United Airlines is to cut 100 planes from its fleet and lay off between 900 and 1,100 members of its staff. Source: BBC News | Business | World Edition | 4 Jun 2008 | 1:50 pm
Stocks struggled Wednesday morning as investors eyed falling oil prices, an upwardly revised reading on productivity and talk of more problems for Lehman Brothers.
Israeli stocks feel selling pressure as investors sell down Bank Hapoalim and Paz Oil. Indexes on the Tel Aviv Stock Exchange tracking the financial and real-estate sectors get hammered.
NEW YORK (Reuters) - Wall Street opened lower on Wednesday, as a further decline in shares of Lehman Brothers showed worries about the credit market persist.
Reuters - J.M. Smucker Co will acquire
Folgers, the largest U.S. coffee business, from Procter &
Gamble Co for stock valued at $2.95 billion, the
companies said on Wednesday.
CHICAGO (Reuters) - J.M. Smucker Co will acquire Folgers, the largest U.S. coffee business, from Procter & Gamble Co for stock valued at $2.95 billion, the companies said on Wednesday.
Reuters - A "credit recession" sparked by a
downturn in the U.S. housing market and excesses in structured
finance may last more than two years, and the financial sector
may undergo "massive consolidation," according to two leading
Wall Street strategists. Source: Yahoo! News: Business | 4 Jun 2008 | 1:31 pm
NEW YORK (Reuters) - A "credit recession" sparked by a downturn in the U.S. housing market and excesses in structured finance may last more than two years, and the financial sector may undergo "massive consolidation," according to two leading Wall Street strategists.
A sharp slump in house prices will hit UK growth and make the economy more vulnerable than others to the global credit crunch, the Organisation for Economic Cooperation and Development warned today. Source: Infocious RSS raw feed - channel BNPaperBusiness | 4 Jun 2008 | 1:31 pm
Companies in the U.S. private sector added 40,000 jobs in May, according to a sampling of payrolls administered by Automatic Data Processing. Data raise prospects for a better-than-anticipated reading for the nation's payrolls when the Labor Department reports data on Friday.
A sharp slump in house prices will hit UK growth and make the economy more vulnerable than others to the global credit crunch, the Organisation for Economic Cooperation and Development warned today. Source: Telegraph Business | 4 Jun 2008 | 1:31 pm
Reuters - UAL Corp , parent of United
Airlines, will slash its domestic capacity and its labor force,
following similar cuts by rivals, as the industry grapples with
soaring fuel costs and a weakening economy, the company said on
Wednesday.
CHICAGO (Reuters) - UAL Corp, parent of United Airlines, will slash its domestic capacity and its labor force, following similar cuts by rivals, as the industry grapples with soaring fuel costs and a weakening economy, the company said on Wednesday.
GCA Acquisition (AMEX:GGA) has received anti-trust clearance related to its proposed $1.3 billion purchase of merchant power generator Complete Energy. Complete Energy owns two natural-gas-fired combined-cycle power plants: the 1,022-megawatt La Paloma plant near Bakersfield, California, and the 837-megawatt Batesville, Mississippi plant. All of Batesville's capacity is committed under long-term contracts with J Aron & Company, a subsidiary of Goldman Sachs (NYSE:GS) and a Mississippi utility company. The Bakersfield plant has two tolling agreements for about half its capacity, with the remaining capacity sold on the California merchant power market. Following completion of the merger, investment funds managed by The...
Barack Obama's emergence as the presumptive Democratic nominee on Tuesday sets the stage for a sharp partisan debate over the issue weighing most heavily on voters: the economy.
NEW YORK (Reuters) - CBS Corp said on Wednesday it reached a deal to allow its Web videos to be carried by Yahoo Inc, part of a broader plan by the media company to add new outlets for its television shows.
United Airlines said Wednesday it will reduce its fleet by 100 planes by 2009 and will cut 1,400 to 1,600 jobs to stave off losses related to fuel costs.
Procter & Gamble Co. and J.M. Smucker Co. announce an agreement to merge P&G’s Folgers coffee business into Smucker through an all-stock transaction valued at about $3.3 billion.
NEW YORK (Reuters) - U.S. mortgage applications fell for a third consecutive week, reaching its lowest level in over six years as demand for home refinancing loans plunged, an industry group said on Wednesday.
United Airlines is cutting up to 1,600 jobs and removing older jets from its fleet as the No. 2 U.S. carrier moves to reduce costs in the face of a whopping $3 billion fuel bill and a slower economy.
NEW YORK (Reuters) - U.S. private-sector employers added 40,000 jobs in May, according to a private report on Wednesday by ADP Employer Services that defied Wall Street's expectations of a fall.
SEOUL (Reuters) - Lehman Brothers Holdings Inc is looking to raise capital overseas and has approached at least one investor in South Korea, the Wall Street Journal reported on Wednesday.
US stocks were set for a moderately lower start as investors mulled over the continuing woes of Lehman Brothers but index futures pared losses after a private employment report showed a surprise gain in May Source: FT.com - US homepage | 4 Jun 2008 | 1:05 pm
Revised government data show that productivity in the U.S. economy remained at a healthy level in the first quarter and that labor costs were contained.
U.S. stock futures pointed to a third day of losses on Wednesday ahead of a wave of economic data, with continued nervousness in the financial-services sector also dampening sentiment.
Stocks that are expected to move actively in trading on Wednesday include American Woodmark, Bank of America, Copart, Corporate Express, Guess, Novartis, E.W. Scripps, Sequenom, Staples and Yahoo.
Reuters - U.S. private-sector employers added
40,000 jobs in May, according to a private report on Wednesday
by ADP Employer Services that defied Wall Street's expectations
of a fall. Source: Yahoo! News: Business | 4 Jun 2008 | 12:43 pm
U.S. stock futures pointed to a third day of losses on Wednesday, with continued nervousness in the financial-services sector dampening sentiment, although a report pointing to surprising employment growth limited the fall.
