Archive for March, 2008

31 March, 2008 | No comments

Stocks End Mixed In Split Fashion, Cap Week With Big Losses

Stocks finished mixed Friday, capping a week of losses.

Only the Nasdaq finished in positive territory, as the tech sector drew inspiration from Amazon.com, which announced a big stock buyback.

According to preliminary data, the Nasdaq rose 0.5%. The Dow fell 0.5%. Meanwhile, the NYSE composite and S&P 500 lost 0.4% each.

Volume dropped off on both exchanges. Decliners edged out advancers by 3-to-2 on the NYSE and 4-to-3 on the Nasdaq.

For the week, the NYSE composite tumbled 4.9%, S&P 500 4.6%, Nasdaq 4.5% and Dow 4.4%. This week’s action essentially wiped out the prior week’s gains.

Omniture () reversed earlier losses and gained 2.38, or 10%, to 25.98 on nearly triple its average volume. The stock had a change of heart after falling more than 7% in the opening minutes of trade. Late Thursday, the business software’s Q4 profit missed analysts’ estimates. But the company expects sales to double this year.

Southwestern Energy () rallied 3.80, or 7%, to 58.07 on slightly heavier trade. That puts the oil and natural gas producer just 3% off its 52-week high. The company reports Q4 earnings Feb. 29. Profit is slated to jump 80% to 36 cents a share.

Group mate Range Resources () added 1.25 to a new peak of 56.87 on above average volume. Earlier this week, the Texas-based oil producer set its 2008 capital expenditure budget at nearly $1.07 billion, up 18% from last year.

Several oil-related industry groups were among the session’s top performers as crude oil surged 4.1%.

On the downside, comScore () gapped down and sank 4.53, or 16%, to 22.92 on almost six times average trade. Late Thursday, the market research firm reported a 100% surge in Q4 profit, beating views. But its full-year outlook for earnings and sales came in below analysts’ expectations.

Telefonos de Mexico () dropped 2.20, or 6%, to 34.20 on more than double its average turnover. The telecom fell on disappointing Q4 earnings. And it’s lowering its capital expenditure for the year to $1.65 billion from $2.43 billion, partly due to an uncertain Mexican economy.

3:15 p.m. Update: Stocks Mixed On Weak Volume: Miners, Energy Issues Log Gains

BY ALAN R. ELLIOTT

Indexes clung midway up the day’s trading range as a sudden leap in oil prices and hard hits to finance and transportation stocks undercut gains.

The Nasdaq composite added 0.1% and the NYSE had slipped 0.6% at 2:57 p.m. EST. The Nasdaq’s banking index withdrew 1.7% and transports skidded 1.6%.

The S&P 500 was off 0.6% and the Dow 0.8%. Nine of 30 Dow components posted gains. Trading was running 16% lower on the NYSE, 24% lower on the Nasdaq.

Oil prices soared $3.64 to $91.75 a barrel as an approaching cold snap in the Northeast and supply snags in Nigeria and the North Sea made commodities traders nervous. The move erased most of the week’s losses, which hinged on fears of an economic slowdown trimming energy demand.

Oil and gas producer EOG Resources () gapped up to gain 4.64 to 94.73. The Houston-based operation on Thursday topped Q4 sales and earnings expectations. The stock cleared a six-week consolidation.

Russian steel producer and miner Mechel () forged ahead 6.36 to 100.61. Its 7% spike raised the stock to within 6% of its Dec. 27 high.

Terra Industries () popped up 1.61 to 42.16 after its Q4 earnings jumped 500%, just above estimates. The move lifted shares near to their 50-day moving average, putting them 21% below their Jan. 14 high.

Centene () clocked a 3.95 loss to 20.72 after a serious Q4 earnings miss. The manager of government subsidized health care programs was in its fifth week of consolidation, its third week below the 10-week moving average. Friday’s move sliced its 40-week line, leaving it 27% below the recent high set Jan. 8.

1:15 p.m. Update Techs Still Up, But Off Highs

By VINCENT MAO

Stocks continued to trek in mixed territory midday Friday. The Nasdaq, which was up as much as 1.1%, pared the bulk of its gains.

At 12:41 p.m. EST, the Nasdaq rose 0.3%. The Dow lost 0.6%. Meanwhile, the NYSE composite and S&P 500 gave up 0.4% each.

