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Friday, March 28, 2008

Stocks closed lower Friday

Stocks closed lower Friday after a profit warning from J.C. Penney renewed fears about slower consumer spending. Financials and techs caved in after earlier attempts to rally.








Major U.S. Indexes































A third straight day of declines was enough to erase gains from the rally at the start of the week triggered by JPMorgan's upgrade to $10 a share for Bear Stearns. The Dow Jones Industrial Average and S&P 500 finished down more than 1 percent for the week.

The Nasdaq finished flat for the week but today's losses were enough to push the tech-heavy index back into bear-market territory, down 21 percent from its October high.

Still, all three indexes are up more than 2 percent in the past two weeks since news of the Bear Stearns bailout and extraordinary measures by the Federal Reserve were announced.

The resilience we've seen in March has been an encouraging sign after weakness in January and February. The consensus is that the market has found a bottom and that better times are ahead in the second quarter.

Tech Rally Fizzles

Tech stocks, which are down about 15 percent so far for the quarter, held on longer than most sectors today, but eventually caved in to the selling pressure.

mong the remaining holdouts were BlackBerry maker Research In Motion [RIMM 115.34 3.19 (+2.84%) ], which gained 2.8 percent after RBC Capital raised its price target on the stock, and Apple [AAPL 143.01 2.76 (+1.97%) ], which rose 2 percent after Bank of America said the company is getting ready to roll out iPhones using 3G technology, which uses higher bandwidth and allows for global roaming.

In economic news, consumer confidence fell to a 16-year low at the end of March, according to a report from the University of Michigan.

Analysts pointed out that consumer confidence is clearly in recession mode, though spending isn't. Consumer spending ticked up 0.1 percent in February, a weak reading but still better than the 0.1 percent decline expected.

J.C. Penney

JC Penney Co Inc
JCP
37.48 -3.04 -7.5%
NYSE








[JCP 37.48 -3.04 (-7.5%) ] shares fell 7.5 percent after the mid-tier department store lowered its first-quarter earnings forecast, saying sales through the Easter holiday were "well below expectations."

Competition from lower-priced retailers like Wal-Mart

Wal-Mart Stores Inc
WMT
52.12 -0.25 -0.48%
NYSE








[WMT 52.12 -0.25 (-0.48%) ] spurred JPMorgan to cut its rating on Bed, Bath & Beyond to "underweight" from "neutral."

There's also concern that spending on the high end is slowing. Merrill Lynch cut its rating on Tiffany

Tiffany & Co
TIF
41.15 -2.00 -4.63%
NYSE








[TIF 41.15 -2.00 (-4.63%) ] to "neutral" from "sell," and downgraded online jeweler Blue Nile [NILE 52.99 -2.60 (-4.68%) ] to "sell" from "neutral."

On the inflation front, the government's report on consumer income and spending showed that the core PCE price index, an inflation gauge closely watched by the Fed, rose 2 percent year over year, the top of the Fed's comfort zone. In the Michigan survey, the 12-month inflation forecast climbed to 4.3 percent from 3.6 percent in February, while the projection for inflation in five years dropped to 2.9 percent from 3 percent last month.

Bear Holds Above $10; a Boost for Lehman

In the financial sector, the big buzz was that Bear Stearns CEO Jimmy Cayne is selling his stock in the company. He's getting about $60 million for a stake once valued at closer to $1 billion. Bear Stearns shares

Bear Stearns Cos Inc
BSC
10.78 -0.45 -4.01%
NYSE












[BSC 10.78 -0.45 (-4.01%) ] fell 4 percent to $10.78.

Lehman Brothers

Lehman Brothers Holdings Inc
LEH
37.87 -0.84 -2.17%
NYSE








[LEH 37.87 -0.84 (-2.17%) ] shares declined 2.2 percent even after Citigroup advised clients to start buying shares of the stock, which has been battered by shorts convinced the brokerage is going to be the next to collapse.

"It's tough to have a liquidity-driven meltdown when you're being backed by government entities that have the ability to print money," Citigroup said.

Overall, financials were rattled after Oppenheimer analyst Meredith Whitney said banks such as Citigroup

Citigroup Inc
C
20.83 -0.96 -4.41%
NYSE








[C 20.83 -0.96 (-4.41%) ] and Wachovia [WB 25.99 -1.08 (-3.99%) ] are likely to announce dividend cuts in April as earnings won't support the current level of dividends.

Citigroup, the largest U.S. bank, is also said to be working on hiring an outsider to take over its flagging U.S. consumer business, according to a report in the Wall Street Journal.

