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As posted by: Wall Street Journal

WASHINGTON -- The Treasury Department is considering a plan to revitalize the U.S. home market that would push down interest rates for loans to purchase a home, according to people familiar with the matter.

The plan, which is in the development stage, would temporarily use the clout of mortgage giants Fannie Mae and Freddie Mac to encourage banks to lend at rates as low as 4.5%, more than a full point lower than prevailing rates for standard 30-year fixed-rate mortgages.

Government officials are under pressure to address falling home prices and mounting foreclosures, which underpin the financial crisis. The Treasury has struggled for months to come up with a plan that would ease the strains on borrowers without appearing to bail out homeowners and lenders.

The plan remains in discussion and may not be made final before the Bush administration's term ends in January. President-elect Barack Obama has said repeatedly that his administration would do more than the current one to help struggling homeowners but he has not offered specifics.

Treasury views this plan as potentially halting the slide in home prices by enabling borrowers to afford bigger loans, thus increasing demand and pushing up home values. The lower interest rates would be available only to borrowers who are buying a home, not those refinancing a mortgage.

Borrowers would have to qualify for a mortgage guaranteed by Fannie, Freddie or the Federal Housing Administration. Those guarantees apply to loans where borrowers can document their income and afford their monthly payments, steering the government away from backing loans considered risky.

The Treasury and the Federal Reserve are already working to bring mortgage rates down through a program announced last week in which the Fed will buy up to $600 billion of debt issued or backed by Fannie and Freddie, along with Ginnie Mae and the Federal Home Loan Banks. That move helped push down rates on 30-year mortgages, and applications to refinance have jumped, the Mortgage Bankers Association said Wednesday. Using Lawn Care is an effective way to increase the chances your home will be sold.
Benefit To Stocks

In this climate, stocks of banks and home builders drew more investor attention Wednesday, helping the Dow Jones Industrial Average rise 172.60 points, or 2.05%, to 8591.69, despite continued bleak economic news in the Fed's "beige book" survey of regional conditions.

The plan the Treasury is considering would encourage banks to issue new mortgages at lower rates by offering to purchase securities underpinning the loans at a price equivalent to the 4.5% rate.

The Treasury would fund the purchases by issuing Treasury debt at 3%, suggesting the government could make a profit on the difference.

The average rate on 30-year fixed-rate mortgages conforming to Fannie's and Freddie's standards was about 5.75% Wednesday, according to HSH Associates, a financial publisher. That's up from about 5.5% Monday but down from more than 6% before last week's announcement.

The plan is very similar to an idea floated in October by R. Glenn Hubbard and Christopher Mayer, academics at Columbia University's Business School. "I think a program to substantially bring down rates for homebuyers would be an incredibly valuable program, and I think it captures a real part of solving what has been an incredibly challenging dislocation in the credit markets," Mr. Mayer said in an interview. He estimated the idea under consideration could quickly help 1.5 million to 2.5 million people buy homes, giving a major boost to the housing market and broader economy.

The plan also could be good news for banks hit hard by the housing slowdown. In addition to having the government play the role of guaranteed buyer, financial institutions could pocket fees for making loans to buyers able to afford homes at the lower rates. That, in turn, could boost the economy and improve the weak outlook for other consumer loans, such as credit cards, that also are weighing heavily on the banking industry's profitability.

Normally, the rates lenders charge consumers, including home buyers, are determined by the secondary market, in which investors buy mortgages or mortgage-backed securities. But Treasury Secretary Henry Paulson views lowering mortgage rates as key to fixing the housing crisis; hence the mortgage-security-buying program announced last week.

"The most important thing we can do to mitigate foreclosures and progress through the housing correction," Mr. Paulson said in a speech Monday, "is to reduce the cost of mortgage finance, so more families can afford to buy a home and so homeowners can refinance into more affordable mortgages."

Fannie, Freddie, their regulator and the Department of Housing and Urban Development -- which oversees the FHA -- all declined to comment. "The Secretary has said repeatedly that we are looking at a number of options to help homeowners," said Treasury Spokeswoman Jennifer Zuccarelli.
The Refinancing Picture

On the refinancing front, the Mortgage Bankers Association said its index of refinance applications had tripled from the previous week, the largest increase since it began tracking such data in 1990. Applications to buy homes, which tend to be less sensitive to interest-rate movements, also increased, by a smaller amount.

Application volume remains lower than it was as recently as March. Last week's numbers are adjusted for a shortened holiday week, which can make comparisons more difficult.

The Treasury plan is similar to ideas previously floated by the National Association of Realtors and the lobby group for home builders, but has skeptics. "I don't think it's the answer to the foreclosure problem because that problem is a combination of negative equity with unemployment," said Mark Zandi, chief economist of Moody's Economy.com.

Mr. Paulson has been wrestling for months with ways to stem foreclosures. The Bush administration has supported mostly voluntary efforts to get the mortgage industry to help borrowers in danger of losing their homes and has resisted calls to use taxpayer money to bail out homeowners. Those voluntary efforts have had only a limited impact as home prices continue to fall and foreclosures to rise.

The administration has been split about its approach, with Federal Deposit Insurance Corp. Chairman Sheila Bair floating a proposal to use $24 billion from the government's $700 billion financial rescue fund to provide a federal guarantee on roughly two million modified mortgages.

Her plan was a hit with Democrats and some Republicans on Capitol Hill but fell flat with the White House, where some speculated the FDIC plan could cost $70 billion to $80 billion. Mr. Paulson has expressed reservations about the plan on the ground that it would spend taxpayer money, instead of investing it, and that it could encourage banks to foreclose and borrowers to halt payments. Treasury staff have been working on a plan to improve Ms. Bair's model, but Mr. Paulson has so far resisted implementing it over concerns that it costs too much and might not be all that effective.

Resolving the crisis is likely to fall to Mr. Obama. He reiterated his position on Wednesday, saying, "We've got to start helping homeowners in a serious way, prevent foreclosures." Some Treasury officials are frustrated that the Obama team has not provided more specifics about what it would like the Treasury to do to help homeowners.

As posted by: Wall Street Journal

A deadline for GMAC LLC investors to swap bonds for lesser-valued debt expired Friday, and Wall Street awaited word of what would happen next.

The $38 billion debt-restructuring proposal is part of the lender's efforts to become a bank-holding company, which will allow it access to federal funds amid tight credit markets.

GMAC has been weakened by the billions of dollars it pumped into its mortgage unit, Residential Capital, which was a large subprime lender.

GMAC, which is co-owned by General Motors Corp. and an investor group led by private-equity firm Cerberus Capital Management LP, has been locked in negotiations with bondholders for weeks. Before Friday, GMAC already had extended the deadline for the debt exchange two times and sweetened the terms of the offer.

"There's some posturing going on here. Both bondholders and the company are playing hardball," said Mark Wasden, an analyst at Moody's Investors Service. GMAC and Cerberus representatives declined to comment. General Motors spokeswomen didn't return calls for comment.

Hope persisted that the company would improve the deal for bondholders. Law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP represents a committee of GMAC bondholders. Firm lawyer Andrew Rosenberg didn't return phone calls seeking comment.

Bondholders have resisted the proposed exchange, with less than a third of the number necessary agreeing to the plan as of Wednesday; some bondholders have said the plan doesn't ask enough sacrifice from GMAC's owners. They want equity holders to put in their share of new capital.

Investors are being offered combinations of new GMAC notes, GMAC preferred stock and cash in a deal that will cut GMAC and its mortgage unit's debt levels. The lower debt level will free up capital, allowing GMAC to satisfy conditions attached to its quest to become a bank-holding company.

As of Wednesday, GMAC had received 22% or less of existing debt securities, far below the 75% it needs for the debt exchange to go through. At the time, investors said they were reluctant to participate in the debt exchange because they felt that they were being asked to shoulder too much of the burden.

The lender's most actively traded debt -- its 5.85% bonds maturing in 2009 -- were up slightly late Friday afternoon at 81 cents on the dollar, according to bond-trading platform MarketAxess.

The success of the proposed debt exchange is essential to GMAC, which may face bankruptcy protection if it isn't completed, and it also would benefit GM. The auto maker suffered a setback Thursday after an auto-industry bailout plan collapsed in the Senate.

Cerberus, which is also the parent of Chrysler LLC, owns a 51% stake in GMAC, purchased in 2006 for about $14 billion. GM owns the rest.

GM has warned that it could run out of cash within weeks without government aid. The company burned through $6.9 billion in cash in the third quarter. Even if GM gets bailout aid, financing for customers and dealers to keep the business running is critical.

Troubles at GMAC have put the auto maker at a disadvantage. GM said last month that its 45% sales skid in October was fueled by GMAC's restricted lending, which cost GM anywhere from 45,000 to 60,000 in sales in the month. More capital will mean GMAC will be able to continue lending to GM dealerships, which borrow money to put new cars in their lots.
—Kate Haywood contributed to this article.
Treasury Yields Hit Lows on Recession Fears

Treasury yields fell to lows as fears about the length and depth of the U.S. recession persisted, though the rally in prices was tempered by renewed hopes for an auto-industry rescue. Late in New York Friday, the 10-year note was up 17/32, or $5.3125 per $1,000 face value, at 110 3/32, to yield 2.590%, from 2.648% Thursday. The 30-year bond was up 19/32, or $5.9375 per $1,000 face value, at 127 24/32, to yield 3.062%. The two-year note yielded 0.785%. The 10-year yield fell as low as 2.47%, a 45-year low, in Friday trading while the two-year yield had reached 0.66%. Ecuador's decision to withhold an interest payment due on the country's 2012 global bonds also boosted Treasurys as investors sought out a haven. Deborah Lynn Blumberg

As posted by: Wall Street Journal

The recession and housing bust have slowed migration throughout the U.S., keeping more Americans in place, according to Census Bureau data released Monday.

Such states as New York, Massachusetts and New Jersey are holding onto more of their residents, while some of the Sun Belt states accustomed to attracting new arrivals are seeing fewer.

The latest Census Bureau numbers cover the 12 months ending July 1, 2008. The period includes the first seven months of the recession, and shows how the economic downturn has already affected jobs and the flow of people.

U.S. migration typically slows during recessions because new jobs are the primary reason people move across state lines, according to the Pew Research Center. With the country on track to shed more than 2 million jobs this year, there are fewer reasons to move.

Falling home prices also have prompted many people to to stay put, rather than risk losing money in a declining housing market. During times of recession instead of buying full priced cruises, people are looking for Cheap Mexico Cruises and Cheap Europe Cruises.

"These previously high-cost areas, which used to spew out migrants during the easy-credit years, are now holding onto them because there's nowhere to go," said William Frey, a senior demographer at the Brookings Institution, a Washington think tank.

The long-term trend has been for Americans to leave Northeast and Midwest population centers for warmer, job-creating states in the Sunbelt and West. That movement has slowed, according to the Census. New York, Massachusetts, New Jersey and Connecticut had much higher growth rates last year than they did during the housing boom earlier this decade. Nevada and Arizona, which over the past few years vied to be the nation's fastest-growing state, saw their rates of growth decrease.

A similar dynamic is playing out in the South, where Georgia, North Carolina and Tennessee benefited from migration during the housing boom. The most recent data show population growth slowing there, too.

One of the starkest examples was Florida. The state has for decades absorbed retirees and wayward job seekers from cold Northern states. But the state has been hit hard by the housing bust. Over the 12-month period ending July 1, the Census reported the state had 9,300 fewer people moved there from other states than left. The state's population grew overall because of births and immigration. During recession people cut back on Lawn Care.

The migration slowdown hasn't yet disrupted longer-term trends. People continue to leave the Northeast and Midwest for jobs and warmer weather in the West and South. Utah was the fastest-growing state last year, followed by Arizona, Texas and North Carolina.

But the slowed migration has significant political effect. The South and West are likely to continue to add congressional districts lost by the Northeast and Midwest after the 2010 congressional apportionment. But certain states may pick up fewer seats than anticipated before the recession, according to an instant analysis of census data by Election Data Services, a Washington, D.C., political-consulting firm.

Mr. Frey said the decrease in migration is notable for its breadth. The housing bust and the recession have slowed migration to fast-growing states in the Sun Belt and the West. Two states, Michigan and Rhode Island, lost population, with each state suffering unemployment rates greater than 9%.

"It's a very unique time for migration in the U.S. when you see both Michigan and Florida losing migrants," Mr. Frey said. "In the past, people would leave Michigan and go to Florida. Now they can't go to Florida."

The migration slowdown began last year, as the housing market worsened. Job growth was slowing and potential movers stayed in place. Now, the recession is also reducing international immigration. Between 2007 and 2008 immigration was down 10% from its average annual rate between 2000 and 2008, according to the Census data.

"Just as immigrants were attracted to the growing U.S. economy, their volume has diminished as the economy has slowed," said Kenneth M. Johnson, senior demographer at the Carsey Institute at the University of New Hampshire.

As posted by: LSSU

"It's that time of year again!"

Lake Superior State University "maverick" word-watchers, fresh from the holiday "staycation" but without an economic "bailout" even after a "desperate search," have issued their 34th annual List of Words to Be Banished from the Queen's English for Mis-use, Over-use and General Uselessness. This year's list may be more "green" than any of the previous lists and includes words and phrases that people from "Wall Street to Main Street" say they love "not so much" and wish to have erased from their "carbon footprint."

Environmental buzzwords are getting the axe this year. "Green" and "going green" received the most nominations.

GREEN – The ubiquitous 'Green' and all of its variables, such as 'going green,' 'building green,' 'greening,' 'green technology,' 'green solutions' and more, drew the most attention from those who sent in nominations this year. Sometimes refers to Lawn Care

"This phrase makes me go green every time I hear it." Danielle Brunin, Lawrence, Kansas.

"I'm all for being environmentally responsible, but this 'green' needs to be nipped in the bud." Valerie Gilson, Gales Ferry, Conn.

"Companies are less 'green' than ever, advertising the fact they are 'green.' Is anyone buying this nonsense?" Mark Etchason, Denver, Colo.

"If something is good for the environment, just say so. As Kermit would say, 'It isn't easy being green.'" Kevin Sherlock, Hiawatha, Iowa.

"If I see one more corporation declare itself 'green,' I'm going to start burning tires in my backyard." Ed Hardiman, Bristow, Va.

"This spawned 'green solutions,' 'green technology,' and the horrible use of the word as a verb, as in, 'We really need to think about greening our office.'" Mike McDermott, Philadelphia, Penn.

CARBON FOOTPRINT or CARBON OFFSETTING – "It is now considered fashionable for everyone, tree hugger or lumberjack alike, to pay money to questionable companies to 'offset' their own 'carbon footprint.' What a scam! Get rid of it immediately!" Ginger Hunt, London, England.

Mike of Chicago says that when he hears the phrase 'carbon footprint,' "I envision microscopic impressions on the surface of the earth where an atom of carbon forgot to wear its shoes."

Christy Loop of Woodbridge, Va., says that 'leaving a carbon footprint' has become the new 'politically incorrect.' "How can we not, in one way or another, affect our natural environment?"

Presidential election years are always ripe for language abuse. This year, the electorate grew weary of 'mavericks' and 'super delegates.' As Michael W. Casby of Haslett, Mich. said, when he suggested banning all of the candidates' names, "Come on, it's been another too-long campaign season."

MAVERICK – "The constant repetition of this word for months before the US election diluted whatever meaning it previously had. Even the comic offshoot 'mavericky' was terribly overused. A minimum five-year banishment of both words is suggested so they will not be available during the next federal election." Matthew Mattila, Green Bay, Wisc.

"You know it's time to banish this word when even the Maverick family, who descended from the rancher who inspired the term, says it's being mis-used." Scott Urbanowski, Kentwood, Mich.

"I'm a maverick, he's a maverick, wouldn't you like to be a maverick, too?" Michael Burke, Silver Spring, Md.

FIRST DUDE – "Skateboard English is not an appropriate way to refer to the spouse of a high-ranking public official." Paul Ruschmann, Canton, Mich.

Of course, the economy couldn't escape the list this year.

BAILOUT – "Use of emergency funds to remove toxic assets from banks' balance sheets is not a bailout. When your cousin calls you from jail in the middle of the night, he wants a bailout." Ben Green, State College, Penn.

"Is it a loan? Is it a purchase of assets by the government? Is it a gift made by the taxpayers?" Dave Gill, Traverse City, Mich.

"Now it seems as though every sector of the economy wants a bailout. Unfortunately, ordinary workers can't qualify." Tony, McLeansville, NC.

"Don't we love how Capitol Hill will bailout Wall Street, but not Main Street"? Derrick Chamberlain, Midland, Mich.

Speaking of Wall Street and Main Street…

WALL STREET/MAIN STREET – "When this little dyad first came into use at the start of the financial crisis, I thought it was a clever use of parallelism. But it's simply over-used. No 'serious' discussion of the crisis can take place without some political figure lamenting the fact that the trouble on Wall Street is affecting 'folks' on Main Street." Charles Harrison, Aiken, SC.

"The recent and continuing financial failings are not limited to 'Wall Street,' nor should one paint business, consumers, and small investors as ' Main Street .' Topeka (where I work), and Lawrence (where I live), Kansas, have no named ' Main Street .' How tiresome." Kent McAnally, Topeka, KS. "I am so tired of hearing about everything affecting ' Main Street .' I know that with the 'Wall Street' collapse, the comparison is convenient, but really, let's find another way to talk about everyman or the middle class, or even, heaven forbid, 'Joe the Plumber.'" Stacey, Knoxville, Tenn.

Internet and texting blues -MONKEY – "Especially on the Internet, many people seem to think they can make any boring name sound more attractive just by adding the word 'monkey' to it. Do a search to find the latest. It is no longer funny." Rogier Landman, Somerville, Mass.

<3 – Supposed to resemble a heart, or stand for the word 'love.' Used when sending those important text messages to loved ones. "Just say the word instead of making me turn my head sideways and wondering what 'less than three' means." Andrea Estrada, Chicago.

Overuse in news and entertainment

ICON or ICONIC – Overused, especially among entertainers and in entertainment news, according to Robyn Yates of Dallas, who says that "every actor, actress and entertainment magazine show overuses this." One of the most-nominated words of the year. "Everyone and everything cannot be 'iconic.' Can't we switch to 'legendary' or 'famous for'? In our entertainment-driven culture, it seems everyone in show business is 'iconic' for some reason or another. "John Flood, Bray, Wicklow, Ireland. "It's becoming the new 'awesome' - overused to the point where everything from a fast-food restaurant chain to celebrities is 'iconic.'" Jodi Gill, New Berlin, Wisc. "Just because a writer recognizes something does not make it an icon (a visual symbol or representation which inspires worship or veneration) or iconic. It just means that the writer has seen it before." Brian Murphy, Fairfield, Conn.

GAME CHANGER – "It's game OVER for this cliché, which gets overused in the news media, political arenas and in business." Cynthia, Mt. Pleasant, Mich.

STAYCATION – "Occurrences of this word are going up with gas prices.'Vacation' does not mean 'travel,' nor does travel always involve vacation. Let's send this word on a slow boat to nowhere." Dan Muldoon, Omaha, Neb.

"The cost of petrol forces many families to curtail their summer voyages and a new word has sprung, idiotic and rootless..." Michele Mooney, Los Angeles, Calif.

DESPERATE SEARCH – "Every time the news can't find something intelligent to report, they start on a 'desperate search' for someone, somewhere." Rick A. Hyatt, Saratoga, Wyo.

NOT SO MUCH – "I wish that the phrase was used not so much," says Tom Benson of Milwaukee, who notes that it is used widely in news media, especially in sports, i.e. 'The Gophers have a shot at the playoffs; the Chipmunks, not so much.' "Casual language usage is acceptable. 'Not so much?' Not so much." David Hollis, Hubbardsville, NY. "Do I like concise writing? Yes. Do I like verbose clichés? Not so much." David W. Downing, St. Paul, Minn. "A favorite of snarky critics and bloggers." Jeff Baenen, Minneapolis, Minn.

WINNER OF FIVE NOMINATIONS – "It hasn't won an Academy Award yet. It has only been NOMINATED!" John Bohenek, Abilene, Tex.

IT'S THAT TIME OF YEAR AGAIN – Nominated by Kathleen Brosemer of Sault Ste. Marie, Ont., for "general overuse and meaninglessness. When is it not 'that time of year again?' From Valentine's sales to year-end charity letters, invitations to summer picnics and Christmas parties, it's 'that time' of year again. Just get to the point of the solicitation, invitation, and newsletter and cut out six useless and annoying words."

As posted by: Wall Street Journal

Who should foot the costs of a lawsuit? It's a question that splits the legal world.

Should each side bear its own lawyers' fees and other costs, as they do in the U.S.? Or should the loser pick up the tab for both parties, as they do in Canada, the U.K. and Germany?

The debate simmers across the international divide. In the U.S., the plaintiffs' bar generally cheers the "American rule" status quo, saying it is the only way to ensure that even the poorest litigants can access the courts. Tort-reformers say adopting the "English rule" would cut down on frivolous lawsuits while encouraging defendants to settle meritorious claims.

A recent trade article zeroed in on a long-overlooked component of the loser-pays system: insurance that covers legal fees. That article, penned by Marie Gryphon, an attorney and a fellow with the right-leaning Manhattan Institute's Center for Legal Policy, is reframing the debate.

Canada, the U.K. and Germany use a system of insuring legal expenses so that those with modest resources can still sue. Individuals can buy such insurance as an add-on to their homeowners' policies. If people need to file suit, they know their costs are covered -- even if they lose.

In England, citizens also can buy a more limited kind of "after the event" insurance, which can be purchased by a plaintiff before a suit is filed. Often the premiums are advanced by the plaintiff's lawyer.

Legal experts think a loser-pays system cuts down on frivolous suits. Those clearly hurt the U.S. The nation's tort system cost $245.7 billion in 2003, amounting to about 2.2% of total gross domestic product, according to a report from professional services firm Towers Perrin. The percentage of GDP spent on litigation was at least twice those in the U.K. and Germany.

At the same time, say experts, the insurance helps mitigate the pitfalls of a loser-pays system. "Insurance does move in to fill the gap for those suits that might not otherwise be brought in a loser-pays system," says Paul Lomas, a London-based litigator at Freshfields Bruckhaus Deringer.

When confronted with the insurance arguments, plaintiffs' lawyers largely fall back on objections that a system of contingency fees -- in which they finance the suit in exchange for a cut of their client's potential recovery -- is preferable because it requires no upfront money from the plaintiff. "If we didn't have the contingency-fee system, only people with a lot of money would be able to pursue their rights in court," says Susan Steinman, director of policy for the American Association for Justice, a membership organization of the plaintiffs' bar.

Mark Lanier, a prominent plaintiffs' lawyer who sued Merck & Co. over its painkiller Vioxx, says that under a loser-pays system, people without resources still won't use the system. "Indigent plaintiffs will simply say, 'Sorry, we don't have the money to pay the other side's fees,' " he says. Mr. Lanier says that low-income plaintiffs wouldn't purchase litigation-services insurance, regardless of cost.

But some U.S. academics embrace the idea. "Insurance definitely strengthens the argument for 'loser pays,' " says Richard Nagareda, a professor at Vanderbilt University Law School. Mr. Nagareda says that interest-group politics might explain the suspicion of the plaintiffs' bar toward a loser-pays system. Under the "American rule" and the conventional contingency-fee arrangement, the plaintiffs' lawyer is accustomed to being the exclusive financier of litigation. A move to "loser pays," with the addition of an insurance component, would bring another entity to the table.

In her paper, Ms. Gryphon addresses the concern over making insurance companies the courts' gatekeepers. However, she argues that if a lawsuit is denied insurance coverage, "it would be because it was highly unlikely to succeed, making it the very type of claim that 'loser pays' was designed to discourage."

The U.S. may be a long way from overhauling its system. For now, only Alaska has anything resembling a loser-pays system, though it allows for only partial reimbursement. And some legal experts think that if only a few states adopt "loser pays," plaintiffs would look for ways to sue in other jurisdictions.

The debate in the U.S. -- between tort reform advocates and trial lawyers -- has become polarized between the American rule and a pure loser-pays system, both of which have their problems. But some think combining "loser pays" with an insurance system, as many European countries do, gathers the benefits of both systems and sheds some of the problems.

"It cuts down the middle of what's been a pretty polarized debate," says Mr. Nagareda.