Softbank, the aggressively-run mobile telecoms and internet conglomerate, will
become the first Japanese carrier to offer the Apple iPhone. Source: Latest Business News from Times Online | 4 Jun 2008 | 12:36 pm
U.S. stock futures pointed to a third day of losses on Wednesday ahead of a wave of economic data, with continued nervousness in the financial-services sector also dampening sentiment.
United Airlines said it would slash its domestic capacity, remove 100 planes from its fleet and cut up to 1,600 jobs as it grapples with soaring fuel costs and a weakening US economy Source: FT.com - US homepage | 4 Jun 2008 | 12:30 pm
Investors will have to wait a fortnight for a detailed update on trading from
HBOS, the owner of Halifax and Bank of Scotland. Source: Latest Business News from Times Online | 4 Jun 2008 | 12:27 pm
If US financial companies go shopping for more cash as the credit crisis drags on, Kuwait wants the world to know it has a big bank account. A good deal might just pull some of that capital in. Althougth Kuwait has not mentioned investing in Lehman (LEH), the investment bank better hope for some interest. Its stock is taking a pounding over the fact that it needs money and may not be able to raise it. For $17 billion, Kuwait can buy the whole company. But, Kuwait seems to want somewhat safer bets, although nothing looks safe right now. According...
TORONTO (Reuters) - Bombardier Inc , the world's top passenger train maker and No. 3 civil aircraft manufacturer, said on Wednesday that quarterly profit nearly tripled as aircraft deliveries rose, prompting it to reinstate its quarterly dividend.
The J. M. Smucker Company (NYSE: SJM) and The Procter & Gamble Company (NYSE: PG) Folgers unit have confirmed yesterday's reports that the two companies are going to merge. The Folgers coffee business was going to be spun-out of P&G already, and this will more quickly exact that transaction. Folgers will merge into The J. M. Smucker Company in an all-stock "reverse Morris Trust" transaction valued at approximately $3.3 billion. This number includes an estimated $350 million of Folgers debt. As part of this transaction, Smucker is going to issue a one-time special dividend of $5.00 per share to current...
The boss of Société Générale rogue trader Jérôme Kerviel said today that he
did not have the proper experience to suspect a possible fraud. Source: Latest Business News from Times Online | 4 Jun 2008 | 12:14 pm
Reuters - Lehman Brothers Holdings Inc is
looking to raise capital overseas and has approached at least
one investor in South Korea, the Wall Street Journal reported
on Wednesday.
RBC Capital Markets has issued a downgrade of the cellular and mobile tower sector this morning, which looks like it will weigh somewhat on the shares in the group. Its prior weighting was "Outperform" in the group, and these three stocks were lowered to a "Sector Perform" rating: American Tower (NYSE: AMT); stock indicated down over 1%. Crown Castle (NYSE: CCI); stock indicated down 1%. SBA Communications (NASDAQ: SBAC); stock indicated down almost 1%. Most of these stocks were very close to 52-week highs, so this is a group to watch in pre-market trading as we get closer to the...
Oil prices slid to a three-week low on Wednesday on expectations of falling global demand after India, the world's sixth largest oil and gas consumer, lowered its fuel subsidies.Nymex July West Texas fell... Source: Infocious RSS raw feed - channel BNPaperBusiness | 4 Jun 2008 | 12:02 pm
The credit-ratings agencies are many people's prime suspects for the credit crisis. The agencies put their stamp of approval on hundreds of billions of dollars worth of securities tied to mortgages, giving wildly optimistic assessments on debt whose underlying assets soon plunged in value.
A large part of the problem, as Jesse Eisinger detailed in August, is that the Big Three ratings agencies—Moody's, Standard & Poor's, and Fitch—have become a very profitable business, and their ties to the firms whose debt they are rating has not always been clear.
Andrew Cuomo, the New York attorney general, is taking a big step toward shaking up the way the ratings agencies do business, according to several reports today.
The agencies and the attorney general's office are near a settlement that would create greater disclosure over the fees the agencies receive.
Jenny Anderson and Vikas Bajaj of the New York Timessay the most important element of the agreement is the change to how the ratings agencies collect fees. The overhaul will "make it harder for investment banks to play the firms against one another to obtain a better rating," they say.
Aaron Lucchetti of the Wall Street Journalnotes that, "If a deal is reached, it could change the $5-billion-a-year bond-rating industry as fundamentally as Mr. Cuomo's predecessor Eliot Spitzer did six years ago with his settlement with Wall Street firms over stock-research analysts whose recommendations were compromised by investment-banking ties."
Lynn Turner, a former chief accountant for the Securities and Exchange Commission, told Bloomberg News that the changes would not eliminate the core conflict of interest.
"It aids transparency but it doesn't solve the problem, because the same people—the issuers—are paying for the services, as opposed to the old model where the investors paid for the services," he said. "The old model was a better model."
The old model, selling subscriptions to receive ratings, changed in the 1970s, and companies began paying to be rated.
So this is a business that could change again, but does anyone other than Cuomo have the will to force an overhaul?
The Financial Times last week suggested the creation of "an independent body to commission credit ratings using issuers' money" to resolve the conflict of interest and called on the agencies to adopt new labels after "triple-A" became something of a joke.
Reuters - Furnishings retailer Williams-Sonoma
Inc reported a 42 percent decline in quarterly profit
on Wednesday as the soft U.S. economy and weak housing market
hurt sales. Source: Yahoo! News: Business | 4 Jun 2008 | 11:56 am
ATLANTA (Reuters) - Furnishings retailer Williams-Sonoma Inc reported a 42 percent decline in quarterly profit on Wednesday as the soft U.S. economy and weak housing market hurt sales.
