December 2009

GM Discounts: Saturn, Pontiac Cars Get $7000 Rebate

December 29, 2009

NEW YORK — General Motors Co. is offering deep discounts on its remaining Saturn and Pontiac vehicles as it looks to move the leftover inventory of the soon-to-be-dead brands, according to a published report. The automaker will pay dealers $7,000 for every new Saturn or Pontiac left on their lot if the vehicle is moved to dealer-operated rental or service fleets, according to The Wall Street Journal, which cited a letter mailed to dealers. This allows the dealers to sell the cars and trucks to consumers at a discount, although the vehicles would be labeled as used because the dealer would technically be the first owner. The offer expires Jan. 4, according to the newspaper. GM spokesman Tom Henderson confirmed the details of the incentive plan Tuesday. “That was the purpose of the programs – to help dealers reduce those inventories,” he said. The decision to discount Saturns and Pontiacs comes as GM closes down both brands under the Detroit automaker’s restructuring plan. The shutdown of Pontiac was announced earlier in the year. GM announced this fall it would discontinue Saturn after a deal collapsed to sell the brand to Penske Automotive Group Inc. Besides Pontiac and Saturn, GM is selling Hummer to a Chinese heavy equipment maker and is likely shuttering Swedish brand Saab. That will leave the automaker with four core brands: Buick, Chevrolet, GMC and Cadillac. Sales of Saturn and Pontiac have declined sharply this year. Saturn sales have plunged 61.5 percent through November, according to Autodata Corp. Pontiac sales have slid 32.3 percent. GM’s companywide decline is 31.8 percent. With a $7,000 discount, the manufacturer’s suggested price of Pontiac’s cheapest vehicle, the G3 hatchback, falls to $7,335. The incentive brings Saturn’s cheapest vehicle, the Astra compact car, to $9,495. Henderson, however, cautioned that the final price of the vehicles might be different. GM’s typical offers discounts that are much smaller. According to the auto research Web site Edmunds.com, GM’s incentive spending in November totaled $4,270 per vehicle, on average.

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Morgan Stanley Pay Packages: Firm Reportedly Considering Revising How Top Execs Are Compensated

December 29, 2009

NEW YORK — Morgan Stanley is considering the way it compensates its top executives, looking to defer more pay and benchmark salaries against rivals, The Wall Street Journal reported Monday, citing people familiar with the matter. The move reflects Wall Street’s effort to minimize criticism of its pay practices and at the same time maintain its executive talent, the Journal reported. Earlier this month, Goldman Sachs Group Inc. said its top executives will not receive cash bonuses this year. Calls to Morgan Stanley for comment were not immediately returned. According to the report, Morgan Stanley’s compensation committee has met several times in recent weeks to discuss pay plans. The New York investment bank may decide to pay senior executives about one quarter of their 2009 pay in cash, with the rest coming as deferred stock, the Journal reported. Another plan being considered would have most of the top 30 Morgan executives submit 65 percent or more of their pay to “clawbacks,” where they would have to return money in the event of future losses. Morgan Stanley could also determine that 20 percent of one’s total compensation would come in shares awarded based on the company’s share price compared with rival firm’s share prices, the Journal said. Earlier this month, outgoing Morgan Stanley Chairman and CEO John Mack said he would not receive his bonus for the year, citing the “unprecedented environment and the extraordinary financial support provided to our industry” in a memo to employees. It would mark the third year that Mack won’t accept a bonus. Mack will step down as CEO on Jan. 1, but will remain at the company as chairman. He is being succeeded by co-president James Gorman. Gorman will help make final decisions on the compensation plans, the Journal said. Shares of Morgan Stanley rose 12 cents to $29.41 in late morning trading.

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Eliot Spitzer: Patent Applications Reflect Shift In Global Economy

December 29, 2009

One way to assess our advantage in innovation is to examine our innovation-patent filings — the core intellectual foundation of production and intellectual activity. A great source for this data is the World Intellectual Property Indicators 2009.

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Keith Ferrazzi: Report from Day 1 in Guatemala

December 29, 2009

Life is so amazing and my first night in Guatemala (12/26) humbled and reminded me yet again. I spent my first day touring the city from 2-5, after an 8 a.m. landing. Honestly, I was frustrated: I wanted to get doing what I was going there to do, service to others. Meanwhile, unknown to me, a young lady in Guatemala City who has been following me on Twitter was trying to find me. Her boss had introduced her to Never Eat Alone a few years ago and changed her thinking about professional relationships. Then when Who’s Got Your Back came out, she read it and gave it to her office mates and created one of the region’s first Lifeline Groups. She and her friend were driving around Antigua trying to use my Twitter updates as clues to find me to get me to sign their books. (“Do you recognize this picture…?”) Finally they got the courage to message me: “We’re in the same city, can we buy you a drink?” Well, skip ahead to dinner with us all: Susette and Sara, my Twitter stalkers, now emerging friends, and of course Emlyn who is my travel coordinator from Cultural Embrace … Read the rest of this article on my blog . To donate to the kids I’m helping in Guatemala, click here .

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Proteonomix, Inc. (PROT) Announces Change in Officers/Directors

December 29, 2009

MOUNTAINSIDE, NJ–(Marketwire – December 29, 2009) – Proteonomix, Inc. ( PINKSHEETS : PROT ) announces that Joel Pensley has resigned as secretary, director and general counsel and Roger Fidler has joined the Company as director and general counsel; and Steven Byle, presently a director, has assumed the role of secretary. Mr. Pensley, 68 years old, resigned as an officer and director of Proteonomix due to health concerns.

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Target Puts Out Anti-Union Video Warning Employees Of New ‘Card-Check’ Law

December 29, 2009

Dec. 29 (Bloomberg) — Target Corp. retooled a training video to warn workers against a bill that would make union organizing easier. Michaels Stores Inc. told investors “our businesses could be impacted” by the measure. Enrollment in Jackson Lewis LLP’s “How to Stay Union-Free” seminars tripled. Companies are rallying to fend off a so-called card-check law sought by labor leaders and backed by President Barack Obama.

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Pete Sessions Spokesman Defends ‘I Love You’ Email To Allen Stanford

December 29, 2009

The Miami Herald reported on Sunday that Rep. Pete Sessions (R-Tex.) once penned a love note of sorts to jailed financier Allen Stanford. “I love you and believe in you,’” said the email, sent on Feb. 17. “If you want my ear/voice — e-mail.” It was signed, “Pete.” Now, a spokesperson for Sessions is defending the email without actually admitting that the congressman wrote it. From Glenn Thrush : From the government that knighted him to Barack Obama and John McCain, Allen Stanford had everyone fooled, and as Mr. Stanford’s scheme has become clear Congressman Sessions has worked to ensure that the investors Mr. Stanford swindled receive the justice they deserve – including signing a letter to the SEC requesting SIPC coverage for the victims. While the referenced email cannot be authenticated, Congressman Sessions believes that its contents resemble language he would use to communicate with a person in crisis to encourage right decisions and prevent further tragedy. Of course, John McCain and Barack Obama probably didn’t send affectionate messages to Stanford after he was charged with swindling investors out of $7 billion. Get HuffPost Politics On Facebook and Twitter!

