered yourself lol
waiting for the selling to stop myself as well.
Gold eases below $1,500 in choppy trade
SAN FRANCISCO (MarketWatch) — Gold futures settled below the $1,500-mark Monday as the U.S. currency’s weakness and the U.S. debt limit vied for investors’ attention.
Gold prices had fallen earlier Monday as the dollar initially gained against the euro following news of the arrest of the head of the International Monetary Fund Dominique Strauss-Kahn. Read more on Strauss-Kahn's arrest.
The precious metal then recovered to successfully test $1,500 per ounce as analysts said Strauss-Kahn’s arrest was unlikely to table talks on restructuring Greek debt, supporting the euro and driving the U.S. dollar lower. But as the New York floor session ended, gold failed to defend its gains as investors increasingly focused on the impending U.S. debt ceiling issue.
“If Congress reaches an agreement which cuts government spending in order to extend the debt limit, the economy will suffer. Stocks go down on that, and so do precious metals,” Jay Feuerstein, chief executive officer of 2100 Xenon Group, said in an email.
Gold for June (COMMODITIES:GCM11) delivery lost $3, or 0.2%, to settle at $1,490.60 an ounce on the Comex division of the New York Mercantile Exchange.
Silver prices also slid, with silver for July delivery (COMMODITIES:SIN11) shedding 88 cents, or 2.5%, to $34.13 an ounce.
“It will be important to keep an eye on Eurozone inflation estimates this week,” Andrey Kryuchenkov, an analyst at VTB Capital said in a note to clients. “In the meantime, we continue to swing back and forth with risk sentiment while still expecting range trading to continue from here.”
Dollar dealings
The dollar index (BOARD:DXY) traded at 75.457 on Monday, down from 75.761 in late North American trading Friday when it reached a six-week high against the euro.
The euro has suffered recently amid resurgent concerns about European sovereign debt woes.
But on Monday, the euro (U.S.:EURUSD) headed higher against the greenback as the currency market downplayed the impact of the arrest of IMF chief Strauss-Kahn on sexual-assault charges. Read about Monday‘s currencies action.
Strauss-Kahn had been one of the key players working to address Europe’s debt crisis. See story on IMF chief's arrest.
Strauss-Kahn had been scheduled to attend meetings to discuss the euro-zone debt crisis on Monday. Nemat Shafik will attend Monday’s Eurogroup meeting in Brussels in place of Strauss-Kahn, the IMF said. See story on IMF appointing acting MD.
In other metals trading, July copper (COMMODITIES:HGN11) rose a penny, or 0.2%, to settle at $3.99 a pound. July platinum (NEW:PLN11) fell $9.30, or 0.5%, to settle at $1,760 an ounce. June palladium (NEW:PAM11) gained $7.05, or 1%, to settle at $713.50 an ounce.
Growth in the automotive sector and strong investor interest fueled a rise in platinum and palladium demand in 2010, a platinum group metals refiner said Monday, and that’s likely to continue to support prices for the metals in the coming months. Read more about Johnson Matthey’s Platinum 2011 industry review report.
Panera Bread says donation model working
The Business Journal
Date: Monday, May 16, 2011, 4:23pm EDT
The Panera Bread Foundation says the nonprofit "community cafe" concept that it launched a year ago called Panera Cares is working well and is being expanded.
Panera Bread is based in St. Louis and has 11 locations in the Triad.
Customers at the Panera Cares cafe in Clayton, Missouri are encouraged to take the food they need and donate what they can. The cafe has no prices or cash registers but does have "suggested" donations. About 60 percent of customers leave the suggested donation, while 20 percent leave more and 20 percent leave less, the company says.
Since being launched in Missouri a year ago, additional Panera Cares cafes have opened in Dearborn, Mich., and Portland, Ore.
Fed Backs Funds for Research
By LUCA DI LEO
WASHINGTON—Federal Reserve Chairman Ben Bernanke made the case for public research funding, saying government spending on research and development can help boost economic growth.
"The primary economic rationale for a government role in R&D is that, absent such intervention, the private market would not adequately supply certain types of research," the Fed chief said at a Georgetown University conference Monday. But he added that, given current budget constraints, the U.S. needs to weigh its decisions cautiously.
The White House and Democrats remain locked in a budget fight with Republicans. The U.S. government hit its $14.294 trillion debt ceiling Monday, setting off political maneuvering to avoid a default before the beginning of August.
While the U.S. struggles to contain the deficit, President Barack Obama has been making the case for more government spending in research and innovation to boost growth. Mr. Obama wants to invest more in clean energy and information technology, as well as biomedical research.
