Archive for July 6th, 2009

NEW YORK: California’s bond rating is far from golden.Citing the Golden State’s ongoing budget upheaval, Fitch Ratings on Monday downgraded California’s long-term debt to BBB, one category above junk bond status. The next step is BBB- before the state’s bonds would be considered speculative debt.Fitch also maintained its so-called negative outlook on California. “[I]nstitutional gridlock could persist, further aggravating the state’s already severe economic, revenue and liquidity challenges,” Fitch wrote.While Gov. Arnold Schwarzenegger and lawmakers battle over closing a 26.3 billion budget gap, the state’s controller last week was forced to issue IOUs for the first time in 17 years. Some county agencies, state vendors and taxpayers are getting paid in paper. The IOUs help the state controller stave off a deficit of nearly 3 billion for July.California has the lowest bond rating of any state, and therefore must pay higher interest rates than its peers when it issues debt.The other two major ratings agencies — Standard & Poors and Moody’s — had previously placed the state on watch for a possible downgrade. They did not follow Fitch’s lead Monday and have maintained California’s ratings at several levels above junk.Moody’s put the state on watch in mid-June after Controller John Chiang warned of the pending cash shortfall. Standard & Poors affirmed its rating last week”We believe California retains the ability to take the actions necessary to meet its debt service payments in full and on time, although we remain concerned about the state’s financial liquidity,” wrote Standard & Poors analyst Gabriel Petek.