Turnover was tracking lower on both exchanges.

Metal, computer and oil-related groups were among the day’s top gainers. Transportation providers, hospitals and home builders were the worst performers.

Among the market’s higher-rated stocks, some consumer-oriented names made significant gains.

Urban Outfitters () ramped up 1.14 to 30.09 in brisk trading. That’s its highest level in more than two years. Bear Stearns upgraded the retailer to peer perform from underperform. And it raised its earnings outlook to $1.07 a share, up from $1.02.

Apple () rose 2.76 to 124.01. The stock was bouncing back from a five-session losing streak. Still, damage in the former IBD 100 stock has been done. Apple is 38% off its 52-week high and its Accumulation/Distribution Rating has soured to a lowest-possible E.

On the downside, Allergan () tumbled 3.29, or 5%, to 64.02 in huge trade. The Food and Drug Administration is reviewing the safety of the company’s Botox cosmetic treatment as well as other competing products.

TransDigm Group () dropped 3.83, or 9%, to 40.32. It sliced its 200-day moving average. Late Thursday, the aircraft parts maker reported a 26% rise in Q1 earnings, beating views. It guided full-year profit in range of $2.43 to $2.53 vs. consensus estimates of $2.49.

11:15 a.m. Update: Nasdaq Continues to Run Ahead of Pack In Weak Trading

By ALAN R. ELLIOTT

Mixed earnings news and economic data made for a mixed market.

The NYSE composite, the S&P 500 and the Dow sat dead-even as of 10:56 a.m. EST, while the Nasdaq composite had added 0.9%. The Nasdaq’s computer and telecom indexes swelled 1.7% and 1.5%, respectively. Volume was running 24% lower on the NYSE, down 34% on the Nasdaq.

Indexes in Europe were mixed after the Bank of England cut its key interest rate by a quarter-point, while the European Central Bank kept its key interest rate at 4%. The FTSE 100 gained 0.7%. Germany’s DAX added 0.8%. France’s CAC-40 slipped 0.1%.

Markets in China remained closed for the lunar New Year. In Japan, the Nikkei 225 slumped 1.4% on weak economic data and a sell-off in machinery stocks. A glitch halted some futures trading.

Tokyo exchanges are scheduled to be closed Monday.

December wholesale inventories in the U.S. rose 1.1%, more than the expected 0.3% gain. Wholesale durable goods sales suffered their largest drop in more than six years. Inventories received a boost from a wide array of factors, including automobiles, lumber and metals.

Cognizant Technology Solutions () shot up 4.65 to 31.93 in wicked trade. The company topped Q4 earnings and sales views. Pacific Crest Securities raised its annual estimates for the S&P 500 company.

Cognizant had been wallowing below its 10-week moving average since early November. Friday’s powerful volume, gap-up gain blasted it back above that line. But the 40-week line still hangs above the stock, at 36.41. The fact that the 40-week is running above the 10-week is a symptom of a downward-trending stock.

Dry-bulk shippers got a bump up, with DryShips () scoring a 2.61 gain to 73.36. The heavy-volume move brought the Greek-based fleet operator even with its 50-day moving average. That left it 44% below its Oct. 29 high.

TBS International (), another dry-bulk shipper, jumped 2.26 to 34.02 on heavy volume. The move edged shares above their 50-day moving average, and left them 52% below their Oct. 18 high.

China-based search engine Baidu.com () sprung for a 6.83 gain to 239.13. The heavyweight Internet issue is still well-below its 200-day moving average, and 44% below its Nov. 6 high.

10:15 a.m. Update: Nasdaq Rises While Others Sink

By VINCENT MAO

Stocks traded in split fashion early Friday with tech issues showing some strength.

At 9:54 a.m. EST, the Nasdaq gained 0.4%, thanks to strength in Internet and big-cap tech stocks. The Dow and NYSE composite each lost 0.3%. The S&P 500 slipped 0.2%

Volume was tracking lower on both exchanges.

Research In Motion () climbed 1.63 to 86.58. That pushed the BlackBerry smart phone maker back above its 200-day moving average.

DRS Technologies () gapped up and gained 3.70, or 7%, to 55.77 in brisk trading. The maker of thermal equipment reported fiscal Q3 earnings of $1.01 a share, up 15% from a year ago and 6 cents ahead of views. Sales grew 23% to $836.6 million, also above views.