Mr. Bernanke said innovation and technological change have played a role in lifting growth. He said the government also could help by trying to increase the ranks of U.S. students of science and engineering, as well as favoring immigration of skilled scientists and researchers.
Innovation and technical advances have transformed economies around the world over the past two centuries, Mr. Bernanke said.
He noted how advances in semiconductor technology have, in recent decades, redrawn many fields, such as communications and health care.
The U.S. has seen many instances where federal research initiatives and government support helped technologies emerge in areas such as agriculture, chemicals, health care and information technology. The Internet revolution of the 1990s was based on scientific investments made in the 1970s and 1980s.
Total public and private R&D spending in the U.S. has been fairly stable over the past 30 years at around 2.5% of gross domestic product, Mr. Bernanke said.
Though he didn't say if that was the right level, the Fed chief noted how some economists have argued that expanded government support for R&D could, over time, significantly increase economic growth.
"That said, in a time of fiscal stringency, the Congress and the administration will clearly need to carefully weigh competing priorities in their budgetary decisions," he added.
While the U.S. still leads in overall R&D spending, Mr. Bernanke said that in recent years, spending has increased sharply in some emerging-market economies, notably China and India.
During his State of the Union address at the start of the year, Mr. Obama used the Cold War imagery of the Soviet Union's launch of the Sputnik satellite more than 50 years ago to underline that what the U.S. needs today is more investment in research and development to compete with rising powers like China and India.
"A reasonable strategy for now may be to continue to use a mix of policies to support R&D while taking pains to encourage diverse and even competing approaches by the scientists and engineers receiving support," Mr. Bernanke said.
Write to Luca Di Leo at luca.dileo@dowjones.com
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved
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Hey AA were you able to try out Ameritrade?
Google Launches $3 Billion Debt Offering
http://abcnews.go.com/Technology/wireStory?id=13616829
Toyota Must Face Claims Over Unintended Acceleration, Judge in U.S. Rules
Toyota Motor Corp. (7203) lost a bid to dismiss lawsuits by car owners alleging economic loss related to unintended acceleration when a federal judge overseeing the suits made final an order allowing the claims to go forward.
The Toyota owners contend the company drove down the value of their vehicles by failing to disclose or fix defects related to sudden acceleration. U.S. District Judge James V. Selna in Santa Ana, California, issued a final order May 13 following last month’s tentative order allowing the lawsuits to move ahead because the vehicle owners had properly pleaded loss or injury.
“Taking these allegations as true, as the court must at the pleading stage, they establish an economic loss,” Selna wrote, using language identical to his tentative ruling. “A vehicle with a defect is worth less than one without a defect.”
Toyota, the world’s largest automaker, recalled millions of U.S. vehicles, starting in 2009, after claims of defects and incidents involving sudden unintended acceleration. The recalls set off a wave of litigation, including hundreds of economic loss suits and claims by individuals or their families alleging injuries and deaths.
Most of the federal lawsuits were combined before Selna, who is overseeing pretrial evidence-gathering.
Selna issued a similar ruling in November that rejected Toyota’s motion to dismiss an earlier complaint by the vehicle owners.
‘Toyota Is Confident’
“At this early stage of the litigation the court is required to accept as true all of the factual allegations made by plaintiffs’ counsel in ruling on Toyota’s motion to dismiss,” Celeste Migliore, Toyota spokeswoman said in an e- mail. “The burden is now squarely on plaintiffs’ counsel to prove their allegations and Toyota is confident that no such proof exists.”
“We believe -- and intend to prove -- that Toyota was aware of a defect and chose not to take action to protect consumers,” attorney Steve Berman, who represents vehicle owners, said in an e-mailed statement today.
“Judge Selna agreed with many of our underlying arguments in the case, including our contention that Toyota owners who did not attempt to sell their vehicle could still bring a claim because they overpaid for their vehicles, buying cars that were not worth as much as a car free of these defects,” Berman said.
California Law
Selna is conducting a hearing today on a request by lawyers for vehicle owners to pursue economic claims under California law, which gives plaintiffs a better chance than most states of recovering damages. Toyota has asked the judge to find that car owners can’t use California law on suits brought in other states.
Selna said last week that he was likely to rule in the vehicle owners’ favor. Selna said he didn’t believe Toyota’s rights to due process would be denied through using California consumer law on the claims.
Toyota’s series of recalls began in September 2009 with an announcement that 3.8 million vehicles were being recalled because of a defect that may cause floor mats to jam down the accelerator pedal. In January 2010, the company recalled 2.3 million vehicles to fix sticking gas pedals.
The carmaker said in February that it was recalling another 2.17 million vehicles in the U.S. for carpet and floor-mat flaws that could jam gas pedals.
