DailyFinance.comhttp://www.dailyfinance.comDailyFinance.com%http://www.blogsmithmedia.com/BlogURL%/media/feedlogo.gifDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/FT/Goldman Sachs Book Awards Celebrate Reading in a Digital Agehttp://www.dailyfinance.com/2010/10/28/ft-goldman-sachs-book-awards-celebrate-reading-in-a-digital-age/http://www.dailyfinance.com/2010/10/28/ft-goldman-sachs-book-awards-celebrate-reading-in-a-digital-age/http://www.dailyfinance.com/2010/10/28/ft-goldman-sachs-book-awards-celebrate-reading-in-a-digital-age/#commentsFiled under: , , , , ,

Reading is fundamental -- regardless of the platform.

That was the message delivered by Vartan Gregorian, president of the Carnegie Corporation of New York, during a rousing keynote speech at the Financial Times/Goldman Sachs (GS) Business Book of the Year Awards ceremony at the Pierre Hotel in New York City Wednesday night.

Fault Lines: How Hidden Fractures Still Threaten the World Economy, by Raghuram G. Rajan, took home the top award for 2010 amid stiff competition from top writers including Andrew Ross Sorkin, author of Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System -- and Themselves; and David Kirkpatrick, author of The Facebook Effect: The Inside Story of the Company That Is Connecting the World.

In his acceptance speech, Rajan, who is Eric J. Gleacher Distinguished Service Professor of Finance at the University of Chicago's Booth School of Business, paid homage to his home institution. "My years at Chicago made me who I am," he said. "Everyone thinks that Chicago is all about free markets, and it is, but it's also about ideas."

In his book, Rajan shows how "the individual choices that collectively brought about the economic meltdown -- made by bankers, government officials, and ordinary homeowners -- were rational responses to a flawed global financial order in which the incentives to take on risk are incredibly out of step with the dangers those risks pose," according to Princeton University Press, the publisher. (Sound familiar?)

False Debate

"Reports of the demise of the book have been greatly exaggerated," Gregorian said in his keynote speech, paraphrasing Mark Twain. He delivered a rebuke of media pundit Jeff Jarvis, who famously said that "print is where books go to die."

In his speech, Gregorian sought to transcend the print vs. digital debate that has been raging for years in technology and media circles. Such a dichotomy represents a false choice, Gregorian said.

"Technology is not our adversary," said Gregorian, who served as president of Brown University from 1989 to 1997. "It's not about platforms but about content. A book is still a book even if it is an e-book."

Far from undermining books, he argued, technology can open the joys of literature to a new, younger generation of readers more accustomed to getting content in purely digital form. That said, we must not view technology as the savior of publishing or journalism, both previously print-focused businesses undergoing wrenching changes thanks to the Internet revolution.

A Nation of Ptolemys

"Technology is not a universal panacea," Gregorian said. "We still have to read, and we still have to think." Most of all he said, we have to remember that books are about ideas, in whatever form we consume them. We must avoid fetishizing technology and remember that what's important is knowledge, community and indeed humanity. After all, Gregorian quipped, "God did not create life out of two computers."

Gregorian, who served as president of the New York Public Library from 1981 to 1989, delivered a impassioned tribute to the role of libraries in our culture. Even in an age in which Google (GOOG) Books has digitized millions of books and made them available online, the idea of the library must remain central to our understanding of community and the body politic. Technology has the power to make a full library available to each citizen, he said.

"We each can now have our own personal library of Alexandria," Gregorian said, referring to the famous center of knowledge that was a wonder of the Classical world. "We can each be a modern-day Ptolemy," Gregorian said, citing the famous ancient scholar whose name is synonymous with knowledge, learning and the search for truth.

One Notable Recusee

Inevitably, an evening celebrating the best business books of the year, co-sponsored by giant investment bank Goldman Sachs, would create some amusing moments. Goldman CEO Lloyd Blankfein, who co-hosted the event along with Financial Times Editor Lionel Barber made some self-deprecating remarks during his introductory speech.

Blankfein recused himself from judging the nominees because, he said to somewhat nervous chuckles, "I'm in the index of all the nominees." (That's actually false. He does not appear in The Facebook Effect.) "We work hard," Goldman's CEO said, "to provide [the nominees] with as much material as possible."

Referring to the Financial Times, Blankfein took a good-natured shot at the respected global daily newspaper, which has done such great work exploring the role of Goldman and the other big banks in the financial crisis and economic meltdown. "It's our favorite source of fiction," Blankfein joked.

Of the 150 attendees at the event -- including many of New York City's business and media leaders -- only Blankfein himself was off-limits to reporters' questions.

Permalink | Email this | Comments

]]>andrew ross sorkinAndrewRossSorkinDavid KirkpatrickDavidKirkpatrickfinancial timesgoldman sachsGoldmanSachslionel barberLionelBarberLloyd BlankfeinLloydBlankfeinRaghuram G. RajanRaghuramG.RajanSam GustinThu, 28 Oct 2010 00:00:00 ESTGoogle Near Purchase of NYC Landmark Building at 111 Eighth Ave.http://www.dailyfinance.com/2010/10/27/google-near-purchase-of-nyc-landmark-building-at-111-eighth-ave/http://www.dailyfinance.com/2010/10/27/google-near-purchase-of-nyc-landmark-building-at-111-eighth-ave/http://www.dailyfinance.com/2010/10/27/google-near-purchase-of-nyc-landmark-building-at-111-eighth-ave/#commentsFiled under:

Last month, we told you that the gargantuan 111 Eighth Ave., a building which occupies an entire city block in Chelsea, and which is home to Google's (GOOG) New York headquarters -- is for sale.

Now, it appears that the likely buyer is none other than Google itself. Rumored sale price? A cool $2 billion, according to the New York Post. 111 Eighth Ave. is the former Port Authority headquarters and one of the city's largest buildings, at nearly 3 million square feet.

It also happens to be one of the East Coast's key "telecom hotels" -- centralized locations where groups of communications and networking firms hook up their hardware. Google is already the largest tenant, leasing 500,000 square feet over three floors.

The building's ownership group, which includes Taconic Partners, has been shopping the massive structure around the market for several months. A $2 billion sale would easily be New York City largest real estate transaction of the year. The building was valued at $300 million in 1998, $800 million in 2004, and possibly, $2 billion today.

Google can afford the purchase; the company is sitting on about $33 billion in cash and marketable securities.

Here's how I described 111 Eighth Ave. for a Village Voice article that marked Google's 2006 arrival in New York.
111 Eighth Avenue, designed by Lusby Simpson and completed in 1932 to house the Port Authority of New York, is one of the largest buildings in the city, an architectural marvel, and a landmark. Looming like a 15-story locomotive over Chelsea, the mammoth red-brick structure occupies an entire city block between Eighth and Ninth avenues and 15th and 16th streets -- a footprint larger than two football fields.
...
The art deco landmark is fast becoming one of the most important high-tech facilities in the world. Google's blockbuster invasion of New York and its impending takeover of nearly two floors of the massive building aim to make New York City a key component of its little-publicized global expansion -- the details of which have become fodder for a mildly hysterical parlor game in the technology community and on Wall Street. The ultimate goal? Perhaps the planet's biggest ever computer network, bypassing all those pesky cable and telephone companies.

That's why what lies beneath 111 Eighth Avenue may be more important than the building itself. The old Port Authority headquarters sits atop one of the main fiber optic arteries in New York City -- the Hudson Street/Ninth Avenue "fiber highway." The venerable behemoth is already one of the country's most important "carrier hotels" -- loosely speaking, the physical connection points of the world's telecommunications networks and the World Wide Web. As a result, Google will "have access to as much bandwidth as possible and as much variety of bandwidth as possible," says Dana Spiegel, a technology consultant and executive director of NYC Wireless.


Permalink | Email this | Comments

]]>111 Eighth Ave.111 Eighth Avenue111EighthAvenuegoogleSam GustinWed, 27 Oct 2010 18:22:00 ESTBerkshire Investors Struggle With the Todd Combs Newshttp://www.dailyfinance.com/2010/10/26/todd-combs-castle-point-goldman-sachs-stephen-friedman/http://www.dailyfinance.com/2010/10/26/todd-combs-castle-point-goldman-sachs-stephen-friedman/http://www.dailyfinance.com/2010/10/26/todd-combs-castle-point-goldman-sachs-stephen-friedman/#commentsFiled under: , , , ,

Berkshire Hathaway (BRK.A) investors had some big news to digest today. And they apparently battled against their initial skepticism about CEO Warren Buffett's hiring of a largely untested 39-year-old named Todd Anthony Combs to manage a "significant" part of Berkshire's investment portfolio. After falling precipitously for most of the day on uncertainty about the new hire, Berkshire shares recovered somewhat as investors learned more about Combs.

The Dow Jones Industrials and S&P 500 closed nearly unchanged Tuesday amid a fierce tug-of-war between buyers and sellers.

Castle Point Capital, Combs's Greenwich, Conn.-based fund, controls about $400 million in assets. It was founded in 2005 by Combs and former Goldman Sachs (GS) CEO Stephen Friedman, whose Trident Funds -- part of Friedman's Stone Point Capital -- provided Castle Point's initial capital. "In November 2005, Trident III seeded the Castle Point fund with $35 million and committed an additional $1.8 million to the management company," Stone Point said in a letter to investors today (see full letter below).

Combs was introduced to Buffett by Charlie Munger, his long-time partner at Berkshire Hathaway, according to press reports.

Friedman, of course, was also chairman of Goldman Sachs and previously served as chairman of the board of the Federal Reserve Bank of New York, chairman of the President's Intelligence Advisory Board and Intelligence Oversight Board, assistant to President George W. Bush for economic policy and director of the National Economic Council. He's currently on Goldman's board of directors.

