Activision Blizzard Inc’s hugely anticipated “Call of Duty: Modern Warfare 2″ video game went on sale early Tuesday morning, welcomed by eager fans who lined up hours in advance of the release.
The first-person shooter game is set to be one of the biggest and fastest-selling titles in history, challenging records set by blockbuster releases from the “Grand Theft Auto” series.
This despite a dicey economic climate that is pinching consumer spending. Video game industry revenue in the United States, the world’s largest market, is down 13 percent this year, according to industry tracker NPD.
But Call of Duty arrives amid high expectations and plenty of hype. Activision partnered with retailers including GameStop Corp and Best Buy Co for more than 10,000 midnight store openings in North America.
At the GameStop store near Union Square in New York City, around 80 mainly young people were lined up Monday night ahead of the launch, some for two hours.
“This is the only game I’m probably going to do this for,” said Paola Altamirano, 21, who was waiting in the queue. She said she planned to play Call of Duty against another friend online later that night.
With what Activision called a record level of preorders, there was little doubt about the strong demand for a game.
“Gamers are enthusiastic about picking this stuff up at midnight,” said Paul Swiderski, who works at the Union Square Gamestop online payday advance.
Analysts’ sales estimates for the $60 game range from 11-13 million units by the end of 2009. Call of Duty is likely to account for a sizable chunk of Activision’s profits in the fourth quarter, analysts say, so there is plenty at stake in the launch.
HARD-CORE AUDIENCE
The audience for the latest Call of Duty — the sixth installment in the franchise — is primarily younger men, the gaming demographic that makes up the core of the estimated $50 billion global industry.
John Paneto, 20, was lined up outside a Best Buy store in San Francisco with about 10 others at around 10 P.M. Monday. He said he played a number of the other games in the Call of Duty franchise.
“I’m going to be up all night playing it, until I crash,” he said.
Analysts say so-called hard-core gamers are unlikely to be dissuaded from buying a big-name title by economic concerns, as some casual gamers are.
But Call of Duty will have to turn in an impressive performance to top that of last year’s mega-hit from Take-Two Interactive Software Inc, “Grand Theft Auto IV.” The title sold 3.6 million units on the first day, and 6 million in its first week or more than $500 million in sales.
The BlackBerry’s transformation from a device destined for corporate executives’ breast pockets into one with wide consumer appeal was bound to encounter a few bumps along the way.
That’s one interpretation of Research In Motion Ltd.’s plunging shares yesterday, closing down 16.77 per cent, or $15.12, at $75.04 on the Toronto Stock Exchange.
The sell-off was a next-day reaction to Waterloo-based RIM’s weaker-than-expected sales outlook for the busy back-to-school quarter, delivered after the markets closed Thursday alongside a slight dip in fiscal second-quarter earnings.
Frank Marsala, an analyst at Gartner Research, said RIM’s estimate that it will ship between 9.2 million and 9.9 million devices was generally in line with expectations. The concern, however, was with RIM’s disclosure that the average price of each BlackBerry sold to carriers would be $320, lower than the $345 average in the second quarter and less than analysts had been expecting.
"When this happens we have to worry about the ultimate impact of competition," Marsala said.
There’s no question RIM is playing in a much more crowded space than just a few years ago.
Today, the BlackBerry portfolio faces threats from Apple Inc.’s iPhone, devices running on Google Inc.’s Android platform and the recent resurgence of Palm Inc. and its touchscreen Pre.
That translates into increased pressure to cut prices on high-end handsets in order to take advantage of rising interest in full-featured devices that combine traditional voice calling with email, mobile Internet and multimedia applications.
"The company’s (average selling prices) are moving lower as the smartphone market and RIM moves more mainstream," said Deepak Chopra, an analyst at Genuity Capital Markets, in a note to clients.
But others argue that the market’s concerns are overblown.
"I think there are number of things that are being missed in the view of this company in the last 24 hours," said Kevin Restivo, an analyst at IDC Canada fast payday loan no faxing. "RIM is entering its best two quarters of the fiscal year … and RIM usually saves it’s best for last."
Indeed, RIM’s product portfolio has looked a little thin in recent months in comparison to the hype surrounding Apple’s launch of the iPhone 3GS and the introduction of Palm’s Pre.
