Stocks End Flat Following Fed Comments

Stocks finished flat Thursday after the Federal Reserve said the economy appeared to be growing at a "moderate" pace but offered a cautious reading on inflation.

The Dow Jones industrial average, which at one point had been up 70 points after the Fed decision, ended down 5.45, or 0.04 percent, at 13,422.28.

Broader stock indicators finished mixed. The Standard & Poor's 500 index slipped 0.63, or 0.04 percent, to 1,505.71, and the Nasdaq composite index rose 3.02, or 0.12 percent, to 2,608.37.

The central bank, which stood pat on short-term interest rates as had been widely expected, offered investors a relatively unchanged assessment of the economy, saying its primary concern remains the risk that inflation will fail to moderate.

Stocks bounced around as investors tried to interpret the Fed's comment that recent readings on inflation excluding energy and food prices showed some improvement but no pronounced signals of easing.

"They took a middle-of-the-road approach. The Fed said some encouraging things about the future growth rate of the economy," said John Miller, head of fund management for Nuveen Asset Management. "They could have been more negative or more concerned about the meltdown in subprime markets or the potential for housing weakness to spread into consumer spending. The changes in the statement didn't indicate any concerns about those recent events."

He contends, however, that the Fed, which left rates unchanged at 5.25 percent as it has for the past year, was careful to remain guarded about inflation.

"It's a little bit of a hawkish message because they're saying they're not really convinced inflation is decreasing in any meaningful way," he said.

Bonds fell after the Fed comments, with the yield on the benchmark 10-year Treasury note rising to 5.11 percent from 5.08 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.

The modest moves in stocks Thursday follow a rally by all three major indexes in the previous session. Stocks have been turbulent during the past few weeks because of soaring bond yields and concern about the broader effect of faltering subprime loans.

The Fed's comments on so-called core inflation, which excludes often volatile food and energy prices, came as some investors had expected the bank would switch its focus to overall inflation, said Marc Pado, U.S. market strategist at Cantor Fitzgerald. Some inflation readings have been rising because of spikes in energy and food costs. While the Fed often focuses on the core level, Pado noted the overall inflation figure affects the economy because rising prices for gas and food can cut into consumer spending.

Wall Street's focus on the Fed's comments left little room for attention elsewhere; investors appeared unfazed as oil prices spiked above $70 per barrel on the New York Mercantile Exchange for the first time since August, then fell back.

Oil prices began moving up Wednesday after a government report showed an unexpected drop in gasoline inventories. Light, sweet crude rose 60 cents to close at $69.57 on Thursday.

In corporate news, shares of General Motors Corp. (GM), one of the 30 stocks that make up the Dow industrials, rose to a two-year high after agreeing to sell its Allison Transmission commercial and military business to an investment conglomerate and a private equity firm. The stock was the best performer in the Dow, rising 74 cents, or 2 percent, to $38.15.

Dillard's Inc. (DDS) rose $2.76, or 8.1 percent, to $36.69 after an investment group representing minority shareholders said it plans to press the department store chain to boost profits.

Digital River fell $5.67, or 11.2 percent, to $45 after the e-commerce outsourcing company cut its second-quarter and full-year forecasts.

Bed Bath & Beyond Inc. (BBBY) fell $1.47, or 3.9 percent, to $36.09 after the home goods chain lowered its full-year profit target, citing uncertain economic trends.

Novellus Systems Inc. (NVLS), a semiconductor equipment maker, fell $1.01, or 3.4 percent, to $28.89 after warning its second-quarter results would come in at the low end of its forecast amid weakness in the chip market.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to 1.49 billion shares compared with 1.76 billion traded Wednesday.

The Russell 2000 index of smaller companies rose 0.57, or 0.07 percent, to 839.03.

Overseas, Japan's Nikkei stock average rose 0.46 percent. Britain's FTSE 100 rose closed up 0.67 percent, Germany's DAX index rose 1.54 percent, and France's CAC-40 rose 1.09 percent. [via]

Vodafone tipped for iPhone deal in Europe

Vodafone recovered from early weakness to close higher Monday amid talk that it could land an exclusive deal to sell Apple’s iPhone in Europe.

Shares in the mobile phone operator opened lower as traders digested a Financial Times interview with Denny Strigl, chief operating officer of Verizon Communications.

Mr Strigl refused to say whether Verizon Wireless, the US mobile phone company in which Vodafone has a 45 per cent stake, would resume dividend payments in two years.

However, Vodafone bounced back to finish 1 per cent higher at 157.6p after Credit Suisse issued a “trading buy” recommendation and said the company was the frontrunner to land the European iPhone contract.

In the US, AT&T won an exclusive five-year deal for the iPhone, which goes on sale this week.

Credit Suisse said a similar deal in Europe would provide a fillip to the Vodafone share price.

“The winner could sell more than 6m such devices over the next 3 years. Assuming half these were new customers, this could add 8p to our valuation if Vodafone were to win,” it said. After the market closed, a block of 200m Vodafone shares were traded at 157.6p. Traders reckoned it might have been an activist investor buying stock.

In the wider market, leading shares closed higher for the first time in six trading sessions.

Lifted by a strong opening on Wall Street, the FTSE 100 rose 21 points, or 0.3 per cent, to 6,588.4. The FTSE 250 fell 11.7 points, or 0.1 per cent, to 11,577.4.

However, trading volumes were thin and traders said the mood would remain jittery until the US interest rate decision on Thursday.

J Sainsbury provided the session’s speculative feature, rising 1.8 per cent to 582½p on talk that several members of the Sainsbury family had been approached to see if they would be prepared to sell their holdings at 610p a share.

On a more fundamental tack, Enterprise Inns recovered some of Friday’s losses, rising 1.9 per cent to 686½p on the back of a Citigroup upgrade to “buy”. Setting a 859p target price, the broker said if Enterprise were able to convert into a Real Estate Investment Trust, its shares would be worth 60 per cent more than the present level.

Should Enterprise fail, Citi said the downside would be limited by a £1bn share buy-back programme, which it expects to kick in over the next 18 months.

Elsewhere, drinks group Diageo improved 0.9 per cent to £10.61 after Credit Suisse said it expected a positive trading statement next week.

“We believe the growth has continued apace in the US and international divisions and that European revenues have seen a recovery from a weak first-half,” the broker said.

Anglo American, down 1.4 per cent at £29.95, and Antofagasta, off 1.6 per cent at 608½p, were among the biggest fallers in the FTSE 100 after both mining companies were downgraded by Cazenove.

The broker said it had decided to cut Anglo to “in-line” because it was trading at a 25 per cent premium to rivals Rio Tinto, up 0.1 per cent to £37.90, and BHP Billiton, 1.1 per cent better at £13.90.

As for Antofagasta, Cazenove said the downgrade to “underperform” was based on the fact that the copper miner looked expensive against its peer group.

Forth Ports was among the best performers in the FTSE 250, climbing 4.8 per cent to £18.46.

Shares in the property and ports group, which has been touted as a takeover target for several years, fell 8.1 per cent last week on fears that one of its biggest shareholders was looking to sell because of ethical considerations. Forth is studying proposals to carry out ship-to-ship oil transfers in the Firth of Forth.

HMV Group rallied 3.4 per cent to 123¼p as nervous traders continued to buy back short positions before Thursday’s annual results.

There has been speculation in the past week that HMV, one of the most shorted stocks in London, would announce the sale of its Japanese business alongside the figures. However, speculation late Monday was that HMV had approached Virgin Megastore with a merger proposal. [via]

Cross-sell offers don’t make consumers cross, survey suggests

Call centers can help companies reach out to customers as well as answering their questions, suggests a new survey. 84% of consumers participating in the survey said they would like to receive proactive communication from their suppliers, and 76% said they would like to hear about other products and services a company offers.

While only 21% said they would like to hear about cross-sell offers when speaking with a company representative on the phone, 82% said they would like to get such offers via e-mail.

The results come from a fall 2006 online survey of 500 consumers age 18 and over who had dealt with a contact center in the previous 12 months. The survey was conducted by Lightspeed Research on behalf of Genesys Telecommunications Laboratories Inc., a provider of software for managing customer service interactions.

The survey suggested that customer service is important in building loyalty. 48% of those surveyed said customer service has the biggest impact on their loyalty to a company, while 37% cited product quality, 13% price and 2% brand name and reputation. 63% said the last time they stopped doing business with a company was at least in part a result of poor customer service.

The survey found consumers are willing to communicate by other means besides telephone. Asked which methods they like to use for communicating with a company, 82% cited phone, 78% e-mail, 28% live chat, and 2% text message.

The survey also showed that consumers expect companies to respond quickly to e-mail inquiries. 20% said they expect a response to their e-mail within one hour, up from 6% when the same question was asked in 2003. 15% expect a response within four hours and 51% within 24 hours. [via]

Yahoo promotes David Karnstedt to head new search and display ad teams

Yahoo Inc. has combined its sales operations for Internet search and display advertising under a unit called North American Sales. The company has promoted David Karnstedt from senior vice president of search sales to head of the new sales organization.

Wenda Millard, Yahoo’s chief sales officer in the U.S., has left the company as part of the reorganization of the sales organization, Yahoo says. "While Wenda was a big contributor to our success in the past, the industry has shifted and requires a different set of skills to take the business forward,” says Gregory Coleman, executive vice president of global sales.

"The future of advertising isn`t about choosing between search and display, but about leveraging the breadth of advertising products to more effectively reach your customers with the right message, in the right context, at the right time, and on the right platform," Coleman adds.

Karnstedt joined Yahoo Search Marketing (formerly Overture) in 2001 and went on to build and manage the company’s North American sales force for search advertising. Earlier in his career, Karnstedt served on the management teams of several Internet companies including search providers Wired Digital Lycos and Alta Vista. Over the years he has helped to develop marketing and branding strategies related to Internet search advertising.

