Tuesday, January 26, 2010
Two Big Printers Expected to Merge
Privately held Quad/Graphics Inc. of the U.S. is expected to acquire Canadian rival World Color Press Inc. for roughly $1.3 billion to $1.4 billion, said people familiar with the matter, in a deal that would create North America's second-largest commercial printer by sales, behind industry giant R.R. Donnelley & Sons Co.
Under the plan, these people said, shareholders of Toronto-listed World Color, which prints such magazines as Sports Illustrated and Rolling Stone, as well as the Crate & Barrel catalog and Yellow Book directory, would get a 40% stake in the newly combined company. The new company would then list on a U.S. stock exchange, they said, in effect bringing Quad/Graphics, whose clients include Newsweek, GQ and the L.L. Bean catalog, to the public market for the first time since its founding in 1971.
Quad/Graphics, based in Sussex, Wis., has 11,500 employees and 11 plants, most of them in the U.S. Its annual sales are around $2 billion. Montreal-based World Color, with a market capitalization of around $730 million, has about 18,000 employees and annual sales of around $3 billion, with about 30% of that coming from Canada and Latin America.
Under the plan, these people said, shareholders of Toronto-listed World Color, which prints such magazines as Sports Illustrated and Rolling Stone, as well as the Crate & Barrel catalog and Yellow Book directory, would get a 40% stake in the newly combined company. The new company would then list on a U.S. stock exchange, they said, in effect bringing Quad/Graphics, whose clients include Newsweek, GQ and the L.L. Bean catalog, to the public market for the first time since its founding in 1971.
Quad/Graphics, based in Sussex, Wis., has 11,500 employees and 11 plants, most of them in the U.S. Its annual sales are around $2 billion. Montreal-based World Color, with a market capitalization of around $730 million, has about 18,000 employees and annual sales of around $3 billion, with about 30% of that coming from Canada and Latin America.
Demand for Macs, iPhones Fuels Apple
Wall Street Journal - Two days before it's set to unveil a major new product, Apple Inc. reported a surge in quarterly profit and revenue that showed demand for its technology hasn't cooled off.
The Cupertino, Calif., company continued to power through the weak economy. Apple, after adjusting for a key accounting change, posted a 50% rise in profit and a 32% increase in revenue for its fiscal first quarter ended Dec. 26.
The growth was fueled by strong sales across most of Apple's product lines as iPhone shipments more than doubled and Macintosh computer sales climbed 33%.
"What this demonstrates is the strength of Apple's brand in good and bad times," said Bill Kreher, an analyst with Edward Jones.
Overall, Apple reported a quarterly profit of $3.38 billion, or $3.67 a share, up from $2.26 billion, or $2.50 a share, a year earlier. Revenue increased to $15.68 billion from $11.88 billion.
Saturday, January 23, 2010
One Third U.S. is Now Below the Poverty Line
A new study from the Brookings Institution tells us that the largest and fastest-growing population of poor people in the U.S. is in the suburbs. You don’t hear about this from the politicians who are always so anxious to tell you, in between fund-raisers and photo-ops, what a great job they’re doing. From 2000 to 2008, the number of poor people in the U.S. grew by 5.2 million, reaching nearly 40 million. That represented an increase of 15.4 percent in the poor population, which was more than twice the increase in the population as a whole during that period.
Job losses, stagnant or reduced wages over the past decade, and the loss of home equity when the housing bubble burst have combined to take a horrendous toll on families who thought they had done all the right things and were living the dream. A great deal of that bleeding is in the suburbs. The study, compiled by the Brookings Metropolitan Policy Program, said, “Suburbs gained more than 2.5 million poor individuals, accounting for almost half of the total increase in the nation’s poor population since 2000.”
Democrats in search of clues as to why voters are unhappy may want to take a look at the report. In 2008, a startling 91.6 million people — more than 30 percent of the entire U.S. population — fell below 200 percent of the federal poverty line, which is a meager $21,834 for a family of four.
http://www.nytimes.com/2010/01/23/opinion/23herbert.html
Job losses, stagnant or reduced wages over the past decade, and the loss of home equity when the housing bubble burst have combined to take a horrendous toll on families who thought they had done all the right things and were living the dream. A great deal of that bleeding is in the suburbs. The study, compiled by the Brookings Metropolitan Policy Program, said, “Suburbs gained more than 2.5 million poor individuals, accounting for almost half of the total increase in the nation’s poor population since 2000.”
Democrats in search of clues as to why voters are unhappy may want to take a look at the report. In 2008, a startling 91.6 million people — more than 30 percent of the entire U.S. population — fell below 200 percent of the federal poverty line, which is a meager $21,834 for a family of four.
http://www.nytimes.com/2010/01/23/opinion/23herbert.html
Friday, January 22, 2010
WSJ Top News Friday-Sat, Jan. 22-23, 2010
New Bank Rules Sink Stocks
WASHINGTON—President Barack Obama proposed new limits on the size and activities of the nation's largest banks, pushing a more muscular approach toward regulation that yanked down bank stocks and raised the stakes in his campaign to show he's tough on Wall Street. With former Federal Reserve Chairman Paul Volcker at his side, Mr. Obama said he wanted to toughen existing limits on the size of financial firms and force them to choose between the protection of the government's safety net and the often-lucrative business of trading for their own accounts or owning hedge funds or private-equity funds.
http://online.wsj.com/article/SB10001424052748703699204575016983630045768.html?mod=WSJ_hps_LEFTWhatsNews
GE Earnings Fall
General Electric Co. posted a 19% slump in fourth-quarter profit, dinged again by weakness at its finance arm and NBC Universal, but offered an upbeat outlook that foresees a return to growth in 2011.
Orders have improved since its investor update in December, with delinquencies in its problematic finance unit also trending down, though commercial real-estate remains a key concern.
http://online.wsj.com/article/SB10001424052748704509704575018672407762274.html?mod=WSJ_hps_LEFTWhatsNews
Birth Weights Fall in U.S.
Mothers are giving birth to lighter babies in the U.S., and no one is quite sure why.