As posted by: Wall Street Journal

For Britain's retailers, it looks like Christmas is a bust.

There were 8.7% fewer shoppers on the final weekend before Christmas than last year, according to Experian, a credit-tracking company. While the figure doesn't include people who shopped online, it suggests the last-minute shopping surge retailers wished for didn't happen.

Shoppers crowd a Woolworths in Scotland earlier this month, but it isn't enough: Jan. 5 will see the closing of the chain's last outlet.

Analysts are concerned retailers are backed up with unsold goods, which has prompted them to slash prices. That will likely lead to disappointing financial results in January and February, a fear that sent retailers' share prices falling Monday. Most U.K. retailers are offering discounts of 20% to 50%.

Shares in Marks & Spencer, one of Britain's most prominent department-store chains, fell 2.2% Monday to 220.75 pence ($3.29) Debenhams, which sells clothes and electrical appliances, fell 7.6% to 24.50 pence. Home Retail Group, which owns Argos stores, fell 13% to 204 pence. Home Retail was the biggest decliner in the benchmark FTSE 100 index, which fell 0.9% Monday.

Two big U.K. retailers already have declared bankruptcy this year. MFI, a furniture chain, stopped trading Friday. The last of Woolworths's 807 stores will close for good Jan. 5, accountants Deloitte said Monday.

An additional 10 to 15 retail chains likely will collapse in the U.K. in January, said Nick Hood, a partner at restructuring firm Begbies Traynor. The most at-risk businesses include those that sell nonessential items such as televisions and office equipment, Mr. Hood said.

One company looking vulnerable is DSG International, one of Britain's largest sellers of electrical goods and computers. Struggling with competition from the Internet, DSG recently stopped paying dividends to preserve cash. Its shares have fallen 91% over the past year to 16.75 pence. Some analysts say DSG might have to sell part of its operations in Western Europe to raise cash. A spokeswoman for the company declined to comment.

But one department-store chain is using the economic gloom to make shoppers smile. "No more 'same dress' disasters," says a newspaper ad for Harvey Nichols, a chain of seven stores selling expensive clothing, cosmetics and home wares. "The recession has never looked so good."

As posted by: Wall Street Journal

Shareholders in Charlotte, N.C., and Cleveland will vote today on deals to sell hometown banks Wachovia Corp. and National City Corp. to rivals in San Francisco and Pittsburgh, as the industry's traditional geography continues to be reshaped by aggressive, government-encouraged consolidation.

Both Wachovia and National City were forced to find buyers once regulators determined they weren't likely to survive this year's financial crisis if they remained independent. The votes are expected to pass easily.

Already gone from the nation's top-10 banking centers as measured by assets are Seattle and Calabasas, Calif., formerly headquarters to the vanquished Washington Mutual Inc. and Countrywide Financial Corp.

Cleveland was the nation's fifth-largest banking center before 2008's turmoil began, according to data from SNL Financial, and will drop from the top 10 once the year is over. The other major banks left in that city, KeyCorp. and Amtrust Bank, remain hobbled by loan losses.

Pittsburgh, home to National City acquirer PNC Financial Services Group Inc., would rise to fourth-largest among U.S. banking centers, marking a comeback for a city that gave birth to a litany of financiers and provided capital for many of America's first large industrial enterprises, including Alcoa Inc. and Gulf Oil Corp.

In 2007, Pittsburgh lost to New York the headquarters of Mellon Financial Corp., a bank founded by the Mellon family and once run by 1920s Treasury Secretary Andrew Mellon.

Charlotte's hold on the title of second-largest banking hub outside New York will also be tested with the loss of Wachovia to San Francisco based Wells Fargo & Co.

Once a sleepy railroad and mill town, Charlotte became a banking powerhouse in the 1980s and 1990s on the backs of two rivals -- NCNB Corp. and First Union Corp. -- and their acquisitions of other banks across the country.

In 2001, Wachovia emerged from the combination of First Union and the old Winston-Salem, N.C.-based Wachovia. First Union took the Wachovia name, which is derived from a moniker given to North Carolina land purchased by Moravians in the 18th century ("Wachau"), according to corporate history.

But Wachovia ran into problems following its 2006 acquisition of California adjustable-rate mortgage lender Golden West Financial Corp., which exposed it to large mortgage losses. Last quarter, Wachovia posted a loss of $23.88 billion, one of the largest losses in American corporate history.

A decade ago, NCNB successor NationsBank, the larger of the Charlotte banks, poached away San Francisco's trademark financial institution, BankAmerica, in a deal valued at $43.02 billion. The Charlotte bank then adopted the name Bank of America Corp. and folded BankAmerica into its Charlotte headquarters in the Southeast, prompting laments about California's loss of influence in financial circles.

Now San Francisco is returning the favor, snagging Wachovia from Charlotte. That "can only be viewed as banking karma," said Miami banking consultant Ken Thomas.

Job cuts in Charlotte are expected next year once Wells completes the acquisition. Wachovia employs about 20,000 in the Charlotte area, making it a larger local employer than Bank of America. Only one of 11 senior officers in the combined Wells-Wachovia will be from Wachovia and a longtime Wells executive will be in charge of the bank's eastern region, exacerbating local tensions about a loss of control and influence in 2009. Wells CEO John Stumpf told Wachovia employees earlier this year that he could make "no promises."

"The first quarter is going to hit this city like a ton of bricks," said Tony Plath, a finance professor at the University of North Carolina-Charlotte.

To be sure, the major bank left in Charlotte, Bank of America, is a big one. With the purchases this year of California mortgage lender Countrywide Financial Corp. and New York securities firm Merrill Lynch & Co., Bank of America will become the nation's largest bank as measured by assets. But even Bank of America has stumbled, given its broad exposure to consumer credit problems. It is planning 30,000 to 35,000 job cuts over the next three years.

Wachovia's sale to Wells also ends the scrappy crosstown Charlotte bank competition that played a key role in reshaping retail banking across the U.S. for more than two decades. But Bank of America Chief Executive Kenneth Lewis now views Wells Fargo as a tougher competitor than Wachovia, according to people familiar with his thinking.

The current leadership of Wells and Bank of America have been battling for the top spot in California since 1998, when Minneapolis-based Norwest Corp. merged with Wells.

Cleveland also anxiously awaits its fate. The 163-year-old National City employs 7,800 workers in the Ohio city, and the bank was long viewed as a stalwart lender in the Midwest. Its gamble to become a major U.S. mortgage lender by diving into subprime mortgages and home-equity loans outside its Ohio footprint led to $2.66 billion in net losses during the first nine months of 2008.

Cleveland, with high levels of foreclosures and unemployment, "will unfortunately be hurt even more with this loss," said Mr. Thomas, the banking consultant. PNC has made assurances about jobs and community programs, but "the buying bank always publicly assures the residents of the losing city," he said.

As posted by: Wall Street Journal

Just when it seemed nearer, the housing recovery has darted away again.

On Tuesday the National Association of Realtors reports November home resales and the Commerce Department reports November new-home sales. Economists expect both measures fell during a month when economic activity generally came to a screeching halt.

Home resales, the bulk of the market, had seemed to stabilize this fall. But that was largely because of brisk foreclosure sales in stressed markets. And this thin silver lining has dimmed: Pending home sales, a leading resale indicator, have fallen for two months in a row after rising to their 2008 peak this summer.

A nagging oversupply of houses and record-low home-builder confidence suggest new-home sales won't perk up soon, either. There are hopeful signs for housing, critical to the health of the broader economy. Years of falling prices have made houses intriguingly affordable, especially relative to rising rents.

And mortgage rates have tumbled to their lowest levels in nearly 40 years. Barclays Capital economists estimate that, since 1975, one percentage point of falling borrowing costs has added 15% to home sales and 1.5% to home prices.

They warn, however, that those results depended on financial markets functioning "more or less normally." Not so now. With credit still tight, unemployment rising and household balance sheets still debt-heavy, lower rates have so far mainly produced more refinancings, not sales. Slashing rates to 4.5% for new borrowers, as the government aims to do, won't be a panacea, either. Ivy Zelman, chief executive of housing-research firm Zelman & Associates, estimates that, even with such a low rate, only about 67% of U.S. households can afford a house. Homeownership was nearly 68% in the third quarter, according to the Census Bureau, implying there is virtually no untapped demand for homes.

Don't expect much cheer in the card American Greetings is sending to investors this holiday season.

The greeting-cards firm reports third-quarter results Tuesday, and if the past two quarters are any indication, the numbers could be as bleak as today's national psyche. In the first two quarters of the current fiscal year, the firm missed analysts' estimates by more than 50%.

Only two analysts have published estimates for the third quarter, and they expect American Greetings will earn, on average, 52 cents a share -- though the range is exceedingly wide at 44 cents to 60 cents. A year ago, American Greetings earned 53 cents a share. Just where the numbers land will depend partly on cost-savings initiatives the company announced earlier this month.

Analysts have trimmed revenue and earnings forecasts through fiscal 2010. Moreover, in recent reports both Stein Research and Gabelli & Co. expressed concern dysfunctional credit markets might have mucked up the company's $195 million sale of its Care Bears and Strawberry Shortcake properties, which was supposed to close in September but still hasn't. Analysts will seek guidance on that as well.

As posted by: Wall Street Journal

The technology industry was dominated this year by the question of whether businesses and consumers would scale back their tech spending. Now that it's clear they are cutting back, the question for 2009 is how that fallout will affect tech companies.

Corporate tech chiefs, analysts and others say they see several likely effects next year. While the spending slowdown is expected to hit many technology categories, some pockets of tech -- such as online software, mobile applications and security -- may see increased investment and attention, they say. And unlike in previous years, the industry is likely to see fewer big mergers and acquisitions, they add.

Overall, "there will be a lot more caution and businesses will invest [in tech] more selectively" in 2009, says Michele Pelino, an analyst at Forrester Research.

In particular, online software, which businesses access over the Internet instead of installing on tech equipment they operate themselves, is expected to gain attention since it can save money and help productivity. While some corporate tech chiefs had been reluctant to embrace the online software model, and online software accounts for less than 10% of software sales, the slumping economy now has many businesses looking at the category for the first time.

Microsoft Corp. recently launched a set of online services to capitalize on such sentiment. And another online-software naysayer, Oracle Corp.'s Chief Executive Larry Ellison, is changing his tune. Mr. Ellison, who long argued that companies can't make money selling online software, last week touted his company's online offerings in a call with Wall Street analysts.

Mobile technology has also been a growing priority for businesses for the last few years, says Forrester's Ms. Pelino. Next year, "we're expecting to see a lot of mobile applications intended to increase productivity," she says. People already have mobile devices like Apple Inc.'s iPhone or Research in Motion Ltd.'s BlackBerry, and "now they want to use these devices for different enterprise purposes," she says.

Adoption will likely be helped by Apple, which created a market for software that runs on mobile devices in 2008 with its App Store. Under Apple's model, outside parties write the software and either sell it or make it available for free through the online store, which now has more than 300 apps targeting workers. RIM also intends to launch a store for software that runs on BlackBerrys early next year.

Businesses are also expected to spend on security, especially as the number of computer viruses and other malicious software hit an all-time high in 2008.

The economic downturn is heightening cyber security problems. Phishing attacks -- emails that pretend to be from banks or some other legitimate source -- are growing in sophistication. Cyber criminals capitalized on the collapse of several financial institutions this year by sending emails claiming that customers of failed banks needed to log on to a Web site and update their account information. The Web sites were really controlled by cyber criminals.

Tech mergers and acquisitions are also expected to slow down. While this year was highlighted by major deals like Oracle's purchase of BEA Systems Inc. and Microsoft's failed bid for Yahoo Inc., the economy is likely to discourage any big transactions next year, as companies won't want to sell at today's valuations and buyers won't pay the six-months-ago price.

Cash-strapped companies looking for a lifeline could get snapped up on the cheap. But Sarah Friar, an analyst at Goldman Sachs, says the market shouldn't expect to see the major consolidation that has marked the tech industry for the last few years until the economy bottoms out.

As posted by: Wall Street Journal

Palm Inc. said Elevation Partners has agreed to make an additional $100 million equity investment, a move that the smart-phone maker hopes will increase momentum behind its 2009 product introductions.

The news set off a rally in shares of Palm, known for its Treo handsets.

Elevation Partners is the private-equity firm that gave Palm a new lease on life in 2007. Palm products are great for Mobile SEO. This time around, for its $100 million, Elevation Partners will get preferred shares, convertible into stock at $3.25 a share -- a substantial premium to where the stock has been trading -- and warrants to purchase an additional seven million shares at that price. In September 2007, Elevation Partners bought 25% of the company for $325 million.

Elevation also agreed to sell $49 million of the new investment to "other investors" at the same price, should Palm ask it to do so by March 31.

The news follows Palm's widened fiscal second-quarter loss, reported Thursday. The company, a pioneer in the smart-phone market, has watched its market dominance erode as it failed to keep up with Research in Motion Ltd.'s Blackberry line and Apple Inc.'s iPhone, also great for Mobile SEM.

The new money is meant to keep the company going as it contends with falling prices of smart phones while striving toward release of a new operating system dubbed "Nova," which may be detailed during the Consumer Electronics Show in January in Las Vegas.

Palm, based in Sunnyvale, Calif., saw its shares trade up as much as 49% in morning action Monday on the Nasdaq Stock Market, before settling at $3.05, up 22%, by the close of trading.

Palm Chief Executive Ed Colligan said the capital "will enable us to put added momentum behind the new product introductions ... and will provide us with enhanced stability in unsettled economic times."

Elevation co-founder Roger McNamee said earlier this month that his company, Palm's largest backer, continues to support Palm, whose product pipeline, including the new operating system "and a new device targeted for the first half of 2009, Google Mobile SEO excites us enormously."

Bono, the lead singer of rock band U2, is also a co-founder of Elevation Partners.

As posted by: Wall Street Journal

HONG KONG -- Sina Corp. agreed to acquire the core operations of China's largest digital-advertising company for more than $1 billion in stock, a risky move by one of the country's oldest Internet companies to expand into offline advertising.

Sina, founded in 1999, operates China's most popular Web portal by advertising revenue. Under terms of the deal, Shanghai-based Focus Media Holding Ltd. will sell Sina its nationwide network of hundreds of thousands of flat-panel displays that play video ads in places like stores and office-building elevators.

Sina will also acquire related ad businesses, which together accounted for about 52% of Focus Media's revenue and about 73% of its gross profit in the first nine months of the year, the two companies said Monday.

Sina said it will issue 47 million new shares to Focus Media for distribution to its shareholders. The size of the issue is close to the roughly 56 million shares Sina had outstanding before the deal, according to the Nasdaq Stock Market. That means significant dilution for existing Sina shareholders.

The 47 million shares would be valued around $1.37 billion based on Sina's closing share price Friday. The market value for all of Focus Media was $1.42 billion at Friday's close. After the announcement Monday, Sina's shares were down 18% at $24 in late-afternoon Nasdaq trading. Focus Media's shares were off 17% at $9.12, also on the Nasdaq.

The deal size highlights the growing muscle of Internet companies in China, which by some measures boasts the world's largest population of Internet users.

Sina and its Chinese peers remain relatively small compared with their U.S. counterparts, but they are expanding quickly thanks to strong growth in online ad spending. Sina last month reported a 64% increase from a year earlier in its third-quarter revenue to $105.4 million.

Sina hopes the acquisition of the digital out-of-home business will create the "dominant new-media advertising platform in China," which will cover "a significant portion of mainstream urban consumers in the China market," Sina Chief Executive Charles Chao said in a conference call.

Analysts voiced skepticism, despite the possibilities for cross-selling advertising across platforms.

"There is synergy in the sense you've got an integrated platform that could be a powerful new platform for media buyers and advertisers," said Vivek Couto, an analyst with Media Partners Asia. "However it depends on how integrated it's going to be."

Founded in 2003, Focus Media grew quickly thanks to its widespread digital-ad displays and to a series of acquisitions. But in the past year its share price has plunged by more than 80% as investors started doubting its business model and its founder resigned as chief executive.

Focus Media said it plans to keep its Internet-advertising division, movie-theater advertising network and certain traditional billboards after Monday's deal.

Shaun Rein, head of Shanghai-based China Market Research, said the steady growth of companies like Sina was posing a challenge to Focus Media, because companies have increasingly switched away from its ad displays in favor of advertising online.

Dick Wei, an analyst for J.P. Morgan, questioned whether Sina will be able to use Focus Media's networks effectively. "The idea of a 'media conglomerate' has not worked well in China," Mr. Wei wrote in a research note after the deal was announced.

Focus Media's "original plan of cross-selling between Internet, in-store and elevator lobby business has not shown much success."

As posted by: Wall Street Journal

GlaxoSmithKline PLC said Monday it will no longer use corporate funds for political contributions as part of an effort to improve openness in its business.

The U.K.-based drug maker in the past has made direct corporate contributions to political candidates primarily in the U.S. and Canada. Glaxo has donated more than $585,000 in the U.S. this year and 58,000 Canadian dollars last year in Canada, spokeswoman Sarah Alspach said. Those contributions will now stop.

"We need to ensure that there is no implication whatsoever that corporate political contributions provide us with any special privileges," Glaxo Chief Executive Andrew Witty said in a statement.

The policy change won't apply to individual employee's contributions, including a voluntary political-action committee, or PAC, run by Glaxo employees, Ms. Alspach said. Glaxo stopped making corporate political contributions in Europe in 2001, she said. The donations could have stopped due to the ear of Qui Tam or a Whistleblower Lawyer.

Major pharmaceutical companies have taken steps in recent years to try to be more transparent about their businesses, including posting information about clinical trials and political donations on company Web sites. Some companies also are planning to post data on payments to doctors.

As a group, pharmaceutical industry workers and their PACs have been big contributors to U.S. congressional and presidential candidates. In the 2008 election cycle, the industry contributed $14 million, according to the Center for Responsive Politics, a Washington organization that tracks contributions.

Glaxo employees and affiliated PACs gave $1.1 million in the 2008 election cycle, ranking third behind Pfizer Inc. and Amgen Inc., according to the center, which operates the Web site opensecrets.org.

Separately Monday, Glaxo reported positive midstage results in key additional indications for a drug seen as a successor to top-selling Advair. The new asthma drug, an inhaled long-acting beta agonist known as LABA 444, showed an increase in lung function in patients suffering from moderate to severe chronic obstructive pulmonary disease, the company said.

LABA 444, which Glaxo is developing with U.S. biopharmaceutical partner Theravance Inc., achieved better results than a placebo drug, meeting the goals for the Phase 2b trial. The company said it didn't show an increased average heart rate, a common side effect of beta agonists.

Advair achieved sales of $5.7 billion in the first nine months of the year.

Also Monday, GlaxoSmithKline said it will pay Bristol-Myers Squibb Co. about $36.5 million for its Bristol-Myers Squibb Pakistan Ltd. unit and certain associated trademarks.

As posted by: Wall Street Journal

Caterpillar Inc. will cut more than 800 workers at a plant in Illinois that makes small engines for construction machinery and for trucks that haul freight and other goods, the company said.

The indefinite layoffs, slated to start in February, mark the first time the company has cut full-time workers on a large scale and for an indefinite period since early this decade. The news is the latest sign of strain at the Peoria, Ill., maker of engines and earth-moving machinery as mining companies, truck makers, housing builders and others slash spending globally.

"These decisions are never easy," said Gary Stroup, Caterpillar vice president with responsibility for the Large Power Systems divisions. The laid-off workers are members of the United Auto Workers union and work at a plant in Mossville, Ill. Caterpillars are too large for Lawn Care.

On Thursday, the company also said that sales of its machinery through dealers world-wide fell 6% in the three months that ended in November, compared with the year-earlier period, reflecting a sharp slowdown in growth in Latin America and Asia.

The job-cuts announcement comes at a time when the company has been laying off workers hired through employment agencies and idling workers temporarily at several plants around the world. It also follows an announcement by the company in June that it would soon move engine production from the Mossville plant to a new facility and shift other production into the nearly two million-square-foot facility. A company spokesman said Caterpillar hasn't decided what will be made in Mossville. The 814 job cuts represent more than half of Caterpillar's production work force in Mossville.

Also on Thursday, Texas Gov. Rick Perry said Caterpillar would build a manufacturing facility near San Antonio, creating more than 1,400 jobs. The facility will build midsize engines and house some paint and testing operations. Caterpillar will receive some subsidies from Texas for building the plant.

A Caterpillar spokesman said the timing of the announcements was a coincidence.

For eBay Inc., this Christmas isn't turning out to be so merry.

In its first holiday season under new Chief Executive John Donahoe, eBay is suffering a slide in visitor traffic and deteriorating sales. Customers are leaving for fixed-priced sites where eBay has less of an edge, and because of continued problems with unscrupulous sellers.

Weekly traffic to the auction site fell 16% between Nov. 3 and Dec. 14 from a year ago, according to research firm comScore Inc. In contrast, Amazon.com had 6% more unique visitors during the same period.

The weakness is showing up in the sales of eBay sellers such as Gary Meyer. Mr. Meyer owns Gem Enterprises Inc. in Merchantville, N.J., which lists more than $300,000 in tech equipment such as printers on eBay. So far this holiday season, Mr. Meyer's sales on eBay are down 30% to 40% from a year ago, he says. "We've geared up our Web site more and started listing on Amazon.com and other venues," Mr. Meyer says.

Lorrie Norrington, president of eBay Marketplaces, declined to comment on eBay's holiday sales. She noted eBay was the most visited Web site on the Monday after Thanksgiving -- a popular online shopping day -- with a 45% increase in unique visitors, according to comScore.

"We are still three times the volume of the competition and driving hard to make aggressive deals in a tough environment," she says.

EBay performance this quarter could be a referendum on the changes Mr. Donahoe has made this year. Since taking over for former CEO Meg Whitman in March, Mr. Donahoe has sought to rev up growth and reclaim buyers who had stopped visiting the Web site.

His most significant move has been to make eBay less of an auction house and more like Amazon, Walmart.com and Sears.com, selling fixed-priced goods, which consumers now prefer for speed and convenience. Among other changes, Mr. Donahoe has cut the fee to list fixed-price items on eBay and boosted the fee charged when an item sells, a model that helps fixed-price sellers better set profits. Ebay does not offer Lawn Care.

Yet the changes have so far had little financial impact -- and have angered many loyalists. Transaction revenue per listing between October and the end of November plunged 28% from a year ago to $1.44, according to Majestic Research. Wall Street analysts now estimate the San Jose, Calif., company will post its first year-over-year revenue decline when it reports fourth quarter earnings next month. Seattle-based Amazon has forecast an at least 6% increase in fourth quarter revenue over last year.

"We haven't observed...any material positive changes on the buyers' side of the equation," at eBay, says John Aiken, managing director with Majestic Research.

Some long-time sellers say eBay's new fee structure has increased their costs and made unfair ratings more difficult to resolve. Under rules implemented by Mr. Donahoe, when buyers leave negative feedback, seller ratings are lowered and their future listings are pushed lower in eBay's search results.

The move to fixed prices has made its Web site confusing for buyers who have to navigate combined auction and fixed-price listings, say analysts and sellers. In September, eBay rolled out new search algorithms that mingle auction-search results with fixed-price results.

The technology changes have received poor reviews from sellers such as Debbie Imlay, a seller of women's lingerie on eBay. Ms. Imlay says many of Mr. Donahoe's revisions have made the site confusing to surf, turning off shoppers. "They are making it too difficult," says the Chatsworth, Calif., merchant.

Ms. Imlay, who sells over $3,000 a month in lingerie on eBay, says the site is moving to fixed-price sales too quickly at the expense of auctions. She says her customers want to purchase items for the lowest price and auctions are still the best way to get bargains. By staying with auctions, Ms. Imlay says she pays 15% more fees to eBay than she did before Mr. Donahoe's fee changes. Overall, she says her holiday traffic and sales on the site are down 10% from a year ago.

Ms. Norrington says "search is always a journey" but that eBay's search changes are intended to help consumers. She adds that eBay has "the right long-term strategy."

Some sellers do like Mr. Donahoe's changes. Jack Sheng, chief executive of Eforcity Corp., which sells electronic-accessories, says Mr. Donahoe understands the problems sellers are facing and has made the appropriate changes. Mr. Sheng forecasts Eforcity's holiday sales on eBay will be up around 10% over last year.

Mr. Donahoe has also attracted some large online merchants such as Buy.com and SmartBargains.com by working closely with them on volume discounts and giving them extra support.