"Integrating our world-class search and display sales teams under David`s leadership will allow us to better serve all of our advertisers` marketing objectives ranging from brand awareness to direct response," says Yahoo president Sue Decker. "This is one of many important steps we`re taking to re-invigorate our display business, further build on our industry-leading position in advertising, and drive thought-leadership in the online advertising marketplace."

Karnstedt’s promotion follows the appointments last week (With a new/old CEO at the helm, Yahoo sets a course for…where?) of Yahoo co-founder Jerry Yang as chairman and CEO and Decker as president. Yang succeeded Terry Semel, who remains as non-executive chairman and advisor to senior management. Decker, formerly executive vice president and head of Yahoo’s Advertiser and Publisher Group, continues to head that group as well as Yahoo! Network, Connected Life and Yahoo’s International operations. [via]

Oil, Gas Futures Rise Supply Concerns

Oil and gas futures rose Monday as reports of new refinery outages countered news that Nigerian labor unions ended a strike over the weekend.

Analysts said traders started buying after hearing of problems at two refineries over the weekend, which revived concerns about domestic gasoline supplies. Oil had started the day dropping more than $1 a barrel and pulling other energy futures lower in response to the strike's end.

Light, sweet crude for August delivery rose 4 cents to settle at $69.18 a barrel on the New York Mercantile Exchange, while gasoline for July added 1.59 cents to settle at $2.3025 a gallon. August Brent crude rose 18 cents to settle at $71.36 a barrel on the ICE Futures exchange in London.

In other Nymex trading, heating oil futures for July rose 0.44 cent to settle at $2.0424 a gallon while July natural gas prices fell 19 cents to $6.94 per 1,000 cubic feet.

At the pump, gas prices extended their decline. The average national price of a gallon of gas dipped 0.3 cent overnight to $2.978 a gallon, down from the late May record of $3.227, according to AAA and the Oil Price Information Service.

Futures traders began the day selling on news that Nigerian labor unions called off a strike aimed at overturning a government fuel price hike, ending a four-day work stoppage. The unions accepted a government proposal to raise gas prices by 4 cents a liter - half of what the government wanted - in exchange for a government promise to hold prices steady for a year.

Energy futures prices rose sharply last week on worries the unions would follow through on their threat to shut Nigeria's oil industry down, although in the end, oil supplies were not affected. Nigeria is Africa's biggest oil producer and one of the top overseas suppliers to the United States.

Later in the day, investors switched their focus to reports that Exxon Mobil Corp. (XOM) and Lyondell Chemical Co. (LYO) were forced to shut down some gasoline making equipment at refineries in Texas over the weekend, said Andrew Lebow, senior vice president at Man Financial Inc.

"The market reassesses and starts worrying about these refinery problems," Lebow said.

Neither shutdown was major or expected to last long. But in a tight market, any little bit of lost refinery capacity can send prices higher, analyst said.

Last week's inventory report from the Energy Department's Energy Information Administration showed unexpected jumps in oil and gasoline inventories, but a surprising decline in refinery utilization rates. Traders were blindsided by the 6.9 million barrel build in crude stocks, and sent oil prices down by nearly $1 Wednesday. But the respite was short-lived, as worries about the Nigerian strike and Iranian nuclear enrichment pushed oil up on Thursday and Friday.

The record gasoline prices of recent months were the result of an unusual number of domestic refinery outages this spring. Analysts and traders have long been concerned that the refining industry won't be able to produce enough gasoline to meet U.S. summer driving demand, which peaks between the July 4 and Labor Day holidays. Those fears have been fed by EIA reports that show refinery utilization rates in the 87 percent range, well below the 94 percent to 95 percent range analysts prefer.

Oil prices, which trade in sympathy with gasoline futures, are likely to continue trading in the high $60 range, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service.

"It's hard to find something that you're going to grab onto and say, well, this is going to drive prices higher or this is going to drive prices lower," Kloza said.

Although retail gas prices continue to fall, their pace of decline has slowed, Kloza said. Gas prices aren't likely to continue falling, and could even rise again if the supply picture doesn't improve, analysts said.

"The overall battle goes on - supplies are so much lower than normal," Flynn said. [via]

GLG Sells Itself in Reverse Takeover

GLG Partners LP, one of Europe's largest hedge funds, said Monday it is selling itself in a $3.4 billion reverse takeover that will give it access to the U.S. stock market.

Under the terms of the deal with Freedom Acquisition Holdings Inc. (FRH) (FRH), the combined company will be named GLG Partners Inc. and will trade on the New York Stock Exchange. GLG, which is not currently traded, may also seek a listing in Europe.

"This strategic transaction is an important step in building GLG's global business, affording us the opportunity to increase brand awareness and expand in major targeted markets," said Noam Gottesman, co-chief executive of GLG.

New York-based Freedom Acquisition is a "blank check" company, an investment vehicle that allows the parent company to raise money for acquisitions by listing on the stock exchange. Such companies reveal acquisitions after putting shares on the market.

Shares of Freedom Acquisition rose 73 cents, or 7 percent, to $11.18 Monday.

GLG, with $20 billion (14.9 billion euros) under management, will receive $1 billion (742.7 billion euros) in cash and 230 million shares of Freedom common stock, the company said in a statement. Freedom's shareholders will own approximately 28 percent and current GLG equity holders will own about 72 percent of the combined company's shares.

"I think its another example of securitizing the business in the same way that private equity has been buying up" businesses, said Richard Hunter, a broker at Hargreaves Lansdown in London. Management is "looking to crystalize the value of their business."

Freedom was founded last year by Nicolas Berggruen and Martin E. Franklin, chief executive of a consumer products conglomerate, Jarden. They will both join GLG's board of directors.

Berggruen's company is an investment vehicle for his family's money, whose assets in 2004 exceeded $1 billion. His grandfather, Heinz Berggruen, was a friend of Pablo Picasso and operated the family's art gallery in Berlin until his death earlier this year. Nicolas Berggruen's father, John, also operates a family gallery located in San Francisco.

High-risk and largely unregulated, hedge funds have traditionally been the investment domain of the wealthy. But the funds and private equity firms have become more popular investments because of their potential returns.

Shares of private equity group Blackstone Group shares rose 13 percent in their stock market debut Friday, as investors scrambled for a piece of the sixth-richest initial public offering in U.S. history. The company is worth about $38 billion. Blackstone shares fell $2.62, or 7.5 percent, to $32.44 Monday.

Around 9,400 hedge funds operated worldwide at the end of 2006, controlling assets of some $1.4 trillion (1.04 euros trillion). That's more than twice as many hedge funds as operated five years ago, while funds under management have nearly tripled during the same period, according to Chicago-based Hedge Fund Research Inc.

The 2.5 billion euro GLG transaction is subject to Freedom shareholder and regulatory approval. GLG expects to complete the deal early in the fourth quarter. [via]

Consumers spend same time online as TV, but TV ad spending’s higher

Advertisers spent four times as much on television advertising last year as they did on all online advertising combined: display, search and classifieds, according to a new report from JupiterReseach. Marketers spent $68.3 billion on TV ads last year versus some $16.5 billion in online advertising.

Neither better targeting opportunities online nor the greater availability of branding-friendly rich media ad inventory online has led to any significant online cannibalization of TV ad spending, according to Jupiter’s report, “Media consumption patterns: Online vies with TV as primary medium.”

But that spending disparity doesn’t reflect the fact that online consumers now spend approximately equal amounts of time in online activities as they do in watching television, according to the report. Jupiter`s study found that both TV viewing and online use are up over the past five years, with the median time spent on each activity by online consumers now about 14 hours per week.

The research firm’s report does note that the “highly desirable” 18- to 24-year-old audience spends about twice as much time online, at a median 14 hours per week, as they spend watching TV, at a median seven hours per week. But the Internet is not the most effective way for reaching all young audiences. In contrast to young adults, teens, at a median 10 hours per week, spend more time watching TV than they spend online, at a median eight hours per week, Jupiter’s report found.

While brand marketers should use online vehicles to reach the young adult audience, “The Internet is no panacea for communicating with youth. Rather, multimedia campaigns are necessary,” according to the report. [via]

Wall Street looks for room to run

Stock futures are pointing higher but Wall Street could have trouble keeping its footing Monday following last week's dismal performance and ahead of housing numbers and the Federal Reserve's policy meeting later in the week.

At 5:30 a.m. ET, futures were mixed, with a comparison to fair value pointing to a to a positive opening for U.S. stocks.

Stocks were battered last week after the near collapse of two Bear Stearns (Charts, Fortune 500) hedge funds highlighted the risk posed by the subprime mortgage sector and raised concerns about trouble ahead for the credit markets. Rising Treasury yields also pressured sentiment.

This week, investors have a slew of economic reports to digest including the latest figures on existing home sales Monday. Trading could also be volatile before the Fed releases its policy statement, due on Thursday.

Following Wall Street's sell off on Friday, European shares opened lower, and most markets in Asia finished the session in negative territory.

In major corporate news, Rupert Murdoch's News Corp. (Charts, Fortune 500) is closer to reaching an agreement with Dow Jones (Charts) over the editorial independence of the Wall Street Journal, according to published reports.

Takeover talks heated up this weekend and the two sides neared an agreement on editorial integrity, the New York Times and Journal reported. News Corp. has made a $5 billion bid for Dow Jones. [via]

Walgreen 3Q Net Income Climbs

Drugstore Walgreen Co. (WAG) said Monday that an increase in prescription sales, especially among profitable generic medications, helped its third-quarter profit climb nearly 20 percent.

The nation's biggest pharmacy chain by revenue reported a profit of $561.2 million, or 56 cents per share, in the quarter that ended May 31. During the same period last year, the Deerfield-based company posted earnings of $469.2 million, or 46 cents per share.