An All-American Type

During the early stages of the Great Recession, Buffett invested $5 billion in Goldman Sachs in exchange for a 10% preferred stake, meaning Buffett earns $500 million every year the deal is in place. Factor in warrants, and Buffett will walk away with about $2 billion on his $5 billion investment after approximately three years, assuming The Oracle sells his stake back to Goldman, as has been rumored.

Sponsored Links
Combs is an "all-American type" who isn't interested in publicity, according to Fortune's Carol Loomis, a longtime Buffett confidant. "Now a resident of Darien, Conn., Combs is by birth a Floridian who graduated in 1993 from Florida State University with majors in finance and multinational business operations," Loomis reported.

Though little known outside Wall Street, Combs is a respected money manager and obvious disciple of Buffett's value-driven, company-focused approach. "At Castle Point we like to think of ourselves as owners of businesses," Combs said in a July shareholder letter cited by Reuters.

Combs's top 10 long holdings in June included CIT Group senior secured credit, CME Group, MasterCard, US Bancorp, Western Union, State Street Corp, Amadeus IT and RenaissanceRe, according to the wire service.

Another Savvy Short-Seller

Combs made a ton of money in 2007 and 2008 by shorting financial stocks during the credit crisis, Marketwatch reported. He also reaped big returns before the financial crisis by shorting shares of the massive government-sponsored enterprise Fannie Mae, as well as reinsurer RenaissanceRe.

"Short positions, or negative bets, returned 35.56% in 2007 and 36.68% in 2008 for the Castle Point Capital Master Fund, Combs' hedge fund," Marketwatch reported. "Those gains helped the Castle Point hedge fund return 18.95% in 2007, after fees. Long positions that year lost just over 9%."

Below is the notice Castle Point has posted about Combs's departure:
Castle Point Capital, a long-short hedge fund sponsored by Trident III to focus on the financial services sector, announced earlier today that its portfolio manager, Todd Combs, has agreed to join Berkshire Hathaway as an investment manager responsible for a significant portion of Berkshire's investment portfolio.

As a result, we will be winding down the Castle Point hedge fund. A copy of the Berkshire Hathaway press release is attached for your information.

This is disappointing news for Trident III given the success that Castle Point has had in building its platform during the past five years. The fund has grown its asset base from $35 million at inception to more than $400 million at the end of last month.

The fund has also had strong relative performance during extremely challenging times in the financial services sector, outperforming its benchmark by roughly 80 percentage points since inception in November 2005 (positive 34% cumulative net return for Castle Point since launch vs. negative 46% for the XLF).

Nevertheless, we are happy for Todd, who has an incredible opportunity to work for Warren Buffett at Berkshire Hathaway. Todd is an extremely talented investor and we wish him much success in his new position.

In November 2005, Trident III seeded the Castle Point fund with $35 million and committed an additional $1.8 million to the management company. Since then, Trident III's fund investment has grown to more than $48 million. Trident III has also received $5.4 million in distributions from the management company. Accordingly, after winding up the business, we expect the total investment return of Trident III to be approximately $54 million, or 1.5x cost.

The Castle Point fund is up 1.0% net for the current month through the close of business today, and it has already liquidated approximately 90% of its positions. We expect Castle Point to close out the balance of its holdings in an orderly manner over the next few weeks, although certain positions may take longer. We should receive 90% of our capital account balance from the Castle Point fund by or before the end of November and the balance upon completion of the year end audit.

We also note that Castle Point has sufficient cash on hand to wind up the operations of the management company and the firm has informed its investors that it is suspending the accrual of management fees as underlying positions transition to cash.

Trident III remains extremely well positioned. In total, the fund has invested $1.1 billion in fourteen portfolio companies. As of September 30, 2010, Trident III had generated realized proceeds of $1.1 billion and, based on preliminary valuations, total realized proceeds and unrealized value of approximately $2.3 billion, representing 2.0x cost and a gross IRR in excess of 26%.

As always, please do not hesitate to contact us with any questions.
Sincerely,

Chuck Davis, Meryl Hartzband and Jim Carey

Permalink | Email this | Comments

]]>Castle PointSteven FriedmanStone Point Capitaltodd combswarren buffettwarren buffett successorSam GustinTue, 26 Oct 2010 16:30:00 ESTTop U.S. Incomes Grew Five-Fold in 2009, to a $519 Million Averagehttp://www.dailyfinance.com/2010/10/26/top-us-incomes-grew-five-fold-in-2009-to-a-519-million-average/http://www.dailyfinance.com/2010/10/26/top-us-incomes-grew-five-fold-in-2009-to-a-519-million-average/http://www.dailyfinance.com/2010/10/26/top-us-incomes-grew-five-fold-in-2009-to-a-519-million-average/#commentsFiled under:

During the depths of the recession in 2009, as millions of Americans lost their jobs, homes and life savings, the highest-paid earners in the United States saw their average incomes increase more than five-fold from 2008, according to new data from the federal government.

The 74 people who earned more than $50 million last year -- the highest income category measured by the Social Security Administration -- saw their average incomes skyrocket from $91.8 million in 2008 to a mind-boggling $518.8 million in 2009.

These 74 people earned an average of $10 million -- per week. Meanwhile, half of all American wage-earners, or about 75 million people, earned less than $505 per week.

$10 Million Per Week Vs. $505 Per Week

Even though the absolute number of earners in the over-$50 million income category decreased from 131 to 74 in 2009, the combined wages of that group increased by an astonishing $26.5 billion, from $11.9 billion in 2008 to $38.4 billion in 2009.

Sponsored Links
These 74 people earned a combined $38.4 billion last year, or as much as the 19 million lowest-paid American workers, combined. In 2009, the average income earned by all Americans fell by $384 to $39,269 and the median income fell by $253 to $26,261.

These figures were revealed by the Social Security Administration on October 15th, and were first reported by David Cay Johnston, a Pulitzer Prize-winning former reporter for The New York Times, who now writes for Tax.com, the website of Tax Analysts, a nonprofit tax analysis group based in Falls Church, Virginia.

The names of the top 74 earners were not disclosed, but they were "most likely Wall Street traders who earned bonuses or corporate executives cashing in deferred compensation that accumulated over the years, or even highly paid athletes," Bloomberg said, citing Johnston.

In an email, Johnston told DailyFinance that the top 74 earners also does not include most hedge fund managers because much of their "investment" income is not counted as wages.

An "Orgy of Money Exhibitionism"

"This systematic destruction of the working class and middle class has come during an era notable for celebrating the super-rich just for being super-rich," Johnston wrote. "From the Forbes 400 launch in 1982 and Robin Leach's Lifestyles of the Rich and Famous in 1984 to the faux reality of the multiplying Real Housewives shows, money voyeurism has grown in tandem with stagnant to falling incomes for the vast majority. There has also been huge income growth at the top and the economic children of income inequality: budget deficits and malign neglect of our commonwealth."

"This orgy of money exhibitionism has created a society in which commas - it takes three to be a billionaire - count more than character," Johnston continued. "We have gone so far down this path that we bailed out bankers, allowing them to keep the untaxed wealth in their deferral accounts and, with a few exceptions, retaining shareholder value, while wiping out investors in General Motors and Chrysler as a condition of their bailouts. And while autoworkers had to take severe pay cuts, bonus time on Wall Street is at new record levels."

Permalink | Email this | Comments

]]>David Cay Johnstonincomesinequalitymiddle classrecessionwagesSam GustinTue, 26 Oct 2010 03:00:00 ESTBuffett's New Hire to Manage 'Significant' Chunk of Berkshire's Portfoliohttp://www.dailyfinance.com/2010/10/26/buffett-hires-todd-combs-possible-successor/http://www.dailyfinance.com/2010/10/26/buffett-hires-todd-combs-possible-successor/http://www.dailyfinance.com/2010/10/26/buffett-hires-todd-combs-possible-successor/#commentsFiled under: , , ,

Warren BuffettWarren Buffett is betting on youth to help lead his revered conglomerate Berkshire Hathaway (BRK.A) after he leaves the scene. The Oracle of Omaha has tapped 39-year-old Todd Anthony Combs to manage a major part of Berkshire's investment portfolio.

Combs, who is CEO and portfolio manager at Greenwich, Conn.-based Castle Point Capital Management, will "handle a significant portion of Berkshire's investment portfolio," Buffett, 80, said Monday, in announcing Combs's hiring.

The three-year search for a successor to Buffett, arguably America's most famous investor, has captivated the financial world. Thanks to a unique combination of homespun wisdom, integrity and consistently outsized investment returns, Buffett has built a fiercely devoted following of fans, thousands of whom gather each year in Omaha, Neb., for Berkshire's annual meeting, also known as the Woodstock of Capitalism.

Combs is an "all-American type" who is "not the least bit interested in publicity, an attitude unlikely to shield him from it," reported Fortune's Carol Loomis, a longtime Buffett confidant. "Now a resident of Darien, Conn., Combs is by birth a Floridian who graduated in 1993 from Florida State University with majors in finance and multinational business operations," Loomis reported.

A Long-Term View

In this year's installment of his widely read annual letter, Buffett reiterated the core investment philosophy that has made him an investing legend along with longtime partner Charlie Munger: Invest in easy-to-understand companies run by honest and talented managers at a good price. Then, nurture those companies and investments over the long term.

"For three years Charlie Munger and I have been looking for someone of Todd's caliber to handle a significant portion of Berkshire's investment portfolio," Buffett said in a press release. "We are delighted that Todd will be joining us."

In 2009, Berkshire notched its best performance since 2003. Shareholder book value increased 19.8% after falling 9.8% in 2008. Berkshire's 2009 performance slightly trailed the S&P 500, however, but over the entire financial crisis the company outperformed that index, thanks to a comparatively small 2008 loss.

The Oracle's Intuition

The appointment of Combs is classic Buffett: Confound the conventional wisdom, and ignore the so-called experts.