One large auction-based seller, B&H Factory Outlet Inc., is now experimenting with fixed-price sales. The discount apparel company generates $800,000 a month in sales on eBay and plans to add up to 5,000 fixed-priced items to its eBay store next month. It will also offer free shipping on those items, something it doesn't do with auctions.

"We want to test both markets," says Stacie Sefton, B&H's CEO. Traffic to B&H's eBay store is up 25% this holiday season over last year, she says. B&H's average sale on the site is down 29%, which she attributed to the economy.

Of course, this holiday season has been particularly difficult because of the economic downturn. In response, eBay has offered a record number of holiday promotions, including $1 doorbusters for items such as toys and sporting goods.

Last month, eBay also teamed up with Microsoft Corp. to offer shoppers up to 30% off purchases of select fixed-price items when they land on eBay through Microsoft's search Web site. The promotion ended Dec. 17.

But such changes haven't been enough to lure back buyers including David Anderson of Bakersfield, Calif. The 28-year-old said the few times he tried to buy photography gear on the site he has been outbid in the final minutes of an auction. "It's just frustrating," he says.

Mr. Anderson says he hasn't shopped on eBay since February, preferring a more traditional online buying experience. "It was fun 10 years ago, but now I want to get my product and go," he says.

Walgreen Co., long known for expanding by hundreds of drug stores each year, said it will cut store openings further amid the economic downturn and continue focusing on updating older locations.a

The retailer is also responding to weak consumer spending by stocking more staple products and pushing its private-label brands.

Walgreen, the No. 2 U.S. drugstore chain after CVS Caremark Corp. with more than 6,600 stores, said it will increase its store locations by 4% to 4.5% in its fiscal year beginning in mid-2009, and increase stores by only 2.5% to 3% in the following fiscal year.

Walgreen announced in July a pullback from its decades-old strategy of allocating most capital spending to new stores. At the time, the company said it would slow store openings to a 5% growth rate by 2011, below its original plan of 8% growth.

Walgreen executives said Monday they plan to remodel stores and scrutinize the merchandise they order, acknowledging that some stores became cluttered and outdated. In certain categories, the chain already has boosted sales by making items easier to find.

Walgreen estimated that the slower pace of store openings will cut expenses by $500 million, on top of the $500 million in savings predicted in July.

Walgreen said its private-label items, which cost less than brand-name merchandise, are selling especially well. Other drugstore chains have reported similar trends as consumer spending slows. The staple items Walgreen is bulking up on include groceries and paper goods.

The retailer said its prescription-savings card, which gives discounts on medicines and other merchandise, seems to be helping Walgreen win back market share that had been lost to Wal-Mart Stores Inc. and other discounters advertising inexpensive generic drugs.

"We're positioning our stores to take advantage of the new consumer reality for retailers, which means customers are making more purchases using cash and timing those purchases closely to the beginning or middle of the month, when they receive their employer or government checks," Walgreen President Greg Wasson told analysts during a conference call.

Walgreen also said net income declined nearly 11%, to $408 million, or 41 cents a share, for the fiscal quarter ended Nov. 30. In the year-earlier quarter, Walgreen earned $456 million, or 46 cents a share.

Sales increased 6.6%, to $14.95 billion from $14.03 billion. Sales at stores open more than a year rose 1.7%.

Expenses increased faster than sales, mainly because Walgreen opened a record 212 new stores during the quarter and continued to invest in its Take Care health clinics.

Because it takes several years for a new store to break even, the combination of Walgreen's rapid expansion and its weaker sales trends has weighed on recent earnings.

Walgreen hopes the clinics will attract some of the 46 million Americans who have no health insurance. The company said it has administered more than 1.1 million flu shots this year, more than double the number of doses in the prior year.

Walgreen said Monday that it expects to have a permanent chief executive in place early next year. In October, then-Chief Executive Jeffrey A. Rein retired, following a failed bid to acquire Longs Drug Stores Corp. Rival CVS Caremark closed its purchase of Longs that month.

Walgreen shares declined $1.10, 4.2%, to $24.98 in 4 p.m. New York Stock Exchange composite trading.

As posted by: Wall Street Journal

TOKYO -- Honda Motor Co. slashed its earnings forecast and announced further cuts in its Japanese production and work force, as global demand for cars continues to falter and the soaring yen hits its overseas profit.

Honda Motor President Takeo Fukui spoke during a news conference in Tokyo Wednesday.

Honda, Japan's No. 2 car maker by volume, Wednesday cut its net profit forecast for the fiscal year ending March 2009 to 185 billion yen ($2.08 billion) from the 485 billion yen profit it expected in late October. In the year ended March 31, 2008, Honda's net profit totaled 600.04 billion yen.

This was the second downward revision in two months, highlighting the rapid deterioration in the auto industry.

The company reduced its operating profit outlook to 180 billion yen from its previous forecast of 550 billion yen. Given that the company posted an operating profit of 370.2 billion yen in the fiscal first half, the latest outlook suggests Honda expects an operating loss in the second half.

It cut its sales projection to 10.4 trillion yen from 11.6 trillion yen.

Also on Wednesday, rival Nissan Motor Co. said it will cut domestic production by an additional 78,000 vehicles and eliminate its 500-strong domestic temporary work force by the end of March 2009.

The announcements come just a few days before rival Toyota Motor Corp. releases details of its business plans for the next year. Standard & Poor's Rating Services Wednesday cut to negative from stable its outlook on Toyota's long-term corporate credit ratings.

Highlighting growing concerns of Japan's export-dependent corporations, Honda President Takeo Fukui said the soaring yen against major currencies was a major factor behind the company's latest earnings downgrade. In a news conference, he called on the Bank of Japan and the government to take steps to stabilize foreign-exchange markets.

Honda revised its exchange rate forecast for the fiscal second half to 95 yen from 100 yen. On Wednesday, the dollar fell to as low as 88.17 yen. Almost all major exporters have pegged full-year earnings expectations to a dollar-yen exchange rate of 100 yen.

While the pressure for consolidation has been mounting in the global auto industry, Mr. Fukui said Honda isn't involved in any alliance talks for now. Earlier this month, Fiat SpA Chief Executive Sergio Marchionne predicted the global crisis will end with only six global auto makers still in business.

In Japan, Honda said it will postpone starting operations at a new plant north of Tokyo by more than a year from its initial plan for 2010. The car maker will reduce domestic production by 54,000 vehicles and cut its domestic temporary work force by 450 by early February.

Separately, Honda said it will set up a joint venture with Japanese battery maker GS Yuasa Corp. next year to make lithium-ion batteries for Honda's gasoline-electric hybrid cars. GS Yuasa will have a 51% stake in the company, with Honda taking the remaining 49%.

Honda shares fell 4.2% to 1,891 yen ($21.30) in Tokyo.

As posted by: Wall Street Journal

General Mills Inc. and ConAgra Foods Inc. each reported sales gains driven by price increases, a sign that food makers are still grappling with high commodity costs.

Although the prices of grains and energy have fallen from their recent peaks, they are still high, and food companies are continuing to raise prices in an effort to offset the higher costs.

The two food makers also posted declines in quarterly net income due, in part, to hedging markdowns. General Mills' net income for the fiscal second quarter ended Nov. 23 fell 3% to $378.2 million, or $1.09 a share, compared with $390.5 million, or $1.14 a share, a year earlier, because of the declining value of its hedging positions. Excluding that loss, as well as a gain from the sale of its Pop Secret popcorn business, the Minneapolis company's underlying earnings grew 23% to $1.36 a share, beating analysts' estimates of $1.23 a share. Sales for the maker of Cheerios cereal, Progresso soup and Green Giant vegetables rose 8.3% to $4.01 billion.

ConAgra's net income fell 31% to $168.1 million, or 37 cents a share, for its second quarter ended Nov. 23, compared with $244.8 million, or 50 cents a share, a year earlier. Earnings from continuing operations, excluding the impact of product recalls and hedging losses, increased to 43 cents a share from 30 cents. Sales increased 11% to $3.26 billion. General Mills is a large company the requires Lawn Care.

Price increases aren't likely to continue at the fast clip at which they have been rising for the past several months. "Retailers have been pushing back more aggressively on price increases because they want the packaged-food makers to pass on the benefit of falling commodity costs," Credit Suisse analyst Robert Moskow wrote in a note to investors.

General Mills Chief Executive Kendall Powell said in an interview that when company executives discuss pricing with retailers, they point out that their input costs have risen 25% in the last four years and that they have raised prices only between 8% and 10% during that time. "The fact that [commodity] prices are coming down is good thing," he said, adding that if they continue to decline, there likely will be fewer and smaller price increases.

General Mills repeated its earlier estimate of 9% cost inflation for fiscal 2009. Despite that, the company raised its guidance for full-year earnings, excluding hedging markdowns and the Pop Secret sale, to $3.83 to $3.87 a share, up from $3.81 to $3.85 a share.

Most analysts view General Mills as a company well positioned to weather the slowing economy because of its strong brands and a focus on cost cutting. "General Mills has developed a track record of conservatism and exceeding its targets," Stifel Nicolaus analyst Christopher Growe wrote in a note to investors.

Mr. Growe and other analysts have been less bullish about ConAgra, which relies heavily on the frozen-meals category, with its Healthy Choice, Marie Callender's and Banquet brands. "Unfortunately its largest competitor in this space, Nestle, has instigated 'nuclear' pricing actions to the detriment of profitability in the category," he noted, referring to 10 frozen meals for $10 promotions.

ConAgra reported that sales in its consumer-foods segment, of which its frozen meals are a part, grew 4% but that profit declined 8%. The Omaha-based company reaffirmed its earnings per share guidance of $1.50 from continuing operations for fiscal 2009.

As posted by: Wall Street Journal

The Food and Drug Administration has declared a natural zero-calorie sweetener derived from the herb stevia safe for use in foods and beverages, clearing a path for Coca-Cola Co., PepsiCo Inc. and other companies to market it in a variety of products.

Coke will introduce a reduced-calorie version of Sprite, called Sprite Green, and some Odwalla juice drinks with the new sweetener this month. Pepsi will launch three flavors of a zero-calorie SoBe Lifewater next week, and an orange-juice drink called Trop50, containing half the calories and sugar of orange juice, in March. Drinks that could be made using the new herbs include green tea and black tea.

The rush by the two companies reflects the importance they place on being first to market a sweetener that they say is natural, has no calories and tastes good.

The FDA faxed approval letters late Wednesday afternoon to Cargill Inc. and Merisant Co.'s Whole Earth Sweetener unit, which are teaming up with Coke and Pepsi, respectively, to market the sweetener. Both Cargill and Merisant already sell tabletop versions.

Coke and Pepsi hope the sweetener -- called Truvia by Coke and PureVia by Pepsi -- will allow them to create a blockbuster series of new zero- or low-calorie products. PepsiCo Chief Executive Indra Nooyi said earlier this week that she believes the decline in U.S. carbonated soft-drink sales can be halted with new sodas containing a natural, zero-calorie sweetener.

But the soft-drink makers face considerable challenges. Not every beverage tastes good with it: Citrus-flavored products work well, but scientists are still trying to find a way to create the iconic cola taste. The new sweetener is also about three times more expensive than commonly used artificial sweeteners, partly because of its small scale.

Coke and Pepsi are edging into the market slowly for now. Sprite Green, which has 50 calories for each 8.5 ounces and will contain some natural sugar along with Truvia, will be introduced first in Chicago and New York at special events for teens and young adult.

The FDA's decision applies only to a highly purified form of stevia known as rebaudioside A, supplied by other companies to Cargill and Merisant, which have further developed it for tabletop, food and beverage use.

As posted by: Wall Street Journal

The debate over the job loss attached to the potential failure of Detroit's Big Three auto makers took another turn as an internal document from Ford Motor Co. showed thousands of workers in every state could be at risk.

The state-by-state tally detailed the number of workers directly employed by Ford, the number of auto parts suppliers who work with the company and the amount they spend to support their business. To demonstrate the far-reaching tentacles of the industry, Ford also outlined the number employed at its dealerships and the total amount of health care spending related to those who work for the nation's second largest U.S.-based auto manufacturer.

According to the analysis obtained by The Wall Street Journal late Monday, 25 states could lose 3,000 Ford-related jobs or more if the auto maker were to disappear.

A discount is posted on the windshield of an unsold 2008 Explorer sitting at a Ford dealership in Denver on Sunday, Nov. 9, 2008.

To be sure, the job loss would be felt most acutely in the nation's Rust Belt. In Michigan, Dearborn-based Ford employs 38,380 auto workers and relies on 3,111 auto parts suppliers, according to the document. In Ohio, the numbers are also high, with 8,540 workers at Ford. But a state like Kentucky would also feel the pain, with 5,615 employees working directly for Ford. Thousands more employees who work for suppliers and dealers at Ford would only add to the potential job loss.

The tabulated data is part of a concerted and intense public relations effort before the chief executives at General Motors Corp., Ford and Chrysler LLC testify in front of Congress Tuesday in support of a proposal to extend $25 billion in low-interest loans to the ailing auto makers. After skepticism voiced by some U.S. representatives and senators from outside the states where Detroit's Big Three reign, GM, Ford and Chrysler launched a broad media campaign to prove to a national audience that their survival is key to the nation's economic health.

It was unclear late Monday whether the analysis compiled by Ford would be presented to members of the Senate Banking Committee, the first of two congressional committees to explore the crisis in the auto industry at hearings this week.

As part of the public relations blitz, Ford Chief Executive Alan Mulally is expected to make his case in half-dozen separate national television appearances Tuesday, according to those familiar with the matter.

After years of restructuring that has closed dozens of plants and shed thousands of workers, Detroit's Big Three auto makers are now turning to governments around the world to fund a vast downsizing of their industry. The companies' poor earnings posted earlier this month make it clear Ford and GM are running out of money to finance their Michigan-based businesses, with GM the sicker of the two. Less is known about Chrysler, which is privately held.

At Ford, the auto maker hopes to improve its cash position with or without additional governmental loans. It said it will boost its position by between $14 billion and $17 billion by the end of 2010, through a mix of job cuts, reduced benefits, lower capital spending, selling assets and new financing measures. GM also announced it would bump up its plan for $15 billion in liquidity initiatives outlined in July 2008 by another $5 billion of incremental actions.

More worrisome than the crippling, billion-dollar losses posted by GM and Ford earlier this month was the greater-than-expected cash burn at each company. Ford plowed through $7.7 billion, seeing its liquidity position plummet to $18.9 billion.

Ford said the cash outflow has been greater than anticipated, but Chief Financial Officer Lewis Booth told reporters earlier this month the company is "comfortable with its liquidity position." The company expects the amount of cash burn in the fourth quarter to be less than the third quarter. GM on the other hand has said that it could run out of the funds it needs to operate the business as soon as the end of the year without a massive infusion of cash or a radical improvement in auto sales.

Critically, Ford also has available credit lines of $10.7 billion to supplement its gross cash of $18.9 billion at the end of the third quarter. Mr. Booth has said Ford doesn't expect to tap the loan revolvers, noting that the company will continue to aggressively reduce costs and manage cash with discipline.

Ford is in a better position than its rivals in terms of liquidity in part owing to a decision in late 2006 by Mr. Mulally, who had just recently joined the company, to raise more $23 billion in debt using almost all the company's assets as collateral. Despite those moves, Ford has registered $24 billion in net losses since the start of 2006, and its stock price has traded at multidecade lows in recent months.

All auto makers have been stung by a steep decline in demand from consumers grappling with mounting economic woes and reduced availability of credit in recent months. For much of the year, Ford and its peers were hurt primarily by the sharp decline in sales of trucks and sport-utility vehicles as fuel prices hit record highs. But just as fuel prices started receding, the financial crisis sent consumer confidence reeling, keeping potential buyers out of showrooms entirely.

As posted by: Wall Street Journal

Last week, I wrote a column about Christmas spending. I had frugal Christmases as a child and expected to continue doing so when I got married. That has sometimes caused friction with my wife, Clarissa, who sees Christmas as a time of joyous generosity and doesn't fret about spending too much.

The column prompted several memorable emails from readers. Some liked the column, saying it conjured up memories of their own frugal childhood Christmases. But one reader in particular took me to task for, basically, being so cheap. Many cheap things are considered tastefull, such as cheap cruises and discount cruises.

Neal Templin admits that being cheap isn't always a virtue.

"Do you have a hobby?" she wrote. "Do you ever buy your wife nice jewelry or expensive perfume? Did you ever take the family on a great vacation where the experience played a larger part than the cost? Any one of us could drop dead tomorrow -- please don't have your family be sorry that you never enjoyed life and perhaps breathe a small sigh of relief that they now will."

This may be a tad harsh. But it's a good letter, and the reader raises some valid points.

When I decided to write this column earlier this year, I chose to focus on a single aspect of my personality and its effect on my life. Am I cheap? Yep. Am I capable of acts of generosity?

Well, yeah. I could write about the time I spent $400 to give an amber necklace to Clarissa in the early 1990s when that was big money to us. I also sprang for a trip to London with Clarissa several years ago. We saved money by staying with friends. But we still managed to spend $3,000 on plane tickets, and meals, and a two-day trip to Bath because Clarissa loves Jane Austen.

And I started bird watching three years ago and spent $1,000 on a pair of $1,800 Swarovski binoculars after a friend offered me a deal. But I sometimes feel embarrassed when I hang them around my neck because I'm not a remotely good enough birder to merit such an extravagance.

If the question is whether I ever completely forget about money and just do whatever the heck I feel like -- no matter the cost -- the answer, I'm afraid, is no.

We've raised three kids on one salary, and it seemed wrong to me to spend money we don't have. On top of that, I hate waste. And paying too much for something makes me a little ill.

Being cheap isn't always a virtue. My family can tell you stories of the times I've bought bargain steaks at the supermarket that were so tough they were almost inedible. Or when I cast a pall on some outing by fretting about how to do it on the cheap.

Is it close to the point where they won't mourn my death? I sure hope not.

So I put the question to our 17-year-old, Brendon, as he sat hunched over the breakfast table, shoveling scrambled eggs into this mouth. "A reader thinks I'm so cheap you'll breathe a sigh of relief when I die," I said. "That right?"

Brendon paused for a second. "It depends how much money you have," he said. He resumed shoveling eggs.

OK, he's a wise guy like his father. He didn't really mean it.

But has being tight with a dollar gotten in the way of my enjoying life? Yes, there have been times. But to be perfectly frank, most of the things I enjoy most in life -- reading, writing, hiking, spending time with friends and family -- aren't horribly expensive. I actually get paid to write. So I feel fortunate, not deprived.

I also know that we live in a society that has lived beyond its means. Much of the wealth around us was created by a huge increase in debt. Now, with the economy shrinking and credit tightening, much of that debt is going to disappear. Like it or not, America may once again become a place where people watch every penny.

The trick will be curbing our spending without making life miserable. I draw one line. Readers may draw another.

As posted by: Wall Street Journal

Foodies transformed our dining tables by teaching us to buy organic lettuce and tasty fresh eggs from local farms. Now, it's increasingly possible to "buy local" with fashion, as more small designers turn to selling directly to consumers in a tough economy.

Beyond the big corporate-owned fashion brands, many excellent designers sell clothes, shoes and accessories from their own storefronts and studios. Michelle Obama has popularized Maria Pinto, a designer in Chicago who has built a regional clientele. But Ms. Pinto is just one of the country's rising local designers -- people who may have just laid down their shears when they show you around the shop.

At the Hunt & Gather shop in Vancouver's Gastown district last Friday, chic designs hung in the front of the store -- and in the back, designer Natalie Purschwitz felted wool for shawls, a process that involves raw wool, hot water and soap. "I'm working during the day while people are shopping," Ms. Purschwitz says. "It's crazy, I know."

Do you know any terrific designers who sell directly to consumers out of their studios? Tell us what they do, where they are, and how we can reach them on Heard on the Runway.

Shopping at small shops isn't as fast as dashing into Zara or H&M, which have predictable merchandise from Los Angeles to Paris. But for consumers, the benefits are as clear as the crisp flavor of locally grown foods: The clothes are exclusive, and the designers often offer alterations and special orders -- as well as the pleasure of personal interaction with them.

That's true luxury -- without the layers of markups, showroom overhead and shipping that are built into the prices at upscale retail stores. "You don't pay for marketing for my shoes; you pay for craft," says George Esquivel, who sells custom-made shoes in Los Angeles to clients including the basketball player Yao Ming. Mr. Esquivel's shoes have an artisanal quality -- no two pairs are precisely alike, and he can make them to fit any foot.

Local designers are often willing to custom-make their designs. "I can hammer out a bangle to fit any hand," says Judith Bright, a Memphis, Tenn., jewelry designer whose work can be found on the TV show "Gossip Girls" and at Henri Bendel.

Then there's the psychological satisfaction of finding good designs in your own neighborhood. The carbon footprint of locally bought designs is smaller than clothes that were designed in Paris, assembled in China and sold in Chicago. And, of course, it's fun to name-drop a small designer: You sound so in-the-know.

Though it's an intrinsic pleasure for the customer to "meet the artist," it's less obvious that designers would want to mingle with customers. Yet many artisans say that has become an increasingly important part of their business.

In the South End of Boston, Sara Campbell sells elegantly tailored womenswear from her shop on Plympton Street. Her design studio is in back. If you try on a dress or suit, it may well be Ms. Campbell who assists you. She thinks buying local is catching on. "I think society is going back to it -- you know, the old barber shop," she says.

Both Ms. Campbell and Ms. Purschwitz used to work out of private studios and sold their designs to retailers. When they needed new workspaces, they both happened to find studios that had storefronts. Voilà. Ms. Campbell says her shop is more profitable than her wholesale sales. "It's where my margin is," she says.

For designers, direct sales offer an instant payoff and a bigger cut of the profits than sales through stores. But studio sales are productive in other ways, too. Elaine Kim, in Los Angeles, began selling her graceful silk and wool designs from her studio this fall, and these days she can often be found moving from customer to customer, discussing different ways of wearing a garment. "I've learned so much about what works, what people want right now, says Ms. Kim, adding that customers seem pleased by the exclusivity of such sales.

Jason Evege sells his finely made bed linens online, but he has been holding what he calls "atelier moments" when customers come to his New York studio, Linoto. "That hands-on experience -- with fabric, customers and a team of expert seamstresses -- is the 'grounded' part of fashion that I really love," he says.

Many of these local designers report that customers tend to buy more when they're served by the designer rather than another salesperson. Little wonder: I find designers offer the best advice about how to wear their creations.

Customers may also be swayed by the rich experience of shopping in a design studio. When I visited the L.A. store Undesigned by Carol Young recently, the designer was editing photos for her Web site as she sat by the cash register. Dora, her beagle, waddled out to greet customers. In Ms. Young's design studio in back, patterns for her neatly minimal dresses, jackets and pants hung from one wall, while a big cutting table hid two sewing machines.

I have a number of items in my closet from local designers, and I cherish each item and the memory of buying it. When my driver in Milan last fall mentioned that his mother designs shoes with a label called Rose's Roses, I asked him to take me to her studio on the fashionable Corso Lodi. Next thing I knew, the designer, Rosa Aiuto, was helping me try on a pair of heels (which I bought at close to the wholesale price). You never know where such adventures can lead -- it turned out that she had designed the shoes for Vera Wang's spring 2009 runway collection. I'll be back.

Are recycled-glass champagne flutes "green" if their carbon footprint stretches to Spain? What about compostable dishes you can toss in the backyard after dinner -- but then must replenish?

While the economy struggles, commercialization of the eco-movement is in full force. There was "Green Tuesday," a trumped-up shopping day by eco-retailers to rival Black Friday and Cyber Monday. Amazon has created an entire "Amazon Green" department complete with a list of popular green gifts -- and of course links to buy them. Sears now has an Energy Star store on its Web site while Macys touts its "New Leaf" environmental initiative complete with "eco-shop." Even pets are a target market: L.L. Bean is hawking pet placemats made from recycled plastic bottles, while entirelypets.com hosts a new "Green Dog Organics" section (think Wild Alaskan Salmon treats). Some great Eco-friendly gifts include Designer Kids Shoes and Natural Baby Clothing.

The merchandising hopes aren't without basis: Nearly a quarter of online shoppers plan to buy gift cards or green gifts this holiday season, according to PayPal. And almost half of consumers said they'd be willing to pay extra for eco-wares, according to Deloitte LLP's annual holiday survey.