Meanwhile, the company said Monday that it added 129 new stores during the quarter, and was on pace to open nearly 500 stores during the 2007 fiscal year.

"During the past quarter, our main focus - and biggest opportunity - continued to be drugstore expansion," said Rick Hans, the company's director of finance. "This will drive our company's growth well into the future."

At the end of the quarter Walgreen operated 5,751 drugstores in 48 states and Puerto Rico.

Revenue climbed nearly 13 percent to $13.7 billion from $12.2 billion last year, but fell short of Wall Street forecasts. Analysts polled by Thomson Financial expected a profit of 54 cents on revenue of about $13.8 billion.

The retailer's results were boosted by at least $17 million in one-time credits, which analysts at Morgan Stanley (MS) said accounted for a three cent-per-share gain. The company didn't break out the earnings-per-share impact of the gains it received from the credits. Thomson estimates typically exclude such one-time items.

Goldman Sachs analyst John Heinbockel said the company's latest performance was "solid."

"How good was the 3Q? Pretty solid, although certainly not to the extent as the two prior quarters," he wrote in a research note.

Same-store sales, which measure sales in stores open at least one year, rose 7.8 percent during the quarter. Non-pharmacy, same-store sales climbed 5.6 percent.

Same-store sales are considered to be an important measurement of retail performance because it tracks growth from established stores rather than growth from newly opened ones.

Prescription sales, which accounted for 65.9 percent of the quarter's total sales, grew 13.8 percent.

The growth comes while pharmacy companies face mounting pressure from discount retailers, such as Wal-Mart Stores Inc. (WMT), which are offering medicines at deeply discounted prices. To compete, Walgreens has acquired some smaller, independent pharmacies, while ramping up the number of in-store health clinics.

Thanks to its May acquisition of Take Care Health Systems, Walgreen expects to have 400 such clinics in operation by the end of next year.

"Walgreen also appears to be entering higher investment cycle," Bear Stearns analyst Robert Summers wrote in a research note. "Rapidly adding retail health clinics, recently opened distribution center, and continued high unit expansion all contribute to higher expense structure and absorb some of gross margin gains."

Walgreen shares fell 72 cents, or 1.6 percent, to close at $44.26 Monday. [via]

Appeal Heard in Verizon-Vonage Case

A judge suggested a possible compromise in a patent dispute between Internet phone carrier Vonage and Verizon Communications that would allow Vonage to continue signing up new customers while it modifies its technologies.

Judge Timothy B. Dyk, part of the three-judge panel of the U.S. Court of Appeals for the Federal Circuit, made the remark during oral arguments Monday.

The panel is considering Vonage's appeal of a March jury verdict that found Vonage infringed on three Verizon Communications Inc. (VZ) (VZ) patents in constructing its Internet phone system. The jury in awarded Verizon $58 million, plus future royalties for continued patent infringement.

U.S. District Judge Claude Hilton then barred Vonage from signing up new customers, a decision that threatens to cripple the company. The appeals court granted a stay while it considers the case.

Dyk raised the possibility that the appeals court could instruct Hilton to consider softening the injunction.

"Isn't there kind of a middle ground in these cases when the injunction would put someone out of business? Shouldn't that be a consideration?" he asked. "Shouldn't the district court consider allowing time for a workaround as part of the injunction?"

Verizon lawyer Richard Taranto said that Vonage has never asked for such a compromise. He added that Vonage has said publicly that it will be able to find alternatives to the disputed technologies while telling the court that the injunction would kill the company.

Verizon Deputy General Counsel John Thorne said after the hearing that Verizon has always been open to a settlement that would give Vonage more time.

Vonage could accept a modified injunction "if that's the least we got," Vonage attorney Roger E. Warin said. But he stressed that the company wants the entire verdict thrown out and a new trial granted because of what Vonage claims were flawed jury instructions.

Arguing before the judges, Warin said the verdict was invalid because Hilton, the trial judge, failed to provide the jury with adequate definitions for some technical terms.

Shares of Vonage rose 4 cents to $3.09 Monday. Verizon shares fell 13 cents to $41.50. [via]

What Is Search Engine Optimization ie SEO?

Amidst all the terms and acronyms in the web design, hosting and web business world is SEO. SEO is search engine optimization. Simple enough, right? Well, actually SEO is an ever-changing and rather complex process, and one that should be thought of as an ongoing task with each website you own or manage. While there are many aspects to search engine optimization, keeping up to date on the newest is critical for the best search engine rankings and results. While SEO integrates content, keywords, site design and back linking, one new and very critical component to good search engine rankings is unique, high quality content. Meta tags, keywords and phrases and more also play into modern search engine optimization strategies.

Search engines today are looking for more than keywords. Search engine algorithms, including Google’s are being reworked to look for unique, new and quality content. Fortunately, new, unique, well-written good quality content appeals not only to search engine spiders, but also to your site visitors. If you have the keywords, anchor text, and back links in place, but your rankings still are not what you would like, think about making certain that you are keeping your content new and unique.

While you may be familiar with keywords, for instance SEO for an article such as this one, the concept of key phrases may be new. Key phrases are short phrases that are likely to be typed into a search engine together. When planning and working on your site content, include likely key words and key phrases for your topic to increase the likelihood that your site will come up on a given relevant search.

Meta tags are just one part of the answer to the what is SEO question; however, they are an important one. Today, your page title and actual content are more important for search engine rankings and SEO than Meta tags. Visitors to your site cannot see Meta Tags, however search engine spiders can see them. Meta tags are located in the section of an HTML document, and may include the author’s name and email, copyright information, and most importantly, a description and also keywords.

When working to answer questions about what is SEO, keep all elements of search engine optimization in mind. [via]

Small businesses urged to exploit budget measures

Prime Minister Lawrence Gonzi has urged small businesses to take advantage of the measures introduced in the last budget that are of particular help to family businesses.

Dr Gonzi was speaking at the opening of a conference which brought together representatives of government entities and of business organisations and co-operatives to discuss the government's work in the commercial sector, with particular emphasis on small business and the self employed.

Parliamentary Secretary for Small Business and the Self Employed Edwin Vassallo said small and micro enterprises employed 66 per cent of persons in the private sector.

Together they contribute 38.7 per cent of the economy's value added made by the private sector, while 16.9 per cent of investment made by the private sector comes from small and micro-enterprises, he said.

Some 40 per cent of all small and micro businesses are in the wholesale and retail sector. [via]

Mirant sale of Philippines business nets $3.22 billion

Mirant Corp., which produces and sells electricity, said Friday it completed the sale of its Philippine business to a consortium of The Tokyo Electric Power Co. and Marubeni Corp.

Net proceeds after transaction costs and the repayment of $642 million in debt were $3.22 billion.

Mirant said in April it might sell or merge the entire company or take other measures to boost the power provider's shareholder value.

Since then, it sold off six natural gas-fired power plants to Broadway Generating Co. for about $1.39 billion and said it will sell its Caribbean business to a subsidiary of Marubeni Corp. for about $730 million, excluding repayment of debt. [via]

Unilever's Dove ad flies home with top prize

A product-less commercial questioning perceptions of beauty that started as a viral video on the Internet won the top trophy at the advertising industry's version of the Oscars on Saturday night.

The Evolution ad landed a Grand Prix best commercial award ahead of a Coca-Cola videogame and Pfizer Viagra commercial, which both picked up Gold Lion trophies at the industry's biggest annual awards ceremony.

The Evolution ad was created by the Toronto office of advertising agency Ogilvy & Mather for Anglo-Dutch consumer products group Unilever.

"It is interesting that this particular piece of film actually started as a viral video on the Internet," said Bob Scarpelli, who headed the 22-member voting jury.

"It maybe is indicative of the times we are in and the way our industry is changing. The way we are communicating with people has changed and will continue to change," he told a press conference in Cannes announcing the winners.

Unilever's win follows last year's success with a Guinness ad created by the London office of Abbott Mead Vickers BBDO, a division of the Omnicom Group. That ad was built around a campaign called "Noitulove" - evolution spelled in reverse.

The Unilever Evolution ad, which also picked up a Grand Prix trophy in the online digital communications category, uses time lapse to show an ordinary-looking woman worked over by make-up artists, hairdressers, lighting and digital retouching to quickly become a billboard model - ultimately asking the question: How have we so distorted our notions of beauty?

The short digital film was created to encourage girls to participate in Dove-sponsored "real beauty" workshops in conjunction with the brand's self-esteem fund.

However, once on the Internet it generated million of hits within a matter of weeks and became a talking point among media commentators and social commentary television shows.

The commercial had been widely tipped by advertising editors and commentators to pick up the industry's most prestigious award.

The ad also triggered numerous consumer-generated imitations, such as one showing a good-looking teenager digitally transforming into an overweight, smoking and drinking slob that became a hit on sites like Google's YouTube.

Ad executives at the festival were not put off by such maverick reworkings of the hit campaign, saying they simply underscored the rising level of engagement between brands and consumers via digital media.

"We have penetrated a culture in such a way that we all want to play with it," Babs Rangaiah, head of media and entertainment at Unilever, said during a panel debate at the festival on consumer-generated content.

The New York office of Saatchi & Saatchi won the agency of the year award, ahead of DDB in London and Ogilvy & Mather in Singapore. Saatchi's success broke a four-year winning run by the Paris office of TBWA, an Omnicom unit.

Abbott Mead Vickers BBDO picked up the trophy for the top network, a new category in the festival this year, ahead of DDB and Saatchi & Saatchi.

