On Thursday January 27, 2011, 6:57 pm EST
Panel finds financial
crisis was avoidable
WASHINGTON (AP) -- The
government-appointed panel investigating the roots of the financial crisis says
the meltdown occurred because government officials and Wall Street executives
ignored warning signs and failed to manage risks.
The crisis could have been
avoided, the Financial Crisis Inquiry Commission determined in a final report
released Thursday that was only supported by Democrats on the panel. Instead
the country fell into the deepest recession since the 1930s and millions of
people lost their jobs, the congressionally appointed panel concluded.
The Bush and Clinton
administrations, the current and previous Federal Reserve chairmen, and
Treasury Secretary Timothy Geithner all bear some responsibility for allowing
the crisis to happen, the panel said.
It also criticized bankers
who got rich by creating trillions of dollars in risky investments. The deals
grew so complex that bank executives and regulators did not understand them,
the report found, and banks discouraged aggressive oversight of their
activities, saying the government's interference would stifle financial
innovation.
P&G, Colgate profit
squeeze means prices to rise
CINCINNATI (AP) -- Shoppers
can expect some higher prices as the makers of toothpaste, soap and other
everyday household products see their profit margins pinched by rising
ingredient costs.
Both Procter & Gamble
Co. and rival Colgate-Palmolive Co. reported lower profits Thursday and posted
revenue below Wall Street expectations for the last quarter, and their stocks
slid. They both said commodity costs are rising more than expected. P&G
said they are adding $1 billion in costs for the year, double what it
anticipated.
P&G, which counts
Pampers diapers, Gillette shavers and Crest toothpaste among its major brands,
said fast-rising costs for product-making materials and fuel likely will mean
some price increases, with hikes already planned for its Duracell batteries in
March.
Colgate-Palmolive President
and CEO Ian Cook said during a conference call that the price increases would
run 1 to 2 percent.
Consumers can expect to see
not only household product makers, but beverage, food and other companies to
try to pass along price increases, said Jack Russo, an Edward Jones analyst.
That will test whether they are feeling confident enough about the economy to
pay higher prices again for their favorite brands.
S&P cuts Japan's credit
rating on debt concerns
TOKYO (AP) -- Standard
& Poor's cut Japan's credit rating for the first time in almost nine years
Thursday, issuing a harsh critique of the government's ability to control its
ballooning debt.
The agency lowered Japan's
long-term sovereign debt rating one notch to AA-, which is the fourth highest
level and the same rating given to China, Saudi Arabia and Kuwait. The news
sent the dollar as high as 83.18 yen from 82.20 yen.
The downgrade is a stern
reminder to Japan that it faces consequences for letting its debt swell to
twice the size of gross domestic product. Prime Minister Naoto Kan is pushing
to reform the country's tax and social security systems, but the downgrade
could complicate the fiscal picture by making it more expensive to finance the
country's debt. Creditors typically demand higher interest rates when credit
ratings fall.
Japan's debt ratio, already
among the highest in the developed world, is on track to rise more than
expected and won't peak until the mid-2020s, S&P said in a statement. The
country's problems, it added, are exacerbated by persistent deflation and a
rapidly aging population.
Japan is the world's
fastest-aging country, with its population projected to shrink from 127 million
people now to 90 million by 2055 -- 40 percent of whom will be over 65.
Rate on 30-year fixed
mortgage rises to 4.80 pct.
LOS ANGELES (AP) -- The
average rate on a 30-year fixed mortgage rose for the second week in a row,
buoyed by higher bond yields.
Freddie Mac said Thursday
that the average rate rose to 4.80 percent this week from 4.74 percent the
previous week. The average rate on the 15-year loan, a popular refinance
option, inched up to 4.09 percent from 4.05 percent.
Mortgage rates have changed
little in the new year after spiking more than half a percentage point in the
last two months. Investors sold off Treasurys bonds during that stretch,
driving yields lower. Mortgage rates tend to track the yield on the 10-year
Treasury note.
The 30-year loan rate
reached a 40-year low of 4.17 percent in November, and the 15-year mortgage
rate fell to 3.57 percent, the lowest level on records dating back to 1991.
