European regulators have approved Emerson's planned $1.5 billion acquisition of British power supply company Chloride Group.
The European Commission said it concluded that the acquisition would not significantly impede effective competition.
"The merged entity would continue to face strong competition from a number of credible competitors in all national markets affected by the concentration," the panel said in a statement Tuesday. "Therefore, the commission concluded that the proposed transaction does not raise competition concerns."
Emerson and Chloride both provide uninterruptible power supply systems for computers and hospitals.
Emerson Chairman, President and Chief Executive David Farr said he wants to invest in faster-growth areas, such as network power, and divest of businesses that aren't growing as rapidly low interest personal loan.
Last week, Emerson announced a deal to sell its motors and appliance controls businesses to Kyoto, Japan-based Nidec Corp. for $700 million.
On Monday, Emerson said it planned to sell LANDesk Software, a Salt Lake City IT systems manager, to private equity investment firm Thoma Bravo.
Emerson (NYSE:EMR) is the second-largest public company in St. Louis with $20.9 billion in revenue in 2009. It has 129,000 employees companywide, including 1,400 in St. Louis after the motors business sale closes next month.
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Mortgage rates continued to decline this week, plunging to the lowest level in decades, according to surveys from Freddie Mac and Bankrate.
Freddie Mac’s weekly report said the 30-year fixed rate slipped to 4.44% for the week ended Thursday, the lowest since the government-backed lender began tracking the rate in 1971. Last week’s rates stood at 4.49%, and a year ago it was at 5.29%.
The 15-year fixed rate fell to 3.92% this week, the lowest since Freddie Mac began tracking it 1991, down from 3.95% last week and from 4.68% a year ago.
Adjustable-rate mortgages also declined, with the 5-year rate falling to 3.56% this week, the lowest since 2005 when the lender began tracking it.
Mortgage tracker Bankrate.com, which surveys large lenders across the country, said the average 30-year fixed loan sank to a record low for the fourth consecutive week, falling to 4.57% from 4.66% the previous week.
The 15-year fixed rate, which is a popular option for refinancing, also fell to the lowest level in the history of Bankrate’s 25-year old survey, dipping to 4.06%, from 4.11% the week before.
While the 1-year adjustable-rate mortgage held steady at 4.8% for a fourth week, the 5-year adjustable rate mortgage dropped to a record low of 3.92% from 3.95% the previous week.
"Low rates are helping to heal many battered local housing markets by increasing home-purchase activity, said Frank Nothaft, chief economist at Freddie Mac.
Mortgage rate applications inched up a modest 0.6% during the week, according to the Mortgage Bankers Association. Applications for purchase rose 0.3% while refinance applications increased 0.6%.
Please remember that a payday loan is a rather expensive line of credit. Much like taking something to the pawn shop.
It’s the best of times and the worst of times for iPhone 4 case makers.
As a remedy for its so-called "death grip" problem on the new device, Apple announced on Friday that it would send a free case to every iPhone 4 purchaser who wants one, at least until Sept. 30. Sounds like a pretty good deal for a company like Forward Industries (FORD), which manufacturers the Apple-branded "bumper" case for the new iPhone. Forward’s stock shot up 22% right after Apple CEO Steve Jobs’ announcement.
The freebie deal presents an opportunity for other case manufacturers as well: Jobs said his company can’t make enough bumper cases to satisfy anticipated demand, so Apple will also allow customers to get a free third-party case instead. To do this, Apple will post a list of cases to choose from on its website beginning next week, and it will deliver them to customers free of charge.
"There’s a tremendous upside for case manufacturers," said Francis Sideco, principal wireless analyst with supply chain analysis firm iSuppli. "Whatever Apple pays them for the cases, it’s going to be what the manufacturers were going to get from Apple anyway. And the announcement gives them much higher penetration than they would have had before."
But Forward Industries’ shares finished the day essentially flat, at $3.75 a share. Another big iPhone case maker, Zagg Inc. (ZAGG), closed down 5% after rising 5% on the announcement. Why the sudden drop back?
That’s where the "worst of times" comes into play. Jobs mentioned Friday that just 20% of iPhone 4 users have picked up a bumper case so far, despite all of the hoopla about how the case solves the phone’s dropped-signal issue. That’s far fewer than the 80% of iPhone 3GS users who bought a case soon after the phone’s release last year.