(Reporting by Gavin Haycock; editing by Keith Weir; gavin.haycock@reuters.com; Reuters Messaging: gavin.haycock.reuters.com@reuters.net; +44 0207 5427954))
[via]

Can MLM Network Marketing Help New Entrepreneurs Learn Vital Business Practices

Many people rush into a business, and due to lack of knowledge about making a successful business they ultimately fail. As the corporate America starts to decrease people seek a new way of earning an income. There is a way to get into business and work at home all with a small investment. Can MLM Marketing be the best way to learn how to run a successful business?

Points covered in this article:
* Why start a business?
* What is MLM Marketing?
* Benefits of joining a MLM Network Marketing opportunity

::: Why start a business? :::
So why start a business of your own? Some of the reasons people choose to work at home are:

- They have small children and can't afford nursery care
- Live in a remote place where transport is hard
- Make more money then in day job
- Save time from travelling

As you can see there are many reasons why you may want to start your own business and work at home. You may want to become financially free or be able to set your own time schedule.

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One of the biggest benefits I have seen with being part of the MLM Network Marketing opportunity is the whole ethos about how MLM Marketing works and why it works. MLM Marketing fundamentally says "I win - only when you win", and this is a fantastic model to follow. When you buy products which promises to make you wealthy, even though the person producing that product may have your interest in mind, it still doesn't fully create the win-win which we see in MLM Marketing.

MLM Marketing does require work. MLM Marketing is no easy ride, but with commitment to achieving your success, a MLM Network Marketing opportunity can be the best thing you decide to join. MLM Marketing promises so much, and MLM Marketing can deliver as long as you commit to your success. With consistent effort you can find financial freedom with MLM Marketing, as long as you put in the effort necessary to succeed. [via]

Brown given 20-point plan for business

BUSINESS will this week set out a series of demands for Gordon Brown, who takes over as prime minister on Wednesday.

The Institute of Directors (IoD) is to send him a 20-point plan for what needs to be done “to maximise economic growth and wealth creation”.

It comes as Brown is putting the finishing touches to his Downing Street team and a planned shake-up of Whitehall.

He is expected to reveal two additions to his group of special advisers this week.

Nick Pearce, chief executive of the left-of-centre think tank IPPR, is expected to join him at No 10. Gavin Kelly, an IPPR old boy, is also likely to be recruited.

They will join Dan Corry in Brown’s inner circle. Geoffrey Norris, Tony Blair’s special adviser on business, is expected to remain at Downing Street, while Shriti Vadera, a special adviser to Brown at the Treasury, is set to accompany him to No 10, although it is not clear what role she will fill.

The IoD’s programme focuses on making life easier for business. The UK’s regulatory culture needs to be radically changed, it says, rewarding officials for their efforts in deregulating the economy rather than making new rules. It also wants cuts to the business tax burden, which it says is approaching a “tipping point”.

This could be done, it says, by restricting the growth of public spending to 1.5% a year on top of inflation after 2008, rather than the 2% planned by Brown. The IoD also says that Brown should insist on tougher public service agreements between the Treasury and Whitehall.

Other measures urged include following through on plans to liberalise planning; encouraging competition in the provision of public services; and an early decision on new nuclear power stations. It also wants universities to be freed from the £3,000-a-year cap on fees.

But Miles Templeman, director-general of the IoD, warned Brown against change for the sake of it. “We’d empha-sise the need for some changes but continuity is also very important,” he said. “What we don’t want is a whole raft of new initiatives. And we do need things like the skills agenda to be pursued.

“If there is going to be more tax on private equity, let us have less tax elsewhere. Brown has some way to go before he convinces our members. One way to do it, if he plans to increase the take from capital-gains tax, would be to take some bold action in reducing or removing inheritance tax.” Analysts see a 90% probability of a hike in interest rates by the Bank of England next month, meaning it is regarded as the nearest thing to a “done deal” since the monetary policy committee starting raising rates last August. But they also believe that 5.75% is likely to represent the peak, according to the survey by Ideaglobal.com, a financial research company.

This is in contrast to the money markets, which are discounting a rise in Bank rate to more than 6%. [via]

Many in U.S. Don't Have Bank Accounts

Grandma stuffing money under the mattress isn't the only one living outside the banking system.

As many as 28 million people in the United States are forgoing traditional financial institutions because of mistrust, cultural and language barriers or a belief that by the time all the bills are paid there will be nothing left for an account.

That can be expensive and risky. People can run up big fees to cash checks, pay bills and meet their other financial needs. Walking around with large amounts of cash can make them a target for thieves.

The bankless are estimated to earn hundreds of billions of dollars a year in income. Seeing a business opportunity, banks are trying to draw in these potential customers. So, too, are check-cashing businesses and retailers, including Wal-Mart.

Many people, however, still resist, preferring to remain in the financial shadows.

They tend to be minority - Hispanic or blacks especially - as well as low income and young.

According to the Federal Reserve, about one in 12 families - 8.7 percent - does not have a bank account.

The number is higher for the poorest - nearly a quarter of families earning less than $18,900, the Fed said, citing 2004 data.

For some, like Rosa Alvarez, the financial choices can be bewildering.

"I don't understand about this bank stuff," says Alvarez, 54, who lives in Texas. A nagging fear that she might make a mistake "if I don't keep up with it right or something" keeps her from opening an account. She had one once, briefly. But she had trouble keeping track of her balance. She thinks that when the account closed, she owed the bank $12.

Carlos Maren, 25, a cook, is afraid that if he opens a bank account in the U.S., he will get hit with fees for not keeping in enough money or for taking out more money than he has.

"My uncle sometimes says that it's expensive ... because if you don't have money in the account, (the bank) is going to be charging you," Maren says.

Leonel Mendoza, 32, a hospital worker, is not comfortable with banks in this country.

Both he and Maren do their financial transactions at a check-cashing outlet in the Adams Morgan neighborhood of Washington, D.C. They say it is convenient and they like knowing upfront what they will be charged to cash their paychecks, buy money orders, and, in Maren's case, wire money to his native Mexico. He has a bank account there.

"It's not real expensive," Maren says.

Yet those charges can add up.

A Consumer Federation of America survey of check-cashing outlets, found that on average it cost $24.45 to cash a $1,002 Social Security check last year. A blue-collar worker pays an average $19.66 every week to cash a $478.41 handwritten paper check.

Having a bank account can be expensive, too, if it is not managed wisely.

Failure to keep track of an account balance can incur a penalty of $20 to $35 each time a check is bounced or an account is overdrawn.

"It can be costly to be outside the banking system. The poor pay more," says John Caskey, economics professor at Swarthmore College.

"On the other hand, if all you did is take that low-income person, living paycheck to paycheck and moved them into the banking system and they are bouncing checks and incurring fees, you haven't done much and you may not have done them a favor," Caskey says.

Although there is no federal requirement for banks to offer low-cost, no-frill accounts, some do.

"Some have very low dollar accounts. Some have accounts that have to maintain a minimum balance," says James Ballentine, director of community and economic development at the American Bankers Association.

Ballentine's advice: "Do some shopping around."

The share of families without bank accounts decreased gradually from 1989 to 2001, then leveled off, the Fed said.

Banks have an economic interest in reeling in people outside the banking system - 10 million to 28 million individuals who earn $510 billion a year - and turn them into customers who eventually may need loans to buy homes, cars and other items.

Banks are working through community groups to ease fears, build trust and to educate people about financial options. It is a challenge that can take years, bank officials say. Moreover, what may work in Houston does not necessarily prove fruitful in Fresno, Calif.

Adding to the challenge, the bankless are slowly spreading out. Hispanics and immigrants have moved beyond traditional ports of entry, such as big cities on the coasts and in border states; they are settling in Tennessee, North Carolina and Indiana. In the same way, people without bank accounts have move around.

The FDIC has spearheaded a project to help bring the bankless into the financial mainstream. Financial institutions, community groups and others are teaming up in nine markets - including parts of Alabama, Chicago, Los Angeles and Wilmington, Del. - to provide services including affordable small loans, check cashing, savings and financial education and for wiring money outside the U.S.

Nationwide, there are fewer banks in poor neighborhoods versus wealthy ones but the difference is small, according to the Federal Reserve.

In some neighborhoods, however, there are no banks conveniently located. Federal banking regulators just weeks ago identified 3,500 middle-income neighborhoods in rural areas - from parts of Clarke, Ala., to parts of Washakie, Wyo. - that they consider to be underserved by financial institutions.

Federal Reserve research found that the most common reason families gave for not having checking accounts was that they did not write enough checks to make it worthwhile. Many people said they did not like dealing with banks.

Some - regulators could not provide a percentage - are in the country illegally. Without some proof of identification such as a driver's license or a passport, they cannot set up a bank account.

Check cashers and other outlets give them a financial lifeline.

"You purchase the transactions you need, when you need them. Prices are posted. There are no surprises," says Joseph Coleman, president of Rite Check Cashing Inc., which operates stores in New York City's Harlem neighborhood and the borough of the Bronx.

New York is among the roughly two dozen states plus the District of Columbia that regulate check-cashing fees.

"We are like financial oxygen. People in our communities rely on us," says Coleman, who once worked for Citibank. He hires people who speak languages in addition to English, easing communications with the customer.

Is the average 2 percent fee that customers pay for cashing a paycheck too high?

I would say no," says Cynthia Vega, spokeswoman for the Financial Service Centers of America, whose members include check cashers. Customers pay for the convenience of having quick access to their cash, she says.

Over the years, technological innovations have spurred a range of products for people without bank accounts.

Some employers, not wanting to deal with the expense of paper checks, load employees' paychecks onto electronic cards that can be swiped at the supermarket, restaurant and other places or used to pay bills. These cards have federal protections, such as liability limits for unauthorized use, says Jean Ann Fox, director of consumer protection at the Consumer Federation of America.