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Mike Bonifer: Pat on the Back

December 29, 2009

I am at our local hardware store on Vermont Avenue in L.A. where I’ve recently been spending a lot of time and money on our fixer-upper, when I see one of the store’s employees give another one a pat on the back. It makes me smile because it’s something I don’t see too often in the workplace these days: generous, a gesture of appreciation — for what, exactly, I cannot tell. A favor returned? Encouragement? A conflict resolved? Good news? A joke? All I can tell for sure is that it’s a connection between two people who, in that instant, are enjoying their scene. We earn our money by learning from the Past and by being correct more often than not about the Future. But we do our living in the Now, and nothing says Now like a pat on the back. And yet, there’s a problem with this, at least where the workplace is concerned. Touching is a vital element of communication, but between the computer culture and the corporate playbook, it is being systematically eliminated from the game. To get the complete picture, I phone Martin Ett, an HR consultant with ObsessiCom Outsourcing Services , and ask him to interpret a pat on the back like the one I witnessed in the hardware store. “It depends,” says Ett. “On?” “A lot. Was it a display of affection? If so, was it sexual in nature? What was the duration of the gesture? We recommend a three-second limit on casual contact, including handshakes, conversational touching, hair or clothing adjustments, and lint-plucking. Back-patting falls under the three-second rule. “There’s also the nature of the contact itself to consider,” Ett went on. “Was there rubbing involved or was the contact static? Was it hand contact only, or was it of a hugging nature so that bodies were touching? This is an important distinction, because hugs are becoming increasingly problematic in the workplace. Many employers prohibit what we call ‘full frontal clutching’ while still allowing what we call ‘casual side-to-side linkage.’ We’re seeing strong anti-clutching trends across the corporate landscape. “I’d want to talk to each of the employees separately,” Ett continues, “to determine both intention and interpretation, an ‘ I-to-I Analysis,’ we call it.” “Eye-to-Eye? I ask. Misinterpreting. “Is that like a 360?” “You mean a 720? Uh, no. It means was there alignment between the patter’s Intention and the pattee’s Interpretation of the incident? (Incident?) I get where this is going but there’s no stopping him now. I put the phone on speaker and tend to my Farmville on Facebook as Ett continues: “Did the pat make the pattee defensive or uncomfortable, or imply some kind of future obligation? Also, what was the proximity of the parties? Was one of the parties backed into a corner, or was there space for the pattee to avoid the pat if it was unwelcome or unwarranted?” “It happened in the hose aisle,” I say. “It’s cramped in that store. Space is tight.” ” Hose aisle ,” repeats Ett, gravely. “That could be an issue. Context is key. I’d need to know more about what exactly goes on in the hose aisle. Is one of the parties the hose manager, or is that aisle considered neutral space? Was there actual hose involved? Because that’s a whole new kettle of worms… Kettle of worms? When did a pat on the back turn into a scene from a Wes Craven movie? “Also what, specifically, was ‘the back’ being patted? I’d want to know that. Was it in the region of the upper, or Cervical, vertebrae? If it was on the upper back it was probably okay, assuming of course, it didn’t last for longer than three seconds and no rubbing was involved. Middle, or Thoracic vertebrae, are a gray area, especially numbers T-One through T-Four. You find HR people very divided about this, and there are no clear guidelines, so my advice is to steer clear of the Thoracic region entirely, just to be safe. The lower, or Lumbar region, is a definite no-no. And a pat on the Sacrum will get you a visit from Security, no question. “Was one of the employees the other one’s superior?” continues Ett. “If so, the gesture could be taken as intimidation or harassment. Was the patting public or did it happen in private? Was this an isolated incident, or was it part of a pattern?” “I don’t know,” I say, feeling a bit harassed myself now, for even bringing it up. “They just seemed like a couple of guys enjoying a moment.” “Couple of guys, eh? We’re seeing a big increase in same-sex sexual harassment these days.” Ett says it with the ominous satisfaction of an exterminator describing a cockroach invasion in the building where you live. “What about giving myself a pat on the back?” I ask. “Do you have a rule against that?” “Are you making fun of me?” Ett replies. “If you are, you’re barking down the wrong well, buddy. There are rules about that .” Next time I see them, I’ll warn the guys over at the hardware store they’re skating on some very thin skin. The problem with rules of the game like those cited by (the fictional) Martin Ett is that they define workplace interactions in the context of the Past or the Future while minimizing the impact of the Now. Because of this they tend to suppress rather than expand our ability to communicate in a productive, meaningful way. In this kind of sanitized environment, we may be making our money and limiting our liability, but it has very little to do with how we’re living our lives. Mike Bonifer is the author of GameChangers–Improvisation for Business in the Networked World .

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Developer of Golf’s `Nicklaus Trail’ in Spain Is in Talks With Creditors

December 29, 2009

By Sharon Smyth and Alex Duff Dec. 29 (Bloomberg) — Polaris World, a privately held Spanish real estate company that develops golf courses designed by Jack Nicklaus , is in talks with lenders to avoid filing for protection from creditors. The developer, whose courses designed by 18-time golf Major winner are dubbed the “Nicklaus Trail”, notified a court in Murcia about the talks with lenders, an official for the Murcia Superior Court said today in a phone interview. The company has three months to reach an agreement or it will have to file for protection from creditors, said the official, who declined to be identified. In May 2009 the company’s lenders, including Banco Popular SA and Spanish savings bank Caja Murcia, agreed to cancel 970 million euros ($1.4 billion) of debt in return for real estate assets, according to a company filing. Polaris World still has about 900 million euros of debt, El Mundo newspaper reported. Phone messages left with Nicklaus Design in North Palm Beach, Florida, were not immediately answered. Spokesmen for Banco Popular SA and Caja Murcia declined to comment. Calls made to Polaris World went unanswered. To contact the reporters on this story: Sharon Smyth in Madrid at ssmyth2@bloomberg.net or Alex Duff in Madrid at aduff4@bloomberg.net

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Price Gains in Five German States Suggest National Figure May Top Forecast

December 29, 2009

By Christian Vits Dec. 29 (Bloomberg) — Consumer prices in five German states increased in December from a year earlier, led by higher energy costs. The inflation rate in Bavaria rose to 1 percent from 0.4 percent in the previous month, the statistics office in Munich said today. In Brandenburg, consumer prices rose 0.7 percent, while prices in North Rhine-Westphalia, Hesse and Saxony advanced 0.8 percent. Economists predict German consumer prices , when calculated using a harmonized European Union method, will rise 0.7 percent in December from a year earlier, according to the median of 19 forecasts in a Bloomberg News survey. Crude oil prices have almost doubled over the past year, undermining confidence just as the economy recovers from the worst recession in more than six decades. While German economic growth accelerated in the third quarter, rising unemployment may prompt consumers to keep a rein on spending. The Bundesbank said this month that German inflation will remain benign and unemployment is forecast to rise to 10.1 percent in 2011 from 8.1 percent today. “On the year, inflation rates are still driven by energy prices,” said Karsten Junius , a senior economist at Dekabank in Frankfurt. “However, inflation pressures will remain extremely subdued over the next year.” Stimulus Package Germany’s economy emerged from the recession in the second quarter and growth accelerated to 0.7 percent in the third. Chancellor Angela Merkel’s government is spending 85 billion euros ($123 billion) to stimulate activity and the European Central Bank has cut its benchmark rate to a record-low 1 percent as inflation risks remain contained. “Our interest-rate decisions are to be seen in connection with our price-stability goal, and in this context I do not see major threats for price stability in the near future,” ECB Governing Council member Ewald Nowotny said in an interview with Bloomberg News on Dec. 14. “Inflation rates will be on the positive side but it will be safely below the inflation target of the ECB.” Petroleum prices in Brandenburg rose 12.4 percent in December from the previous year, fuel gained 13.5 percent and heating-oil prices increased 8.2 percent. Food prices dropped an annual 2.6 percent while clothing and shoes were 3.3 percent more expensive than in December last year. Excluding energy, consumer prices in Bavaria rose 0.6 percent in the year and 0.9 percent in the month, while prices excluding energy in Hesse rose 0.8 percent in the year and were 1 percent higher than in the prior month. In the 16-nation euro area , consumer prices rose an annual 0.5 percent in November after declining 0.1 percent in the previous month. The ECB aims to keep inflation just below 2 percent. Euro-area data for December will be published on Jan. 5. To contact the reporter on this story: Christian Vits in Frankfurt at cvits@bloomberg.net