Source:CNN

NEW YORK: Thanks to a bankruptcy court decision issued late Sunday night, General Motors is close to making a quick trip through bankruptcy. But that doesn’t mean that its reorganization is almost done.U.S. Bankruptcy Judge Robert Gerber approved plans laid out by GM and the Obama administration for a sale of GM’s more valuable assets to a “new GM,” which will retain both the company’s name and its more profitable brands such as Chevrolet and Cadillac.Many of its liabilities, including contracts with thousands of dealerships and more than 27 billion in debt to bondholders, will remain part of a continuing bankruptcy proceeding for the old GM.Now renamed Motors Liquidation Co., the old GM will spend at least two to three years disposing of all those liabilities and finishing up the bankruptcy case.In short, many steps remain before GM has any chance of becoming a competitive, money-making automaker.Some issues are outside of its control. Tight credit and a poor economy has sent industrywide U.S. auto sales to levels not seen in decades. A recovery in auto sales is crucial for GM (GMGMQ) and Chrysler Group, which recently exited from bankruptcy itself with financing from the government, to return to the black.No automaker — not Ford Motor (F, Fortune 500), the only U.S. automaker to avoid bankruptcy, not deep-pocketed Toyota Motor (TM) — can make a profit at current U.S. sales levels. In the first six months, Americans have bought only 4.8 million vehicles.Here’s what’s next for GM as it tries to put its bankruptcy behind it.Near termThe first step is the creation of the new GM. But that will likely have to wait a bit because Gerber, as expected, put his order on hold for four days. That will give time for the 850 parties to the case that objected to the Obama plan to try to get another federal court to stop it from taking effect.0:00
/2:19Long and winding road for GMThe same kind of stay was in place when a similar sale was approved in the Chrysler bankruptcy case in June. While the Supreme Court temporarily held up the Chrysler case, it eventually allowed the sale to go through without comment. Many experts expect that the GM sale will close quickly, even if not in exactly four days.”There might be a lot of people unhappy, but no one wants to go through the time and expense of fighting it,” said Jeffrey Manning, managing director at investment banking firm Trenwith Securities LLP, and an expert in bankruptcy and restructuring.Once the new GM emerges from bankruptcy, it will be owned 60.8% by Treasury, 17.5% by a union controlled health care trust fund, 11.7% by the Canadian and Ontario governments, and 10% expected to go to the old GM’s bondholders.Current GM shareholders will be left with no ownership in the new company.Later this this yearGM intends to shed half of its U.S. brands as it moves forward. Pontiac will be discontinued. Saturn, Saab and Hummer will be sold. The sales were announced since the June 1 bankruptcy filing, but none have yet closed. All three deals are due to close before the end of this year.The last Pontiac is due to be made in September.Most GM facilities are now idle because of a regularly scheduled two-week summer shutdown. But this year that shutdown was started as early as May for some plants.By next week, 6 of 15 U.S. assembly lines are due to restart operations, and 11 are set to be back in operation by the week of July 20.During the bankruptcy, GM identified 16 plants and other facilities that will be closed in the coming years. They were left behind in bankruptcy with Motors Liquidation Co. But most of those plants will continue to make GM cars and products in the near term. Some will not be closed until 2012. The new GM will lease those facilities from Motors Liquidation for as long as they stay open.The closing of those plants is expected to trim 20,000 workers from GM’s current workforce of about 91,000. Those employees, even those at the plants targeted for closure, will work for the new GM, not Motors Liquidation. Some will be offered jobs that open up at other facilities. But many are expected to leave the company as their plants are closed.Before the bankruptcy, GM had received 19.4 billion in federal help. As part of its bankruptcy case, Treasury agreed to pour in an additional 30 billion.So far, the automaker has received 10 billion to 11 billion of that 30 billion. The rest will be doled out as-needed the rest of the year, Steve Rattner, Treasury’s key auto adviser, told reporters Monday.2010 and beyondGM used the bankruptcy to shed agreements with 1,900 of its 6,000 U.S. dealerships. Unlike Chrysler, which moved to terminate its unwanted dealership before its bankruptcy sale was finalized, GM will keep about 99% of those dealerships to try to have a more controlled wind down of its network.Some of the dealerships that GM will shed sold Saab, Saturn or Hummer and no other GM brand. Most of the rest of the dealerships will continue to sell vehicles and do warranty work for GM customers into 2010.GM is staging the dealer closings because they had more than 65,000 cars in their inventories as of May, and the automaker didn’t want to flood the market with unsold vehicles.Stock in the new GM will not be publicly traded again until 2010 at the earliest. It will need to complete a complex initial public offering — the timing of which will depend on when the market for cars, and for stocks, shows signs of improvement.”IPOs are difficult to execute when the market is not reasonably robust,” said Rattner. He said he hoped that shares could be sold as early as the first half of 2010, but he wasn’t making promises.Rattner repeated earlier statements that the administration wants to sell its GM stake as soon as possible. But he made clear that it will be awhile.Dumping its entire stake as soon as GM started trading would depress the stock price. Judging by the history of privatizing government-controlled companies, it is likely to be a multi-year process.”You can not simply sell it in one day,” Rattner said.