Record high foreclosures, a
weak job market and expectations that prices will fall further have convinced
potential buyers to hold off on purchasing homes. And historically low rates
have done little to boost demand.
Fewer people bought
previously owned homes last year than in any year since 1997, according to the
National Association of Realtors. Sales fell 4.8 percent last year to 4.91
million units, the worst level in 13 years.
And sales of newly built
homes fared even worse, sinking last year to the lowest level on records going
back 47 years.
Still, sales of previously
occupied homes showed some improvement in December, rising to the strongest
pace since May, while sales of new homes jumped to the highest level since
April.
AT&T CEO: We'll push
Android phones
NEW YORK (AP) -- The CEO of
AT&T Inc. on Thursday said the company will start "very
aggressively" marketing smart phones based on Google Inc.'s Android
software now that it will no longer be the exclusive carrier for Apple Inc.'s
iPhone in the U.S.
So far, Verizon Wireless,
AT&T's chief competitor, has been the biggest supporter of Android. But it
will start selling the iPhone on Feb. 10, and is likely to shift resources away
from Android.
Motorola on Wednesday said
it's already seeing a drop-off in sales of its Android phones in Verizon
stores, as customers are holding off, waiting for the iPhone.
In effect, AT&T and
Verizon Wireless are set to swap strategies in the high-stakes smart phone
market, with AT&T turning to Android and Verizon to the iPhone.
AT&T, the nation's
largest telecommunications company, also provided an earnings forecast for the
year that disappointed analysts, and said it signed up a net of just 400,000
new customers on contract-based wireless plans in the last three months of last
year. It was the lowest quarterly number in at least five years.
The low number of new
contracts demonstrated that even though AT&T activated a lot of iPhones --
4.1 million -- the iconic phone has lost much of its power to attract customers
from other carriers.
Requests for unemployment
benefits up due to snow
WASHINGTON (AP) -- The
number of people applying for unemployment benefits rose sharply last week, but
the figures were largely distorted by rare snowstorms that swept through the
Southeast.
Applications surged last
week by a seasonally adjusted 51,000 to 454,000, the highest level since late
October, the Labor Department said Thursday.
A government analyst said
that a major reason for the spike was the harsh weather in Alabama, Georgia,
North Carolina and South Carolina. That forced many companies to shut down
temporarily and also prevented many people from applying for benefits in the
previous week.
When state offices, which
had closed, reopened and people were able to file applications that pushed the
number of requests up sharply, the analyst said.
The four southern states
reported a large increases in the number of requests for unemployment benefits.
Trucking companies, delivery firms, construction companies and others were
affected.
Applications had been
declining steadily for several weeks. Requests for unemployment benefits fell
sharply in the previous week to 403,000.
Many economists consider
data in January less reliable because of seasonal fluctuations.
Exxon: Global gasoline
demand to fall over 20 yrs
NEW YORK (AP) -- There will
be 400 million more cars on the world's roads 20 years from now, yet gasoline
consumption will decline, according to a projection from Exxon Mobil Corp. in
its long-term energy outlook released Thursday.
The world's biggest
investor-owned oil and gas company expects energy use overall will grow 35
percent by 2030, But that growth would be three times higher if people used as
much energy per capita as they do now.
Nowhere is that more
apparent than in projections of gasoline demand. People in developing
countries, especially China, will drive millions of more cars and gas demand
will grow, but the cars will be more efficient than those of the past.
Meanwhile, improvements in
fuel efficiency in the U.S. and Europe will create a drop in demand that more
than matches Asia's growth. Demand for fuel for passenger vehicles will decline
by 20 percent in the U.S. and by one third in Europe by 2030.
In developed countries like
the U.S., Japan, and the nations of Europe, demand for energy will stay flat
even as economic activity increases by 60 percent. In developing countries like
China, India and Brazil, demand for energy will rise more than 70 percent as
more and more people gain access to electricity and transportation.
Amazon.com posts surprise
4Q revenue miss
SAN FRANCISCO (AP) --
Amazon.com uncharacteristically missed Wall Street's revenue target in the
fourth quarter, sending the stock tumbling 9 percent and showing that not all
Internet companies benefited equally from the holiday shopping season.