Loose Floor Mats
Many of the lawsuits claim that loose floor mats and sticky pedals don’t explain all episodes of sudden acceleration and that the electronic throttle system in Toyota vehicles is to blame. Toyota has disputed any flaws in its electronic throttle control system.
In February, NASA, the U.S. space agency, and the National Highway Traffic Safety Administration said their probe of possible electronic defects found no causes for unintended acceleration other than sticking accelerator pedals and floor mats that jammed the pedals.
The cases are combined as In re Toyota Motor Corp. Unintended Acceleration Marketing, Sales Practices and Products Liability Litigation, 8:10-ml-02151, U.S. District Court, Central District of California (Santa Ana).
To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; Bill Callahan in San Diego at callahan@san.rr.com
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net
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Gasoline price falls first time in 8 weeks: Energy Department
(Reuters) - U.S. gasoline prices fell for the first time in eight weeks, the Energy Department said on Monday, in what could be a turning point for American consumers.
Regular unleaded gasoline declined half a penny over the last week to a national price of $3.96 a gallon, which is still up $1.10 from a year ago.
The price for diesel fuel also fell 4.3 cents to $4.06 a gallon, diesel's first price decline in three weeks.
The drop in gasoline prices follows the sharp retreat in crude prices. U.S. oil has fallen about $16 a barrel since the beginning of this month.
"I think we've turned the corner and we should expect to see substantial price drops in the coming weeks," said Phil Flynn, energy analyst at PFGBest Research in Chicago. He said gasoline could fall to $3.50 a gallon.
Guy Caruso, energy analyst at the Center for Strategic and International Studies added: "We may have seen the 2011 peak gasoline price in the U.S."
The amount of money consumers will spend on gasoline is close to what they will spend on groceries and medicine in a year, according to Mark Cooper, research director for the Consumer Federation of America.
"This is a big budget item and people clearly want near-term relief," Cooper said.
(Reporting by Tom Doggett; Editing by Dale Hudson and Sofina Mirza-Reid)
As gas prices soar, Democrats attack tax breaks for oil companies
By DAVID LIGHTMAN AND RENEE SCHOOF
The push by Democrats in Congress to end some tax breaks for Big Oil companies wouldn't make much difference in the federal deficit, oil company profits or prices at the gasoline pump, but it could be a big political winner for them just the same.
Senate Democrats have made the punish-the-oil-industry effort the centerpiece of their economic pitch to Americans this month. They've staged a news conference at a Capitol Hill Exxon station, excoriated oil company executives at a televised Senate hearing and plan a Senate vote Wednesday on repealing the tax breaks.
They say the oil companies don't deserve the tax breaks since they're rolling in profits, and that canceling them will give the Treasury much-needed revenue in a time of high federal debt.
But ending tax breaks worth $4 billion this fiscal year and $21 billion over 10 years would have little impact on budget deficits expected to reach $1.4 trillion this fiscal year and to total about $7 trillion over the next decade.
Nor are consumers suddenly likely to see lower pump prices from punishing Big Oil.
"In the near term, impact on either production or gasoline prices would be negligible in either direction, because there are other factors working," said Frank Verrastro, the director of the energy and national security program at the Center for Strategic and International Studies, a center-right Washington policy research group.
"To go after the top five (oil companies) to me seems totally punitive. I mean there's no reason for doing that except that you don't like bigness."
The Big Five oil company profits, which totaled about $35 billion in the first quarter of this year, would only be nicked. Ending the breaks would amount to "a few percents of their profits each year," said Michael Lynch, an analyst at Strategic Energy and Economic Research Inc., a consulting firm.
"The industry would presumably invest a bit less and we'd have somewhat less domestic supply," he said. "If you ran a sophisticated computer model, you'd find gas prices a few cents higher down the road, but that's about it."
So why bother?
Politics.
"People can make an emotional connection. Voters don't have time to analyze the numbers; they have to live their lives," said Tim Hagle, an associate professor of political science at the University of Iowa.
Oil companies are convenient political targets because their profits are huge, and changes in gasoline prices, unlike consumer products, are visible to the public every day - and resented.
"If you went on a website and it said it cost 50 cents to click on some site one day and 80 cents the next day, you'd be angry. But that doesn't happen," said Sen. Mark Begich, D-Alaska. "But you see those gasoline prices all the time."
On May 6, the Lundberg Survey, considered the leading authority on gas prices, reported that the average price of regular self-service gasoline nationwide hit $4 a gallon, just below the July 2008 record of $4.11.
So Democrats tee off on Big Oil.