Check-cashing outlets also sell electronic cards on which money from paychecks or a tax refund can be loaded. These cards on average cost $10.86, the federation says. Fox says some of these cards can carry usage fees and may not have the same protections by bank-issued debit or ATM cards.

Wal-Mart, the world's largest retailer, recently announced it will sell for $8.94 each a prepaid Visa debit card. This step is aimed partly at shoppers who do not have bank accounts. Those cards have protections against theft and loss.

Alvarez, a Texas cake decorator, does not bother with any of these options. She cashes her check for free at the supermarket where she works and hides her cash in books at home.

"When I need money for gas, I get a little bit out," she says. "When I pitch in for groceries, I get it out. But sometimes I'm scared the house can burn down. My money will be burned with it," she says. Or, there could be a break-in, she worries.

Some of the potential perils for the bankless include theft, forgetting where you stashed your cash or losing your money.

"If you have most of your money in a bank. You have protection. If you are carrying it all in cash, it is easy to lose, easy to be stolen and easy to spend," Fox says

In Prince William County, Va., there were 351 robberies last year and more than 40 percent involved Hispanic victims - many of whom were new to the country - who had large amounts of cash on them, says Police Chief Charlie Deane. Many of the robberies occurred on paydays - Thursday or Fridays.

"The criminal element is aware that many of these people do not put their money in a bank," Deane says. "Many of these individuals are living in conditions where they have to share common space, so they often don't have ways of securing their cash where they live. So therefore they carry the cash with them," he says.

The robbers, when caught, have told police they targeted the victims because "they knew they were carrying cash," he said.

There also is a long-term impact for those who opt to do without banks.

"The ability to sock away money for a rainy day and to cover emergency costs are enhanced if somebody is using a mainstream financial institution and begins to get on a pattern of regular savings," says Barry Wides, deputy comptroller of community affairs at the Office of the Comptroller of the Currency.

The ability to establish good credit through a bank is crucial to getting competitive interest rates on loans for homes, cars and other items. Those with spotty credit are charged higher rates.

Despite all her fears about banks, Alvarez says one day she would like to become a steady bank customer. She thinks it will help her build a nest egg and feel more financially secure.

"When I cash my check, I'd may be put $25 in savings that would never get touched until something like an emergency happens," she says. [via]

Regions reaches loan probe agreement

By SHERRI C. GOODMAN
News staff writer

Birmingham's Regions Financial Corp has reached an agreement with New York Attorney General Andrew Cuomo in his probe of the student loan industry, his office said Wednesday.

Regions, Alabama's largest bank, agreed to abide by Cuomo's seven-point code of conduct for education loan practices. Cleveland-based National City Bank and Charlotte-based Wachovia Education Finance Inc. also struck agreements.

Cuomo has subpoenaed as many as 20 banks as part of his investigation of banks paying kickbacks to colleges in return for their student-loan business. So far, 26 banks have agreed to the code of conduct and 10 banks agreed to reimburse students more than $3 million for the cost of revenue-sharing agreements.

Under the code of conduct, banks agree to ban financial ties between the lender and the college. The code also calls for a ban on payments from lenders to get on a college's preferred-lender list, gifts from banks to college employees and payment to college employees who serve on lenders' advisory boards.

Bank call center employees also cannot identify themselves as college employees or work in a college financial aid office.

Lenders also must disclose to any requesting school the range of rates they charge to students at the school, the number of borrowers at each rate, and the lender's historic default rate at the school. They also must disclose to students and their parents any agreements they have to sell loans to any other lender.

"We believe this code establishes a high standard for ethics in education lending, which ultimately works to the benefit of student borrowers," said Regions spokesman Rick Swagler. "We're committed to helping students and their families gain access to higher education and believe these principles can give them more confidence in the system."

Cuomo's office never indicated why it was looking at Regions, but the bank confirmed in April that it had received a subpoena.

Wednesday's agreement ends Regions' involvement in the probe, Swagler said.

Wachovia spokeswoman Carrie Ruddy said the bank believes it is important to "publicly endorse this set of principles to help promote industry-best practices."

Kristian Baird Adams, a spokeswoman for National City, said it already had lending principles in place.

"Did we technically sign the New York code? No, but we certainly support the spirit of it and the underlying principles," Adams told Bloomberg News.

E-mail: sgoodman@bahmnews.com
[via]

Celtel International gets $320m for African expansion

The International Finance Corporation (IFC) will finance Africa's largest cellular operator, Celtel, to the tune of $320 million (R2.4 billion), to help it expand its operations in five sub-Saharan Africa countries.

Announced recently at the World Economic Forum in Cape Town, the financing deal is the IFC's largest.

The corporation is the private sector arm of the World Bank, within sub-Saharan Africa, says Edward Nassim, IFC VP for Africa, Europe and the Middle East.

Celtel Chairman, Mo Ibrahim, says the loan will be used to build Celtel networks in rural areas and regions not covered in the Democratic Republic of Congo, Madagascar, Malawi, Sierra Leone and Uganda.

Ibrahim says this is also part of Celtel's strategy to build "one Africa network, which allows all the network operators' subscribers to roam freely on all Celtel networks on the African continent."

He says subscribers living in the Congo Republic, the Democratic Republic of Congo, Tanzania, Kenya, Gabon and Uganda are able to do so since September last year. The combined population of these countries is about 160 million people and the total area covered by the network is larger than Europe.

Celtel, the largest competitor to South Africa's MTN and Vodacom on the African continent, was bought by Kuwait's MTC in 2005. It has since invested $10 billion in African mobile telecommunications services.

Half of the $320 million loan will come from the IFC and the rest from a consortium or private banks located in the country where the expansion will occur and other African countries, such as SA.

Nassim says this loan, and the $424 million credit line IFC opened two months ago on behalf of the East Africa Submarine Cable System, are part of the IFC's overall strategy to invest in Africa telecommunications infrastructure.

"These investments fit into our overall telecommunications strategy to get involved in African infrastructure to lower the cost for consumers," he said. [via]

Property groups lead European stocks lower

By Neil Dennis

European equity markets fell on Thursday after rising government bond yields hit US stocks overnight on concerns over rising global interest rates.

By late morning in London, the FTSE Eurofirst 300 was down 0.5 per cent to 1,611.44, led lower by falling real estate stocks and construction and materials groups.

Frankfurt's Xetra Dax fell 0.8 per cent to 8,028.45, while the CAC 40 in Paris lost 0.6 per cent to 6,056.45 and London's FTSE 100 shed 0.4 per cent to 6,622.7.

Sacyr-Vallehermoso, the construction group, fell 4.4 per cent to EU36.88 as investors sold down its exposure to rising interest rates and their impact on the struggling Spanish property market.

French property developer Unibail fell 1.8 per cent to EU193.07, while Austria's Immoeast fell 2.7 per cent to EU9.91 and Britain's Land Securities Group shed 3 per cent to £17.38.

A spate of positive broker notes lifted shares in utility EdF, making it France's largest listed company by market value. Societe Generale lifted its price target from EU66 to EU88 due to the company's improved pricing and increased nuclear reactor life expectancy.

UBS, meanwhile, raised its price target from EU80 to EU100, saying it expected the government to sell a stake in the company by September and announce a phasing out of regulated tariffs. Shares in EdF rose 7.2 per cent to EU79.40.

Luxottica, the Italian maker of designer eyewear, rose 6.6 per cent to EU27.96 after it announced the acquisition of US sunglasses maker Oakley for $2.1bn.

Broker Cheuvreux raised its price target from EU27 to EU29.50, and maintained its "outperform" rating, saying the purchase was "extremely favourable" for Luxottica and would trigger further growth.

Danish drugmaker Novo Nordisk rose 4.1 per cent to DKr588 after publishing positive phase three data for Liraglutide, its diabetes drug. [via]

Thomson unit forced to up interest costs: sources

By Michael Flaherty

Investors forced the textbook publishing unit of Thomson Corp. (TOC.TO: Quote) to raise the interest rate on a loan backing its $7.75 billion leveraged buyout amid concerns about the company's high debt levels, sources close to the deal told Reuters Loan Pricing Corporation on Wednesday.

Pricing on the seven-year, $3.44 billion term loan backing the deal was increased by 25 basis points, the sources said, bumping up the company's borrowing costs. Investors also forced Thomson Learning to change terms on its revolver and pay-in-kind notes.

The company and its private equity buyers already faced high borrowing costs through the large chunk of debt borrowed for the buyout.

The raised terms could also have broader implications, signaling the start of a pull back in the frothy debt markets that have helped fuel the leveraged buyout wave. Most leveraged buyout loans have met little resistance in the current LBO boom.

"If there were difficulty in obtaining financing on the appropriate terms, that would obviously cause them to re-evaluate whether they wanted to acquire the asset or not," said Paul Bradley, director of research at Fraser Mackenzie.

Investors were slow to participate in the Thomson Learning loan on concerns about debt levels and discomfort with the loan's loose covenant structure, sources told Reuters LPC, a unit of Reuters Group PLC (RTR.L: Quote).

Apax Partners, a London-based private equity group, and Canada's OMERS Capital Partners, agreed to buy the company last month for a higher-than-expected $7.75 billion in cash, with Apax leading the deal.

Apax did not immediately return a call seeking comment. Thomson Learning declined to comment.

Bankers who participated in the auction previously told Reuters that the buyers paid much more than the second highest bid, agreeing in the end to pay more than 15 times the company's cash flow. The average leveraged buyout multiple for media deals is in the low double-digits, according to analysts.

Private equity buyers pay around one-third of a purchase price in cash, and borrow the rest. They seek companies with strong cash flows to pay down the debt quickly.

Sources also previously told Reuters that the financing structure of the leveraged buyout was such that Thomson Learning would not have enough cash flow to pay its annual interest payments. As a result, the deal has a pay-in-kind note attached to it, meaning the company could defer interest payments.