By contrast, many observers expect this fall to see RIM unveil an updated version of the touchscreen Storm, an iPhone rival, as well as another device some bloggers have described as a "mash-up" between the high-end BlackBerry Bold and the Curve 8900.
"I would expect price points to rise … because its premium products, its best products, are likely to be launched in the coming months," Restivo said.
In the meantime, the average selling price of existing BlackBerry models will be weighed down by efforts to clear out older inventory to make room for the new models.
Also contributing to the trend is RIM’s roll out of a new, low-cost version of the popular Curve model. The Curve 8520 is selling for less than $50 at Wal-Mart stores in the United States when customers agree to a two-year contract with T-Mobile. The device, which runs on slower, second-generation wireless networks, is also expected to be popular in developing countries.
From RIM’s perspective, much of the angst is unwarranted. That’s because demand for smartphones continues to balloon while overall sales of mobile devices are falling. And RIM sees itself as perfectly positioned to take advantage of an increasingly hot sector.
"We are positioning and investing for success here," co-CEO Jim Balsillie told analysts during a conference call Thursday.
"And that’s everything. Or else the world will (pass) you by."
NO. 1 IN THE MEAT MARKET Brazilian beef producer JBS SA is set to become the world’s largest meat processor with an $800 million deal that takes struggling chicken producer Pilgrim’s Pride Corp guaranteed high risk personal loans. out of bankruptcy protection.
Microsoft Corp put its new Zune HD digital music and video player on sale on Thursday, pricing it below comparable Apple Inc iPod devices, in an attempt to claw some market share away from the dominant leader.
The devices, which are available for pre-order but won’t hit shelves until September 15, are priced at $219.99 for the 16 gigabyte version and $289.99 for the 32 gigabyte version. Comparable iPod Touch players are priced at $299 and $399 respectively.
A 16-gigabyte player typically holds about 4,000 songs fast cash personal loans.
Microsoft’s new Zune HD is slimmer than previous version and has a touch screen for the first time. The range comes in five colors and has a built-in radio receiver, Wi-Fi, and can display high-definition video to a big screen.
(Reporting by Bill Rigby; Editing by Derek Caney)
China’s central bank pledged to maintain loose monetary policy to support economic recovery and ensure sustainable credit growth without resorting to heavy-handed quotas to rein in a surge in lending.
In a statement that analysts said was intended to calm skittish markets, the People’s Bank of China Vice Governor Su Ning said the central bank “will unswervingly continue to apply appropriately loose monetary policy and consolidate the economic recovery momentum.”
The statement was posted on the bank’s website after Wednesday’s 5 percent fall in the Chinese stock market, its biggest daily drop in eight months, which had been sparked in part by worries that Beijing would restrict bank lending.
China has in the past used a quota system to control lending, telling banks not to exceed specific ceilings. This credit management was a key prong of China’s monetary tightening in 2008 and it was subsequently blamed for contributing to the economy’s sharp slowdown in the fourth quarter.
Su’s comments appeared to rule out an imminent return to a strict, central bank-directed quota system.
“They are responding to an incorrect interpretation by the market,” Ting Lu, economist with Merrill Lynch in Hong Kong, said.
“There will not be credit quotas this year, though there could be window guidance,” Lu said, referring to more informal directions that Beijing gives banks to influence their decisions.
The benchmark Shanghai stock index clawed back some of its lost ground, closing up 1.7 percent in topsy-turvy trading business card.
Chinese banks lent a whopping 7.37 trillion yuan ($1.08 trillion) in the first six months, easily topping the full-year figure of 4.91 trillion yuan in 2008 and igniting concern that excess liquidity was leading to stock and property bubbles.
Two initial public offerings in Shanghai soared beyond expectations this week, underlining how speculative fever had returned in full force to Chinese markets.
Beijing has tamped down a little on the tide of money washing through the economy, but it is seen as unwilling to shift to more substantial tightening until a full-fledged recovery is assured.
CREDIT QUOTAS
“We will focus on market tools, not quantitative-style control methods, flexibly using many kinds of monetary policy instruments,” Su said. In this context, market tools likely referred to central bank’s regular selling and buying of bills in the open market to influence liquidity.