The finding, published Thursday in the Journal of Obstetrics and Gynecology, has potentially troubling public-health implications, if the trend continues. Low-birth-weight babies are at higher risk for a host of health problems.
http://online.wsj.com/article/SB10001424052748704423204575017471267586344.html?mod=WSJ_hps_MIDDLEFifthNews
Court Kills Limits On Corporate Campaign Spending
WASHINGTON—A divided Supreme Court struck down decades-old limits on corporate political expenditures, potentially reshaping the 2010 election landscape by permitting businesses and unions to spend freely on commercials for or against candidates.President Barack Obama attacked the ruling and said it gave "a green light to a new stampede of special-interest money in our politics," particularly "big oil, Wall Street banks, health-insurance companies and the other powerful interests" that "drown out the voices of everyday Americans." He pledged to work with lawmakers to craft a "forceful response."
http://online.wsj.com/article/SB10001424052748703699204575016942930090152.html?mod=WSJ_hps_MIDDLEForthNews
Restaurants Begin to Count Calories
Restaurants from Applebee's to Starbucks are pushing new low-calorie menu items in an effort to attract customers who say they want healthier options.Chain restaurants, traditionally known for peddling fatty food and sugary drinks, hope that offering healthier fare will give them a competitive advantage, especially with the prospect of a federal nutrition labeling law looming.
http://online.wsj.com/article/SB10001424052748704381604575005530811257728.html?mod=WSJ_hps_MIDDLEFifthNews
Google Earnings Soar
Google Inc. reported its strongest revenue growth in a year and issued its firmest public statement saying it would like to continue doing business in China, a week after it said it may pull out of the country due to a sweeping cyber attack.The Mountain View, Calif., company said its revenue rose 17% in the fourth quarter to $6.67 billion from a year earlier, up from only 7% revenue growth in the third quarter and 3% growth in the second quarter.http://online.wsj.com/article/SB10001424052748703699204575017451974056226.html?mod=WSJ_hps_LEFTWhatsNews
Wednesday, January 20, 2010
Time to Sell Health-Care Stocks?
Aetna Inc. (AET)
Barron's - HEALTH-CARE STOCKS seemed to get a late Christmas gift last night in the form of a Republican victory in Massachusetts.
But as stunning as the final result might be coming from the liberal state, the market saw it coming.
The sector rallied in recent days, as a victory by Republican Scott Brown looked increasingly possible. Managed-care stocks were up significantly in the last five days, including 12% for UnitedHealth Group (ticker: UNH), 8% for Aetna (AET) and 7% for WellPoint (WLP). Pharmaceutical giant Pfizer (PFE) was up 7% and medical-device maker Boston Scientific (BSX) gained 5%. All of those returns are well ahead of the Standard & Poor's 500 index's 1% gain over the last week.
Given those impressive returns, we would "sell on the news" today. To be sure, analysts are generally dire in their predictions for health-care reform. "We think the Democratic push for the government takeover of health care is dead or effectively dead," David Maris, a well-respected health-care analyst for Calyon Securities wrote this morning.
Falling Beer Sales Have Brewery Mergers Over a Barrel
The Wall Street Journal - U.S. beer sales volumes fell 2.2% last year, the highest rate since the 1950s, with demand worsening late in the year in a sign of the pressures on big brewers to make their mergers pay off.
The decline, the industry's first since 2003, raises demands for industry leaders Anheuser-Busch InBev NV and MillerCoors LLC to come up with better advertising and to rethink recent price increases, said retailers and analysts.
But they must tread carefully, balancing price moves against a need to drive profits in the wake of the mergers that created the two.
The two giants increased prices by about 5% last year, fresh off InBev NV's acquisition of Anheuser-Busch Cos. and the move by SABMiller PLC and Molson Coors Brewing Co. to combine U.S. operations. Those increases, along with a weak job market and lackluster advertising, contributed to the sales drop, industry analysts said.
The decline, the industry's first since 2003, raises demands for industry leaders Anheuser-Busch InBev NV and MillerCoors LLC to come up with better advertising and to rethink recent price increases, said retailers and analysts.
But they must tread carefully, balancing price moves against a need to drive profits in the wake of the mergers that created the two.
The two giants increased prices by about 5% last year, fresh off InBev NV's acquisition of Anheuser-Busch Cos. and the move by SABMiller PLC and Molson Coors Brewing Co. to combine U.S. operations. Those increases, along with a weak job market and lackluster advertising, contributed to the sales drop, industry analysts said.
Starbucks Growth Revives, Perked by Via
Starbucks Corp. posted its first quarter of same-store sales growth since the end of 2008, citing the unexpected success of its Via instant coffee in the U.S. and strong holiday coffee sales in international markets.
U.S. same-store sales rose 4%, mainly due to a 4% increase in customers' average ticket that the company attributed mostly to Via.
"We expected a contribution from Via, but it was even more than we expected," said Starbucks Chief Financial Officer Troy Alstead in an interview. "We knew it fit perfectly for people on the go, but there was much bigger single-serve, at-home usage than we anticipated or hoped we could get in these early days."
U.S. same-store sales rose 4%, mainly due to a 4% increase in customers' average ticket that the company attributed mostly to Via.
"We expected a contribution from Via, but it was even more than we expected," said Starbucks Chief Financial Officer Troy Alstead in an interview. "We knew it fit perfectly for people on the go, but there was much bigger single-serve, at-home usage than we anticipated or hoped we could get in these early days."
New York Times to Charge for Web
New York Times Co. unveiled a plan to charge readers for unlimited access to the Web version of its flagship newspaper, a seminal—and risky—move in the industry's broader push to stem the free flow of proprietary news online.
Under the plan, to be launched in early 2011, people who read more than a certain number of articles in a month will be prompted to pay a flat monthly fee for additional access. Print subscribers will have full access to the site.
Most newspaper publishers are exploring options for charging for Web articles. But few papers have actually erected a so-called pay wall, reflecting concerns that readers will turn to countless other news sources before paying for something they are used to getting free. The Times is the most prominent newspaper so far to revise its Web strategy to cope with the recent flight of readers and advertisers from print.
Under the plan, to be launched in early 2011, people who read more than a certain number of articles in a month will be prompted to pay a flat monthly fee for additional access. Print subscribers will have full access to the site.
Most newspaper publishers are exploring options for charging for Web articles. But few papers have actually erected a so-called pay wall, reflecting concerns that readers will turn to countless other news sources before paying for something they are used to getting free. The Times is the most prominent newspaper so far to revise its Web strategy to cope with the recent flight of readers and advertisers from print.