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Budding Housing Recovery Fails to Bolster Real Estate Broker Commissions

December 29, 2009

By Kathleen M. Howley Dec. 29 (Bloomberg) — A surge in home purchases by first- time U.S. buyers is doing little to help real estate agents and brokers who close the deals. Commissions in 2009 fell to the lowest level in seven years, driven down by sales of low-priced homes to first-time buyers using the federal tax credit. Commissions through November dropped 6.2 percent from a year earlier to $40.6 billion, according to Bloomberg calculations based on the average commission rates from Real Trends Inc. and on home price and sales data from the National Association of Realtors . The tax credit strengthened only the low end of the market and reduced agents’ pay, according to Steve Murray , president of Real Trends, a residential property research company. The tax benefit and foreclosure sales may lower the national median home price by a record 13 percent this year to $172,700, according to the Chicago-based Realtors’ group. Last month almost 75 percent of sales were for $250,000 or less, the Realtors said. “The impact of the tax credit has been huge,” Murray said in an interview. “The average commission rate inched up this year and the number of real estate sales have gone up too, but the average price has dropped significantly because of the bulge of first-time buyers .” The dollar value of commissions fell to the lowest amount since 2002 even as the average U.S. rate per transaction rose to about 5.29 percent this year, the fourth consecutive annual gain. The average commission rate was 5.26 percent in 2008, according to Real Trends , based in Castle Rock, Colorado. ‘No Trivial Number’ Commissions earned by real estate agents typically are computed as a percentage of a property’s sale price . Agents negotiate with sellers to set the rate and are required to pay a portion of it to the brokerage they work for. Income from commissions at Realogy Corp., the largest U.S. residential brokerage and franchiser, fell to $2.1 billion during the first nine months of 2009 from $2.8 billion a year earlier, the Parsippany, New Jersey-based company said in a Nov. 10 regulatory filing. “Income from real estate commissions is not a trivial number,” Patrick Newport , an economist at IHS Global Insight in Lexington, Massachusetts. “In a very weak economy, every little bit helps strengthen GDP.” During the five-year real estate boom, commission rates dropped as agents competed for clients and surging prices boosted income from each transaction, according to Murray. By 2005’s record low of 5.02 percent, the average commission had tumbled more than a percentage point from 1992’s 6.04 percent. Charging More When home prices declined in 2006 and properties began sitting on the market for longer periods, agents started charging more, Murray said. Real Trends commission data is based on surveys of the largest 500 U.S. real estate brokerages. “When the market was super-hot, getting a listing was like cash in the bank and there was a huge amount of competition,” Murray said. “Listings are not scarce anymore and, even if priced right, they’re not easy to sell.” Sales of previously owned homes probably will total 5.15 million this year, a 4.8 percent gain from 2008, according to an estimate on NAR’s Web site. In November, sales rose 7.4 percent to a 6.54 million annual rate, the highest level in almost three years, as buyers rushed to meet the tax credit’s original Nov. 30 deadline, the trade group said in a Dec. 22 report. Leaving the Business “I had the busiest November I’ve had in five years, which made up for lower prices and lower commissions, but I know some people who left the business altogether or took second jobs because they were making so much less for each transaction,” said Karen McCormack, co-owner of McCormack & Scanlan Real Estate in Jamaica Plain, a Boston neighborhood. The number of U.S. real estate brokers and salespeople as of Sept. 30 fell 9.2 percent from a year earlier to 850,000, according to the Bureau of Labor Statistics in Washington. Housing demand probably will drop in December, even though Congress extended the home-buying tax credit to April and expanded it to include some move-up buyers, according to Lawrence Yun , chief economist at the National Association of Realtors. “We expect a temporary sales drop while buying activity ramps up for another surge in the spring when buyers take advantage of the expanded tax credit,” Yun said in last week’s NAR report. There are already signs that the real estate market is slowing again. The Mortgage Bankers Association’s index of loan applications decreased 11 percent to 595.8 the week ended Dec. 18, the lowest level since October, from 667.3 the prior week, the bankers’ trade group said last week. “Starting this month, home sales are going to take a hit,” said Global Insight’s Newport. “The first credit used up the pool of first-time buyers by moving 2010 sales into 2009. We may not get much of a kick from the extension.” To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net .

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Netflix Content King Sarandos Pitches Web Film Rentals to Wary Hollywood

December 29, 2009

By Adam Satariano, Ari Levy and Ronald Grover Dec. 29 (Bloomberg) — Netflix Inc. Chief Content Officer Ted Sarandos bypassed Hollywood to jumpstart the company’s online film-rental business last year. Now he has to convince the studios the company is a friend and not a foe. Chief Executive Officer Reed Hastings is counting on Sarandos to cut deals with studios giving Netflix rights to show more films over the Web. Sarandos, 45, says he is willing to write big checks and negotiate directly with studios after Netflix earlier went around Walt Disney Co. and Sony Corp. to gain access to their titles from the Starz cable channel. “We have to fight against their fear that we’ll destroy the ecosystem,” Sarandos, a former video-store clerk, said at a Dec. 16 panel discussion. “We’re not destroying anything. We’re creating a new opportunity.” Sarandos’s success is critical to Netflix as viewers move to the Web, endangering the mail-order DVD rental business that helped the company upend brick-and-mortar stores such as Blockbuster Inc. His challenge is to convince studios to provide content as they explore their own digital options, including offering movies online themselves. “The challenge for Netflix is what to do when the world migrates to digital distribution and whether it can obtain product from all the studios as that’s happening,” said Warren Lieberfarb , the former head of Warner Bros. DVD operations. Netflix, the largest mail-order film-rental service, offers Web-based movie-viewing that’s used by 42 percent of its 11.1 million subscribers, according to the company. It has an online library of 17,000 films and TV shows. DVDs Yes, Streaming No? The studios, coping with a decline in DVD sales, are trying to avoid the fate of newspapers and music labels, which lost sales when their content went online. Hollywood executives view digital distribution as a threat to the traditional way money is made from movies. “Everybody views it as a terminal career decision if you get it wrong,” said Frank Biondi , who has led Universal Studios, Time Warner Inc. ’s HBO cable network and Viacom Inc. , owner of Paramount Pictures. Acquiring DVDs has rarely been a problem for Netflix, which charges $8.99 a month and up for unlimited mail-order service . The company needs additional rights from the studios to stream films to PCs, game consoles and Web-linked TVs. Netflix gained streaming rights to Disney and Sony movies including “Ratatouille” and “Spider-Man 3” last year by allying with Starz, the pay-TV network controlled by John Malone’s Liberty Media Corp. , based in Englewood, Colorado. In the future, permission will have to come from the studios, Netflix said in its annual report . Hollywood Breadbasket The Starz partnership created “animosity” in Hollywood, according to Tony Wible , an analyst at Janney Montgomery Scott LLC in Philadelphia, who recommends selling Netflix shares. The retailer will probably need to pay studios more or risk losing content, he said. Paramount, based in Los Angeles, supplies older titles to Netflix for streaming, Thomas Lesinski , head of home entertainment, said in an e-mail. “But not new releases.” Home entertainment executives at the other major studios declined to be interviewed. DVDs rank as the most-profitable part of Hollywood’s film business, with studios keeping about 80 percent of each purchase, according to Tom Adams , president of Monterey, California-based Adams Media Research. Sales will fall about 10 percent to $13 billion this year, according to Adams, who tracks the market. Rentals will total $8 billion, unchanged from 2008. Studios also will get about $2 billion from premium cable in the U.S. and $1 billion from basic cable and broadcast TV. Market Share Sarandos, based in Beverly Hills, California, and Hastings, 49, pledge to pay studios more as online viewing replaces the mail-order business. The company estimates it will spend $600 million next year shipping DVDs. “We’ll become one of the networks’ and studios’ largest revenue generators,” Hastings said. He expects to be mailing DVDs until 2030. Netflix’s DVD subscription service is projected by analysts to drive profit of $110.8 million this year on sales of $1.67 billion, a 22 percent gain from 2008. The shares, which have almost doubled this year, added 45 cents to $57.34 yesterday in Nasdaq Stock Market trading. Through the first half of 2009, Netflix accounted for $803 million of the $4.14 billion U.S. rental market, trailing Blockbuster Inc. ’s $986 million, according to Janney Montgomery, which cited Adams Media data. The big studios — Warner Bros., Disney , News Corp. ’s Fox, Paramount, Sony and General Electric Co. ’s Universal — sell films in separate windows and times. Movies go from theaters to stores, for purchase or rental, to cable and satellite pay-per- view, to premium channels like HBO, then basic cable and broadcast, with studios collecting money at every step. Existing Contracts Hastings’s aim is to find a niche for streaming. Netflix’s goal of streaming films to rental customers when DVDs arrive in stores or air on pay TV would violate studio agreements with cable networks, said Biondi who’s now senior managing director of WaterView Advisors LLC, a New York-based private-equity firm. “Not that those can’t be reset,” Biondi said in an interview. “But you’re going to have big customer sets that are going to be very unhappy.” Sarandos says Netflix is creating a business that didn’t exist before, partnering with Tokyo-based Sony, Microsoft Corp. and TiVo Inc. to stream films to game consoles and set-top boxes. It is also vying with cable operators such as Comcast Corp. , which is introducing an online service, studios including New York-based Time Warner and Burbank, California-based Disney, as well as Apple Inc. and retailer Best Buy Co. Sale-Only Window Researcher iSuppli Corp. in El Segundo, California, estimates consumers worldwide will have 376.5 million devices that can receive Web video content by 2013, up from 94.8 million now. Netflix plans to expand internationally with a streaming- only service next year, Hastings said in October. The studios have seen rental chains buckle under competition from Netflix and Bellevue, Washington-based Coinstar Inc. , operator of Redbox kiosks that rent movies for $1 a day. Time Warner is seeking more money from Netflix, whose Web site no longer features the studio’s DVDs — a possible “sign of strain,” Janney’s Wible said in a Dec. 17 research note. To alleviate fears that its online service won’t cannibalize existing revenue, Netflix has suggested it may agree to a new sales-only window in which movies can’t be rented. Sarandos often meets with Hollywood brass over breakfast at the Four Seasons Hotel in Beverly Hills. ‘Trust and Relationships’ “Doing business in Hollywood is very much built on trust and relationships,” Sarandos said in an interview. In May, Jeffrey Katzenberg , CEO of DreamWorks Animation SKG Inc., hosted Netflix executives for a demonstration of 3-D home movies. At the Video Hall of Fame dinner this month, Sarandos mingled with executives like Lions Gate Entertainment Corp. President Steve Beeks . “If you could assume anybody’s position in the game right now you’d probably prefer Netflix’s,” said Kevin Landis , the founder of SiVest Group Inc. , in Santa Clara, California, which owns 227,000 Netflix shares . To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net ; Ari Levy in San Francisco at alevy5@bloomberg.net ; Ron Grover in Los Angeles at rgrover5@bloomberg.net .

