Applied Materials Inc’s chief executive said on Tuesday there will be more failures in the semiconductor equipment sector in future as the number of customers declines.
Slammed by sluggish demand and high development costs, chipmakers are joining hands to survive, but that is not happening among their equipment suppliers, Mike Splinter told a group of reporters on Tuesday.
Acquisitions in the chip gear sector are “very difficult” to conduct, Splinter said. “That leaves very few avenues to give consolidation, other than … companies failing.”
Technological differences often hinder chip equipment makers from joining together even when the biggest are flush with cash.
Combining technologies takes precious time while rivals move forward, and scrapping one firm’s technological base means overhauling equipment and high restructuring costs.
Orders for semiconductor equipment are emerging from near record lows, as chip makers replenish their inventory. Chip sales inched up 6 percent in April from March.
But the orders are still a fraction of levels from a year ago, while the world’s No.2 PC maker Dell Inc said last week there was not enough momentum in the PC market to call a bottom yet cash advance lenders.
Chip makers are still thinking twice about investing big sums to make smaller, more powerful chips, as they deal with ongoing losses that are eroding their capital and that drove Spansion to file for Chapter 11 bankruptcy protection and Qimonda into insolvency.
“The semiconductor equipment industry cannot support the necessary level of R&D without some amount of consolidation,” Splinter said. “Today there is too much repetition, too much waste in the industry.”
Applied Materials competes with No.2 chip equipment maker Tokyo Electron of Japan.
Sliding prices and a weak demand outlook have forced chipmakers to team up to cut mounting development and equipment costs.
PC memory makers Nanya Tech, Micron and Taiwan’s Inotera are joining hands as are Taiwan Memory Co and Japan’s Elpida Memory Inc.
Intel Corp, Samsung Electronics Co Ltd and Toshiba Corp are jointly developing advanced chips, while Japanese microcontroller makers NEC Electronics and Renesas Technology are in talks to merge.
(Reporting by Mayumi Negishi; Editing by Michael Watson)
When a mysterious flu emerged from Mexico in late April, government officials dubbed it "swine flu" — a label that quickly became a hog farmer’s worst nightmare.
In the days just after April 24, when the flu began to dominate the globe’s airwaves and newspapers, pork prices tumbled, socking an industry that was already down.
Industry officials tried to persuade authorities and the media to call the flu by its subtype. The World Health Organization, the U.S. Department of Agriculture, the Food and Drug Administration heeded the pleas. The Centers for Disease Control and Prevention switched to this: a "novel influenza A (H1N1) … of swine origin."
"It’s the H1N1," said Rick Rehmeier, who raises 20,000 hogs a year on his family’s farm in St. Charles County. "I even corrected my minister in church one day."
But swine flu was too convenient a handle. The name stuck, and pork purchases plummeted.
Now, more than a month after the outbreak began, the pork business is still reeling and will probably continue to struggle for months to come. One estimate puts the losses at more than $80 million so far.
"The overall loss is just staggering," said Don Nikodim, of the Missouri Pork Producers Association. "If you add that on top of the general trend, it continues to be a very painful business to be in."
The "misnomer" was a major factor, pork producers say. "If they had called it H1N1 from the beginning, we wouldn’t have had the drop in prices," said Steve Meyer, an analyst for the National Pork Board.
But the association with swine was damning enough. Consumption in Mexico, the United States’ second largest export market, plummeted, largely because the public didn’t get the message from health officials that humans can’t contract the flu from eating pork. Several countries shut their borders to U.S. pork, including Russia and China, also among the top importers.
"The problem is the perception that you can get the disease from swine," said Ron Plain, a professor of agricultural economics at the University of Missouri-Columbia, "and as far as we know, nobody in the world has gotten it from swine."
The virus is a combination of swine, avian and human influenza strains. As of Friday, the flu had sickened 15,510 people in 53 countries and was connected to 99 deaths. In the United States it has sickened 8,975 people and has been linked to 15 deaths, including one in Missouri and two in Illinois.
