Financial News

August 17, 2010

HP board’s decision in Mark Hurd case shrouded in mystery

Filed under: money — Tags: , , — Insurancent @ 4:42 am

Exactly what happened behind the scenes at Hewlett-Packard Co. as the board of directors reached a deal for CEO Mark Hurd to resign after an ethics probe over sexual harassment allegations is still not known.

But the back-room dealing that led to one of America's top CEOs to resign with what could be up to a $40 million severance deal from HP (NYSE: HPQ) continues to be one of the most-talked about topics in the business world more than a week after his departure.

In a report this weekend, The Wall Street Journal cited a person it says was familiar with the HP board's thinking who said that the former CEO short-circuited an internal investigation by agreeing to a settlement with former actress Jodie Fisher on August 4, two days before his departure was announced.

The Journal reported that the settlement with the former marketing contractor came without the board's knowledge or input, a day before Fisher and her lawyer were supposed to meet with HP's outside counsel and Hurd's personal lawyer.

That story runs counter to another that the Journal attributes to an unnamed source it said is familiar with Hurd's thinking that HP had repeatedly instructed its CEO for three weeks before the settlement to come to an agreement with his accuser.

That source told the Journal that Hurd gave the board everything it asked for up to that point but the directors didn't let him address them or respond directly to questions.

The paper further said, however, that another unnamed source familiar with the board's thinking encouraged Hurd to speak with the board but he declined. It said, however, that the source on Hurd's side didn't agree with that version of the story.

Hurd led NCR Corp. (NYSE: NCR) in Dayton before going to HP, and had helped grow it's data warehouse division into what spun off as Teradata Corp. (NYSE: TDC) while at NCR.

The latest revelations about Hurd's departure come amid continuing scrutiny of the reasons for his sudden exit.

New York Times columnist Joe Nocera called it "one of the great head-scratchers in recent times" in a Saturday piece.

"The consensus in Silicon Valley is that Mr. Hurd was despised at HP, not just by the rank and file, but even by HP’s top executives," Nocera wrote.

The Times columnist suggests that the sexual harassment claim merely gave the board the pretext for doing what it wanted to do, get rid of Hurd without provoking an outcry on Wall Street where he was extremely popular for turning around the company's finances.

"In fact, the directors should be called out for acting like the cowards they are," the columnist wrote in a scathing piece. "Mr. Hurd’s supposed peccadilloes were a smoke screen for the real reason they got rid of an executive they didn’t trust and employees didn’t like."

Fisher, 50, was working as a contractor for HP when the alleged incidents that led to Hurd's resignation on August 6 occurred. She was reportedly paid to appear as a greeter at HP customer events where Hurd also appeared.

HP said an internal investigation didn't find evidence of sexual harassment but did find instances when Hurd's behavior didn't live up to the company's codes of conduct. This reportedly included alleged instances of expenses Fisher was paid that weren't properly reported.

For more on this story, including Hurd's full connections to Dayton through the years, click the following DBJ stories in our continuing coverage:

Mark Hurd - Rise and fall of a CEO

Poll: HP right to force Mark Hurd to resign

Report: Mark Hurd agrees to pay settlement

Hewlett-Packard stock plummets on CEO scandal

HP CEO Hurd to get $12M severance payout

Full text of Mark Hurd's separation agreement with HP

HP CEO Mark Hurd resigns amid sexual harassment scandal

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May 7, 2010

Companies on the Move: May 5

Filed under: money — Tags: , , — Insurancent @ 6:12 pm
ENGINEERING

Barge Waggoner Sumner & Cannon Inc., which has an office in Birmingham, has been ranked No. 195 on the 2010 Engineering News Record list of Top Design Firms based in the U.S. The firm’s 2010 ranking is 24 places higher than its ranking last year.

FINANCIAL

ServisFirst Bank celebrated its five-year anniversary and said it ranks in the top 5 percent of de novo banks founded in 2005 for cumulative profitability, along with an 81 percent compounded annual growth rate in total deposits.

HEALTH CARE

HealthSouth Corp. (NYSE:HLS) will participate in Baird’s 2010 Growth Stock Conference in Chicago on May 18-20. HealthSouth CEO Jay Grinney will speak at 4:15 p.m. May 19.