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Stifel to Accelerate Auction-Rate Securities Repurchases After Settlement

December 29, 2009

By Katrina Nicholas Dec. 29 (Bloomberg) — Stifel Financial Corp.’s investment banking unit will repurchase auction-rate securities from individual customers six months ahead of schedule as part of a settlement agreed with a group of state regulators. St. Louis, Missouri-based Stifel Nicolaus & Co. will complete the repurchases no later than December 2011, Stifel Financial said in a statement yesterday. Retail investors who bought securities prior to the collapse of the ARS market last year, and who still hold them at Stifel, will be eligible for payment, it said, without providing a value for the buyback. “This accelerated and enhanced plan will ultimately provide liquidity to 100 percent of our ARS retail clients, about 1,200 in number,” Stifel Chairman and Chief Executive Officer Ronald Kruszewski said in the statement. Investors sued at least 19 broker-dealers after the $330 billion auction-rate market froze in February 2008 as credit conditions worsened and banks stopped participating in auctions that set interest rates for the investments, according to data compiled by Bloomberg. As private litigation moved forward, financial firms agreed to buy back about $61 billion of ARS to end regulators’ probes of their treatment of customers. An auction-rate security is a corporate or municipal short- term bond designed to preserve capital while realizing higher rates of return than other money market investments. Since their interest is typically reset every seven to 35 days at bidding managed by dealers, when such auctions began failing customers were unable to sell their securities at face value and get access to their money. State Settlement Stifel’s repurchase plan is part of a settlement with states including Missouri, Indiana and Colorado, it said in its statement. Missouri sued the financial company in March over its alleged failure to repay 1,200 investors stuck in the securities, and in June described the repurchase plan then in place as “drawn-out and inadequate.” The settlement includes a $525,000 fine that will be shared by participating North American Securities Administration Association members and payments of $250,000 to Missouri and $25,000 to Indiana for expenses including investigation costs, according to yesterday’s statement. Stifel will also hire an independent consultant who will review the company’s supervisory and compliance policies and procedures solely for non-conventional investments, it said. To contact the reporter on this story: Katrina Nicholas in Singapore at knicholas2@bloomberg.net

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Budding U.S. Housing Recovery Fails to Lift Real-Estate Broker Commissions

December 29, 2009

By Kathleen M. Howley Dec. 29 (Bloomberg) — A surge in home purchases by first- time U.S. buyers is doing little to help real estate agents and brokers who close the deals. Commissions in 2009 fell to the lowest level in seven years, driven down by sales of low-priced homes to first-time buyers using the federal tax credit. Commissions through November dropped 6.2 percent from a year earlier to $40.6 billion, according to Bloomberg calculations based on the average commission rates from Real Trends Inc. and on home price and sales data from the National Association of Realtors . The tax credit strengthened only the low end of the market and reduced agents’ pay, according to Steve Murray , president of Real Trends, a residential property research company. The tax benefit and foreclosure sales may lower the national median home price by a record 13 percent this year to $172,700, according to the Chicago-based Realtors’ group. Last month almost 75 percent of sales were for $250,000 or less, the Realtors said. “The impact of the tax credit has been huge,” Murray said in an interview. “The average commission rate inched up this year and the number of real estate sales have gone up too, but the average price has dropped significantly because of the bulge of first-time buyers .” The dollar value of commissions fell to the lowest amount since 2002 even as the average U.S. rate per transaction rose to about 5.29 percent this year, the fourth consecutive annual gain. The average commission rate was 5.26 percent in 2008, according to Real Trends , based in Castle Rock, Colorado. ‘No Trivial Number’ Commissions earned by real estate agents typically are computed as a percentage of a property’s sale price . Agents negotiate with sellers to set the rate and are required to pay a portion of it to the brokerage they work for. Income from commissions at Realogy Corp., the largest U.S. residential brokerage and franchiser, fell to $2.1 billion during the first nine months of 2009 from $2.8 billion a year earlier, the Parsippany, New Jersey-based company said in a Nov. 10 regulatory filing. “Income from real estate commissions is not a trivial number,” Patrick Newport , an economist at IHS Global Insight in Lexington, Massachusetts. “In a very weak economy, every little bit helps strengthen GDP.” During the five-year real estate boom, commission rates dropped as agents competed for clients and surging prices boosted income from each transaction, according to Murray. By 2005’s record low of 5.02 percent, the average commission had tumbled more than a percentage point from 1992’s 6.04 percent. Charging More When home prices declined in 2006 and properties began sitting on the market for longer periods, agents started charging more, Murray said. Real Trends commission data is based on surveys of the largest 500 U.S. real estate brokerages. “When the market was super-hot, getting a listing was like cash in the bank and there was a huge amount of competition,” Murray said. “Listings are not scarce anymore and, even if priced right, they’re not easy to sell.” Sales of previously owned homes probably will total 5.15 million this year, a 4.8 percent gain from 2008, according to an estimate on NAR’s Web site. In November, sales rose 7.4 percent to a 6.54 million annual rate, the highest level in almost three years, as buyers rushed to meet the tax credit’s original Nov. 30 deadline, the trade group said in a Dec. 22 report. Leaving the Business “I had the busiest November I’ve had in five years, which made up for lower prices and lower commissions, but I know some people who left the business altogether or took second jobs because they were making so much less for each transaction,” said Karen McCormack, co-owner of McCormack & Scanlan Real Estate in Jamaica Plain, a Boston neighborhood. The number of U.S. real estate brokers and salespeople as of Sept. 30 fell 9.2 percent from a year earlier to 850,000, according to the Bureau of Labor Statistics in Washington. Housing demand probably will drop in December, even though Congress extended the home-buying tax credit to April and expanded it to include some move-up buyers, according to Lawrence Yun , chief economist at the National Association of Realtors. “We expect a temporary sales drop while buying activity ramps up for another surge in the spring when buyers take advantage of the expanded tax credit,” Yun said in last week’s NAR report. There are already signs that the real estate market is slowing again. The Mortgage Bankers Association’s index of loan applications decreased 11 percent to 595.8 the week ended Dec. 18, the lowest level since October, from 667.3 the prior week, the bankers’ trade group said last week. “Starting this month, home sales are going to take a hit,” said Global Insight’s Newport. “The first credit used up the pool of first-time buyers by moving 2010 sales into 2009. We may not get much of a kick from the extension.” To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net .