These are ten of the analyst calls we are focusing on this Wednesday morning in pre-market trading: Bristol-Myers (NYSE: BMY) cut to Neutral at Cowen. Marriott (NYSE: MAR) cut to Perform at Oppenheimer. Morgan Stanley (NYSE: MS) Raised to Outperform from Market Perform at Wachovia. NRG Energy (NYSE: NRG) Cut to Neutral at Credit Suisse. Omrix (NASDAQ: OMRI) Cut to Neutral from Buy at UBS. Synchronoss Tech (NASDAQ: SNCR) started as Buy at Brean Murray. Trimble Navigation (NASDAQ: TRMB) Cut to Neutral from Overweight at JP Morgan. Tyson Foods (NYSE: TSN) Raised to Outperform from Market Perform at Wachovia. Vail...
The OECD warns that the UK will not escape as a global economic slowdown becomes sharper and longer. Source: BBC News | Business | World Edition | 4 Jun 2008 | 11:47 am
The Italian prime minister, Silvio Berlusconi, softens his stance on Alitalia partnering with Air-France-KLM. Source: BBC News | Business | World Edition | 4 Jun 2008 | 11:37 am
The Financial Services Authority (FSA) is continuing its clampdown on illegal
investment schemes with an assault on the UK’s largest “landbanking” company
that it says cheated investors out of £69 million. Source: Latest Business News from Times Online | 4 Jun 2008 | 11:36 am
In the history of real estate there are a handful of legendary homebuilders - William Levitt, who created Levittown on Long Island, being one, and then there's Eli Broad, who became a billionaire building tract homes throughout the Midwest and Southern California.
Interest rates are expected to be left unchanged at 5pc for the second consecutive month tomorrow as the Bank of England's concerns over rising inflation pressures outweigh fears that the economy is slowing... Source: Infocious RSS raw feed - channel BNPaperBusiness | 4 Jun 2008 | 11:31 am
Interest rates are expected to be left unchanged at 5pc for the second consecutive month tomorrow as the Bank of England's concerns over rising inflation pressures outweigh fears that the economy is slowing rapidly. Source: Telegraph Business | 4 Jun 2008 | 11:31 am
Falling oil and metals prices dragged European shares lower on Wednesday, while the financial sector continued to be dogged by concerns over rights issues. At lunchtime, the FTSEurofirst 300 index fell... Source: Infocious RSS raw feed - channel BNPaperBusiness | 4 Jun 2008 | 11:31 am
Britain’s services sector shrank for the first time in more than five years
last month while services companies cut jobs sharply, a key survey of
conditions showed today. Source: Latest Business News from Times Online | 4 Jun 2008 | 11:29 am
European equities fell sharply Wednesday, mirroring a poor overnight US showing, as energy and mining firms were hammered by weakening oil and metals prices, while banks continued to suffer Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 11:17 am
Orange is cutting 450 back office jobs, opening more shops and reducing its reliance on Indian call centres in a shake up by its new UK chief executive Tom Alexander. Source: Telegraph Business | 4 Jun 2008 | 11:15 am
Orange is cutting 450 back office jobs, opening more shops and reducing its reliance on Indian call centres in a shake up by its new UK chief executive Tom Alexander. Source: Infocious RSS raw feed - channel BNPaperBusiness | 4 Jun 2008 | 11:15 am
Mushers wanting to run the world's best known sled dog race will have to pay a lot more for a shot at a severely slashed guaranteed purse. Also starting in 2009, the Iditarod Trail Sled Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 11:08 am
Tony Pearson can always tell when times are good in the New Mexico oil patch. It's all in the quality of goods passing through his pawn shop. "When people bring in their good stuff, you Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 11:08 am
Leaders gathered at a summit on the world's food crisis quickly laid out their disagreements on a key issue: how much the rush for environmentally friendly biofuels is contributing to... Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 11:08 am
United Airlines plans to ground dozens of its least fuel-efficient aircraft in an effort to conserve cash and cope with spiraling fuel prices, according to published reports. The... Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 11:07 am
The dollar climbed further against the euro on Wednesday as dealers continued to digest comments from Federal Reserve Chairman Ben Bernanke, who said that a weak US currency added to... Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 11:04 am
India raises prices of petroleum products amid fears of inflation ahead of elections next year. Source: BBC News | Business | World Edition | 4 Jun 2008 | 11:03 am
Inflation in the eurozone this year will surge to its highest level since the creation of the euro in 1999, with economic growth also set to drop amid high oil and food prices, the OECD... Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 11:02 am
London stocks fell sharply on Wednesday as sentiment in the financial sector turned sour while housebuilders were downgraded and energy stocks slid on weakening oil prices.By midday, the FTSE 100 had extended... Source: Infocious RSS raw feed - channel BNPaperBusiness | 4 Jun 2008 | 10:56 am
U.S. stocks headed for a lower open Wednesday ahead of a reading on the service sector and as investors remained worried that Lehman Brothers Holdings Inc. will need to raise capital... Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 10:52 am
The boss of Northumbrian Water warns that it will be a "challenge" to keep water bill rises below inflation. Source: BBC News | Business | World Edition | 4 Jun 2008 | 10:49 am
Reserve Chairman Ben Bernanke signaled that inflation had become a more prominent concern. By midday in Europe, light, sweet crude for July delivery was down 52 cents at $123.79 a... Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 10:37 am
The U.S. dollar was mixed against other major currencies in European trading Wednesday morning. Gold fell. The euro traded at $1.5465, down from $1.5470 late Tuesday in New York. ... Source: Infocious RSS raw feed - channel BNewsBusiness | 4 Jun 2008 | 10:23 am
Shares in Uniqlo owner Fast Retailing hit a five-year high after reports it was set for bumper annual profits. Source: BBC News | Business | World Edition | 4 Jun 2008 | 10:21 am
Sony's (SNE) PS3 has not sold as well as the Microsoft (MSFT) Xbox 360 or Nintendo Wii. But, the Japanese company has dropped prices and more games are coming out to add to the library of products which will work on the platform. Sony has come along with the brilliant idea of serving advertising over the internet to customers who have bought a PS3. In other words, people get to pay $500 for the console and $70 for a video game so that they can watch ads to make Sony rich. According to The Wall Street Journal, a new partnership...