So far, the flu has been detected in one swine herd — in Canada. Initially, health officials suspected that a Smithfield-owned hog plant in Vera Cruz, Mexico, was the source of the outbreak. Tests of hogs, however, came back negative for the flu, the pork industry says.
Even before the flu outbreak, the pork industry already had been beset with challenges.
A rise in grain prices increased operating costs, making last year the second-least profitable on record for U.S. pork producers, even as the price for hogs was the third highest. Then the recession crept in, and consumers, particularly overseas, started to eat less meat low cost payday loans.
"What started off causing the problems was the enormous run-up in grain prices because of the ethanol industry," Plain explained. "Then when gas prices got cheaper, grain prices got cheaper, which was some relief. But gas prices dropped because of the recession. … That hurts demand. Unemployment is up and people have less money to spend, here and in other countries."
The price per hog carcass in May 2008 was about $148. A year later, it’s about $108. The National Pork Board attributes half the difference to fallout from the flu and estimates that the industry has lost more than $80 million in the month following the flu outbreak.
Though there is no hard evidence yet that American consumers have refrained from buying pork because of flu fears, at one point, retailers stopped ordering pork, anticipating a slowdown in demand.
"You’re in this long line of cars," explained Meyer. "The front car is the consumer, and the consumer tapped his brakes. Then the retailer slammed his brakes and everybody behind him had to slow down dramatically to avoid hitting him."
Analysts say that the slowdown has yet to force producers out of business, but that many are at risk.
Much of the pork in this country is produced for giant pork corporations, such as Smithfield, which contracts with farmers to raise the animals for a set amount. The farmer owns the barn and all the equipment, but not the hogs.
"A contract grower doesn’t have any market risk," Meyer said. "They have strategic risk if the company that owns the pigs goes out of business."
Those at greatest risk, analysts say, are producers who own their own animals and also have to pay a premium for grain. Economies of scale don’t help. "Having more hogs isn’t an advantage," Plain said. "You just lose money faster."
The most advantageously positioned pork producers are those who grow their own grain, analysts say. "The hog farmers in the best shape are the diversified guys who raise their own feed," Plain said.
That’s a good scenario for the Rehmeiers, who grow about half their grain and have weathered even leaner times, notably the late 1990s when hogs were selling for $30. "It’s a cycle," Rehmeier said. "When we start getting into the barbecue season, that’s our pick-up time."
Some analysts, however, aren’t as sanguine.
"We have so many farms in dire financial straits, and they were really counting on positive cash flows this summer," said Meyer, noting that grain prices are already heading up. "They’re not going to get it, even if we get a summertime peak."
And then flu season awaits.
"What’s going to happen when winter comes?" Plain said. "Are we going to see more of the disease? Is it going to become more virulent? If it comes back in the fall worse than it’s been, certainly we’re going to be dealing with this all over again."
MINNEAPOLIS — Airlines are doing a better job of taking care of the passengers they still have, according to a new study.
Passenger satisfaction with airline service rose 3.2 percent earlier this year, the first increase in six years, according to a University of Michigan study to be released today.
The increase came as the number of passengers dropped and airlines reduced flying. Also passengers checked fewer bags as luggage fees became more common, making it easier for airlines to keep track of the bags that remained. Enplanements on U.S. routes dropped 1.5 percent in 2008, according to the Federal Aviation Administration.
And if fewer passengers are the reason for the improved satisfaction score, imagine how happy they’ll be this year, when the FAA expects domestic boardings to fall 8.8 percent.
Southwest Airlines Co. had the highest score, 81 on a zero-to-100 scale. After that it was Continental Airlines Inc. at 68, Delta Air Lines Inc. at 64, AMR Corp.’s American Airlines at 60, US Airways Group Inc. at 59, Northwest Airlines at 57, and UAL Corp.’s United Airlines at 56.
The overall satisfaction improvement at airlines masked some big jumps at individual carriers, according to the university’s American Customer Satisfaction Index.
The most improved were Continental Airlines Inc., up 9.7 percent, and US Airways Group Inc., up 9.3 percent. Customer satisfaction at US Airways was on the rebound after a big drop in 2007, when it had the worst on-time showing among big carriers. For 2008, US Airways was first among big carriers for on-time arrivals.