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Copper, Mining Stocks, Rand Rally on Outlook for Faster Economic Expansion

December 29, 2009

By Stuart Wallace Dec. 29 (Bloomberg) — Copper rose to a 15-month high, mining companies led an advance in stocks and currencies of commodity producers strengthened as investors anticipated faster economic growth next year. Copper advanced 2.3 percent at 12:04 p.m. in London, extending its 2009 gain to 136 percent. Sugar rose to a two- decade high. The Dow Jones Stoxx 600 Index of European shares added 0.4 percent as the U.K.’s FTSE 100 Index recouped its losses since Lehman Brothers Holdings Inc.’s collapse in September 2008. The South African rand strengthened against all 16 of its most-traded counterparts. Barton Biggs , a hedge-fund manager at Traxis Partners LP, and Marc Faber , publisher of the “Gloom Boom & Doom” newsletter, predict that stocks and the dollar will extend gains in 2010. Bill Miller has made 43 percent this year in his Legg Mason Capital Management Value Trust fund, beating 93 percent of similar funds by betting on a recovery. The decrease in U.S. home prices probably moderated in October and consumer confidence improved, economists said before reports today. “History would suggest that after such a severe economic shock like we’ve just had the odds are that we’re going to have a pretty good burst of growth in 2010, 2011,” Biggs said in a Bloomberg Television interview yesterday. “I don’t see any reason why we can’t have a further rally in the dollar and a further rally in stocks. And my guess is that the next move in both could be on the order of 10 percent.” Mining Strikes Copper rose $165 to $7,235 a metric ton on the London Metal Exchange, which was closed yesterday for a national holiday. The metal is heading for its best year since at least 1986. Officials in China, the world’s biggest copper user, said the economy expanded more than 8 percent in 2009. Workers at Chile’s Altonorte copper smelter went on strike yesterday and employees at the Chuquicamata copper mine voted to do the same. White sugar advanced as much as 1.9 percent to $707.20 a metric ton on the Liffe exchange in London, its highest since at least 1989. Crude oil for February delivery fell 0.5 percent to $78.37 a barrel in New York trading. Gold for immediate delivery fell 0.2 percent. Mining stocks including Vedanta Resources Plc and Xstrata Plc led the 0.5 percent gain in the U.K.’s FTSE 100 Index. The MSCI World Index of equities in 23 developed nations advanced 0.4 percent. China Railway Construction Corp. and Tongling Nonferrous Metals Group Holdings Co. offered C$679 million ($651 million) for Canada’s Corriente Resources Inc., the owner of copper deposits in Ecuador. U.S. Futures Futures on the Standard & Poor’s 500 Index added 0.4 percent before reports on U.S. home prices and consumer confidence. Property values in 20 metropolitan areas probably fell 7.2 percent in October from a year earlier, the smallest 12-month drop since 2007, according to the median forecast of 31 economists surveyed by Bloomberg News. The Conference Board’s consumer sentiment gauge probably improved in December for a second month. Oil-producing nations were the biggest gainers in emerging market stocks, with Abu Dhabi’s ADX General Index advancing 0.6 percent. The MSCI Emerging Markets Index fell 0.1 percent, snapping a five-day rally. The Australian dollar climbed 1.1 percent to 89.72 U.S. cents, gaining for the fifth successive day, and rose 1.2 percent to 82.23 yen. South Africa’s rand added 1.4 percent to 7.4121 per dollar. Bonds Fall U.K. government bonds declined, sending the yield on the 10-year gilt up as much as 11 basis points to 4.11 percent, the highest level in more than a year. The market was closed yesterday. The U.S. plans to sell a record-tying $118 billion of securities this week, including $42 billion of five-year notes today and $32 billion of seven-year debt tomorrow. Two-year Treasury note yields reached the highest level since September yesterday as an investor class that includes foreign central banks bought the lowest amount of the debt in five months at an auction. The yield was 2 basis points lower today at 1 percent. To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net

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TYLENOL RECALL 2009: Arthritis Pill Pull Expanded

December 29, 2009

NEW YORK — Johnson & Johnson is expanding a voluntary recall of Tylenol Arthritis Caplets due to consumer reports of a moldy smell that can cause nausea and sickness. According to a statement posted to the Food and Drug Administration Web site late Monday, the New Brunswick, N.J., company is now recalling all product lots of the Arthritis Pain Caplet 100 count bottles with the red EZ-Open Cap. Johnson & Johnson had recalled five lots of the product last month after consumers complained of a musty, mildew-like odor that triggered nausea, stomach pain, vomiting and diarrhea. The health care company said the odor results from trace amounts of a chemical called 2,4,6-tribromoanisole. That chemical is believed to result from the breakdown of another chemical used to treat wooden pallets that transport and store packaging materials. To date, the side effects, which also include vomiting and diarrhea, have been “temporary and non-serious,” although the health effects of the compound have not been studied. The recall only affects the specific lots cited. All other Tylenol Arthritis pain products remain available. The company will reintroduce Tylenol Arthritis Pain Caplets 100 count by January after moving production to a new facility. J&J’s McNeil consumer health care division sells a range of over-the-counter medicines, including cold reliever Sudafed and the antacid Mylanta. The unit posted $16 billion in sales in 2008, according to J&J’s annual report. Consumers seeking a refund or replacement can call J&J at 1-888-222-6036. Company shares rose 38 cents to $65.32 in morning trading Tuesday.

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Tylenol Recall 2009 EXPANDED, All Arthritis Pain Caplets Recalled

December 29, 2009

A Tylenol recall on arthritis caplets has just gotten larger, as Johnson & Johnson has expanded the recall to include all such products . A recall last month included five lots of the product with the Red EZ-Open Cap, but now Tylenol says all lots of the Tylenol Arthritis Pain caplets are included. Per Trading Markets , “The recall was due to a moldy odor that can cause nausea and stomach pain caused by trace amounts of the chemical 2, 4, 6-tribromoanisole.” Other side effects include vomiting and diarrhea, but they’ve been labeled as “temporary and non-serious.” Those affected should stop taking the medication immediately and contact Tylenol at 1-888-222-6036 or www.tylenol.com . Those with medical concerns should immediately contact their doctor. Tylenol says it plans to reintroduce the arthritis caplets in January 2010.