Ajit Jain, the Berkshire superstar who runs the National Indemnity business, had long been seen as the front-runner. David Sokol, the hard-driving chief of huge Berkshire subsidiary MidAmerican Energy and recently installed CEO of NetJets, had also been viewed as a top contender.

Sponsored Links
Sokol remains the leading candidate for the Berkshire CEO job, the second third of the managing triumvirate that will ultimately take over Buffett's duties. Buffett's son Howard is in line to complete the trio as chaiman of Berkshire, the Oracle has said.

Berkshire has nearly $100 billion in assets, including over $50 billion in equity positions and about $40 billion in corporate and government debt holdings.

Combs managed $395 million on July 1, according to Reuters. "Through June this year, his fund has risen 28% from its November 2005 inception, against a 49% drop in his benchmark, the SPDR Financial Services sector fund," according to the wire service.

"Owners of Businesses"

Combs is a respected money manager and obvious disciple of Buffett's value-driven, company-focused approach. "At Castle Point we like to think of ourselves as owners of businesses," Combs said in a July shareholder letter cited by Reuters.

Combs's top 10 long holdings in June included CIT Group senior secured credit, CME Group, MasterCard, US Bancorp, Western Union, State Street Corp, Amadeus IT and RenaissanceRe, according to the wire service.

Combs shouldn't expect to take the job while Buffett still has his wits about him.

Combs is "not going to take over the whole thing as long as I'm around," the Oracle told The Wall Street Journal. "I have this dual position as CEO and CIO, and I will remain in that."


Permalink | Email this | Comments

]]>berkshire hathawaybuffett successor todd combsbuffett taps todd combshedge fund manager todd combstodd anthony combstodd combswarren buffett successorSam GustinTue, 26 Oct 2010 01:00:00 ESTEconomist Joseph Stiglitz: Put Corporate Criminals in Jailhttp://www.dailyfinance.com/2010/10/22/joseph-stiglitz-corporate-crooks-to-jail/http://www.dailyfinance.com/2010/10/22/joseph-stiglitz-corporate-crooks-to-jail/http://www.dailyfinance.com/2010/10/22/joseph-stiglitz-corporate-crooks-to-jail/#commentsFiled under: , , ,

Joseph StiglitzAn institutionalized system of skewed incentives allowed Wall Street bankers and other corporate executives to gamble with America's wealth and then get away largely scot-free after the house of cards came tumbling down, plunging the U.S. into the worst economic crisis in decades and destroying trillions of dollars of wealth worldwide.

That's the analysis of Joseph Stiglitz, an internationally renowned economist and winner of the 2001 Nobel Prize in economics. (His latest book, Freefall: America, Free Markets, and the Sinking of the World Economy, is just out in paperback.)

During a wide-ranging interview with DailyFinance at AOL headquarters in New York City this week, Stiglitz, who served as chief economist of the World Bank from 1997-2000 and is currently University Professor at Columbia University, explained how the availability of cheap money (thanks in large measure to former Fed Chairman Alan Greenspan), combined with outright mortgage fraud and deceptive and predatory lending practices put millions of people into homes they couldn't afford and caused real estate prices to skyrocket. That created a bubble that would inevitably pop. (See video below, or read the full interview transcript.)

"Festering For Years"

"We have to understand that the problems have been festering for years, not just the last three years," said Stiglitz. "In the years prior to the breaking of the bubble, the financial industry was engaged in predatory lending practices, deceptive practices. They were optimizing not on producing mortgages that were good for the American families but in maximizing fees."

Meanwhile, stock-based compensation created further skewed incentives by encouraging executives to pursue short-term stock gains at the expense of long-term corporate sustainablity, Stiglitz said, and in some cases encouraged them to deceive their own shareholders.

Highly complex financial instruments and off-balance-sheet transactions allowed the bankers to keep much of their activity hidden from woefully understaffed regulators at the SEC and other supposed financial watchdog agencies. And if the regulators did catch some fraud, Stiglitz explained, the system of penalties generally meant a small fine relative to the full ill-gotten gains, often in the hundreds of millions of dollars.

"Still Home Sitting Pretty"

Legal penalties for financial fraud in the U.S. have become "just a cost of doing business," Stiglitz said. "It's like a parking fine. Sometimes you make a decision to park knowing that you might get a fine because going around the corner to the parking lot takes you too much time."

"We fine them, and what is the big lesson?" said Stiglitz. "Behave badly, and the government might take 5% or 10% of what you got in your ill-gotten gains, but you're still sitting home pretty with your several hundred million dollars that you have left over after paying fines that look very large by ordinary standards, but look small compared to the amount that you've been able to cash in."

Taken together, Stigliz said, this system of widespread fraud, lax regulation and non-deterrent enforcement, created a system of skewed incentives that rewarded criminality, gambling and other bad behavior, and left American workers, investors and homeowners holding the bill.

Meanwhile, the astonishingly disproportionate influence of the big banks and corporations on the American political system has allowed powerful executives to exert their will on the U.S. government at the expense of the people, Stiglitz said.





"Five or Six Banks Equal to 300 Million People"

"Look at the regulatory reform that got passed," said Stiglitz. "It was an intense battle. And you had on one side a few banks. And on the other side you had 300 million people, American people. And it was really right in balance. Five or six banks equal to 300 million people. And in the end we got what you might call an unsatisfactory compromise."

Stiglitz doesn't buy the argument that trying to restrict corporate political donations would somehow infringe on the free speech of corporations, as the U.S. Supreme Court recently ruled in the landmark Citizens United case, a decision that busted open the door to a flood of corporate political donations.

"Corporations are a legal entity," Stiglitz explained. "We create them. And when we create them we create all kinds of rules. They can go bankrupt. And that means they owe more money and they get away scot-free. They can create an environmental disaster, and then go bankrupt and again go away scot-free. So, as legal entities we have the right to make the rules that govern them."

"As individuals we have certain basic rights," Stiglitz continued. "We aren't created by the law. We exist by nature. But corporations are man-made. They are supposed to serve our interest, our society's interests. And we are creating them with powers that are not serving our society's interests."

"A Vicious Cycle"

Unfortunately, he continued, we now have a situation where the owners of major American corporations, the shareholders, have virtually no say in compensation, the very thing that created many of the skewed incentives that led to the bad behavior.

"If you're going to rob your shareholders, shouldn't they have the right to say I don't like this?" asked Stiglitz. "It's basically a vicious cycle in which we've gotten ourselves, because the corporate executives control the corporations. The corporations have the right to give campaign contributions. So basically we have a system in which the corporate executives, the CEOs, are trying to make sure the legal system works not for the companies, not for the shareholders, not for the bondholders -- but for themselves."

"So it's like theft," said Stiglitz. "These corporations are basically now working for the CEOs and the executives and not for any of the other stakeholders in the corporation, let alone for our broader society."

What should be done? "I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison," said Stiglitz. "Absolutely. These are not just white-collar crimes or little accidents. There were victims. That's the point. There were victims all over the world."

A Theory of Justice

Among the casualties of this whole mess, according to Stiglitz? Faith in the legal system itself. "The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work," he said. "If the legal system is seen as exploitative, then confidence in our whole system starts eroding."

"When you say the Pledge of Allegiance, you say, with 'justice for all," Stiglitz said. "People aren't sure that we have justice for all. Somebody is caught for a minor drug offense, they are sent to prison for a very long time. And yet, these so-called white-collar crimes, which are not victimless; almost none of these guys, almost none of them, go to prison."

"Families are as important as corporations," he said. "Keeping kids in school, not forcing them out of their home, keeping the community together, is certainly as important as keeping a corporation alive."

Permalink | Email this | Comments

]]>campaign financecampaign finance reformCorporate governanceDodd-Frank ActFeaturedVideofinancial crisisfraudJoseph StiglitzNobel Prizeunderwater mortgagesSam GustinFri, 22 Oct 2010 06:30:00 ESTJoseph Stiglitz Interview Transcript, Oct. 20, 2010http://www.dailyfinance.com/2010/10/22/joseph-stiglitz-interview-transcript/http://www.dailyfinance.com/2010/10/22/joseph-stiglitz-interview-transcript/http://www.dailyfinance.com/2010/10/22/joseph-stiglitz-interview-transcript/#commentsFiled under: , , ,

Interview Transcript: Joseph Stiglitz, Oct. 20, 2010
By Sam Gustin and Michael Rainey

Prof. Joseph Stiglitz is University Professor at Columbia University and Chair, Columbia University Committee on Global Thought. He teaches classes at the Columbia Business School, the Graduate School of Arts and Sciences (Department of Economics) and the School of International and Public Affairs. Stiglitz was awarded the 2001 Nobel Prize in Economics and served as Chief Economist of the World Bank from 1997-2000. (Main article here.)

DailyFinance: Over the last three years, the U.S. economy has experienced the worst crisis in decades. Is the worst over?
Joseph Stiglitz: No. You might say the worst if you thought of the worst as the immediate weeks following the collapse of Lehman Brothers where we didn't know where the bottom would be; we've pulled back from the brink. But in terms of most Americans, the question is, are they likely to be able to get a job? One of six Americans who would like a full-time job right now cannot get one. Are things going to be better than that in the next year or two? The answer is probably not. It might get a little better, but there's also a substantial risk that it could get worse.

Do you anticipate a "double dip" recession, where the economy returns to two consecutive quarters of negative growth?
I think there's a possibility, but in some ways that's not the key issue. The key issues for most Americans are two-fold right now. One is, is it likely that the economy will be growing fast enough to create enough jobs for the new entrants to the labor force so that the jobs deficit gets reduced? The answer is almost no one sees growth in 2010, 2011 and even into 2012 at that rate. So we are going to maintain this gap of 15 million unemployed, 26 million Americans who would like a full-time job that can't get one. That situation is likely to be maintained. And it is possible that it might get a little worse; it might get a little better.