LEGAL

Burr & Forman LLP, along with the Cornerstone Schools of Alabama, offered three events on April 27 as part of the middle school educational, community service program called “Legal Eagles.” Throughout the school year, Burr & Forman attorneys participate in monthly classroom lessons and that expose the Cornerstone students to the practice of law and to Burr & Forman clients. Sixteen students graduated from the first “Legal Eagles” class this year.

NONPROFITS

The Birmingham Botanical Gardens raise more than $250,000 at the 2010 Spring Plant Sale. More than 7,400 visitors came out and took part in the sale.

Gaining Life Initiative Foundation formed recently as a nonprofit organization to increase the knowledge about brain tumors and raise support for research. It was founded in fall 2009 with a specific focus on Glioblastoma Multiforme Brain Cancer research with the objective of extending life expectancy and finding a cure for the deadly form of cancer. The foundation’s creator is Birmingham native Bill Cash, who was diagnosed with Glioblastoma Multiforme, the most metastatic and fatal type of brain tumor, in spring 2008. He underwent treatment and is now in remission.

POLITICS

The Central Alabama Labor Federation AFL-CIO hosted a political forum featuring Democratic candidates for governor Congressman Artur Davis and Agricultural Commissioner Ron Sparks on April 29 at the Local 3902 Union Hall in Homewood.

RETAIL

The Trussville Area Chamber of Commerce held a ribbon cutting on April 23 to celebrate the grand opening of Great Clips at 445 Main Street near Winn Dixie in Trussville.

Southern Family Markets was awarded the Autism Outstanding Advocate of the Year by Glenwood Autism & Behavioral Health Center for their ongoing support of persons with autism and their families. The award was presented on April 21 during the sixth Glenwood endowed lecture series with UAB’s School of Public Health.

TECHNOLOGY

Birmingham’s Optimal IMX selected and implemented MobileMD’s Health Information Exchange technologies and services.

Birmingham’s ibml and partner EDAC Systems Inc.’s ImageTrac 3e series high-production scanner won the 2010 Best of FOSE Award in the Peripherals category. This is the second Best of FOSE Award that EDAC Systems has won since 2006.

TRANSPORTATION

Boatright Cos. hosted the Samford Business Network Birmingham Source Meeting at its Boatright Railroad Products Inc. in Montevallo on April 22. Guests toured the plant by bus and networked.

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March 28, 2010

TARP watchdog slams Obama foreclosure program

Filed under: money — Tags: , , — Insurancent @ 5:45 pm

President Obama’s foreclosure prevention program will likely fall far short of its goal and may even do more harm than good, a government watchdog said Tuesday.

The Special Inspector General for the Troubled Asset Relief Program said the Treasury Department set targets that weren’t "meaningful," mismanaged the implementation of the program, and now risks a substantial number of "re-defaults," with many participants ultimately losing their homes anyway.

The administration’s $75 billion loan modification program may help as little as 1.5 to 2 million people, about half the number Obama said it would when he first unveiled the program in February 2009, the inspector general, Neil Barofsky, wrote in a report.

Recently, Treasury Department officials have come under fire for saying the initial goal applied only to offering trial modifications, as opposed to permanent help.

"Continuing to frame HAMP’s success around the number of "offers" extended is simply not sufficient," Barofsky wrote, referring to the Home Affordable Modification Program.

Under HAMP, eligible troubled borrowers can have their monthly mortgage payments reduced to 31% of their pre-tax income. But first, homeowners are put into trial modifications to determine whether they can keep up with the lowered payments and to give loan servicers time to verify income and hardship.

Homeowners, servicers and mortgage investors are eligible for incentives, paid for with TARP funds, when the trial adjustments are converted to long-term modifications.

About 170,000 borrowers have received permanent modifications through February, according to the Treasury Department. Treasury officials, however, have emphasized that more than 1.3 million homeowners have received trial modification offers.

Responding to the report, Assistant Treasury Secretary Herbert Allison disputed many of Barofsky’s findings, saying the program’s success should not be based only on permanent modifications.