“We will guide appropriate monetary and credit growth, strengthen the sustainability and do what is necessary to drive the economic recovery and to ensure stable and quite fast economic growth,” he said.
Dong Xian’an, chief macro-economist with Industrial Securities in Shanghai, said firm lending quotas were still very much on the table, because they are a direct way to manage the underdeveloped and occasionally unruly Chinese financial system.
Boeing Co. will pay $580 million for a plant that makes large sections of its 787 jetliner, an apparent effort to rein in supplier problems that have led to costly delays of the next-generation aircraft and hurt the company’s credibility.
The plant, owned by Vought Aircraft Industries, makes barrel-like sections of the 787’s fuselage that fit between its wings and tail and are composed primarily of lightweight materials.
Deliveries of the 787 have been postponed by nearly two years partly because of problems with components made by suppliers and work that suppliers didn’t complete. Those hang-ups are expected to cost the airplane maker billions of dollars in added expenses and penalties.
Boeing took a new approach to building airplanes when it announced its 787 program in 2004. Instead of building the plane’s parts in the United States, it used suppliers around the world to build sections of the plane that are later assembled at the company’s commercial aircraft plant near Seattle. Ill-fitting parts and other problems have hamstrung production ever since.
Vought, owned by private equity firm Carlyle Group, says financial problems, not production glitches, prompted the sale, expected to close in the third quarter. Under Tuesday’s deal, Boeing will release Vought from obligations to repay money advanced earlier by Boeing.
Vought President and CEO Elmer Doty said that his company’s investment in 787 parts was far greater than expected, and that the financial demands of the program "are clearly growing beyond what a company our size can support."
But Richard Aboulafia, an analyst at Teal Group, an aerospace consultancy in Fairfax, Va., said, "This clearly is more about securing the supply chain and undoing numerous mistakes.
"It’s a good move, it’s a proactive move, it undoes some damage," he said. "But on the other hand, it shows this program still has more than a few challenges to overcome. … I don’t think Carlyle quite knows what to do with this asset, and they might not have been prepared to give it the necessary resources instant payday loans completely online."
Despite those problems, Boeing spokesman Jim Proulx said Tuesday that the company had no plans to change its 787 production plan. "We remain committed to the business model and the global strategy for the 787," he said.
The mid-sized, long-haul 787 will be able to carry 210 to 330 passengers. Its design includes wider seats and aisles, larger windows and a ventilation system that will allow for higher humidity, all of which Boeing says will make the cabin feel more comfortable.
It’s Boeing’s first all-new aircraft since the 777 and the first commercial jet made mostly of carbon-fiber composites instead of aluminum. Boeing says it will be about 20 percent more fuel efficient than other planes of comparable size.
Boeing, based in Chicago, has booked orders for a record 850 of the planes, but some 60 have been canceled so far this year, including the cancellation of 15 and the delayed delivery of another 15 by Qantas Airways last month.
Adam Pilarski, an aviation economist with consulting firm Avitas, based in Washington, said Boeing might want the Vought plant, in North Charleston, S.C., as part of a plan to start a second 787 production line. The added capacity is in response to strong demand for the plane.
"Boeing made it very clear that they need a second line," he said. "They need it more now than they did before because they are behind."
It remains unclear when Boeing will conduct the first test flight of the 787, previously scheduled for the second quarter of this year.
Vought will continue to run other plants that work on different 787 components as well as parts for Boeing’s 737s, 747, 767, 777, C-17 and V-22 aircraft.
From David Nicklaus’ Mound City Money blog. STLtoday.com/moundcitymoney
Unanimity is rare in surveys of businesspeople, but the St. Louis Fed found it among area car dealers. The Fed’s latest Burgundy Book survey says all the dealers it talked to expect lower sales this year. Other retailers aren’t quite as pessimistic, but half expect sales to fall and only one-third expect sales to rise.
If Kansas City’s leaders want to learn about the economics of a 1,000-room convention hotel, they could drive 250 miles east and talk to the folks who recently foreclosed on the Renaissance Hotel in downtown St. Louis. Instead, they’re spending $500,000 for a feasibility study. According to the Kansas City Star’s Kevin Collison, our neighbors to the west are also establishing a 20-member steering committee to think about the idea.