Shortly after the deal for Thomson Learning, Thomson Corp. struck a deal to buy Reuters Group Plc for about $17.2 billion.

Pricing on the $3.44 billion Thomson Learning loan has been increased by 25 basis points to 275 basis points over Libor, the floating interest rate set by banks, according to LPC. The loan will now be issued at 99-99.25 cents on the dollar, whereas before it was being sold at 100 cents on the dollar.

The LBO will leave debt to cash flow leverage at the Thomson Learning unit just under 10 times -- also a high multiple by private equity standards.

Commitments to the loan are due June 21, while the bonds are expected to price by the end of the week.

RBS Securities, JPMorgan Chase & Co. (JPM.N: Quote), Citigroup (C.N: Quote) and UBS AG (UBSN.VX: Quote) lead the loan financing deal.

(Reporters and editors involved in writing and editing this report may own Reuters securities and are bound by the Reuters Code of Conduct, which restricts dealing in securities in companies a journalist is reporting on).

(Additional reporting by Wojtek Dabrowski in Toronto. Reuters LPC reporting by Faris Khan and Caleb Frazier) [via]

Telus confirms talks with BCE

Telus confirmed early Thursday morning it has "entered into a mutual non-disclosure and standstill agreement and is pursuing non-exclusive discussions with BCE about a possible business combination as part of the strategic review process announced by BCE on April 17, 2007."

"Telus believes the combination of the two businesses would represent a compelling strategic and financial opportunity for all BCE and Telus stakeholders. It would be an all-Canadian solution for both immediate and long-term value creation, whilst ensuring a vibrant player continues in this increasingly competitive industry," said Darren Entwistle, president and CEO of Telus, in a statement. "Telus has a unique opportunity to create a truly national Canadian enterprise with the requisite balance sheet strength as well as scale and scope to continue Telus’ development as a global leader in the deployment of state of the art technology and innovative new services for customers."

Given the accelerated process that BCE has adopted, among other things, there is no assurance that Telus and BCE will continue discussions or enter into any agreement to proceed with any transaction, Telus warned in its statement.

It was first reported on nationalpost.com Wednesday night that the Western Canadian telephone company, which many observers had expected to sit out the auction for Bell, plans to make a cash-and-stock bid for its Eastern Canadian counterpart.
© CanWest News Service 2007
[via]

Bond Risk Rises on Concern Over Bear Stearns Hedge-Fund Losses

By Hamish Risk

The perceived risk of owning corporate bonds soared worldwide on concern over losses at hedge funds run by Bear Stearns Cos.

Credit-default swaps based on 10 million euros ($13 million) of debt included in the iTraxx Crossover Series 7 Index of 50 European companies jumped as much as 16,000 euros to 216,000 euros, the biggest one-day rise in three months, according to Deutsche Bank AG. The CDX Crossover index in New York surged as much as $10,000 to a nine-month high of $178,000.

Bear Stearns in New York is trying to salvage two hedge funds specializing in mortgage bonds after they lost as much as 20 percent because of rising delinquencies this year on subprime loans made to homebuyers with poor credit ratings. Merrill Lynch & Co. yesterday threatened to seize and sell $800 million of bonds held as collateral for loans to the funds.

``While markets ignored the subprime-mania time bomb since the market shake out in March, it seems to be a longer lasting phenomenon,'' said Jochen Felsenheimer, head of credit derivatives strategy at UniCredit Group in Munich. ``In this highly leveraged environment, when the playing field is dominated with hedge funds, the risk is you could get a domino effect. There's the potential for more negative news.''

Credit-default swaps are used to bet on a company's ability to repay debt and an increase in the cost indicates worsening perceptions of credit quality.

The European iTraxx index was at 213,000 euros at 1:10 p.m. in London, according to JPMorgan Chase & Co. The CDX index was at $172,500.

Loans Index

The LCDX index of credit-default swaps on high-yield, high- risk loans fell for a ninth day, dropping 1.19 to 98.08, signaling a deterioration in the perception of the creditworthiness of the 100 U.S. borrowers included in the index. The LCDX is down 2.55 since May 22, when 13 Wall Street banks began offering the five-year contracts in the privately negotiated over-the-counter market.

As home-loan defaults rise, bondholders stand to lose as much as $75 billion of subprime-mortgage securities, according to an April estimate from Pacific Investment Management Co., manager of the world's largest bond fund. Investors in all mortgage bonds will probably take about $100 billion in losses, according to a March report from Citigroup Inc. bond analysts.

To contact the reporters on this story: Hamish Risk in London at hrisk@bloomberg.net
[via]

H&R Block reports $85.5 million 4Q loss

H&R Block Inc. swung to a fourth-quarter loss Thursday as the continuing struggles of its mortgage lending arm offset higher revenue in its tax and financial services divisions.

The company reported losing $85.5 million, or 26 cents per share, during the February-April period, which is when the nation's largest tax preparer sees the majority of its revenue. By comparison, the company earned $587.5 million, or $1.79, during the same period a year ago.

Revenues during the quarter grew 7.9 percent from about $2.18 billion to about $2.35 billion.

H&R Block announced in April that it will sell its Option One Mortgage Corp. to a subsidiary of private equity firm Cerberus Capital Management LP by October 31. The price won't be final until the sale closes but it's expected the company will sell Option One at a discount.

Option One, which lends money to people with poor credit, has suffered as the so-called subprime market has been rocked as rising interest rates and declining home prices has forced more borrowers to default on their loans.

The company said it recorded a quarterly loss of $676.8 million, or $2.07 per share, on discontinued operations, which includes Option One as well as several smaller non-mortgage businesses.

Not including those operations, the company said it earned $591.2 million, or $1.81 per share. By comparison, earnings from continuing operations during the same period a year ago totaled $541.7 million, or $1.63 per share.

Analysts surveyed by Thomson Financial expected earnings of $1.88 on $2.44 billion in revenue.

The company's tax division reported $1.91 billion in revenue, up 8.2 percent from $1.76 billion during the same period last year.

H&R Block's consumer financial services, which includes its year-old bank, saw fourth-quarter revenues jump almost 57 percent from $76.8 million to $120.2 million.

For the year, the company said it lost $433.6 million, or $1.34 per share, compared with earnings of $490.4 million, or $1.49 per share, during the previous year.

H&R Block reported an $808 million, or $2.48 per share, loss on discontinued operations. Not including those operations, the company said it earned $374.3 million, or $1.15 per share, for the year, up 26 percent from $297.5 million, or 89 cents per share, the year before.

The 2006 earnings included a $42.5 million after-tax charge for settling various lawsuits and other legal expenses.

Revenue for the year increased 12 percent from $3.57 billion to $4.02 billion.

Analysts were expecting annual earnings of $1.17 per share on $4.5 billion in revenue.

Looking ahead to the current fiscal year, the company said it expected earnings of between $1.25 and $1.45 per share, below analysts' expectation of $1.47 per share. H&R Block said it expected Option One and other discontinued operations to continue posting modest losses during the first two quarters.[via]

Futures lower on rising oil, rate worries

By Kristina Cooke

Futures pointed to a lower open on Thursday, as higher oil prices and rising bond yields fueled concerns about the outlook for interest rates and corporate profits, a day after the Standard & Poor's 500's biggest drop in two weeks.

Concerns that higher borrowing costs could cut into corporate profits and slow the pace of takeovers fanned Wednesday's market drop. The yield on the 10-year Treasury note was up at 5.16 percent from the 5.13 percent seen late on Wednesday.

London benchmark Brent crude was up 0.8 percent at $70.96 a barrel after dropping $1.42 on Wednesday.

While the rising oil prices may help shares of energy companies such as Exxon Mobil (NYSE:XOM - news), they could fuel worries about consumer spending and inflation.

"The market seems to be worried about one thing and one thing only and that is interest rates," said Peter Cardillo, chief market economist at Avalon Partners in New York.

"Interest rate jitters are being used as a catalyst for this market to correct, and the correction that began several weeks ago is probably not over as long as bond yields continue to rise."

S&P 500 futures were down 3 points, below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures were down 17 points while Nasdaq 100 futures were down 3.75 points.

In corporate news, U.S. sunglasses maker Oakley Inc.'s (NYSE:OO - news) stock gained 13.4 percent in Europe, after Italy's Luxottica (LUX.MI) (NYSE:LUX - news), the world's biggest eyewear maker, agreed to buy the company in an all-cash deal worth about $2.1 billion.

Shares of Dow Jones & Co. Inc. (NYSE:DJ - news) rose 4.15 percent in Europe, after it said late on Wednesday that its board would take over negotiations related to a $5 billion takeover offer from Rupert Murdoch's News Corp. (NYSE:NWSA - news), a move that could bring a quicker resolution to the talks.

Investment banks were expected to remain in the spotlight after falling sharply on Wednesday as Bear Stearns (NYSE:BSC - news) struggled to keep afloat two hedge funds that suffered big losses on securities tied to the subprime mortgage market.

Merrill Lynch & Co. Inc. (NYSE:MER - news), a main lender to the funds, sold off assets seized from the funds, and three other banks closed out their positions with them.

Bear Stearns' shares were down 2.22 percent in Europe, and Merrill Lynch's stock fell 2.02 percent.

Investors will also be closely watching demand for Blackstone Group's (BG.UL) initial public offering. The flotation on the New York Stock Exchange, worth up to $4.75 billion and underwritten by Morgan Stanley and Citigroup, was set to be priced later on Thursday.

Thursday's U.S. economic data calendar included Weekly jobless data, was due at 8:30 a.m. (1230 GMT); followed by leading indicators for May at 10 a.m. (1400 GMT) and the Philadelphia Fed regional business index at noon (1600 GMT). [via]

FTSE down after Wall Street slide

By William MacNamara and Michael Hunter

London equities were rapidly losing ground by midday on Thursday, tracking steep overnight losses on Wall Street. Shares in the London Stock Exchange were in focus as LSE executives met to discuss a bid for Borsa Italiana.