The second thing that is weighing down on most Americans is the threat of losing their home. The fact is that one out of four Americans with a mortgage are now underwater. They owe more money on their home [than the value of their home]. The bubble in the housing market crashed in 2007, and we're beyond three years now since that happened and there is no recovery in sight. The housing market might get a little better. There's a greater likelihood it will get a little bit worse. But going back to where they can say their home is their reserve for retirement or paying for college education? The likelihood of that happening is just very low.

What should be done about all of these people whose mortgages are underwater? Should there be a suspension of foreclosures?
Stopping the foreclosures is a palliative. It's a temporary measure. We have to understand that the problems have been festering for years, not just the last three years. In the years prior to the breaking of the bubble, the financial industry was engaged in predatory lending practices, deceptive practices. They were optimizing not on producing mortgages that were good for the American families but in maximizing fees and exploiting and predatory lending. Going and targeting the least educated, the Americans that were most easy to prey on.

We've had this well documented. And there was the tip of the iceberg that even in those years the FBI was identifying fraud. When they see fraud, it's really fraud. But beneath that surface, there were practices that really should have been outlawed if they weren't illegal.

So now, we have the legacy of that, plus all kinds of practices that are designed to get people out of their homes, to take advantage. It's not just the things that have been exposed, the robo-signers and that kind of thing. There are temporary judges hired in to process millions and millions of Americans losing their homes. The system was not designed for dealing with a failure of this magnitude.

Are we talking about widespread illegality or simply exploitative, but technically legal, practices? Where do you draw the line between outright criminality and mere exploitation?
It's very hard to draw the line, and that's almost a lawyer's issue rather than an economist's, but I think what we can say is there was a considerable amount of what was done should have been illegal if it wasn't.

This is a really important point to understand from the point of view of our society. The legal system is supposed to be the codification of our norms and beliefs, things that we need to make our system work. If the legal system is seen as exploitative, then confidence in our whole system starts eroding. And that's really the problem that's going on.

Because people are being told, "Well, you signed this." Well, if you have a legal system that encourages, allows, that kind of predatory behavior, something is wrong. And we know that something is wrong. Because the banks used their political power to make sure they could get away with this. There were a lot of people pointing out the predatory behavior. There were some initiatives to try to restrain the banks from doing it. And they used all their political muscle to ensure that they could continue engaging in these kinds of predatory behaviors.

Is this an argument for trying to restrain the influence of major banks and corporations on our political system?
Oh, very clearly. Look at the regulatory reform that got passed. It was an intense battle. And you had on one side a few banks. And on the other side you had 300 million people, American people. And it was really right in balance. Five or six banks equal to 300 million people. And in the end we got what you might call an unsatisfactory compromise. We moved a little bit in the right direction. For instance there was an agency set up to try to protect consumers.

But they made huge exemptions and exceptions so that, for instance, a lot of the predatory practices in automobile loans are going to be able to be continued. Why is it OK to engage in bad lending in automobiles and not in the mortgage market? Is there any principle? We all know the answer to that. No, there's no principle. It's money. It's campaign contributions, lobbying, revolving door, all of those kinds of things.

How do you respond to the argument that trying to restrict corporate political donations is somehow infringing on the free speech of corporations?
Corporations are a legal entity. We create them. And when we create them, we create all kinds of rules. They can go bankrupt. And that means they owe more money and they get away scot-free. They can create an environmental disaster, and then go bankrupt and again go away scot-free. So, as legal entities we have the right to make the rules that govern them. As individuals we have certain basic rights. We aren't created by the law. We exist by nature. But corporations are man-made. They are supposed to serve our interest, our society's interests. And we are creating them with powers that are not serving our society's interests.

Let me give you an example of something I think we ought to do, part of the way we have to deal with the consequences. Corporations are supposed to be owned by the shareholders. If you hired somebody to go do some work for you and you gave them some money, you would say that you have the right to make sure that they spend the money you gave them the way you tell them to. You should have the right to look at their books.

Right now, the shareholders, who are supposed to be the owners, have no say in pay. They have no say in the decision about how much their CEOs get paid. In some countries there is a sense of corporate responsibility. There's a sense that the shareholders own it, and the owners should have the right to vote, at least in an advisory sense.

If you're going to rob your shareholders, shouldn't they have the right to say I don't like this? And yet in America, the corporations have been resisting this. I think it's the same thing in the area of advertising and campaign contributions. As a shareholder, I should have the right to make sure the corporation that works for me, that I own, doesn't go against my interest. For instance, as a shareholder in BP -- I'm not, but if I were -- I want them to have safety, I don't want them to pollute the country. And I'm going to say they should act in a socially responsible manner and a responsible way. Shouldn't we have that right?

What do you think it is about the U.S. that makes it so hard to achieve corporate responsibility?
I think it's basically a vicious cycle in which we've gotten ourselves, because the corporate executives control the corporations. The corporations have the right to give campaign contributions. So basically we have a system in which the corporate executives, the CEOs, are trying to make sure the legal system works not for the companies, not for the shareholders, not for the bondholders - but for themselves.

So it's like theft, if you want to think about it that way. These corporations are basically now working now for the CEOs and the executives and not for any of the other stakeholders in the corporation, let alone for our broader society.

You look at who won with the excessive risk-taking and shortsighted behavior of the banks. It wasn't the shareholder or the bondholders. It certainly wasn't American taxpayers. It wasn't American workers. It wasn't American homeowners. It was the CEOs, the executives. And they use all kinds of language that quite honestly is deceptive. So they talk about incentive pay. We all believe in incentives as economists, it's the one thing we talk about. And who could object to incentivizing people to work harder? Sounds good. But if you look at the details of the incentive pay, it was incentives to act not in the interest of the shareholders and bondholders, but in the interest of the CEOs and the executives.

Explain how those incentives around compensation were motivating executives to act in a way that was contrary to their shareholders' interests.
Let me give you two examples. They got more pay when they got stock options. When the value of the stock goes up, they get the upside. But when it goes down, they don't have to share the losses. When you have a system like, you have an incentive to gamble because you get the upside, but somebody else bears the losses. So that's an example of incomplete sharing inducing excessive [risk-taking].

But it's even worse than that, because if your pay is related to the stock market performance, then you have an incentive to try to deceive the stock market. In the long run, information may get out, but you have a short term, and so if you can deceive them for a few years, get your stock options, sell out before the news strikes, then you walk off with a lot of money. And that's what they've done.

So you ask the question, why did they move so much of the risky activity off balance sheet? Now, partly it was to deceive the regulators, let's be fair. Partly some of this was to deceive the tax collector. But a major part was to deceive the shareholders, so it looked like they were doing much better than they were. Share prices go up, their bonuses go up. Some time down the line, the truth will come out. But by then, they've cashed in.

A good example of that might be [former Countrywide CEO] Angelo Mozillo, who recently paid tens of millions of dollars in fines, a small fraction of what he actually earned, because he earned hundreds of millions.
The system is designed to actually encourage that kind of thing, even with the fines.

During the S&L crisis, people actually went to jail. Do you think there's any chance that's going to happen with the mortgage crisis.
I know so many people who say it's an outrage that we had more accountability in the '80's with the S&L crisis than we are having today. Yeah, we fine them, and what is the big lesson? Behave badly, and the government might take 5% or 10% of what you got in your ill-gotten gains, but you're still sitting home pretty with your several hundred million dollars that you have left over after paying fines that look very large by ordinary standards but look small compared to the amount that you've been able to cash in.

So the system is set so that even if you're caught, the penalty is just a small number relative to what you walk home with.
The fine is just a cost of doing business. It's like a parking fine. Sometimes you make a decision to park knowing that you might get a fine because going around the corner to the parking lot takes you too much time.

Are there any steps regulators can now take to make the penalties more painful?
I think we ought to go do what we did in the S&L [crisis] and actually put many of these guys in prison. Absolutely. These are not just white-collar crimes or little accidents. There were victims. That's the point. There were victims all over the world. What worries me is that the Dodd-Frank bill, the regulatory bill that we passed a few months ago, gives responsibility to a set of regulatory bodies - the bill itself has all kinds of holes and exceptions - but the regulatory agencies, in many cases, are the same people that were in charge as we pushed to the brink.

So do we have any confidence that these guys who got us into the mess have really changed their minds? Actually we have pretty [good] confidence that they have not. I've seen some speeches where they said, "Nothing was really wrong. We didn't get things quite right. But our understanding of the issues is pretty sound." If they think that, then we really are in a sorry mess.

What happens when fines and other penalties lose their deterrent value in preventing or deterring people from committing crime?
There are many aspects of this. Economists focus on the whole notion of incentives. People have an incentive sometimes to behave badly, because they can make more money if they can cheat. If our economic system is going to work then we have to make sure that what they gain when they cheat is offset by a system of penalties.

And that's why, for instance, in our antitrust law, we often don't catch people when they behave badly, but when we do we say there are treble damages. You pay three times the amount of the damage that you do. That's a strong deterrent. Unfortunately, what we've been doing now, and more recently in these financial crimes, is settling for fractions - fractions! - of the direct damage, and even a smaller fraction of the total societal damage. That is to say, the financial sector really brought down the global economy and if you include all of that collateral damage, it's really already in the trillions of dollars.

But there's a broader sense of collateral damage that I think that has not really been taken on board. And that is confidence in our legal system, in our rule of law, in our system of justice. When you say the Pledge of Allegiance you say, with "justice for all." People aren't sure that we have justice for all. Somebody is caught for a minor drug offense, they are sent to prison for a very long time. And yet, these so-called white-collar crimes, which are not victimless, almost none of these guys, almost none of them, go to prison.

Can we draw a direct line from the outsize influence of the executives and the bankers -- because these skewed incentives and penalties out of whack didn't just arise out of a vacuum. How did we get to where we are?
It's clearly the influence of campaign contributions and lobbyists. Let me give you another example of where the legal system has gotten very much out of whack, and which contributed to the financial crisis.