NEW YORK: Nearly five months after President Obama signed the American Recovery and Reinvestment Act (ARRA), a still-worsening economy has many wondering if stimulus is a bunch of baloney.In February, the stimulus bill was passed with the promise that funds would be paid out quickly to save or create 750,000 jobs by early August. Without it, the Obama administration said, unemployment could rise to 9% in 2010.With August quickly approaching, 56.3 billion, or 10% of stimulus funds have been paid out, and the unemployment rate has already risen to 9.5%. As a result, there’s debate about whether stimulus has put the economy on a path to recovery or is merely a broken promise. Some economists are already calling for a second stimulus bill as the economy continues to falter, arguing the stimulus wasn’t strong enough and isn’t being paid out fast enough. On the other hand, many Republicans and even some Democrats are saying that parts of the plan were a waste of money. “This form of fiscal stimulus will have no meaningful effect on the economy whatsoever, because they don’t have a magic wand to create purchasing power,” said J.D. Foster, economic fellow at the conservative-leaning Heritage Foundation. “Even if you do think stimulus is effective, what they’re arguing is 56 billion is really effective. This is pure spin.” But a number of experts say stimulus is working, only its successes have been obscured by a worse-than-expected economy.”The stimulus package is helping with job creation, but the job loss has been a lot bigger than the administration envisioned,” said Dean Baker, co-director of the Center for Economic and Policy Research. “What they inherited was worse than they thought — we’ll probably be going over 10% in the fall.”The Obama administration estimated that the stimulus package helped to create or save 150,000 jobs in the administration’s first 100 days, and will save or create 500,000 in its second hundred days, ending in early August. Still, that’s little help to an economy that has shed an average of 490,000 jobs per month, totaling 2 million lost jobs since the stimulus bill’s signing.Though the White House conceded that the economy has turned out to be much worse than it anticipated, it cautioned people not to give up on stimulus just yet.”We misread how bad the economy was, but we are now only about 120 days into the recovery package,” said Vice President Joseph Biden in an interview on ABC’s “This Week” on Sunday. “The truth of the matter was no one expected that that recovery package would in fact be in a position at this point of having distributed the bulk of the money.” “The pace of the ball is now going to increase,” Biden added.Still a long way to go: Of the 787.2 billion in ARRA funds, 499 billion is for stimulus projects, of which 157.8 billion has been made available and 56.3 billion has been spent. The biggest chunk, 22 billion, has been spent by states for Medicare and Medicaid payments.The other 288 billion is in tax relief, including increased unemployment insurance, health insurance and food stamp benefits that the government began funneling out on March 1. The Making Work Pay tax credit began appearing in workers’ paychecks on April 1.The Congressional Budget Office did not have exact figures for how much in tax relief has been paid out so far.”It’s just not fast enough,” said Bob Brusca, economist with FAO Economics. “There’s a lot of political agenda associated with stimulus, on top of the fact that the economy is clearly in worse shape than administration thought.”Part of the reason stimulus has been slow-going so far is the number of hurdles projects need to clear before money gets out the door. Projects need to meet certain guidelines, as the government seeks to ensure that the money is spent wisely.For instance, the electronic health record program has been allocated 20 billion, but the Health Department will not pay out the funds until October 2010 — until hospitals and physicians can demonstrate that they are using the records meaningfully.”Typically, projects chase money, but stimulus has created a situation where money is chasing projects,” said Tim Dowd, chief executive of Input, a consulting firm that provides information about government contracts. “States and companies are still struggling to determine what infrastructure and overhead they need to meet government requirements.”Still, Dowd believes the government will ultimately meet its spending targets, ramping up its spending toward the end of the year as states fund projects that can spend the money quickly.The Obama administration agrees, saying it is on pace to reach its goal of spending 70% of the money by September 2010. But it said the true measure of stimulus is whether or not the economy shows sustained improvement.”There’s a huge need to put people back to work as soon as possible, but the ultimate goal is to create stability over the long term,” said an administration official who spoke on condition of anonymity. “Regardless of where the economy is now, it could have been a lot worse [without stimulus].”