Jobs’ said his theory about why fewer customers are buying cases is that people love the look and feel of the iPhone 4 so much they don’t want to ruin it with a rubbery bumper.
Illustrating the point: During a Q&A session at Friday event, veteran Apple chronicler John Gruber asked Jobs if he uses a case. Jobs and two other Apple executives simultaneously whipped out their bare, bumper-free iPhones.
So even if many users will want a case, it’s unlikely that every single iPhone customer would order one.
"The signal issue is a relatively sporadic problem," said Sideco, noting that Jobs said just 1.7% of customers have returned their iPhone 4s and 0.55% have registered complaints. "It wouldn’t be 100% of people who get a case."
Sideco said he still expects the number of customers ordering cases to rise well above 20% after Apple’s offer goes into effect next week. Many people who balked at the bumpers’ $29 price tag will be happy to take a free case, even if they’re on the fence about actually using it.
The offer could be an expensive proposition for Apple, though predicting how much the company will spend is like trying to hit a moving target.
ISuppli expects 8 million to 10 million iPhones will be sold between the iPhone 4’s June 24 launch day and September 30. The cases that Apple will offer on its website will likely retail at $30, though analysts assume that Apple pays far, far less for each case than the retail price.
Shares of Apple (AAPL, Fortune 500) fell less than 1% to close the day after rising a bit more than 1% after its announcement.
Energy Holdings International Inc. has signed a memorandum of understanding to develop a 200 megawatt, $400 million power plant in Bangladesh.
Through a wholly owned subsidiary, EHII signed the deal with the Bangladesh Power Development Board for a single cycle electrical power generation plant with room to expand to a 450 MW combined cycle facility same day payday loans.
Houston-based EHII (NYSE: EGYH) is currently talking with a handful of engineering, procurement and construction contractors to build the plant while EHII will serve as the independent power producer.
Bexar County is planning to sell $155 million worth of bonds and certificates of obligation later this month.
The county will sell $25 million in limited tax general obligation bonds, $95 million in certificates of obligation and $35 million in certificates of obligation backed by Build America Bonds. The debt is slated to be sold during the week of July 26.
Fitch Ratings has assigned an ‘AAA’ rating to the bonds and certificates. Fitch has also affirmed its ‘AAA’ rating on Bexar County’s $728 million in unlimited tax and limited tax bonds outstanding. The rating outlook is stable.
Fitch assigned strong ratings to the debt offering because of the county’s prudent stewardship of funds during the current economic slowdown no checking account payday advance. Fitch also noted that the county keeps a pool of money in reserve due to its 10 percent fund-balance policy, that it has steady population growth, and that it has robust military, health care, higher education, professional business and service sectors.
The current offerings will finance public safety, park, parking and street improvements. In addition, the county is planning to issue up to $680 million in certificates of obligation over a 10-year period for drainage improvements planned in conjunction with the City of San Antonio, the San Antonio River Authority and other regional partners.
Procter & Gamble Co. and Kroger Co. topped the list of eight Greater Cincinnati and Northern Kentucky firms that made repeat appearances on the Fortune 500 list this year, joined by insurance/financial services firm American Financial Group.
Fortune ranks companies based on annual revenue. Walmart Stores ranked at No. 1, with $408 billion in revenues.
P&G ranked 22nd, down from 20th in 2009, with $79.7 billion in revenue versus $83.5 billion last year; and Kroger ranked 23rd, down from 22 last year, with $76.7 billion in revenues, up from $76 billion a year ago.
Other firms on the list included:
• Macy’s Inc. at 103, down from 98, with $23.5 billion in revenues, down from $25 billion last year;
• Fifth Third Bancorp at 248, up from 302, with $9 on line pay day loans.5 billion, up from $8.6 billion;
• Ashland Inc. at 280, up from 310, with $8.1 billion, down from $8.4 billion;
• Omnicare at 347, up from 392, with $6.2 billion, down from $6.3 billion;
• Western & Southern Financial Group at 420, up from 441, with $5 billion, down from $5.4 billion;
• General Cable Corp. at 469, down from 396, with $4.4 billion, down from $6.2 billion;
• American Financial Group at 478, with $4.3 billion in revenues.
AK Steel, which had ranked at 334 in 2009, fell off the list this year.