DRS pegged full-year earnings in a range of $3.24 to $3.31 a share vs. $3.19 consensus. Revenue is seen coming in between $3.17 to $3.23 billion vs. consensus estimates of $3.16 billion.

McDonald’s () rose 0.65 to 55.11. The fast-food giant said its January same-store sales climbed 5.7%, fueled by overseas strength.

On the downside, Omniture () gapped down and dropped 1.62, or 7%, to 21.98 in heavy trading. Thursday night, the business software maker delivered missed Q4 profit estimates by a penny.

9:15 a.m. Update: Stocks Head For Mixed Open

By VINCENT MAO

Stock futures pointed to a mixed open Friday amid worries over economic growth.

Nasdaq futures rose a fraction vs. fair value, S&P 500 futures fell 7 points and Dow futures slid 62 points.

Speaking in Hawaii, San Francisco Fed President Janet Yellen said the economy would likely avoid a recession.

“The Fed’s policy actions should help to promote a pickup in growth over time,” Yellen said. “I consider it most probable that the U.S. economy will experience slow growth, and not outright recession, in coming quarters.”

Yellen is not a voting member of the Federal Open Market Committee. Other Fed officials are slated to speak today.

Late Thursday, Congress approved the economic stimulus bill, which would put anywhere from $150 billion to $172 billion into the economy. Taxpayers could be seeing checks of $600 for singles or $1,200 for couples as soon as May.

The sole piece of economic data today will be December wholesale inventories. It will be out at 10 a.m. EST.

Amazon.com () rallied 7% in the pre-open. The Web’s top retailer said it would buy back $1 billion of its stock over the next two years. The company will also repurchase some outstanding debt.

CF Industries Holdings () climbed 4% in pre-open trading. Late Thursday, the fertilizer maker reported Q4 profit, excluding items, of $2.38 a share. That was up from 14 cents the prior year and well above views. Revenue rose 62% to $852.2 million. The company raised its quarterly dividend to 10 cents a share from 5 cents.

Tiffany & Co. () rose 3% in pre-market trading. The luxury goods retailer guided full-year 2008 profit in a range of $2.50 to $2.55 a share vs. current estimates of $2.28. Tiffany expects U.S. sales increases in the high single-digits and international sales in the mid-teens.

Merrill Lynch () slipped 1% in the pre-open. According to a published report, regulators widened a probe into the company’s mortgage business. Prosecutors have asked the Securities and Exchange Commission for information collected on Merrill.

MBIA () tumbled 11% in pre-open trading. The troubled bond insurer raised the size of a stock offering to $1 billion from $750 million. It priced 82.3 million common shares at $12.15 each, a 14% discount from Thursday’s close. The company is in need of capital in order to maintain its AAA credit rating.

31 March, 2008 | No comments

‘Day of Silence’ Makes Noise on ‘Net

WASHINGTON—So you just found a new Internet radio channel that has the coolest music and you’re telling all your pals about it? Well, it might not exist after July 15.

And to give a taste of that sound, Internet radio broadcasters Tuesday observed a “Day of Silence” in which they set out to shake up their audiences by turning off their broadcasts and running a vigorous online campaign to rally Congress over new fees they say are unfair.

Online listeners who tried to go to their favorite music sites and public radio stations likely found messages to call their representatives in Congress to block the new rates, and Д as «www.savenetradio.org» said Д “preserve music diversity on-line.”

The clash between Internet radio broadcasters and music industry advocates is over copyright royalty costs, which were recently reset by the Copyright Royalty Board Д CRB Д led by a panel of three judges and housed under the Library of Congress.

Wanda and Jim Atkinson said the new rules have to be changed.

“It will literally destroy most Web-casters,” said Wanda Atkinson, who with her husband runs 3wk.com, a site that runs an indie rock and classic rock channel. “There’s no basis in reality for their decision.”

The Atkinsons, both 51, of St. Louis, said the new rates imposed by the CRB would mean a 400 percent increase in their royalty costs from over a year ago. Given that, Wanda said they would have to shut down the classic rock channel, and scrap plans for a third channel they’d hoped to get off the ground. They’re comfortable financially outside their radio enterprise, but it would essentially mean the business would no longer make money.

