Financial News

The Sobrato Foundation has provided a $300,000 bridge loan to InnVision-The Way Home to help tide it over until about $11 million in stimulus funding is available to help with emergency needs in Santa Clara County.

Christine Burroughs, CEO of InnVision, said the agency can draw against the money over a 13-month period. "Needs are very high right now," Burroughs said, "so if we have to distribute more than we've got this will be a huge help, especially since it's an interest-free loan."

InnVision said the federal government has a reimbursement policy for the distribution of much of its stimulus funding: Do the work first, then submit receipts for reimbursement.

"For the CalWORKs program, InnVision was given an estimate of up to 1,400 new clients that would receive over $11 million in emergency assistance over the next year. That’s almost $1 million dollars a month for which InnVision would be liable while waiting for reimbursement, much more than their financial reserves could handle," the agency said installment payday loans.

John Sobrato, chairman of the foundation, said the objective of the emergency fund "aligns perfectly with the Sobrato Foundation’s charitable mission of promoting the economic independence and social well-being of individuals and families across Silicon Valley, especially those earning 50 percent of area median Income or less and are homeless, or who will become homeless if they don’t receive some assistance. We believe that leveraging federal stimulus dollars is a smart role that philanthropists can play in helping address our society’s greatest needs right now due to the current economic depression.”

InnVision serves more than 25,000 people in Silicon Valley annually at 20 locations.

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P&G reported first quarter sales and EPS exceeded expectations.

* Q1 earnings per share $0.97 from continuing operations

* Q1 earnings per share $1.06 * Q1 sales $19.8 billion

* Sees 2010 core earnings per share $3.47 to $3.59 * Says for 2010 the company increased range of expected organic sales growth by one percent to plus two to four percent

* Says net sales are expected to increase three to seven for October-December quarter

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An index of U.S. manufacturing hit its highest point in a year, an industry survey showed on Thursday, suggesting one of the sectors hit hardest by the recession could improve next year.

The Manufacturers Alliance/MAPI said its composite business index — a weighted sum of shipments, backlogs, inventories and profit-margin indexes — rose to 38 percent in September following a reading of 24 percent in June.

“While many of the individual indexes remain at very low levels, the forward-looking indexes, like that for annual orders, are at much higher levels, indicating that manufacturing activity is expected to increase in 2010,” said Donald Norman, MAPI economist and survey coordinator.

At 38 percent the index still indicates that overall manufacturing activity is expected to contract over the next three to six months, relative to levels one year ago when the economy was entering the severe recession, MAPI said.

The September 2009 index marks the fifth straight quarterly reading below 50 percent, the demarcation point between growth and contraction. The last time the index reached 50 percent was June 2008.

Most forward-looking indexes showed strength.

The annual orders index, based on a comparison of expected orders for all of 2010 with orders in 2009, was 66 percent, while the non-U.S. investment index was 52 percent, with respondents anticipating marginally increased expenditures for capital spending outside the United States, the survey said.

The U.S. prospective shipments index, based on expectations for orders in the fourth quarter of 2009, increased to 30 percent from 4 percent. The non-U.S. prospective shipments index increased to 33 percent from 15 percent.

The U.S. investment index, based on expectations for capital spending for all of 2010 was 47 percent.

However, the survey found signs the recovery still faces some challenges.

The U.S. prospective shipments index, which reflects expectations for fourth quarter 2009 shipments compared with the fourth quarter of 2008, improved to 30 percent in the September survey compared to 4 percent in the June report.

This implies that most companies will continue to see domestic shipments decrease this quarter compared to levels one year ago, MAPI said.

Business investment is seen by economists and Federal Reserve officials as necessary for the recovery to last.

The survey was based on responses from 61 senior financial executives with firms in a broad range of manufacturing industries.

