Archive for July 10th, 2009

NEW YORK: Bank of Wyoming was closed Friday by state regulators, bringing the total number of failed banks this year to 53, the Federal Deposit Insurance Corporation said. The Thermopolis, Wyo.-based bank has just one branch, which will reopen Monday as a branch of Central Bank & Trust, which is based in Lander, Wyoming. It was the first bank in that state to fail this year.Central Bank & Trust agreed to assume all of Bank of Wyoming’s 67 million in deposits and purchase 55 million of the failed bank’s 70 million in assets. The remaining assets will be sold later by the FDIC. The failed bank had about 8 million in brokered deposits, which the FDIC said it will pay directly to the brokers.Today’s failure will cost the FDIC 27 million, bringing the FDIC fund’s total cost for failed banks to 12.33 billion this year. That compares with 17.6 billion in all of 2008.The number of bank failures so far this year has more than doubled last year’s total of 25, with an average of nearly 9 failures per month. Over the next 5 years, the FDIC expects to incur roughly 70 billion in losses due to the failure of insured institutions.Most of the banks that have failed so far this year were casualties of risky funding strategies, as well as losses on loans issued to local residential and commercial real estate developers, who were hit hard by the flagging economy.

Source:CNN

NEW YORK: Chrysler Group LLC has reversed course and decided not to sell off its V-10 powered Dodge Viper sports car business. The car will remain in production after this year, the automaker announced Friday.The Viper will be produced “though 2010 and beyond,” a Chrysler spokesman said.Chrysler had announced last summer that it would sell the Viper business and would not produce anymore Viper cars after this year. Ultimately, Chrysler later said, the carmaker did not receive any bids that met its requirements.The Viper brand and the plant that makes the car were taken over by the “new” Chrysler, now called the Chrysler Group, that recently emerged from bankruptcy.The Viper is a high-priced, limited production performance car. It is powered by a massive 8.4-liter, 600 horsepower V-10 engine and has a price tag that starts at about 90,000. The car was originally introduced in the 1992 model year, and only about 25,000 have been sold since then. But the car became an important marketing centerpiece for Chrysler’s Dodge brand.”We’re extremely proud that the ultimate American-built sports car with its world-class performance will live on as the iconic image leader for the Dodge brand,” said Mike Accavitti, president and chief executive of Chrysler’s Dodge brand in a prepared statement. The Chrysler Group is owned by a combination of the Italian automaker Fiat, the U.S. government, the United Auto Workers union’s retiree trust and the Canadian and Ontario governments.

Source:CNN

NEW YORK: Fresh out of bankruptcy, the new General Motors hopes to soon start selling its whole line of cars on eBay through a pilot program. While the marketing effort would initially be limited to California, it could go national if it proves to be successful, said GM Chief Executive Fritz Henderson at a news conference Friday.A tie-up with eBay wouldn’t be entirely new for GM. The automaker has been placing all of its “GM Certified” used cars on eBay for over a year. Toyota and Chrysler have similar programs for their certified used cars, as well.However, there is no definitive agreement in place and discussions are still ongoing, said both GM and eBay.”At this time, no plans have been finalized with General Motors,” said Rob Chesney, vice president for eBay Motors in a prepared statement. “We hope to support GM’s new company and vision going forward.”0:00
/1:21New GM’s management changesAutomakers are prevented by state laws from selling cars, new or used, directly to consumers. Only licensed auto dealers can do that. Under GM’s plan, California GM dealers will put their entire new vehicle inventories on the auction site and eBay users can bid on them. Each vehicle would also have a “Buy it now” price for shoppers who don’t want to risk losing out in a bidding process.Winning bidders, or “Buy it now” buyers, would complete the purchase at the dealership, said Susan Docherty, general manager for GM’s Buick, Pontiac and GMC brands.She said GM decided to try selling cars on eBay because 80% to 90% of GM shoppers already spend a lot of time researching their purchase online.Shoppers can check vehicle inventories online now by looking at dealers’ own individual Web sites, but the eBay pilot project would allow users to search multiple dealerships at once and more easily compare products, features and prices.”The power of the eBay brand mated up with the four core brands from GM could be a really good thing,” Docherty said. “It takes the shopping process online up about 4 notches because you’ve got a lot more information at your fingertips.”Shoppers will also be able to complete the negotiation process online once they’ve found the vehicle they want.Docherty has been working on the plan along with her counterparts from GM’s Chevrolet and Cadillac brands. The carmaker expects to have more details of the pilot project worked out within the next week or so, she said.A lot of that work will take place in meetings with dealers, she said. Among the things dealers will have to work out will be how to respond to those who could be shopping for cars and even buying them in the middle of the night.”What we’ve got to talk to them about is if someone goes in there at two o’clock in the morning,” Docherty said, “They’re going to need to respond to that consumer in ways they haven’t had to in the past.”Whether GM’s eBay listings prove to be beneficial will depend on how much freedom GM gives dealers to set their own “Buy it Now” prices, said Scott Painter, chief executive of the auto pricing Web site TrueCar.com.”The proof in the pudding for GM will be if the “Buy it now” price is set above the market price,” he said.The market price is what most people are actually paying for the car in the real world. If dealers are genuinely competing for buyers on eBay, “Buy it Now” prices should reflect that, he said.If the eBay program ultimately really works, shoppers will begin using eBay as a research tool — to see what people are paying for cars — even if they don’t intend to buy through eBay, he said. That information alone will be valuable for consumers, said Painter.
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Source:CNN