But one of the chief advocates for rate change said much of the criticism raised by the Internet radio community is unfounded.

, spokesman for SoundExchange, a non-profit organization that collects and distributes musician royalty payments, said his organization has offered the small Web-casters Д like the Atkinsons Д to keep the rates down where they were before the CRB acted this March. He said the real fight is coming from the larger Web-casters, like AmericaOnline and Yahoo!, who stand to make money off plans to derail the royalty schedule.

“We’re trying to get the fairest deals. I think our contention is that artists and labels need to be paid for the music they create and everybody loves. They want their fair piece of the pie,” Ades said.

Under the previous plan, which ended in 2005, Web-caster royalties were determined on a fraction of revenues. The new royalty payments would be based on a per-performance basis: an online listener who hears one play of a song would equal one performance, and that would equal $0.0011 in royalty payments in 2007.

The charges gradually increase to $0.0019 per performance in 2010, the last year covered by the CBP decision. The rates affect commercial as well as non-commercial Web-casters who have more than 159,000 “aggregate tuning hours,” a number estimating the amount of listenership a broadcaster receives. The ruling has been appealed to the U.S. Court of Appeals for the District of Columbia.

While the incremental cost is small, the total cost for even a small outfit Д that could have tens of thousands, or hundreds of thousands of listeners Д is too much, said Michael Roe, the founder of Radioio.com, an Internet radio provider.

“There are very few entities that would likely survive it,” Roe said.

Tuesday’s campaign was designed to bolster the push behind «thomas.loc.gov», sponsored by , D-Wash. The bill aims to set the royalty payments by Internet radio providers equal to those paid by satellite radio and other digital radio formats Д another point of contention by Internet radio broadcasters.

But Ades argues that Web radio, satellite radio and radio over other digital means are different animals, and his organization does not dispute the way Congress currently handles it. He said, for instance, royalties are paid by satellite radio, but the numbers are not public. A process is to finalize rates for satellite radio by the end of the year. He said SoundExchange agrees with the Web-casters that royalties should be collected from AM and FM stations.

He says the “Day of Silence,” not only no longer makes a point, but also makes the case for his group.

“Without music, you’ve got nothing. … If you don’t pay them … they’re not going to be able to make music,” he said.

Nevertheless, the Web protest appeared to catch the attention of the online community. Jake Ward, a hired spokesman for the SaveNetRadio Coalition, said Web traffic through a site routing e-mail to Congress hit record highs. Inslee’s office said it was receiving about three times the usual phone traffic.

And still, Web radio enthusiasts are hoping that the rate change won’t cut off their source of music, and in some cases, their creative outlet.

Alistair Barnett, 30, of Redding, Conn., also goes by the moniker “Angry Canadian” on the Internet radio service Live365. He favors his punk rock channel, but also runs a classic rock channel, which he hoped might become more lucrative for him. While he’s a Web consultant by day, he DJs online as a hobby.

But once the new rates came down, his hopes of taking his classic rock channel to the next level Д from just a hobby to a hobby that makes him some extra cash Д were derailed.

“When I tallied it up, I would be paying $600 a month just to have 50 listeners. … I can’t afford that,” he said.

“What this will do if the rates go into effect is only the big guys will be out there,” Barnett said.

31 March, 2008 | No comments

Home Sweet Home-Office Tax Breaks

As BlackBerrys and laptops proliferate, working from home becomes more practical. Adding to the appeal, you may be able to claim home office deductions.

Even if you don’t claim a home office, you can take business-related deductions. Those can include a business phone line and office supplies.

If you do qualify for home office treatment, you can write off a portion of your housing expenses, too. That can include part of your cost for utilities, home security, homeowners insurance and so on.

You also can take depreciation deductions for the percentage of your home used for business.

You may be able to use another tax break that stems from claiming your home office. The cost of traveling to and from business-related meetings elsewhere is deductible.

Otherwise, without a home office your first and last trip of each business day might be considered non-deductible commuting.

There are several ways to calculate your home office deductions. One is to go room by room.

If you live in a 10-room house and use one as an office, you can deduct 10% of your heat, electricity and so on. And you’d depreciate 10% of your house.

Or you can figure out what percentage of your total square footage is used for business. Only living space counts. Leave that unfinished basement out of the calculation.