Sterling suffered on Wednesday after a survey suggested the UK services sector had gone into contraction for the first time in five years in May. Figures showed the UK services purchasing managers' index... Source: Infocious RSS raw feed - channel BNPaperBusiness | 4 Jun 2008 | 10:11 am
Motorola (MOT) may be close to finding a new CEO for its handset division. It is his job to do what two generations of management before him could not. He is being asked to reverse the slide in sales of the cellphones that Motorola makes. His job will be harder than those of his predecessors. The company's market share of global handset is down to 10% from 22% two years ago. Competition is worse as Nokia (NOK), Apple (AAPL) and others kick MOT while it is down. It does not do anything to disparage garbage haulers to say that one...
Britons' confidence in the economy has hit a new low, with almost half convinced the outlook for their finances and their job will deteriorate over the next six months. Source: Infocious RSS raw feed - channel BNPaperBusiness | 4 Jun 2008 | 10:00 am
Britons' confidence in the economy has hit a new low, with almost half convinced the outlook for their finances and their job will deteriorate over the next six months. Source: Telegraph Business | 4 Jun 2008 | 10:00 am
Britain's big seven housebuilders saw more than £300 million wiped from their
combined market value in early morning trading today as UBS slashed its
targets across the sector, bringing to £13.5 billion the total value erased
from the big builders in the past year. Source: Latest Business News from Times Online | 4 Jun 2008 | 9:52 am
India and China are starting to get the message that they cannot buy oil cheap and sell by-products like gas and diesel low. When the deficits start to hit hundreds of billion of dollars, the action is a little harder to swallow China has already started to back off of the practice of supplying more and more capital to support state-controlled oil operations like PetroChina (PTR) and China Petroleum (SNP). Now, India is matching that. According to MarketWatch, "The latest moves are expected to ease the losses at state-controlled oil-refining and marketing firms like Indian Oil Corp." The fact that...
The chief executive of Kingfisher said today that there was "no single magic bullet" to turnaround Britain's biggest do-it-yourself retail group, as a new survey showed that consumer confidence in the... Source: Infocious RSS raw feed - channel BNPaperBusiness | 4 Jun 2008 | 9:40 am
The chief executive of Kingfisher said today that there was "no single magic bullet" to turnaround Britain's biggest do-it-yourself retail group, as a new survey showed that consumer confidence in the UK has hit a new low. Source: Telegraph Business | 4 Jun 2008 | 9:40 am
AMD (AMD) is about to launch it new chip for laptops. It will be helpful to consumers who want extra-special graphics and should help save battery power. AMD's share of the laptop market is now around 14%. That has been falling. AMD's chipset is unlikely to change that. Investors don't think much of the company's prospects. Its stock is off about 75% over the last two years, and its still sports $5 billion in debt, mostly from is disastrous takeover of ATI. The new product melds together several features that AMD hopes will make it a tool for resurrecting the...
Employment prospects are finally moving in the direction that the events of the last six to nine months would have led us to expect. Hiring in May was the lowest for five years as companies start to draw in their horns and batten down the hatches for a possible sharp slump on the high street. Source: Telegraph Business | 4 Jun 2008 | 9:25 am
Apple (AAPL) still has not penetrated on of the world's largest cellphone markets--Japan. Now that is changing as one of the largest cellular carriers there, Softbank, will begin to market the phone. The move should help Apple surpass its iPhone sales goals, especially when it puts out its new 3G model. Japan is set up to run most phones on these ultra-fast networks. Softbank probably paid dearly for the deal, most likely by giving Apple a big cut of the service fees that the cellular company will charge iPhone users on their calling plans. According to the AP, "Tokyo-based Softbank...
Advanced economies have survived a "near-perfect storm" in financial markets remarkably well, the OECD said, predicting recoveries in the US and European economies next year without inflation taking root. Source: FT.com - US homepage | 4 Jun 2008 | 8:28 am
A free share dealing service is being offered by HBOS as part of the bank group's impending £4bn rights issue. Source: BBC News | Business | World Edition | 4 Jun 2008 | 8:18 am
Mortgage lender HBOS said it will seek investor approval for its £4bn rights issue on June 26 and trading in its nil-paid shares will start the next day. Source: Telegraph Business | 4 Jun 2008 | 8:05 am
Barack Obama won the epic Democratic presidential race as party leaders unified behind his bid to become America's first black president Source: FT.com - US homepage | 4 Jun 2008 | 7:49 am
Kingfisher, Europe's biggest home improvements retailer, beat forecasts with an 8.9pc rise in first-quarter profit on Wednesday, but said trading was tough and cut its full-year sales growth forecasts. Source: Telegraph Business | 4 Jun 2008 | 7:20 am
Untapped North Sea oil reserves far exceed industry estimates at around 30
billion barrels of oil, according to geological experts. Source: Latest Business News from Times Online | 4 Jun 2008 | 7:17 am
Kingfisher, the owner of DIY group B&Q, beat forecasts with an 8.9 per
cent increase in first-quarter pre-tax profit despite wet weather and the
earliest Easter since 1913. But Europe's biggest home improvements retailer
cut its predictions of sales growth and said that it expected a challenging
year. Source: Latest Business News from Times Online | 4 Jun 2008 | 6:46 am
Some investors in Geneva Finance have wasted little time deciding what to do with their first payout from the troubled company - put it straight back in again.
Geneva has emerged from its moratorium to make its first payout of... Source: New Zealand Herald - Business | 4 Jun 2008 | 4:00 am
In science, as in most things, you usually get what you pay for. Money doesn't always mean you get the best. Just ask the New York Yankees so far this season.
But when a nation has been the world leader at something as vital as, say, medical research and regulation, and annual funding is flat or declining when it used to go up, then money may matter.