We St. Louisans could save them plenty of time and money. Here are three pieces of free feasibility advice:
— It won’t work without a huge public subsidy.
— It won’t magically generate more convention business
— Even with a huge subsidy, it might not succeed.
The ESOP Association estimates that 10 million U.S. workers, about 10 percent of the private-sector work force, participate in employee stock ownership plans at 11,500 companies. Many people would look at those numbers and see upbeat, motivated employees, their incentives fully aligned with the employers’ goals auto one car insurance.
Sean Anderson, a visiting law professor at the University of Illinois, looks at ESOPs and sees a disaster waiting to happen. In an upcoming article, he says Congress should ban employer stock from all company-sponsored retirement plans. Here’s an Anderson quote, from a U of I News Bureau summary of the article that will appear in the Loyola University Chicago Law Journal. :
"ESOPs have a lot of intuitive appeal — the idea of having workers own a piece of the company they’re working for. But they’re Enron on steroids. At the end of the day, they put workers at terrible risk and more often than not work as a tool that benefits the company, not employees."
ESOPs prevent workers from diversifying their retirement savings, and workers don’t even control the price at which they invest.
My guess is that any proposal to abolish ESOPs would run into a firestorm of criticism from many of those 10 million employee-owners. I’ve talked with people who get a special sense of pride from working at an employee-owned company such as Graybar Electric or McBride & Son Homes. Any reformer would also have to contend with the ghost of Louis O. Kelso, the Cold-War-era thinker who conceived of ESOPs as a way to keep workers engaged with capitalism and opposed to communism.
The Japanese government raised its assessment of the economy for the first time in three years on signs the worst of the recession may be over.
“While the economy is in a difficult situation,” the pace of deterioration has “become moderate,” the Cabinet Office said in its monthly report released in Tokyo today, the first upgrade since February 2006. The government last month said the economy is “worsening rapidly while in a severe situation.”
The Bank of Japan also raised its assessment last week and Governor Masaaki Shirakawa today predicted the economy will resume growing this quarter after shrinking at a record pace in the first three months of the year. The government said it was more optimistic about exports and industrial production after companies said they plan to increase output to replenish stockpiles.
“We don’t expect the economy to keep deteriorating at the pace already seen,” said Fumihira Nishizaki, director of macroeconomic analysis at the Cabinet Office. “The economy will be supported by some improvement in overseas demand, inventory adjustments and stimulus packages.”
The Nikkei 225 Stock Average has risen more than 30 percent since it fell to a 26-year low on March 10 freecreditreport. Sentiment among households and merchants improved for a fourth month in April.
The export slump probably eased and production rose for a second month in April, economists surveyed by Bloomberg expect reports to show this week.
Still, the government said it isn’t expecting a full- fledged recovery because unemployment is rising.
“The employment situation is severe and worsening rapidly,” the government said in today’s report, downgrading its assessment for labor conditions.
The jobless rate surged to 4.8 percent in April from 4.4 percent, the biggest gain since 1967, and economists expect a report this week to show that unemployment climbed to a five- year high in April.
“The downward pressure on the labor market will continue to be a downside risk,” Nishizaki said. “The economy is likely to remain in a severe state.”
DETROIT — The United Auto Workers struck a deal with General Motors and the federal government Thursday to cut labor costs, close factories and change the way retiree health care is funded.
The agreement could ease one of GM’s biggest problems: The cost of its work force. But the automaker is still struggling with a crushing debt that may drive it into a Chapter 11 bankruptcy reorganization.
General Motors Corp., which has received $15.4 billion in federal loans, faces a government-imposed June 1 deadline to finish a major restructuring or be forced into bankruptcy protection.
The government has told the automaker to cut costs, close factories, shed dealers and brands, and persuade at least 90 percent of its bondholders to sign on for the stock-for-debt exchange. But thousands of bondholders are expected to shun the company’s offer to take 10 percent of its stock to wipe out $27 billion in unsecured debt.
Harlan Platt, a professor at Northeastern University in Boston who teaches corporate turnarounds, said the UAW deal could be the catalyst for more bondholders to accept GM’s offer.
GM shares rose more than 32 percent on Thursday — an increase that Platt says indicates that investors see value in the company. Platt believes the stock could climb to around $4 because GM will be able to restructure out of court, emerging with far less debt, lower costs, fewer brands and factories, and a rejuvenated vehicle lineup health insurance.