Apple Sees New Money in Old Media
The Wall Street Journal - With the new tablet device that is debuting next week, Apple Inc. Chief Executive Steve Jobs is betting he can reshape businesses like textbooks, newspapers and television much the way his iPod revamped the music industry—and expand Apple's influence and revenue as a content middleman.
In developing the device, Apple focused on the role the gadget could play in homes and in classrooms, say people familiar with the situation. The company envisions that the tablet can be shared by multiple family members to read news and check email in homes, these people say.
For classrooms, Apple has been exploring electronic-textbook technology, these people add. The people familiar with the matter say Apple has also been looking at how content from newspapers and magazines can be presented differently on the tablet. Other people briefed on the device say the tablet will come with a virtual keyboard.
Apple has recently been in discussions with book, magazine and newspaper publishers about how they can work together. The company has talked with The New York Times Co., Conde Nast Publications Inc. and HarperCollins Publishers and its owner News Corp., which also owns The Wall Street Journal, over content for the tablet, say people familiar with the talks.
New York Times Chairman Arthur Sulzberger declined to comment in an interview Wednesday on its involvement in the new device except to say, "stay tuned."
Apple is also negotiating with television networks such as CBS Corp. and Walt Disney Co., which owns ABC, for a monthly TV subscription service, the Journal has reported. Apple is also working with videogame publisher Electronic Arts Inc. to show off the tablet's game capabilities, according to one person familiar with the matter.
Tuesday, January 19, 2010
WSJ Top News Tuesday, Jan 19
JAL Files for Bankruptcy
TOKYO -- Japan Airlines Corp launches Wednesday a painful three-year restructuring that will significantly shrink its operations to make it a viable financial concern, after the former flag carrier suffered the ignominy of filing one of the country's largest-ever bankruptcy protection petitions.
A pillar of Japan Inc. founded in 1951 to help the country rise out of the ashes of World War II, JAL Tuesday sought court protection for help in handling a crushing debt load of $25 billion, a level well above its cash flow.
http://online.wsj.com/article/SB10001424052748703837004575012323580338724.html?mod=WSJ_hps_LEFTWhatsNews
NBC To Pay Conan O'Brien $40 million
Conan O'Brien is close to signing a nearly $40 million deal to walk away from his dream job hosting NBC's "The Tonight Show," bringing down the curtain on one of the entertainment industry's biggest debacles in years.
The comedian's exit agreement, which could be completed as early as Tuesday, bars Mr. O'Brien from bad-mouthing his former NBC bosses, according to people familiar with the matter, but paves the way for him to land another television gig within a year.
The expected departure ends a nearly two-week public spectacle that engulfe
http://online.wsj.com/article/SB10001424052748704541004575011482898148788.html?mod=WSJ_hps_LEFTWhatsNews
Senate Race in Massachusetts Key to Health Bill
White House and Senate Democratic officials said Monday that they believed asking the House to pass the Senate health bill unchanged was likely to be their best hope if their party loses a Senate seat in Massachusetts. But House Speaker Nancy Pelosi's office signaled Monday that the House wouldn't go along with that, and the bill's fate dimmed.
A defeat in Massachusetts would not only deprive Democrats of their filibuster-proof majority in the Senate but also underscore the unpopularity of the health legislation and possibly lead some wavering party members to reverse their support.
Cadbury accepts Kraft's offer
Kraft Foods Inc. on Tuesday clinched a deal to acquire Cadbury PLC for £11.9 billion ($19.44 billion), in a trans-Atlantic tie-up that ends the nearly 200-year independence of Britain's most famous candy company.http://online.wsj.com/article/SB10001424052748703837004575012330202258818.html?mod=WSJ_hps_LEADNewsCollection
Sweden calls for EU to levy U.S.-style tax on banks
BRUSSELS--Swedish Finance Minister Anders Borg said Tuesday he is proposing to his European Union colleagues to apply a levy on banks similar to the one being discussed by the U.S. administration.
"The financial system should pay for the actual cost it incurs to society and the taxpayers in the form of implicit state guarantees for systemically important banks," Mr. Borg wrote in a letter to Spanish Finance Minister Elena Salgado, who chairs the two-day meeting of EU finance ministers in Brussels.
Detroit Pistons' owner asks $47 million for Snowmass estate
Roaming through her 10,000-square-foot, eight-bedroom vacation home, clad in a gray hooded sweatshirt, Karen Davidson said it was time for a change. "It's got everything but a post office," she said of her 10-acre property here, which in addition to the main house also has two guest houses, a former stable and two barns. "I just want to downsize."
On Dec. 29 Ms. Davidson—whose husband Bill Davidson, owner of the Detroit Pistons, died last March at age 86—put her property on the market. The asking price: $47 million, making the estate, called Stony Creek Ranch, one of the most expensive listings in the country, in a resort area that has been hard-hit by the housing bust. In 2006, four area homes priced at $20 million or more sold; in 2009, just one did. After more than a year on the market, the asking price of a $60 million home on 44 acres in West Buttermilk was cut earlier this month to $47.5 million.
http://online.wsj.com/article/SB10001424052748704586504574654431721393864.html?mod=WSJ_hps_sections_realestate
TOKYO -- Japan Airlines Corp launches Wednesday a painful three-year restructuring that will significantly shrink its operations to make it a viable financial concern, after the former flag carrier suffered the ignominy of filing one of the country's largest-ever bankruptcy protection petitions.
A pillar of Japan Inc. founded in 1951 to help the country rise out of the ashes of World War II, JAL Tuesday sought court protection for help in handling a crushing debt load of $25 billion, a level well above its cash flow.
http://online.wsj.com/article/SB10001424052748703837004575012323580338724.html?mod=WSJ_hps_LEFTWhatsNews
NBC To Pay Conan O'Brien $40 million
Conan O'Brien is close to signing a nearly $40 million deal to walk away from his dream job hosting NBC's "The Tonight Show," bringing down the curtain on one of the entertainment industry's biggest debacles in years.
The comedian's exit agreement, which could be completed as early as Tuesday, bars Mr. O'Brien from bad-mouthing his former NBC bosses, according to people familiar with the matter, but paves the way for him to land another television gig within a year.