The stakes for America were spelled out in a panel discussion held at the first-ever World Science Foundation last weekend in New York.
"I think there's a loss of American power and prestige that came about as a result of our anti-science policies," biologist David Baltimore, a Nobel laureate and the chairman of the American Association for the Advancement of Science, said.
Harold Varmus, another Nobel laureate and the president of Memorial Sloan-Kettering Cancer Center in New York, decried the lack of attention being paid to advancing science even in the current presidential campaign. "The campaign so far has given too little attention to what science means for our own economy and our status in the world," he said.
This comes as reports and recommendations have been piling up describing the slowdown in research grants and projects at the National Institutes of Health since budgets began a decline in 2004.
The American Association for the Advancement of Science concluded last spring that five years of shrinking budgets have led to an institute that is "falling further and further behind the increasing challenges and costs of biomedical research."
Last week, the Senate voted to add $400 million tacked onto President Bush's 2009 budget. That is less than the $600 million Congress added to the budget in 2007 and 2008, but better than the zero percent increase asked for by the president.
Even more acute is the situation at the Food and Drug Administration, where a report from an advisory panel described an agency in such desperate need for funding that it is in a state of near dysfunction.
The report, issued by the agency's Subcommittee on Science and Technology in January, said that the F.D.A. "cannot fulfill its mission" in part "because its scientific workforce does not have sufficient capacity and capability."
The culprit, the panel concluded, was a lack of funding and resources for an agency that oversees virtually all food and drugs American's consume. F.D.A. regulates $1 trillion of the nation's economy with a budget of $2.27 billion in 2008—about $7.50 for every American. (See my column, "F.D.A. on the Brink?.")
Yet the president's budget provided only a minuscule increase in the budget of the Food and Drug Administration, up $50.7 million to a total of $2.4 billion. (This includes user fees paid by drug companies asking the F.D.A. to approve new drugs.) This anemic increase does not even cover salary increases, and is also supposed to pay for several hundred new inspectors and other personnel.
The situation is so dire that a few days ago Food and Drug Administration Commissioner Andrew von Eschenbach—a political appointee who serves at the pleasure of the president—appealed to Congress to raise his agency's budget $275 million above what his boss asked for.
Earlier, von Eschenbach faced a maelstrom of criticism of the administration's meager budget increase. He sent the request and detailed plan for spending it to Senator Arlen Specter, the Pennsylvania Republican who had asked von Eschenbach provide him with this information "to protect the public health."
According to the New York Times, Specter added in a handwritten note in the letter's margins: "Andy, I know the situation is extreme. I want to get you financial help now."
The Senate responded with a rather paltry increase of about $72 million for the F.D.A. Again, that's better than nothing, though the January report and others have called for much steeper increases, along with major reforms in how the agency is organized and how it works.
In a demonstration of how tough it is to get science funded in the Bush II era, Senate leaders tucked both budget increases into a $156 billion war and veterans' appropriations bill. That measure passed the Senate by a wide enough margin to override a threatened veto from the president. The House didn't include the raise in its version of the bill, but is expected to agree to the increase in conference.
Merely spending money, however, will not restore the waning prestige and power of American science, as articulated by Baltimore and Varmus. Nor will it insure that the life sciences in America will continue to produce breakthroughs and treatments that have benefited millions of people.
In February, with oil prices hovering at just above $90 a barrel, JetBlue Airways announced plans to start four daily flights from the Northeast to Los Angeles. In a matter of weeks, crude prices shot up 30 percent, and in a quick reversal, JetBlue was forced to abandon its plans.
"It cost us $9,600 in fuel to fly from the L.A. area to the Northeast when we announced those flights. Two months later that went up to $15,000," says JetBlue spokesman Bryan Baldwin. "Those are huge cost increases."
THE NEW OIL SHOCK
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The rise in energy prices has been unwelcome in many industries-automakers and retailers have reported softer sales as consumers spend more at the pump. But fuel accounts for a huge portion of airlines' cost structures. And the swiftness of the recent surge in oil prices left them particularly vulnerable as a result.
Through the 1990s, with oil prices at $20 per barrel, fuel expenses made up between 10 and 20 percent of airlines' operating costs. As of the first quarter, with oil prices at over $100 per barrel, most airlines reported fuel costs of between 30 and 40 percent of total expenses—exceeding the amount spent on labor.
So what can an industry projected to lose more than $7 billion this year—about the combined market capitalization of the six legacy carriers—do to survive?
"One of the puzzles of the industry is why haven't airlines been able to pass on higher costs to passengers," says Nancy Rose, an M.I.T. economist who has studied airlines.
While airlines have announced plans to cut unprofitable flights and increased or introduced ancillary charges, they have only recently begun to raise ticket prices.
Competition from low-cost carriers and bankruptcy protection for legacy airlines may be the culprit here, says Rose's colleague Peter Belobaba, who runs M.I.T.'s Global Airline Industry Program. Legacy carriers were able to compete with thriftier airlines in recent years thanks to bankruptcy protection, which helped Delta, United, and others slim down and pare debts.
But this left the marketplace "terribly spoiled over the past five years by what are, by any measure, unreasonably low airfares," Belobaba says. In order to get back some pricing power and offset higher fuel prices, analysts expect more airlines to merge. After deregulation, the first major M&A dance of the airline industry reduced the number of regional and national carriers by roughly half to 13 by 2001. But after Delta and Northwest announced that they would combine forces last month, other airlines have been slow to follow.
Besides merging, airlines also need to cut down on capacity and dump less fuel-efficient planes to keep energy expenditures in check, experts say. American Airlines recently announced that it would fly 12 percent fewer seats in the fourth quarter. And some destinations will feel the cutbacks. Traffic at Pittsburgh airports, for example, has declined 25 percent as of February compared with a year ago.