(Reporting by Nancy Waitz; Editing by Kenneth Barry)

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Bank of America Corp CEO Kenneth Lewis announced he was retiring, after months of being dogged by a series of government investigations into the company’s acquisition of Merrill Lynch last year that had become a major distraction for the biggest U.S. bank.

The reputation of the 62-year-old Lewis had been badly bruised by massive credit losses and the need for two government bailouts. But experts believe it was the intense scrutiny from federal regulators, state attorneys general and the courts that forced his hand.

“It’s a good thing for the company to make a clean break and move forward,” said Walter Todd, portfolio manager for Greenwood Capital Associates.

He added that regardless of the reality, “the perception is, everything that happened with the Merrill transaction was his fault, and for Bank of America to move beyond that, Lewis would have to go.”

Bank of America shares, which have shed 50 percent since the Merrill Lynch deal was announced on September 15, 2008, the same day Lehman Brothers declared bankruptcy, were up 2 percent in after-hours trading.

His retirement by the end of the year — which Lewis characterized as voluntary in a letter to employees — sets up a struggle within the bank’s ranks to be his successor, with six possible candidates seen vying for the job, including recently named wealth management chief Sally Krawcheck, consumer banking chief Brian Moynihan and Chief Financial Officer Joe Price.

His departure underlines the dramatic change there has been at the top of the nation’s banks in the past two years. Only Lloyd Blankfein, the head of Goldman Sachs Group Inc, and Jamie Dimon, CEO of JPMorgan Chase & Co, have survived. Some lost their jobs as their banks collapsed or were taken over. Others resigned or were forced out as results suffered.

Lewis’ planned retirement could raise new questions about the staying power of Citigroup Inc Chief Executive Vikram Pandit, who, like Lewis has been under pressure from regulators after his bank received a massive taxpayer bailout.

In addition to Krawcheck, Moynihan and Price, leading candidates to eventually replace Lewis include mortgage lending chief Barbara Desoer, investment banking chief Thomas Montag and Greg Curl, chief risk officer, said bank spokesman Bob Stickler.

LEWIS WOULD BUILD TOP U.S. BANK

Known as a dealmaker, Lewis built the largest U.S. retail banking franchise through aggressive acquisitions.

Yet his last deal appears to have been his undoing.

In September 2008, the bank announced a $50 billion buyout of Merrill Lynch & Co at the height of the financial crisis.

At the time, Lewis and the bank were heralded as saviors of the financial system.

But they began to draw public ire when questions arose in early 2009 about how the bank publicly disclosed roughly $3 billion in accelerated Merrill Lynch bonus payments and billions in Merrill Lynch losses during fourth quarter 2008 in advance of a shareholder vote on the deal. 

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Whether or not you’re personally convinced that the recession is just about over, those in the big buck mergers-and-acquisitions game are believers.

Biotechnology stocks, for example, have made dramatic gains because investors consider them ripe for picking. Big drug companies want innovative products in place for an economic revival.

Bristol-Myers Squibb recently bought biotech group Medarex Inc. for $15 a share, or $2.4 billion, about a 100 percent premium for Medarex shareholders.

"There are all these biotechnology companies out there that have been dying throughout the recession and unable to get capital or funding," observed Richard Bove, banking analyst with Rochdale Securities of Stamford, Conn.

Other deals include Walt Disney Co. buying Marvel Entertainment Inc., PepsiCo Inc.’s purchase of Pepsi Bottling Group Inc. and, in energy, Baker Hughes Inc. acquiring BJ Services Co.

In pharmaceuticals, there’s been the Pfizer Inc. deal for Wyeth and Merck & Co. acquisition of Schering-Plough. In technology, there’s the Adobe Systems Inc. deal for Omniture Inc. and Oracle Corp. purchase of Sun Microsystems Inc. In candy, Cadbury Plc has been in play since Kraft Inc.’s hostile bid.

"It’s all a sign you can’t keep a good capitalist down, and eventually greed will overcome fear," said James Paulsen, chief investment officer for Wells Capital Management, Minneapolis. "People are saying, ‘Gee, not only are we not going to have a depression, but it looks like we’re actually going to have a recovery.’"