Continental also regained lost ground after a drop the previous year. Delta Air Lines Inc.’s score rose 6.7 percent.
American Airlines’ score fell 3.2 percent, though it was still in the middle of the airline pack.
American Airlines spokesman Tim Smith said the airline’s internal customer satisfaction measurements show big improvements from a year ago paydayloans. He said American has "customer experience teams" at its airports that look for ways to improve customer service, and that last week American paid out some $14 million in employee rewards for meeting customer service and operational goals.
United’s score was unchanged from last year, when it was also in last place.
"We need to focus on the basics of running a good airline, and that means one that runs on-time with clean planes. When our flights are on-time and our planes are clean, we can deliver great service to our customers," United spokeswoman Robin Urbanski said.
Claes Fornell, a University of Michigan business professor and director of the research center that compiled the customer satisfaction data on airlines and other industries, said traffic dropoff appears to have as much to do with the airline improvement as any action taken by the airlines.
"Nobody’s making any money," he said. "It’s very difficult in that environment to provide good customer service."
The study noted that even though airlines showed some improvement, their average score of 64 was good enough for a tie with newspapers but lower than most other industries measured, including utilities (74) the Postal Service (82), express delivery companies (82), movies (70), and cellular phone service (69).
The phone survey of about 25,000 people during the first quarter of this year had them rate their satisfaction with companies in a variety of industries, including airlines. The index was created based on responses to questions about overall satisfaction, intention to be a repeat customer and perception of quality, value and expectations.
The Obama administration moved on Wednesday to exert more control over the shadowy over-the-counter derivatives market, now closely linked to the global credit crisis.
Federal regulators proposed subjecting all over-the-counter derivatives dealers — whose trades are not made through an exchange, making them hard to monitor — to “a robust regime of prudential supervision and regulation,” including conservative capital, reporting and margin requirements.
The plan, sketched out by Treasury Secretary Timothy Geithner and top regulators at a news conference, marks a big step in the administration’s push to rewrite rules for banks and financial markets in response to a credit crisis that has sent economies around the globe reeling.
U.S. officials have pumped billions of dollars of taxpayer money into banks and automakers to try to stem the crisis. Last week, they wrapped up “stress tests” at the nations 19 largest banks and told ten of them to raise a combined $74.6 billion.
The Obama administration is now aiming to bolster regulatory oversight of the financial system.
Over-the-counter derivatives are presently difficult to monitor and supervise. Billionaire investor Warren Buffett has called derivatives “financial weapons of mass destruction.”
Under current law, they are only loosely policed.
“We’re going to require for the first time all standardized over-the-counter derivative products be centrally cleared,” Geithner told the news conference compare car insurance prices.
EXPLOSION IN TRADING
Trading of OTC derivatives, instruments that derive their value from other assets, exploded in size in recent years, with many large firms — such as mega-insurer American International Group — charging into the burgeoning market.
The global market is pegged at about $450 trillion.
When the U.S. real estate bubble burst, firms such as AIG were left with mountains of complex, hard-to-sell financial instruments on their books.
In the United States, four large banks control over 90 percent of the derivatives market: JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, and Goldman Sachs Group Inc. All have received taxpayer aid.
Officials did not make clear which agency would be in charge of the crackdown. They said they would work together to prevent “forum shopping” for weak rules. Lawmakers disagree over which agency should oversee OTC derivatives clearing.
Laws enforced by both the Securities and Exchange Commission and Commodity Futures Trading Commission would have to be amended by Congress to accommodate the administration’s plans.
Ed Brock has to start planning for Halloween a bit earlier than most people. Brock, the owner of the Johnnie Brock’s chain of costume stores, typically starts looking in late April for temporary retail space for as many as 10 seasonal locations he operates during the fall.
Usually, landlords delay signing agreements with Brock until June or July. But this year, four have been spurred by the frighteningly bad economy into signing lease agreements for Brock’s little shops of horror — at an average of about 30 percent lower than normal leasing price.