Poor implementation

Barofsky also said administration officials did a poor job of rolling out the program. They launched the effort before fully developing it and the subsequent revisions caused confusion and delays. They also have failed to market the program properly, Barofsky said.

But one of the biggest implementation mistakes was allowing servicers to put homeowners into trial modifications before collecting the required documentation. This has created a large backlog of trial modifications, many of which will never become permanent, Barofsky said faxless cash advance.

After the program got off to a slow start, administration officials came under intense pressure to speed assistance to troubled borrowers. So, the Treasury Department permitted servicers to enroll people in trial modifications without verifying income.

When the number of borrowers receiving permanent assistance lagged, the administration pressed servicers to convert more trial modifications to long-term help. But banks said they were having trouble collecting the needed paperwork from homeowners.

Officials in January changed the program’s guidelines, requiring servicers to gather the paperwork before placing people into trial modifications.

Re-default concerns

The Treasury Department anticipates that 40% of homeowners in the program will ultimately re-default, prompting Barofsky to question the initiative’s worth. The program is vulnerable to re-defaults because it does not take into account how much total debt borrowers have, including credit card and student loan debt, among other factors.

Barofsky urged administration officials to review the program and its goals, and offered several recommendations. These include: clarifying expectations for the program; reconsidering allowing servicers to use alternate forms of income verification, and working to minimize the risk of re-default.

"Absent a thorough review of HAMP and its goals, the program risks helping few, and for the rest, merely spreading out the foreclosure crisis over the course of several years, at significant taxpayer expense," Barofsky said.

In his response, Allison said the Treasury Department would try to be more precise in its objectives for the program and said that officials are continuously monitoring its operations and effectiveness.

But he stressed that permanent modifications are but one way to help struggling homeowners, noting servicers’ own foreclosure prevention initiatives and alternatives such as short sales, where the servicer agrees to sell the home for less than the loan amount.

"The success of HAMP should be measured by how many eligible homeowners are able to avoid the pain and stigma of foreclosure by reducing their mortgage payments to affordable levels while either remaining in their homes or transitioning with dignity to more suitable housing," Allison said. 

Source

March 24, 2010

Travers Collins big ADDYs winner

Filed under: money — Tags: , — Insurancent @ 12:09 pm

Travers Collins & Co. won the Best of Show award at Advertising Club of Buffalo’s annual ADDY Awards.

The Buffalo-based agency earned the top honor for four, 15-second television commercials it created for Northtown Automotive Co., and also won the most awards with 32 — 10 gold and 22 silver. The awards were presented March 19 at Kleinhans Music Hall.

Following Travers Collins in total awards were:

• Martin Group, 25 (5 gold, 20 silver)

• Crowley Webb and Associates, 20 (6 gold, 14 silver)

Gelia, 5 (all silver)

• Courtney Remm, 4 (1 student gold, 3 student silver)

• White Bicycle, 3 (2 gold, 1 silver)

• Block Club Creative, 2 (1 gold, 1 silver)

Hadley Exhibits Inc., 2 (1 gold, 1 silver)

• Abbey Mecca & Co., 2 (2 silver)

• Souter Productions Inc., 2 (2 silver)

• Uniland Development Co., 2 (2 silver)

Buffalo Niagara Convention & Visitors Bureau (1 silver)

• Telesco Creative Group (1 silver)

Independent Health (1 silver)

The annual ADDYs recognizes advertising created in Western New York in various forms of media including print, broadcast, out-of-home and interactive instant payday loan. Entries earning gold awards are then entered on regional and national levels of the American Advertising Federation.

For the 2010 Buffalo ADDYs, a total of 395 entries by 33 organizations were judged by a panel of four advertising industry professionals from Green Bay, Wis., Roanoke, Va., Columbus, Ohio and Toronto.

Individual awards were also presented to the following:

• David I. Levy Communicator of the Year Award: Bob Moody, M&T Bank

• Alex Osborn Award for Creativity: Greg Meadows, Martin Group

• Advertising Club of Buffalo Service Award: Biff Henrich, Keystone Film Productions

• Future Star Award: Jordan Case, Eric Mower and Associates

Source

March 6, 2010

Obama pushes home efficiency rebates

Filed under: money — Tags: , , — Insurancent @ 10:30 pm

President Obama was stumping once again Tuesday for his plan to reimburse homeowners who invest in energy efficiency and create jobs.