The expected departure ends a nearly two-week public spectacle that engulfe
http://online.wsj.com/article/SB10001424052748704541004575011482898148788.html?mod=WSJ_hps_LEFTWhatsNews
Senate Race in Massachusetts Key to Health Bill
White House and Senate Democratic officials said Monday that they believed asking the House to pass the Senate health bill unchanged was likely to be their best hope if their party loses a Senate seat in Massachusetts. But House Speaker Nancy Pelosi's office signaled Monday that the House wouldn't go along with that, and the bill's fate dimmed.
A defeat in Massachusetts would not only deprive Democrats of their filibuster-proof majority in the Senate but also underscore the unpopularity of the health legislation and possibly lead some wavering party members to reverse their support.
Cadbury accepts Kraft's offer
Kraft Foods Inc. on Tuesday clinched a deal to acquire Cadbury PLC for £11.9 billion ($19.44 billion), in a trans-Atlantic tie-up that ends the nearly 200-year independence of Britain's most famous candy company.http://online.wsj.com/article/SB10001424052748703837004575012330202258818.html?mod=WSJ_hps_LEADNewsCollection
Sweden calls for EU to levy U.S.-style tax on banks
BRUSSELS--Swedish Finance Minister Anders Borg said Tuesday he is proposing to his European Union colleagues to apply a levy on banks similar to the one being discussed by the U.S. administration.
"The financial system should pay for the actual cost it incurs to society and the taxpayers in the form of implicit state guarantees for systemically important banks," Mr. Borg wrote in a letter to Spanish Finance Minister Elena Salgado, who chairs the two-day meeting of EU finance ministers in Brussels.
Detroit Pistons' owner asks $47 million for Snowmass estate
Roaming through her 10,000-square-foot, eight-bedroom vacation home, clad in a gray hooded sweatshirt, Karen Davidson said it was time for a change. "It's got everything but a post office," she said of her 10-acre property here, which in addition to the main house also has two guest houses, a former stable and two barns. "I just want to downsize."
On Dec. 29 Ms. Davidson—whose husband Bill Davidson, owner of the Detroit Pistons, died last March at age 86—put her property on the market. The asking price: $47 million, making the estate, called Stony Creek Ranch, one of the most expensive listings in the country, in a resort area that has been hard-hit by the housing bust. In 2006, four area homes priced at $20 million or more sold; in 2009, just one did. After more than a year on the market, the asking price of a $60 million home on 44 acres in West Buttermilk was cut earlier this month to $47.5 million.
http://online.wsj.com/article/SB10001424052748704586504574654431721393864.html?mod=WSJ_hps_sections_realestate
Sunday, January 17, 2010
JPMorgan Chase Earns $11.7 Billion
The New York Times - JPMorgan Chase kicked off what is expected to be a robust — and controversial — reporting season for the nation’s banks on Friday with news that its profit and pay for 2009 soared.
In a remarkable rebound from the depths of the financial crisis, JPMorgan earned $11.7 billion last year, more than double its profit in 2008, and generated record revenue. The bank earned $3.3 billion in the fourth quarter alone.
Those cheery figures were accompanied by news that JPMorgan had earmarked $26.9 billion to compensate its workers, much of which will be paid out as bonuses. That is up about 18 percent, with employees, on average, earning about $129,000.
Workers in JPMorgan’s investment bank, on average, earned roughly $380,000 each. Top producers, however, expect to collect multimillion-dollar paycheck.
http://www.nytimes.com/2010/01/16/business/16morgan.html
In a remarkable rebound from the depths of the financial crisis, JPMorgan earned $11.7 billion last year, more than double its profit in 2008, and generated record revenue. The bank earned $3.3 billion in the fourth quarter alone.
Those cheery figures were accompanied by news that JPMorgan had earmarked $26.9 billion to compensate its workers, much of which will be paid out as bonuses. That is up about 18 percent, with employees, on average, earning about $129,000.
Workers in JPMorgan’s investment bank, on average, earned roughly $380,000 each. Top producers, however, expect to collect multimillion-dollar paycheck.
http://www.nytimes.com/2010/01/16/business/16morgan.html
Taxing the Banks For the Bailout
The New York Times - WASHINGTON — President Obama laid down his proposal for a new tax on the nation’s largest financial institutions on Thursday, saying he wanted “to recover every single dime the American people are owed” for bailing out the economy.
With both anti-Wall Street sentiment and the budget deficit running high, Democratic leaders on Capitol Hill welcomed the proposal, which could ultimately raise up to $117 billion to cover projected bailout losses. Republicans were uncharacteristically silent, their instinctive opposition to tax increases apparently checked by their fear of defending big bankers. And the financial industry lobby seemed splintered, with small community banks happily exempted
http://www.nytimes.com/2010/01/15/us/15tax.html
WSJ News Jan. 16-17
Fed Stays the Course Despite Worries
Although Federal Reserve officials expect the economy to grow too slowly this year to bring the jobless rate down substantially, they are likely to conclude at their Jan. 26-27 meeting that there isn't much more they can do about it.
That means sticking to their stated plan to end purchases of mortgages at the end of March, roll back emergency lending programs in February and maintain the vow to keep interest rates exceptionally low for at least several more months.
http://online.wsj.com/article/SB10001424052748703657604575004961390797800.html?mod=WSJ_WSJ_US_News_5&mg=com-wsj
Paperwork Woes Plague Mortgage Plan
Thousands of homeowners participating in the Obama administration's foreclosure-prevention plan could miss a government deadline for completing necessary paperwork, putting them at risk of disqualification.
http://online.wsj.com/article/SB10001424052748703657604575005112496393670.html?mod=WSJ_hps_LEFTWhatsNew
Democrats plan tax to punish banks
WASHINGTON—Democrats' last-minute scramble to salvage the special U.S. Senate election in Massachusetts is offering the first test of a populist pitch that party strategists hope to take to other campaigns this year.
Central to the strategy is the new White House plan to tax big banks as punishment for their role in the financial crisis. President Barack Obama announced the proposal Thursday amid reports that financial institutions bailed out by the government are enjoying healthy profits and paying generous bonuses, and as a bipartisan commission began hearing testimony on banks' role in the economic crisis.