"They’re working out what I need to work out," Brock said of negotiations with commercial landlords. "They know I’m a very good tenant, so they want me to stick around. A year ago, they would have said, ‘Tough noogies.’"
With businesses looking to cut costs, many owners of retail and office space are hearing cries for cut-rate rent from current and potential tenants, say local real estate experts. Owners, in turn, have become open to negotiating and dropping rates slightly as vacancies rise, said Dave Randolph, first vice president for real estate brokerage firm CB Richard Ellis.
"It went from this laundry list of tenants out there kicking tires, and then a lot of tenants said, ‘I’d better hold off on the expense of a move,’" Randolph said.
St. Louis’ commercial market doesn’t tend to have dramatic spikes in price to the north or south, Randolph noted. The average rate for both office space and retail space during the first quarter of 2009 — $18.77 per square foot and $12.97 per square foot, respectively — were down from the previous quarter, but not dramatically, according to agencies that track that data. Fourth-quarter numbers from 2008 were $13.16 for retail space and $19.06 for office space.
Randolph said he had been able to get about 5 percent savings in rent, at most, for some clients. But more often than lowering rent, landlords are renegotiating other terms, Randolph said. Five-year leases are being reduced to two years, for example.
But in extreme cases, landlords sometimes do more. In recent months, Randolph said, he was able to barter for a rent reduction of 15 percent for one large client.
"These office managers ask me to find some way to reduce costs," he said. "I knew if they didn’t get rent reduced, there was going to be some kind of layoffs."
The situation has put large landlords in a difficult position, said Glenn Guenther, principal for Discovery Group, a real estate services firm based in Maryland Heights. Landlords are facing some tenants that make a compelling argument for rent relief, while others make an argument for it but may not need it, he said.
"The key for landlords today is to keep tenants in place and keep that income stream in place, because the cost of losing the tenant, going through the vacancy and having to retrofit the space for the new tenant is extraordinary," Guenther said cashadvance.
The decision is being weighed on a case-by-case basis at Duke Realty, one of the area’s largest property owners. The firm has had only about a dozen requests for renegotiation from its more than 200 St. Louis tenants, said Toby Martin, vice president of Duke’s St. Louis operations. But it has also seen a fair number of clients go through bankruptcies, so Martin said the firm was being sensitive to clients’ financial matters.
"If they can make a case that they have a plan that they’ve really evaluated what they need … and they’ll make good use of the cash flow that would be freed up by that, then we can talk about doing some trade-offs," Martin said.
Brock, for one, has asked for rate cuts at only his temporary locations. However, he said, he has lost first-quarter sales from theater programs that usually drive business, as area schools have faced spending cuts. He said he knew things hadn’t been bad enough to justify lowering rates on his permanent leases — at least not yet. If sales drop further, though, he said he might have to bring his accounting books and ask for relief from the landlords of his permanent locations. Brock owns two costume stores, in St. Louis Hills and McKinley Heights in south St. Louis, and one gift and card store in Shrewsbury.
Unfortunately for many tenants, the economy is too rough for them to take better advantage of the situation, said Piers Pritchard, second vice president for commercial real estate firm Colliers Turley Martin Tucker. Pritchard said he had witnessed this new negotiating environment while representing both tenants and landlords. He said landlords weren’t really losing too much because many business owners were being overly cautious by signing shorter lease extensions. In return, landlords are able to solidify partnerships with most stable businesses, in hopes of emerging from the recession with a core group of healthy and loyal tenants.
Pritchard also noted the adage that all real estate is local has held true. More bargaining has taken place among downtown owners, while top-flight space in hotter markets such as Clayton has seen less turnover, he said. At the Pierre Laclede Center in Clayton, for example, Pritchard said the owner he represented had had just one client leave in the past 18 months despite raising rent rates. However, the owner has also invested millions in facility upgrades, including a renovated lobby and fitness center.
"We’ve been able to retain almost every tenant that’s had a lease roll over in that building the last three years," he said. "They’ve committed to capital improvements. There’s a lot to be said for a strong and stable owner which has really kept a comfort level for all the tenants."
U.S. regulators may be tempted to force bank marriages and asset sales to fill multi-billion dollar capital holes exposed by their stress tests.
