07.29.09
Posted in All, hot news, online, top, world of money tagged campaign, life, people, political, writing at 3:06 pm by carydalton
Shares on Wall Street fell on Wednesday as investors grow increasingly wary about the economic recovery.
A new report on American factory orders was the latest sign that the economy may not rebound as fast as hoped.
The stock market’s two-week market rally is on hold after earnings reports and the Conference Board’s reading on consumer confidence fell short of expectations.
Amid investors’ growing caution, the markets appeared unmoved by the Internet search deal announced Wednesday between Microsoft and Yahoo.
The Dow Jones industrial average was down 25 points, or 0.3 percent . The Standard & Poor’s 500-stock index declined 4.6 points, or 0.48 percent, while the Nasdaq was down 10 points, or 0.55 percent.
European stock markets rose Wednesday after generally positive corporate earnings from leading industrial companies, although a sharp drop in Chinese stocks and an expected retreat at the open on Wall Street capped the gains.
The FTSE 100 in London was up 38 points, or about 0.8 percent, while the DAX in Frankfurt rose 91 points, or 1.7 percent. The CAC-40 in Paris was 49 points, or 1.7 percent, higher .
The early gains have more or less erased the losses posted Tuesday, when modest profit-taking drove trading after a two-week run that sent many of the world’s major indexes to their highest levels this year.
“We are now in an important transition period for these markets and the next few days will be pivotal to see if we can continue the recent strength,” said Jimmy Yates, the head of equities at CMC Markets.
So far Wednesday, prospects don’t look so bad, especially after a string of encouraging results in Europe and Asia.
In Asia, carmakers were in the spotlight. Nissan Motor reported a smaller-than-expected loss for its first-quarter and unveiled plans to build more cars in China, one of the few auto markets where sales are still growing. Meanwhile, Honda Motor bucked expectations and remained in profit online payday loans.
In Europe, France’s PSA Peugeot-Citroen a reported a big first-half loss but generated strong cash flow from cost-cutting measures and an inventory drawdown. In Germany, Daimler reported a second-quarter loss but said it expected improved profitability in the second half.
The pharmaceutical and chemical company Bayer topped the German DAX index despite sagging second-quarter sales and a 7 percent fall in net profit. The company’s share price rose 4.2 percent to 41.74 euros after the company showed good growth at its health care unit, which makes Bayer Aspirin, Alka-Seltzer, Yasmin and the multiple sclerosis treatment Betaseron.
Earlier in Asia, most markets dropped in the wake of the modest retreat in Europe and on Wall Street.
Japan’s Nikkei 225 stock average closed up 25.98 points, or 0.3 percent, at 10,113.24 following a seesaw session, but Hong Kong’s Hang Seng retreated 489.04, or 2.4 percent, to 20,135.50.
The main Shanghai index dived nearly 8 percent at one stage before clawing back some losses, ending down 171.94 points, or 5 percent, at 3,266.43. Even so, the drop was the biggest since last November but followed seven straight gains and arose after reports suggested that China’s two state-owned banks have been asked to limit their lending — another sign that the Chinese authorities are beginning to worry that the country may be growing too fast.
The losses in China came despite a stellar opening by China State Construction Engineering Corporation, which built the Water Cube swimming center for the Beijing Olympics. On its first day of trading, the company’s stock ended 56 percent higher. The company’s initial public offering was the biggest this year, raising $7.3 billion.
Wall Street Falls on Worries About Economy
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Posted in All, economic, hot news, money, online tagged finance, financial, markets, news, writing at 7:06 am by carydalton
THE California wine industry encompasses many with little in common. It includes small grape growers and brokers, family producers, négociants, big corporations, major distributors and many different types of retail outlets.
Still, as diverse as this group is, one word seems to sum up the effect of the recession on their businesses: brutal.
The reason is simple. Wine is a cash-flow business, and all along the pipeline, from farm to production to sales, cash is not flowing. Growers are behind on sales of grapes, which are fetching much lower prices than last year. Sales are sluggish for wines retailing at $15 a bottle and higher. Meanwhile, distributors, restaurants and retail shops are reluctant to buy more wine, preferring to sell through what they already have.
Cash may be trickling, but anxiety is gushing forth.
“People are drinking out of their cellars, the big distributors are throwing their weight around, and you add these things up, and from the winery perspective, the cash flow is brutal,” said Steve Matthiason, a vineyard consultant who also grows grapes and makes small quantities of wine. “Everybody figures this is kind of a temporary thing, that when restaurants burn through their inventory they’re going to have to start buying again, and distributors, too. But everybody is wondering when the levee is going to break, and you have harvest coming up.”
The harvest is what makes selling wine so different from, say, selling computer chips. When production of chips outpaces sales, executives adjust production. But nature is relentless in its annual rhythm. The grapes must be harvested each fall, whatever the need. If grapes are scarce, it may take 10 years from the time a new vineyard is planted to when wines from its grapes can be enjoyed. In a glut, the spigot can’t be switched off immediately.
Consumer preference, though, can turn on a whim. Even in the recession, people continue to buy wine. Consumption and sales are actually up, industry analysts agree. But people have turned away from expensive wines, buying two $8 bottles instead of one $20 bottle. As a result, growers in high-status areas who don’t already have contracts for their grapes are having trouble selling them, and prices are way down.
Russian River pinot noir grapes, for example, which sold in 2008 for $2,800 to $4,500 a ton, are now going for $1,800 to $2,800 a ton, said Bill Turrentine, president of Turrentine Brokerage, a leading California broker of wine grapes. Napa Valley cabernet sauvignon is selling for $2,000 to $3,000 a ton, he said, down from $3,500 to $5,500 in 2008.