White House pay czar Kenneth Feinberg, who has clamped down on executive compensation at the nation’s biggest bailout firms, now has a new target: any firm that accepted a government lifeline.
Unveiling a bold new initiative Tuesday, Feinberg said he would examine compensation paid to top executives at 419 companies made between October 2008 until February 2009, a period when the nation’s financial system was teetering on the brink.
The review is part of an effort to shed light on whether any firms that accepted money under the Troubled Asset Relief Program, or TARP, paid employees any excessive bonuses or awards during that tumultuous period before Congress stepped in and required greater oversight on pay practices at bailed-out firms.
Feinberg is asking each company to provide information on bonuses, retention awards and all other compensation for their senior executives and next 20 most highly-paid employees within 30 days.
Much of his focus though will be on executives earning more than $500,000, Feinberg said during a press briefing, sparing the hundreds of community and regional banks that also took TARP funds.
His review however, could subject paychecks of hundreds of financial executives, who have otherwise been free from leering eyes, to intense government and public oversight.
Among those likely to endure the greatest scrutiny would be employees at Goldman Sachs (GS, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and Morgan Stanley (MS, Fortune 500). All three Wall Street firms are known for paying multi-million bonuses to top performers as well as senior executives in any given year.
And while investors have closely examined pay packages of their top executives, the trio avoided any federal scrutiny after paying back the billions of dollars received under TARP last year.
Morgan Stanley and JPMorgan Chase declined to comment. Goldman Sachs was not immediately available.
To date, Feinberg’s efforts have been focused on the seven firms that required an "exceptional" amount of government assistance. Two of those firms — Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) — have since repaid all of their bailout funds to the government though.
On Tuesday, Feinberg set 2010 compensation for executives at the remaining firms under his authority — AIG (AIG, Fortune 500), General Motors, its former finance arm GMAC, Chrysler and Chrysler Financial faxless cash advance..
Total pay for those executives would decline by 15% this year, with a larger portion of their compensation coming in the form of stock, according to Feinberg.
GMAC CEO Michael Carpenter, for example, who was appointed to lead the firm last November, will only be paid in the form of company shares.
Feinberg also said Tuesday that executives from AIG’s notorious financial products unit, which brought the firm to its knees, had repaid the entire $45 million in bonuses they originally pledged to return.
No Wall Street brain drain
There have been some questions about whether attempts to cap compensation at bailed-out firms would prompt top employees to seek work elsewhere.
But according to Feinberg’s latest ruling, more than 80% of the executives that submitted to Feinberg’s review in 2009 were still with the same firm earlier this year.
Feinberg’s forthcoming review of all firms that accepted TARP funds is expected to be made public by late spring or early summer.
The pay czar said Tuesday he will attempt to negotiate with those companies and employees that were awarded payments that were "contrary to the public interest."
One likely target could be bonuses paid to bank employees for fiscal year 2008.
An analysis of the original nine banks that received money under TARP published last July by New York Attorney General Andrew Cuomo revealed that those banks still paid out billions of dollars in bonuses in 2008, even as the firms suffered severe losses.
Citigroup, for example, paid an estimated $5.33 billion in bonuses in early 2009, despite suffering more than $27 billion in losses in 2008.
Goldman Sachs, which continues to face criticism over its pay practices, paid out some $4.8 billion in bonuses despite earning just $2.3 billion, according to the report.
It is unclear though, whether those firms may put up a fight. Others have questioned whether Feinberg will have the legal authority to renegotiate some of these employee payments.
–CNN’s Lisa Sylvester contributed to this report
BRUSSELS, BELGIUM — The EU on Tuesday warned the United States against protectionism after a European-led consortium pulled out of the bidding for an Air Force contract, saying the terms had been altered to favor a U.S. company.
EADS, the parent company of Airbus, had partnered with Northrop Grumman to vie for the 179 tanker order, but the consortium pulled out on Monday. It said the terms of the deal appeared designed to eliminate its design in favor of a smaller jet offered by rival Boeing Co.
The announcement left Chicago-based Boeing as the only bidder for the project. It is offering a version of the 767 commercial airplane to replace the Air Force’s 1960s-era fleet of KC-135 tankers.
"The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract," the EU said in a statement.
In 2008, the EADS-led consortium was awarded a contract for the fleet, but Boeing protested and the deal was annulled later that year cheap credit report.