NEW YORK (Reuters) — U.S. government debt prices climbed Friday, as investors searched for bargains following Thursday’s sell-off and on the view of a distant, sluggish economic recovery.Investors also jumped back into Treasurys on worries over second-quarter earnings and relief the market digested this week’s 73 billion in long-dated supply without much of a hitch, analysts said.”People are coming to the realization that the economy is not out of the woods,” said Ron D’Vari, chief executive officer at New Oak Capital in New York.A profit warning from Chevron Corp (CVX, Fortune 500) pushed stocks lower and underscored recent evidence signaling the U.S. economy continues to deteriorate albeit at a slower rate.On Friday, government data showed a surprise contraction in the U.S. trade gap in May and bigger-than-expected increases in export and import prices. These reports suggest some stabilization on the global trade front.The trade deficit shrank to 25.96 billion in May, the smallest since November 1999, while U.S. import prices jumped 3.2% in June, the largest single-month rise since November.The price on benchmark 10-year Treasury notes were last up 23/32 at 98-11/32. Their yield which moves inversely to the price was 3.33% down from 3.41%Thursday. The 10-year yield is not far above the seven-week low of 3.28% set two days ago.

Source:CNN

(Fortune Magazine) — We had a vacation house in Newport Beach, Calif., so I was always in and around the water and loved to surf. My dad was an importer, and on a trip to Japan he brought me home a movie camera. I started filming surfers at the local beach and then editing and splicing my own little surf movies. When I went to the University of Southern California’s school of business, I helped pay my way by showing surf movies up and down the coast for 1 a ticket. ” Look for a product that’s proven.I thought I’d just bum around for a year or two and then get serious about life. I started traveling to go surfing and ended up in Bali in 1974. I met Jeff Hakman, who’s a very famous surfer. We became good friends, and he invited me to spend time on the North Shore. He knew about these shorts coming out of Australia called Quiksilver (ZQK). He also knew Alan Green, the guy who designed them, and Alan sold us the rights to Quiksilver in America in 1976. ” Do it yourself.Jeff and I started buying the fabric and getting the shorts sewn one at a time. I put the snaps in every pair, Jeff would iron every pair, and then we’d put them in the back of my Volkswagen van and drive up and down the coast to sell them. By doing that we built relationships with surfers who owned local shops that are now larger accounts.0:00
/0:54H&M: Profit is in fashionFind a niche.Most people didn’t sell [surf] clothing back in those days, only boards and wax, so we were really different. The marketing was easy: Give free pairs of shorts to hot kids who surfed. That’s the grass-roots methodology that we continue to use. Don’t listen to the naysayers.Early on when I told my father about Quiksilver, he said, “I spent all this money on education, and you’re going to go and make surf shorts?” Thankfully, I proved him wrong.
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Source:CNN