According to data released by the Treasury Department Friday, more than 900,000 borrowers have begun trial modifications under the program, but just 7% of them have received permanent changes so far.
http://online.wsj.com/article/SB10001424052748704381604575005361644727140.html?mod=WSJ_hps_LEFTWhatsNews s
MediaNews Group to seek bankruptcy protection
The holding company of MediaNews Group Inc., the publisher of dozens of newspapers including the Denver Post and San Jose Mercury News, said Friday that it plans to seek bankruptcy protection, the latest in a string of troubled newspaper companies to seek refuge from creditors amid unsustainable debt loads.
The holding company, Affiliated Media Inc., said it reached an agreement with its lenders for a streamlined bankruptcy that will hand a majority of new stock to creditors, a group led by Bank of America Corp. The company's existing equity will be canceled, the holding company said.
MediaNews Chairman and Chief Executive William Dean Singleton and company president Joseph Lodovic IV will control the restructured company through a special class of stock.
http://online.wsj.com/article/SB10001424052748703657604575005813195786280.html?mod=WSJ_hps_sections_business
Why Investors Keep Fooling Themselves
A nationwide survey last year found that investors expect the U.S. stock market to return an annual average of 13.7% over the next 10 years.
Robert Veres, editor of the Inside Information financial-planning newsletter, recently asked his subscribers to estimate long-term future stock returns after inflation, expenses and taxes, what I call a "net-net-net" return. Several dozen leading financial advisers responded. Although some didn't subtract taxes, the average answer was 6%. A few went as high as 9%.
We all should be so lucky. Historically, inflation has eaten away three percentage points of return a year. Investment expenses and taxes each have cut returns by roughly one to two percentage points a year. All told, those costs reduce annual returns by five to seven points.
So, in order to earn 6% for clients after inflation, fees and taxes, these financial planners will somehow have to pick investments that generate 11% or 13% a year before costs. Where will they find such huge gains? Since 1926, according to Ibbotson Associates, U.S. stocks have earned an annual average of 9.8%. Their long-term, net-net-net return is under 4%.
http://online.wsj.com/article/SB10001424052748704381604575005291706758502.html?mod=WSJ_hps_sections_markets
Although Federal Reserve officials expect the economy to grow too slowly this year to bring the jobless rate down substantially, they are likely to conclude at their Jan. 26-27 meeting that there isn't much more they can do about it.
That means sticking to their stated plan to end purchases of mortgages at the end of March, roll back emergency lending programs in February and maintain the vow to keep interest rates exceptionally low for at least several more months.
http://online.wsj.com/article/SB10001424052748703657604575004961390797800.html?mod=WSJ_WSJ_US_News_5&mg=com-wsj
Paperwork Woes Plague Mortgage Plan
Thousands of homeowners participating in the Obama administration's foreclosure-prevention plan could miss a government deadline for completing necessary paperwork, putting them at risk of disqualification.
http://online.wsj.com/article/SB10001424052748703657604575005112496393670.html?mod=WSJ_hps_LEFTWhatsNew
Democrats plan tax to punish banks
WASHINGTON—Democrats' last-minute scramble to salvage the special U.S. Senate election in Massachusetts is offering the first test of a populist pitch that party strategists hope to take to other campaigns this year.
Central to the strategy is the new White House plan to tax big banks as punishment for their role in the financial crisis. President Barack Obama announced the proposal Thursday amid reports that financial institutions bailed out by the government are enjoying healthy profits and paying generous bonuses, and as a bipartisan commission began hearing testimony on banks' role in the economic crisis.
According to data released by the Treasury Department Friday, more than 900,000 borrowers have begun trial modifications under the program, but just 7% of them have received permanent changes so far.
http://online.wsj.com/article/SB10001424052748704381604575005361644727140.html?mod=WSJ_hps_LEFTWhatsNews s
MediaNews Group to seek bankruptcy protection
The holding company of MediaNews Group Inc., the publisher of dozens of newspapers including the Denver Post and San Jose Mercury News, said Friday that it plans to seek bankruptcy protection, the latest in a string of troubled newspaper companies to seek refuge from creditors amid unsustainable debt loads.
The holding company, Affiliated Media Inc., said it reached an agreement with its lenders for a streamlined bankruptcy that will hand a majority of new stock to creditors, a group led by Bank of America Corp. The company's existing equity will be canceled, the holding company said.
MediaNews Chairman and Chief Executive William Dean Singleton and company president Joseph Lodovic IV will control the restructured company through a special class of stock.
http://online.wsj.com/article/SB10001424052748703657604575005813195786280.html?mod=WSJ_hps_sections_business
Why Investors Keep Fooling Themselves
A nationwide survey last year found that investors expect the U.S. stock market to return an annual average of 13.7% over the next 10 years.
Robert Veres, editor of the Inside Information financial-planning newsletter, recently asked his subscribers to estimate long-term future stock returns after inflation, expenses and taxes, what I call a "net-net-net" return. Several dozen leading financial advisers responded. Although some didn't subtract taxes, the average answer was 6%. A few went as high as 9%.
We all should be so lucky. Historically, inflation has eaten away three percentage points of return a year. Investment expenses and taxes each have cut returns by roughly one to two percentage points a year. All told, those costs reduce annual returns by five to seven points.
So, in order to earn 6% for clients after inflation, fees and taxes, these financial planners will somehow have to pick investments that generate 11% or 13% a year before costs. Where will they find such huge gains? Since 1926, according to Ibbotson Associates, U.S. stocks have earned an annual average of 9.8%. Their long-term, net-net-net return is under 4%.
http://online.wsj.com/article/SB10001424052748704381604575005291706758502.html?mod=WSJ_hps_sections_markets
A Window Opens on Pay for Bosses
The New York Times - Is it possible that shareholders will finally get a reliable view of what the bosses are getting paid? And that it will come this spring? Yes.
There is no doubt that pay consultants are now looking for ways to keep that from being the case, and it would be a risky wager to say they will not succeed. But it appears that new disclosure rules that take effect with this year’s proxies will provide the most accurate view ever.
Anger over executive pay, particularly at banks, is high. That may have been one reason the Securities and Exchange Commission moved to improve the rules this year, but it was something that would have needed doing even if business leaders were widely deemed to be geniuses. Shareholders need good information, and the disclosures required by the S.E.C. before made the figures unnecessarily confusing.