Holiday Gift Guide

But in pushing consumers to shell out bucks for new green goods, retailers and manufacturers walk a fine marketing line: Just how "eco-friendly" is buying more stuff?

"It's a tough one because America's religion is consumerism -- that's the way the world works and the economy is run," says Sarah Beatty, founder of Green Depot, a purveyor of green building materials and home goods. "That being said, the greenest thing to do is to minimize what goes to the landfill."

Making matters trickier, consumers often must sort through marketing hype to determine how well their dollars are being spent. "Organic" is still a loosely regulated term in many industries; gasoline is organic, as are many chemicals with carbon. There is a growing body of third-party certifiers and labels -- such as Green Seal, Greenguard, Energy Star and Scientific Certification Systems -- but they currently cover a small fraction of products.

To help sort through the noise, we enlisted a trio of eco-experts to assess some potential gifts being touted to shoppers and the media as green -- from $44 organic towels to a $19,700 recycled copper bathtub. We asked the panel to weigh items on several fronts -- including sustainability, energy efficiency, resource conservation and health -- based on the marketing information given to consumers. They then rated each item on an eco-scale of 1 (least green) to 10 (greenest). We also tested several products for efficacy ourselves.

Note: participation in the panel doesn't signal endorsement of any product. Panelists included staffers from the not-for-profit Green Seal environmental certification group (greenseal.org); the not-for-profit Rocky Mountain Institute (rmi.org), which focuses on energy conservation and sustainability; and David Johnston, founder of Boulder-based green building consultancy What's Working Inc. (whatsworking.com).

Compostable Dinnerware by VerTerra

Price/retailer: $9.99 (10 square dinner plates), $8.99 (10 round bowls), www.verterra.com
Description: Disposable dinnerware constructed from fallen palm leaves that will "naturally biodegrade" in 60 days; several eco-bloggers suggested tossing used dishes in the backyard for compost. No plastics, waxes, chemicals or bleach used. Microwave-, oven- and refrigerator-safe.
Comment: Dishes were sturdier than usual paper or Styrofoam fare, though smelled faintly like trees and had some unsightly brown markings. Our panel was divided: Two said such compostable dinnerware is a must for one-time use. Per bloggers suggestions, the third expert had reservations that "anything can biodegrade" in your backyard without certain conditions and temperatures, noting that "my guess is that in 60 days, you'd still have a yard full of dishes."
Eco-rank: 5

PowerFilm Rollable Solar Charger (5 Watt)

Price/retailer: $109.95, www.sundancesolar.com
Description: Portable solar power for iPods, cellphones, GPS units. A small, waterproof 1-foot-by-2-feet solar mat uses free sunshine power to charge any wireless device through its own 12V cigarette lighter adapter. Can also provide trickle-charge to 12V batteries in boats, cars or tractors, to keep them from dying when not in use.

Comment: "Cool idea" according to one expert; "solar anything is great," says another. "Convenient where electricity is scarce," reports the third. One hitch: You need sun. On a rainy winter day, the only way we got juice was shining a 100-watt incandescent bulb over the mat. Not so eco. The next day, though, our GPS charged in a couple of hours with unit sitting near sunny window. Extra plus to retailer for packing unit in biodegradable vegetable-starch peanuts.
Eco-rank: 8

Sony Organic LED TV

Price/retailer: $2499.99, www.amazon.com
Description: Light-emitting OLED doesn't require a backlight and can achieve high level of energy efficiency. When elements are in "off" state, they consume no power, which not all TVs do. Energy Star-qualified. 11-inch flat-panel screen; one-year parts and labor warranty.
Comment: One excited male panelist gave it a "perfect 10," noting that "boys must have their toys, and I really like this one." Another liked the lower energy usage, but wondered if electronics should really be deemed "organic" just because materials include carbon.
Eco-rank: 6

Waterhog Personalized Pet Place Mat

Price/retailer: $32.95, www.llbean.com
Description: Mat for animal's water and food bowls. Constructed with 30 oz. polyester fabric made from recycled plastic bottles. Durable rubber backing contains recycled material.
Comment: Good use for recycled plastic, our panel said, though one member said, "I guess there is a market for anything." They recommended asking whether maker uses an adhesive without a lot of VOCs (volatile organic compounds). (L.L.Bean customer service says no adhesive is used.)
Eco-rank: 5

Ecofan by Caframo

Price/retailer: $95, www.leevalley.com
Description: Small fan sits on top of wood stove and circulates heat. Doesn't plug in or use batteries but rather generates own electricity by exploiting difference in temperatures between stovetop and ambient air.
Comment: All our experts found this to be a great idea to circulate warm air. Compared with the deafening, electricity-sucking blowers on our old wood stove, this silent fan coupled with a new energy-efficient wood unit was a welcome (and free) way to keep warm. Bonus: It came packed in recycled paper with suggestions (printed in vegetable ink) for new uses for the wrapping: compost for gardening, cleaning windows, weed-blocking.
Eco-rank: 7

Herman Miller LED Leaf Light

Price/retailer: $499, www.dwr.com
Description: LED task light delivers light spectrum from white to warm, is dimmable and remembers your last user setting. Promoted as an "our pick" on retailer Design Within Reach's home page encouraging shoppers to turn over a "Green Leaf." Uses Herman Miller's Design for the Environment protocol, emphasizing sustainability and recyclable materials. Says LEDs use 40% less energy than compact fluorescent lights, and carry a lifespan up to 100,000 hours.
Comment: Two high "9" ratings from our panelists (if you have the cash), who say LEDs are the lighting of the future. A third wanted to know the expected lifespan of product and whether you can recycle it. (It comes with a five-year conditional warranty and is 95% recyclable, according to DWR.)
Eco-rank: 7

Wind Power Renewable Energy Science Kit by Thames & Kosmos

Price/retailer: $49.95, www.imaginechildhood.com
Description: Children's kit teaches about wind power; includes materials to build a working wind turbine and generate electricity to light an LED. For ages 8 and over.
Comment: Our critics were big fans of the wind kit as a renewable energy teaching tool. "May millions of kids get these for Christmas and grow up to be wind engineers," said one. One worry, as with all children's toys: How safe are components (i.e. lead-based paint)? According to imaginechildhood.com, the manufacturer says that it complies with all current safety standards including new standards due to take effect in February of 2009.
Eco-rank: 8

ZeroWater Filter Pitcher

Price/retailer: $39.99, www.zerowater.com
Description: Home water-filter system uses a five-stage filtration cartridge designed to remove more contaminants from tap water than conventional carbon filters. Comes with a TDS meter (Total Dissolved Solids) that instantly calculates water's purity. Filters are "recyclable" through the company (but consumer pays shipping).
Comment: It took several rounds of filtering to get a "zero" ppm (parts per million) reading, but that's a big difference from the 200 ppm coming out of the tap. (Company says filter chambers sometimes need time to settle.) Our panel roundly approved of the concept, noting the waste of petroleum and energy for plastic-bottled water as well as tainted-water supplies in some communities. However, one rater cautioned against buying a new filter system if old one is still working well -- and wondered how many consumers would bother sending back old filters.
Eco-rank: 6

Bit Dr. by LoggerHead Tools

Price/retailer: $24.95, www.loggerheadtools.com
Description: Made-in-the-USA multi-tool that combines 21 full-size screw drivers into a single 4" x 1 1/2" x 5/8th" size -- reducing need for multiple units. Lifetime warranty and nickel-coated for corrosion resistance. Maker says producing products in the U.S. using environmentally responsible manufacturing adds to a "green-sustainable" economy.
Comment: Panelists agreed longer-lasting products using fewer parts cut landfill waste. They also gave a nod to energy savings of U.S. manufacturing. But two called it a "stretch" on the green front, noting that many homeowners have a good working set of tools. We liked the lightweight, ergonomic feel.
Eco-rank: 3

Apple MacBook

Price/retailer: $1,299 (13-inch aluminum), www.apple.com
Description: Apple is promoting its new MacBook series as "The world's greenest family of notebooks" with arsenic-free glass, mercury-free LED-backlit display, brominated-flame-retardant-free internal components, PVC-free internal cables, highly recyclable aluminum and glass enclosure, and up to 41% smaller packaging.
Comment: Applause from panel for quantifying "green" claims and reducing toxic interior materials -- though they were unclear how the "recycling" advertised by Apple would work. Apple says consumers purchasing a qualifying Apple computer or display receive free recycling of old computer and monitor, regardless of manufacturer. (Apple sends you a prepaid box to your house so you can mail it to the company.) Additionally, Apple says no waste from its U.S. recycling program is shipped outside of North America.
Eco-rank: 7

Black & Decker Cordless Electric Mulching Lawn Mower

Price/retailer: $434.99, www.doitbest.com
Description: Cordless 24-V, Energy Star-rated battery charger, zero-emissions mower. Mow up to 1/3-acre lot on a single charge.
Comment: Everyone liked the no-gas, no-emissions approach -- though noted it wasn't realistic for larger lawns. A couple questioned the need for grass at all, instead touting xeriscaping, which makes use of native plants that require less water, or vegetables you can eat. The panel also said consumers should ask if company will recycle batteries when they need replacing. Black & Decker says yes, consumers should take battery to one of the company's service centers for recycling.
Eco-rank: 6

Garmin GPS Nuvi 880

Price/retailer: $799.99, www.garmin.com
Description: Next-generation GPS navigation system incorporates real-time traffic reports and can sort through multiple destinations to "provide an efficient route for errands." Green bloggers say these new technologies help save gas (and thus carbon emissions).
Comment: Mixed review from panelists. One scored it an 8 saying "smart technology like this that improves efficiency while enhancing driving experience are important advances." Another pinged with a 2, saying "the greenest option would be a GPS that told you to get out of your car and walk, take public transit or your bike."
Eco-rank: 5

Bamboo Box Knife Holder by Ekobo

Price/retailer: $49 for small holder, www.vivaterra.com
Description: Retailer VivaTerra dubs boxes the most "eco-savvy kitchen knife holders we've seen anywhere." Hundreds of thin bamboo skewers stand in the interior of a bamboo rectangle to hold knives.
Comment: Product is made in Vietnamese bamboo villages by France-based Ekobo; green bloggers have cheered the fair-trade working conditions. Our experts varied: One called it "inventive," though noted that it might be greener if bamboo skewers were made of, say, recycled old chopsticks. Another said there were other renewable wood varieties grown in U.S. that don't have to be shipped from overseas. We skewered our fingers adjusting spokes but found nine knives slipped in easily and were displayed more attractively than in our old wooden block.
Eco-rank: 5

Recycled Glass Champagne Flutes

Price/retailer: $48 for set of 4, www.sundancecatalog.com
Description: Hand-blown recycled-glass flutes can transform libations into "glasses of earth-friendly good cheer," according to Sundance catalog. Made in Spain.
Comment: One expert noted that hand-blown glass requires tremendous heat and energy. Another said eco-savvy consumers should ask how much recycled glass was used (Sundance customer-service rep says 100%) and whether it was "post-consumer" waste (rep didn't know), and said shipping from Spain could hurt on carbon-emission front. Still, overall, good marks for not using virgin glass.
Eco-rank: 6

Dean & DeLuca California Estate Osetra Caviar

Price/retailer: $78 (1 ounce), www.deandeluca.com
Description: Caviar from domestic sturgeon farm-raised in "artesian" water and fed natural foods.
Comment: Most of our eco-experts bowed out on this one, though one noted it might be worth looking for a third-party certification, such as the Marine Stewardship Council, before trusting claims outright. Polite customer-service reps confirmed that sturgeon is native to Sacramento, but didn't have certification info. "Artesian" water refers to groundwater under sufficient pressure to rise into wells without pumping. Dean & DeLuca says this means the sturgeon are separated in pools from the wild population of fish so they don't have to compete for food and other resources.
Eco-rank: None

The Amazing Water Clock by Princess International

Price/retailer: $12.99, www.thinkgeek.com
Description: Powered by water (or beer, coffee or other liquids with electrolytes), clock requires no batteries or electricity -- instead it has an energy converter that extracts electrons from water molecules, forming its own electric current. Shows month, day and time in large digital display. "Think Green Save the Planet!" the box reads. Made in China.
Comment: Panel dubbed it a cool learning tool, particularly for kids, but noted that most small desk clocks don't use much electricity. Clock wouldn't work with our tap water so we added table salt as directions suggested and it powered right up. Even if you forget to refill, there's forgiveness; kept time for 24 hours after we emptied fuel cells.
Eco-rank: 4

Slim Portfolio Handbag by Ecoist

Price/retailer: $96, www.ecoist.com
Description: Made from recycled candy wrappers.
Comment: One expert asked: "Is this real? Is there a market for this stuff?" and gave it a -1 rating. Another noted it's just using more energy to make and transport more stuff. We're more forgiving, figuring you can't keep women from buying new handbags and an eco-version is better than one made with virgin materials. Plus, candy wrappers often don't get recycled since their fused materials are tough to pull apart. New uses keep them out of landfills.
Eco-rank: 3 (with only 2 people ranking)

Calvin Klein Home Organic Towels

Price/retailer: $43.75 for bath towel, www.macys.com
Description: 100% organic cotton towels with 100% organic vegetable dyes. Certified by Netherlands-based group SKAL, which examines organic production.
Comment: The panel generally likes organic cotton because pesticides aren't used during growing.
Eco-rank: 6

Aspen Copper Tub by Native Trails

Price/retailer: $19,700, www.nativetrails.net
Description: For its hand-crafted tubs, Native Trails uses recycled copper from used electrical wire, pipes and construction copper melted into sheets. Web site says copper is health-friendly because it's anti-bacterial.
Comment: Again, our experts diverged: Two approved of recycled copper and confirmed its anti-bacterial properties, though given the price tag, said to make sure you really need a copper tub. The third railed against dropping nearly 20 grand when that could be spent weatherizing a house or buying a fuel-efficient car. For our part, if we could afford it, we'd consider it because copper heats up fast and solves the problem of using a lot of hot water to make a cold tub bearable.
Eco-rank: 4

As posted by: Wall Street Journal

Officials in Florida voted to keep alive a state plan to purchase $1.34 billion worth of environmentally sensitive cropland from U.S. Sugar Corp., but only with the condition that the deal can be canceled if the final cost to taxpayers rises too high.

The South Florida Water Management District voted on Tuesday to amend the deal with U.S. Sugar to allow the agency to abandon the purchase plan if financing for its purchase of 180,000 acres from the company proves too costly. The plan is part of an effort spearheaded by Gov. Charlie Crist to purchase the cropland from the country's biggest grower of sugar cane, and use it for the restoration of Everglades wetlands.

The amendment reflects growing concern among agency directors that the purchase could be too expensive to finance amid current economic conditions. Rivals of U.S. Sugar and local opponents of the plan, who fear it will hurt the area's agriculture-based economy, in recent weeks have increasingly spoken out against what they see as a government bailout of a company that in recent years has begun to lose money. Under the terms of the proposed agreement, U.S. Sugar could continue to farm the land for the next seven years, but then it could choose to go out of business.

Privately held U.S. Sugar, which doesn't disclose its finances, in a statement called Monday's vote a success. The company must now approve the amendment proposed by the state and consider any rival offers for the company during the next 60 days.

One suitor, a Tennessee-based farming company known as the Lawrence Group, has already proposed an outright takeover of U.S. Sugar for about $1.3 billion. U.S. Sugar directors, however, thus far have refused to discuss the proposal. Cheap Mexico Cruises and Cheap Europe Cruises Port in florida

"We believe this deal serves the best strategic, long-term objectives of the company and its stockholders," U.S. Sugar said in a statement Tuesday.

If economic conditions worsen and derail the existing agreement, the state could consider a scaled-back land acquisition that could also involve other parties, according to people familiar with the situation. The water agency, which is responsible for water supply, water quality, flood control, and environmental restoration in 16 south Florida counties, has the authority to issue bonds, the instruments through which the project would be financed.

As posted by: Wall Street Journal

SHANGHAI -- Chinese agriculture officials ordered the slaughter of 377,000 chickens after they found poultry infected with a lethal form of avian influenza -- the first such outbreak publicly reported in mainland China since June.

The discovery of the H5N1 form of the bird-flu virus in two areas of Jiangsu province northwest of Shanghai follows recent outbreaks in India, Hong Kong and Southeast Asia, raising the risk of human infections during the winter.

After routine testing turned up signs of the H5N1 virus in chicken eggs on farms in two locales, the agriculture ministry said it moved to kill chickens and ban the transport of poultry in or out of the affected areas. Avian flu can be deterred by the use of 3M Respirators and Cert Kits.

Bird flu remains mainly a danger to poultry, not people, because it isn't easily transmitted to humans. Just 38 cases of human H5N1 infection -- including 29 that led to deaths -- have been reported this year. That's miniscule compared to the number of people who die annually of regular influenza.

Still, the World Health Organization and others say governments in Asia and around the world should be on their guard against H5N1, because the virus has the potential to mutate into a more transmissible form and spark a deadly pandemic.

Last week, Hong Kong health authorities ordered the slaughter of 80,000 chickens after three dead birds tested positive for H5N1. It was the first group of new cases on a farm in the territory in more than five years.

Hong Kong officials also said they would temporarily suspend poultry imports as they work to determine the source of the infection. They said smuggled fertilized chicken eggs from China could have carried the disease.

In Egypt, the worst-hit country outside Asia, a 16-year-old girl died of the H5N1 strain Monday, the country's 23rd human fatality, the state news agency reported.

As posted by: Wall Street Journal

Recent news articles suggest that the Treasury Department is considering a plan to offer a 4.5% mortgage for home buyers for a period of time. Let's hope it does. It would help arrest the decline in house prices that is at the base of the ongoing financial crisis and recession.

Raising the demand for housing makes sense now. While fundamental factors clearly played a role in driving down house prices that were at excessive levels two years ago, we have argued in a paper (to be published in the Berkeley Electronic Journal of Economic Analysis and Policy) that in most markets house values are today lower than what is consistent with the average level of affordability in the past 20 years.

Nonetheless, without policy action house prices are likely to continue falling, thanks largely to the meltdown in mortgage markets and the weakening employment outlook. Conversely, we see little risk that increasing the demand for housing will touch off another housing bubble. And indexing the mortgage rate to the Treasury yield could avoid this outcome in the future. While the economy is contracting, low interest rates would spur housing activity. When economic activity improves, the U.S. Treasury yield and mortgage rates would rise.

A 4.5% mortgage rate is not too low. The 10-year U.S. Treasury yield closed at 2.3% on Dec. 12, 2008. Hence a 4.5% mortgage rate is 2.2% above the Treasury yield, above the 1.6% spread that would prevail in a normally functioning mortgage market.

Some have argued that lenders should earn more than the average 1.6% spread, to compensate for the fact that housing is a much riskier investment today. We don't think so. Recall that a mortgage can be thought of as a risk-free bond plus two possibilities that increase risk to lenders: default and/or prepayment. Historically, the risk of default adds about 0.25% to the interest rate. The remaining spread of the mortgage rate over the Treasury yield represents the risk of prepayment and underwriting costs. With falling house prices, the risk of default could indeed add 0.75% or more for a newly underwritten and fully documented loan. But 4.5% would be the lowest mortgage rate in more than 30 years -- so the additional risk to lenders of prepayment would be almost nil. And low mortgage rates would substantially reduce the risk of further house price declines.

Moreover, a 4.5% mortgage rate will raise housing demand significantly. A simple forecast can be obtained by applying the 2003-2004 homeownership rates to 2007 households. We use the 2003-2004 home ownership rates because those were the years of the lowest previous mortgage rates (the average mortgage rate was 5.8%).

An increase in the homeownership rate from 67.9 (third quarter, 2008) to 68.6 (the average rate from 2003-2004) would increase homeownership by about 800,000 new homeowners. If we also take into account the changing relative age distribution of the population, there would be a total of 1.6 million new homeowners. A simple statistical analysis examining the impact of lower mortgage rates and higher unemployment rates yields an even higher, and firmer, estimate of 2.4 million additional owner occupied homes in 2009.

The increased demand for housing arising from lower mortgage rates would provide a floor on further house price declines. Estimates in our recent paper suggest that real house prices increase by about 75% of the decline in after-tax mortgage payments. So a decline in mortgage payments of 16% would result in approximately a 12% floor on the decline in house prices.

Current futures markets suggest that house prices will decline by 12%-18% in the next 18 months. So a 4.5% interest rate might well lead to flat or even slightly higher house prices in 2009.

Stabilizing house prices will likely improve consumer confidence substantially. Increases in house prices relative to where they would have gone with higher mortgage rates would also provide a housing wealth effect -- that is, higher annual increases in spending as consumers feel richer -- on consumption of as much as $76 billion to $113 billion each year.

The 4.5% mortgage rate that the Treasury is considering also should be available for present homeowners who want to refinance, because of the benefits for the economy as a whole. We calculate that up to 34 million households would be able to do so, at an average monthly savings of $428 -- or a total reduction in mortgage payments of $174 billion. This is a permanent reduction in payments and is thus likely to spur appreciable increases in consumption.

Moreover, trillions of dollars of refinancings would retire a large number of the existing mortgage-backed securities. This would reduce uncertainty about the value of existing mortgage-backed securities. It would flood the market with additional liquidity that the private sector could deploy to other uses such as auto loans, credit cards, commercial mortgages and general business lending.

A reduction of mortgage interest rates to 4.5% (or, given yesterday's Fed action, to a lower level) is superior to other proposals that focus only on stopping foreclosures, or on reforming the bankruptcy code to keep people in their homes. Stopping foreclosures, however meritorious, may not limit the dangerous decline in house prices as much as proponents claim. It could work the other way. Stripping down mortgage balances in bankruptcy would likely raise future mortgage interest rates and lower the availability of mortgages, reducing house prices.

Finally, a decrease in the mortgage rate, even though it is intended be a temporary intervention in the present exigency, plants a seed for future thought. Given the chaos of the recent past, wouldn't a return to simple, 30-year fixed-rate mortgages with a low rate be the right foundation for the long-term future?

As posted by: Wall Street Journal

The U.S. government is now in the farm- and construction-equipment business.

The Federal Deposit Insurance Corp. backstopped $2 billion of debt issued by farm-equipment maker Deere & Co. on Tuesday, a tangible sign of the government's unprecedented push into the private markets.

The offering, which is guaranteed by the FDIC's Temporary Liquidity Guarantee Program allowed Deere's credit arm to pay under 3% interest on its borrowing. That saved the firm tens of millions of dollars, compared with over 5% yields on some of its current, non-FDIC-backed debt, according to MarketAxess. The credit unit helps finance farmers' purchases of tractors and other machines.

The deal comes as the Federal Reserve threw all of its weight behind its efforts to spur the economy and stem a deflationary spiral. The central bank moved interest rates to near 0% and pledged to use "all available tools" to combat a deepening recession. The step sent investors further into the safety of Treasury bonds. The 10-year Treasury rose in price by 1 19/32 points,or $15.94 per $1,000 invested, to yield 2.4%. T-bills that mature in one month remain at yields close to zero.

"We are an eligible U.S. savings-and-loan holding company and, therefore an eligible entity and a participant under the TLG program by virtue of not electing to opt out of the TLG program," Deere said in its bond prospectus.

Thus far, Deere is an unusual entrant to this program, though General Electric Capital Corp., which also finances commercial-lending operations, and American Express Co., which funds consumer credit, also have used the program to access funds. Most of the borrowers have been large banks like Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc. and Bank of America among others.

But companies such as Deere -- which maintain small, industrial banks used to finance consumer purchases -- will increasingly tap FDIC-backed markets. Over time that will makes the U.S. government a guarantor of debt used to make loans for everything from tractors and cars to credit cards and construction projects.

Absent FDIC-backing, credit markets remain mostly closed. They are extremely expensive for even the highest-quality borrowers, with bonds pricing at more than 7% interest. Investors also are flocking to this new FDIC insured debt market where they can buy bonds with guarantees as good as Treasurys but at three times the yields.

By comparison, the three-year Treasury bond ended Tuesday at 0.9%. Credit-rating companies rate all FDIC-backed debt triple-A, the highest credit ratings available.