Leading the charge is Sen. Charles Schumer, D-N.Y., who argued that ending the tax breaks is "a twofer. We can stop padding the profits of big oil companies and start reducing our deficit."
At a Finance Committee hearing, Schumer pointedly asked James Mulva, the chairman and chief executive officer of ConocoPhillips: "Do you think that your subsidy is more important than the financial aid we give to students to go to college?" Student aid is facing cutbacks to help lower deficits.
Mulva called that "a very difficult question for me," saying it was a legislative question. His company's job was "to provide energy in an affordable way to the American public."
Skeptics argue that Schumer is oversimplifying the issue.
If politicians want to reduce dependence on foreign oil and lower gasoline prices, they should push to build more efficient vehicles, said Sen. Mary Landrieu, a Democrat from the oil-producing state of Louisiana, "and stop introducing gimmicks such as this that might get you a few political points in the short run, but is not leading us in the right direction."
Republicans say they're not defending Big Oil, just trying to stop higher taxes.
"Raising taxes to address high energy prices is about as relevant as a person walking into a doctor's office complaining of chest pain, and having the doctor respond by offering to reupholster the patient's couch," said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee.
The nonpartisan Congressional Research Service said in a May 11 report that revoking the tax breaks wouldn't raise gasoline prices. With oil prices more than $100 a barrel recently, "prices are well in excess of costs and a small increase in taxes would be less likely to reduce oil output, and hence increase petroleum product (gasoline) prices," the service said.
Democrats plan to proceed this week.
The reason, said Senate Majority Leader Harry Reid, D-Nev., seems obvious.
"Seniors are struggling," he said. "Oil companies are not struggling."
The Democrats are unlikely to prevail in either the Senate or the Republican-run House of Representatives, but since their effort is more about winning voters' favor than enacting law, they may feel that they've won simply by dramatizing the issue.
Read more: http://www.miamiherald.com/2011/05/16/v-print/2219714/as-gas-prices-soar-democrats-attack.html#ixzz1MYxTMBqT
Charlie Ergen gives up his CEO and president titles at Dish Network
Those roles will be assumed by Joe Clayton, who has been a board member at Dish sibling Echostar since 2008. Ergen will remain chairman of the company her founded more than 30 years ago.
By Ben Fritz and Joe Flint, Los Angeles Times
May 17, 2011
Charlie Ergen, the fiery leader of satellite broadcaster Dish Network Corp., is relinquishing his position as chief executive and president at the company he founded and has tightly controlled for more than 30 years.
Joe Clayton, a former head of satellite radio broadcaster Sirius XM Radio Inc. who has become close to Ergen since joining the board of Dish's sibling company EchoStar in 2008, will assume his duties. Meanwhile, Ergen will retain his role as chairman.
"There's a lot to say grace over on a daily operational basis here," Clayton said in an interview. "With [chief executive] Michael Dugan at EchoStar and me here, this will free Charlie up to do the thing he is good at, which is to put a strategic direction in place."
Similarly, three years ago Ergen gave up his job as CEO of EchoStar, a satellite technology and set-top box company that spun off from Dish in 2008. He remains the controlling shareholder and chairman of both companies.
By naming the 61-year-old Clayton, Ergen is signaling that he isn't seeking enormous change at the company. Nonetheless, the departure from the top management role of an executive whose name has always been synonymous with Dish in the media business and on Wall Street is significant.
Clayton, who was involved in the 1994 launch of Dish competitor DirecTV Inc. while at electronics company RCA Thomson, takes the job at a crucial time when online platforms are stealing consumers' attention away from traditional television and some question whether satellite is able to compete.
However, Clayton said Dish, the No. 3 cable and satellite television provider with 14.2 million subscribers, plans to launch additional online services in order to grow.
"You can be a digital company and a satellite company," he said. "There are other services we might add in the Dish family, recognizing that going forward it's a digital world."
The management change comes several weeks after Dish Network completed its surprise $320-million purchase of struggling movie-rental chain Blockbuster, which the satellite company is expected to use to launch an online movie service. Dish also this month settled a long-running legal dispute with TiVo Inc. over patents related to digital video recording and is being sued by Starz Entertainment and Walt Disney Co. over its decision to provide subscribers a year of the Starz pay TV channel for free.
ben.fritz@latimes.com
joe.flint@latimes.com
H-P Chief Warns of Tough Times
By BEN WORTHEN
Leo Apotheker, the chief executive of Hewlett-Packard Co., told his top deputies to brace for tough times.
In an email sent to 10 senior H-P executives, Mr. Apotheker asked his lieutenants to cut back expenses and slow their hiring plans.