That may sound like a lot, but it's close to the level analysts believe airlines need to pare unprofitable flights back by in order to stop the bleeding. Flight delays can also eat away at revenues. In 2007, delayed flights cost airlines an extra $19 billion in extra fuel, crew, and maintenance costs, according to a report by the Joint Economic Committee.
One more option for airlines is to hedge against rising fuel prices.Southwest Airlines, the only major airline to actively protect itself against higher oil costs, has been able to increase its cash levels to more than $3 billion thanks to its hedges. In addition, the Dallas-based low-cost airline has hedged 70 percent of its 2008 fuel consumption at about $50 per barrel.
Buying protection still makes sense if airlines believe crude will go even higher, says Robert Mann, an industry consultant. The problem for airlines, however, is that they're unprofitable at current prices, so unless costs are reduced or revenues raised, hedges will diminish the pain but not heal it.
Southwest's cash hoard makes it the best-positioned airline to survive the worst of the oil crunch, estimates Morningstar. Indeed, some have even suggested that Southwest may be the only American airline to survive the current fuel crunch.
Still, a combined Delta and Northwest are also on the relatively healthy list, as is Continental. At the other end of the spectrum, the airlines most likely to need bankruptcy protection are American Airlines, JetBlue, and US Airways.
But not everyone thinks the industry will get crushed. Roger King, an airlines analyst with CreditSights, points to the relative resistance of drivers to higher gas prices as a sign that demand may not wane as much as feared when ticket prices do head north. Average gasoline prices have jumped 70 percent since January 2007, and although consumers are cutting back on car usage, the number of miles driven is still up 7 percent.
King estimates that at $117 per barrel, airlines would have to increase fares by only 14 percent on average over 2007 levels in order to break even.
"That doesn't seem like a lot," he says. "I think the airlines are just an industry that everyone likes to bitch about."
International dairy prices dropped last month but several of New Zealand's other key commodities took up the slack, pushing a monthly commodity price gauge to a new record level.
The ANZ Commodity Price Index rose 1 per cent to... Source: New Zealand Herald - Business | 4 Jun 2008 | 3:30 am
Brokers selling life and health insurance are earning excessive commissions and ultimately the consumer is paying for it in higher premiums.
This is the view of Grant Samuel in its analysis of insurer Tower in the midst of Guinness... Source: New Zealand Herald - Business | 4 Jun 2008 | 3:00 am
The country's largest electricity and gas distributor, Vector, said today it remained comfortable with analysts' predictions of full year profit from $150-165 million.
Vector said it expected June year earnings before interest,... Source: New Zealand Herald - Business | 4 Jun 2008 | 2:30 am
SAN FRANCISCO - An internet analyst for a major Wall Street firm argues in a new report that Google and Amazon.com will be long-term winners, while Yahoo and IAC InterActiveCorp fall by the wayside and eBay becomes a merger... Source: New Zealand Herald - Business | 4 Jun 2008 | 2:00 am
US investment bank Lehman Brothers denies rumours it is facing funding problems, but its shares fall by 10%. Source: BBC News | Business | World Edition | 3 Jun 2008 | 11:55 pm
The sharemarket has firmed today,after yesterday taking its biggest tumble of 2008 amid renewed concerns in world credit markets.
The benchmark NZSX-50 index, which yesterday lost 84.172 points or 2.3 per cent, is now at 3563,... Source: New Zealand Herald - Business | 3 Jun 2008 | 11:30 pm
Lower house prices should let many more young people buy a home for the first time, a report says. Source: BBC News | Business | World Edition | 3 Jun 2008 | 11:08 pm
Lehman Brothers lost $500m-$700m on certain hedging positions in the second quarter, contributing to what is expected to be a larger-than-anticipated loss that may lead the bank to raise more capital by selling a stake to an outside investor Source: FT.com - US homepage | 3 Jun 2008 | 11:04 pm
The dollar rose sharply on foreign exchanges yesterday after Ben Bernanke, the
Chairman of the US Federal Reserve, issued a ground-breaking warning over
the currency's slide in an apparent attempt to halt its decline. Source: Latest Business News from Times Online | 3 Jun 2008 | 11:00 pm
Michael O'Leary, the chief executive of Ryanair, has welcomed high oil prices,
claiming that it will drive “crappy competitors” out of business. Source: Latest Business News from Times Online | 3 Jun 2008 | 11:00 pm
The big rating agencies have agreed to change the way they charge for credit ratings in the mortgage-backed securities market to prevent "ratings shopping", where only the highest ratings on a deal are selected and paid for Source: FT.com - US homepage | 3 Jun 2008 | 11:00 pm
Legendary corporate raider Carl Icahn said he's "amazed" at Yahoo boss Jerry Yang's scorched-earth plans to fight off Microsoft and wants to oust the Web giant's C.E.O. from the corner office.
Yesterday, a Delaware state judge unsealed documents in a class action lawsuit against Yahoo, which outlined Yang's planned defense of his embattled company. Now Icahn has ratcheted up his rhetoric, telling the Wall Street Journalthat if his proxy bid is successful, Yang is history.
"I'm very cynical about many of the boards and C.E.O.'s in this country, but even I am amazed at the lengths that Jerry Yang and the board went to to entrench themselves in this situation," Icahn told the paper.
Among other tactics, Yang was set to encourage all 14,000 Yahoo employees to quit if Microsoft succeeded, and he failed to notify them of Microsoft's $1.5 billion bonus package designed to encourage employees to stick around if the offer stuck.
In the wake of their release, Icahn unloaded on Yang.
"It's no longer a mystery to me why Microsoft's offer isn't around," Icahn said. "How can Yahoo keep saying they're willing to negotiate and sell the company on the one hand, while at the same time they're completely sabotaging the process without telling anyone."
Yang, as a member of Yahoo's board, would lose his seat if Icahn wins, but this is the first time the raider has said Yang will be out as chief executive, as well. Although it's hard to imagine that Icahn, if successful, would have allowed Yang to stick around, the financier's increasingly hostile rhetoric appears designed to turn up the pressure on Yahoo's embattled chief.