In 2005, we passed a bankruptcy reform. It was a reform pushed by the banks. It was designed to allow them to make bad loans to people to who didn't understand what was going on, and then basically choke them. Squeeze them dry. And we should have called it, "the new indentured servitude law." Because that's what it did.

Let me just tell you how bad it is. I don't think Americans understand how bad it is. It becomes really very difficult for individuals to discharge their debt. The basic principle in the past in America was people should have the right for a fresh start. People make mistakes. Especially when they're preyed upon. And so you should be able to start afresh again. Get a clean slate. Pay what you can and start again. Now if you do it over and over again that's a different thing. But at least when there are these lenders preying on you should be able to get a fresh start.

But they [the banks] said, "No, no, you can't discharge your debt," or you can't discharge it very easily. They have a right, now, to take 25% of your before-tax income. Now imagine what that means. Let's assume that you wound up, as it's not that hard to do, with a debt equal to 100% of your income. You're making $40,000, and your debt is $40,000. You have to turn over to the credit card company, to the bank, $10,000 of your before-tax income every year. But, the banks can now charge you 30% interest.

So what does that mean? At the end of the year, you've paid the bank $10,000, a quarter of your income. But what you owe the bank has gone from $40,000 to an even larger number because they're charging you 30%. So you're debt is larger. So the next year you have to give a quarter of your income again to the bank. And the year after. Until you die.

This is indentured servitude. And we criticize other countries for having indentured servitude of this kind, bonded labor. But in America we instituted this in 2005 with almost no discussion of the consequences. But what it did was encourage the banks to engage in even worse lending practices.

We've made it so difficult for individuals to discharge their debt and have this fresh start, and yet it is just taken for granted that a corporation or a company can blow up and then they can file for bankruptcy and then they can start over.
We give rights to corporations that we don't give to ordinary Americans. One of my proposals in my book Freefall -- one of the ways to deal with this foreclosure problem, the fact that one out of four Americans who have a mortgage are underwater: They owe more money on their home than the value of their home. Their home used to be what they used as the reserve for paying their kids college education, for their retirement. Now it's a liability, not an asset.

So what I've argued is, we have these laws called Chapter 11 to give a fresh start to corporations. We say it's very important to be able to do this quickly, we want to keep jobs, we want to keep the corporation going as an ongoing enterprise.

Families are as important as corporations. Keeping kids in school, not forcing them out of their home, keeping the community together, is certainly as important as keeping a corporation alive. So what I've called for is a homeowner's Chapter 11. So what you do is you write down the mortgage, what they owe, to the value of the house. And you convert the debt into, make [the bank], in a sense, the new equity owner. And when they, sometime in the future, sell the home, if there is a capital gain they share that with the bank. That's the way the bank is protected. Nobody would do this just to escape; there is accountability here. But it gives homeowners a fresh start and it would deal with a significant part of our foreclosure problem.

It sounds like that would be a reasonable and actually quite popular plan. Do you think there's any chance that would be enacted?
Not as long as our banks have the kind of political influence they have today. There were some people in Congress that were pushing for a variant of this idea, and the banks came down really, really hard, for an obvious reason. The banks want to pretend that they did not make bad loans. They don't want to come into reality. The fact that they were very instrumental in changing the accounting standards, so that loans that are impaired where people are not paying back what they owe, are treated as if they are just as good as a well-performing mortgage.

So the whole strategy of the banks has been to hide the losses, muddle through and get the government to keep interest rates really low. So the Fed lends to the banks at zero interest rate, or almost zero interest rate. We wish we could borrow at that [rate] - if we could borrow at that [rate] we would also solve the foreclosure problem. So the government is basically giving money to the banks at very low interest rates, and then they're lending it on at much higher interest rates, and that's recapitalizing the banks. Money [is also] being paid out in bonuses -- not all of it is going to recapitalization, some of it goes into the pockets of the bankers.

The result of this is, as long as we keep up this strategy, it's going to be a long time before the economy recovers, because that huge spread between what they can get money from the government and what they can lend is dampening the economy.

Permalink | Email this | Comments

]]>Corporate governanceDodd-Frank Actfinancial crisisJoseph StiglitzmortgagesNobel PrizeSam GustinFri, 22 Oct 2010 06:29:00 ESTApple Reports Profit of $4.3 Billion on Record Saleshttp://www.dailyfinance.com/2010/10/18/apple-reports-profit-of-4-3-billion-on-record-sales/http://www.dailyfinance.com/2010/10/18/apple-reports-profit-of-4-3-billion-on-record-sales/http://www.dailyfinance.com/2010/10/18/apple-reports-profit-of-4-3-billion-on-record-sales/#commentsFiled under: , ,

Apple iPadTech juggernaut Apple (AAPL) handily beat earnings and revenue expectations last quarter, but supply constraints prevented the company from reaching its full potential. In other words, Apple literally cannot produce enough products to meet consumer demand.

As a result, Apple stock fell about 6% after a brief halt in after-hours trading.

Apple, the second-largest company in the S&P 500, posted revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per share, compared to revenue of $12.21 billion and net quarterly profit of $2.53 billion, or $2.77 per share, one year ago.

The company also revealed that it is sitting on $46 billion in cash. Asked about the cash hoard, CEO Steve Jobs said Apple would hold onto its money with a view toward potential future "strategic acquisitions."

Apple sold a whopping 14.1 million iPhones in the last quarter. Wall Street analysts had been expecting Apple to sell about 11.1 million iPhones. Apple also sold 4.19 million iPads. Gross margin was 36.9%, compared to 41.8% in the year-ago quarter, a change that may have contributed to the stock decline.

Sponsored Links
International sales accounted for 57% of the quarter's revenue, the company said. Apple sold 3.89 million Macs during the quarter, a 27% increase over last year.

Jobs trumpeted his company's earnings performance.

"We are blown away to report over $20 billion in revenue and over $4 billion in after-tax earnings -- both all-time records for Apple," said Jobs. "iPhone sales of 14.1 million were up 91% year-over-year, handily beating the 12.1 million phones RIM [Research In Motion, maker of BlackBerry] sold in their most recent quarter. We still have a few surprises left for the remainder of this calendar year."

Peter Oppenheimer, Apple's CFO, offered a positive outlook.

"We're thrilled with the performance and strength of our business, generating almost $5.7 billion in cash flow from operations during the quarter," Oppenheimer said. "Looking ahead to the first fiscal quarter of 2011, we expect revenue of about $23 billion, and we expect diluted earnings per share of about $4.80."

Permalink | Email this | Comments

]]>Apple earningsiPadiPhoneSam GustinMon, 18 Oct 2010 16:45:00 EST'Mad Men' Waiting to Close the Deal on Another Seasonhttp://www.dailyfinance.com/2010/10/18/mad-men-waiting-to-close-the-deal-on-another-season/http://www.dailyfinance.com/2010/10/18/mad-men-waiting-to-close-the-deal-on-another-season/http://www.dailyfinance.com/2010/10/18/mad-men-waiting-to-close-the-deal-on-another-season/#commentsFiled under: , , ,

Why hasn't Mad Men been picked up for another season?

Matthew Wiener, Mad Men's heralded creator, isn't sure. Or if he is, he didn't tell DailyFinance when we caught up with him Sunday night outside the 21 Club in a quiet moment during the screening of the star-studded finale for the hit show. All he could say (on the record) is that it has something to do with money.

Translation: Hey AMC -- pay up! You've got a blockbuster series on your hands. This is one deal you want to close.

AMC declined to comment Monday when asked about the status of the show, which just concluded its fourth season. The cable channel is owned by Rainbow Media Holdings, a subsidiary of Cablevision Systems Corporation (CVC).

Cara Buono, Elisabeth Moss and Christina Hendricks attend the 'Mad Men' Season 4 Finale screening,Like the show, Manhattan's 21 Club isn't an exact facsimile of a certain alcohol-drenched and tobacco-stained 1960's cultural milieu in which men were handsome buffoons and drop-dead gorgeous women were really pulling the strings the whole time. More like an admirable simulacrum.

Still, from the hired models dressed to the nines in JFK-era threads to the free flowing martinis ("Sterling Classic") and something appropriately-titled the "Deal Closer," the vibe was buoyant and worries were scant. Except for the ever-present threat of nuclear annihilation, there were few cares in the air. That blend of devil-may-care hedonism and we'll-deal-with-it-tomorrow nonchalance may be why the show resonates so deeply today. When the world could end tomorrow, people tend to enjoy the present a little more vividly.

When Christina Hendricks, who plays Joanie the office manager, rolled into the 21 Club, every woman in the place suddenly lost interest in her date. "I didn't think that was physically possible," DailyFinance was informed by a Google-eyed beauty who only moments earlier had been focusing her attention on your AOL correspondent.

Sponsored Links
Hendricks was assembled in a floral-on-black dress that had every social science major in the room questioning the laws of physics, and reconsidering the possibility of "intelligent design."

For the next 30 minutes, Hendricks proceeded to tear it up on the red carpet in the 21 Club's front ante-room.

Elizabeth Moss looked absolutely stunning in a sequined number, like a Greek goddess straight out of Homer. Jon Hamm seemed slightly bored, (when you're the most desired man in the United States that can happen), and a little more focused on his University of Missouri Tigers, set to play the Oklahoma Sooners next week. (Hamm was noncommittal when DailyFinance asked him to confirm that the University of Oregon Ducks are the No. 1 team in the country.)

Several dozen Chase (JPM) Sapphire members used 5,000 accrued "points" for a chance to rub shoulders with the Mad Men stars. Some came from as far away as Larchmont. The idea behind the Chase Sapphire program is to move beyond rewarding cardmembers with "stuff" and instead offer them "experiences," said Sean O'Reilly, general manager of Chase Card Services.