But a rapid redrawing of the banking landscape like the one last fall may not be in the cards, banking industry experts say, even though the capital shortfalls at the 19 largest U.S. banks are much larger than analysts had expected.
Citigroup analyst Keith Horowitz wrote that banks, other than his own, may need to raise $75 billion after the tests.
The results are due on Thursday, and about 10 of the 19 banks may need capital, according to media leaks.
While seeking stronger partners could be tempting to the weaker banks, their healthier brethren will likely want to repay money they got under the Treasury Department’s $700 billion Troubled Asset Relief Program (TARP) before they use their capital for acquisitions.
And regulators may not have the needed leverage to force these banks to buy their needy rivals, the experts said.
Still as some banks find it hard to raise money, and with mergers often offering significant cost savings, regulators may try to forge a handful of deals, they said.
Some companies may try to sell assets to raise capital, but regulators are unlikely to give weaker banks six months to raise capital unless they have assets they can plausibly sell in that time, said Seamus McMahon, chief executive of bank consulting firm McMahon Advisory LLC credit scores.
“If what you are saying is that you are waiting for market conditions to improve and you have no plausible plans in place by June, I don’t think they will hesitate to force some of these banks together,” McMahon said.
The list of likely acquirers could include banks such as US Bancorp, JPMorgan Chase & Co and Morgan Stanley, McMahon said.
Targets could include banks such as SunTrust Banks Inc, Regions Financial Corp, KeyCorp and Fifth Third Bancorp, he added.
Citigroup Inc, which a source said needs $5 billion, could be an acquirer as well despite all its troubles, as takeovers could be a way for it to get much-needed deposits, McMahon said.
RELUCTANT BUYERS?
In urging any mergers, though, regulators will want to be careful that they do not create a new problem instead of solving one.
“You don’t want to put two stones together and see if they float,” said Jonathan Weld, a banking lawyer at Shearman & Sterling.
For the past two days, this town has hosted an international shopping expedition.
About 50 Chinese businesspeople, traveling with the Chinese Investment Promotion Agency, added a St. Louis stop to a weeklong swing through the U.S., looking for companies and real estate in which to invest. It’s the latest round of deepening trade talks between St. Louis and China, talks that local leaders say could create thousands of jobs here. "The big idea," they call it.
But before that idea becomes reality you need to know with whom you’re doing business. And for the Chinese, this weekend was all about getting to know St. Louis.
So the delegation visited the Danforth Plant Science Center and Express Scripts. They toured the Gateway Arch and saw the Mississippi. They heard from the governor and the mayor and business leaders. And Monday they talked business over steaks processed here in St. Louis.
Before they left, Zhang Yingxin, the investment agency’s deputy general director and the head of the delegation, sat down with the Post-Dispatch to share her thoughts about St. Louis, China and trade. Here are her comments, edited for length and through a translator.
PD: Why did you add St. Louis to your trip?
Zhang: We are here not only because of the "big idea" but also because of (an agreement) we signed last year (with state officials). We want to do some follow-ups on that and we want to have some concrete cooperation.
PD: Why is this trip important to building relationships between China and St. Louis?
Zhang: It’s just like going shopping. People will always choose good quality and low prices. But if the prices and quality are the same, they will pay attention to whether they know the shop owners. It’s deeply rooted in our culture. For the Chinese, friendship can turn into productivity. So I do think this trip has been very successful cash advance usa.
PD: China has benefited greatly from exporting to the U.S. in recent decades. Why do you want to invest here and boost imports from the United States?
Zhang: This is not a new topic. China has always focused on two-way trade. For the last 30 years we’ve focused more on (foreign direct investment), and for 17 years in a row the U.S. has been the biggest investor in China. … As our economy grows, the Chinese government is encouraging our companies to go global. … China is the biggest developing country in the world, and the U.S. is the biggest developed country in the world. We think the Chinese and U.S. economies are highly compatible to each other. … We need to enhance the cooperation and exchange between the two countries and enhance their mutual trust. I think enhanced cooperation is in the best interest of both countries.