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Home Prices October: Housing Rebound Weaker Than Expected, Down 7.3 % Over Last Year

December 29, 2009

NEW YORK — Home prices rise for the fifth month in a row in October, but the recovery continues to be uneven with only 11 of the 20 metro areas tracked showing gains. The Standard & Poor’s/Case-Shiller home price index released Tuesday edged up 0.4 percent to a seasonally adjusted reading of 145.36 in October from September. The index was off 7.3 percent from October last year, nearly matching expectations of economists surveyed by Thomson Reuters. The index is now up 3.4 percent from its bottom in May, but still almost 30 percent below its peak in April 2006. San Francisco and Detroit posting the largest increases. Dallas recorded a flat reading for the month, while Tampa and Chicago had the largest declines. “Coming after a series of solid gains, these data are likely to spark worries that home prices are about to take a second dip,” David Blitzer, chairman of the index committee at Standard & Poors, said in a statement. That happened in the early 1980s, he said, and the current housing recovery appears more solid.

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Derivatives Reform Has Failed: WSJ

December 29, 2009

Lobbying by Wall Street has blunted efforts to step up regulation on derivatives trading by carving out exceptions or leaving the status quo in place. Derivatives took blame for some of the worst debacles of the financial crisis. But a year after regulators and critics began calling for an overhaul in the way they are traded, some efforts have been shelved and others have been watered down.

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WindTamer Corporation Announces Appointment of Adeeb Saba as Vice President of Operations

December 29, 2009

ROCHESTER, NY–(Marketwire – December 29, 2009) – WindTamer Corporation (“WindTamer” or the “Company”) ( OTCBB : WNDT ), a developer and manufacturer of a patented new wind turbine technology, announced today that Adeeb Saba has been appointed Vice President of Operations. Prior to joining WindTamer, Mr. Saba was Vice President of Manufacturing for Ultralife Corporation, where he was responsible for all rechargeable, non-rechargeable and communications systems operations. Prior to that, as Director of Technology, Mr. Saba led the team that developed and started up production of the Land Warrior Power System.

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AFI USA Completes $267M Refinancing of Times Square Bldg.

December 29, 2009

Manhattan’s iconic Times Square Building is about to see a significant revitalization, thanks to a major financial restructure. Property owner AFI USA has settled with its lenders and completed a recapitalization and restructuring of the debt on the…

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US Home Prices Index up 0.4% in October

December 29, 2009

US Home Prices Index up 0.4% in October

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Russia threatens EU of more oil cuts

December 29, 2009

Russia threatens EU of more oil cuts

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China misses $34.4b in frauds and embezzlement

December 29, 2009

China misses $34.4b in frauds and embezzlement

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S.Korea’s KNOC Oil Company takes over Kazakh energy firm

December 29, 2009

S.Korea’s KNOC Oil Company takes over Kazakh energy firm

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Germany approves Russia’s gas pipeline under Baltic Sea

December 29, 2009

Germany approves Russia’s gas pipeline under Baltic Sea

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China to spend $1.1m on Guantanamo’s irrigation project

December 29, 2009

China to spend $1.1m on Guantanamo’s irrigation project

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German farmers union (DBV) expects hike in food prices

December 29, 2009

German farmers union (DBV) expects hike in food prices

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Audi to invest $10.5 billion through 2012

December 29, 2009

Audi to invest $10.5 billion through 2012

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Hawaii tourism revenues decline in November

December 29, 2009

Hawaii tourism revenues decline in November

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Hong Kong retail sales surge in November

December 29, 2009

Hong Kong retail sales surge in November

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Legend Mining (ASX:LEG) Raises $3.42M Through Share Placement

December 29, 2009

Legend Mining (ASX:LEG) Raises $3.42M Through Share Placement

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French GDP expands 0.3% in 2009

December 29, 2009

French GDP expands 0.3% in 2009

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724 Solutions brings Its Mobile Internet, Mobile broadband solution to India

December 29, 2009

724 Solutions brings Its Mobile Internet, Mobile broadband solution to India

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Spain’s budget deficit widens to $103 billion

December 29, 2009

Spain’s budget deficit widens to $103 billion

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Forex daily technical analysis – Dec 29

December 29, 2009

Forex daily technical analysis – Dec 29

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Pilgrim’s Pride emerges from bankruptcy

December 29, 2009

Pilgrim’s Pride emerges from bankruptcy

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Sumitomo to buy 20% of Australia’s Nufarm

December 29, 2009

Sumitomo to buy 20% of Australia’s Nufarm

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Chinese firms bid $650m for Canada’s Corriente

December 29, 2009

Chinese firms bid $650m for Canada’s Corriente

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Putin opens new oil terminal on Russia’s Pacific coast

December 29, 2009

Putin opens new oil terminal on Russia’s Pacific coast

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Iran to boost steel output capacity by 2011

December 29, 2009

Iran to boost steel output capacity by 2011

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Russai signs gas export deal with China

December 29, 2009

Russai signs gas export deal with China

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South Korea acquires Kazakh energy firm

December 29, 2009

South Korea acquires Kazakh energy firm

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The good, the bad and the ugly face of cricket

December 29, 2009

The good, the bad and the ugly face of cricket

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Cricket: Australia has Pakistan on the backfoot

December 29, 2009

Cricket: Australia has Pakistan on the backfoot

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Whisky Menorah, Insipid Kitty Put Weirdness in 2009 Wine World: Elin McCoy

December 29, 2009

Review by Elin McCoy Dec. 29 (Bloomberg) — Every year, the world of wines and spirits produces great bottles, pleasant surprises and some thoroughly weird stories. This year, I’m happy to report, was no exception. There was the world’s first whisky menorah, the nine- branched candelabrum of Judaism, which had its debut on the third night of Hanukkah at the Chabad-Lubavitch center of Buckhurst Hill, England. The seven-foot high menorah, built with clear tubing, was filled with 65 liters of single malt donated by Tullibardine Distillery . Rabbi Odom Brandman said in an e-mail that he initially mentioned the idea “almost as a joke’’ but got serious about it on a visit to Scotland. His first Highlands distillery stop, Tullibardine, offered a cask of 17-year-old to fill the menorah. About 200 Chabad community members showed up to toast Hanukkah with swigs of the Scotch, Rabbi Brandman said. Over-the-top, decadent champagne packaging not only survived the world economic crisis, but even reached new heights. Veuve Clicquot touted the sleek pink “ice dress’’ that fits its rose bottle like a wet suit. Piper Heidsieck topped that by becoming the champagne pick for shoe fetishists. Haute couture footwear designer Christian Louboutin created a seductive black crystal stiletto-heeled shoe “flute,’’ from which you can sip Piper’s lively Cuvee Brut. Slipper Tipple Launched this month as Le Rituel , the “shoe for the lips’’ and bottle with Louboutin-designed label come packaged in, naturally, a fancy shoebox. The point? To recall the glamorous days when gentlemen admirers sipped champagne from their favorite dancer’s slippers. (Yes, it’s possible to sip from the glass shoe — I tested it, and no, there are no photos of me doing this.) You can try this experience for $500. Unshod, the nonvintage cuvee can be had for less than $40. The terminally cute category exploded in 2009. Mendocino County blogger Hairy Putter, the pet-friendly California wine county’s official “canine ambassador,’’ added winery tasting rooms to his reviewing roster. The cairn terrier applauded the dog treats at Navarro Vineyards and gave Goldeneye Vineyards a rating of 4 paws. Then there was the U.S. launch of Hello Kitty wines. The ubiquitous Japanese kitschy kitten, 35 years old this year, is plastered on everything from coin purses to wallpaper to a Taiwan maternity hospital. A Hello Kitty Beaujolais nouveau from France has been marketed in Japan for several years. Now the logo is gracing four Italian wines made by Lombardy producer Tenimenti Castelrotto in partnership with official distributor Camomilla . Bottle Necklace So far, only the two Italian rose bubblies, one brut ($30) and one demi-sec (half-bottle, $20), are available in the U.S. Both are made from pinot noir and are fruity and bright — better than you’d expect. The brut comes with a “bottle necklace’’ charm which any 8-year-old girl would be thrilled to wear as a bracelet, but I give the taste edge to the sweeter demi-sec. The most amusing wine-world oddity, though, came from the world of Japanese manga comic books. Once-staid Bordeaux is embracing the wildly popular wine manga series “Kami no Shizuku’’ (“Drops of God,” or “Les Gouttes de Dieu” in French) by Tadashi Agi, the pen name of brother and sister Shin and Yuko Kibayashi. The manga has become so influential in moving wine in Asia that the duo made U.K. wine magazine Decanter’s 2009 most-powerful list. Medoc Marathon In the latest issue, Decanter reported, renowned Chateau Lynch-Bages owner Jean-Michel Cazes helps the comic’s hero while he’s in Bordeaux to run the Medoc marathon, as Shin Kibayashi did in the autumn. The story line revolves around hero Shinzuku Kanzaki, son of a famous wine critic, who defies his dad and goes to work in a brewery. Then his father dies leaving a will that pits Kanzaki against his adopted sommelier brother in a test to find wines their father terms the “12 Apostles’’ and finally a 13th, the greatest wine in the world, known as the “drops of god.’’ The son who finds them first will inherit his father’s 2 billion yen ($21.8 million) wine collection. I won’t spoil the rest. This isn’t kid’s stuff. The series has appeared in a Japanese weekly since 2004 and is periodically collected in book form. The 22 volumes in Japanese have sold 3.5 million copies, according to publisher Kodansha, and inspired a 2009 television series in the country. It has also been published in South Korea, China and France, where 300,000 copies have been sold. English-language editions look like a sure thing — the hero is getting into New World wines. ( Elin McCoy writes on wine and spirits for Bloomberg News. The opinions expressed are her own.) To contact the writer of this story: Elin McCoy at elinmccoy@gmail.com