Amex Black, eat your heart out. (See you next season, Mr. Weiner.)

Permalink | Email this | Comments

]]>21 clubAMCChristina HendricksElizabeth MossJohn Hammjon hammMad Menmad men 21 clubMad Men AMCmad men finaleMad men partyMad Men season 4Matthew Wienerseason 5Sam GustinMon, 18 Oct 2010 12:30:00 ESTApple Earnings Are Set to Shine on iPhone and iPad Saleshttp://www.dailyfinance.com/2010/10/18/apple-earnings-iphone-ipad-sales/http://www.dailyfinance.com/2010/10/18/apple-earnings-iphone-ipad-sales/http://www.dailyfinance.com/2010/10/18/apple-earnings-iphone-ipad-sales/#commentsFiled under: , , , , , , ,

Apple iPad third-quarter earningsJust how high can Apple (AAPL) go? That's the question on investors' minds heading into Monday's earnings report, which is expected to reveal the not-shocking fact that Apple's iPad and iPhone devices continue to sell wildly.

Although much of the U.S. economy remains sluggish, the recession appears to have passed over One Infinite Loop, Apple headquarters in Cupertino, Calif. Indeed, 2010 has surely been of the strongest years in Apple's history, and the company's shares have broken the $300 barrier and show no sign of stopping their ascent.

Apple shares jumped 4% on Friday, Oct. 15, in anticipation of another strong earnings report, and they kept going after-hours, finally hitting $316.40.

Will "Supply Constraints" Hurt?

As usual, expectations are high, but Apple has a way of exceeding already optimistic hopes, partially because it's an inveterate low-baller of financial expectations. Last quarter, Apple absolutely obliterated Wall Street expectations.

Pacific Crest Securities analyst Andy Hargreaves said he expects another strong quarter, if not as powerful as last, partially because Apple is literally having trouble producing enough products to meet consumer demand. "I don't think it will be a big as what we've seen in the past, at least relative to our numbers, because of supply constraints early in the quarter," Hargreaves told Reuters.

Sponsored Links
Analysts will want to hear how strong iPhone sales have been in the face of the onslaught of competing devices that run Google's (GOOG) Android operating system. Wall Street is looking for iPhone shipments in the 11 million to 12 million range. If Verizon Wireless begins offering the iPhone next year, as expected, that could add another 10 million units to 2010 iPhone sales projections.

As far the the iPad is concerned, Apple has had a bit of a honeymoon period because it was the first company to take tablet computers truly mainstream. Analysts are looking for 3.5 million to 4 million Mac computers sold.

Analysts polled by Reuters expect Apple to report earnings of $4.08 a share on revenue of $18.9 billion. StarMine's SmartEstimate, which polls a selection of top-rated analysts, calls for Apple to report EPS of $4.17 on revenue of $19.1 billion. Soon enough, everyone will know whether Apple keeps up its streak of beating Wall Street's already lofty expectations.

Permalink | Email this | Comments

]]>Appleapple earningsApple revenueApple third-quarter earningsgoogleiPadiPhoneMacsteve jobsSam GustinMon, 18 Oct 2010 07:30:00 ESTGoogle Earnings Easily Beat the Streethttp://www.dailyfinance.com/2010/10/14/google-earnings-easily-beat-the-street/http://www.dailyfinance.com/2010/10/14/google-earnings-easily-beat-the-street/http://www.dailyfinance.com/2010/10/14/google-earnings-easily-beat-the-street/#commentsFiled under: , , , , ,

GoogleInternet phenomenon Google (GOOG) reported third-quarter earnings that easily exceeded Wall Street expectations, sending the company's shares soaring immediately after the numbers were announced following the close of trading Thursday.

The strong results were an "October Surprise" of sorts for investors who have lately wondered whether Google's prodigious profit-making ability was beginning to wane. Last quarter, Google's results disappointed Wall Street. Not so this quarter.

Google, which dominates the online search advertising market, said it earned $7.64 a share excluding one-time items, handily beating Street expectations of $6.67 and last year's earnings per share of $5.89.

Sponsored Links
The company reported revenues of $7.29 billion in the third quarter -- putting Google's first $30 billion year within reach over over the next 24 months. It's clearly a stellar performance by the one-time Stanford dorm-room project that has come to be known as the "Mountain View Money Machine." (Google's corporate headquarters are located in Mountain View, Calif., in the heart of Silicon Valley.)

Eric Schmidt, CEO of Google, sounded pleased. "Google had an excellent quarter," Schmidt said in a statement. "Our core business grew very well, and our newer businesses -- particularly display and mobile -- continued to show significant momentum. Going forward, we remain committed to aggressive investment in both our people and our products as we pursue an innovation agenda."

Permalink | Email this | Comments

]]>Google beats estimatesgoogle earningsgoogle revenueInternet stockssearch adssearch advertisingweb searchSam GustinThu, 14 Oct 2010 16:45:00 ESTA 'New Homeless' Revisited: A New Job and New Hope for Candido Gonzalezhttp://www.dailyfinance.com/2010/10/14/a-new-homeless-revisited-a-new-job-and-new-hope-for-candido-g/http://www.dailyfinance.com/2010/10/14/a-new-homeless-revisited-a-new-job-and-new-hope-for-candido-g/http://www.dailyfinance.com/2010/10/14/a-new-homeless-revisited-a-new-job-and-new-hope-for-candido-g/#commentsFiled under: ,

In October 2007, Candido Gonzalez was laid off from the New York City municipal job he had held for 19 years. It was the very beginning of the recession, and Gonzalez, a 48-year-old father of two, soon exhausted his savings. Six months later, he was living in the Bowery Mission, one of America's oldest homeless shelters.

Gonzalez had served as a community coordinator at the New York City Department of Sanitation's recycling bureau. But despite 19 years of service, he was only a "provisional" city employee, not a titled civil service worker, so when the city started cutting its budget, he was hit by the earliest wave of layoffs.

"When the recession and the budget cuts kicked in, it didn't matter how many years you had in the service, if you didn't have a title and were a provisional worker like myself, you were the first one to be let go," Gonzalez said last December, when DailyFinance first profiled him in our series, The New Homeless.

Last month, after three years of searching for a new job, Gonzalez was hired by the Davidson Community Center, a nonprofit community outreach organization in the South Bronx.

From Hard Worker to Recession Victim to New Hope

Gonzalez's three-year odyssey from gainful employment to a homeless shelter and back isn't unique. Since the beginning of the recession, some 15 million Americans have lost their jobs. Millions, like Gonzalez, have seen their life savings wiped out.

Many of the newly unemployed have become newly homeless. Earlier this year, the National Alliance to End Homelessness estimated that 1.5 million people would be made homeless over the next two years as a result of the recession. Today, some 50,000 New Yorkers have no place to live, stretching the city's shelters and homeless outreach organizations to new limits.

Founded in 1965, Davidson's mission is to "provide services to underprivileged children, youth, adults and seniors of the South Bronx through education, training, empowerment, and advocacy," according to the center's website. The South Bronx is one of the poorest collections of neighborhoods in the United States.

"It feels very good to be back working after three years," Gonzalez said this week. "What I like is that I'm helping the community."

The Mission "Really Opened My Eyes"

Gonzalez now serves as a merchant liaison for the nascent Burnside Avenue commercial district, a key project for the Davidson Center. The goal is to work with local businesses and the city to improve the local economy of Burnside Avenue and the surrounding area. For now, the job is part-time, but it was enough to get him back up on his feet. If he performs well, he's been told, he'll be brought on full time.

Sponsored Links
Gonzalez says his time living at the Bowery Mission, where he worked as an intake coordinator in exchange for a roof over his head, really brought home the importance of community service.

"Living and working at the Bowery Mission really opened up my eyes to what life in the community is really like," Gonzalez said. "It showed me how much we take for granted. I thought I had it bad, but every day, people come into the shelter just looking for food. It really changed my way of thinking."

Gonzalez resolved to try to give back to the community. In August, he was walking with his sister, with whom he now shares an apartment one block from the Davidson Center, when he decided to poke his head in. On a bulletin board, he spied a job opening for a community liaison and quickly applied. A week later, the center's executive director, Angel Cabellero, called and asked him to come in for an interview.

The interview went well, and before Gonzalez knew it, he was speaking to Aida Martinez, the center's chairwoman. He was hired!

Priorities

In his new job, Gonzalez gives technical support to various business owners in the area. The Davidson Center is working to create a new business development agency to help boost the neighborhood, and Gonzalez works directly with the local merchants, addressing their needs.

"The business owners know they can reach me one-on-one," Gonzalez said as the phone rang in the background. "Now, excuse me, but I have to get back to work."

Permalink | Email this | Comments

]]>back to workbowerybowery missioncandido gonzalezcommunity outreachemploymentemployment opportunitiesgetting hiredGreat Recessionhomeless shelterjoblessjobless recoveryjoblessnessjobsnew homelessnew jobnew jobsrecallrecessionSam GustinThu, 14 Oct 2010 06:30:00 ESTReport: AOL Preparing Possible Yahoo Takeover Bidhttp://www.dailyfinance.com/2010/10/13/report-aol-preparing-possible-yahoo-takeover-bid/http://www.dailyfinance.com/2010/10/13/report-aol-preparing-possible-yahoo-takeover-bid/http://www.dailyfinance.com/2010/10/13/report-aol-preparing-possible-yahoo-takeover-bid/#commentsFiled under: , , , , , ,

Yahoo's (YHOO) stock price jumped 13% Wednesday on news that AOL (AOL), a company one-tenth its size, is in talks with several private equity firms to purchase the purple-hued Internet pioneer.

AOL, the parent company of DailyFinance, has been approached by several buyout firms about acquiring Yahoo, according to a report in The Wall Street Journal. The firms are reported to include Silver Lake Partners, which recently bought Skype from eBay (EBAY), and Blackstone, run by finance mogul Stephen A. Schwartzman.