The CEO cautioned the world's largest technology company by revenue is in for "another tough quarter," and its current work-force plans are unaffordable.
News of the email, days before the Palo Alto, Calif., company is set to report quarterly results, spooked investors, who sent H-P shares down 5% in after-hours trading Monday.
"We must watch every penny and minimize all hiring," Mr. Apotheker wrote in the email, a copy of which was reviewed by The Wall Street Journal.
H-P "will be driving hard for revenue and profit" in the current quarter, Mr. Apotheker wrote. "We have absolutely no room for profitless revenue or any discretionary expenditures."
The email was sent on May 4, a few days after H-P started its current quarter, and was also signed by Chief Financial Officer Cathie Lesjak. The company reports results for its fiscal second quarter on Wednesday.
An H-P spokeswoman declined to comment. The email was earlier reported by Bloomberg News.
The statements are the latest setback for Mr. Apotheker, who often criticized cost cuts made by his predecessor, Mark Hurd.
Soon after starting as H-P CEO in November, Mr. Apotheker said he would spend more on research and development and resume wage increases that had been frozen by Mr. Hurd.
View Full Image
Associated Press
CEO Leo Apotheker, shown in San Francisco earlier this year, told deputies that H-P was in for "another tough quarter."
.But H-P has since hit some speed bumps. Its revenue for the fiscal quarter ended Jan. 31 increased 3.6% to $32.3 billion, coming in below the company's projection of $32.8 billion to $33 billion. In February, H-P also revised down its earnings-per-share and revenue targets for the current fiscal year.
In an interview then, Mr. Apotheker attributed the revenue shortfall to slow personal-computer sales to consumers, which he said was an industry-wide problem, and a portion of its services business, which he said had already been fixed.
The CEO has since revealed plans to grow H-P by investing in software and by providing "cloud services" that businesses access over the Internet. H-P is also getting ready to sell new mobile phones and a tablet computer based on the WebOS operating system H-P acquired along with Palm Inc. last year.
In the April quarter, analysts expect H-P to report earnings per share of $1.21, excluding one-time charges, and revenue of $31.5 billion, up from $30.85 billion a year earlier.
H-P's shares dropped $2 to $37.80 in after-hours trading. The stock, which is down more than 14% since Mr. Hurd resigned in August, was down 61 cents at $39.80 at 4 p.m. on the New York Stock Exchange.
Write to Ben Worthen at ben.worthen@wsj.com
Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved
US Stocks Lose Ground After Data, Debt Worries; Technology Hit Hardest
By Brendan Conway
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The technology and consumer-discretionary sectors led U.S. stocks lower Monday as weak economic data spurred worries of a softening economy and Europe's debt crisis kept investors wary for another session.
The Dow Jones Industrial Average closed down by 47.38 points, or 0.38%, at 12548.37, and the Standard & Poor's 500-stock index fell 8.30, or 0.62%, to 1329.47, with both measures adding to two weeks' consecutive losses. The technology-oriented Nasdaq Composite shed 46.16 points, or 1.63%, to 2782.31.
Volume was relatively light, with 3.5 billion shares changing hands in NYSE composite volume.
Investors said a New York-area manufacturing survey that was well below expectations underscored the uneven state of the economy, while a weak housing index showed continued stress in that market. Technology and consumer-discretionary shares are often among the first to be hit when consumers and businesses tighten their belts.
"A lot of the macro numbers we've seen over the last few weeks have shown a sedated economy. It's less robust," Jay Suskind, senior vice president at Duncan-Williams, said. Suskind said weakness in technology stocks in particular should be expected if more market participants foresee an economic soft patch.
Eurozone debt also stayed front of mind after the arrest of International Monetary Fund Managing Director Dominique Strauss-Kahn on sexual-assault charges, seen as weakening the IMF's ability to resolve the euro-zone debt crisis. The euro gained midsession and stocks rose briefly as some of the debt worries dissipated, but not enough to trigger a rally in U.S. stocks.
"This is a market that has been dominated by currency moves, moves that have been whipsawed by rumors out of Europe," Prudential Financial market strategist Quincy Krosby said.
Regulatory hurdles prompted Nasdaq OMX Group and IntercontinentalExchange to withdraw their bid for NYSE Euronext. NYSE Euronext tumbled 5.16, or 13%, to 35.73, while Nasdaq's shares lost 68 cents, or 2.5%, to 26.23.
Microsoft led the blue-chip Dow index lower as it shed 46 cents, or 1.8%, to 24.57, while Cisco Systems also fell 28 cents, or 1.7%, to 16.60. Yahoo fell 74 cents, or 4.5%, to 15.81, despite a joint statement with Chinese search firm Alibaba that the companies were taking steps to resolve a dispute over one of Alibaba's most important websites, called Alipay.