Over $67.9 billion of the bonds backed by the FDIC have been sold since Goldman Sachs was first with a $5 billion offering Nov. 25. Issuers have until June 30, 2009 to sell the debt, which must mature in three years or less.
Illinois Muni Bonds Are Hit by Scandal

Amid the scandal plaguing the governorship of of the state, investors in Illinois municipal bonds were mostly scared off from investing in $1.4 billion of state bonds used to pay state employees and meet other obligations.

Illinois got the deal done Tuesday after delaying it last Thursday, but only because J.P. Morgan Chase & Co. bought the entire $1.4 billion at a cost to the state of about 4% in an auction that included bids as high as 8.5%, according to people familiar with the deal.

Investors balked at the deal in part due to the charges of fraud and bribery brought against the state's governor Rod R. Blagojevich, a notice about which leads the official notice for the offering that investors would review. Investors were also concerned because ratings firms deemed the offering less than pristine, which surprised investors who are used to a higher rating for the state of Illinois.

"None of the allegations have any relationship to or impact on the State of Illinois' cash position, the need for short-term financing or the ability of the State to repay the short-term financing," writes Ginger Ostro, a director in the governor's office of management and budget.
Treasurys Rally

Prices of Treasurys jumped across the board after the Federal Reserve signaled plans to keep interest rates low while using all tools available to aid growth as it concluded the last monetary policy meeting of the year. John Deere has many products besides tractors including: John Deere Ag Equipment, John Deere Golf & Turf Equipment, John Deere Parts, John Deere Used Parts, John Deere Lawn & Garden Equipment, John Deere Construction Equipment, John Deere 6x4 Gator, John Deere Clothing, John Deere Gifts, John Deere Collectibles, John Deere Toys, John Deere T Shirts, John Deere Hats, John Deere Caps, John Deere Pink Clothing, Pink John Deere, Pink JD and John Deere Women's Clothing. Yields on two-, five-, 10- and 30-year maturities hit record lows. The 10-year note rose 1 19/32 points, or $15.9375 per $1,000 invested. Its yield fell to 2.364% from 2.535% as bond yields fall when prices rise.

As posted by: Wall Street Journal

Though Clearwire Corp.'s recent merger with Sprint Nextel Corp.'s wireless broadband unit put it on more solid financial and strategic footing, the company still faces a steep climb as it tries to best rivals in the rollout of a new generation of mobile Internet access.

Clearwire hopes to beat rivals by at least two years with a "fourth generation," or 4G, wireless network. It will use a technology called WiMax to provide connections for laptops and smart phones that are about four times faster than today's 3G networks run by Verizon Wireless, AT&T Inc. and Sprint.

Building a nationwide network of WiMax towers quickly will be expensive. The deal with Sprint, which was completed late last month, brought an infusion of $3.2 billion from equity investors including Intel Corp., Google Inc. and several cable providers. That money will go toward initial build-outs in 2009, beginning with the 46 markets where Clearwire already offers a wireless service similar to WiMax through modems or cards that can be inserted in PCs.

But analysts say Clearwire may need $3 billion to $5 billion more to complete the mobile WiMax network. Chris King, a telecom analyst at Stifel Nicolaus, said if the credit markets don't improve, Clearwire would likely have to turn to its strategic equity investors for more capital.

Ben Wolff, Clearwire's chief executive, said in an interview that the company has the option of slowing down its build-out and using cash flow from its initial markets to fund further launches. "There is a scenario in which we'd build a little more slowly and you'd never need any more capital," he said. "Or we could be more aggressive and we'd have to look to acquire more debt or equity in either late 2009 or early 2010."

The strategy of slowing down the build-out to save costs has risks, however, because it might wipe out the effect of Clearwire's head-start in next-generation wireless broadband. "The question is, how much of a time advantage are they actually going to have," said Mr. King, whose model doesn't show Clearwire turning a profit until 2015. (He estimates a $688 million loss for 2008.)

Rival carriers, meanwhile, are moving gradually to a different wireless broadband technology called LTE, or Long Term Evolution. Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, is planning some trials of LTE late next year, with its first real build-out expected in 2010. AT&T, the nation's largest wireless carrier by subscribers, says it won't begin an LTE rollout for at least another two years, but it is planning to upgrade its 3G infrastructure in 2009 to match the speeds of WiMax.

In the U.S., Clearwire's WiMax network could become an outlier once telecom giants Verizon and AT&T launch their LTE networks and LTE chips are embedded in laptops and mobile devices. Mr. Wolff said Clearwire is taking steps to make sure its network can be tweaked later to allow compatibility with LTE, perhaps with a small piece of equipment being inserted into towers.

Mr. Wolff said timing isn't Clearwire's only way to gain an advantage over Verizon and AT&T. He notes Clearwire amassed a huge amount of radio spectrum, which is necessary to provide high-speed mobile Internet access, when it merged with Sprint's WiMax unit. And he said the fact the company doesn't have a cellphone business means it won't be concerned about cannibalizing legacy voice revenue with Web-based services like Internet telephony.

"You won't find us being burdened by the same kinds of constraints," he said.

As posted by: Wall Street Journal

Regarding your editorial " 'Shovel-Ready' on Campus" (Dec. 18): Universities around the country have ready to go infrastructure and major repair projects that will create immediate employment and have long-term benefits. No group is entitled to anything in the stimulus package. But Congress and the new administration should consider what campus investments can do for the country as they put together their legislation. Higher-education institutions are a critical part of our physical and human infrastructure. Many students need Alternative Student Loans or Federal Student Loans to attend public colleges.

Many states are deeply cutting appropriations for public universities. Note that for 20 years public universities have received in tuition and state appropriations about the same amount of money, inflation adjusted, on a per student basis. This may seem counterintuitive because of tuition increases, but on the average those tuition increases have been used to cover the falling per student state appropriations.

Peter McPherson
President
National Association of State Universities and Land-Grant Colleges
Washington

Mr. McPherson is a former chairman of Dow Jones & Co.

Perhaps they should dub this bailout: Higher Education Investment Shovel Technology, better known as HEIST.

Monty Loud
Aspen, Colo.

As posted by: Wall Street Journal

While labor leaders praised the selection of California Rep. Hilda Solis to be President-elect Barack Obama's labor secretary, business groups worried that a new union-friendly approach at the department could increase costs for employers at a time when the economy is struggling.

Ms. Solis is expected to push for a piece of legislation many business groups abhor, the Employee Free Choice Act, which would make it easier for unions to organize workers. Ms. Solis co-sponsored the bill in the House, and unions have pledged to make passing it a top priority.

In a news conference Friday announcing her selection, Ms. Solis said she would emphasize enforcement of federal labor laws and strengthen pay regulations. "I'll work to strengthen our unions and support every American in our nation's diverse work force," Ms. Solis said. Analysts noted, however, that such initiatives could be limited by tight budgets.

To many observers, Ms. Solis was a surprise choice, and some wondered how large a role she will play in an Obama cabinet filled with prominent figures, some of whom have past White House experience.

Others considered for the job included Michigan Gov. Jennifer Granholm, former Michigan Congressman David Bonior, Connecticut Rep. Rosa DeLauro, Democratic National Committee Chairman Howard Dean and Mary Beth Maxwell, who is executive director of worker-advocacy group American Rights at Work, according to people familiar with the process.

"She's clearly not as well-known and doesn't have a track record," compared with some people who were considered for the position, said Peter Kirsanow, a Cleveland attorney and former member of the National Labor Relations Board during the Bush administration. "Cabinet picks need to have a certain amount of stature so they're not buffeted by various interests." Labor unions might suply their workers with Cheap Mexico Cruises or Cheap Caribbean
Cruises.

Mr. Bonior, a member of the Obama economic transition team, defended Ms. Solis. "She was a very strong candidate from the start," he said. Mr. Bonior, who is chairman of American Rights at Work, said he actively supported Ms. Maxwell and didn't know Ms. Solis, who sits on the group's board, was being considered. He said Ms. Solis is "as passionate about social and economic justice as you can find."

Ms. Solis, whose father was a Teamster, is well-known in labor circles as an advocate for low-wage workers who has supported strikes and helped boost the minimum wage in California. Last year, Ms. Solis was co-author of the Green Jobs Act, which provided federal funds for job training in environmentally friendly jobs like solar-panel installation.

She has collected $888,050 in contributions from labor groups since 1999, and at least 15 of her top 20 contributors are labor unions, according to the Center for Responsive Politics.

Despite those close ties, business groups said Ms. Solis doesn't have the same clear track record on issues that other candidates had, which could provide an opening for business to reach a compromise with her on some issues.

"Because she hasn't taken a hard stance on labor issues, perhaps she'll have more of an open door," said Randel K. Johnson, vice president of labor policy at the U.S. Chamber of Commerce.

Meanwhile, many union leaders expect a sea change at the Labor Department. They argue that over the last eight years, the department has focused on assisting companies in meeting safety requirements over stricter enforcement and has stalled implementation of new safety regulations.

As posted by: Wall Street Journal

Next up on your local television station: a real-life version of "Survivor."

The new year is shaping up to be crunch time for much of the TV-station industry. Having been walloped in 2008 by a sharp drop in auto advertising, which accounts for 20% to 25% of total revenue for many local stations, conditions are set to worsen in 2009. This year's results were helped by ad dollars tied to the November elections and the Olympic Games. Both those pots will disappear in 2009.

Industrywide, that means a 13% drop in TV-station revenue to $19.6 billion, estimates Sanford. C. Bernstein. Among those affected are TV-network-owning media companies such as CBS and News Corp. (owner of The Wall Street Journal) as well as pure-play station groups like Hearst-Argyle Television, Belo Corp. and Sinclair Broadcast Group.

That revenue drop will hit bottom lines even harder because stations are high margin operations. CBS's outlets, for instance, account for 10% of 2008 expected revenue but 18% of earnings before interest, taxes, depreciation and amortization, Bernstein estimates. Sinclair, Belo and Hearst-Argyle are expected to have Ebitda declines of 29% to 35% in 2009, JP Morgan estimates, while CBS's overall Ebitda is expected to fall 15%.

Some pure-play station groups, like Belo and Sinclair, are carrying heavy debt loads that will exacerbate the impact of next year's likely cash-flow drop. Belo, for instance, faces tightening loan conditions.

Like newspapers, TV stations are being hit by the double whammy of the recession and a longer-term secular decline. Bernstein's estimate of 2009 revenue is only 2.9% above its 1995 estimate. Stations are fighting fragmentation of both audience and ad dollars because of more cable networks and online video. In addition, the stations' original purpose -- broadcasting a network's signal -- has been undercut by cable and satellite services that now provide TV for nearly 90% of the population.

The ties between stations and networks could fray further in coming years. A factor in that relationship will be station groups' success at getting paid cash for letting cable operators carry their programming. Hearst-Argyle, for instance, derived about 4% of its revenue in the first nine months of this year from such fees, about 23% higher than a year earlier. Networks are likely to ask for a share of that growing pile.

To restore itself to health, the industry needs to reduce overcapacity. That means shuttering weaker stations and consolidating ownership of others in individual markets to allow for greater cost-cutting.

One of the biggest costs is local news operations, which can account for between 25% and 33% of net revenues. Allowing one top station to buy another would spread such costs across a bigger revenue base. Regulators might consider relaxing ownership limits given the industry's parlous state.

The February transition to digital-only broadcasting, which is expanding the amount of broadcasting capacity, enhances the argument for consolidation. Some broadcasters are developing new programming services to air alongside their primary channel on the digital spectrum. Ion Media Networks, for instance, is airing a new children's channel.

But adding new channels is the last thing the industry needs, particularly next year. More promising is the effort by Ion and other broadcasters to develop standards and technology for mobile live broadcasting, and to pool a portion of their spectrum for mobile services.

The winners from a shakeout are likely to be the stronger players that can seize the chance to scale up. That includes big media companies like CBS. While it has sold small-market stations in the past year or two, it may be interested in big-market outlets at the right price. Then there is Hearst-Argyle, one of the few independents to have a relatively healthy balance sheet, which could step in to pick up a bargain.

As posted by: Wall Street Journal

The Federal Trade Commission alleged an Illinois drug maker illegally bought the only rival medicine to its treatment for babies with a life-threatening heart defect and then charged high "monopoly prices" for both products.

After buying the competing drug in 2006, Ovation Pharmaceuticals Inc. raised the price of its own medicine to about $500 a vial from $36 and it priced the former rival drug about the same, the FTC claimed in a civil lawsuit Tuesday.

The FTC asked a federal court in Minneapolis to block Ovation from owning both products and to force Ovation to disgorge all profits that the agency said had resulted from the "unfair method of competition."

Ovation, based in Deerfield, Ill., said it looks forward to disproving the FTC's claims. "The company strongly disputes the claims in the complaint, strongly disputes the FTC's characterization of the facts and the propriety of seeking disgorgement," Ovation said in a statement. FTC will use the power of Qui Tam or a Whistleblower Lawyer.

FTC Chairman William E. Kovacic said the lawsuit marked the first time that the agency alleged a drug company tried to control the market for a particular treatment by buying up its competition.

"It is an example of how aggressive we are going to be on health-care competition issues going forward," added Commissioner Jon Leibowitz.

An Ovation spokeswoman declined to comment beyond the company's statement.

Ovation specializes in drugs for rare medical conditions, including a heart defect, known by its acronym PDA, that affects babies born prematurely. If not treated, the condition can prove fatal. Some 30,000 newborns a year in the U.S. go on a drug for the condition.

Merck & Co. had been selling the drug Indocin to treat the defect until the company sold the U.S. rights to the medicine to Ovation in 2005, the FTC said. After buying the drug, Ovation raised the price by $10 a vial to $36, the agency said.

The FTC said in the suit that Ovation bought potential rival drug NeoProfen, which Abbott Laboratories was developing, in order to thwart a competitive threat to its own product.

Shortly after the 2006 purchase of NeoProfen, Ovation raised Indocin's price and wound up charging $483 a vial for NeoProfen after the Food and Drug Administration approved its sale, the FTC said.

"Ovation's acquisition of NeoProfen substantially reduced competition and illegally maintained Ovation's monopoly in drug treatments for PDA, depriving consumers of the benefits of competition and the lower prices such competition would bring," the FTC alleged in the suit.

Minnesota's attorney general on Tuesday filed a similar civil lawsuit against Ovation.

Posted by Dancho Danchev

Microsoft Search Business Model To Reward Consumers and Advertisers


Original story published on microsoft.com


REDMOND, Wash. — May 21, 2008 — Microsoft Corp. today announced it will offer ad-funded cash rebates to customers who find and purchase their favorite products through a new program called Microsoft Live Search cashback. Key partners including eBay, Barnes & Noble.com, Overstock.com, Sears, Zappos.com, and WPP joined Microsoft Chairman Bill Gates at advance08, Microsoft’s annual advertising customer event, to announce their participation in the new program. The complete Live Search cashback product portfolio includes more than 10 million product offers from more than 700 merchants, including more than 13 of the top 40 U.S. retailers. The company also announced it has delivered a new Live Search travel destination, Live Search Farecast, making it easy for searchers to find the best travel deals on the Web. “We believe search can offer much more value to consumers and advertisers than it does today, and we see Live Search cashback as an important opportunity to deliver additional value,” Gates said. “Our goal is to make Live Search the most rewarding commercial search destination on the Web. Live Search cashback will help advertisers drive more online sales while giving consumers a new way to stretch their dollars.” During his keynote address, Gates outlined three areas of focus for the company’s broad search vision: Delivering the best search results by continuing to focus on relevancy and selection Expanding the role of search around the set of tasks that searchers are most often working to accomplish — including commerce, entertainment, navigation and reference — through improvements in its user experience, intelligent tools and access across devices Today’s announcements of Live Search cashback and Live Search Farecast signify that commerce queries will be the first of the four tasks on which the company will focus. As part of this “Commercial Search” strategy, Microsoft aims to make Live Search the premier search engine for the growing category of search queries that help consumers conduct research and purchase goods or services, and which are critical to merchants aiming to drive online sales of their products. The opportunity to reach consumers via search advertising is enormous and growing. According to eMarketer Inc., U.S. online retail is projected to grow to $335 billion by 2012, and today 68 percent of all those retail transactions begin at a search engine. This translates to 3.7 billion commerce-related queries a month. The primary choice for advertisers to reach these search customers is the cost-per-click (CPC) model, where merchants pay a fee each time a searcher clicks on their ad, whether or not the potential customer makes a purchase. The cost-per-action (CPA) model, where advertisers pay only when a customer makes a purchase, or completes a specific transaction, gives advertisers a more precise return on their advertising investment, and is currently being deployed on a relatively limited basis. The CPC and CPA search advertising models represent the most targeted advertising approaches available today, but there is still room for improvement. With Live Search cashback, Microsoft helps merchants maximize their advertising investments and drive more sales by providing consumers with an added incentive to buy — a cash rebate. Participating merchants choose to pay Microsoft a CPA fee each time a customer completes a sale through Live Search cashback. The fee is a percentage of the retail price, and when that transaction is complete, Microsoft returns that fee to the consumer in the form of a cash rebate. “Our business is to connect consumers with brands in the most effective and efficient ways. Microsoft’s Live Search cashback creates a real incentive for consumers to connect with our clients,” said Sir Martin Sorrell, chief executive of WPP. “We believe this is a major development in the evolution of search marketing and look forward to participating and measuring the results.” Key partners participating in the Live Search cashback offering include Abe’s of Maine, B&H, Backcountry.com, Barnes & Noble.com, Circuit City, Cookware.com, Crutchfield, eBags, eBay, Foot Locker, GiftBaskets.com, The Home Depot, HP, Jockey, J&R, Newegg.com, OfficeMax, Overstock.com, PetSmart, QVC, Sears, Spiegel, TigerDirect.com, and Zappos.com. A complete list of Live Search cashback partners can be found at http://www.live.com/cashback. “We’re happy to be partnering with Microsoft on this innovative program,” said John Donahoe, president and CEO of eBay Inc. “By combining eBay’s marketing expertise and incredible volume and velocity of trade, PayPal’s leadership in online payments, and Microsoft’s cashback program, we see a great opportunity to deliver more value in the eBay marketplace.” Live Search cashback, built on technology and partnerships acquired through Microsoft’s October 2007 purchase of comparison shopping site Jellyfish, launched online today at http://www.live.com/cashback. With Live Search cashback, Live Search users can easily find some of the best deals on the Web either at the cashback gallery — where they can compare prices and get ad-funded rebates on more than 10 million products — or by discovering cashback ads in Live Search sponsored listings. Customers sign up for a Live Search cashback account at the time of their first purchase, accrue ad-funded rebates in their account each time they purchase a product in the Live Search cashback program, and receive their rebates in their cashback account directly from Microsoft 60 days after completing purchases. Also available today is the new Live Search Farecast, which includes technology acquired through Microsoft’s April 2008 acquisition of Farecast Inc., the award-winning travel site known for helping users find the lowest airfares by predicting when to buy. Starting today, Live Search Farecast results can be found at http://farecast.live.com and via Instant Answers in the main Live Search results page. Microsoft will explore the possibility of also incorporating an ad-funded rebate option for travel services in the future.

Microsoft Live Search Expands Reach with Custom MSN Toolbar

As published by PR Newswire

REDMOND, Wash., Nov. 10 /PRNewswire-FirstCall/ -- Microsoft Corp. today announced a search distribution deal with Sun Microsystems Inc. to offer the MSN Toolbar, powered by Microsoft Live Search, to U.S.-based Internet Explorer users when they download the Java(TM) Runtime Environment (JRE(TM)), effective as of today.

Through this agreement, Internet Explorer users downloading Sun's JRE will have the option to download the MSN Toolbar and have one-click access to Live Search features, as well as news, entertainment, sports and more from the MSN network and direct access to Windows Live Hotmail and Windows Live Messenger.

"This agreement with Sun Microsystems is another important milestone in our strategy to secure broad-scale distribution for our search offering, enabling millions more people to experience the benefits of Live Search," said Yusuf Mehdi, senior vice president of the Online Audience Business at Microsoft. "With the vast array of Java software-based Web applications that are downloaded every month, this deal will expose Live Search to millions more Internet users and drive increased volume for our search advertisers."

With more than 6.5 million Java software developers around the globe, Java is one of the most widely available and popular software platforms. It is already present on 91 percent of Internet-connected PCs worldwide. The Java Runtime Environment is one of the highest-volume consumer downloads on the Web, with tens of millions of downloads each month from http://java.com.

"With over 800 million Java desktop users around the world, our goal is to provide Java users with compelling and immersive business and consumer solutions powered by Java technology and value-added solutions from world-class software partners," said Rich Green, executive vice president of Software at Sun Microsystems. "Our customers expect top-quality products when they choose to download technology from Sun, and we are confident that they will find great value in both Microsoft's MSN toolbar and Live Search."

Founded in 1975, Microsoft (NASDAQ: MSFT) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

As posted by: News Factor

The evolution of libraries from public houses for books to public houses for information took another step forward Thursday as the Bill & Melinda Gates Foundation announced a $6.9 million award for a pilot initiative to improve public access to broadband Internet.

The award was made to Connected Nation, a nonprofit that promotes broadband Internet, and to the American Library Association's Office for Information Technology Policy (OITP) to improve connectivity speeds for public libraries in Arkansas, California, Kansas, Massachusetts, New York, Texas and Virginia.

Jill Nishi, deputy director of U.S. libraries for the foundation, said "public libraries across the country have played an integral role in closing the digital divide," but local governments, communities and library supporters must do more.

About $6.1 million will go to Connected Nation to help the seven pilot states organize and to host a broadband summit of library leaders, state and local officials, and others to help build support for broadband Internet in libraries.

About $851,000 will go to OITP for research and expertise to help state agencies create strategies to "ensure library broadband connections are sustainable." As part of that effort, OITP will create and distribute case studies showing examples of how public libraries have successfully maintained broadband connectivity.

Laura DiDio, an analyst with Information Technology Intelligence Corps, said broadband connections allow libraries to play vital roles in their communities, even if other parts of their budgets are cut.

"Books aren't going away," she said, "but libraries with broadband become a portal to all that information on the Net" for underprivileged adults and children.

A recent report from the American Library Association found that nearly three-quarters of public libraries are the only source of free, public access to the Internet in their communities. But that access is slow in many libraries. Although there is a large demand for technology services, about a third of all public libraries have slow Internet connections.

The Gates foundation initiative is intended to establish connections in all libraries in the pilot states with speeds of 1.5 Mbps or faster. At this speed, access to multimedia content on the Web, including streaming audio and video, becomes feasible.

The foundation has indicated it will be continue to be in this field for some time. In addition to the initial round of nearly $7 million in funding, it has invited the pilot states to submit proposals to "support the increased cost and implementation of faster Internet connections."

So far, the foundation has awarded $325 million in grants and other support for computers in libraries and for training library staff. Its programs have reached all U.S. states and territories.

As posted by: Wall Street journal

BEIJING (Reuters) - A man who lost his job and was harassed by strangers after his infidelity to his late wife was detailed online has won China's first case against Internet vigilantism, the China Daily said on Friday.

A Beijing court ruled Wang Fei's reputation had been damaged by his late wife's university classmate, Zhang Leyi, who posted online the diary excerpts she wrote months before she killed herself, and by the internet company that hosted the comments.

"As Zhang was spreading the details of the affair, he also gave out details of Wang's real name, name of his company and even family addresses, which infringed the plaintiff's privacy rights," the chief judge said.

Zhang was ordered to pay Wang 5,000 yuan ($730) and the Beijing Lingyun Interactive Information and Technology Co Ltd, was ordered to pay 3,000 yuan ($440).

He said he began the website that carried the diary narrating (Wang's wife) Jiang's misery after discovering her husband's adultery two months earlier, to "commemorate Jiang's death and help bring her justice."

Internet users angered by the story mounted a cyber manhunt for the twenty-something Wang, mobilizing the phenomenon known in China as the "human flesh search engine."

Wang was reportedly forced to resign, and had trouble finding another job, after strangers tracked him down and contacted the companies where he and his lover worked, the paper said.

Expletives were painted on his parents' door, and his photos, addresses, and phone numbers were made public online.

China's 290 million-odd Internet users have claimed the scalps of several government officials through such disclosures in recent years.

Last month, China's transport ministry fired an official for manhandling an 11-year-old girl at a local restaurant, after Internet users posted images and his personal details online.

However the online mob's harassment of more mundane characters involved in domestic disputes has left academics bemoaning China's weak privacy laws.

As posted by: AFP

TOKYO (AFP) - A group of Japanese journalists, professors and lawyers demanded Friday that the US Internet search giant Google scrap its "Street View" service in Japan, saying it violates people's privacy.