AOL's market capitalization stands at about $2.7 billion, roughly a tenth of Yahoo's $23 billion stock market valuation.

The private equity firms are interested in either teaming with AOL or buying Yahoo outright to take it private, according to the paper. At least two or three other buyout firms might join the deal if talks progress.

But, citing anonymous sources, The Journal cautioned, "the conversations may not even lead to an approach given the complexities inherent in structuring a proposal."

For weeks, AOL, which is in the midst of a turnaround effort led by former Google (GOOG) advertising executive Tim Armstrong, has been the subject of rumors that it would buy -- or be bought by -- Yahoo, the ailing Internet behemoth.

Sponsored Links
One possible scenario involves the sale of Yahoo's 40% stake in Chinese Web giant Alibaba -- a position worth an estimated $10 billion. The proceeds of that sale would then be used to help finance a reverse buyout of Yahoo, led by Blackstone and Silver Lake. Armstrong, who leads a cadre of technically-minded former Googlers steeped in Web-oriented algorithmic formulas, would then be named to lead the combined company, according to this scenario.

Armstrong, who has vowed to make AOL the world's top Internet content company, would assume control of a combined entity -- including Skype, assuming Silver Lake participates -- worth about $15 billion, over five times what AOL is currently worth.

Yahoo successfully fended off a $40 billion takeover attempt by Microsoft (MSFT) in 2008. That saga ultimately led to a search partnership between Microsoft and Yahoo, which seek to challenge Google's Web search dominance. AOL, for its part, just renewed its own search partnership with Google. It is not clear how a theoretical AOL buyout of Yahoo would affect these various search deals. All parties named in The Wall Street Journal report either declined to comment or did not respond to requests for comment.

It's very likely that any of the scenarios under discussion would attract regulatory scrutiny.

AOL, the 1990's-era dial-up Internet pioneer, spun off from media giant Time Warner in December 2009, a decade after the two merged in one of the most ill-fated pairings in corporate history.

Permalink | Email this | Comments

]]>mergertakeoverSam GustinWed, 13 Oct 2010 21:00:00 ESTIntel Earnings Beat Wall Street Expectations; Outlook Solidhttp://www.dailyfinance.com/2010/10/12/intel-earnings-beat-wall-street-expectations-outlook-solid/http://www.dailyfinance.com/2010/10/12/intel-earnings-beat-wall-street-expectations-outlook-solid/http://www.dailyfinance.com/2010/10/12/intel-earnings-beat-wall-street-expectations-outlook-solid/#commentsFiled under: , , ,

Intel earningsIntel (INTC), the world's largest microchip maker, reported better than expected results Tuesday, setting a positive tone for a spate of tech company earnings due in the next few weeks.

Intel said that third-quarter profit was $2.96 billion, or 52 cents a share, beating Wall Street expectations of 50 cents a share, on revenue of $11.1 billion, up from $9.4 billion one year ago.

"It looks fairly well in line with consensus, a little upside," Chris Caso, an analyst at Susquehanna Financial Group, told Reuters. "The revenue guidance for the December quarter is about in line with the Street, or a little better."

Intel's solid results ease some fears after the company reported in August that sluggish PC sales could hamper profits.

"Intel's third-quarter results set all-time records for revenue and operating income," said Paul Otellini, Intel president and CEO. "These results were driven by solid demand from corporate customers, sales of our leadership products and continued growth in emerging markets."

Intel offered a fairly rosy outlook, saying revenue for the next quarter could hit $11 billion to $11.8 billion. That's in line with, or slightly above, the Street's forecast of $11.3 billion.

"Looking forward, we continue to see healthy worldwide demand for computing products of all types and are particularly excited about our next-generation processor, codenamed Sandy Bridge, and the many new designs around our Intel Atom processors in everything from the new Google TV products to a wide array of tablets based on Windows, Android and MeeGo operating systems," Otellini said.

Permalink | Email this | Comments

]]>intcIntelintel earningsSam GustinTue, 12 Oct 2010 17:00:00 ESTRubin, El-Erian: Uncertain Times Ahead for World Economyhttp://www.dailyfinance.com/2010/10/07/rubin-el-erian-uncertain-times-ahead-for-world-economy/http://www.dailyfinance.com/2010/10/07/rubin-el-erian-uncertain-times-ahead-for-world-economy/http://www.dailyfinance.com/2010/10/07/rubin-el-erian-uncertain-times-ahead-for-world-economy/#commentsWelcome to "the new normal."

That was the message delivered Thursday by Robert E. Rubin and Mohamed El-Erian, two of the most prominent figures in global finance, at the Financial Times View From the Top conference in New York City.

During a discussion with Martin Wolf, the FT's Chief Economics Commentator, Rubin, Co-Chairman of the Council on Foreign Relations and a former US Treasury Secretary, and El-Erian, CEO and Co-CIO Pimco, the world's largest mutual fund, painted a picture of a global economy that has crossed a Rubicon of sorts. In the West, at least, economic growth may not return to earlier levels, at least not any time soon.

A Tough Spot

"I think we're in a very difficult situation," Rubin said. "This is the most uncertain, and most difficult, set of circumstances in my adult lifetime."

The former Chairman of Goldman Sachs expressed alarm about the fiscal situation in the United States and urged the Obama administration and Congress to embark on a course that will address it within the next two or three years. "It is imperative that we get back on the right fiscal track, but there has to be room for public investment in critical areas," Rubin said.

Rubin said that he believes that the US intervention in the financial system has been "effective" and that financial regulatory reform was "sound." Still, he said, "there is no question there is strain between the business community and the administration."

Despite calls for another economic stimulus, he doesn't favor that path, because it could adversely impact business confidence and market psychology. Also, there's no guarantee it would work, Rubin said.

Rubin says he doesn't favor extending the Bush-tax cuts for those making over $250,000 per year.

Sluggish Forecast

For his part, El-Erian said his firm Pimco has placed a 55% probability of continued sluggish growth - eg. 1.5-2% increases in GDP, well below healthy growth rates - and high unemployment. He places a 15% probability that "we are surprised on the upside." Finally, he places 30% probability of a double dip recession, in which the economy returns to negative growth.

Sponsored Links
Both Rubin and El-Erian highlighted the tough political choices facing US policy-makers seeking to dig the economy out of its hole.

"The politics of austerity are proving to be very difficult," El-Erian said. "What is economically desirable is not politically feasible." Further exacerbating the problem, he said, is the fact that "policy outcomes have fallen short of policy expectations."

Asked about whether investors should be bullish on stocks, El-Erian, the world's largest bond manager, endeavored to answer the question "delicately."

"Our collective expectations of returns should be coming down," El-Erian said. "Returns are a function of the health of the economy. Returns coming from outside the US will be higher than returns coming from inside the US. The most dynamic growth is coming from the rest of the world."

Rubin declined to take a position on the question. Wolf, the moderator, said: "We are not going back to where we were in 2005 and 2006, and that's a good thing, because that was deranged."

Permalink | Email this | Comments

]]>economyglobalizationSam GustinThu, 07 Oct 2010 18:04:00 ESTSolar Roadways Wins GE Ecomagination Community Challengehttp://www.dailyfinance.com/2010/10/07/solar-roadways-wins-ge-ecomagination-community-challenge/http://www.dailyfinance.com/2010/10/07/solar-roadways-wins-ge-ecomagination-community-challenge/http://www.dailyfinance.com/2010/10/07/solar-roadways-wins-ge-ecomagination-community-challenge/#commentsFiled under: , , ,

solar roadwaysWhat if your electric car could be recharged by the road as you're driving?

From a remote workshop in northern Idaho 100 miles from the Canadian border, Scott Brusaw, an electrical engineer and Marine Corps sergeant, is building a system to do just that. And he's gotten the attention of some influential folks, including at the Department of Transportation, which last year awarded Brusaw a $100,000 contract to build a prototype of a new kind of road paving.

"The states are all broke," Brusaw said in a recent interview. "So the DOT was looking for some kind of material that would pay for itself."

Brusaw says that if all the highways in the U.S. were covered in solar panels with just 15% efficiency, enough electricity would be produced to power the entire country three times over.

On Thursday, GE (GE) announced that Solar Roadways was the top community vote-getter in the company's $200 million Ecomagination challenge. Although the winners won't be formally announced until next month, Solar Roadways received the most votes among the community and was awarded a $50,000 prize.

"Throughout the 10-week Challenge, members of the general public have been able to review and comment on entries and vote in support of the idea they believe will have the most impact on the smart grid of the future," said a GE spokesperson. "Solar Roadways has been announced as the idea that received the most votes."

Lifelong Dream

As a child, Brusaw was captivated as he played with electric toy cars that run along winding tracks. But it wasn't until decades later when he was standing in his garden with his wife, Julie, that the inspiration for Solar Roadways hit.

"We were talking about global warming, and Julie said to me, 'Can't you make your electric road out of solar panels?'" Brusaw recalled. A vision was born. The idea is to embed solar panels beneath a glass surface that is laid on top of asphalt.

As the electric car passes over the road, it receives a charge from the road itself. One method for the power transfer involves induction, in which a magnet under the car would draw power as it travels over the road. Additionally, Brusaw's prototype involves embedding LED lights into the road for navigation or safety signals.

Needless to say, the engineering challenges are non-trivial. For one thing, the glass surface must be strong enough to withstand the weight of an 18-wheeler -- or a vandal's sledgehammer. For another, the glass must be sealed to prevent moisture from seeping into the solar panel.

Today Parking Lots, Tomorrow the World

Brusaw is confident those challenges can be overcome -- his goal is to build a solar panel that can withstand abuse similar to what "black boxes" in aircraft must put up with. The Federal Highway Administration was so impressed by the prototype that it asked Brusaw to apply for a $750,000 grant to continue his work.