The results from the
world's biggest online retailer highlight the unevenness of retail's recovery,
as people have picked up their spending after the official end of the Great
Recession but are being picky about what they buy.
Expectations were high,
especially since other consumer-oriented technology companies, such as Google
Inc. and Netflix Inc., wowed Wall Street with their results.
Amazon CEO Jeff Bezos noted
that the company hit two important milestones in the quarter: cracking $10
billion in quarterly revenue for the first time, and selling more electronic
books for Amazon's hot-selling Kindle device than paperbacks.
Still, the revenue miss
jolted investors, signaling that expectations were running too hot for a
company whose stock price had jumped nearly 75 percent since its 52-week low of
$105.80 in July.
After the results were
reported Thursday, Amazon shares fell $16.18, or 8.8 percent, to $168.27 in
extended trading.
Microsoft 2Q earnings edge
down on slow PC sales
SEATTLE (AP) -- Microsoft
Corp. said Thursday that its net income for the latest quarter fell slightly
from a year ago, and it beat Wall Street's expectations despite the weak
personal computer market.
Sales of Office 2010 to
consumers and businesses buoyed the results, as did the popularity of Kinect,
Microsoft's new motion-sensing controller for the Xbox 360 video game system.
Microsoft's net income for
the October-December quarter was $6.63 billion, compared with $6.66 billion in
the same period last year. Thanks to stock buybacks, net income rose to 77
cents per share, from 74 cents. Analysts surveyed by FactSet were expecting net
income of 69 cents per share for the fiscal second quarter.
Much of Microsoft's
business depends on selling copies of the Windows operating system and Office
desktop software, products that usually rise and fall with fluctuations in the
personal computer market.
Microsoft launched Windows
7 in the same quarter of 2009, making for a tough comparison. Revenue plunged
30 percent in the Windows division to $5.1 billion, in a quarter when worldwide
personal computer shipments only grew about 3 percent, as Apple Inc.'s iPad and
the promise of more tablet devices to come made consumers think twice about
what kind of device to buy.
LinkedIn looks to link up
with investors with IPO
SAN FRANCISCO (AP) --
LinkedIn Corp., the company behind the largest website for professional
networking, plans to raise at least $175 million in an initial public offering
of stock that could open the IPO floodgates for other widely used online
services that connect people with common interests.
The IPO papers filed
Thursday by LinkedIn puts the 8-year-old company on a path to make its stock
market debut in the next three to four months, barring any major stumbling
blocks.
It might be the most highly
anticipated IPO in the technology industry since software maker VMware Inc.
went public in 2007, said Scott Sweet, senior managing partner of IPOBoutique.
After VMware raised about $900 million in its IPO, the Silicon Valley company's
stock soared by more than 70 percent in its first day of trading.
LinkedIn's filing could
encourage other rapidly growing Internet services to finally test the public
markets after amassing zealous followings among millions of users. Other likely
candidates include: online coupon service Groupon, which rejected a $6 billion
takeover bid from Google Inc. last year.; online game maker Zynga; online
messaging service Twitter; and potentially the biggest investment opportunity
of all, social networking phenomenon Facebook, which already has indicated it's
likely to file its IPO plans by the end of April 2012.
By The Associated Press
The Dow Jones industrial
average inched up 4.39 points, or 0.1 percent, to close at 11,989.83. The index
broke through 12,000 Wednesday for the first time since June 2008 but slipped
in the late afternoon.
The S&P 500 rose 2.91
points, or 0.2 percent, to close at 1,299.54. The last time the index closed
above 1,300 was Aug. 28, 2008.
The Nasdaq composite index
gained 15.78, or 0.6 percent, to 2,755.28.
Benchmark oil for March
delivery lost $1.69 to settle at $85.64 a barrel on the Nymex.
In other Nymex contracts
for February contracts, heating oil lost 1.62 cents to settle at $2.6551 a
gallon and gasoline gave up 4.34 cents to settle at $2.4132 a gallon.
In London, Brent crude lost
52 cents to settle at $97.39 a barrel on the ICE Futures exchange.