PD: Is that harder to do, harder to convince people of, in a time of global recession, when some people think we should tend first to our own country and our own economy?
Zhang: China is always against trade protectionism. We think it does no good to any country in the world, and at these difficult times we need to work together and ride out the difficulties. Otherwise we’ll be like we were in the 1930s, with the Great Depression, or after World War II, when many countries pulled back. … Any trade protectionism will be a lose-lose situation. … Fortunately, we don’t hear any trade protectionist voices in St. Louis or Missouri.
PD: Do you expect more visits back and forth between St. Louis and China?
Zhang: We’ve received a very gracious reception and hospitality here. Of course we’ll want to give it back as the host in Beijing.
U.S. banks that received money under the Troubled Asset Relief Program (TARP) are facing a probe over increases in rates and fees, the Wall Street Journal said. The Congressional Oversight Panel, the body named by Congress to oversee the federal bailout, is working on a report examining instances of potentially inappropriate lending by banks that got taxpayer capital, according to the paper.
“The people who are subsidizing the activities of the banks through their tax dollars are the same people who are furnishing the high profits through consumer lending,” Elizabeth Warren, chairwoman of the Congressional Oversight Panel told the Journal in an interview.
“In a sense, we’re asking taxpayers to pay twice,” Warren told the paper bad credit cash loan.
The U.S. Treasury Department’s $700 billion TARP was intended to provide lenders with more capital to spur lending and improve the economy.
Since TARP was launched in October, banks bolstered by capital infusions have boosted charges on a wide range of routine transactions, hiked rates on credit cards and continued making loans criticized as predatory by consumer advocates, the Journal said.
(Reporting by Amitha Rajan in Bangalore; Editing by Muralikumar Anantharaman)
U.S. Treasury Secretary Timothy Geithner said he will soon announce details of his plan to help banks clean up the non-performing assets that are clogging the financial system.
“We’re going to move quickly to lay out a new financing program to deal with these legacy assets,” Geithner said in an interview with Bloomberg television two days ago during a meeting of Group of 20 finance ministers in Horsham, England. “We have and expect to see a lot of support for this program” among potential buyers of the assets, he said.
Geithner disappointed investors and was criticized by U.S. lawmakers including Senator Kent Conrad of North Dakota, chairman of the budget committee, for outlining plans to address toxic assets without explaining how they will work. The Standard & Poor’s 500 Stock Index slumped 4.9 percent on Feb. 10, the day Geithner unveiled the plan.
Geithner’s program has three main elements: Injecting fresh government capital into some of the country’s biggest financial institutions; establishing a public-private partnership to handle as much as $1 trillion of banks’ bad assets; and starting a credit facility with the Federal Reserve of as much as $1 trillion to promote lending to consumers and businesses.
The Treasury hopes to unfreeze credit markets by providing new incentives to banks and investors to resume trading in mortgage securities and other troubled assets. U.S. regulators are conducting a new series of examinations to make sure banks have enough capital to accept losses when selling these assets, while also planning to provide government financing to the investors who might buy them.
Gauging Interest
More information about the public-private investment plan will be made available in the next week, a Treasury official told reporters in Horsham, speaking on condition of anonymity. The Treasury will roll out enough information for investors to gauge their interest in the new program, along with an operational timeframe, the official said.
In the interview, Geithner said the Treasury already is well on its way to starting “a dramatic lending program to help securities markets get flowing again.” He said regulators will ensure banks have a “backstop of capital” to make sure they can “do what’s necessary” to restore lending.
The Treasury also is looking to a new program, launched in partnership with the Federal Reserve, to encourage banks to make new loans. The Term Asset-Backed Securities Loan Facility is intended to revive the market for securities backed by consumer loans, yet it may start with just a handful of deals, according to participants in the preparations.
TALF Delay
Last week, the Fed delayed by two days until March 19 the deadline for submissions of proposed packages of debt that investors can buy with Fed financing. Brokers and investors have had difficulty agreeing over contract terms for the TALF, the people said.
The Treasury isn’t worried if the TALF gets off to a slow start, the Treasury official told reporters no fax payday loan. The program is meant to be a longer-term effort to spur new lending, so a slow initial take-up shouldn’t be surprising, he said.