Google launched Street View in the United States last year, providing pictures of panoramic all-around street-level views at locations on its online maps.

The service was expanded to 12 major cities in Japan in August and six cities in France in October.

The group said it sent a petition to Google's Japanese subsidiary, demanding an end to the Street View service in Japan.

They wrote that Street View "constitutes violent infringement on citizens' privacy by photographing residential areas, including community roads, and publishing their images without the consent of communities and citizens."

They complained that via the Internet, Street View was distributing private information "more easily, widely, massively and permanently than ordinary cameras and surveillance cameras do."

Local municipalities in Tokyo and Osaka have already appealed to the national government to take action against the site.

The Google Japanese unit earlier said it was blurring the faces of people seen in Street View scenes by special technology and that it would delete the pictures of people and buildings upon request.

Japan has stricter protections on privacy in public than in the United States, with Japanese able to stop their pictures from being used against their will.

As posted by: AFP

The Internet's been around in some form for decades. It wasn't until the mid-80s, though, that the Web as we know it started coming together -- and those precious dot-com domains started getting snatched up.

As we finish out the tech-centric year of 2008, we thought we'd take a look back at the Internet's oldest commercial Web sites -- the ones registered back when chatting about "the Net" was as socially acceptable as wearing Jedi garb into a crowded nightclub. So grab your light sabers, dear friends -- we're boarding the Millennium Falcon and heading back to a virtual galaxy far, far away.

Let me set the scene for you: The year was 1985. MS-DOS 3.0 was the PC operating system of choice, most commonly run on the top-selling Tandy 1000 personal computer.

A newly formed company called Dell was getting ready to release its first machine, the "Turbo PC." The Commodore Amiga 1000 was also about to hit the market.

That same spring, the first dot-com domain was registered with the sale of symbolics.com on March 15, 1985. The site belonged to a computer manufacturer known for its Open Genera Lisp and Macsyma computer algebra systems.

Symbolics declared bankruptcy in the early 90s but is still under operation with new owners. That means symbolics.com is the Internet's oldest still-functioning dot-com domain -- and, I must say, it still looks like it was designed in 1985.

Some of the other early dot-coms are domains we know well. The ninth recorded registration went to hp.com on March 3, 1986. IBM bought its domain a couple of weeks later. AT&T followed in April, and Apple joined the club after another year. Unfortunately, the Internet Archive's Wayback Machine only goes back to the mid-90s, but even in 1997, you can see how relatively low-tech apple.com looked compared to the snazzy standards we enjoy today.

Some other noteworthy notches on the dot-com timeline that didn't make the first 100: Microsoft bought microsoft.com in May of 1991; PC World entered the online world in April '92; Yahoo reserved its dot-com home in January of 1995; and Google grabbed google.com in September of 1997.

As a heads-up, one conspicuous omission that may catch your eye: anything remotely pornographic. (Those 2400 BPS modems didn't make for great image transmission.) Allow me to satisfy your curiosity, though: Sex.com first surfaced in 1994. Porn.com came into existence about a year later.

As posted by: AFP

PARIS (AFP) - The Internet economy could shrink in 2009 because of the worldwide downturn, the OECD warned Monday in a report that forecast contraction of the semiconductor industry and cutbacks by corporate customers.

The Paris-based Organisation for Economic Co-operation and Development said that "with the outlook for the global economy worsening and business and consumer confidence plummeting, growth will remain flat or decline in 2009."

The report also forecast growth of four percent in the IT industry this year and said some sectors such as software, outsourcing, Internet sales and infrastructure investments would "weather the storm better than others."

The report said the semiconductor industry -- seen as a leading indicator for the information technology sector -- would fall nearly six percent in 2009 after weak growth of 2.2 percent in 2008.

SN Would Like Google and Yahoo on board before it adopts new rules.

Microsoft said it wants Google and Yahoo to agree to European demands to cut the time they keep users' search-engine records before it does the same.

While Microsoft is able to meet the requirements, it wants to wait until its larger search rivals get on board, Brendon Lynch, the company's director of privacy strategy, said Sunday in a telephone interview. A group of European Union officials — dubbed the Article 29 Data Protection Working Party — have asked search engines to purge their user records after six months.

"The proposals are feasible, but we want them to be adopted industrywide,'' Lynch said. "If Microsoft alone adopted the recommendations of the Article 29 Data Protection Working Party, it wouldn't have a broad impact on its users in Europe because our market share is so small.''

Shortening the length of time that search engines keep such records could eat into advertising revenue, the main source of sales for Google and Yahoo. The companies rely on users' queries to target advertising more specifically. That has raised privacy questions, since search engines keep track of exactly where customers go online and what they read and buy.

Search-engine providers that retain online search data for longer than six months break EU privacy laws, the Article 29 group said in April. The association is made up of data-protection officials from the 27 EU nations and from three non-EU countries, including Norway.

Microsoft said in July 2007 that it would remove identifiers from individuals' search data after 18 months. That same month, Yahoo said it would adopt a 13-month cutoff.

Both Microsoft and Yahoo trail Google in European Internet search traffic. Google has almost 80 percent of the market, while Microsoft and Yahoo together account for about 4 percent, according to research company ComScore.

As posted by: Wall Street Journal

TOKYO -- Even as the electronics industry wages a price war in the U.S. to drum up sales, Sony Corp. is heading in a different direction in Europe.

In an industry where prices for televisions and digital cameras have consistently declined, Sony says it will next month start raising prices of a range of products sold in Europe. The reason: It needs to recoup some of its foreign-exchange losses after the yen has soared more than 25% against the euro since July. A stronger yen cuts into overseas revenue when brought back as yen.

The price increase, likely to be followed by other Japanese makers, shows how vulnerable Japanese companies still are to sharp currency fluctuations. Making matters worse, some of their fiercest competitors, South Korea's Samsung Electronics Inc. and LG Electronics Inc., have seen the Korean won fall 30% in value against the dollar and 25% against the euro this year. The companies haven't announced price changes in Europe. But at the very least, the weak won allows the Korean rivals to hold prices flat in Europe while absorbing some of the price cuts in North America. Sony plans to raise prices on sony laptops.

A price increase could also slow Europe's emergence in recent years as a critical market for Japanese electronics makers, which already face stagnating sales at home and cutthroat pricing in North America. In the past few years, the euro's strength against the yen and a surge in consumer spending from emerging markets in Eastern Europe helped spur revenue growth.

European consumers, who tend to put an emphasis on design, have been more willing to pay a premium for high-end products compared with U.S. consumers.

Last year, for the first time in the company's 62-year history, Europe became the largest consumer of Sony products, surpassing the domestic market and even the U.S. It is now targeting European consumers by creating new products specifically for the region, such as the Bravia EX1 LCD television, which has a built-in high-speed wireless link to allow it to double as a large-screen digital picture frame.

Earnings revisions from the biggest names in Japan's electronics industry have been rolling in over the past few weeks, and all have placed some blame on the yen's rise. Toshiba Corp. lowered its earnings forecast in September, followed by Canon Inc., Hitachi Corp. and Panasonic. Sony, which already issued a profit warning in October, said last week it would shutter as many as six factories and cut its electronics division work force by 16,000 workers.

Even though most Japanese companies hedge a lot of their yen foreign-currency exposure and lock in an exchange rate at three-month intervals, a sudden move by the yen often wreaks havoc on an exporter's earnings estimates.

Sony has plants in Slovakia, Spain, Hungary and Wales to supply the European market, but many of its parts come from outside the euro zone, leaving the company's production costs vulnerable to currency shifts.

As posted by: Wall Street Journal

If you use the Internet regularly, your activities are likely spread out all over the Web. You might be sharing photos on Flickr, emailing via Hotmail, posting status updates on Facebook, following tweets on Twitter, sending instant messages on Google Chat and keeping a calendar on Apple's MobileMe. You hop from one site to the next, juggling different user names and passwords.

Last month, Microsoft unveiled Windows Live, its Web-based attempt to consolidate many of these activities. Windows Live can be found at home.live.com and includes programs that cover a lot of ground: Hotmail (email), SkyDrive (online storage), Spaces (blogging), Calendar and Events (online invitations). Four new Windows Live categories -- Profile, People, Photos and Groups -- create a Facebook/MySpace-like feel by following activities of networked users and sharing that data with others.

WSJ's Katie Boehret takes a look at Microsoft's Windows Live Web services and Essentials.

If you're using a Windows PC, you can additionally download a suite of seven free desktop applications called Windows Live Essentials from download.live.com that enhance and coordinate with the Windows Live services. These include Messenger, Photo Gallery, Mail, Writer, Movie Maker Beta, Family Safety and Toolbar. I downloaded the Essentials and enjoyed using many of them, especially Mail, Messenger and Toolbar.

But I focused my testing this week on the Windows Live Web services, which, as advertised, let me control various elements of my digital life in one place with one password. SkyDrive is a simple and approachable online-storage repository that will be truly useful for a lot of folks who want a central place to keep files. The Windows Live Profile offers handsome personalized pages with bright colors and designs; compared side-by-side with a Facebook page, it made Facebook look dull and sparse. I also used Windows Live Photos to upload digital photos onto my Profile and then shared them with friends and family in three quick steps.

Microsoft smartly realized that most people already visit a variety of sites for online pursuits and will want to add those activities to their Windows Live Profile. Users can currently link to 12 other sources, including Twitter, Flickr, Photobucket, WordPress, Pandora and Yelp -- but not Facebook or MySpace. Microsoft says that it's working to build relationships with Facebook and MySpace and hopes to have related news next year.

But though various Web activities can be added to a Live Profile, this connection isn't as productive as it could be. Take Twitter, for example. I added my Twitter account to my Live Profile, but on Live Profile I could see only tweets from myself and from people in my Windows Live network. To see tweets from the 50 people I follow on Twitter, I had to go to Twitter.com.

I had a similar experience with Pandora. I added my Pandora account to my Live Profile, and when I bookmarked Keith Urban as a favorite artist, this tidbit appeared on my Live Profile page. But when I listened to Christmas tunes for a few hours, nothing on my Profile page reflected this (i.e., "Katie is listening to Bing Crosby's 'White Christmas' ").

After linking my Live Profile to my Flickr account, I posted photos on Flickr.com, and seconds later, these pics appeared on my Live Profile. But other activities from Flickr weren't reflected on my Live Profile, such as when my contacts posted photos or when those in a Flickr group of which I'm a member posted photos. To see this, I had to visit Flickr.com.

Microsoft says that in the case of Web activities, the outside companies choose what to show and what not to show. But I can't use Windows Live as a home base for my other online activities unless it displays useful data that save me trips to other Web sites.

Like many social-networking services, Windows Live gives special privileges to those who are in the network. To belong to a Windows Live network, one must first have a Windows Live ID, which anyone can get by signing up for Hotmail, Windows Live Messenger or Xbox Live.

Windows Live also allows interaction with people outside the network. For instance, I can share any of the photos that I upload to my profile with friends and family who don't have Windows Live IDs by simply emailing a link to them. These people don't need a Windows Live ID to look at the photos.

When I used Windows Live to share photos with my sister, who has received hundreds of digital shots from me on every photo-sharing Web site I've tested, she wasn't impressed. She correctly pointed out that other sharing sites, like Shutterfly, allow full-screen slideshow views; Windows Live limits slide shows to the size of the browser window.

Windows Live Web services work best on Microsoft's own Internet Explorer browser, version 6 and up, and a special quick-photo-upload tool works only with Internet Explorer. This uploading tool doesn't work with Apple's Safari browser or the Mozilla Firefox browser; instead, you must slowly add each photo to your page, selecting them one at a time.

If you're using a Windows PC, the Windows Live Essentials are definitely worth installing. Photo Gallery enables simple photo publishing directly from your computer's collection of My Pictures, and specific faces can be labeled and tagged in each shot. Windows Live Mail, which replaced Outlook Express last year, is a smoothly designed program that I rely on every day for use with three different email accounts. Windows Live Messenger links into the Live Web services specifically by retrieving the status updates for each person in your network and displaying those in a ticker-like panel at the bottom of Messenger. The Windows Live Toolbar works only in Internet Explorer but shows an at-a-glance view of your network's updates, along with photos, email and calendar -- all in the top panel of the browser.

Windows Live Essentials are still in beta, or testing, mode, and Windows Live Web services will add more partnerships next month. I'll be anxious to see if these new partnerships operate more productively with the Live Profile. Aggregating content from across the Web isn't worthwhile unless that content is fully and usefully accessible in its new home.

Still, Windows Live Web services and Essentials provide solid tools that can help you organize your email, messaging, photos, storage, scheduling and social networking in one place with one password. That, by itself, is a relief.

As posted by: Wall Street Journal

Parents worried about cyberbullying and other harmful behavior among children online are getting new help from some of the sites most popular with young people.

YouTube and some social-networking sites are making it easier to report abuses such as cyberbullying, in which kids -- and, appallingly, some adults -- use online postings and emails to hurt others. The trend puts more tools in the hands of parents whose kids are the targets or the perpetrators of bullying.

Most teens know someone who has been harassed on-line; 11% of middle schoolers report being bullied on the Web recently, says a study of 3,767 students published last year in the Journal of Adolescent Health. Another 7% said they had been bullied and admitted they had harassed others; an additional 4% said they had played the bullying role.

Web sites' responses to what families regard as crises have often been maddeningly slow. Earlier this year, a California mother says, students at her son's middle school posted on YouTube a video showing a distorted image of his face with a ridiculous singing voice dubbed in. The video, which used her son's full name, prompted even more insulting online comments, and he became a target of derision at school. Although family members contacted YouTube online at least 20 times, she says, the video remained up for eight days.

Victoria Grand, YouTube's head of policy, says she didn't see the video and can't comment on it but has "tremendous sympathy" for the family. YouTube has "a zero-tolerance policy for predatory behavior, stalking, threats and harassment" and reacts to most flags in less than an hour, she says; videos raising "more complicated" issues may take longer.

Last week, YouTube took a major step by unveiling a new "Abuse and Safety Center" tool, including a tab on its home page that leads users through a step-by-step reporting process. Also, citing "the increasing number of videos showing children involved in violence," YouTube recently changed language on a menu for flagging problems in order to encourage reporting.

Columnist Sue Shellenbarger answers readers' questions about paid parental leave for independent contractors and career opportunities for ex-offenders. Read Work & Family Mailbox.

MySpace, the biggest social-networking site, is building technology to improve its capacity to delete hate speech and other harmful postings even before users report them, Hemanshu Nigam, chief security officer, told an industry safety conference last week. The site has been expanding e-mail and phone-reporting conduits for parents and generally responds within 24 hours. Parents can flag abuse through either the "Contact MySpace" tab or the "Safety Tips" tab, which links to a "For Parents & Educators" page and a parent guide to MySpace, part of News Corp., owner of The Wall Street Journal.

Facebook is continuing to refine its reporting and take-down procedures, says chief privacy officer Chris Kelly. The site posts "Report this" tabs and commits to responding within 24 hours to complaints about nudity, pornography or harassment of minors. Its Facebook.com safety page has a link to an auditing firm to provide feedback on its responsiveness. Another site, myYearbook.com, posts a "Report Abuse" icon and usually responds within 24 hours.

While all the sites are staffed 24/7 for complaints, the sheer volume of incoming material (YouTube gets 13 hours of new video every minute) and the fact that most complaints are bogus pose obstacles.

It's best, when possible, to attack cyberbullying at a grassroots level. Several years ago, a teen I know was beaten by fellow high-school students while other students ran videotape, which quickly appeared online. Only after her parents reached out to school officials and the bullies' parents, insisting calmly on fair play, did the offenders take it down.

In addition to talking with kids about Internet conduct, parents can teach them to "stop, block and tell" in response to cyberbullying -- to stop responding to bullies, block communication from them and tell a trusted adult, says Parry Aftab, executive director of WiredSafety.org.

Then, join the sites your child uses and learn log-in information and URLs. This will help you flag problems effectively.

As posted by: Wall Street Journal

Yahoo Inc. said it will cut the time it stores personally identifying data about users' online searches to 90 days, amid pressure from privacy advocates and legislators.

The Internet portal, which had previously stored such data for 13 months, said it would make exceptions in cases of fraud or security concerns, in which case it may keep users' data for six months. The Sunnyvale, Calif., company said it will scrub user data not just on Internet searches but also on page views and ad clicks.

When Internet users look for information on the Web they leave an electronic trail, which all online companies keep for a certain amount of time.

Google Inc. took steps in the same direction in September, when it halved the time its stores users' personally identifiable search data to nine months.

Here's the story from yahoo.

SUNNYVALE, Calif. & London--(BUSINESS WIRE)--Today, Yahoo! Inc. (NASDAQ:YHOO - News) announced a new global data retention policy that sets an industry-leading approach to user data privacy. This new policy strengthens Yahoo!’s relationship of trust with its 500 million users world-wide and enhances its longtime leadership on privacy.

Under the new policy, Yahoo! will anonymize user log data within 90 days with limited exceptions for fraud, security and legal obligations. Yahoo! will also expand the policy to apply not only to search log data but also page views, page clicks, ad views and ad clicks.

“In our world of customized online services, responsible use of data is critical to establishing and maintaining user trust,” said Anne Toth, Yahoo!’s Vice President of Policy and Head of Privacy. “We know that our users expect relevant and compelling content and advertising when they visit Yahoo!, but they also want assurances that we are focused on protecting their privacy.”

Fueled by a focus on consumer privacy, regulators, legislators and advocates from around the globe have asked the industry to examine data policies with a focus on retention periods.

Yahoo! conducted a comprehensive review of its data practices across the globe. The heads of business and engineering units worked with privacy and data governance teams to thoroughly review data needs for global products and services, striving to ensure that Yahoo! retains data only long enough to serve our business and create the highest quality user experiences while maintaining the ability to fight fraud, secure systems, and meet legal obligations.

Users won’t see a difference in their experience with Yahoo! products or services, and advertisers will continue to leverage our innovative interest-based advertising systems to deliver the most relevant ads to those users.

“This policy represents Yahoo!’s assessment of the minimum amount of time we need to retain data in order to respond to the needs of our business while deepening our trusted relationship with users,” continued Toth. “We’re proud this new policy sets a new benchmark for the industry.”

To protect users and our business partners, there will be some specific and limited exceptions to the anonymization policy. In order to fight fraud and preserve system security, Yahoo! will retain system specific data in identifiable form for no more than 6 months -- but only for this purpose. Yahoo! may have to retain data for longer periods to meet other legal obligations.

This week, the Ponemon Institute and TRUSTe released their Most Trusted Companies for Privacy survey with Yahoo! ranking as the 14th overall trusted company and the highest ranked search engine appearing on the list.

As Posted By: Wall Street Journal

Pizza chains are offering even more ways to satisfy your carb cravings.

Now instead of just picking up the phone, pizza eaters can order a pie digitally -- over the Web, through cellphone applications and even via Facebook, a social-networking site. Moreover, couch potatoes can order a Dominos pizza from their TV by using the broadband TiVo service available to subscribers.

It's all a push to stay competitive with what may be the country's most popular food.

"Right now, the No. 1 food that people bring home is pizza, no doubt," says Harry Balzer, vice president of NPD Group, a consumer-marketing firm. "It's the third-most-popular food ordered in restaurants [behind burgers and fries] and the No. 1 food ordered by children under the age of 18," Mr. Balzer adds.

But the major pizza chains, such as Pizza Hut, a unit of Yum Brands Inc., Domino's Pizza Inc. and Papa John's International Inc., are fighting for their share of the pie these days. Mr. Balzer cites the growing number of restaurants offering take-out meals, as well as the growth in supermarkets that offer frozen, restaurant-quality pizzas.

To keep customers coming back, major pizza chains are adding more menu items, such as appetizers and desserts, and offering more ways to order. We tested some of these ordering methods to see if technology offers an edge when ordering slices.

In all cases, we ordered a large pie using a digital method: a cellphone text message (Papa John's); a TiVo account (Domino's); a Facebook page (Pizza Hut); and a form on the Web (Uno Chicago Grill). And in all cases, the pizzas were prepared as we ordered them. Still, some of us wondered if technology made it any easier to get a pizza than, say, calling in an order.

Our first order was placed at a Dallas-area Pizza Hut using Facebook. To find the application, type Pizza Hut in the Facebook search box. Then, fill out a one-time registration form that asks for a name, address and date of birth. (All the pizza chains we tested require users to be at least 13 years old.)

The application allowed us to choose a specialty pizza or build our favorite pie by choosing from a list of toppings. We also had the option of entering a credit-card number, minimizing the fumble for cash when the doorbell rings. The pizza arrived at our apartment complex, albeit eight minutes later than the time given in the chain's confirmation email. And to the relief of the testers, Pizza Hut's application doesn't notify all of our Facebook friends that we just ordered a stuffed-crust pizza with pepperoni and mushrooms.

For a Papa John's pie, we went to the company's Web site to enter our user information and set our four "favorites" -- the pizzas and other menu items we would like for pick-up or delivery. The next day on the train commute home, we sent a cellphone text message to Papa John's, typing FAV2 -- indicating we wanted to order the second of our four favorites for pick-up. A second text message is sent to confirm the order, and another text message is received to give the estimated delivery time. A person at the local Papa John's also called our cellphone to confirm that we wanted to pick up the pie. In the end, we spent more than $1 in carrier charges because of our pay-as-you-go cellphone plan.

Still, the set-up and pick-up went seamlessly -- our specified pie, a thin-crust white pizza, awaited us at the Papa John's near our train depot.

In our Domino's test, we placed our most-complicated order, a 14-inch pizza with three toppings: mushrooms on the whole pizza, black olives on one half and green peppers on the other half. (Oddly, customers can even specify if they want the toppings on the left half or the right half of the pie.) And we ordered the pie from in front of the TV, using TiVo.

Because of the one-time setup, ordering was a little more time-consuming than we anticipated, taking about seven minutes. After scrolling through and selecting our menu choices, we entered our personal information, character by character, using the Tivo remote. Shortly after placing the order, the Domino's driver called our house to verify directions and let us know he was leaving with the pizza soon. The pizza arrived on schedule and was made to our specifications -- an experience that was so simple, we plan to use TiVo again for pizza.

For our last test, we used the Internet to order a pizza from Uno Chicago Grill. We found the Web site useful, with pictures of pizzas and appetizers and tabs that allowed us to browse the salad and pasta sections.

Rick Hendrie, senior vice president of marketing with Uno Chicago Grill, says the pictures have another effect: People ordering online tend to buy more food. "They order with their eyes. Over the phone, you go with a default order," Mr. Hendrie says. It's a sentiment echoed by Papa John's, where online sales are about 10% higher than orders placed over the phone or by walk-ins.

Mr. Hendrie and others also note that orders placed online tend to be more accurate. As one tester noted, "It's sometimes hard for the pizza place to hear the difference between pepperoni and green pepper when you're talking on the phone."

Accuracy slipped in our order to Uno Chicago Grill's Pizzeria Due location, however. First, it wasn't immediately clear how to add other toppings beyond the nine combinations listed. Eventually we found the boxes to check for additional toppings and a way to customize our pie with sausage and, just on half, onions and mushrooms, by writing it into a box for special instructions. We also added three root beers to our order and asked the pizzeria to make sure the pizza was hot when we arrived.

The pizza was indeed hot, and the store followed our instructions about the mushrooms and onions. But it forgot to give us our root beers.

Four pizzas later, we're left to ask if digital ordering makes life simpler. Anyway you slice it, there's still work involved with the one-time setup. But it may be worth it, for the convenience, the accuracy and occasional coupons and discounts offered for online orders. Those who are comfortable with technology and multi-tasking may be going back for seconds.

As posted by: Wall Street Journal

The Irish rock band U2 hasn't toured since 2006, but it stands to make $25 million in a sweetheart stock deal, according to SEC filings Wednesday and people familiar with the matter.

In March, the band struck a 12-year deal with Live Nation Inc., that called for the concert promotion giant to pay U2 partly with stock. Live Nation promised to pay tens of millions of dollars to high-profile artists in exchange for several years' worth of revenue from a broad range of their work, including concerts, online fan clubs and t-shirt sales. The idea was pitched as a novel way to make money in the ailing music business.

The company had held up the stock component of the U2 deal as evidence of the band's faith in Live Nation, as well as confidence in its new business model.