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Four German States Say Prices Rose in December, Led by Higher Energy Costs

December 29, 2009

By Christian Vits Dec. 29 (Bloomberg) — Consumer prices in three German states increased in December from a year earlier, led by higher energy costs. The inflation rate in Brandenburg rose to 0.7 percent from 0.2 in November, while prices in Hesse advanced 0.8 percent after rising 0.3 percent in the previous month, the states’ statistics offices in Potsdam and Wiesbaden said today. In Saxony, inflation rose to 0.8 percent after increasing 0.3 percent in the previous month. Economists predict German consumer prices , when calculated using a harmonized European Union method, will rise 0.7 percent in December from a year earlier, according to the median of 19 forecasts in a Bloomberg News survey. Crude oil prices have almost doubled over the past year, undermining confidence just as the economy recovers from the worst recession in more than six decades. While German economic growth accelerated in the third quarter, rising unemployment may prompt consumers to keep a rein on spending. The Bundesbank said this month that German inflation will remain benign and unemployment is forecast to rise to 10.1 percent in 2011 from 8.1 percent today. “On the year, inflation rates are still driven by energy prices,” said Karsten Junius , a senior economist at Dekabank in Frankfurt. “However, inflation pressures will remain extremely subdued over the next year.” Germany’s economy emerged from the recession in the second quarter and growth accelerated to 0.7 percent in the third. Chancellor Angela Merkel’s government is spending 85 billion euros ($123 billion) to stimulate activity and the European Central Bank has cut its benchmark rate to a record-low 1 percent as inflation risks remain contained. ‘Safely Below’ “Our interest-rate decisions are to be seen in connection with our price-stability goal, and in this context I do not see major threats for price stability in the near future,” ECB Governing Council member Ewald Nowotny said in an interview with Bloomberg News on Dec. 14. “Inflation rates will be on the positive side but it will be safely below the inflation target of the ECB.” Petroleum prices in Brandenburg rose 12.4 percent in December from the previous year, fuel surged 13.5 percent and heating oil prices increased 8.2 percent. Food prices dropped an annual 2.6 percent while clothing and shoes were 3.3 percent more expensive than in December last year. Excluding energy, consumer prices in Brandenburg rose 0.2 percent in the year and 0.9 percent in the month, while prices excluding energy in Hesse rose 0.8 percent in the year and were 1 percent higher than in the previous month. In the 16-nation euro area , consumer prices rose an annual 0.5 percent in November after declining 0.1 percent in the previous month. The ECB aims to keep inflation just below 2 percent. Data for December will be published on Jan. 5. To contact the reporter on this story: Christian Vits in Frankfurt at cvits@bloomberg.net

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Anti-Union Efforts Intensify at Target, U.S. Companies as Obama Bill Looms

December 29, 2009

By Holly Rosenkrantz Dec. 29 (Bloomberg) — Target Corp. retooled a training video to warn workers against a bill that would make union organizing easier. Michaels Stores Inc. told investors “our businesses could be impacted” by the measure. Enrollment in Jackson Lewis LLP’s “How to Stay Union-Free” seminars tripled. Companies are rallying to fend off a so-called card-check law sought by labor leaders and backed by President Barack Obama . While the bill stalled in Congress this year as health- care legislation dominated debate, anti-union groups say they expect the president and Democrats to deliver next year on a compromise version of the legislation. “As we approach the 2010 elections, the unions are really going to want their pound of flesh,” said Randy Johnson , who handles labor issues for the U.S. Chamber of Commerce , the nation’s largest business lobbying group. “Even if we defeat the card-check bill, it’s entirely possible that other changes to the National Labor Relations Act will come up, and some of those will likely make it easier to organize the workplace.” Companies have added anti-union videos to training programs, required employees to sit through anti-union meetings and hired outside labor-relations consultants as a pre-emptive strike against a union organizing campaign. “The whole culture that currently allows us to be a low- cost producer while paying top wages would probably be destroyed” by the legislation, Craig Milum, president of Milum Textile Services, a Phoenix-based linen supplier, said in an interview. Paying Weekly Dues “You may be paying weekly dues for something you don’t want” if the union-organizing measure passes, the company says in an anti-union video introduced in September for its 45,000 employees. Among customers of closely held Milum Textile are Darden Restaurants Inc. , Harrah’s Entertainment Inc. and Waste Management Inc. , according to Craig Milum. Leaders of unions that spent a record $450 million electing Obama and congressional Democrats in 2008 had promised members that the legislation easing organizing would be passed in 2009. Andy Stern , president of the 2.1 million-member Service Employees International Union, said in an interview this month that he now expects Congress to take up the bill in the first quarter of 2010. Stern was the most frequent visitor to the White House during Obama’s first six months in office, according to a log released by the administration in October. The Washington-based Chamber of Commerce and other trade associations have poured millions of dollars into efforts to kill the legislation. Dropping Namesake Provision To get enough votes in Congress, supporters of the card- check bill have agreed to drop the provision that gave the measure its name: a requirement that companies grant union recognition as soon as a majority of employees at a workplace sign cards saying they want a union. A compromise version backed by labor leaders calls for a secret-ballot election a week or two after workers petition for a union. The bill also calls for binding arbitration if companies fail to reach a contract with a new union after a certain period of time. Minneapolis-based Target, the second-biggest U.S. discount retailer, updated its anti-union video for employee training to explain the consequences of the bill, company spokeswoman Donna Egan said in an e-mailed statement. “If proposed labor relations legislation is adopted, allowing third-party involvement or interruptions to our business, our business could be impacted,” Michaels Stores of Irving, Texas, the world’s largest arts-and-crafts retailer, said in its earnings filing this month. Research on Unions Registration for Jackson Lewis’s $595 “How to Stay Union- Free” seminars has increased to about 100 executives a session, according to Michael Lotito , a partner in San Francisco with the New York-based law firm. Jackson Lewis also has done research for companies on unions that could come to their workplaces if there is a change in labor law. “We look at their financial reports, strike records, and what the leadership of the organization is all about,” Lotito said. Exploiting business fears of card-check has become a profitable pursuit, said Pat O’Neill, organizing director for the United Food and Commercial Workers. “There is one stimulus plan that has worked this year, and that’s union avoidance,” O’Neill said in an interview. “The law firms that do union-busting have put the fear of Armageddon out there with this bill.” O’Neill said unions have received calls from workers at CVS Caremark Corp ., Ikea and Target about “captive audience” meetings with an anti-union theme at stores where no organizing is going on. ‘Over the Top’ “They try to scare the hell out of them, and it’s over the top,” O’Neill said. CVS Caremark’s policy is to “communicate with our employees on an ongoing basis on a variety of issues,” Carolyn Castel , a spokeswoman for the biggest U.S. drugstore chain, said in an e-mailed statement. “We are constantly engaging our co-workers about unions,” said Mona Liss , a spokeswoman for Ikea, the world’s biggest home-furnishings retailer. The card-check legislation may be incorporated early next year into legislation in the Senate to create jobs, according to Steve Rosenthal , a Democratic consultant and former political director at the AFL-CIO, the nation’s largest labor organization. “Going into the 2010 election, when unions are critical to turnout, the Democrats need to do this to energize the labor movement and kick it into high gear,” Rosenthal said in an interview. “Something’s going to pass.” To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net .