NEW YORK: Stocks slipped Friday morning as investors mulled a narrower-than-expected trade deficit and weakness in global markets ahead of a reading on consumer sentiment.The Dow Jones industrial average (INDU) lost 24 points or 0.3% in the early going. The S&P 500 (SPX) index fell 2 points, or 0.3%. The Nasdaq (COMP) rose 4 points, or 0.3%. Weakness in overseas markets was weighing on U.S. stocks in the morning, said David Wyss, chief economist for Standard & Poor’s.Wyss added that this has been “a quiet week for the markets,” with light volume, considering the lack of major market movers and the fact that many on Wall Street are on summer vacation.Thursday, stocks were mostly stuck in the mud, with leading indexes posting gains of less than 10 points. Alcoa’s (AA, Fortune 500) narrower-than-expected loss failed to dispel concerns about the start of the quarterly reporting period. Investors have been worried that the economic recovery is going to be slow. As companies start reporting quarterly results, investors will be closely tuning into management forecasts of business conditions for the remainder of the year. Economy: The May trade balance shrunk to a deficit of 26 billion, the Commerce Department reported, from the revised deficit of 28.8 billion for April. Economists had expected the May deficit to widen to 30 billion.The Bureau of Labor Statistics reported that the U.S. Import Price Index rose 3.2% in June. Also, export prices rose 1.1% in June. The University of Michigan releases its initial reading on consumer sentiment at 9:55 a.m. ET. The index is expected to have dipped to 70 from 70.8 in June.General Motors: The automaker emerged from bankruptcy protection Friday with less brands, dealerships and billions less in debt. The so-called new GM will be majority owned by the U.S. government, with the Canadian government, and the United Auto Workers union also taking a share. The old GM’s bondholders will eventually own about 10% of the company, although old GM shareholders will not.0:00
/2:39Unemployment gets politicalGlobal markets: Japan’s Nikkei stock average dipped slightly for its eighth straight day of declines. The Nikkei lost 5.4% on the week for its steepest weekly decline since late January. European stock markets tumbled in afternoon trading.Oil and money: The price of oil fell 1.08 to 59.33. The dollar edged up against the euro and the British pound but slipped versus the yen. Been to the mall lately? What has changed that you like or dislike? We want to hear about your experiences. E-mail your story to realstories@cnnmoney.com and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here.

Source:CNN

NEW YORK: AIG is set to pay out more bonus payments next week, but the larger issue is how — or whether — AIG will pay roughly 235 million in bonuses still owed to its crippled financial products division employees.The contentious issue of the bonuses resurfaced late Thursday after The Washington Post reported that AIG was seeking the government’s consent to make a scheduled performance bonus payment of 2.4 million to 43 of its top-ranking executives.AIG put the issue before Kenneth Feinberg, the Obama administration’s pay czar. Feinberg is tasked with reviewing bonuses and retirement packages for the 100 highest-paid executives at AIG (AIG, Fortune 500), Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500), General Motors, GMAC, Chrysler and the now defunct Chrysler Financial. But Feinberg will also be reviewing a much larger, and much more controversial pool of bonuses scheduled to be paid out to employees of AIG’s Financial Products (FP) division next year, according to a source close to the matter.Roughly 235 million in retention bonuses is still owed to about 400 AIG-FP employees. Public furor erupted in March when it was revealed that AIG had paid out 165 million of retention bonuses to those employees.AIG-FP is the division that wrote insurance contracts on shaky derivatives that were at the root of the company’s near-collapse. In September, the government bailed out AIG with funds now worth up to 182 billion.The 165 million of bonus payments in March was the second installment of a larger, 454 million retention plan for the FP employees. The first — 50 million — was made in 2008, before the company was bailed out by the government. After the uproar in March, FP employees returned about a third of their bonuses, and a dozen workers resigned. The reaction from the public and Congress consumed AIG, Treasury and Federal Reserve officials, and called into question what to do with the last payment that is scheduled to go out in 2010.0:00
/4:26AIG could not failFeinberg only has to review payments that were contracted beginning in 2009, so the 235 million in FP payments — contracted in 2008 — do not officially fall under his purview. Still, a source close to the matter said that AIG wants Feinberg to take a look at those bonuses to make sure the government is completely comfortable with the company’s compensation plan. Feinberg was also asked to review the 2.4 million in performance bonuses set to be paid out to 43 of AIG’s top executives. That is part of a larger bonus pool of 121 million, the vast majority of which was paid out in March to the company’s most senior executives. But with pressure mounting from Congress and the Obama administration, AIG restructured its bonus payments for the top 50 executives. The top seven AIG executives opted to forgo their bonuses. The other 43, set to receive 9.6 million in March, took home only half — 4.8 million — in March, and are set to receive 2.4 million July 15 and another 2.4 million Sept. 15.Outgoing AIG Chief Executive Edward Liddy has said on many occasions that the public outrage about the bonuses has limited the company’s ability to move forward with its plan to repay the government.A Treasury spokesman would not comment directly on AIG’s bonuses, but suggested Feinberg can review those payments and the FP bonuses if he chooses, even though they were contracted in 2008, saying, “Mr. Feinberg has broad authority to make sure that compensation at those [seven] firms strikes an appropriate balance.”"Companies will need to convince Mr. Feinberg that they have struck the right balance to discourage excessive risk taking and reward performance for their top executives,” the spokesman added.– CNNMoney.com senior writer Jennifer Liberto contributed to this report.
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Source:CNN