NEW YORK: The federal minimum wage is set to increase later this month as the job market shows signs of further decay.The federal minimum wage will go to 7.25 an hour on July 24 from its current level of 6.55, according to the U.S. Department of Labor.The impact will be felt in 29 states, and many of them plan to match the federal minimum when it goes through.Seven states already have laws mandating 7.25 minimum pay, while 14 states and Washington, D.C., exceed the new minimum. Employers are required to pay whichever is the highest: Federal or state.Last July, the wage floor was raised from 5.85 per hour. The increases were mandated by a bill passed by Congress in 2007, when the minimum was 5.15 an hour, where it had stayed for years. 0:00
/5:20Is stimulus helping jobs?But the next increase is set to occur as the job market is reeling under high unemployment and ongoing payroll cuts. Unemployment has increased for nine months straight, achieving a 26-year high of 9.5% in June, according to the Labor Department.Also in June, the U.S. job market shed 467,000 jobs, compared to a loss of 322,000 jobs the month before. Altogether, the U.S. economy has lost nearly 3.4 million jobs in the first half of 2009, which is more than the 3.1 million lost during all of 2008.Many workers have taken jobs that pay far below what they’re used to. Other people have given up looking. The number of people who have been unemployed for more than six months has reached nearly 4.4 million, meaning that benefits for some of the unemployed have expired. John Lonski, chief economist for Moody’s Investors Service, said the hike in the minimum wage is “going against the grain” of the economy, and that the job market might not be able to absorb the mandated increase.”You wonder if this might be a little too much for certain employers to shoulder, especially in a time that’s been marked by a decline in business sales,” said Lonski. “This might actually delay the return of job growth.”The minimum wage increase will be felt most acutely by employers at restaurants, especially fast food, and also the hard-hit retail sector, according to Lonski.”We’ve seen a loss of jobs in retailing, and this latest hike in the minimum wage will add to the difficulty of stabilizing employment in industries that are dependent on lesser paid workers,” he said.Advocates for low wage workers believe that a higher minimum wage is a step in the right direction, even though for many people it’s barely enough to survive on.At 7.25 an hour, a full-time worker earns 15,080. At the nationwide work week average of 33 hours, the worker would earn 12,441. The U.S. government sets the poverty level at 10,830 for one person or 22,050 for a family of four in the lower 48 states and D.C. A worker who is above the poverty level would not be eligible for certain welfare-related assistance. “For a family to survive on 22,000, it’s impossible,” said Matt Goldberg, a staff attorney at the Legal Aid Center-Employment Law Center, an organization that advocates for low income workers. “A minimum wage job might technically keep you above the poverty line. But the practical reality is that anyone trying to survive on minimum wage is in real, real dire straights.”Goldberg said that San Francisco, where his organization is based, imposes its own minimum wage, of 9.79 an hour.Higher wages increase worker productivity, reduce costly turnover and reduce dependence on government assistance, Goldberg said.”A lot of people who are minimum wage earners are taking advantage of different kinds of public assistance,” said Goldberg. “Raising those wages at the low end of the pay scale will help keep those workers off the various welfare programs. Out of work? Looking for qualified employees? Start networking now. Join Hired! on Facebook.

Source:CNN

(breakingviews.com) — The annual G8 summit could be a time for mutual commiseration. The leaders of rich countries who will gather in Italy this week share many economic woes. From London to Paris and Washington to Moscow, what used to be different “models” or economic systems are converging fast on the way down. It would be tempting to trade moans about bank bailouts and bankruptcies, shrinking GDPs and widening deficits.But the G8 leaders should do more. To start, they might listen to the leaders from China, India, Brazil, Mexico and South Africa, who will also be meeting next door. Following a new tradition, the rich world summit has de facto widened to include that up-and-coming G5. Obama, Medvedev, Merkel, Brown and their colleagues can learn that their problems won’t be solved unless the rest of the world’s are too.They could also listen to the twin warnings against protectionism issued over the weekend. Both Robert Zoellick, the World Bank president, and Pascal Lamy, head of the World Trade Organization, know protectionism when they see it. They were once partners and sometimes adversaries in the world trade negotiations — when Zoellick was the U.S. trade representative, and Lamy the European Union commissioner in charge of trade.In their current jobs, the two men look at the economic tempest from a global perspective, and they don’t like what they see. Zoellick sent a letter to G8 leaders asking them not to proclaim the end of the recession too early, because their stimulus packages are still needed in the rest of the world. Lamy warned that bank bailouts, which often force banks to regroup on their national territories, could pose a risk to world trade. Protectionism, he added, still is a most severe threat, and “a terrible disease”.The G8 final declaration will include, as usual, a now-compulsory sentence about the necessary fight against protectionism. But beyond the automatic and diplomatic niceties, it’s what G8 leaders do when they’re back home that matters — whether or not they’ll keep to their word on trade. As the hardships mount, the commitment will be more difficult to keep. This week could be a good time to build some mutual support.