Boston Fed President Eric Rosengren called for more detailed reports from banks on how they respond to problems amid concerns that troubles of U.S. banks could grow as the economy slows down.

U.S. money manager Legg Mason

Legg Mason Inc
LM
54.12 -1.80 -3.22%
NYSE








[LM 54.12 -1.80 (-3.22%) ] said Friday that it is mulling options for providing liquidity to holders of auction-rate preferred securities issued by seven closed-end funds of its affiliates.

On the home front, KB Home

KB Home
KBH
24.54 -1.25 -4.85%
NYSE








[KBH 24.54 -1.25 (-4.85%) ] shares dropped nearly 5 percent after the homebuilder reported it swung to a loss amid impairment and abandonment charges and said it didn't expect conditions to improve in the near term.

A day earlier, Lennar

Lennar Corp
LEN
17.94 0.04 +0.22%
NYSE












[LEN 17.94 0.04 (+0.22%) ] posted a quarterly loss but beat estimates. That coupled with a lower-than-expected decline in new-home sales and a slight decline in inventories had offered some hope that a turnaround may be brewing for the housing sector. But both homebuilders stressed that, until prices and consumer confidence rebound, inventory levels are going to remain out of whack with demand.

Responding to a question about a proposal from Democratic presidential contender Hillary Clinton, a housing official said the the idea of freezing mortgage rates for any length of time would be a mistake.

"You'd really cause market dislocations," said James Lockhart, the director of the Office of Federal Housing Enterprise Oversight Director. "I think we're going to let the market work and interest rates have come down dramatically and people are going to be able to refinance," Lockhart said.

Google Paid Clicks

New data confirming slowing growth in Google Inc.'s paid clicks renewed debate Thursday on Wall Street over whether the Internet search company's revenue can quickly adjust to changes it made in how it generates clicks.

Citing data that comScore Inc. released after the market closed on Wednesday, analysts said growth in Google's click-through rate has nearly ground to a halt.

Google's stock closed down $14.11, or 3.1 percent, to $444.08 in afternoon trading.

The click-through rate grew 3 percent in February compared to a year earlier, and January saw no increase compared to January 2007. Several months earlier, the rate was growing 25 percent to 40 percent compared to a year earlier. The new data is in line with click-through declines Google reported last quarter.

Google, which gets paid when users click on a sponsored ad that comes up as the result of a Google search, has reported steadily rising per-click revenue.

The Mountain View-based company said in January that the drop in click-through rates is a result of its efforts to boost the usefulness of each click to its advertisers' sales performance. For instance, the company decreased the space around a word that would result in a click, so more clicks would be intentional.

Analysts disagree on how long it will take Google's per-click revenue to adjust to any increased value per click it has created.

Rob Sanderson, an analyst with American Technology Research, said per-click revenue will rise immediately if advertisers see more value in each click, because they'll pay more for them at auction.

"It's not clicks that advertisers are really buying, it's what those clicks get them, which is sales conversions," said Sanderson.

Colin Gillis, an Internet analyst at Canaccord Adams, also was optimistic.

"It's very difficult to spin this as positive data point, but it also doesn't mean the world is ending," Gillis said.

The click-through rate is only one piece of the equation for Google, he said.

"The counter point is that Google is out there saying, 'We are trying to make our clicks more worthwhile.' They want to actually deliver relevant hot leads to their customers because that's what their customers want," Gillis said.

Other analysts disagreed.

Piper Jaffray analyst Gene Munster predicted Google will fall short of Wall Street expectations in the current quarter because of the click-through rate.

Lehman Brothers analyst Doug Anmuth cut his 2008 profit estimate for Google and reduced his price target to $580 per share from $644, citing the click-through rates.

He also said advertisers may be trimming their budgets -- and not responding to the changes Google has made.

Google, which reports first quarter earnings April 17, declined to comment on the comScore data.

Numbers from comScore are closely watched by some industry analysts, even though the firm uses online recruitment techniques dismissed by many traditional pollsters.

Sanderson said comScore's numbers have a wide margin of error and can't be used to predict quarterly results.

"ComScore data has a really wide range of plus or minus in terms of being accurate. They don't know what the real number is, it's just a sample," he said.

Wednesday, March 26, 2008

Motorola to Break Into 2 Companies

Motorola Inc. announced plans to separate its struggling handset business from other operations Wednesday, forming two separate publicly traded companies after months of agitation from frustrated investors.

The suburban Chicago-based cell phone maker has been under pressure from billionaire investor Carl Icahn for changes meant to revitalize its cell-phone business. The cell phone unit has seen its sales and stock price plummet with the company unable to produce second act to the once-popular Razr phone.