NEW YORK (Reuters) — The dollar and yen rose against other major currencies on Friday on investor caution as the U.S. corporate earnings season began and share prices fell.The yen hit a five-month high against the U.S. dollar this week and surged to two-month highs against the euro and Australian dollar as investors unwound bets in riskier assets that they made using the low-yielding Japanese currency.It lost some those gains Thursday but then held its ground as the other currencies lost momentum. A profit warning from Chevron (CVX, Fortune 500) added to the specter of a weaker-than-expected second half economic recovery.”Currency markets move into Friday’s North American session with the dollar regaining losses from yesterday move, seemingly unaffected by any comments coming out of the G-8,” said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto in a note to clients.”Support is instead coming in from softer equities and some worries over the potential for near term economic recovery, both of which have helped the dollar index push back towards its opening level for this week,” Tihanyi said.The yen gained in particular this week as the U.S. dollar’s reserve currency status came under scrutiny at the G8 meeting in Italy, although reaction was muted to calls from China for a review of the reserve currency system at a meeting of world leaders Thursday.In early New York trade, the euro was 0.8% lower at 1.3909. The common currency was down 1.5% against the yen at ¥128.36.0:00
/0:55Japan wholesale prices plummetThe U.S. dollar index, which tracks performance against a basket of six major currencies, was up 0.6% at 80.382 . The dollar was down 0.7% at ¥92.27.A report on U.S. international trade also helped boost the dollar Friday. The U.S. trade gap narrowed unexpectedly to 26 billion in May to the lowest reading since November 1999 as exports rose despite weak global demand and imports shrank, government data on Friday showed.Swiss franc eyedThe European Central Bank and euro zone national central banks bought 23 million euros’ worth of covered bonds under the 60 billion euro program launched this week, the ECB said on Friday. The program is aimed at boosting lending to stimulate the ailing economy.The Swiss franc fell after Swiss central bank chief Jean-Pierre Roth said in an interview published on Friday the Swiss National Bank was sticking “decidedly” to its policy to prevent an appreciation of the Swiss franc.The dollar gained 0.9% on the day to 1.0880 Swiss francs while the euro rose 0.1% to 1.5136 francs.Sterling fell 1.0% on the day to 1.6181, relinquishing gains made on Thursday in part after the Bank of England surprised markets by not using the remaining 25 billion pounds available under the current asset-buying program. The central bank has said it will review the program in August when it releases new quarterly forecasts.