There is still one area where companies could play games to make their bosses look less well paid than they really are. That is in the area of performance-based awards, where the payout will depend on how well the executive or the company performs relative to undisclosed goals. A company that wants to do so may be able to obscure just how likely a rich reward is for an executive.
http://www.nytimes.com/2010/01/15/business/15norris.html
Tuesday, January 12, 2010
Shares Edge Higher as Investors Await Earnings
The New York Times - As companies began releasing fourth-quarter results on Monday, the question on Wall Street was not so much whether businesses turned a profit but how they did so.
Investors are looking for signs that employers moved beyond heavy cost-cutting and established a steady stream of revenue in the last part of 2009. On Monday, traders seemed cautious about that prospect: stocks searched for direction for much of the day, but a late rally pushed most indexes into positive territory. Oil briefly touched a 15-month high and the dollar weakened.
Expectations for fourth-quarter results are high. Over the last year, many employers have slashed work forces and reined in spending to spruce up earnings. Now, investors are looking for substantial revenue growth and indications that global demand is picking up.
Wall Street, the Depression and the Lords of Finance
These six books — about financial history and how economics went astray — are informative and enjoyable.
What follows is my list of six for 2009, books that I found informative and enjoyable this year. Three of the books cover aspects of financial history, including one on the greatest capitalists ever and two on the era that led to the Great Depression. The other three deal with how economics went astray.
What follows is my list of six for 2009, books that I found informative and enjoyable this year. Three of the books cover aspects of financial history, including one on the greatest capitalists ever and two on the era that led to the Great Depression. The other three deal with how economics went astray.
Monday, January 11, 2010
The Fox News Architect
Bruce Headlam and Tim Arango on Roger Ailes, the head of Fox News whose success has placed him at the pinnacle of power in three corridors of American life: business, media and politics
A Fox Chief at the Pinnacle of Media and Politics
The New York Times - In the fall of 2008, Roger Ailes, the head of Fox News, went to his boss, Rupert Murdoch, with two complaints: he had heard that Mr. Murdoch was considering endorsing Barack Obama for president in The New York Post, and he had read a book excerpt in Vanity Fair suggesting that Mr. Murdoch was sometimes embarrassed by the right-leaning Fox News.
Mr. Ailes threatened to quit, a person familiar with the conversation said. Instead, Mr. Murdoch soon rewarded him with a new, more lucrative contract — he made $23 million last year in salary, bonuses and other compensation, more than Mr. Murdoch — and The New York Post endorsed John McCain.
In an interview in late December in his office at News Corporation headquarters in Midtown Manhattan, Mr. Ailes conceded that he had opposed an Obama endorsement. (“I didn’t think he had the experience,” he said, adding, “I don’t tell Rupert Murdoch who to endorse.”) He was outraged by the Vanity Fair article but said he “demanded nothing” and did not threaten to quit. He said he did not have to.
“If you’re making money and you’ve hit your targets for five years, you don’t need to demand a new contract,” he said.
Mr. Ailes is certainly making money. At a time when the broadcast networks are struggling with diminishing audiences and profits in news, he has built Fox News into the profit engine of the News Corporation. Fox News is believed to make more money than CNN, MSNBC and the evening newscasts of NBC, ABC and CBS combined. The division is on track to achieve $700 million in operating profit this year, according to analyst estimates that Mr. Ailes does not dispute.
http://www.nytimes.com/2010/01/10/business/media/10ailes.html
Mr. Ailes threatened to quit, a person familiar with the conversation said. Instead, Mr. Murdoch soon rewarded him with a new, more lucrative contract — he made $23 million last year in salary, bonuses and other compensation, more than Mr. Murdoch — and The New York Post endorsed John McCain.
In an interview in late December in his office at News Corporation headquarters in Midtown Manhattan, Mr. Ailes conceded that he had opposed an Obama endorsement. (“I didn’t think he had the experience,” he said, adding, “I don’t tell Rupert Murdoch who to endorse.”) He was outraged by the Vanity Fair article but said he “demanded nothing” and did not threaten to quit. He said he did not have to.
“If you’re making money and you’ve hit your targets for five years, you don’t need to demand a new contract,” he said.
Mr. Ailes is certainly making money. At a time when the broadcast networks are struggling with diminishing audiences and profits in news, he has built Fox News into the profit engine of the News Corporation. Fox News is believed to make more money than CNN, MSNBC and the evening newscasts of NBC, ABC and CBS combined. The division is on track to achieve $700 million in operating profit this year, according to analyst estimates that Mr. Ailes does not dispute.
http://www.nytimes.com/2010/01/10/business/media/10ailes.html
WSJ Top News - Monday, Jan 11, 2010
U.S. to Sell More Inflation Protected Bonds
The government on Monday is set to ramp up the sale of bonds that provide protection against inflation, known as TIPS, with its biggest offering in five years.TIPS, which account for less than 10% of the $7 trillion Treasury market, offer investors a way to hedge against inflation as their value rises along with the increase in consumer prices. The fixed returns on nominal Treasurys, in contrast, can be eroded over time by inflation, which especially affects long-term bonds.
http://online.wsj.com/article/SB10001424052748703535104574646680342322404.html?mod=WSJ_hps_LEFTWhatsNews
Banks Brace For Bonus Fury
Critics of Wall Street firms are grumbling that this year's bonuses are far too generous. But some recipients are none too happy, either: They're complaining too much of the payout is coming in stock instead of cash.
Banks and securities firms have told workers their bonuses will contain a bigger percentage of stock to demonstrate that Wall Street is sensitive to public anger over the big paychecks. The idea is that stock reduces employees' temptation to take too many financial risks, since they have an ownership stake.
http://online.wsj.com/article/SB126317064618124057.html?mod=WSJ_hps_LEFTWhatsNews
Crude Oil Surges to 15 Month High
LONDON -- Crude-oil futures extended their surge to 15-month highs Monday amid strong Chinese import data and a weaker dollar.In late morning trading, the front-month February Brent contract on London's ICE futures exchange was up $0.94 at $82.31 a barrel after earlier hitting a 15-month high at $82.45 a barrel.
http://online.wsj.com/article/SB10001424052748703652104574651902882333112.html?mod=WSJ_hps_MIDDLESecondNews
The government on Monday is set to ramp up the sale of bonds that provide protection against inflation, known as TIPS, with its biggest offering in five years.TIPS, which account for less than 10% of the $7 trillion Treasury market, offer investors a way to hedge against inflation as their value rises along with the increase in consumer prices. The fixed returns on nominal Treasurys, in contrast, can be eroded over time by inflation, which especially affects long-term bonds.
http://online.wsj.com/article/SB10001424052748703535104574646680342322404.html?mod=WSJ_hps_LEFTWhatsNews
Banks Brace For Bonus Fury
Critics of Wall Street firms are grumbling that this year's bonuses are far too generous. But some recipients are none too happy, either: They're complaining too much of the payout is coming in stock instead of cash.