Adding to Icahn's anger may be the revelation, also contained in the unsealed documents, that Yahoo executives dismissed a search-advertising pact with Google on antitrust grounds just one day before Microsoft made its takeover bid.
"Short-term analysis of the revenue potential of outsourcing monetization [to Google] may not take into account the longer-term impact on the competitive market if search becomes an effective monopoly," an excerpt from a Yahoo document said.
In the weeks following Microsoft's bid, however, Yahoo held out a search-ad pact with Google as an alternative despite the company's earlier concerns, which it never made public.
Disgruntled Blue Chip investors are gathering for a rally in Hamilton tomorrow, as the nation's lawyers announce they too will be offering free advice for victims of the collapse.
Lobby group Exposing Unethical Financial Activities... Source: New Zealand Herald - Business | 3 Jun 2008 | 9:00 pm
Wall Street fell for a second straight day today, as investors grew more worried that the financial sector is still suffering badly from the credit crisis. The Dow Jones industrials dropped more than 100 points, bringing their two-day... Source: New Zealand Herald - Business | 3 Jun 2008 | 8:40 pm
The global airline industry is set to turn to a loss this year, possibly as high as US$6.1 billion, as carriers struggle with sky-high fuel prices, the International Air Transport Association (IATA) said yesterday.
"The situation... Source: New Zealand Herald - Business | 3 Jun 2008 | 8:30 pm
America's Cup skipper Dean Barker has taken up a significant shareholding in Auckland marine products company Kiwi Yachting Consultants.
Barker, son of retail chain millionaire Ray Barker of menswear company Barkers, approached... Source: New Zealand Herald - Business | 3 Jun 2008 | 8:00 pm
European companies suffered a bigger fall in first-quarter profits than their US counterparts in a striking contrast to the underlying performance of their home economies Source: FT.com - US homepage | 3 Jun 2008 | 7:03 pm
Hummer, the gas-guzzling American SUV favoured by celebrities, could be put up for sale by General Motors as part of a strategic review Source: FT.com - US homepage | 3 Jun 2008 | 6:36 pm
The dollar surged while oil and gold tumbled after Ben Bernanke surprised markets by making clear the Federal Reserve does not want the US currency to weaken any further because of the risks to inflation Source: FT.com - US homepage | 3 Jun 2008 | 6:05 pm
Lehman Brothers may be reporting its first quarterly loss and could seek billions to shore up its books. John Dimsdale looks at what that news could mean for the struggling financial sector. Source: Marketplace | 3 Jun 2008 | 5:58 pm
Make room for science at the dinner table. One San Diego company is grabbing its share of the multibillion-dollar flavor market. Janet Babin visits and takes us on the search for the perfect taste. Source: Marketplace | 3 Jun 2008 | 5:22 pm
From electric cars to no cars at all, from prices on the highway to the price at the airport, energy costs are on your mind. Host Kai Ryssdal has the energy to read your thoughts on our recent coverage. Source: Marketplace | 3 Jun 2008 | 5:22 pm
Since its 2006 opening, millions of Chinese have ridden the Qinghai-Tibet railway into Tibet. Host Kai Ryssdal talks with author Abrahm Lustgarten about the financial and cultural impact of the influx of outsiders on Tibet. Source: Marketplace | 3 Jun 2008 | 5:22 pm
The stage is set in China for the Olympic Games, but with so many companies looking for a slice of the world's attention, it's increasingly difficult to tell who's a sponsor and who's an impostor. Scott Tong reports. Source: Marketplace | 3 Jun 2008 | 5:22 pm
New York's cigarette tax moved up to $2.75 per pack today, a move officials hope will drive as many as 140,000 smokers to quit. Jill Barshay gets some smokers' reactions. Source: Marketplace | 3 Jun 2008 | 5:22 pm
The prognosis appears good for Massachusetts' health insurance mandate. A new report concludes the state is meeting its goal of reducing the number of uninsured citizens. Sarah Gardner reports. Source: Marketplace | 3 Jun 2008 | 5:22 pm
General Motors plans to close four of its North American truck and SUV plants and direct more attention to small cars and hybrids. Nancy Marshall Genzer reports on the dramatic shift. Source: Marketplace | 3 Jun 2008 | 5:22 pm
Wine may get better with age, but airplanes don't. And that's a problem for US carriers, which operate some of the oldest fleets in the world. Younger planes are more fuel efficient, which puts US-based airlines at a huge disadvantage when compared with foreign competitors.
There's no getting around the fact that the the fleets of US airlines are on the old side. On average, American Airlines' planes have seen 15 years in the sky, United's 14, and Northwest's 11. Post 9/11, US airlines had their hands full just trying to stay in business, but when they finally emerged from that downturn, they called in orders for hundreds of new jets. Continental and Northwest lined up for Boeing's sleek and green new 787. US Airways shopped for shiny new Airbus widebodies to fuel its international expansion, and American was said to be mulling a replacement for it's rapidly aging MD80 single aisle fleet.
But high fuel prices and the resulting capacity cuts have put many of these plans into question. JetBlue and Airtran have deferred delivery of new planes, and an Airbus executive admitted that the company is expecting more. When an airline like American cuts its schedule by over 10 percent and and sends 85 planes to that big parking lot in the sky, you've got to think that fleet renewal falls off the top of its to-do list.
In the meantime, foreign airlines are ordering up a storm. Air France is waiting on 14 A380 superjumbos, 18 777s, and 20 A320s, while Dubai-based Emirates has a stunning 242 planes on order. Aircraft renewal yields younger fleets: Air France's planes have an average age of 8.8 years, and Emirates' a downright youthful 6.2 years old.
Is this really such a big deal? Absolutely. The Department of Transportation estimates that the Boeing 767, a plane that began service in 1982, burns an average of $17.85 per passenger per hour, while a newer A330 burns $15.72. The newer the fleet, the lower the fuel bill. The lower the fuel bill, the lower the total cost of operations.