Source:CNN

SAN FRANCISCO (Fortune) — Half this miserable economic year is gone. That’s the good news; we’ve got less of 2009 to go.The rest of the economic news? It depends on what you choose to focus on. Unemployment continues to hammer the nation’s workforce — at 9.5% it’s at a level not seen since the early 1980s. Meanwhile, untold numbers of businesses hang precariously onto solvency. And yet there are signs here and there, like weak smoke signals, that while not on an upward swing, the economy is not getting worse.One such sign is the stock market, a leading indicator of economic recovery (if history is to be trusted). The markets have been on a roll in recent months, and leading the charge are shares of technology companies.For example, Amazon (AMZN, Fortune 500) up 55% since the beginning of the year. Research In Motion (RIMM), the maker of Blackberry smartphones, is up a stunning 72% in the last six months. Of course the other heavyweight in the smartphone world Apple (AAPL, Fortune 500) is up 64% for the year. Google (GOOG, Fortune 500), IBM (IBM, Fortune 500), Qualcomm (QCOM, Fortune 500) are all up significantly so far this year. And it’s not just name brand tech companies that are riding rockets upward. Take HR software-as-a-service vendor Ultimate Software (ULTI), its shares are up 60% in the first half of the year.Technology stocks in general are supposed to offer growth, and you would assume shares in those companies might bounce back faster than other sectors. Fair enough, but it’s hard to reconcile the Nasdaq (COMPQ), which is up about 14% for the year, with the S&P 500 (SPX), which is just below positive territory and the Dow (INDU), which is down 6% in the same period.There are tech stocks that have clearly run too far too fast. From a valuation perspective it’s hard to justify buying in on RIMM after its tremendous bounce, or Amazon for that matter, especially when those unemployment numbers keep coming. Who’s got the money to buy new Blackberries or the collection of electronics/books/and whatever else Amazon sells these days? Are they great companies? Yes. Great values as a stock? Hard to argue that point.So where do you look for investment opportunities? I checked in with Michael Lippert, who spends every waking moment analyzing tech stocks as portfolio manager of the Baron iOpportunity Fund, a 130 million New York-based mutual fund, to see what he is championing these days.Lippert agrees that some share prices in tech companies have gotten ahead of themselves. “What has helped the market is that you had so much fear in the system at the end of last year, and the beginning of this year,” Lippert says. “There was fear of this unbelievable chaos, a breakdown of the system, the potential of a depression. Once that fear was removed from the system, stocks started to do well. You went from pricing in a depression to pricing in a recession, and now pricing in a recovery, though the jury is still out on what the recovery is going to be. I have been a little bit surprised that we have held onto all these gains.”Lippert advises against trying to forecast economic recovery. Instead, focus on individual companies. “I am still trying to find those sectors and those companies that I believe will have what I call secular tailwinds, regardless of what the economy is going to do in the next six months to a year, which, by the way, there is no way I can call.”Here are three tech stocks that Lippert thinks have the wind at their back:Equinex (EQIX) has had a 34 % run already thus year, but the data center company is in a business that keeps cranking as more and more companies rely on strings of servers to run their businesses.”Even with the move in this company this year I would buy in,” Lippert says. “It was down so much last year, and we still get comfortable with valuations over 100. I think the company should be valued there now. It will take a while for the Street to get there, but on the cash flow that this business is going to generate, it’s worth at least that. We continue to have a big position there.”SBA Communications (SBAC) SBA puts up and operates wireless communications towers. All that fuss over the iPhone and the Palm Pre? It doesn’t work without a good network backing it up.”The stock is up almost 50% on the year, but we still think is undervalued given the cash-flow the business is going to generate,” Lippert says. “They have also done an incredible job dealing with the debt maturities on their balance sheet. If you look at the smartphone market there is huge and growing demand for wireless bandwidth, these guys have several years worth of demand for the towers they operate already backlogged.”Google (GOOG, Fortune 500) You know what Google does. Lippert is betting that the shift toward online and performance-based advertising continues with Google lead the charge.”We continue to own a medium-sized Google position,” Lippert says. “I don’t think Microsoft’s (new search engine) Bing is a threat, or anything that Yahoo is doing is a threat to it. You are going to see a rebound in the core search advertising business when the rebound in the economy occurs.”While the shares aren’t a bargain, they are “solid” Lippert says at this price, especially when some of the initiatives Google has underway aren’t reflected in share price. “The Street doesn’t offer any value to YouTube, to Google’s applications businesses, or what they are doing in mobile and netbooks with Android,” Lippert says. “I think you have a number of free options in the stock, and if any of those things become big businesses for Google you could have a far higher stock price.”