In December, Northrop Grumman/EADS expressed concerns to the Pentagon and the Air Force that the new criteria were slanted in favor the Boeing design.
"It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type," said EU Trade Commissioner Karel De Gucht. "Open procurement markets guarantee better competition and better value for money for the taxpayer."
The EU noted that the trade balance in defense equipment with the 27-nation EU has traditionally been heavily in favor of the American side, and that in 2008, the US exported $5 billion worth of defense materials while importing only $2.2 billion from the European side.
"The Commission will be following further developments in this case very closely," the statement said.
On the last day of 2009, the state of Missouri gave $19.6 million to developer Paul McKee.
It came in the form of tax credits, from a program never before used, to pay back some of the cost of the land McKee spent five years secretly buying in north St. Louis.
It was a good day for McKee, and for his hugely ambitious $8.1 billion NorthSide project.
It was also a good day for his bankers.
Because after McKee sold the tax credits for cash, he used the money not on NorthSide itself but to pay down his debt, mostly to the small Washington, Mo., bank that is his primary lender on the project.
Yet nearly half of the $19.6 million was reimbursement for interest and fees already paid to lenders. In a sense, the bank got some added protection and a quick payback.
This is exactly how the new tax credit program was intended to work, supporters say. The credits provided the backup a bank needed to see before accepting the risk of financing a long, complex process of assembling land in beleaguered north St. Louis neighborhoods.
"We’ve got to understand, these are high-risk loan areas," said Missouri Sen. John Griesheimer, who pushed the Distressed Areas Land Assemblage tax credit in the Capitol. "This is where bankers and developers don’t want to go."
But the way the program has worked so far speaks to the heart of a lawsuit against it to be heard this week in Cole County. The tax credits won’t create jobs, said attorney Irene Smith. They won’t build buildings or generate any other public good, at least not directly.
"You’re basically just incentivizing the collection of land," she said. "You’re not incentivizing any development."
When state lawmakers established the program in 2007, they designed it to encourage lending on a speculative project such as NorthSide, something risky that might take years to pan out. Indeed, many say it was written specifically for McKee.
Griesheimer, a Republican from Washington, Mo., chairs the Senate’s economic development committee and helped author the credit. Early on in that process, he said in a recent interview, the senator consulted with McKee and with L.B. Eckelkamp, a constituent of his and chief executive of McKee’s primary lender, the Bank of Washington.
They met, Griesheimer said, "to explain what they needed." And after talking with a few other experts, he inserted the tax credit program, worth $95 million, into a massive state economic development bill. It had the vocal support of Lt. Gov. Peter Kinder, St. Louis Mayor Francis Slay and St. Louis County Executive Charlie Dooley. And it passed.
The measure included a 100 percent reimbursement for money spent on interest and loan fees to buy at least 50 acres of land in low-income neighborhoods, and a 50 percent reimbursement for the cost of land itself. It was structured that way, Griesheimer said, to protect any banker willing to take a chance on a major project such as this. It was, he said, the only way NorthSide would happen.
"It was a very high-risk area," he said. "The banks and everybody wanted to make sure that they’re going to recoup at least some of their losses, some of their money."
Indeed, beyond a $27 million loan from the Bank of Washington, McKee has struggled to attract lenders, even with the support of the tax credits. He has pitched NorthSide to a number of local banks, but none has publicly committed to him.
The Bank of Washington’s money did not come cheap. Since 2005, McKee’s NorthSide Regeneration has paid at least $9.25 million in interest and fees on loans held by the bank, according to documents obtained from the Missouri Department of Economic Development under state open records laws. Another $529,000 in interest went to a small Illinois bank that’s now defunct. Now, every cent of that has been reimbursed by the state.
In a recent e-mail, McKee acknowledged that his interest costs were high. But so, he argued, was the risk.
"The loans were unique," McKee wrote. "They were the only loans made in decades for large-scale site development in north St. Louis that were not backed by government guarantees."
Once he sold the tax credits in January, McKee used the proceeds to pay a substantial portion of his debt. The bank "required a pay down," he wrote, and it makes sense for the project. Paying off debt will reduce interest payments — which were nearly $3.8 million last year — and free up cash for actual redevelopment.
But some say all this focus on protecting lenders reflects misplaced priorities.