Say you rent an apartment with 1,000 square feet. In one room, an area five feet by 10 feet is set aside as an office. Fifty square feet is 5% of 1,000 square feet, so you can deduct 5% of your rent.

To take home office deductions, you must clear several hurdles. “You must have a space in your home you use regularly and exclusively for business,” said Tom Ochsenschlager, vice president of taxation at the American Institute of Certified Public Accountants.

If your home office has a convertible couch where your mother-in-law sleeps when she visits, the room is not used only for business. Deductions may be denied.

Principal Place

After clearing the regular-and-exclusive hurdle, you must meet at least one other requirement. The most common is to make your home office your principal place of business.

If you spend most of your working hours there, that probably won’t be a problem.

But you can still get home office deductions even if you spend most of your workday elsewhere. That will be the case if your home office is the only location where you do paperwork for your business.

You can spend most of your working hours visiting clients and still deduct some household expenses.

What if your home office is not your principal place of business? You still may take home office deductions if you have an area where you meet regularly with customers, clients or patients.

Or you can use a separate structure as an office. That might be a detached garage you’ve converted to a meeting space.

You’ll still have another test to pass if you work in your home office as an employee. You must be required to work at home by your employer.

If you pass all these tests, you can take your home office deductions on IRS Form 8829.

“If you take these deductions you may run into a trap when you sell your home,” Ochsenschlager said.

All of your depreciation deductions must be “recaptured.” You will owe tax on your accumulated write-offs.

A simplified example can explain the process. Say you bought your house several years ago for $450,000. You have used a home office ever since.

Say you allocated $60,000 to land and $390,000 to the house. And say 10% of your house is used as an office.

So the office part of your house is valued at $39,000: 10% of $390,000.

Your $39,000 office is considered commercial real estate so it will be depreciated over 39 years. That is $1,000 of depreciation per year.

Say you have taken this deduction for six years before selling your house. You would have $6,000 worth of accumulated depreciation.

When you sell your house, that $6,000 will be recaptured at a tax rate that goes up to 25%. You would owe $1,500 in tax.

Come Out Ahead

That may not be a bad deal. Taking depreciation deductions can save you tax at rates as high as 35% each year.

If you owe tax at a rate higher than 25%, you come out ahead with this maneuver. You also benefit from tax deferral over all the years you claimed a home office.

And you are still selling your house. If you have owned it and used it as your principal residence for at least two of the five years before a sale, you can exclude up to $250,000 of profit from tax.

Married couples can exclude gains up to $500,000. So taking a home office deduction effectively provides a tasty appetizer but doesn’t spoil the tax reduction main course you get to enjoy on a home sale.

31 March, 2008 | No comments

Italy Feb retail sales up 0.4 pct yr-on-yr

ROME (Thomson Financial) - Retail sales rose 0.4 pct year-on-year in February, as non-food sales rose 0.6 pct and food sales increased 0.1 pct, the statistics office ISTAT said.

On an adjusted basis, retail sales rose 0.2 pct in February from January.

philip.webster@thomson.com

pw/vs

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31 March, 2008 | No comments

Branson, Gore launch carbon cutting prize

Virgin chief Sir Richard Branson has launched what he calls the world’s biggest prize to inspire innovators to develop ways to cut greenhouse gases.

Mr Branson announced the $US25 million ($A32 million) Earth Challenge prize at a joint press conference with former US vice president Al Gore.

“The Earth cannot wait 60 years,” Mr Branson said.

“I want a future for my children and my children’s children. The clock is ticking.”

Mr Branson says the future wellbeing of the planet is at stake.

“Unless we can devise a way of actually removing CO2 from the earth’s atmosphere, we will lose half of all species on earth, including the polar bear and the walruses,” he said.

“We’ll lose all the coral reefs ,including the Great Barrier Reef.

“One hundred million people will be displaced due to rising sea levels; farmlands will become deserts; rainforests - wastelands.”

It is not the first time Mr Gore and Mr Branson have teamed up to promote green issues: last September Mr Gore backed Mr Branson’s pledge to spend $US3 billion ($A3.85 billion) on reversing global warming.

The former vice-president, who brought global warming to prominence in his documentary film An Inconvenient Truth, told the British Virgin boss at the time that he was in a unique position to make a difference.

- AFP/BBC

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