At noon the FTSE 100 was trading 0.7 per cent or 45 points weaker at 6,604.3. The FTSE 250 was 1.65 per cent lower at 11,600.7 with weakness in real estate and support services stocks helping to generate a loss of 197 points.

Overnight in New York the Dow Jones Industrial Average fell 1.1 per cent to 13,489.4, as higher bond yields and lower oil prices weighed. There was also concern after Bear Stearns said two of its hedge funds active in mortgage securities were to be wound up amid continuing fall out from the sub-prime lending crisis in the American housing market.

News of the London Stock Exchange's advanced talks about a potential £1bn bid for Borsa Italiana pressured shares in the UK market operator, which fell 1.5 per cent to £13.45.

Jessops rose 9.7 per cent to 19¾p on news that HSBC extended and enlarged an existing banking facility to the struggling camera retailer, whose shares have fallen 88 per cent this year. On the same day it announced plans to close one quarter of its stores, the company said HSBC increased by £4m to £66.5m its banking facility.

Financial stocks came off their recent strong run as equities markets cooled. Shares in Man Group were off by 0.2 per cent to 624p despite news that the upcoming floatation of MF Global, its US brokerage business, could value it at between $4.6bn and $5bn.

Fund manager Schroders lost 1.8 per cent to £13.41 and Aberdeen Asset Management lost 2.5 per cent to 198p.

Standard Chartered topped blue-chip performers by midday, gaining 0.7 per cent to £16.70 after JP Morgan, UBS, HSBC, and ABN Amro all upgraded their positions on the bank's stock, citing strong earnings momentum in Asia.

There were further losses for DSG International following Wednesday's news of lower profits and its decision to not exercise an opportunity to enter the Russian market. The operator of the Curry's electricals chain led declining shares at midday, falling a further 4.2 per cent to 162p.

Go-Ahead was one of the only FTSE 250 stocks trading in positive territory by midday. One of its units, Govia, won an eight-year government contract to operate rail routes in the West Midlands. [via]

U.S. stocks head for flat open

By TIM PARADIS
AP Business Writer

Wall Street headed for a mostly flat open Thursday after a jump in Treasury yields the previous session unnerved investors and sent stocks tumbling. Bond yields ticked lower on Thursday.

Wednesday's pullback, which slashed more than 140 points from the Dow Jones industrial average, came ahead of the Conference Board's May index of leading economic indicators.

Also, the Philadelphia Federal Reserve is set to release its June index of regional manufacturing activity. Wall Street is expecting the report will show signs of a recovery in the U.S. industrial sector.

The number of workers seeking jobless benefits rose by 10,000 last week to a two-month high, marking the third straight weekly gain. While the increase wasn't immense, the movement could suggest workers were having a more difficult time finding work.

The data come in an otherwise quiet week for broad news about the economy and only a handful of quarterly results from companies. Corporate earnings reports will begin flowing in earnest in several weeks and Wall Street is accustomed to receiving profit warnings around this time. Investors are hoping a parade of strong earnings might continue and provide fodder for sending stocks higher.

Dow futures expiring in September fell 3, or 0.02 percent, to 13,605, while S&P 500 futures slipped 2.00, or 0.13 percent, to 1,525.00. Nasdaq 100 index futures fell 3.25, or 0.17 percent, to 1,944.50.

Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 5.14 percent from 5.15 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude oil rose 50 cents to $69.36 per barrel in premarket electronic trading on the New York Mercantile Exchange as a general strike in Nigeria — Africa's largest crude oil producer — began to weigh on the market.

In corporate news, H&R Block Inc. swung to a fourth-quarter loss as continuing troubles in the company's mortgage lending arm outweighed higher revenue from the company's tax and financial-services businesses.

Pier 1 Imports Inc., the seller of furniture and home decorating goods, saw its first-quarter loss widen as sales fell and as profit margins shrank.

Ameron International Corp., a maker of engineered products for the chemical, energy and transportation markets, saw its second-quarter profit fall 16 percent from a year earlier, which benefited from a gain from a sale of property.

Andersons Inc., an ethanol and grain producer, late Wednesday raised its full-year profit forecast after a strong second-quarter performance from its agricultural businesses. The company also began producing ethanol from a second plant and has seen better-than-expected margins.

Overseas, Japan's Nikkei stock average closed up 0.16 percent. Britain's FTSE 100 fell 0.99 percent, Germany's DAX index fell 1.70 percent, and France's CAC-40 lost 1.04 percent. [via]

American Greetings profits nearly double

American Greetings Corp. said Thursday that its first quarter profit nearly doubled from a year ago on strong sales of greeting cards.

The company made $30 million, or 54 cents per share, for the quarter ended May 25 compared with earnings of $15.4 million, or 24 cents per share, a year ago. Sales rose to $418 million in the quarter from $404.2 million a year ago.

Analysts surveyed by Thomson Financial were looking for the company to post earnings of 34 cents per share for the most recent quarter.

The company reaffirmed its full-year estimate of earnings per share from continuing operations to between $1.35 and $1.55 per share. Analysts expect $1.35 per share.

The company, which has about 20,000 employees, sells cards and other products under brand names American Greetings, Carlton Cards and Gibson. It owns and operates about 600 card and gift shops throughout North America and sells cards through retailers such as Wal-Mart and Target. [via]

Jobless claims jump unexpectedly

By MARTIN CRUTSINGER
AP Economics Writer

The number of newly laid off workers filing claims for unemployment benefits shot up unexpectedly last week, rising to the highest level in two months.

The Labor Department reported that unemployment claims totaled 324,000 last week, up 10,000 from the previous week. The big increase was unexpected.

Despite the year-long economic slowdown, the job market has remained strong as most employers have resisted pressures to lay off workers in the face of a steep slump in housing and troubles in the domestic auto industry.

The increase last week pushed claims to the highest level since they stood at 325,000 for the week ending April 21. The four-week average for claims rose to 314,500, the highest level since the first week in May. That increase reflected the fact that claims have posted increases for three consecutive weeks.

Overall economic growth slowed to a lackluster annual rate of 0.6 percent in the first three months of this year, the weakest performance in four years. However, growth is expected to have rebounded in the current April-June quarter to a rate of 3 percent or even better.

The Federal Reserve meets next week to review interest rates with most analysts believing the central bank will leave rates unchanged.

The last rate change was a quarter-point increase a year ago. That capped a two-year Fed campaign to push rates higher as a way of slowing the economy enough to reduce inflation pressures.

A total of 37 states and territories posted increases in jobless claims for the week ending June 9 while 16 states had declines. The state data lags the national data by one week and is not adjusted for normal seasonal variations.

California had the largest rise in claims applications, an increase of 10,333 that was atttributed to higher layoffs in trade and service industries. Other big increases were in Pennsylvania, up 5,220; Florida, up 3,576, and Illinois, up 3,162.

Michigan had the biggest drop in jobless claims, a decline of 1,093, which was attributed to fewer layoffs in the auto industry. [via]

Oil prices settle at $68 a barrel

By JOHN WILEN
AP Business Writer

Crude oil futures settled at $68 a barrel on Friday, their highest close since September, while gasoline futures extended their rally, raising the prospect that prices at the pump will stabilize and possibly even rise after falling for several weeks.

Analysts say oil prices were boosted by unrest in the Middle East and a lower-than-expected core inflation figure, which encouraged investors to move money from fixed income investments to commodities. But oil futures also followed the lead of gas futures, said James Cordier, president of Liberty Trading Group, in Tampa, Fla.

Gas futures have risen several days this week after a government report Wednesday that shocked traders by showing gasoline inventories remained flat as refineries used less of their capacity than they had the week before.

The report was bullish for gasoline, but not for oil, which has been "trading in sympathy" with gas, Cordier said. That's because the refinery outages that are crimping gasoline supplies serve as a bottleneck for oil, which backs up behind the facilities waiting to be processed, he explained. Cordier thinks oil can't sustain a price this high, and should ease next week.

Light, sweet crude rose 35 cents to settle at $68 a barrel on the New York Mercantile Exchange. Brent crude for August delivery rose 15 cents to settle at $73.98 a barrel on London's ICE Futures exchange.

Meanwhile, retail gasoline prices, which typically lag the futures market, fell again by 1.4 cents overnight to a national average price of $3.029 a gallon, according to AAA and the Oil Price Information Service. Prices peaked at $3.227 a gallon on May 24.

"Unfortunately, I think this is about as good as it gets," said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service, predicting a higher price in the near future.

Gasoline futures for July jumped 3.54 cents to settle at $2.2601 a gallon on the Nymex.

Also on the Nymex, heating oil futures fell 0.55 cent to settle at $2.0106 a gallon while natural gas prices added 11 cents to settle at $7.918 per 1,000 cubic feet.

Analysts said traders continued to react to Wednesday's report by the Energy Department's Energy Information Administration.

"The report we got this week ... that was just incredibly disappointing and extremely bullish," Cordier said.

The report showed that refinery utilization, which had been expected to grow by 0.8 percent, fell 0.4 percent to 89.2 percent, the second straight weekly decline, in the week ended June 8. Most analysts say refineries should be using 94 percent to 95 percent of their capacity at this time of year.

The report also showed gasoline inventories unchanged at 201.5 million barrels last week. Analysts surveyed by Dow Jones Newswires had expected inventories to rise by 2 million barrels.

The report killed any sentiment that the domestic refining industry, beset by an unusual number of outages this spring, has recovered. Analysts have warned for months that the industry is not producing enough gasoline to meet summer driving demand, which typically peaks between the July 4 and Labor Day holidays.