Source:CNN

(Fortune Small Business) — For years, Grant Opperman’s tiny delivery company struggled to keep up with the giants of its industry. FedEx (FDX, Fortune 500) and UPS (UPS, Fortune 500) deployed tracking technology that could pinpoint a package within minutes of its arrival at any given facility. Opperman’s 90-employee firm — D.W. Morgan, based in Pleasanton, Calif. — was forced to rely on the memories of its 30 drivers, who were instructed to phone the boss whenever a shipment arrived. The drivers didn’t always remember to call, and managers spent hours on the phone following up. When clients — which included 20 Fortune 500 companies — called about an undelivered package, Opperman couldn’t tell them where it was. That was okay for a niche company (D.W. Morgan delivers high-tech hardware) with 50 million in annual revenues. But Opperman dreamed of international expansion and knew he needed a better tracking system. He couldn’t afford what the big guys had — FedEx alone spends 1 billion each year on its tracking setup. So he bought the cheapest iPhone (200) for each of his drivers, paid 300 for a developer’s license from Apple (AAPL, Fortune 500) and asked one of his in-house tech specialists to build a custom application that used the phone’s global positioning system (GPS) technology. “I had to be creative to show my value,” Opperman says. Not so long ago, most of us associated GPS with expensive in-car guidance systems that gave driving instructions in patronizing voices. Today, the receiver technology, which can pinpoint your position anywhere on the planet based on data from six orbital satellites, is cheap, and small enough to fit in many phones. Most major carriers now sell GPS packages on cell phones starting at 10 per phone per month. Global spending on GPS receivers and software is set to hit 13 billion by 2013, according to ABI Research in London, up from 2.5 billion today. Entrepreneurs like Opperman are getting creative with the technology — using it to keep tabs on remote workers, to track down stolen machinery and even to plant crops. “GPS is pervading every aspect of life and business,” says Dominique Bonte, practice director at ABI. “You’ll see many more applications in the future.” D.W. Morgan’s clients can now track shipments online in real time. The custom application — developed in six weeks — displays the precise location of each truck on a Google (GOOG, Fortune 500) map. Drivers ask package recipients to sign their iPhone screens. The signatures are immediately uploaded to the company Web site. “Even the big guys don’t get it that fast,” says Opperman proudly. For a total investment of 21,000, including the salary of one IT worker for six weeks and 5,970 for 30 iPhones, Opperman estimates he will save 96,000 a year, based on the number of work hours he and his drivers spent filing, getting signature documentation and making manual data entries. Better yet, the system is allowing him to expand: Starting at the end of this year, D.W. Morgan will begin delivering in the Czech Republic and Thailand. There’s no need to build your own iPhone application, though. AT&T (T, Fortune 500), Verizon (VZ, Fortune 500) and Sprint (S, Fortune 500) sell GPS packages using software from Gearworks of Eagan, Minn., TeleNav of Sunnyvale, Calif. and Xora of Mountain View, Calif. The cheapest deals buy you basic driving directions. Those monthly prices don’t include data plans, which typically range between 15 and 30 per month. Expect a onetime activation charge of 20 to 25 per phone to be tacked on. More expensive packages, which run about 22 per phone per month, include features such as GPS time-carding, which allows employees to clock in and out using their cell phones. A tool called geo-fencing lets you draw a boundary on a map and sends text alerts if your employees cross it. Users of iPhones can download MotionX-GPS, a 2.99 application that will track routes and overlay the path on a Google map, tracing where they’ve gone and how long it took to reach their destination. Getting started isn’t always simple, as John Tartaglione discovered. Tartaglione owns JMS Partners, a residential construction firm based in Hopkinton, Mass. He installed Xora’s GPS app on his four employees’ cell phones so they could clock in remotely from job sites. But getting the software to work properly was a frustrating experience that took a couple of months, including many hours on the phone with Xora’s tech support staff. Tartaglione’s employees hated being tracked. Some simply turned off their phones. Many viewed the entire system as a waste of resources. Carrie MacGillivray, a senior analyst at Framingham, Mass.-based research firm IDC, calls getting support from employees the greatest challenge in GPS tracking.”They don’t want Big Brother,” she says. Tartaglione has yet to demonstrate the system’s worth to his employees. Still, remote time cards shaved off 15 minutes here and there from the time workers claimed they were at the job site. The result: a few thousand dollars in payroll costs saved. Now, when bidding new work, Tartaglione knows better how long it really takes to get a job done. “This clearly helps me with profitability,” says Tartaglione. “It’s been invaluable.”Pros and consGPS snooping can be legally risky, particularly if your monitoring extends beyond working hours — even if you don’t know it. Fire or reprimand an employee and she could claim that your knowledge of her off-hour activities — such as a medical appointment or a union meeting — was being used unfairly. “When they’re not working, turn it off,” advises Jonathan Segal, an employment attorney with WolfBlock in Philadelphia. On the other hand, precise time tracking can also work to the advantage of employees. When Gem Plumbing, Heating and Electric installed a GPS system to keep its 168 trucks on schedule, the Lincoln, R.I.-based firm offered bonuses to drivers who reached customers on time. The more efficient the technician, the bigger the bonus. Gem’s technicians now reach 95% of appointments on time, up from 50% before the GPS system was installed. The average monthly bonus per worker: 750. “Employees need to know what’s in it for them,” says Gem president Anthony Gemma. If GPS turns out to be integral to your business and you need more than phones can offer, you can upgrade to more specialized, sophisticated GPS hardware from established players such as Navtrak, based in Salisbury, Md.; NetworkFleet, out of San Diego; and Sunnyvale, Calif.-based Trimble. Operating costs for these systems can range from a few hundred dollars to several thousand dollars a month, depending on your requirements. Trimble alone generates revenue of 1.3 billion a year selling GPS equipment such as “precision agriculture” systems that control and drive forklifts and tractors. Thanks to Trimble, Iowa corn farmer Dennis Smith can climb on his tractor, push a button and watch his fields get seeded and fertilized in perfectly straight rows. The payoff: Smith’s crop yields and profits have both climbed 5% in the year since he adopted the system. Better yet, Smith and his single employee can work longer hours with less fatigue. “I will not farm without it anymore,” says Smith, who invested about 65,000 in the system, including activation fees and money spent on base stations, receivers, navigation controllers and antennae. “You can literally sit and read the newspaper while the tractor tills the field.”
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Source:CNN