But the president’s plan offered less money than had been previously hoped.

‘It’s going to be politically difficult to get this done," Obama said at a speech at Savannah Technical College in Georgia. "But it’s the right thing to do."

The plan, officially known as Home Star, would give rebates of 50% up to $3,000 for energy saving purchases like new appliances, furnaces, or insulation.

Consumers would get the rebate from a store, contractor, or utility.

It would also offer a larger rebate for homeowners who performed a more comprehensive energy audit of their home. Under that plan, homeowners could be reimbursed for up to half the cost of hiring contractors to do things like add insulation, swap out old appliances, and caulk leaky windows and doors.

Rebates depend on a home’s energy savings. Cut energy use by 20% and homeowners could get back half the money they shell out, up to $3,000. Homeowners who cut more than that might get up to $8,000, depending on how much they cut, according to people familiar with the plan.

A typical home energy audit and retrofit costs $5,000 to $8,000, and generally shaves 20%-40% off the monthly energy bills.

Unlike the Energy Department’s Weatherization program, which is targeted to low-income people and has been criticized for taking too long to get going, this plan would be available to everyone.

The $8,000 rebate is less than the $12,000 proponents originally wanted, and the $6 billion proposed for the program is less than the $10 billion originally hoped for creditreport.

Nonetheless, environmentalists praised the idea.

"Even the most basic upgrade puts money in our pockets, puts Americans back to work and puts energy waste on the run," Lane Burt, manager of Building Energy Policy at the Natural Resources Defense Council, said in a statement. "It’s a triple play on a more efficient future."

The program, dubbed "cash for caulkers" by some, has been touted by the president for months. It even won a mention in his State of the Union Address.

But whether it becomes reality is far from certain.

Congressional Democrats are also behind the idea and have said it is a part of their larger job creation strategy. But it was not included in a recent jobs bill, which focused more on extending current tax breaks rather than enacting new programs.

And it faces likely opposition from lawmakers concerned about rising government spending.

"Democratic leaders in Congress will still need to test the level of support for ‘cash for caulker’ programs relative to other jobs priorities," Whitney Stanco, an energy policy analyst at the brokerage firm Concept Capital, said in an e-mail.

The plan could appear in another jobs bill, or in separate energy legislation expected later this year.  

Source

January 2, 2010

Many state offices closed Dec. 31

Filed under: money — Tags: , , — Insurancent @ 4:39 am

Anyone having to take care of business with the state of Colorado before the end of 2009 should plan to do it Wednesday, as most state government offices will be closed Thursday.

The New Year’s Eve closings are one of eight unpaid furlough days that some 15,500 non-essential state personnel are being made to take in order to help close a budget shortfall this fiscal year. The furlough days are expected to save a combined total of $27.2 million.

Among the offices closed Thursday are state driver’s license offices, the attorney general’s office, state administrative offices, state history museums, Division of Wildlife service centers and the Department of Public Health and Environment’s vital records office.

Essential state services that will remain open Thursday include the state unemployment benefits office, the state judicial branch, the Treasurer’s Office, the Secretary of State’s Office, Colorado State Parks and the transportation department’s snow plows and maintenance crews.

State offices also will be closed Friday for New Year’s Day.

Source

December 22, 2009

More states losing jobs

Filed under: money — Tags: , , — Insurancent @ 5:21 am

In a reversal of earlier gains, more states lost jobs than added them in November, signaling that hiring is occurring only sporadically around the country.

Thirty-one states and the District of Columbia suffered a net loss of jobs, the Labor Department reported Friday quick guaranteed personal loans. Nineteen states added jobs in November, down from 28 in October.

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November 25, 2009

Pandemic plan an antidote to business disaster

Filed under: money — Tags: , — Insurancent @ 5:24 pm

Cheryl Gray knew she had a problem on her hands when cleaning staff in one of the buildings she was responsible for started showing up to work with masks.

It was the summer of 2003 and severe acute respiratory syndrome, or SARS, had hit Canada’s largest city. By the end of the outbreak there were 443 probable cases, with 44 deaths. Tenants in her Toronto buildings were clamouring for information. Was it even safe to touch the elevator buttons?