Stock is still available at a "30-percent-off sale price," and there is excess cash lying around, said Paulsen. "That boatload of cash is on hand at so many companies because nine months ago everyone was saying cash was king — even though they were earning nothing on it," he said.

While he doesn’t expect a red-hot M&A market the rest of this year, he thinks it will continue to noticeably improve.

"It seems like a lot is happening because finally, after the whole economic crisis, some deals are actually getting done," said Jonathan Marino of the M&A Journal in New York. "It’s not driven by availability of money because credit markets are just as frozen as they were in May, but many acquirers have cash on their balance sheets."

Cash lets firms avoid issuing stock or paying high loan costs, he said.

"Some of these deals are tacit indication that the companies can’t grow their businesses much beyond what they are now, so they’re looking to fill some holes with key partnerships," said Paul Nolte, director of investments for Hinsdale Associates in Hinsdale, Ill. "Certain companies reach a ceiling where they are limited in how fast they can grow their revenue organically."

Firms aren’t using their traditional sources of financing, said Nolte. In the case of Kraft, financing for the deal was lined up well in advance of an offer being made.

"It’s really a broad spectrum this year," he said. "We’ve seen deals in the food industry, entertainment, technology and oil industry."

There will be windfalls for some investors. Greatest gains typically fall to those holding shares of the company being bought, especially if there are several competitors due to a hostile bid. Meanwhile, the acquiring firm’s stock often suffers on worries over whether the merger is logical or could stretch finances too thin.

Investors are buying a variety of shares in the likely target industries. Much of the acquisition activity will take place in digestible smaller firms, along with some larger companies if they have strong product lines.

The fact that mining company BHP Billiton has built up $18 billion in cash, for example, has investors looking at its possible acquisition of Freeport-McMoRan Copper & Gold Inc., Potash Corp. or Anglo American Plc.

Nonetheless, everyone is still into low risk these days. Lenders aren’t over-lending, individuals aren’t overpaying for houses, most firms aren’t expanding their business, and assets are still priced for "the depression that wasn’t," Paulsen said.

The 2009 merger environment is "high risk and high reward," according to a recent report by the Transaction Services unit of PriceWaterhouseCoopers. It believes a number of deal makers, including private equity firms, are eager to get back to business. While some companies will merge for survival, others will simply decide it is a good time to combine with a partner to prepare for an uptick in the economy.

Here are the sectors best-positioned for mergers and worthy of monitoring by investors, according to the PriceWaterhouseCoopers partners:

— Technology is "poised for another wave" of consolidation because many of its companies have mature business models and healthy balance sheets.

— Energy is experiencing greater stabilization in crude oil prices. This industry features excellent cash flow and growth prospects that make it a "consolidation hot spot."

— Pharmaceuticals and health care are now in the merger "spotlight," no matter what type of reform may be passed in Washington. Drug companies are seeking to fill their product pipelines through acquisitions, while some health care companies will be realigning their business models to take advantage of a new industry environment.

— Financial services consolidation will be "rampant," driven by mergers of necessity based on the distressed circumstances of some competitors. There will a flight to quality banks in the top one-fourth of the banking industry because they aren’t so hamstrung by government oversight.

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WINNIPEG–CanWest Global Communications Corp. is selling its majority stake in Australian broadcaster Ten Network Holdings Ltd. in a deal worth $634 million.

Proceeds will be used in large part to repay debt as the company works to recapitalize its business.

"The sale of the shares of Ten Holdings is expected to facilitate continuing discussions with the ad hoc committee (of lenders) regarding a recapitalization transaction," the company said in a statement last night. CanWest is grappling with a $4 billion debt load and negotiating with creditors to recapitalize the company.

