Top Headlines - Monday April 6

Big Companies Invest to Grab Sales in Recovery; the iPod Lesson



Frugality Forged in Today's Recession Has Potential to Outlast It

With their jobs less secure, their houses worth less and their stock-market portfolios shrunken, Americans are saving more now. But will they still be thrifty when the recession ends? No one will know for sure for years, but there's good reason to believe Americans will be saving more in the next decade than they did in the last one. "It's hard to believe we're ever going back to the easy credit and free spending of the last 10 years," said economist Richard Berner of Morgan Stanley. He predicts consumer spending will grow at an inflation-adjusted 2% to 2.5% annual rate over the next several years, compared with 3.5% in the decade ended in 2007. That means trouble for retailers, restaurants and luxury-goods makers that rely on U.S. consumers. But it could also restore some balance to a world economy that has relied -- too much, many economists say -- on Americans' debt-fueled spending and emerging markets' willingness to save and lend.http://online.wsj.com/article/SB123897160787290857.html


Euro-Zone Consumer Prices Tumble

LONDON -- Industrial producer prices in the euro zone posted their biggest drop in annual terms for almost 10 years in February, official data showed Monday.
Factory gate prices dropped 0.5% on the month, leaving them 1.8% weaker than in February last year, the European Union statistics agency Eurostat said. It was the biggest annual fall since April 1999 and the seventh consecutive monthly decline in prices. February's declines were also sharper than the market consensus estimate of a 0.4% drop from a month earlier and a 1.6% fall on a year-to-year basis from a Dow Jones Newswires survey of economists last week. January's price drops were revised from 0.8% on a month and 0.5% on the year reported in March.http://online.wsj.com/article/SB123901150123392283.html#mod=testMod

R&D Spending Holds Steady in Slump

Major U.S. companies are cutting jobs and wages. But many are still spending on innovation. Wary of emerging from the recession with obsolete products, big U.S. companies spent nearly as much on research and development in the dismal last quarter of 2008 as they did a year earlier, even as their revenue fell 7.7%, according to a Wall Street Journal analysis. The sampling looked at 28 of the largest U.S. R&D spenders, excluding deeply troubled auto makers and the drug industry, where R&D spending is dictated by government requirements.http://online.wsj.com/article/SB123819035034460761.html#mod=testMod

Internet Providers Gird for Fight With FCC

Cable and telephone companies are gearing up for a fight as regulators begin work Wednesday on a national broadband strategy that could bring major changes to how Internet services are delivered to American homes. The $787 billion government stimulus package requires the Federal Communications Commission to provide a road map for how potentially billions of future taxpayer dollars should be spent to build or upgrade Internet lines across the U.S. The plan will raise thorny issues about what sort of requirements, if any, should be imposed on Internet-service providers to share the networks they have built with government help. Phone and cable companies argue that such requirements would likely stifle investment and be counterproductive.http://online.wsj.com/article/SB123897361669991013.html


City Tries to Hang On Amid Auto Collapse

STERLING HEIGHTS, Mich. -- This factory town has held its own through decades of auto-industry retrenchment and downsizing, staving off the blight that has spread to so many nearby cities. When an auto-supply plant here closed two years ago, city leaders found a defense company to fill the property. And the city's finances remained strong enough that Sterling Heights hasn't had to cut into core services such as the police and fire departments.http://online.wsj.com/article/SB123878894916987561.html?mod=article-outset-box


IBM Talks Teeter as Sun Board Splits

Talks between International Business Machines Corp. and Sun Microsystems Inc. were on the verge of unraveling Sunday, threatening a potential $7 billion acquisition that would place one of Silicon Valley's iconic companies under the Big Blue umbrella.Sun's board is split over whether to do the deal, with a faction led by Sun's chairman and co-founder, Scott McNealy, opposing the transaction and a group led by Chief Executive Jonathan Schwartz in favor, said two people familiar with the talks. While the price of IBM's offer remained unclear -- some placed it at $9.10 a share, others at $9.40 -- some people familiar with the talks say price wasn't the biggest issue.http://online.wsj.com/article/SB123896664697090681.html#mod=testMod