NEW YORK (Reuters) — The yen and the U.S. dollar gained broadly Monday as investors debated the outlook for the global economy, shunning risk and buying currencies perceived to be safe.Data showing the U.S. service sector shrank at a slower pace in June from May failed to dent the overall market trend of the day.But the upcoming G8 meeting and the possibility that it will feature a discussion about replacing the dollar as the world’s reserve currency could add to volatility.Currencies including the Australian dollar and British pound, which have tended to benefit the most from any signs the global economy is on the mend, fell sharply as the fallout from grim U.S. jobs data last week continued.Analysts said traders were coming to terms with signs recent economic data have not been consistently better than expected as in past months, and that it was possible for future readings to show weakness.”On balance, it was better than expected, and that will prompt the dollar to pare some of its overnight gains,” said Omer Esiner, market analyst, Travelex Global Business Payments in Washington of the service sector report. “We are seeing the market lose some of its recent optimism, though, and re-balance its outlook for the global economy.”Midway through the New York morning, the dollar index, which tracks its performance against a basket of six major currencies, was up 0.3% on the day at 80.657. A fall in U.S. and European shares helped boost the U.S. currency.The euro fell 0.5% to 1.3907, its lowest in nearly two weeks, according to Reuters data. Also prompting euro weakness was a survey showing an unexpected worsening in euro zone Sentix index, which tracks investor and analyst sentiment.The yen was the biggest beneficiary of increasing aversion to risk, pushing the dollar down 1.3 % to 94.76 yen on electronic trading platform EBS, around a one-month low.The Japanese currency also rallied on the crosses, pushing the euro down 1.8% to 131.78 yen, its weakest in nearly two weeks, while the pound fell roughly 1.9% to 153.70 yen, its weakest since late May.The pound, which is often seen as higher risk, fell 1% to a one-month low versus the dollar of 1.6168, according to Reuters data.The Australian dollar lost 0.8% to 0.7904.G8 summit in focusThis week also sees central bank policy decisions in Australia and the UK, while in the United States, the earnings season for the second quarter gets underway.But the principal focus is the Group of Eight summit on July 8-10, with investors watching for the possibility of a debate on an alternative to the dollar as a world reserve currency.Though any diversification of central bank reserves away from the dollar would take several years to materialize, investors are jittery about what comments may be made at this week’s G8 meeting, particularly by China.Analysts said they did not expect serious concerns to be raised about the issue this week, but some said the dollar’s short-term vulnerability to comments about reserves suggested improving global fundamentals in the future may open the door to dollar weakness.”While it may be too early to sell USD, the fact that the discussion has become so public suggests that USD weakness would accompany a global recovery as confidence is restored in the medium and long term,” Barclays analysts said in a note. The dollar received some support by reassurances from China, which said at the weekend that the U.S. currency would remain dominant for “many years to come”.In comments published on Monday, however, Chinese officials said the financial crisis had laid bare defects in the dollar-led global economy and the world should look to displace the U.S. currency, even if it takes many years.The debate remains front and center however, with India’s Foreign Secretary Shivshankar Menon saying on Monday, that nation is willing to discuss proposals to replace the U.S. dollar as the global reserve currency.”This would be one of the ideas which is on the table. There have been ideas expressed and we are ready to discuss all of them,” Menon told reporters when asked if India would consider replacing the dollar.