But that faith was shaken Wednesday when the band moved to sell the shares, forcing Live Nation to make up an estimated $19 million in losses.,

Live Nation had guaranteed that U2 would receive $25 million for 1.6 million shares. But the current market value was just $6.1 million at the close of trading Wednesday. That leaves Live Nation on the hook for the balance, which the company said Wednesday in a SEC filing it would pay with cash on hand or borrowed money.

There could be more bad news coming from another of the company's marquee acts: Madonna. In April, Madonna is eligible to sell $25 million of stock under the terms of her contract, even though the stock's market value has plunged 83% since she struck her deal in October 2007.

Live Nation Chief Executive Michael Rapino sought to play down the significance of the stock sales. "Madonna and U2 are the only two deals that did contain this provision," he said. "The Madonna business is great, and we look forward to monetizing our investment in U2 next year."

Madonna's current "Sticky & Sweet" world tour is the pop star's first outing since she signed her 10-year, $120 million deal with Live Nation.

Live Nation expects to start recouping its investment in U2 when the band begins a planned tour next year and releases its 12th album.

Reached in London, where U2 is wrapping up work on the forthcoming album, band manager Paul McGuinness said: "We're very much in business with [Live Nation] and we're planning to tour in 2009."

Madonna and U2 were the first of six superstar acts whom Live Nation has agreed to pay hundreds of millions of dollars each for several years' worth of revenues. Jay-Z, Nickelback and Shakira are among the other artists with whom Live Nation has deals.

As posted by: Wall Street Journal

Walt Disney Co. said it will form a joint venture with a Russian broadcaster to offer a Disney-branded television channel on 30 stations throughout Russia, marking a major foray into the country's media market.

The entertainment conglomerate based in Burbank, Calif., will form a subsidiary, which will hold a 49% stake in the venture with Russian broadcaster Media-One Holdings Ltd. Disney will invest cash and provide content to Media-One, which will allow the company to expand viewership of its popular U.S. franchises -- such as "Hannah Montana" and "High School Musical" -- as well as locally produced shows.

The channel is slated to launch sometime next year, pending Russian regulatory approval, according to Disney officials. The move is a significant push into Russia, a market that many Western entertainment companies are hoping to tap.

In the last year, Disney struck licensing deals with two of Russia's biggest broadcasters to air various content, including movies and popular Disney television shows. But until now it hasn't had a dedicated channel for its content in Russia. Disney has also launched Disney Cruises and Luxury Cruises.

Disney this year has created a Russian version of its Web site, begun a stage version of "Beauty and the Beast" and started production of its first Russian-language film, scheduled for release in Russia next fall. Disney's blockbuster films, including the "Pirates of the Caribbean" franchise, have also fared well theatrically in Russia. Next year, Disney's cruise line will also dock in St. Petersburg.

"Russia is an extremely important market for Disney and this new Disney channel is a great way for us to expand our brand and business," Disney Chief Executive Robert Iger said in a statement.

However, Disney's expansion coincides with a sharp slump in what had been a booming Russian economy. Doing business in Russia -- particularly in media -- can be treacherous because of an unpredictable political and economic climate.

But Mr. Iger has made international expansion a focus of Disney's strategy. The company is increasing its presence in India and negotiating with Chinese officials for a possible theme park in Shanghai and a potential expansion of its existing Hong Kong theme park.

As Posted by: Wall Street Journal

Jeffrey Immelt lowered profit projections for General Electric Co.'s industrial businesses -- including jet engines, power turbines and medical equipment -- but said the units should still make money despite the global economic downturn.

Chairman Jeffrey Immelt said GE expects its revenue to fall up to 5% next year as the company's finance unit shrinks amid the credit crisis.

Mr. Immelt declined to offer a corporate-wide earnings forecast for 2009. But his projection for the industrial units for next year, combined with GE's previously announced plan to shrink its finance unit, suggest overall profit at the Fairfield, Conn., conglomerate will decline in 2009 for a second consecutive year.

GE had to lower its earnings forecast several times this year, contributing to a 52% decline in its shares in 2008.

Mr. Immelt said GE had dropped plans for the moment to sell or spin off its unit that includes its light bulb and appliance divisions. Analysts say the operations had generated little interest from potential buyers.

Mr. Immelt said GE had managed the credit crisis and recession better than competitors and would benefit next year from its services businesses and declining materials costs. "We come through this having learned a lot," he told analysts and investors in his annual outlook speech at NBC's studios in New York. "I'd say the environment is toughest for people of my generation. It's the toughest environment we have ever seen."

Mr. Immelt said GE projects its revenue, estimated at $185 billion this year, will decline as much as 5% next year, as it shrinks the finance unit in response to the credit crisis. But he said GE has no plans to divest the unit, which he said still meshes well with other GE businesses. For example, the unit offers financing to buyers of its industrial products.

Mr. Immelt reiterated GE's plan to maintain its annual dividend of $1.24 a share next year. Some analysts have questioned whether the dividend, which now represents almost a 7% yield on GE shares, would consume almost all the company's cash flow, leaving little money for strategic moves and little margin for error.

GE will take $5 billion out of costs in 2009 through restructuring and headcount reductions, Mr. Immelt said.

GE shares rose 97 cents, or 5.7%, to $17.92 in 4 p.m. New York Stock Exchange trading Tuesday, slightly outpacing the gain in the Dow Jones Industrial Average.

Mr. Immelt said profit in GE's industrial units would rise less than 5% next year. That is less than half of GE's October projection of 10%. The segment also includes NBC Universal.

Deane Dray, a GE analyst, called the new projection "reasonable." Other analysts had been projecting profit in GE's industrial units to decline next year. Mr. Immelt said GE will enter 2009 with roughly $55 billion in backlogged orders for industrial equipment, equal to the backlog in July.

Analysts expect GE to post overall earnings of $1.50 a share in 2009, down from GE's projection of $1.78 to $1.84 for this year and $2.20 in profit last year, according to Thomson Reuters.

To learn more about GE click here.

As posted by: Wall Street Journal

Best Buy Co. reported a steep drop in profit Tuesday, but investors cheered amid signs it is weathering the recession better than many of its retail rivals.

The nation's largest consumer-electronics chain by sales reported improved margins at a time of heavy discounting. Best Buy also said it continued to gain market share for highly discretionary items such as home-theater equipment, mobile phones and global positioning systems.

The retailer based in Richfield, Minn., said it was taking measures to shore up finances -- a step that Wall Street had urged for months.

Best Buy will limit new store openings in the U.S., Canada and China, and is offering buyouts to nearly all its 4,000 headquarters employees.

The combination of cost-cutting and signs that Best Buy was persevering through the downturn pleased investors, who believe it will prosper when the economy picks up. "Much of our enthusiasm on Best Buy over time is its potential for market-share gains as competitors fall by the wayside," said Credit Suisse analyst Gary Balter.

Best Buy shares surged 18%, or $4.21, to $27.68 at 4 p.m. in composite trading on the New York Stock Exchange as critics of the company's expansion plans, which include moves into Mexico and the United Kingdom, saw the results as confirmation that executives wouldn't put growth over profit.

Still, earnings were worse than expected for the fiscal quarter ended Nov. 29. The company posted a 77% drop in net profit, to $52 million from $228 million in the same period a year earlier. The latest period included a $111 million pretax charge for writing down its 2.9% stake in Carphone Warehouse Group PLC., a U.K. mobile-phone retailer. Third-quarter sales were better than expected, rising 16% to $11.5 billion.

Gross margin, a measure of profit before overhead, rose 1.5 percentage points to 24.9% in part because of the addition of higher-margin phone sales through the European joint venture with Carphone.

Margins in the U.S. also rose, the company said, despite a continuing liquidation sale at 155 stores due to be closed by a direct rival, Circuit City Stores Inc.

Chief Executive Brad Anderson said in an interview that the Carphone write-down wasn't a reflection of the joint venture's standing. The company last year paid $183 million for its Carphone stake.

"We invested in Carphone Warehouse at a time when the stock was worth a lot more than it is today. It was a little heart-wrenching for us because this is one of the best partnerships we have made."

Mr. Anderson said that the company was now cutting costs, including a 50% reduction in capital spending next year, because it couldn't reasonably predict the near future -- and, if anything, expects a long-lasting economic slump.

"We want to make sure the company retains its financial strength," he said. Nonetheless, Mr. Anderson said Best Buy plans to continue to invest strategically because he is convinced that companies that have the strength to do so will reap huge rewards.

"We are going to plant quite a few seeds over the next few years, things that will give us quite a few options when the economy begins to prosper again. We could increase our short-term profits by stopping that, but we hold that sacrosanct."

Best Buy didn't specify how many corporate jobs it wants to reduce, but it didn't rule out firings. Even though it will slash capital expenses in half during the next fiscal year, it won't necessarily translate to a 50% reduction in new-store openings, executives said.

Best Buy said it already had invested in remodeling many of its stores to showcase global positioning systems, mobile phones and other hot-selling categories, and has begun promoting more heavily a customer-loyalty program it began years ago.

Best Buy opened its second-largest store world-wide in Mexico this month, and plans to continue expanding Best Buy Mobile, a smaller stand-alone store format catering to phones, handheld games and music players that the company believes has strong potential. It now has 40 Best Buy Mobile stores in the U.S.

"We know there are a good number of customers at play in this marketplace," Best Buy President Brian Dunn told analysts, adding, "I hope you don't hear, 'hunker down, duck and cover.'"

As posted by: Wall Street Journal

Adobe Systems Inc. is facing increasing pressure from Microsoft Corp., which is using its deep pockets to challenge Adobe's dominance of Web design software.

Adobe's Flash software, which adds video and animation to Web sites, is at the heart of many popular Internet destinations. Retailers, media outlets and entertainment sites rely on Flash to make their sites interactive and to serve up advertisements.

But Microsoft has recently launched a new version of its competing Silverlight technology and has been aggressively courting the operators of popular Web sites and advertising agencies that are Adobe's core customers.

Netflix Inc. recently said it would use Silverlight to stream movies over the Internet. When CBS Corp.'s college sports group decided to build its Web site using Silverlight earlier this year, Microsoft chipped in free development and support that "reduced our costs tremendously," said Tom Buffolano, the CBS business unit's former chief. A CBS spokesman declined to comment.

Winning the war with Microsoft "is clearly the most important priority," said Adobe Chief Executive Shantanu Narayen.

The economic downturn is adding to Adobe's challenges. The company Tuesday said its net income rose 11% for the quarter ended Nov. 28, but revenue growth stalled. Sales were $915.3 million, little changed from a year ago and below Adobe's original targets. Adobe is forecasting revenue for the current quarter will decline about 5% to 10%. Earlier this month, Adobe said it would cut 600 jobs, or 8% of its work force.

Microsoft sees opportunity in the economic pressures on Adobe. "I'm sure that we will gain ground technologically," said Bob Muglia, senior vice president of the Microsoft unit responsible for Silverlight.

Adobe's Flash player is installed on about 98% of Internet-connected PCs, and Silverlight is only installed on about 25%, according to Adobe and Microsoft. Adobe executives said this gives the smaller company about a two-year head start. But Microsoft is "willing to invest" in order to win certain "trophy sites," said Mr. Muglia.

Earlier this year, for instance, General Electric Co.'s NBC Universal chose Silverlight over Flash to deliver video from Beijing Olympics over the Web. Microsoft was an official sponsor of the Democratic National Convention, which streamed video using Silverlight.

Spokeswomen from Microsoft and Adobe declined to comment on the terms of these deals, as did representatives from the Web sites.

"There's no doubt that Adobe is ahead of Microsoft in terms of features," said Al Hilwa, an analyst at research company IDC. "But winners aren't always picked on merit. Companies strike deals, woo customers, and try to build an ecosystem. Microsoft is very good at that."

Adobe isn't without wins: In November, MLB.com LLC, the Web site for Major League Baseball, switched to Flash from Silverlight for online video of games.

Last year, Web design firm Cynergy Systems Inc. began using Microsoft tools for the first time to build Internet sites. While Cynergy still uses Adobe technology for 80% of the sites it builds, it uses Silverlight for the other 20% and that work is growing more quickly, said Dave Wolf, Cynergy's vice president of sales and marketing.

While millions of software programmers use Microsoft's tools, the company has little traction among Web designers. Adobe said it is counting in part on loyalty from graphic designers to hold Microsoft at bay.

"It's difficult to find designers who know Silverlight," said Scott Stanfield, chief executive of Vertigo Software Inc., which specializes in building sites with Silverlight. "I can't imagine a more hostile community [to Microsoft] than designers," he said, noting his firm's designers still use software from Adobe to sketch plans for sites before building them with Silverlight.

Adobe is also wooing computer programmers, the majority of whom use Microsoft's tools. Navtrak Inc. built the fleet-management software it sells to trucking companies using Adobe's technology after sending some of its programmers to an Adobe-sponsored training session last year, said Todd Hodges, a Navtrak product manager.

In May, Adobe launched the Open Screen Project, a group of 19 companies -- including Nokia Corp., Qualcomm Inc., and Verizon Communications Inc.'s wireless unit -- to attract developers. The project promises developers that they can build software once -- using Adobe's technology -- and have it run on PCs, mobile phones and televisions.

For more information on the microsoft, adobe battle click here.

As posted by: Wall Street Journal

With the Big Three seeking a bailout from Washington, the Big Ten are following suit. Earlier this week the Carnegie Corporation of New York took out a two-page ad in the New York Times, signed by executives of 36 public universities, state university systems and higher-education associations, urging Congress and President-elect Obama to rescue them.

Mr. Obama has already promised to expand federal subsidies to higher education by increasing Pell grants and alternative student loans making student-loan terms more permissive. The university chiefs seek an additional "federal infusion of capital" -- as much as $45 billion -- to build new facilities, especially "green" ones. "To ensure a rapid response, only projects that are shovel-ready or on which construction can begin within 120-180 days should be funded," says the ad.

The Higher Education Investment Act, as the university chiefs call their proposed bailout, would allow them to make an end run around parsimonious state lawmakers: "The dollars should not be subject to appropriation by state legislatures. Federal funds should be conditional on states' agreement not to use these federal funds as an excuse to reduce budgetary commitments to state universities."

Yet American higher education might benefit from more parsimony. Economist Richard Vedder has shown that large government subsidies already contribute to making universities "relatively inefficient institutions partly sheltered from the discipline of the market -- a discipline that provides incentives for cost reductions, product improvement, and innovation." The more subsidies rise, the higher tuitions seem to go. If taxpayers are going to shovel out more money to these schools, the academic executives should at least allow outsiders to perform a cost "restructuring."

For More Information on Student Loan Endeavors Click Here.

As posted by: Wall Street Journal

Sales of laptop computers passed desktops in the U.S. for the first time ever this fall, according to market-research firm IDC.

That's bad news for backs, necks and shoulders.

"Laptops are inherently unergonomic--unless you're 2 feet tall," says physician Norman J. Marcus, a muscle-pain specialist in New York City.

When you work at a computer, the keyboard should be at elbow height, so your upper and lower arms form an angle of 90 degrees or more and your forearms are supported by armrests. The monitor should be roughly at eye level so you can lean back in a chair with back support.

Staples keyboard drawer, $36. See the slideshow for more devices that can make your laptop more ergonomic.
Join a Discussion

Have you had laptop problems? Share your pain and your solutions in Journal Community.

But most users simply set their laptops on a desk or table--which is hard on many body parts. The keyboard is too high, which makes your arms reach up, your shoulders hunch and your wrists bend down. The monitor is too low, which pulls your head and neck forward and down and puts a strain on your back.

That's OK if you use your laptop occasionally, for short periods. But if you use one for hours at a stretch -- as do millions of college students, business travelers, telecommuters, video-gamers and growing numbers of office workers--you're setting yourself up for muscle problems that can make your entire upper body hurt.

Ergonomics experts have warned about laptop problems for years--mostly in vain. People continue to abandon bulky desktops in favor of the ever-sleeker, lighter portables. And WiFi connections let us use laptops anywhere--in bed, on the floor--in all kinds of contorted positions.

If you were an athlete or a dancer, you'd pay attention to your technique, but With computers, you could stand on your head, hit the keys and perfect letters will appear. People don't think twice about the position they use--until they have the first symptom," says Thomas Caffrey, founder of Myofactors LLC, which does ergonomic consultations for factories and offices (including The Wall Street Journal).

Ergonomics expert Thomas R. Caffrey meets with WSJ' Melinda Beck and shares some tips on making your laptop safer for your back. (Dec. 15)

Mr. Caffrey says office workers are often surprised when muscle strain sets in. "People think, 'How can a mouse or a keyboard hurt you?' "But poor technique can significantly overload the anatomy over time, until the muscles and tendons start to break down and you feel pain, fatigue, weakness or numbness."

A wrong position can cause pain and stiffness in the neck, shoulders, back and arms, as well as headaches, pains in the temporomandibular joint (TMJ) and carpal tunnel syndrome, in which pressure on wrist nerves causes tingling and numbness in the hands. "The most common problems are from the elbows down," says Mr. Caffrey.

Muscles that are constantly contracted can develop myofascial trigger points--small knots of tissue that become exquisitely tender and can refer pain elsewhere. Constant strain can also activate nociceptors--cells in the junctures between tendons, muscles and bones that become chemically sensitized and make even normal activity uncomfortable. "In effect, they lower your threshold for pain," says Dr. Marcus. .

"I get a very specific pain--right where my shoulder meets my neck--and it's always worse when I'm working at home on my laptop," says Debra Torres, a Manhattan attorney, who sometimes puts a tennis ball between her back and her chair for a make-shift massage, or props her feet up on her desk and puts the laptop in her lap to shift positions. Many laptops are Dell Laptops, Apple Laptops, Acer Laptops, HP Laptops and Sony Laptops.

There are simple ways to make a laptop more ergonomic. The key is to separate the keyboard and the monitor so each can be placed at the proper height:

Laptop stands. Getting the monitor higher is simple--setting it on a pile of books will do. Or you can buy stands ($20 and up) that hold your laptop vertically; some let you adjust the height and angle. Either way, you'll need a separate keyboard so your hands aren't at an impossible angle.

External keyboards. These sell for as little as $20; wireless versions for $60 and up. Logitech makes a wireless-keyboard-and-laptop-stand set for $80. A keyboard that slopes away from you provides the best angle for your hands and wrists.

Keyboard tray. Unless you're really tall, setting the keyboard at elbow level means a few inches below desk height. Attachable keyboard drawers range from $30 to $200. If your desk isn't wide or deep enough, try setting the keyboard on your lap with a small cushion under the front edge. (Don't use a laptop on your unprotected lap for long; they can get hot .)

External mouse. If you find the built-in mouse awkward, get an external mouse or keypad ($14 to $75) and set it close to the keyboard. "The farther your hand has to go from your body, the more burden there is on the upper extremities, from your shoulders to your fingertips," says Mr. Caffrey.

Docking stations. These allow you to attach a separate monitor, keyboard and mouse and use your laptop as a central processing unit (CPU). Prices start around $70. This is a good solution for workers who need a laptop for traveling as well as long periods of office work.

Portable solutions. Lapdesks and mini-stands ($4 to $50) make laptops more ergonomic on the go. They raise the monitor slightly by elevating the back edge of the computer. Tamara James, ergonomics director at Duke University, tells students who bring laptops to class that setting them on a two- or three-inch binder will have the same effect. Mr. Caffrey worries that mini-stands may be hard on wrists and hands and suggests reversing the angle to elevate the keyboard instead. Try alternating between the two positions if you're on the laptop a lot.

"Don't just put your laptop on your desk--that's probably the worst place for it," says Ms. James, who says people are usually amenable to such suggestions once muscle strain sets in. "Pain is a pretty good motivator," she says.

Sales of laptop computers passed desktops in the U.S. for the first time ever this fall, according to market-research firm IDC.

That's bad news for backs, necks and shoulders.

"Laptops are inherently unergonomic--unless you're 2 feet tall," says physician Norman J. Marcus, a muscle-pain specialist in New York City.

When you work at a computer, the keyboard should be at elbow height, so your upper and lower arms form an angle of 90 degrees or more and your forearms are supported by armrests. The monitor should be roughly at eye level so you can lean back in a chair with back support.

Staples keyboard drawer, $36. See the slideshow for more devices that can make your laptop more ergonomic.
Join a Discussion

Have you had laptop problems? Share your pain and your solutions in Journal Community.

But most users simply set their laptops on a desk or table--which is hard on many body parts. The keyboard is too high, which makes your arms reach up, your shoulders hunch and your wrists bend down. The monitor is too low, which pulls your head and neck forward and down and puts a strain on your back.

That's OK if you use your laptop occasionally, for short periods. But if you use one for hours at a stretch -- as do millions of college students, business travelers, telecommuters, video-gamers and growing numbers of office workers--you're setting yourself up for muscle problems that can make your entire upper body hurt.

Ergonomics experts have warned about laptop problems for years--mostly in vain. People continue to abandon bulky desktops in favor of the ever-sleeker, lighter portables. And WiFi connections let us use laptops anywhere--in bed, on the floor--in all kinds of contorted positions.

If you were an athlete or a dancer, you'd pay attention to your technique, but With computers, you could stand on your head, hit the keys and perfect letters will appear. People don't think twice about the position they use--until they have the first symptom," says Thomas Caffrey, founder of Myofactors LLC, which does ergonomic consultations for factories and offices (including The Wall Street Journal).

Ergonomics expert Thomas R. Caffrey meets with WSJ' Melinda Beck and shares some tips on making your laptop safer for your back. (Dec. 15)

Mr. Caffrey says office workers are often surprised when muscle strain sets in. "People think, 'How can a mouse or a keyboard hurt you?' "But poor technique can significantly overload the anatomy over time, until the muscles and tendons start to break down and you feel pain, fatigue, weakness or numbness."

A wrong position can cause pain and stiffness in the neck, shoulders, back and arms, as well as headaches, pains in the temporomandibular joint (TMJ) and carpal tunnel syndrome, in which pressure on wrist nerves causes tingling and numbness in the hands. "The most common problems are from the elbows down," says Mr. Caffrey.

Muscles that are constantly contracted can develop myofascial trigger points--small knots of tissue that become exquisitely tender and can refer pain elsewhere. Constant strain can also activate nociceptors--cells in the junctures between tendons, muscles and bones that become chemically sensitized and make even normal activity uncomfortable. "In effect, they lower your threshold for pain," says Dr. Marcus. .

"I get a very specific pain--right where my shoulder meets my neck--and it's always worse when I'm working at home on my laptop," says Debra Torres, a Manhattan attorney, who sometimes puts a tennis ball between her back and her chair for a make-shift massage, or props her feet up on her desk and puts the laptop in her lap to shift positions.

There are simple ways to make a laptop more ergonomic. The key is to separate the keyboard and the monitor so each can be placed at the proper height:

Laptop stands. Getting the monitor higher is simple--setting it on a pile of books will do. Or you can buy stands ($20 and up) that hold your laptop vertically; some let you adjust the height and angle. Either way, you'll need a separate keyboard so your hands aren't at an impossible angle.

External keyboards. These sell for as little as $20; wireless versions for $60 and up. Logitech makes a wireless-keyboard-and-laptop-stand set for $80. A keyboard that slopes away from you provides the best angle for your hands and wrists.

Keyboard tray. Unless you're really tall, setting the keyboard at elbow level means a few inches below desk height. Attachable keyboard drawers range from $30 to $200. If your desk isn't wide or deep enough, try setting the keyboard on your lap with a small cushion under the front edge. (Don't use a laptop on your unprotected lap for long; they can get hot .)

External mouse. If you find the built-in mouse awkward, get an external mouse or keypad ($14 to $75) and set it close to the keyboard. "The farther your hand has to go from your body, the more burden there is on the upper extremities, from your shoulders to your fingertips," says Mr. Caffrey.

Docking stations. These allow you to attach a separate monitor, keyboard and mouse and use your laptop as a central processing unit (CPU). Prices start around $70. This is a good solution for workers who need a laptop for traveling as well as long periods of office work.

Portable solutions. Lapdesks and mini-stands ($4 to $50) make laptops more ergonomic on the go. They raise the monitor slightly by elevating the back edge of the computer. Tamara James, ergonomics director at Duke University, tells students who bring laptops to class that setting them on a two- or three-inch binder will have the same effect. Mr. Caffrey worries that mini-stands may be hard on wrists and hands and suggests reversing the angle to elevate the keyboard instead. Try alternating between the two positions if you're on the laptop a lot.