Motorola said the handset business will operate separately from another company that will encompass its home and networks business, which sells TV set-top boxes and modems, and its enterprise mobility solutions, which sells computing and communications equipment to businesses.

"Our priorities have not changed with today's announcement," Chief Executive Greg Brown said in a statement. "We remain committed to improving the performance of our Mobile Devices business by delivering compelling products that meet the needs of customers and consumers around the world."

Schaumburg-based Motorola said it hopes the transaction will be tax-free, allowing shareholders to own stock in both of the new companies. If the deal is approved, the two units would be separated in 2009.

Brown said Motorola will launch a search for a new chief executive of the Mobile Device business as it works to regain favor with customers and its No. 2 position in the cell phone market.

Motorola lost that spot last year to rival Samsung Electronics Co.

Finland's Nokia Corp. is the industry leader.

"We believe strongly in our brand, our people and our intellectual property, and expect that the Mobile Devices business will be well-positioned to regain market leadership as a focused, independent company," Brown said.

Wednesday's announcement was just the latest shake-up at Motorola, which rode the success of the iconic Razr phone from 2005 to 2006, but has stumbled since amid stiff competition.

Last year, the company pulled back from developing markets, cut 7,500 jobs and CEO Ed Zander resigned.

A flock of executives have left the company this year, and more cuts and changes are likely as the new management team scrambles to retain control in the face of a revived threat from Icahn.

Icahn, who has been steadily increasing his Motorola position, disclosed in a filing this month that he now owns 142,362,000 million shares, or 6.3 percent -- up from 5 percent a month ago.

Wednesday's announcement came two days after Icahn sued Motorola, seeking documents about its executives and its cell phone business.

Icahn plans to use the material in his battle to win four seats on the Schaumburg-based company's board, his second proxy fight in two years with Motorola. He rejected a concessionary offer of two seats from the company.

A message left with Icahn's office was not immediately returned.

Motorola shares climbed 45 cents, or 4.6 percent, to $10.21 at the open of trade.

http://www.motorola.com

US Stocks Head for Lower Open

U.S. stocks headed for a lower open Wednesday after orders for big-ticket manufactured goods declined for a second straight month in February.

The Commerce Department report that durable goods orders fell 1.7 percent last month -- rather than rising as the market expected -- appeared to rekindle some unease about the health of the economy.

The report comes a day after stocks generally extended their gains after two sessions of sharp advances. The market's recent ability to add to its climb has been greeted by bullish investors as a sign that its troubles are on the mend; Wall Street hadn't succumbed to a recent pattern of selling off after such a strong move upward. The Dow Jones industrial average has risen more than 425 points in the past three sessions.

But the durable goods numbers made it unclear whether the rally would hold.

Government figures are also due after the opening bell on new home sales.

Dow Jones industrial average futures fell 38, or 0.30 percent, to 12,477. Standard & Poor's 500 index futures fell 4.30, or 0.32 percent, to 1,347.10, while Nasdaq 100 index futures fell 4.80, or 0.26 percent, to 1,821.20.

Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.50 percent from 3.51 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose $1.01 to $102.23 in premarket electronic trading on the New York Mercantile Exchange.

Corporate news appeared to weigh on some investors. Private equity firms leading a $19.5 billion buyout of Clear Channel Communications Inc. were having difficulty reaching terms with the banks committed to financing the deal and the plan was close to collapse, according to a report by The Wall Street Journal.

In other corporate news, Motorola Inc. said it plans to split its troubled handset business from other operations, creating two separate, publicly traded companies.

Electronic parts manufacturer Jabil Circuit Inc. posted a fiscal second-quarter loss and warned its third-quarter results will fall short of Wall Street's expectations.

Overseas, Japan's Nikkei stock average fell 0.30 percent. In morning trading, Britain's FTSE 100 fell 0.48 percent, Germany's DAX index fell 0.41 percent, and France's CAC-40 was off 0.62 percent.

Tuesday, March 25, 2008

mcdonald's ads


mcdonald's has for decades maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events from ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company's advertising strategy. To date, McDonald's has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions. At times, it has run into trouble with its campaigns.

i'm lovin' it is an international branding campaign by McDonald's Corporation. It was created by Heye & Partner, a longtime McDonald's agency based in Unterhaching, Germany, near Munich, and a member of the DDB Worldwide Communications Group, Inc. It was the company's first global advertising campaign and was launched in Munich, Germany on September 2, 2003, under the German title ich liebe es. The English part of the campaign was launched on September 29, 2003 with the music of Tom Batoy and Franco Tortora (Mona Davis Music) and vocals by Justin Timberlake, in which the slogan appears. In 2007, after a public casting call which received 15,000 submissions, McDonald's selected 24 people to appear as part of the campaign.[5] Images of those chosen, who had submitted a story and digital photograph which "capture[d] ... themes of inspiration, passion and fun," appear on McDonald's paper bags and cups worldwide.