"Half of the money is going to pay interest on loans," Smith said. "What public benefit do we gain from a tax credit being used to pay someone’s interest?"
That question will be up to a judge.
Smith said she planned to focus her case on the constitutionality of the tax credits, an issue, she says, that’s never been thoroughly vetted in court. It’s a fairly narrow legal question, Smith said, and she expects the trial, set for Wednesday, to be brief.
In the mean time, McKee continues to buy property in north St. Louis.
His tax credit application says he has spent $25.1 million on 98 acres across two square miles near downtown. It estimates another $66 million in land-buying costs to come. And there’s still about $75 million in the pot of money available through the Distressed Areas credit; McKee’s financial plans project his getting nearly all of it.
Even the program’s critics express little surprise in how it’s been used so far. In floor debate three years ago, Sen. Brad Lager, R-Savannah, raised questions about so much reimbursement for borrowing costs and whether the state should spend $95 million on this sort of project. But he lost that debate.
"And right, wrong, or indifferent, they’re using the credit exactly how it was written," Lager said recently. As for whether it will work, he said: "Only time will be the judge."
Dell shares fell more than 5% in after-hours trading, after the computer maker reported a 5% drop in fourth-quarter earnings Thursday.
The Texas-based company beat Wall Street’s expectations, however, on solid sales across all its segments as businesses started spending on IT again.
Net income dropped to $334 million, or 17 cents per share, compared with $351 million, or 18 cents per share a year ago.
Results included a one-time charge of 11 cents per share for special items, mainly related to the company’s $3.9 billion acquisition of Perot Systems in November. Without the charge, Dell (DELL, Fortune 500) said it earned 28 cents per share. Analysts polled by Thomson Financial, who typically exclude one-time items from their estimates, were looking for 27 cents.
Sales rose 11% to $14.9 billion from $13.4 billion last year, beating analysts’ forecast of $13.85 billion.
In a conference call with analysts following the results, chief financial officer Brian Gladden and Dell chairman and CEO Michael Dell said they expect to see an uptick in commercial sales in the next year and continuing into fiscal 2011 as businesses upgrade to Windows 7.
Gladden said the company is focused on cutting overhead and manufacturing costs and in simplifying its supply chain. Last year, Dell announced plans to trim expenses by $4 billion annually by the end of fiscal 2011. Gladden noted that in the last two years, Dell had consolidated its manufacturing facilities to six from 11.
"Ongoing competitor pressure and economic realities never stop, and we can’t either," he said in the call. "We’re moving into the next phase of our transformation."
While Dell’s financials beat analyst expectations, the news comes with a mixed bag of concerns such as high consumer sales with lower margins, and tight commodity prices, said Shannon Cross, an analyst with Cross Research. On the upside, the company is investing in key growth areas, she said.
"The biggest concern is a lack of leverage in the model," she said. "People had hoped to see more of that revenue upside fall through to the bottom line."
Segment by segment
Analysts say trends point to a hardware-driven uptick in IT spending during the recent holiday months. Notebook and desktop computer sales together account for more than half of Dell’s revenue.
Dell reported a 16% year-over-year jump in laptop sales and a 3% drop in revenue from desktops.
Overall, consumer sales were up 11%. That’s better than expected, Gladden said in the conference call. That said, operating margins in the consumer segment were below a target 1% to 2%, due to holiday discounts, he noted.
Software sales from Dell’s third largest division were flat. Meanwhile server sales rose 26%, while sales in Dell’s tech services division were up 51%, year-over-year.
The company’s acquisition of Perot Systems in November marked a strategic shift toward ramping up its technology services market share and taking on Hewlett-Packard (HPQ, Fortune 500) and IBM (IBM, Fortune 500).
Revenue from Dell’s public business unit jumped 16% to $3.8 billion, with sales from services more than doubling, due in large part from the Perot addition.
Dell’s number one rival HP reported results Wednesday that blew past Wall Street’s expectations. The company said earnings jumped 25% on 8% rise in sales.
"HP had a lot more room to cut costs that Dell did, and HP has seen far more of the revenue upside fall through to their bottom line. HP is more focused on the consumer, so they’ve benefited from consumer strength more than Dell has," Cross pointed out.
For the full year, Dell reported a 42% drop in earnings and a 13% drop in sales over the year before.
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