Source:CNN

NEW YORK (Reuters) — The service sector contracted in June, but at a slower pace than in May, according to a report released Monday.The Institute for Supply Management’s services index rose to 47.0 last month from 44.0 in May, above economists’ median forecast for a rise to 46.0. The dividing line between growth and contraction is 50.The services sector represents about 80 percent of U.S. economic activity, including businesses such as banks, airlines, hotels and restaurants.

Source:CNN

NEW YORK (Fortune) — A year ago this week Apple opened the floodgates and began letting software developers sell software for the iPhone, and geeks everywhere caught iPhone fever.Since then Apple’s iTunes App Store has swelled to more than 50,000 titles, logged more than 1 billion downloads, and inspired an entrepreneurial surge that’s reminiscent of the dot-com gold rush — only without the illusion that everyone is making tons of money.In fact, aside from Apple (AAPL, Fortune 500) and AT&T (T, Fortune 500), it’s hard to point to many folks that are raking in a pile of iPhone cash quite yet. Matt Murphy, a venture capitalist at Kleiner Perkins Caufield & Byers, guesses that as many as 95% of the developers building iPhone apps “aren’t trying to build a company on the iPhone” — they’re just hobbyists making a little money on the side, or companies using fun iPhone apps as marketing vehicles.The world is still waiting for the equivalents of eBay (EBAY, Fortune 500), Amazon (AMZN, Fortune 500) or Yahoo (YHOO, Fortune 500) — the groundbreaking new companies that will redefine and inspire the mobile ecosystem.Not that people like Murphy are discouraged. Murphy manages the 100 million “iFund,” which is primarily dedicated to iPhone apps, making him the most high-profile mobile investor in Silicon Valley these days. (He hasn’t handed out much investment capital yet — Kleiner Perkins has funded just over a half dozen startups so far.) And during a recent visit to his office in Kleiner Perkins’s tree-shaded headquarters on Sand Hill Road, he sounded upbeat about the iPhone’s progress.A year in, Murphy still believes smartphones will open rich new markets for software and services, much as the PC and the web did before. “It’s shaping up way beyond anyone’s expectations as far as I can tell — mine, Apple’s, the industry’s at large.”0:00
/1:42On-the-go projectorsStill, it takes some imagination to see how we get there from here. A casual observer surfing through the offerings on iTunes today could easily mistake it for a digital dollar store. Though the place is crowded with options, the app store bestseller list is dominated by 99-cent games like the Moron Test and Sally’s Spa — hardly the foundation of a new mobile economy. That stands in contrast to the more mature list of PC software bestsellers at Amazon.com, where serious titles like Microsoft Office, QuickBooks Pro and Photoshop Elements sell for closer to 100.But there are already signs that things are changing on iTunes, and that more serious apps are beginning to command a price premium.The best example might be Quickoffice Mobile Office Suite, a five-week-old program for creating, editing and syncing documents and spreadsheets. It’s currently the most expensive title on the top 100 list at 12.99. “Good to see some of these apps emerging that aren’t just going to be used five or eight times and then be thrown away,” Murphy said. “What we’re going to see over the next year is people wanting applications that have a bit higher engagement, that are a bit sticky.”Those applications won’t all be on the iPhone. Competitors like Palm (PALM), Research in Motion (RIMM) and Google (GOOG, Fortune 500) also have their operating systems on smartphones. Murphy said given that Palm still has to prove itself and RIM has struggled to attract developers, the dark horse could be Google’s Android. Major phone makers including LG, Motorola (MOT, Fortune 500) and Samsung have announced Android-based handsets due out soon. And while the first Android phone from HTC got mixed reviews for its heft and unfinished software, the newest crop is earning positive buzz.”The notion that Android might actually start to get a lot of device penetration — a year ago it was too early. Now I think it’s an area to watch more closely,” Murphy said. “I think if Android can get enough devices out there and get enough market share, then Android will be likely the second platform.”If that happens, the next year in the mobile economy could be even more dynamic than the first. And who knows — maybe by next July, Silicon Valley will have even minted a few more mobile multi-millionaires.