Gray, a senior vice-president at Canadian property manager and developer Bentall Capital, knew she had to be prepared if there was a next time. "There was a lot of angst amongst tenants and we really didn’t have a clear game plan on what to do," Gray said.

What Gray did was create what some describe as the gold standard of pandemic planning for commercial buildings in North America.

Gray’s obscure manual is getting more attention today after long lines for H1N1 flu vaccination shots in Ontario created a heightened sense of urgency for Canadian businesses. About 2.5 million people have been vaccinated in three weeks, with 198 deaths across the country.

Apart from the health implications, the virus can have severe consequences on the economy if commercial and retail operations close.

Written in the wake of the SARS epidemic, the manual is considered the go-to document in pandemic preparedness, written on the front lines by property managers like Gray who were at the epicentre of the SARS outbreak.

"We were caught by surprise with SARS, and Cheryl took the initiative to reach out to the industry so we could collectively come up with a game plan," said Diana Osler-Zortea, president of the Building Owners and Managers Association of Canada, which represents commercial real estate landlords.

"We really needed to figure out how you continue to service everyone when all your workers are sick. How would your business continue in the event of an emergency?"

At the time, Gray was responsible for managing 20 million square feet of properties in eastern Canada, mostly in Toronto. After the SARS outbreak, she got in touch with other members of BOMA, a group whose members include major landlords such as Redcliffe Realty, Brookfield Properties and Oxford Properties, and formed a group that met monthly for 18 months to prepare the 95-page document now used by building managers worldwide.

The committee used input from not just real estate experts, but legal, insurance and medical experts as well. Toronto microbiologist Dr. Donald Low is also a consultant.

Ralph Dunham, managing director of risk consultancy Marsh Canada Ltd., said he uses the guide as a good starting point for clients.

"Not only is it a gold standard in the North American real estate industry, but it is valuable to other non-real estate organizations," he said.

"Each company is different, but the principles of preparedness are the same."

The guide looks at basic issues such as how to maintain contact with tenants and employees, preparing for the possibility of closure, travel policies, education and even rent defaults by tenants in the wake of a pandemic.

It discusses whether there is even a legal obligation for owners and building managers to have a pandemic plan. It argues employers have a duty to do this because legislation requires that they maintain a safe workplace.

"We tried to look at everything that could happen," said Gray. "If the cleaning company has a 40 per cent absenteeism rate, how are you going to cope with cleaning the premises effectively? Another example might be that some people may not want to take public transit during an outbreak, so they drive in. How do you respond to the need for extra parking spaces?"

Over the past year the guide has been fine-tuned with more input from stakeholders. Gray says it is necessarily a work in progress as building managers learn from the real world.

"When I finished working on the first manual, I was hoping it would have some value one day. I just didn’t think it would be this soon," said Gray.

"People thought, well, that’s interesting, but I guess it didn’t have the kind of relevance and immediacy it has now."

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October 28, 2009

BP beats forecasts on cost cuts

Filed under: money — Tags: , , — Insurancent @ 7:51 pm

BP Plc beat third-quarter earnings forecasts by a big margin in a sign Chief Executive Tony Hayward’s restructuring plans were delivering results, with cost cuts ahead of targets and oil and gas output up strongly.

BP said third-quarter replacement cost net profit, which strips out unrealized gains or losses related to changes in the value of fuel inventories, fell 50 percent to $4.98 billion, due to lower oil and gas prices.

However, the underlying result was almost 50 percent ahead of average analyst forecasts, lifting BP’s shares to their highest level since June 2008, before easing back to trade up 4.3 percent to 591 pence at 1100 GMT (7:00 a.m. EDT).

Shares in rivals such as Royal Dutch Shell Plc also rose, on hopes they could also mimic BP’s success at cost cutting and weathering the oil price drop. The DJ Stoxx European oil and gas sector index was up 2.3 percent.

Analysts said a lower-than-expected tax rate and positive foreign exchange impacts flattered the figures but could not take away from a strong result.

“It’s just blow-away numbers. It’s good to see them bouncing back,” said Jason Kenney, oil analyst at ING.