The company said it has agreed with a group of its lenders to use $102 million to repay its 12 per cent senior secured notes issued by CanWest Media and CanWest Television Ltd. Partnership.

Another $85 million will be used for general corporate and working-capital purposes, including the repayment to a senior secured revolving asset-based loan facility with CIT Business Credit Canada Inc.

CanWest also agreed to deposit $426 million with a trustee for the holders of its 8 per cent senior subordinated notes.

CanWest said members of the ad hoc committee have also extended a forbearance agreement to Oct. 6, while CIT Business Credit Canada has agreed to extend to Oct. 15 a deadline for certain milestones that were to have been achieved by tomorrow.

The company said it has signed a deal with Sydney-based Macquarie Capital Advisers Ltd. for the sale of 50.1 per cent stake in Ten Holdings in a block trade. The sale is expected to be completed by Oct. 1.

"No new Ten Holdings shares will be issued as part of this sale process," the Australian company said in a statement last night.

Ten Holdings stock was halted on the Australian stock exchange to help with the sale.

CanWest, owner of the Global television network in Canada, the National Post and an array of big-city Canadian daily newspapers, has been struggling to repay debts and loans in recent months.

Ten Holdings completed an equity offering earlier this year that cut CanWest’s ownership stake in the broadcaster from 57 per cent to just over half. Ten Holdings used the cash raised to pay down debt and strengthen its balance sheet.

CanWest has previously tried to sell its stake in the Ten to help it cope with its own debt.

The company first put the commercial television channel up for sale in October 2006, when Australian foreign ownership rules were relaxed.

Rupert Murdoch’s News Corp. considered buying the assets, but decided the asking price was too high.

After a failed search for an offer that it deemed attractive, CanWest yanked the broadcaster off the market and completed a share exchange plan that gave it majority ownership of the network.

Since then, CanWest has sold numerous other assets including some of its local E! channel branded stations in Canada, indirect interests in four Turkish radio stations, and American political magazine the New Republic.

The Canadian Press

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When Paul McKee isn’t talking about WingHaven, he’s usually touting NorthPark.

The 550-acre business park just east of Lambert-St. Louis International Airport sits on land cleared through an airport noise buyout in the 1980s. In 2005, McKee’s McEagle Properties partnered with two other developers to win a bruising five-way competition for the redevelopment rights and promised to create 6,290 jobs over a decade.

Within a few months, the project landed its first big tenant: Express Scripts, which decided to have McEagle and Claycorp build it a new, $50 million headquarters at the University-Missouri St. Louis — just south of NorthPark — and move 1,100 people there from Maryland Heights.

Since then, the pharmacy benefits manager has added a second building, and 1,400 employees, to the site. And it will decide soon whether to locate a third building there or put it in Pennsylvania.

Much of NorthPark’s acreage, though, remains empty for now. There’s a Hilton Garden Inn, the headquarters of Vatterott College, a half-occupied office building and a lot of grass.

The project’s fate, McKee acknowledges, is tied closely to that of Lambert free insurance quotes. And thus by extension, to talks with China about putting an air cargo hub at Lambert. If that hub happens, NorthPark will be a prime spot for warehouses and light factories.

"NorthPark lives and dies a lot on the airport," he said. "And on growth. I think China is so significant to that."

McKee’s company last year spent $110,000 lobbying Congress on the project, according to federal disclosure records.

In February, the Department of Commerce added 825 acres to Lambert’s Foreign Trade Zone — an area where customs taxes are reduced to encourage imports and exports — and the new boundaries include NorthPark.

If that helps the China project happen, McKee said, it will prove to be a boon for NorthPark, for NorthSide — his proposal for a large swath of north St. Louis — and for the whole St. Louis area.

"It would be real jobs, from outside," he said.

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STUTTGART–Nokia Corp., the world's biggest maker of cell phones, unveiled new models Wednesday that boast more music features and mesh better with Facebook and the Finnish company's upcoming netbook.