Times are barely easier for wineries that rely on purchased grapes. At Siduri, which specializes in making pinot noirs from top vineyards up and down the West Coast, sales are down 11 percent from last year, “not great, but I don’t think it’s awful, either,” said Adam Lee, the proprietor with his wife, Dianna.
“We are certainly seeing a real slowdown in single-vineyard pinots,” Mr. Lee said, “but our appellation series, at $30 or less on the shelf, are flying.”
Such a diversity of offerings is crucial as even those consumers who continue to want top wines have nonetheless traded down. When times were good a few years ago, Brewer-Clifton, which makes small amounts of pinot noir and chardonnay in the Santa Rita Hills of Santa Barbara County, began planting vineyards so it could farm its own grapes cheap payday advance.
As it waited for these vineyards to become productive, Brewer-Clifton shifted its own sales focus. Instead of selling only wines from single vineyards for $60 to $80 a bottle, it started to offer wines with a regional appellation, for about $40 a bottle. These wines now make up half its production, which Greg Brewer, the proprietor with Steve Clifton, says is a lucky thing.
“Brewer-Clifton may have lost some people at $60 to $80, but we’ll catch them at $40,” Mr. Brewer said.
Some top wineries, while acknowledging a wholesale slump through distributors to retail shops and restaurants, say their direct sales, either at the winery or through the Internet, are still strong. At Cain Vineyard and Winery in Napa Valley, retail sales of Cain Five, for $125 a bottle, is down the most, while Cain Cuvée, for $34 a bottle, is selling well. But sales at the winery are up, even for Cain Five, said Christopher Howell, the general manager and winemaker. Hanzell Vineyards in Sonoma County reports similar strength in direct sales.
“It is a Catch-22 in some ways,” said Jean Arnold Sessions, president of Hanzell. “Distributors say the high end is not selling well, so they don’t present the wines.”
So what’s the good news?
The wine industry can take some comfort, no matter how small, in knowing that the situation could be a lot worse. Ten years or so ago, California was making too much wine, and so began paring production and trimming back on new vineyards.
“If this had hit a few years ago, when there was a basic structural excess, this would have been catastrophic,” Mr. Turrentine said.
The industry is also seeing some small acts of preemptive kindness. Peter Cargasacchi, a grower in the Santa Rita Hills who sells pinot noir grapes to Brewer-Clifton and Siduri, among others, recently cut his price by 10 percent, even though he already had contracts with producers.
“It just seemed like the right thing to do given the economy and the sluggish premium wine market,” he said. “Part of the concession also is motivated by the recognition that this symbiosis between vineyard and winery really is a team effort.”
Consumers still interested in high-end wines may find great discounts now as everyone is trying to move inventory. Those who don’t want to spend a lot on wine may also be drinking better in the near future. Premium producers who need to make room for the new vintage may sell their wines on the bulk market, even at a loss. These premium wines in turn will be repackaged and sold inexpensively, though it will be difficult for consumers to identify which bottles benefit from a premium wine infusion.
Meanwhile, people in the industry wait, and hope, especially those who expanded or invested in new vineyards before the downturn.
“People who made smart, conscientious decisions three years ago I think will be glad they did when the market stabilizes in 2012 or 2013,” Mr. Brewer said. “I think we have to be positive. God help us if it’s still like this in 2012.”
The Pour: Where Anxiety Is All That’s Flowing
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Posted in All, business, money, online, shortly tagged blogs, events, financial, newsreports, writing at 12:17 am by carydalton
Sprint Nextel said on Tuesday that it had agreed to buy out Virgin Mobile USA for $420 million, as it tries to recover from losses and customer defections.
The mobile phone company agreed to pay $5.50 a share to public shareholders of Virgin Mobile, whose biggest investor is the billionaire Richard Branson’s Virgin Group. Sprint gains 5.25 million users, expanding a prepaid unit that has added customers while its contract unit has lost them.
Sprint had 4.3 million prepaid subscribers, most of which were on the network obtained from Nextel, at the end of the first quarter. Its average monthly bill for contract customers was almost double the $31 the company got from prepaid subscribers. The company is set to report second-quarter earnings on Wednesday.
Sprint is taking a risk by increasing its exposure to the low prices and higher customer turnover of the prepaid market, said Chris King, an analyst at Stifel Nicolaus & Company. The company is still recovering from the Nextel acquisition, which led to almost $30 billion in losses from write-downs.
Sprint, which already owns 13 percent of the company, will retire Virgin Mobile’s outstanding debt, which it expects to be no more than $205 million net of cash by the end of September fast cash loans. Sprint, based in Overland Park, Kan., plans to complete the acquisition as soon as the fourth quarter.
Sprint lost 4.6 million customers last year after the $36 billion Nextel purchase led to complaints about call quality as the company struggled to integrate the Nextel network into its operations. The company wrote down most of the acquisition in 2007. The purchase also increased Sprint’s debt, which stood at $20 billion at the end of the first quarter.
Virgin Mobile, which sells Sprint service under its own brand, gives Sprint more customers that buy mobile phone service without a contract, a business that is growing amid the worst economic slump in a half-century.
In May, Virgin Mobile it raised its forecast for 2009 earnings before interest, taxes, amortization and depreciation and some other items to $127 million to $142 million, from a March projection of $117 million to $132 million.
Sprint Nextel in $420 Million Deal for Virgin Mobile USA
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