BP was helped by production rising in lower-tax areas such as the Gulf of Mexico, where the Thunder Horse platform, one of the largest offshore rigs in the world, ramped up in the first half of this year.

“It shows you the kind of margin coming in from Thunder Horse. Light sweet crude on the doorstep of the U.S., and it’s caught me and a lot others by surprise,” Kenney added.

Brent crude prices averaged $68/barrel in the quarter, 40 percent lower than in the same period of 2008, while gas prices in the U.S. and UK fell around 65 percent.

DIVIDEND SAFE, HIGHER COST CUTS

A slight drop in BP’s debt-to-equity, or gearing, ratio reassured investors that BP’s fat dividends were safe.

Lower earnings meant BP and its rivals had to borrow in the first half of this year to pay dividends, or in some cases, were forced to cut their payouts.

Europe’s second-largest oil company by market value said it had reduced costs in the oil and gas production and refining units by over 15 percent.

This progress has allowed BP lift its cost-cutting target for this year to $4 billion from $3 billion.

“BP is harvesting the fruits of its turnaround program,” Richard Griffith, analyst at Evolution Securities, said. 

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October 11, 2009

Prosecution of UBS informant seen backfiring on U.S.

Filed under: money — Tags: , , — Insurancent @ 8:30 am

The key informant in the U.S. tax evasion case against Swiss bank UBS AG faces prison next year, but his harsher-than-expected treatment by the U.S. Justice Department will undermine efforts to expose secretive offshore tax havens, lawyers and whistle-blower advocates say.

Bradley Birkenfeld, a 44-year-old U.S. citizen, has been hailed by his attorneys and prosecutors alike as pivotal to the tax case against UBS, his former employer.

The case centered on UBS’s private banking business and on wealthy Americans who used their Swiss accounts to hide money overseas to evade taxes. In August, UBS agreed to turn over 4,450 names of American clients with undisclosed offshore accounts to settle a civil suit by the U.S. government.

By coming forward in the summer of 2007 and volunteering insider information to the Justice Department, Birkenfeld exposed a “massive fraud scheme” that probably never would have been discovered otherwise, said Kevin Downing, a senior Justice Department trial lawyer who spoke at his sentencing in Fort Lauderdale on August 21.

Despite that praise, Birkenfeld, who pleaded guilty to a single fraud conspiracy count in June 2008 for helping a billionaire hide assets from the Internal Revenue Service, was sentenced to 40 months in prison and ordered to start serving his time no later than January 8.

Justice Department officials, in a claim disputed by Birkenfeld’s supporters, said the punishment was meted out because Birkenfeld had initially sought to conceal his personal involvement in tax fraud.

Lawyers and whistle-blower advocates have expressed outrage over the sentence. They said they had expected Birkenfeld to get off with just a fine and probation, given that his voluntary disclosure of UBS practices led the company to settle criminal charges by paying $780 million and promising to name thousands of suspected American tax cheats and exit the U on line pay day loans.S. tax-shelter business.

“By prosecuting Brad, it is going to greatly harm IRS efforts to encourage future whistle-blowers,” said Birkenfeld lawyer Dean Zerbe, former tax counsel for the Senate Finance Committee.

“The only people that are benefiting from sending Brad to jail are the Swiss bankers and their clients,” he added.

‘TERRIBLE MESSAGE’ TO WHISTLE-BLOWERS

Zerbe is pressing for Birkenfeld’s formal recognition under an IRS whistle-blower program and says his client could still collect millions of dollars for his cooperation from the government.

“There is no question that Brad is the most important tax whistle-blower ever,” said Zerbe, who helped write a 2006 law that boosted rewards for those giving key information in tax cases involving evasion of $2 million or more.

Birkenfeld’s sentencing was originally set for August 15, 2008, but was delayed three times as the Justice Department, citing his cooperation in the UBS investigation, called for more time to advance its ongoing probe.

Zerbe, however, said the Justice Department stopped seeking any information more than a year ago and had left Birkenfeld hanging in legal limbo ever since.

“June 10, 2008 is the last time that DOJ asked Birkenfeld any questions regarding UBS, Swiss private banking or his former U.S. clients with UBS,” said Zerbe. 

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