McDonald's
Type Public (NYSE: MCD)
Founded May 15, 1940 in San Bernardino, California
Founder Dick and Mac McDonald
Headquarters Oak Brook, Illinois, USA
No. of locations 31,000+ worldwide[1]
Key people Ray Kroc, corporate founder
Andrew J. McKenna Sr. Chairman
Jim Skinner Vice Chairman/CEO
Ralph Alvarez, president/COO UK CEO, Steve EasterBrook Vice CEO and COO David Fairhurst
Industry Restaurants
Products Fast Food
(hamburgerschickenfrench friessoft drinksmilkshakessaladsdessertsbreakfast)
Revenue $22.79 billion USD (2008)[2]
Operating income $14.445 billion USD (2006)[2]
Net income $3.544 billion USD (2006)[2]
Employees 465,000 (2005)[2]
Slogan i'm lovin' it
Website www.mcdonalds.com

Home Sales in February

Sales of existing homes increased unexpectedly in February after six months of decline, but private economists said it was too soon to say the prolonged slide in housing is coming to an end.

The National Association of Realtors said sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units. It marked the first sales increase since last July, but even with the gain sales were still 23.8 percent below where they were a year ago.

Prices continued to slide. The median sales price for single-family homes and condominiums dropped to $195,900, a fall of 8.2 percent from a year ago, the biggest slide in the current housing slump. The median price for just single-family homes was down 8.7 percent from a year ago, the biggest decline in four decades.

Wall Street, which had been expecting another decline in home sales, was encouraged by the February increase as well as improved terms for Bear Stearns stockholders in the sale of that company to JPMorgan Chase & Co. The Dow Jones industrial average rose 187.32 points Monday to close at 12,548.64.

Economists, however, said they still believed any sustained housing rebound was many months away.

"The hemorrhaging has stopped but the recovery will be long, slow and painful," said Bernard Baumohl, managing director of the Economic Outlook Group. "It's unlikely that we will see any sustained jump in home purchases, must less higher prices, until mid 2009 at the earliest."

Brian Bethune, an economist at Global Insight, said, "A quick bounce-back in the housing markets is simply not in the cards."

White House press secretary Dana Perino said the increase in sales and a decline in the inventory of unsold homes was encouraging but "we can't put a lot of stock in just one report."

Lawrence Yun, chief economist for the Realtors, said that some formerly hot markets in California and Florida were seeing significant price declines now as sellers are cutting prices to attract buyers.

"We are not expecting a notable gain in existing-home sales until the second half of this year," he said.

He said sales should be helped in coming months by recent moves to boost the loan limits on mortgages that can be insured by the Federal Housing Administration and purchased by Fannie Mae and Freddie Mac.

By region of the country, sales surged by 11.3 percent in the Northeast and were up 2.5 percent in the Midwest and 2.1 percent in the South. The only region of the country to see a sales decline was the West, where sales dropped by 1.1 percent.

The inventory of unsold homes dipped to 4.03 million units in February. That meant it would take 9.6 months to exhaust the supply of homes for sale at the February sales pace. That was down from January's level of 10.2 months but still about double what the months' supply had been during the peak of the housing boom.

Sales of existing homes fell by 12.8 percent in 2007, the biggest decline in 25 years, following an 8.5 percent drop in 2006. After a five-year boom, the steep downturn in housing over the past two years has been made worse by a severe credit crunch as financial institutions tightened their lending standards in reaction to multibillion-dollar losses on mortgages that have gone into default.

The steep slump in housing has raised concerns about a possible recession. Democrats are pushing for greater efforts to stem a tidal wave of mortgage foreclosures to keep more unsold homes from being dumped on an already glutted market.

Sen. Hillary Clinton, campaigning for the Democratic presidential nomination in Pennsylvania on Monday, called on President Bush to appoint an emergency working group on foreclosures to recommend new ways to confront the housing crisis.

"Over the past week, we've seen unprecedented action to maintain confidence in our credit markets and head off a crisis for Wall Street banks," Clinton said in a campaign speech. "It's now time for equally aggressive action to help families avoid foreclosure and keep communities across this country from spiraling into recession."