Banks and securities firms have told workers their bonuses will contain a bigger percentage of stock to demonstrate that Wall Street is sensitive to public anger over the big paychecks. The idea is that stock reduces employees' temptation to take too many financial risks, since they have an ownership stake.
http://online.wsj.com/article/SB126317064618124057.html?mod=WSJ_hps_LEFTWhatsNews
Crude Oil Surges to 15 Month High
LONDON -- Crude-oil futures extended their surge to 15-month highs Monday amid strong Chinese import data and a weaker dollar.In late morning trading, the front-month February Brent contract on London's ICE futures exchange was up $0.94 at $82.31 a barrel after earlier hitting a 15-month high at $82.45 a barrel.
http://online.wsj.com/article/SB10001424052748703652104574651902882333112.html?mod=WSJ_hps_MIDDLESecondNews
Saturday, January 9, 2010
WSJ Top News - Fri-Saturday Jan 8-9 2010
WSJ Roundup
O'Brien May Jump To Rival Network
Comedian Conan O'Brien and his advisers were mulling career options Friday, including jumping to a rival television network, people familiar with the matter said, leaving the fate of NBC's late-night shake-up in limbo.
http://online.wsj.com/article/SB10001424052748703481004574646660133894126.html?mod=WSJ_hps_LEFTWhatsNews
California Seeks Billions From U.S.
SACRAMENTO, Calif. -- Republican Gov. Arnold Schwarzenegger asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help.
http://online.wsj.com/article/SB126297948893221947.html?mod=WSJ_hps_MIDDLEThirdNews
Economy Still Bleeding Jobs
Employers cut another 85,000 jobs last month, dashing hopes of a turnaround in employment, even as the U.S. economy grows. With December's losses, there were 7.2 million fewer jobs than in December 2007, when the recession began. Although the unemployment rate was unchanged at 10% from November, that's only because many workers stopped looking for work and weren't counted in the numbers. A broader measure of unemployment, including those who have quit job hunting as well as those working part time because they can't find full-time work, remained about the same at 17.3% in December from 17.2% in November.
Wages Still Under Pressure
Wages of U.S. employees are generally stagnant and likely to remain so as the pool of unemployed workers helps employers keep wages from rising even as productivity, or output per hour of work, soars.
http://online.wsj.com/article/SB126300214621122539.html?mod=article-outset-box
UPS Lifts Forecast, Still Cuts Jobs
United Parcel Service Inc. boosted its fourth-quarter profit projections by more than 15% Friday, signaling the economy is improving, but the package-delivery giant also announced 1,800 job cuts and said it still expects the recovery to be gradual.
http://online.wsj.com/article/SB10001424052748703481004574646103310976342.html?mod=WSJ_hps_LEFTWhatsNews
Big Deficits Cloud Britain's Future
BIRMINGHAM, England -- John Murray's electrical engineering firm here has made it through the recession thanks in part to work generated by local government contracts on projects like schools. Yet as the financial crisis winds down, Mr. Murray is "kept awake" by the idea that his prospects may get worse, not better.http://online.wsj.com/article/SB126291111336920699.html
O'Brien May Jump To Rival Network
Comedian Conan O'Brien and his advisers were mulling career options Friday, including jumping to a rival television network, people familiar with the matter said, leaving the fate of NBC's late-night shake-up in limbo.
http://online.wsj.com/article/SB10001424052748703481004574646660133894126.html?mod=WSJ_hps_LEFTWhatsNews
California Seeks Billions From U.S.
SACRAMENTO, Calif. -- Republican Gov. Arnold Schwarzenegger asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help.
http://online.wsj.com/article/SB126297948893221947.html?mod=WSJ_hps_MIDDLEThirdNews
Economy Still Bleeding Jobs
Employers cut another 85,000 jobs last month, dashing hopes of a turnaround in employment, even as the U.S. economy grows. With December's losses, there were 7.2 million fewer jobs than in December 2007, when the recession began. Although the unemployment rate was unchanged at 10% from November, that's only because many workers stopped looking for work and weren't counted in the numbers. A broader measure of unemployment, including those who have quit job hunting as well as those working part time because they can't find full-time work, remained about the same at 17.3% in December from 17.2% in November.
Wages Still Under Pressure
Wages of U.S. employees are generally stagnant and likely to remain so as the pool of unemployed workers helps employers keep wages from rising even as productivity, or output per hour of work, soars.
http://online.wsj.com/article/SB126300214621122539.html?mod=article-outset-box
UPS Lifts Forecast, Still Cuts Jobs
United Parcel Service Inc. boosted its fourth-quarter profit projections by more than 15% Friday, signaling the economy is improving, but the package-delivery giant also announced 1,800 job cuts and said it still expects the recovery to be gradual.
http://online.wsj.com/article/SB10001424052748703481004574646103310976342.html?mod=WSJ_hps_LEFTWhatsNews
Big Deficits Cloud Britain's Future
BIRMINGHAM, England -- John Murray's electrical engineering firm here has made it through the recession thanks in part to work generated by local government contracts on projects like schools. Yet as the financial crisis winds down, Mr. Murray is "kept awake" by the idea that his prospects may get worse, not better.http://online.wsj.com/article/SB126291111336920699.html
Wednesday, January 6, 2010
If Fed Missed This Bubble, Will It See a New One?
Ben Bernanke, the Fed chairman, has said it is difficult “to know in real time if an asset price is appropriate or not.”
Excellent piece by David Leonhardt, economics writer for the New York Times. - MT
The New York Times - If only we’d had more power, we could have kept the financial crisis from getting so bad.
That has been the position of Ben Bernanke, the Federal Reserve chairman, and other regulators. It explains why Mr. Bernanke and the Obama administration are pushing Congress to give the Fed more authority over financial firms.