One myth that needs to be debunked, though, is that aging planes are less safe. Even with its older fleets and recent high-profile events like the grounding of American's MD80s, the US industry has an excellent safety record.
But even that comes with a price. Because their planes are older, US airlines often find themselves spending more on parts and maintenance.
Lehman Brothers is probably going to need to raise more capital. The hedges against its declining assets aren't working. It will have greater write-downs to report. Later this month, it will post its first loss since it went public in 1994.
None of this should be a surprise to anyone who has been following Lehman's story in recent weeks, but the Wall Street Journal's reminder of these facts this morning stoked the fires in the Lehman short-seller pits.
Ever since Bear Stearns' abrupt and shocking collapse in March, some investors have been calling Lehman the next Bear. They've raised questions about Lehman's asset valuations, and about discrepancies in its financial disclosures. And all the while, Lehman has been trying, and failing, to quiet those voices.
But while it's certainly true that Lehman has its problems, it's unlikely that anyone betting on Lehman stock falling into the Bear Stearns $2 territory are going to hit the jackpot.
This is not to say that its shares don't still have further to fall, or that Lehman will necessarily emerge from this credit crisis as an independent company. Rather, this is to say that Lehman's fate won't be another fire sale like Bear.
Lehman chief executive Richard Fuld and chief financial officer Erin Callan have the daunting task later this month of reporting disappointing numbers while trying to quell rumors of the company's demise. The transparency tactic they took when reporting last quarter's results, which included a promise to answer any and all questions about its balance sheet as well as greater disclosure about its valuation calculations, may not be enough to satisfy its critics this time around.
For starters, Lehman's pledge for transparency backfired when the hedge fund investor (and Lehman short-seller) David Einhorn raised a series of questions about Lehman's disclosures. Lehman chose not to file regulatory disclosures highlighting the changes it made to its Level 3 assets, which are closely watched because they are nearly impossible to value. In response to press inquiries about these discrepancies, Lehman chose not to comment on the record, which only clouded its transparent facade.
But Bernstein Research analyst Brad Hintz, who also happens to have been Lehman's chief financial officer during the 1990s, effectively did Lehman's job for it in a research note published yesterday. He came to Callan's defense with painstakingly detailed rebuttals of each of Einhorn's criticisms.
While Hintz defends Lehman's reporting last quarter, he does not present a bullish case for Lehman. It needs to improve its leverage ratios, slow its asset growth, and further reduce its exposure to the toxic asset classes. Indeed, the worst is not behind Lehman, as Fuld prematurely proclaimed it was earlier this year.
But despite its need to raise more capital, Lehman's liquidity position is much stronger than Bear's was. It has access to the Federal Reserve, which Bear did not. Moreover, market participants other than hedge funds shorting Lehman stock have every reason to help avoid another Bear Stearns debacle. The Fed certainly doesn't want a repeat—it threw Bear under the bus to set an example and avoid further catastrophes. Global banks that are trading partners with Lehman don't want to suffer the consequences that another implosion would bring. And if Lehman has any shrewdness at all, it has been out there aggressively allaying its customer fears since March in the hopes of avoiding a run on the bank like the one that blindsided Bear.
These players want Lehman to survive not only for themselves, but for Lehman. Lehman has an important asset that Bear didn't: Street cred. We may never know how much Bear's checkered history as a Wall Street pirate contributed to its demise, but it's one detriment that Lehman doesn't have to worry about.
Changes are certainly in store at Lehman. It has an alarming amount of illiquid assets on its books for a firm its size. It continues to generate justifiable debate about its numbers even as it broadcasts its transparency. Management changes, capital raises, and potential buyouts are all possibilities.
But a Bear-like debacle? We wouldn't bet two bucks on it.
The largest US builder of luxury homes and apartments called for greater government action to help boost demand for homes as it reported its third consecutive quarterly loss Source: FT.com - US homepage | 3 Jun 2008 | 12:56 pm
Those big S.U.V.'s and trucks rumbling down the road? With gasoline at $4, they may soon be dinosaurs.
Following production cuts by Ford Motor last month, General Motors says it will close four North American plants to reduce its output of trucks and S.U.V.'s. It will also increase capacity at some smaller car plants.
And in a decision that has much symbolic importance, G.M. says it is engaging in a "strategic review" of the Hummer—the biggest of the Big Wheels—a review that could lead to a sale.
"From the start of our North American turnaround plan in 2005, I've said that our goal is not just to return G.M. to profitability, but to structure G.M. globally for sustained profitability and growth," said Rick Wagoner, the company's chief executive.
"Since the first of this year, however, U.S. economic and market conditions have become significantly more difficult," he said. "Higher gasoline prices are changing consumer behavior, and they are significantly affecting the U.S. auto industry sales mix."
Speaking before the company's annual meeting in Wilmington, Delaware, Wagoner says high oil prices are here to stay. "We believe it is, by and large, permanent," he said.
Faced with that outlook, the company has approved funding of the Chevy Volt, an extended-range electric vehicle.
"We believe this is the biggest step yet in our industry's move away from our historic, virtually complete reliance on petroleum to power vehicles," Wagoner said.
Reuters - Wall Street opened lower on Wednesday,
as a further decline in shares of Lehman Brothers
showed worries about the credit market persist.
Reuters - J.M. Smucker Co will acquire
Folgers, the largest U.S. coffee business, from Procter &
Gamble Co for stock valued at $2.95 billion, the
companies said on Wednesday.
Reuters - UAL Corp , parent of United
Airlines, will slash its domestic capacity and its labor force,
following similar cuts by rivals, as the industry grapples with
soaring fuel costs and a weakening economy, the company said on
Wednesday.
Reuters - Lehman Brothers Holdings Inc is
looking to raise capital overseas and has approached at least
one investor in South Korea, the Wall Street Journal reported
on Wednesday.