Monster Worldwide was one of the worst performers in the Standard & Poor's 500, falling 1.35, or 8.3%, to 14.99, as some analysts said this week's looming pricing for website LinkedIn's initial public offering weighed on the stock.
Lowe's shares dropped 92 cents, or 3.6%, to 24.84, as the home-improvement retailer reported a surprise fiscal first-quarter sales drop.
Foreign-exchange brokerage FXCM slid 1.99, or 17%, to 9.97, as adjusted earnings fell 7.1% on lower average daily trades.
In deal news, Joy Global bought equipment maker LeTourneau Technologies from Rowan Cos. for $1.1 billion, giving it access to the oil-and-gas market. Joy Global's shares added 88 cents, or 1%, to 88.36, while Rowan shed 8 cents, or 0.2%, to 37.96.
SanDisk rose 1.46, or 3.1%, to 47.95, as the flash-memory maker agreed to acquire solid-state drive company Pliant Technology Inc. for about $327 million plus incentives, giving the company a foothold in the enterprise-storage market.
Insurance intermediary CNinsure Inc. gained 4.16, or 32%, to 17.32, after the company said it received a $982 million non-binding proposal to go private from a consortium led by its founder and chief executive.
-By Brendan Conway, Dow Jones Newswires; (212) 416-2670; brendan.conway@dowjones.com
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Nasdaq OMX Poised to Win Cheaper LSE Out of Failure to Grab NYSE:
Real M&A
By Whitney Kisling and Nandini Sukumar - May 16, 2011 Nasdaq OMX Group Inc. (NDAQ)’s failure to acquire NYSE Euronext is giving Robert Greifeld an opportunity to succeed at buying the exchange he’s always wanted -- at a discount of almost 30 percent.
Greifeld, Nasdaq OMX’s 53-year-old chief executive officer, and IntercontinentalExchange Inc. (ICE) yesterday dropped their $11.3 billion bid for the operator of the New York Stock Exchange after U.S. regulators threatened to block the deal. The decision spurred a 6.8 percent jump in London Stock Exchange Group Plc (LSE), which Nasdaq OMX has tried to acquire three times, and came one day after LSE’s own offer for Canada’s largest bourse was trumped by a group of local banks and funds.
While NYSE Euronext’s Duncan Niederauer can cement his own deal to sell the 219-year-old company to Deutsche Boerse AG (DB1) and emerge as head of the world’s largest exchange, Greifeld risks being left out of the industry’s biggest round of consolidation. Buying LSE now would be cheaper after the London-based exchange lost $1.4 billion in value since Nasdaq OMX’s hostile bid failed in February 2007. LSE closed at 884 pence a share yesterday, 29 percent less than the New York-based exchange’s prior offer of 1,243 pence a share, according to data compiled by Bloomberg.
“Greifeld has to do something clearly,” said Niki Beattie, CEO of Market Structure Partners Ltd., a London-based consulting firm that advises brokers and exchanges. “It makes sense. He’s had a look at LSE before and it would cost him less possibly to do it now. Everything was looking pretty bad for him and now actually it looks a bit easier. I’m convinced he will explore a deal with LSE.”
Exchange Acquisitions
Frank De Maria, a spokesman at Nasdaq OMX, and LSE’s Victoria Brough didn’t return e-mails seeking comment.
Greifeld was counting on a plan to merge Nasdaq OMX’s stock-trading and listings operations with New York-based NYSE Euronext (NYX) to eliminate costs in businesses where competition has cut its profit and market share. Nasdaq OMX would have gained a monopoly on corporate listings.
The April 1 bid from Nasdaq OMX and ICE of Atlanta for New York-based NYSE Euronext was part of more than $30 billion in takeover offers for exchanges in less than six months.
The deals began in October, when Singapore Exchange Ltd. (SGX) bid A$8.35 billion ($8.3 billion) for ASX Ltd. (ASX) of Sydney. LSE, run by Xavier Rolet, 51, agreed to buy TMX for about $3.1 billion on Feb. 9, and Frankfurt-based Deutsche Boerse followed less than a week later with its takeover of NYSE Euronext. Singapore Exchange’s acquisition of ASX was rejected by Australia’s government last month.
‘Credible Proposals’
U.S. regulators needed 45 days to block Nasdaq OMX and ICE from acquiring NYSE Euronext. The U.S. Justice Department cited concern about the potential for monopolies in stock listings, data services and some areas of trading in rejecting the offer, saying in a statement yesterday it would have sued to block it.