So let’s consider what an empowered Fed might have done during the housing bubble, based on the words of the people who were running it.
In 2004, Alan Greenspan, then the chairman, said the rise in home values was “not enough in our judgment to raise major concerns.” In 2005, Mr. Bernanke — then a Bush administration official — said a housing bubble was “a pretty unlikely possibility.” As late as May 2007, he said that Fed officials “do not expect significant spillovers from the subprime market to the rest of the economy.”
The fact that Mr. Bernanke and other regulators still have not explained why they failed to recognize the last bubble is the weakest link in the Fed’s push for more power. It raises the question: Why should Congress, or anyone else, have faith that future Fed officials will recognize the next bubble?
http://www.nytimes.com/2010/01/06/business/economy/06leonhardt.html
WSJ Top News - Wednesday 1-6-10
Private-sector jobs in the U.S. fell by 84,000 in DecemberPrivate-sector jobs in the U.S. fell by 84,000 in December, the smallest drop since March 2008, and service providers added jobs, according to a national employment report published Wednesday by payroll company Automatic Data Processing Inc. and consultancy Macroeconomic Advisers.
http://online.wsj.com/article/SB126278421347117805.html?mod=WSJ_hps_LEFTWhatsNews
Buffet wades into Kraft-Cadbury Battle
Investor Warren Buffett waded into the rancorous battle for Cadbury PLC, issuing a rebuke of Kraft Foods Inc.'s just-sweetened, nearly $17 billion takeover offer for the British confectionary company.
http://online.wsj.com/article/SB10001424052748703580904574639440907695468.html?mod=WSJ_hps_LEFTWhatsNews
Retailers discounting down during holiday season
Clothing stores discounted less and sold fewer items last month than a year ago, a combination that undercut sales but likely will translate into higher fourth-quarter profits, according to figures released Tuesday.
Apparel and department stores remain among the weaker retailers, with sales well below pre-recession levels. December clothing sales fell 1.8% and department store sales fell 2.3%, both from the same month a year ago, according to MasterCard Inc.'s SpendingPulse unit.
http://online.wsj.com/article/SB10001424052748703436504574640611592478386.html?mod=WSJ_hps_LEFTWhatsNews
Economists warn that repairs to regulatory system are still needed
ATLANTA -- Wall Street investors may be breathing a sigh of relief as the financial crisis fades, but academic economists gathered here for the annual meeting of the American Economic Association say we're nowhere close to making sure it won't happen again. Over the past few days, economists here highlighted the many ways in which the lessons of the crisis have yet to sink in. Few think the U.S. and other governments have made needed repairs to the financial regulatory system. And some suggest governments' response has increased the chances of a repeat, making the banking system more crisis-prone, putting new strains on institutions such as the Federal Reserve and stretching government finances closer to the breaking point.
http://online.wsj.com/article/SB126274058881517243.html?mod=WSJ_hps_sections_news
New Google Nexus Unveiled
Mobile phones may be almost indispensable to modern life, but they are costly, too–far more than most people realize. These little gadgets pick your pocket while they sit in it, filching many thousands of dollars from you over the years. The Google Nexus, unveiled Tuesday, may mark a healthy step in a better direction.
Other people will focus on the phone's software, hardware, "apps" and the like. I'm more interested in something simpler: How it's sold–direct, unsubsidized and without a contract.
http://online.wsj.com/article/SB10001424052748703436504574640641358732198.html?mod=WSJ_hps_sections_personalfinance
Monday, January 4, 2010
Could Apple's Tablet be a Savior for Print Publications?
The New York Times - Later this month, we all might get a glimpse of that future. According to The Financial Times, Apple has rented a stage at the Yerba Buena Center for the Arts in San Francisco and is expected to make a major product announcement on Tuesday, Jan. 26, where many have speculated that some version of the Apple tablet will be unveiled. The Web site Gizmodo guessed that the device was likely to be called the iSlate, will cost around $800, and won’t hit store shelves until March or possibly April. (And it’s not just Apple: Word of a color tablet device called Courier from Microsoft made a big splash on the site as well, and a company called HTC reportedly has one in the works that uses the Google Chrome operating system. And there are others.)
The secretive Apple has made fools out of predictors in the past, but Kai-Fu Lee, the former head of Google in China, posted an item on his personal blog suggesting the Apple tablet would feature a 10.1-inch multitouch screen with three-dimensional graphics. And it’s worth pointing out that many publishers are building content in the belief that when it comes to the tablet, it’s not if, it’s when.
So, is the Apple tablet a figment of so much Web-borne pixie dust or is it the second coming of the iPhone, a so-called Jesus tablet that can do anything, including saving some embattled print providers from doom?
The secretive Apple has made fools out of predictors in the past, but Kai-Fu Lee, the former head of Google in China, posted an item on his personal blog suggesting the Apple tablet would feature a 10.1-inch multitouch screen with three-dimensional graphics. And it’s worth pointing out that many publishers are building content in the belief that when it comes to the tablet, it’s not if, it’s when.
So, is the Apple tablet a figment of so much Web-borne pixie dust or is it the second coming of the iPhone, a so-called Jesus tablet that can do anything, including saving some embattled print providers from doom?
Cinema Surpassed DVD Sales in 2009
The Wall Street Journal - Last year was the first since 2002 that U.S. consumers spent more money buying movie tickets than buying movies to watch at home, underscoring the changing economics of Hollywood.
According to new data from Adams Media Research, Americans spent $9.87 billion at the box office in 2009, 10% more than in 2008, according to a report Adams plans to release Tuesday. At the same time, sales in the U.S. of feature films on DVD, long a cornerstone of movie studios' business models, plunged 13% to $8.73 billion, including Blu-ray high-definition discs. (Other companies that track box-office receipts include Canada in their North American figures, adding about 7% to the total and pushing the year's gross above $10 billion.)
The figures indicate that studios will likely have to continue looking for ways to survive in a marketplace where they can't count on hefty home-entertainment revenue to offset giant production costs. Those costs often more than eat up the studios' half of the box-office receipts, which are split with theaters.
The ongoing decline in home-entertainment revenue has already fundamentally altered the way studios do business, forcing them to place big financial bets on hoped-for mass-market blockbusters at the expense of features that cost less to make but that also have smaller earnings potential.
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