Source:CNN

(Fortune Small Business) — One FSB 100 company has grown by grabbing a giant share of something almost nobody else wants to touch — garbage. Not just any trash, but gooey oil-refinery sludge, contaminated Superfund mystery material and radioactive protective clothing. American Ecology (ECOL) specializes in processing (and in some cases recycling) some of the nastiest hazardous waste there is, including low-level radioactive waste and PCBs. In this highly regulated industry, waste-management companies must follow detailed Environmental Protection Agency guidelines for transporting, processing and disposing of various hazardous-waste products. For example, regulations spell out how far disposal sites must be located from groundwater. In the early 1980s a flurry of Earth-friendly laws were passed, triggering a run of hazmat startups capitalizing on the new regulations. Each promoted a different disposal method — such as incineration on offshore barges and propelling trash into outer space — but the volume of hazardous waste decreased as Superfund sites were cleaned up and companies implemented safe disposal practices. “Many early firms went out of business as the industry consolidated in the ’90s,” says Bruce Parker, CEO of Environmental Industry Associations, a trade group in Washington, D.C. Still, a small number of businesses that specialize in hazardous-waste disposal remain. American Ecology, which was founded in 1952 to provide radioactive-waste removal, is one of the largest of them and today disposes of other kinds of hazardous waste as well. (The company does not handle high-level radioactive waste, such as spent nuclear fuel.) American Ecology employs 253 and operates four locations — in Idaho, Washington, Texas and Nevada — that handle the collection and disposal of a range of industrial waste. It now gets rid of some material, such as leftover minerals from uranium refineries, by sealing it in thick-walled drums and burying them deep underground in storage areas that meet federal and state guidelines. The company treats most other hazardous waste by either recycling some materials or rendering them inert. Most post-treatment waste is later buried at disposal sites. Recycling — and the sale of the recycled material — is a growth area for trash-disposal companies, according to Lynn Brown, a spokesperson for industry giant Waste Management (WMI, Fortune 500) in Houston. “Our goal for 2020 is to triple the amount of materials we recycle,” Brown says. As with most large waste-disposal companies, Waste Management handles very little hazardous material, creating an opening for smaller firms. Although recycling options for hazardous waste are limited, American Ecology CEO Steve Romano is finding innovative ways to generate business. Last year the company built a recycling center in Robstown, Texas, that treats and recycles oil sludge from refineries and sells the reclaimed oil. American Ecology’s success there has Romano looking for ways to expand its recycling efforts. “We’re very excited about it,” Romano says. “We believe there is a substantial market for reclaimed oil — and also for metals recycled from refineries.” The company also maximizes efficiencies by sometimes using one type of waste to treat another. For example, bleach sent for disposal can be used to break down some of the organic chemicals from gasoline spill-related waste. “Treating waste with waste is efficient, and we’re always looking for opportunities to do that,” Romano says. Over the past three years, the company has invested in a fleet of 450 railcars, some specially built, to move hazardous waste to Idaho from as far away as New Jersey. American Ecology is now transporting more than a million tons of chromite-contaminated material from Jersey City to Grand View, Idaho, where the company operates a 1,300-acre disposal site. The waste comes from a former chrome factory that dumped its industrial trash in its backyard before environmental regulations took effect. About half of American Ecology’s business comes from such “legacy” sites. Investing in infrastructure has paid off. American Ecology showed record growth last year, processing 1.2 million tons of waste in 2008, a 7% increase. Revenues were 176 million, with net income up 11%, to 1.18 a share. “Our services are necessary in good times and bad,” Romano says. He has his eye on President Obama’s proposal to reinstate the oil-industry tax, which would create a billion-dollar annual fund for environmental cleanup. “Many of these sites will take years,” he adds. In the meantime, it appears that American Ecology with continue to clean up.

Source:CNN