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Medvedev Blitz on Bootlegged Vodka May Be Boon for Synergy Sales in Russia

December 29, 2009

By Andrew Cleary and Maria Ermakova Dec. 29 (Bloomberg) — Russian president Dmitry Medvedev’s crackdown on illegally produced vodka may help the country’s two biggest distillers, OAO Synergy and Russian Alcohol Group, sell more of their most popular brands. Medvedev is fighting the world’s highest per-capita alcohol consumption by targeting the production and availability of bootlegged vodka and imposing minimum prices on store shelves. The measures will probably nudge more drinkers toward the mid- priced vodkas produced by Synergy and closely held Russian Alcohol Group, according to analysts. “The whole push is about reducing alcohol consumption, but it could spur a flight to quality brands that will benefit these local distillers,” said Simon Hales , an analyst at Evolution Securities Ltd. in London. “If people suddenly can’t buy the illegal stuff for half the price, they’ll naturally trade up.” The President has his work cut out for him — the black market accounts for about half the country’s 2.4 billion liters of annual vodka consumption. His reforms may help the value of Russia’s vodka market rise 13 percent to 549.3 billion rubles ($18.5 billion) in 2010, while sales of illegal brands will probably fall 26 percent to 101.3 billion rubles, investment bank Renaissance Capital estimates. Price Controls The government has set a minimum retail price of 89 rubles per half-liter bottle of vodka starting Jan. 1, almost double the average price of illegal brands, which can be readily bought in stores. Russian Alcohol’s Yamskaya costs 100 rubles for the same-sized bottle, while Synergy’s Belenkaya sells for about 135 rubles. “The minimum price is one of the set of measures that should help get rid of illegal vodka on store shelves,” said Alexander Korovka, spokesman for Russian Alcohol, co-owned by Poland’s Central European Distribution Corp. and Lion Capital LLP. “People won’t want to drink unknown products. The demand for mid-level brands will rise.” Medvedev is trying to succeed where former Soviet leader Mikhail Gorbachev could not. Gorbachev in May 1985 introduced a partial prohibition of alcohol in the country to curb abuse, raising prices and restricting sales by time and location. While official consumption dropped, the measures backfired as black- market production filled the void left by legitimate channels. Gorbachev’s Crackdown “Gorbachev’s anti-alcohol campaign in the 1980s was the last serious crackdown on the industry,” said Victor Dima , an analyst at Otkritie brokerage in Moscow. “Bottles disappeared from store shelves, vineyards were getting destroyed, and as a result, people started making and drinking surrogates.” More than 23,000 people die annually from alcohol poisoning in Russia, with 75,000 dying from “excessive drinking,” according to the country’s Alcohol Market Regulation Federal Service. While some distillers sell vodka on the black market to avoid paying excise, more unscrupulous producers sell liquor laced with anything from anti-freeze to lighter fuel and cheap perfume. The government aims to cut pure alcohol consumption to as low as 5 liters per person a year by 2020 from 18 liters now. Russian prosecutors confiscated about 1 million vodka bottles and are investigating two distillers in the republic of North Osetia-Alania, the Interior Ministry’s Investigative Committee press service said in an e-mailed statement. The two vodka makers have been illegally selling part of the liquor they produce to avoid paying excise taxes, the ministry said. ‘Big Winners’ If Medvedev’s reforms succeed in limiting the reach of the bootleggers, Russian Alcohol’s market-leading Yamskaya brand and Synergy’s Belenkaya , which dominate the mid-priced category, will be the first to benefit, according to analysts. Synergy’s revenue may rise 24 percent next year to 23.5 billion rubles, almost twice the pace of this year’s forecasted growth, estimates Renaissance, which recommends buying the stock. “Vodkas in this category were already the fastest growing in Russia, and this is likely to further boost growth,” said Trevor Stirling , an analyst at Sanford C. Bernstein in London. The “big winners” will be Synergy and CEDC, which also sells the Parliament vodka brand through its local unit, he added. CEDC’s market value on Nasdaq has risen 44 percent this year to $1.9 billion. Synergy’s shares more than quadrupled in the period to give it a value of almost 11 billion rubles. Minimum vodka pricing may also accelerate a switch by Russian consumers to beer from cheap spirits, according to Evolution’s Hales. That would benefit brewers including Carlsberg A/S and Anheuser-Busch InBev NV, whose volumes have plunged in Russia this year and face a tripled excise tax starting Jan. 1. Beer Benefit “Widening the price difference between vodka and beer will certainly be a benefit to a beer industry already under pressure,” said Hales. The government’s coffers will also benefit from the switch to beer or legitimate vodka brands as “consumers enter the taxable market,” he added. “The government’s step is right and we fully support it,” Alexander Mechetin , chief executive officer of Synergy, said in an interview. “Russia’s legal vodka market has fallen 15 percent this year. Next year, with the help of this minimum price and other measures, the market should rise.” The probable boost to sales at Synergy and its rival may “provide extra funds which they could invest in marketing some of their brands abroad,” said Natalia Smirnova , an analyst at UniCredit SpA in Moscow. Synergy in September began exporting its premium Beluga brand to the U.S. and some countries in the Middle East. The distiller expects Beluga’s U.S. sales to exceed Russian revenue in five years, Mechetin said in 2008. Overseas Expansion Selling abroad is more profitable, said Russian Alcohol’s Korovka, adding that Russian Alcohol plans to enter the U.S. next year and aims to sell in Latin America. A bottle of the company’s more expensive Green Mark brand, which sells for 140 rubles in Moscow, retails for the sterling equivalent of 496 rubles in U.K. liquor stores. According to Synergy’s Mechetin, the announced measures “won’t be enough” to tackle the scale of bootlegged production. Changes to excise tax policy and regulating licenses for vodka transportation, which are under consideration by the government, are also required, he added. “I’m very skeptical about how effective a campaign this can be when it is against what is almost a national pastime,” said Walter Connor, a post-Soviet politics expert at Boston University. “An awful lot of people will pay whatever the price is or turn to home distilling. Changing a culture without the majority of people on your side is a very long haul.” To contact the reporter on this story: Andrew Cleary in London at acleary7@bloomberg.net . Maria Ermakova in Moscow at mermakova@bloomberg.net

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