On Friday there were new reports that Corpus Christi, Texas, refineries owned by Valero Energy Corp. and Flint Hills Resources were temporarily shutting down equipment for maintenance.

"We needed some big builds (in gas inventories)," said Cordier. "We got one or two big builds, then this figure just threw cold water on it."

The report attracted hedge funds and technical buying, analysts said, further adding to the price increases.

Kloza doubts the rally will continue much longer. He thinks futures will trade in a defined range of a few dollars for oil, and 10 to 20 cents for gasoline, rather than breaking out to new highs.

"I do not believe this is the beginning of another tremendous bounce," Kloza said.

Retail gas will follow suit, he said: It won't fall any further, but it also won't jump back to late May's records.

Unrest in the Middle East, where Hamas consolidated its control of Gaza,also supported oil prices. Though it is not a large oil-producing area, strife in
Israel and the Palestinian territories unsettles oil traders because of the possibility an oil-producing country, such as
Iran, could be drawn in.

"Geopolitics will rally a market at the end of the week every time," Cordier said.

Cordier said energy futures prices were also supported by Friday's core inflation figure, which a government report said rose a lower-than-expected 0.1 percent. That dampened sentiment the
Federal Reserve will raise interest rates. Investors flee equity and commodities markets for fixed income investments when interest rates are believed to be on their way up, Cordier explained. When investors think rates will hold steady or fall, they're more likely to invest in commodities, he said.

"It relieves downward pressure on commodities," Cordier said. "The core figure on inflation today kind of took the cap off the market." [via]

French nuclear giant covets UraMin

Laura Bobak
Canadian Press

French nuclear giant Areva has presented a takeover bid for UraMin Inc. that puts a value of $2.5 billion (U.S.) on the South Africa-headquartered company.

The French-state-controlled company is offering $7.75 per share for UraMin, or about $8.27 (Canadian) at current exchange rates.

The shares were halted for the news yesterday morning on the Toronto Stock Exchange, but rose on the re-opening and closed at $8.85, up almost 11.5 per cent on the day.

The shares were trading at $6.95 Monday, before UraMin said it was in negotiations on a potential sale. A year ago, the price was $2.55.

UraMin's main asset is the Trekkopje uranium project in Namibia, which could be operational as early as this year.

The company also has exploration sites in the Central African Republic and South Africa, providing a good fit for "Areva's strategy to significantly increase its uranium production in the medium term," according to a joint statement.

Yesterday's deal continues a wave of consolidation in the global uranium industry as companies bulk up to cash in on record prices for the nuclear fuel as supply dwindles and demand soars.

Uranium companies are also trying to get bigger to take advantage of new exploration projects and find the financing to develop additional uranium sources in North America, Africa, Asia and Australia.

Recently, Uranium One Inc. announced a takeover of Energy Metals Corp. of Vancouver in a deal the two companies say will create a new entity with uranium production forecast to rival industry leader Cameco Corp. by 2013.

In yesterday's deal, the UraMin board supports the proposal, and Areva, which already owns 5.5 per cent of UraMin, has lock-up agreements with officers and directors holding 25 per cent of the company's shares.

Areva has the right to match any competing offers. The agreement includes a break fee if another bid prevails.

The deal is subject to regulatory approval.

Areva executives said during a conference call with analysts that the takeover will help the company with its goal of becoming the world's leading uranium producer.

The company is planning to double its production from 15 million pounds to about 31 million pounds by about 2011 or 2012, not including the UraMin acquisition. [via]

New CEO named at Eddie Bauer

By Kevin Bell
Bloomberg News

Eddie Bauer Holdings appointed Limited Brands executive Neil Fiske as its chief executive officer.

Fiske takes over July 9, the Redmond-based outdoor-clothing maker said Friday. Director Howard Gross has been interim chief since investors voted down a $285 million buyout offer in February, prompting Fabian Månsson to give up the post.

Fiske was most recently the CEO of Limited Brands' Bath & Body Works unit.

He "looks like a great fit," said Nick Capuano, an analyst with Imperial Capital in Los Angeles. "Limited is known as a breeding ground for good managers, and he's done an excellent job. He's a star there."

Since 2003, Eddie Bauer failed twice to sell itself. It filed for bankruptcy protection that year, and tried to find a buyer before emerging from court protection in 2005 as an independent company.

Fiske, 45, said he plans to expand Eddie Bauer's business at a "sustainable" rate. He helped to turn around two years of same-store sales declines at Bath & Body Works, according to the statement.

Shares of Eddie Bauer rose 21 cents, or 1.5 percent, to $13.98 Friday.

Eddie Bauer reported sales at stores open at least a year rose 9.5 percent in the first quarter after declines in three of the previous four quarters. It reported a net loss of $44.8 million, or $1.47 a share — its fourth loss in five quarters — on sales of $214 million.

The gain in same-store sales shows the company is attracting customers with its traditional outdoor clothes, Capuano said. A merchandising strategy in 2005 misfired when it tried to attract younger customers with more fashion-oriented apparel, he said. [via]

The Business of America is Business?

by Craig Chamberlain

Calvin Coolidge, a hero to many a conservative for his small government, tax cutting philosophies, once famously quipped that the Business of America is Business. In some sense that's true. Historically the GOP has always believed that the best way to help the American economy is to adopt a business friendly approach. But there comes a point when we need to remember that what's best for business is not always best for America.

Now, rest assured, I haven't gone socialist on anyone. The business of America might be business, but what's good for big business is not always what's best for America. There's a difference in thought here. Most American businesses are not big businesses. Most business men don't represent fortune 500 companies, and they are not yelling for a guest worker program. Most business men are patriots who understand that while capitalism is great there is more to life than money.

What the big business, Wall Street Journal group, is interested in is not capitalism exactly. They are more interested in an oligarchic mutation of capitalism. They believe that anything that threatens their interests, to say no to them, is to somehow be a closet Marxist. The country can rot, its culture can deteriorate, and we can be plunged into social chaos. But as long as their bottom line is sound they don't care. Their sneering contempt for the social issues facing this country are breathtaking. Listening to these Wall Street Journal open border advocates you get the impression that they would sell their daughters to a Las Vegas whorehouse if it would fatten their wallet a little bit, or they would be happy to see the country tailspin to its fire demise so long as they get their cheap labor.

The GOP has claimed that it is the party of the middle class, along with being the business friendly party. And I think that has been a good thing. A country needs to have a thriving middle class in order for it to be prosperous and stable. And it makes sense to support businesses that create middle class jobs, or allow the middle class to start businesses to grow the economy. The Wall Street Journal types don't worry about the middle class because they aren't part of that group, but most Americans are. The open borders, and guest worker program they advocate would cripple the American middle class.

Conservatives, and other members of the GOP have long been accused of being puppets for big corporations. I, along with many other conservatives, have long said that being pro business does not equate with being a puppet. It's time to prove that. Will the GOP cave into the guest worker lobby and vote for the the immigration bill, a bill that gives middle class Americans nothing, or will it tell the big business men where they can get off?

National Semi profit, revs beat targets

Analog chipmaker National Semiconductor Corp. (NYSE:NSM - news) reported on Thursday its quarterly profit and revenue topped Wall Street targets, and said orders rose from the prior period, sending shares up 9 percent.

National Semi also said inventory was relatively low, the latest sign it worked through a glut.

Revenue rose 5.8 percent from the preceding quarter, with higher demand for power management, audio, amplifier, data converter and display chips and other products.

Net income fell to $90.1 million, or 28 cents per share, for its fourth quarter ended May 27, from $118.8 million, or 34 cents per share, a year ago.

Revenue dropped to $455.9 million from $572.6 million.

Analysts, on average, expected profit of 23 cents a share, on revenue of $451.3 million, according to Reuters Estimates.

"To briefly recap the full fiscal year, on the down side, it turned out to be a longer inventory correction than many of us expected," said Chief Executive Brian Halla on a conference call. "It was a year that now primes the stage for growth at the bottom and top lines."

National Semi shares fell 52 cents, or 2 percent, to close at $25.79 ahead of its earnings report. In extended trade, the stock jumped to $28.15, a 52-week high.

Shares of rivals Texas Instruments Inc. (NYSE:TXN - news) and Maxim Integrated Products Inc. (Nasdaq:MXIM - news) both rose 2 percent in extended trade.

STOCK BUYBACK

Santa Clara, California-based National Semi also set a $1.5 billion accelerated stock buyback, and will take on $1.5 billion in investment-grade debt to pay for it.

The accelerated plan is part of a new $2.0 billion share repurchase authorization that brings the total to $2.4 billion.

For the current quarter, its first, National Semi said it expects revenue to increase 1 percent to 4 percent from the preceding quarter, implying revenue of $460.5 million to $474.1 million.

Analysts expect a profit of 25 cents per share, on average, on revenue of $461.0 million for the first quarter.

National did not give a per-share profit forecast.

The company also said it expects gross margin to improve in the current quarter, even with operating expenses expected to rise.

Chief Financial Officer Lewis Chew said on the call that its inventory is now at about 10 weeks, which was "relatively low" for the company historically.

Chew also said the higher end of its revenue guidance assumes increased turns orders in the current quarter than in the immediately preceding quarter. Turns orders are placed and shipped in the same quarter.

"The area where we saw growth was new products," said Chief Operating Officer Don Macleod on the call, which he said helped account for its improved gross margin -- a record 62.5 percent in the just-reported quarter.

For the current quarter, Chew said he expects gross margin will rise further to above 63 percent, a figure that includes about $6 million in stock-based compensation expense.

Texas Instruments rose to $35.22 from a
New York Stock Exchange close of $34.39, and Maxim rose to $30.80 from a Nasdaq close of $30.18. [via]