The announcements are part of Nokia's attempt to branch out into new markets, such as wireless online services.

"We are not on the defensive, we are on the offensive," Nokia executive vice president Anssi Vanjoki said at the two-day Nokia World event in Germany.

The Espoo, Finland-based company said it made a deal with Facebook, the wildly popular social networking site, that will let users of some its handsets update their location and status directly to the site through a Nokia Ovi account.

The feature will premier on the new N97 mini phone that was also introduced Wednesday and will retail for euro450 ($644.13) without a contract when it starts shipping in October.

"People want to bring their physical and online worlds together via the Internet. The Nokia N97 mini is designed for this new social Internet and to help navigate people and places," said Jonas Guest, vice president of Nokia Nseries.

Nokia has been the top handset maker since 1998 but has gradually expanded to include online services, such as downloads of music, games, maps and the fast transfer of photos and video, especially as markets have become saturated.

It has estimated that the global online market will reach euro100 billion by 2010.

Nevertheless, Nokia unveiled new devices at its exhibition here, and offered more details about its new laptop, dubbed the Nokia Booklet 3G, which will ship in the fourth quarter of 2009 with Windows 7 and retail for euro575.

In contrast, many new netbooks by Asus, Lenovo and Dell are often priced around euro350 or less.

However, Nokia expects the Booklet 3G to be distributed by cell phone providers, many of whom will likely offer it for a much lower prices in concert with a two-year contract that includes monthly fees for Internet access using cell phone networks.

Nokia said it was already in talks about such an arrangement in Germany with mobile network operator 02.

Made of aluminum, it sports a 10-inch (25-centimeter) screen, weighs 2.8 pounds (1.3 kilograms) and boasts an Intel Atom 1.6 ghz chip, along with a gigabyte of memory. It will have a third-generation hot swappable SIM card to access cellular networks.

Unlike most netbooks, Nokia's Booklet will have a built-in GPS navigation chip coupled to Nokia's Ovi Maps software.

Nokia has previously tried to expand its portfolio beyond cell phones, making a "tablet" computer that runs non-Windows software. It hasn't been a mainstream success.

Nokia also unveiled a pair of new music phones, the X6 and X3.

The X6 features 32 gigabytes of memory, can play up to 35 hours of music and has a 3.2-inch touch-screen. It will retail for euro450.

The X3 is a more compact version that features direct access to Nokia's music store and features a built-in FM radio and 3.2 megapixel camera. It has a suggested retail price of euro115. Both devices are set to ship during the fourth quarter of 2009.

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Wal-Mart Stores Inc. has launched an addition to its online business that has outside retailers selling nearly 1 million new items through Walmart.com, a move that could help the world’s largest retailer catch up in the online world.

The Walmart Marketplace has products from categories that include home, baby, toys, apparel, sporting goods and sports memorabilia. The company said it picked the retailers — including eBags, CSN Stores and Pro Team — because they have large product assortments and solid customer service track records.

Retail consultant Burt Flickinger III said Wal-Mart could use online sales as an area for growth, especially considering how the company’s stores have saturated much of the U.S. market. He said Wal-Mart could also draw online customers from the European continent and South Korea, where it no longer has stores.

Apple has knocked off Wal-Mart as the top music seller, and Amazon has posted healthy sales gains of late, though its second-quarter earnings in July came in below expectations instant payday loan. In its second quarter, Wal-Mart posted its first drop in sales at stores open at least a year, indicating a need to find new growth areas.

"Online is one key growth frontier Wal-Mart has yet to conquer," Flickinger said. Bringing in established companies is faster than the company’s developing such a massive addition itself, he said.

Flickinger said that with Mike Duke taking over this year as Wal-Mart Stores president and CEO, the company has moved other managers into place to build sales across Wal-Mart’s divisions.

On the website, payment for products ordered from the partner companies is handled by Walmart.com. The partner handles shipping and customer service. Wal-Mart plans to add more companies.

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