Details of another plan to spur lending to small businesses will be announced today by Geithner and President Barack Obama, according to a person familiar with the matter. The administration plans to use $375 million to expand federal guarantees and lower fees on small-business loans, the person said.
Geithner met over the weekend with Chinese Finance Minister Xie Xuren, days after Chinese Premier Wen Jiabao said he was “worried” about China’s investment in U.S. Treasury securities and wanted assurances that the holdings are safe. In Horsham, Geithner said the U.S. and the Chinese focused on their common goal of helping restore health to financial markets and the global economy.
Good Tone
“The tone was very good,” Geithner said in the interview, when asked about his meeting with Xie. “China is playing a very strong, very stabilizing, very important role in responding to this global crisis and we’re going to work closely with them.”
Geithner left the G-20 with a broad pledge from his counterparts to wield monetary and fiscal policy “as long as needed” to heal financial markets and the global economy. The ministers also were supportive of Geithner’s proposal to increase funding for the International Monetary Fund, without specifically endorsing his target to provide up to $500 billion.
On the subject of executive salaries and bonuses at institutions receiving bailout funds, Geithner said he wanted to see “guidelines for the future” to better align corporate pay and risk. The Obama administration has not yet released specifics of how it will apply its new executive compensation limits along with new restrictions passed this year by Congress.
AIG Bonuses
Separately, American International Group Inc., the insurer saved from collapse by a $170 billion taxpayer bailout, was ordered by the Treasury to scale back its $1 billion plan to give retention pay and bonuses.
AIG agreed to reduce some retention payments in 2009 by 30 percent and tie bonuses to the company’s recovery, according to a person briefed on the matter and a letter from AIG Chief Executive Officer Edward Liddy. The New York-based insurer still plans to distribute about $165 million on March 15 because of legally binding contracts, said the person, who declined to be identified because the talks weren’t public.
Geithner was “really upset” by AIG’s plan to distribute the bonuses, Austan Goolsbee, a top White House economist, said on the “Fox News Sunday” program yesterday. “You worry about that backlash” from the public, “but you’re also angry,” he said.
Bee colonies might not seem like the most lucrative market for designer drugs. But the need is urgent: CCD, or colony collapse disorder, a strange syndrome that kills adult worker bees outside the hive, has been reported across the U.S. and Europe. The U.S. Department of Agriculture (USDA) says American beekeepers lost 37% of their hives to CCD last year, after losing 31% the year before.
Scientists still can’t agree on which virus, if any, causes CCD. The government estimates that a third of our food supply - $15 billion annually in vegetables, nuts and fruits from plants that depend on bees for pollination - could be in danger.
Enter Beeologics, a Miami biotech startup that aims to create vaccines for all viruses that could lead to CCD. It’s an unlikely collaboration between Eyal Ben-Chanoch, 49, a tech entrepreneur who helped design the first Intel (INTC, Fortune 500) Pentium chip, and Ilan Sela, 71, an Israeli expert on sequencing the genomes of bee viruses.
The pair saw a crisis no other company was responding to and gathered 10 top researchers to work on a cure.
"There hasn’t been a lot of support for bee health," says Ben-Chanoch payday loan. "Our mission is to fill that void." The company’s first proprietary vaccine, Remebee, is in trials with six beekeepers. (Poking insects with syringes is tricky, so the drug is added to a sucrose solution used to feed bees.)
FDA approval is still pending, but the company is confident it will be able to commercialize the vaccine this summer, at around $2 per dose. A hive will need one dose per month. Multiply that by the nation’s 2.5 million remaining hives, and Beeologics could soon be buzzing with revenues.
Jeff Pettis, head of the USDA’s Bee Research Laboratory, is cautiously enthusiastic about Remebee’s potential. CCD likely stems from multiple factors, he says, some of which have yet to be discovered. But with time running out before the food chain is affected, any cure is worth trying.
"We live in a land of milk and honey," says Pettis, "but the honey can no longer be taken for granted."
Powered by WordPress -- XHTML 1.0