For Greifeld, the rejection is a setback after he told shareholders his attempt to snatch away NYSE Euronext would create a trading and listings powerhouse based in the U.S. Greifeld and ICE CEO Jeffrey Sprecher said on April 10 that they were confident they would win antitrust clearance because of a “realistic and actionable” plan to overcome objections.
“They need to be in the position where they can make credible proposals if they go to acquire,” said Keith Wirtz, who helps oversee $18 billion, including more than 60,000 Nasdaq OMX shares, as chief investment officer for Fifth Third Asset Management in Cincinnati. Having the NYSE Euronext deal scuttled “doesn’t relieve Nasdaq of strategic considerations that they must be having right now. They have got to look at ways to position the franchise globally and for growth.”
Maple Bid
A day before Nasdaq OMX’s decision, Maple Group Acquisition Corp., made up of four Canadian banks and five pension funds, announced an unsolicited C$3.6 billion ($3.7 billion) bid for TMX Group Inc. (X) to keep the country’s main stock exchange under Canadian ownership and block LSE’s takeover.
A deal for LSE would be cheaper than trying to buy NYSE Euronext and less expensive than Greifeld’s prior attempts to purchase the exchange that traces its roots back to the coffee houses of 17th century London.
In February 2007, LSE shareholders rejected Greifeld’s 1,243 pence hostile bid when the LSE was valued at $5.33 billion. It was one of five takeover offers that LSE’s former CEO Clara Furse fended off in two years. After closing at 884 pence yesterday, LSE is now worth about $3.9 billion.
Nasdaq OMX currently has a market value of $4.6 billion.
Courting LSE
Greifeld first set his sights on LSE about five years ago to create what would have been the first trans-Atlantic stock exchange. In March 2006, he offered 2.4 billion pounds ($4.1 billion) for the London-based bourse in what the company called an “attractive offer.” LSE rejected that bid, which led to Greifeld’s failed takeover attempt in 2007.
In July 2002, before Greifeld joined Nasdaq OMX, talks between the two broke down after U.S. and U.K. regulators failed to agree on how to oversee the combined market.
Nasdaq OMX owns 12 equity and options markets in the U.S. and Europe including the Nasdaq Stock Market, Nasdaq Options Market and venues in Sweden, Denmark, Finland, Iceland, Estonia, Latvia and Lithuania.
Combining with LSE would create a company with $8.5 billion in market value, leapfrogging Singapore Exchange and Australia’s ASX among the world’s biggest exchanges.
Merger Rationale
Nasdaq OMX, the second-largest U.S. operator of stock trading with a 19 percent share, can also reduce expenses from buying LSE, Europe’s biggest exchange by the value of its listed companies. LSE had 56 percent of the FTSE 100 market for the week ended May 13, data compiled by Fidessa Group Plc showed.
Cutting costs has been a focus of Greifeld’s acquisitions since he joined Nasdaq in 2003, and one of the benefits he touted as part of his joint bid for NYSE Euronext. Greifeld reduced expenses to 59 percent of revenue from 68 percent in the last five years, even as he acquired OMX AB in 2008, according to data compiled by Bloomberg.
“If Nasdaq wants to continue down the path of this premier world equities exchange and partner with people that are good listings venues, LSE is perceived as a logical listings place and would make some sense,” said Jamie Selway, managing director at New York-based Investment Technology Group Inc.
A deal for LSE would also give Nasdaq OMX a bigger presence in derivatives. Nasdaq OMX, which competes with Chicago-based CBOE Holdings Inc. and NYSE Euronext in the U.S. options market, opened a U.K. electricity trading market this year. LSE operates two derivatives markets, the EDX London and IDEM.
Falling Behind
Without any deals, Nasdaq OMX and LSE would fall further behind as their biggest competitors get larger.
NYSE and Deutsche Boerse would have a combined market capitalization of $25 billion, five times Nasdaq OMX’s equity value and more than six times larger than LSE, according to data compiled by Bloomberg.
Hong Kong Exchanges & Clearing Ltd., currently the world’s biggest bourse, and Sao Paulo-based BM&FBovespa SA (BVMF3), the operator of Latin America’s biggest securities exchange, are both at least three times as big as Nasdaq OMX, the data show.
LSE said on May 14 that it remained committed to its merger agreement with TMX, even after the Toronto-based company said it received a higher offer from Maple Group.
Nasdaq OMX may also look to combine with Singapore Exchange. The $6.5 billion equity and derivatives market is run by the bourse’s former President Magnus Bocker, 49, and uses Nasdaq OMX’s technology to match orders, according to Larry Tabb, founder of Westborough, Massachusetts-based research firm Tabb Group LLC.