GM has offered bondholders 225 shares for every $1,000 of debt.
"If you’re getting 225 per $1,000 and the stock goes to $4, which I think it will, you’re getting all your money back," he said. "This is going to be significantly more than they will get in a bankruptcy."
But Douglas Baird, a University of Chicago law professor who specializes in bankruptcy cases, said the bondholder obstacle is nearly insurmountable.
"There’s a collective action problem," he said. "There are a lot of these bondholders. Even if there are a lot of them on board, that’s not the same as 90 percent on board."
Still, the UAW deal could help shorten the length of time GM stays in bankruptcy protection, Baird said, making it easier for the court to concentrate on remaining matters such as the bond debt.
The UAW was withholding details about the deal until plant-level union officials were briefed. The union summoned local officials to Detroit on Tuesday for the explanation, and local union leaders expected voting to end late next week.
LOS ANGELES–The slump in Las Vegas may be bottoming out, but odds are good that a coming wave of new resorts will hinder any rebound in hotel rates or casino revenue.
That could put a cap on profits at recession-battered casino companies.
MGM Mirage, Las Vegas Sands Corp. and Wynn Resorts Ltd. this week reported stronger-than-expected first-quarter results, helping to boost their heavily battered stock prices.
"I see that starting in September – maybe October, more appropriately – we are going to have an accelerated booking pace … I hesitate to use the word getting back to normal, but I think we are getting close to getting back to normal in 2010," Sheldon Adelson, Sands’ chair and chief executive, said this week.
Analysts, however, warn that there is no concrete evidence as yet that the bottom of the downturn is in sight in Las Vegas.
"There has been some talk of things turning around in Las Vegas … but I don’t see any real evidence," said Majestic Research analyst Matthew Jacob.
Las Vegas Strip casinos won 17 per cent less money from gamblers in the first three months of this year than they did a year earlier, according to Nevada gaming regulators.
As the recession stalls travel demand and airlines trim flight capacity, the number of visitors to Sin City has fallen about 9 per cent over the same period, and the average daily room rate fell nearly 32 per cent in March from a year earlier.
Meanwhile, Strip projects like CityCenter, Fontainebleau Las Vegas and the Cosmopolitan, planned when there was no end in sight to the gambling boom, will start opening later this year, adding by 2010 nearly 16,000 luxury hotel rooms to the gambling corridor’s existing supply.
That’s an increase of about 11 per cent from the current total of 141,000 rooms, which reflects the opening last December of Wynn’s Encore and the debut in January 2008 of Las Vegas Sands’ Palazzo.
The total also includes expansions at the Hard Rock Hotel & Casino, set to start opening this summer, and new time-share towers at Planet Hollywood cash loan.
The largest project is the 27-hectare CityCenter, a multi-tower joint venture between MGM and Dubai World that will begin a phased opening in October.
"The opening of CityCenter later this year will add additional hotel and gaming capacity to an already struggling Las Vegas market and is likely to impact MGM’s 100 per cent owned properties," Buckingham Research analyst John Grassano said in a research note this week.
MGM, the largest Las Vegas Strip operator, owns nine other properties along the gambling corridor, ranging from the high-end Bellagio to the more mass-market Circus Circus.
Chief executive Jim Murren believes the new capacity will not cannibalize MGM’s existing operations.
"We have designed CityCenter in a fashion that it does not compete directly against the other properties," he said during a conference call this week.
"We are not adding significant gaming capacity to the market … The intent is to complement, not compete with, our portfolio, and frankly the portfolios of our competitors."
He predicted that CityCenter’s "18 million square feet of excitement" will boost demand for travel to Las Vegas.
"We think the visitation in Las Vegas is going to be up at least 5 or 6 per cent next year. And we think we are going to be largely responsible for it," Murren said.
Even that rate, however, would fall well short of the coming room supply increase.
"The earnings story is tough … Casinos have lots of fixed costs and they have already cut what they can," said Bill Lerner, an analyst at Union Gaming Group.
But he said he is hopeful that once people who do travel to Las Vegas begin to spend more money, the shift will be reflected in the stock prices of casino operators.
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