Sponsored Links
"The FHA wants us to gear the technology toward parking lots first," Brusaw said. The goal is to retrofit the parking lots of big box stores and fast-food restaurant chains so that cars can be charged while their owners shop or grab a Big Mac.

"I challenge you to find 100 miles of interstate in this country without a McDonald's," Brusaw said. In other words, in his vision, one could theoretically drive an electric car from New York to Florida, charging it up the entire way just by going to McDonald's drive-through restaurants.

"We could start drawing a new crowd -- the green crowd -- to McDonald's," Brusaw said.

Congratulations to Scott and Julie Brusaw for a vision that has captured the imagination of thousands of people, including this reporter!


Permalink | Email this | Comments

]]>ecomaginationGEgeneral electricgreen techsolar roadwaysSam GustinThu, 07 Oct 2010 14:00:00 ESTThe Patent Wars Widen: Now Motorola Is Suing Applehttp://www.dailyfinance.com/2010/10/06/the-patent-wars-widen-now-motorola-is-suing-apple/http://www.dailyfinance.com/2010/10/06/the-patent-wars-widen-now-motorola-is-suing-apple/http://www.dailyfinance.com/2010/10/06/the-patent-wars-widen-now-motorola-is-suing-apple/#commentsFiled under: , , , , ,

MotorolaAre corporate patent lawyers going wild? Now it's mobile-phone giant Motorola (MOT) suing Apple (AAPL) for allegedly violating patents in several of Apple's popular products, including the iPhone, iPad and certain Mac computers.

It's just the latest legal salvo in the rapidly escalating war over the intellectual property that underlies several popular mobile devices. No less than four major mobile companies are currently suing each other over cell-phone technology.

Motorola filed three complaints -- with the International Trade Commission, the Northern District of Illinois and the Southern District of Florida -- over 18 patents that relate to "early-stage innovations developed by Motorola in key technology areas" including wireless email, antenna design (hopefully not this one), software applications and location-based services.

Motorola has requested that the ITC bar further sales of the allegedly infringing products, as well as halt the "the marketing, advertising, demonstration and warehousing of inventory for distribution and use of such imported products in the United States."

"We Had No Choice"

The handset maker issued a sharply worded statement justifying the move: "Motorola has innovated and patented throughout every cycle of the telecommunications industry evolution, from Motorola's invention of the cell phone to its development of premier smartphone products," said Kirk Dailey, corporate vice president of intellectual property at Motorola Mobility, in a statement. "We have extensively licensed our industry-leading intellectual property portfolio, consisting of tens of thousands of patents in the U.S. and worldwide."

Sponsored Links
Dailey added: "After Apple's late entry into the telecommunications market, we engaged in lengthy negotiations, but Apple has refused to take a license. We had no choice but to file these complaints to halt Apple's continued infringement. Motorola will continue to take all necessary steps to protect its R&D and intellectual property, which are critical to the company's business."

Last Friday, Motorola itself was the target of a lawsuit by Microsoft (MSFT), which claims Motorola's Android-based smartphones use Microsoft technology that's "essential to the smartphone user experience." Android is the rapidly growing mobile-phone operating system developed by Google (GOOG).

In March, Apple sued HTC, which, like Motorola, is one of Google's key Android partners, for allegedly infringing on 20 patents related to the iPhone, including aspects of its touch screen, user interface and user-sensing technology. In May, HTC struck back, suing Apple for allegedly violating HTC patents.

Somewhere, the lawyers are celebrating.

Permalink | Email this | Comments

]]>Applecell phonegoogleHandsethtciphoneMicrosoftmobilemobile phoneMotorolaMotorola sues AppleSam GustinWed, 06 Oct 2010 16:30:00 ESTVerizon's iPhone: Coming 'Early Next Year'?http://www.dailyfinance.com/2010/10/06/verizon-iphone-early-2011/http://www.dailyfinance.com/2010/10/06/verizon-iphone-early-2011/http://www.dailyfinance.com/2010/10/06/verizon-iphone-early-2011/#commentsFiled under: , , , ,

Apple iPhoneOur long, national nightmare of waiting for Apple's (AAPL) wildly popular iPhone to become available on Verizon Wireless may soon be over. Verizon, the country's largest mobile carrier, will begin offering the device "early next year," according to a report in The Wall Street Journal Wednesday.

Update: 5:15 p.m. -- The Journal has walked its story back a bit, now reporting, "Apple Inc. plans to begin mass producing a new iPhone by the end of 2010 that would allow Verizon Wireless to sell the smartphone early next year, said people briefed by Apple."

Update: 8:30 p.m. -- And now back again: "Apple Inc. is making a version of its iPhone that Verizon Wireless will sell early next year, according to people familiar with the matter, ending an exclusive deal with AT&T and sharpening the competition with Google Inc.-based phones."

(A spokesperson for Journal owner Dow Jones, which is part of Rupert Murdoch's News Corp. media empire, did not return a request for comment on the shifting stories.)

Apple will begin mass-producing the device, which will be based on the CDMA technology used in Verizon-compatible phones, by the end of 2010, the paper said, citing "people briefed by Apple."

The iPhone's arrival at Verizon Wireless will make the handset available to millions of new customers. It will also end Apple's exclusive deal with AT&T (T), which for the last three years has been the sole iPhone service provider.

Verizon has long been coy about when it would offer the device. In June, Verizon CEO Ivan Seidenberg said the iPhone will come to Verizon "eventually". Apparently, "eventually" means next year.

Additionally, the Journal reported that Apple is working on a new, fifth-generation iPhone, which is said to have a different form factor than the current model.

Permalink | Email this | Comments

]]>AppleATTiphoneVerizonverizon iphoneverizon wirelessSam GustinWed, 06 Oct 2010 15:40:00 ESTParker Spitzer: Low Ratings, Scathing Reviewshttp://www.dailyfinance.com/2010/10/05/parker-spitzer-low-ratings-scathing-reviews/http://www.dailyfinance.com/2010/10/05/parker-spitzer-low-ratings-scathing-reviews/http://www.dailyfinance.com/2010/10/05/parker-spitzer-low-ratings-scathing-reviews/#commentsFiled under: , , , ,

CNN's great 8 p.m. hope, Parker Spitzer, garnered lackluster ratings in its debut Monday night, trailing Fox News Channel, MSNBC, and CNN's own sister network HLN. Television critics, meanwhile, savaged the program.

The new chat show, which features disgraced former New York Governor Eliot Spitzer and Pulitzer Prize-winning journalist Kathleen Parker, registered 468,000 viewers, fewer than six times less than The O'Reilly Factor on Fox News, which chalked up 3.1 million viewers.

MSNBC's Keith Olberman came in second place with 1.1 million viewers, followed by HLN's Nancy Grace, with 468,000.

Two alarming, additional data points: First, Parker Spitzer registered a paltry 118,000 viewers in the coveted 25-54 demographic, and second, the program actually shed viewers from the previous show, John King USA, despite being relentlessly flogged in the previous hour. In other words, people knew it was coming up, and changed the channel anyway.

CNN averages 512,000 viewers in primetime during the week, so Parker Spitzer didn't even measure up to that.

CNN and HLN are owned by Time Warner (TWX). MSNBC is owned by NBC Universal, part of conglomerate GE (GE), and soon to be owned by cable giant Comcast (CMCSA). Fox News Channel is owned by News Corp. (NWS).

Early reviews for Parker Spitzer have not been positive, to put it mildly.

8 p.m. cable news ratings:
FNC: 3,112,000 (722,000 in 25-54)

MSNBC: 1,115,000 (329,000 in 25-54)

HLN: 468,000 (149,000 in 25-54)

CNN: 454,000 (118,000 in 25-54)

Permalink | Email this | Comments

]]>bill oreillycnnEliot Spitzerfox newshlnKathleen Parkerkeith olbermannmsnbcnancy graceNews Corp.parker spitzerSam GustinTue, 05 Oct 2010 17:00:00 ESTJack Welch Disses Hewlett-Packard: 'Who Are These Board Members?'http://www.dailyfinance.com/2010/10/05/jack-welch-disses-hewlett-packard-who-are-these-board-members/http://www.dailyfinance.com/2010/10/05/jack-welch-disses-hewlett-packard-who-are-these-board-members/http://www.dailyfinance.com/2010/10/05/jack-welch-disses-hewlett-packard-who-are-these-board-members/#commentsFiled under: , , , ,

Talk about piling on.

Days after Oracle (ORCL) CEO Larry Ellison urged the entire board of Hewlett-Packard to "resign en masse right away," former General Electric (GE) CEO Jack Welch has jumped on the diss-HP's (HPQ) board bandwagon.

Speaking Tuesday at the World Business Forum in New York, Welch, one of the most legendary CEOs in the history of corporate America, let loose with a fusillade of criticism aimed at the tech giant's board.

"The Hewlett-Packard board has committed sins over the last 10 years," Welch said in comments cited by The Wall Street Journal. "They have not done one of the primary jobs of a board, which is to prepare the next generation of leadership."

The criticism comes in the wake of HP's hiring of Leo Apotheker, a former chief of German software giant SAP (SAP), to replace Mark Hurd, who was forced out as CEO in a sexually-tinged expenses scandal. But the board's mistakes go back farther than that, according to Welch.

Leadership development, Welch said, "was very low on the priority of leadership at that company."

"This crowd [at H-P] doesn't seem to do any of that," Welch said. "They end up blowing up the CEO's and don't have anyone else in mind to come in. Where the hell was the leadership development? Who are these board members?"

Interviewer Alan Murray of The Journal asked Welch if he knew any of the board members. His response?

"I wouldn't admit it if I did."

Ouch.

Permalink | Email this | Comments

]]>GEgeneral electrichewlett packardhewlett-packardHewlettPackardjack welchlarry ellisonoracleSam GustinTue, 05 Oct 2010 16:30:00 EST