‘A Good Idea’
Bocker didn’t immediately respond to an e-mail seeking comment outside normal business hours.
“In certain ways Singapore’s a good idea,” Tabb said. “Bocker and Greifeld have a working relationship.”
For Bruce Weber, a professor of finance at the London Business School, taking at shot at the LSE may be worth the risk for Nasdaq OMX at the current price.
“There’s still a green light for Greifeld to move forward on sensible acquisitions,” he said. “LSE’s cheaper now than it was the last time. He might look like a savvy buyer.”
Overall, there have been 9,222 deals announced globally this year, totaling $908.9 billion, a 23 percent increase from the $741.4 billion in the same period in 2010, according to data compiled by Bloomberg.
To contact the reporters on this story: Whitney Kisling in New York at wkisling@bloomberg.net; Nandini Sukumar in London at nsukumar@bloomberg.net
To contact the editors responsible for this story: Daniel Hauck at dhauck1@bloomberg.net; Katherine Snyder at ksnyder@bloomberg.net; Nick Baker at nbaker7@bloomberg.net.
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US government hits debt ceiling, lighting 11-week fuse
By KEVIN G. HALL
McClatchy Newspapers
Treasury Secretary Timothy Geithner informed Congress on Monday that the United States has reached its legal debt limit, setting off a ticking time bomb that could explode in less than three months if lawmakers can't bridge differences and allow more government borrowing.
In hitting the $14.3 trillion debt ceiling - the limit on how much the government can borrow - the Obama administration on Monday began temporarily halting payments to the retirement and federal pension accounts of federal workers and started borrowing from those funds, to be restored later.
Geithner sent a letter to Senate Majority Leader Harry Reid, D-Nev., warning that the government can move money around for about 11 weeks but if a new debt ceiling isn't agreed to by Aug. 2, the U.S. government could effectively default on its obligations to its creditors. He warned of "catastrophic economic consequences for citizens" unless Congress raises the debt ceiling.
An increase of about $2 trillion is expected, enough to get the issue past the 2012 elections before Congress would have to lift it again.
Republicans who control the House of Representatives vow to link raising the debt ceiling to cuts in government spending of at least equal measure. In a combative statement Monday, House Speaker John Boehner, R-Ohio, upped the ante.
"As I have said numerous times, there will be no debt limit increase without serious budget reforms and significant spending cuts, cuts that are greater than any increase in the debt limit." Boehner has called previously for $2 trillion in spending cuts as part of any deal to raise the debt ceiling.
Wisconsin Republican U.S. Rep. Paul Ryan, the chairman of the House Budget Committee, repeated the linkage in a speech Monday in Obama's adopted hometown.
"For every dollar the president wants to raise the debt ceiling, we can show him plenty of ways to cut far more than a dollar of spending," Ryan told the Economic Club of Chicago. "Given the magnitude of our debt burden, the size of the spending cuts should exceed the size of the president's debt limit increase."
Republicans rule out tax increases and any significant cuts in defense spending. The United States continues to fight wars in Iraq and Afghanistan paid for with borrowing, the only time in U.S. history that wars weren't offset at least partially with some sort of tax.
Democrats insist that Social Security is off the table, as is an end to Medicare, but they are open to changes in Medicare funding.
If Congress fails to raise the debt ceiling by Aug. 2, it would force the Obama administration to choose between paying creditors or paying for military operations, Social Security and Medicare payments, and other commitments.
A government default on debts surely would trigger a harsh reaction from investors and could panic global financial markets, jeopardizing the U.S. and global economies. It would mean that the world's largest economy was governing its finances as if it were a basket-case economy such as Greece.
It might not even take a default to have severe consequences for the U.S. economy, warned prominent forecaster Mark Zandi, the chief economist for Moody's Analytics. Democrats and Republicans alike frequently cite Zandi's research.
Speaking to the National Economists Club last Thursday, Zandi scoffed at the idea that the government could simply prioritize payments to creditors and halt other spending commitments, as some Republicans have suggested.
"The global investors are going to ask themselves how long can policymakers pay me and not a Social Security recipient? So if I were a global investor, I would be bailing well before that, and interest rates would spike," Zandi said. He added that the idea that deep spending cuts on the order that Republicans are calling for wouldn't harm the economy is "just wrong, dead wrong, particularly in the context of the kind of cuts we're talking about here."
Read more: http://www.miamiherald.com/2011/05/16/v-print/2219825/us-government-hits-debt-ceiling.html#ixzz1MYvy7rCB
yeah, it's been good for a few good swings in the past.
traded it two days in a row last week at these levels and it tends to follow the market which is anyone's guess from day to day.