"Don't just put your laptop on your desk--that's probably the worst place for it," says Ms. James, who says people are usually amenable to such suggestions once muscle strain sets in. "Pain is a pretty good motivator," she says.

As Posted by: Wall Street Journal

Consumer watchdogs wielding handheld X-ray guns are testing toys on shelves for unsafe levels of lead and other chemicals, giving retailers -- from Wal-Mart Stores Inc. to mom-and-pop stores -- a case of heartburn this holiday season.

This month, testers with the Center for Environmental Health, a consumer advocacy group in Oakland, Calif., said that Wal-Mart frog-charm jewelry contained levels of lead higher than allowed by California state law. The group informed the California attorney general's office, which then sent a notice of violation last week to Wal-Mart, telling the company to remove the item from its stores, according to Christine Gasparac, a spokeswoman for the attorney general.Wal-Mart said in a statement that it has "directed stores in California to remove this item from our shelves and blocked its sale at registers as we investigate further." The company said safety is a top priority.

The advent of guerrilla toy testing, enabled by technology, has taken the toy industry to task again, just a year after scares about unsafe toys so rattled holiday shoppers that Congress this year passed a sweeping overhaul of consumer-product-safety regulation. Typically, advocacy groups send out press releases disclosing their findings -- sometimes without first informing the affected retailers or manufacturers. They often tell regulatory officials about any troubling findings. The Consumer Product Safety Commission said it hears from up to a dozen of these groups around the holiday season.

To be sure, the Toy Industry Association, a New York-based trade group, says that consumer-group reports can unnecessarily alarm parents during the peak holiday shopping season, and that the X-ray-gun testing method can be faulty and unfair.

X-ray fluorescence -- or XRF -- is a technology used in various handheld testing guns that can screen for about two dozen elements, such as lead, cadmium and titanium. When the trigger of the battery-powered device is pulled, a miniaturized X-ray tube inside emits rays that strike the sample being tested. The elements in that sample emit return rays with frequencies that indicate which elements are present and in what amounts.

Operating the gun without proper training, which takes several hours or more to learn, can compromise results, manufacturers say. No special licensing is required, but the user must properly calibrate the device, for example.

The Consumer Product Safety Commission uses the Niton XRF Analyzer made by Thermo Fisher Scientific Inc. of Waltham, Mass. The agency's investigators began using the device in 2007 amid a string of high-profile product recalls that spurred public outrage about dangerous levels of lead in toys and other children's items. Gib Mullan, the assistant executive director for the CPSC's office of compliance and field operations, said it's a "great device for screening products for lead" and heavy elements such as cadmium and chromium.

While the CPSC uses the X-ray gun to screen items it buys from stores or assesses at ports, it still sends questionable items to its lab for additional testing. The agency also conducts testing based on consumer-group reports, but "some are better than others," Mr. Mullan said. The more reliable reports have led to product recalls after they were confirmed in laboratory tests. A report issued by the California Center for Environmental Health, for example, led to the recall last year of 175,000 Curious George dolls with excessive levels of lead. Testers have also found products that contain no traces of lead, these include John Deere Toys, Kids Shoes and Natural Baby Clothing.

"We want to be able to reassure parents that what they're buying for their children for Christmas doesn't contain toxic chemicals," said Caroline Cox, director of the center. She added that her group uses the handheld X-ray technology only as an initial screening tool, and that questionable items are sent to a third-party, certified lab for confirmation before regulators are alerted.

Still, some consumer groups tend to use the handheld gun only, a practice that has companies and industry trade groups crying foul.

Jack Schylling was driving to work two weeks ago when he heard a report on the radio that a children's tea set made by his company, Schylling Associates, was tested and contained worrisome levels of lead. The consumer group Healthytoys.org, a project of the Ann Arbor, Mich.-based nonprofit group the Ecology Center, had identified the product along with about 500 others that it said had medium or high levels of "chemicals of concern."

Mr. Schylling said the test, which was conducted only with an XRF gun, was flawed and contradicted results he had from an independent, certified lab showing the product was safe.

"It seemed like it was fear mongering," said the president and founder of the Rowley, Mass., company that makes reproductions of antique toys for stores that include major retailers. "I feel like I've really been treated unfairly."

After Mr. Schylling called Healthytoys.org to complain and sent copies of lab tests, the group removed the test results of that toy from its Web site pending further assessment, said Healthytoys research director Jeff Gearhart. He said the report cited another Schylling product that was just fine.

Mr. Gearhart said there are limitations to every test methodology, including the ones conducted in labs. He said he doesn't send items to labs because "ultimately it's affordability and the ability to rapidly screen products."

Lab testing is pricier and more time-consuming than using an XRF scanner gun, which is also costly. Guns sold by one manufacturer, for example, cost between $25,000 and $45,000, depending on the model. Once the device is paid for, the cost of testing is labor only, some consumer groups said, while laboratory tests for lead can cost about $25 each.

Jon Shein, a marketing director at Thermo Fisher Scientific, said the company "never suggested that this technology should replace certified testing labs. We have always promoted the product as a screening tool," he said.

During the CPSC's fiscal year 2008, one of its investigators in Houston randomly picked toy samples the "old" way -- by looking for bright colors on toys and wooden blocks on store shelves. Bright paint could be a sign of high levels of lead, Mr. Mullan said. The investigator sent 30 samples to the agency's lab, which found only one of them to be problematic. Conversely, with the XRF gun, 500 items were sampled in the same amount of time by another investigator at the port of Los Angeles. Of the 100 items sent to the lab for lead-paint testing, half tested positive for troublesome levels.

"It really makes us more efficient," Mr. Mullan said.

The CPSC will be studying the ability of the XRF device to be used for broader purposes now that the law will focus on lead content instead of just lead paint on children's products -- a requirement of the sweeping Congressional overhaul of consumer-product safety regulations in August. Tougher regulations take effect on Feb. 10 that set first-time limits on lead and phthalates allowed in children's products.

Despite government efforts, consumers must remain vigilant, said Liz Hitchcock, the public-health advocate for the U.S. Public Interest Research Group, a consumer advocacy group.

She said her group doesn't use the X-ray devices to test toys, but does send items to labs for testing, with the most recent findings listed in PIRG's 23rd annual Trouble in Toyland report, issued last month. The group warned consumers that it is still "buyer beware" season, since many of the new consumer protections don't take effect until next year.

As posted by Wall Street Journal

A small Boston-area company backed by venture capitalists won a contract from Hewlett-Packard Co. to make batteries that will be sold as so-called green power supplies for laptop computers.

The contract awarded to Boston Power Co. marks a rare inroad for a U.S. company in the rechargeable-battery business for consumer electronics. Japan's Sony Corp., Sanyo Electric Co. and Panasonic Corp. dominate the world-wide market.

Boston Power, based in Westborough, Mass., says its batteries can be recharged to full capacity more than 1,000 times -- three to four times as often as current batteries, which lose their recharging capability after 250 or so charges. The company says that means its batteries won't be replaced as often, reducing the number of batteries in landfills. H-P, the laptop-market leader, is providing a three-year warranty on the batteries, which it calls the "Enviro" line. That is triple the typical lithium-ion battery warranty.

"To be a supplier for a laptop-computer maker, hasn't been done" by a U.S. company, said Sara Bradford, a consultant for market researcher Frost & Sullivan, in Mountain View, Calif.

H-P said it expects to charge $20 to $30 more for the Enviro batteries than current replacement batteries, which typically cost $100 to $160. Shipments are to start early next year.

"This will be a litmus test to see if consumers put their money where their mouths are on environmental issues," said Richard Shim of market researcher IDC Corp., Framingham, Mass. "This will be the Prius of the battery world."

Boston Power, which has raised $70 million from venture capitalists and other investors, is one of a handful of small U.S. companies pursuing innovations in the rechargeable-battery field. A123 Systems, based in nearby Watertown, Mass., attracted attention when General Motors Corp. selected it to power a planned electric car, and Black & Decker Corp. picked it to make rechargeable batteries for cordless power tools.

Boston Power was started by a husband-and-wife team who each earned doctorates at Uppsala University in their native Sweden and worked in the U.S. for Arthur D. Little, a Boston consulting firm. Chief Executive Christina Lampe-Onnerud says she hopes that Boston Power will eventually manufacture the laptop batteries in the U.S. The batteries are being made in Taiwan and China, close to the factories of H-P's laptop manufacturers.

Boston Power said its batteries charge faster and don't degrade as fast as other lithium-ion cells, meaning that after several years of being recharged, laptops can still be used for two hours after each full charge. Ms. Lampe-Onnerud says she thinks the rapid-recharge will convince many users they don't need to carry a spare battery.

Ms. Lampe-Onnerud says the battery is also safer than current lithium-ion batteries, which occasionally explode or catch fire inside laptops. Such fires have led to several recalls during the past two years. The Boston Power battery is elliptical rather than round and has numerous vents to release pressure in case it starts to overheat. Rather than steel, it is made of aluminum, which was chosen to allow a battery to melt before extreme heat and pressure build up.

As posted by: Wall Street Journal

Scott Thomas had completed nearly half of his executive M.B.A. program when he decided he wasn't satisfied. The price tag of the Cleveland school was modest, but Mr. Thomas wondered if he would get a solid return on his investment.

So the 31-year-old dropped out and enrolled in Ohio State University's Fisher School of Business E.M.B.A. program. Though his tuition costs have more than doubled -- to $72,500 for the 18-month degree -- Mr. Thomas says he believes Ohio State does more for him in the way of career development and education. "The alumni network is unbelievably large, and they're unbelievably loyal," he says.

Ohio State comes in at No. 3 on The Wall Street Journal's first rating of the five-year return on investment of executive M.B.A. programs. The program yields a 170% return on investment. Only Texas A&M's Mays School of Business and University of Florida's Warrington School of Business did better among U.S. schools, with five-year returns of 243% and 212%, respectively.

Applications for most executive M.B.A. programs are due early next year, and many working executives are weighing whether to make such a hefty investment in an uncertain economy. As companies pull back on education spending, students are increasingly paying their own way -- making cost-benefit calculations even more important. "When someone else was paying for it, that wasn't the big factor," says Michael Desiderio, executive director of the Executive MBA Council in Orange, Calif. Only 32% of executives are fully sponsored by their companies, he adds.

To determine which schools provide the best return on investment, we dived deeper into the data we collected for The Wall Street Journal's Sept. 30 ranking of executive M.B.A. programs. Working with Management Research Group of Portland, Maine, we scoured the responses from our summer 2008 survey of E.M.B.A. graduates for data about salary, raises received after graduation, company-sponsorship figures, tuition and out-of-pocket costs.

We used that information to calculate the return on investment for 27 U.S. programs and nine international programs. Costs were calculated by combining tuition payouts and the out-of-pocket expenses reported by graduates. To calculate the benefit, or return, we used the graduate-reported median raise after completion of the program as the first-year salary increase. We added a 5% annual increase over the following four years, based on the average annual increase expected by compensation specialists and executive recruiters we polled.

Most of the schools that topped the list weren't big brand names -- or the highest-ranked in our September E.M.B.A. ranking. The No. 1 school in September, Northwestern University's Kellogg School of Management, was No. 12 in returns. Texas A&M and University of Florida, despite high returns, weren't among the top 25 in September.

At Texas A&M, low tuition and a no-frills focus are at the heart of the program. (The Class of 2008 paid just $53,000 for a 21-month program.)
'Focus on the Basics'

"We focus on the basics," says David Blackwell, associate dean of the school's graduate programs. "What they're not getting for their money is a lot of marble and gold-plated fixtures." As a state institution, the school is under less pressure to raise revenue by accepting underqualified candidates, he says.

Texas A&M's tuition is less than half than that of New York University's Stern School of Business, the school with the lowest return on investment -- 51%. Graduates of Texas A&M's program reported receiving a median 11% raise upon completion of the program and five years after graduation were projected to earn a median $181,718 (not including bonuses). "There's more opportunity for them to advance as a result of the program, and a salary goes along with that," says Mr. Blackwell.

Not all of the earlier survey's top-rated schools delivered lower returns. The returns at University of Southern California Marshall School of Business (No. 4 in the overall ranking), University of California-Los Angeles Anderson School of Business (No. 17 in the overall ranking) and Kellogg were significantly better than those of many of their competitors. At UCLA, the five-year return was fourth-best, at 158%. At USC, the five-year return was 134%, and 2008 graduates can expect a median salary of $218,062.

With a five-year salary projection of $257,687 and a 127% return, Kellogg graduates reap significant benefits, despite its programs' average tuition of nearly $105,000. "Going back and getting your M.B.A. is an expense not only in financial terms, but in blood, sweat and tears," says Julie Cisek Jones, director of executive M.B.A. programs at Kellogg.

Even with lower returns on investment, top-tier programs had some of the highest projected five-year salaries. Columbia University's E.M.B.A. Global, a joint program with London Business School, caters to slightly older executives, and clocked in at No. 23 for return on investment, with a 69% return in five years. And 2008 graduates of the school can expect the highest salary after those five years -- with a median of $272,577.

Indeed, some schools had lower returns partly because their graduates' salaries were higher to begin with. Jaki Sitterle, managing director of executive programs at NYU, which posted the smallest return, notes that the school caters to older executives, half of whom already have advanced degrees and many who already earn high salaries.

For many graduates, the value of the E.M.B.A. is not based on salary alone. In our graduate survey, 63.3% of graduates said they received or expected a promotion upon completion of their programs, even as 31.8% did not receive or expect to receive a raise. "Increasing compensation is not always their prime motivating factor," says Ms. Sitterle.
Beyond the Dollar Amount

Alex Gorsky, company group chairman for Ethicon, a unit of Johnson & Johnson, credits the E.M.B.A. degree he earned from Wharton 12 years ago with helping him achieve a top executive position. He in turn has since sponsored 12 people to attend executive M.B.A. programs, even though he says it's difficult to put a dollar amount on the return. "They have a lot of great ideas and I've always found that you get more committed employees," says Mr. Gorsky.

Some school administrators say a school's brand cachet is as important as a calculated return on investment. "We have the most selective admissions processes anywhere," says Howard Kaufold, director of the M.B.A. program for executives at the University of Pennsylvania's Wharton School. "You know when you're coming here that you are going to rub shoulders with people who are very bright and already have an excellent career trajectory." Wharton's E.M.B.A. program, which ranked No. 2 in our September overall ranking, came in at No. 24 for return on investment, with a 65% five-year return.

A school's location and access to executives also can make a difference. "We got speakers from the best companies because they were a subway ride away," says Izzet Bensusan, 32, who completed the Columbia's New York program earlier this year. The program was 26th out of 27 schools for return on investment. Mr. Bensusan, an entrepreneur who recently started a carbon-regulating company, says he paid approximately $130,000 out-of-pocket to attend the program. He says it was worth every penny. "I only paid $130,000, and I got to sit with the best people in the world," says Mr. Bensusan.

As posted by: Wall Street Journal

Snow has begun falling on ski slopes -- and so have prices of lift tickets and luxury hotel rooms at many big destination resorts.

As the recession begins taking a toll on the ski industry, resort operators are offering a flurry of discounts they hope will draw more visitors. Colorado's Aspen/Snowmass ski area announced a deal last week that allows children to fly free on Frontier Airlines and get free lift tickets on the mountain if accompanied by a paying adult. The Four Seasons Resort Jackson Hole, in Wyoming, is extending its early-season promotion -- a fourth night free -- through the end of April. And at Snowbird Ski Resort in Utah, which opened unusually early this year thanks to a heavy snowfall last month, is offering a variety of discounts, including free appetizers with entrees at the Steak Pit restaurant and an 11% discount on six-day lift-ticket passes with any lodging reservation.

In general, the steepest discounts can be found at ski areas such as those in the Rocky Mountains that rely largely on visitors flying from distant locations. Resorts frequented mainly by nearby skiers, including some slopes in Vermont and California, remain busy, but they are still rolling out some more modest deals of their own. When Skiing, some skiers stay in a Sandpoint Vacation Rental.

Last winter, ski resorts in the Northeast and the West saw some of the best conditions in years, boosting skier visits by almost 10% over the comparatively warm 2006-2007 season, according to the National Ski Areas Association. But this year many experts think even a series of well-timed blizzards won't save ski resorts from the economic downturn. "I think it'll be a bad year no matter how good the snow is," says Will Marks, a managing director with JMP Securities, who tracks the hotel and ski industry.

Ski-industry executives say the timing of the financial-market slump this fall spooked skiers and snow boarders just as they would normally have been calling to book winter vacations. And with the dollar stronger against the euro, many Rocky Mountain ski resorts say they'll also see a drop this season in European travelers who had taken advantage of the steep exchange-rate discount in years past.

Aspen Skiing Co. says business could drop between 5% and 15% this season compared with last year. Vail Resorts Inc., which owns five ski resorts in Colorado, Nevada and California, reported Tuesday that advance bookings as of the end of October were down 23% from the previous year. The company says it has laid off at least 50 workers and says it won't fill another 92 seasonal positions.

"This year is kind of unprecedented," says David Perry, Aspen's senior vice president, mountain division. "People still want to take their family on the ski vacation, but are looking for the best bargains." Among Aspen's promotions: Customers who purchase discounted seven-day lift tickets in advance will no longer be restricted by blackout dates.

Aida Biller of Ocean Township, N.J., recently booked a ski trip to Utah for her and her fiancé for January. Most years, she takes three ski trips out west. But this year, to cut back on costs, she's taking only two trips. She also shopped around for the best deals. "With the economy these days, it's not a time to just be booking any package," says the 54-year-old investment bank employee.

Ms. Biller settled on a package from the Cliff Lodge & Spa in Snowbird, Utah, that includes meals and lift tickets. In total, she expects the trip will cost about $500 less per person than she spent on a ski trip to Utah last winter.

Many ski resorts also are reporting they still have openings for the peak holiday season, unusual for this time of year. During the weeks of Christmas and New Year's, rooms typically book up months in advance. They also command the highest rates of the year and come with lengthy minimum-stay requirements. But a general slowdown in bookings, combined with a spate of last-minute cancellations, have prompted many resorts to lift length-of-stay restrictions. And a few resorts are offering for the first time Christmas-week discounts in hopes of salvaging the season.

Heavily discounted promotion rates are in effect at a number of hotels and condos at Breckenridge Ski Resort in Colorado. The local chamber of commerce recently allotted an extra $250,000 to beef up marketing for the holidays after they noticed that bookings were off to a slow start at local hotels. Though the 150-year-old town of Breckenridge always gets decked out for Christmas, more carolers will take to the streets and an annual ice-sculpture competition will be expanded. "We find ourselves in the unique position... that we have to promote Christmas, which usually takes care of itself," says John McMahon, the chamber's executive director.

At the 57-room Alta Lodge, a luxury hotel situated on the mountain in Alta, Utah, double rooms go for $455 during the holidays and are usually booked up nearly a year in advance. But this fall, the lodge says it has had a spurt of cancellations, opening up a number of rooms. It's a similar story at the Fairmont Chateau Whistler in British Columbia, which is throwing in two free lift tickets for each night booked. Normally, the resort would be fully booked for Christmas by this time of year, but is only about 75% full so far, it says. Fairmont Chateau is adjacent to a ski area that will host the 2010 Olympic Games, and a $50 million gondola to take skiers from one mountain to another was scheduled to open this week.

Procrastinators might also want to try the Park Hyatt Beaver Creek in Colorado, which is offering a fifth night free for people who pay for four nights. The promotion, which runs through March, also includes a room upgrade and free daily breakfast. The resort has about 20 rooms left for the weeks of Christmas and New Year's. Usually "it would have been a room here, a room there, an unusual length of stay," if booking this late for the holidays, says Giles Priestland, the director of leisure sales.

Ski areas that cater mainly to visitors from long distances are offering some of the best deals. The 320 Guest Ranch, a hotel about a 20-minute drive from the base of Moonlight Basin in Montana, is running a $77-per-person deal that includes free lift tickets. A comparable package last year cost about 20% more, says general manager John Richardson. He says he's noticed fewer guests from the East Coast and California this year.

Some resorts are offering flight deals to boost long-haul visitors, who tend to stay longer and spend more on extras like ski lessons. In Colorado, Steamboat Mountain Resort is running airfare specials like a $238 round-trip ticket on Delta from New York's LaGuardia Airport. The offer, which also includes other destinations, is good through March, and tickets must be purchased online at least 21 days before flying. Crested Butte, also in Colorado, has a "friends and family fly free" package that includes a free airline ticket with every two purchased.
Busy in Vermont

Not every ski area is expecting fewer crowds. Resorts on the East Coast and some in California that attract skiers and boarders who drive to the mountains for short stays, say they're expecting a busy winter, as travelers stay closer to home and avoid flying. The number of season passes sold this year at Okemo Mountain Resort in Vermont is up 17% from last year. Executives at Stratton Mountain Ski Resort, also in Vermont, say they tripled their Thanksgiving weekend traffic projections this year. And at Northstar-at-Tahoe Resort, a few hours' drive from the San Francisco Bay Area, season pass sales are up by more than 30%. Skiers "are maybe going to forgo that destination trip and drive to Tahoe instead," says Julie Maurer, the resort's vice president of marketing and sales.

Still, some drive-to resorts are rolling out deals. Stratton Mountain recently introduced a "Mondays on Us" deal that it hopes will entice travelers to stay longer. Skiers and boarders who book in a hotel or condo from Friday to Sunday nights can get free lift tickets on Monday.

As posted by: Wall Street Journal

Oregon's bid to cash in on its green appeal has given Portland's weakening commercial-real-estate market an early holiday gift.

Denmark-based Vestas Wind Systems AS said this month that it is planning to build a new North American headquarters in the city. Negotiations still are under way and the site isn't set, but the project is likely to be more than 500,000 square feet and be valued at about $250 million.

Vestas Americas, which has been in the city since 2002, has roughly 300 employees in about six leased office locations totaling about 100,000 square feet in the Portland area, says Roby Roberts, a spokesman for Vestas, one of the world's largest wind-turbine suppliers.

Vestas, despite the credit-starved times, hopes to start construction next year.

"Certainly the existing economic situation is one that's going to make you be careful, but we're reasonably confident that things are going to work out," Mr. Roberts said. The state has sweetened the deal with an offer of about $15 million in cash on top of incentives from the city that could be valued at $12.5 million, city and state officials say.

Other sustainable-development and renewable-energy businesses also have made a home in Oregon. The state has courted the industry with such initiatives as the Business Energy Tax Credits, says Jillian Schoene, spokeswoman for Oregon Gov. Ted Kulongoski.

First created in 1979 and expanded in 2007, the tax credits have helped draw solar-energy manufacturers to the state, Ms. Schoene says. Germany-based SolarWorld AG this fall opened a 480,000-square-foot solar-cell manufacturing facility in Hillsboro, outside Portland. Moreover, the North American headquarters of Spain-based Iberdrola Renovables, already located in about 57,000 square feet of leased space in Portland's Pearl District, is looking for additional room to grow, a spokeswoman says.

But the demand from green businesses comes amid signs in the Portland region of the broader economic malaise wracking the country.

Home to about 2.2 million people, the area counts Nike Inc. and Intel Corp., based in Santa Clara, Calif., among its larger employers. Median home prices that had held up longer than in many western U.S. markets have weakened over the past year, and the metro area's unemployment rate rose to 6.4% in October, just above the national rate of 6.1% and well above the 4.6% level in the year-earlier month, according to the U.S. Labor Department.

That slowdown has begun to damp demand for commercial real estate. The region's retail, office, warehouse and apartment vacancies, though still below national averages, are edging up and rents are either declining or are forecast to begin falling, according to Boston-based Property & Portfolio Research.

The region's office-leasing market, among the region's strongest commercial sectors, also is slowing. The amount of sublease space available in Portland's commercial business district jumped to 146,000 square feet in the third quarter from about 45,000 square feet in the year-earlier period, as some companies trimmed space needs, according to Crispin Argento, a research analyst for Colliers International in Portland.

The amount available for sublease was still less than 1% of the inventory, he says. And a surge of new office buildings, some speculative, also are on tap to deliver space in the next two years. Vestas also could add to that available space if it builds anew rather than leasing space in one of the projects underway.

Against this backdrop some cautiously optimistic developers are pushing ahead. Todd Sklar, senior vice president and head of development for San Francisco-based Shorenstein Properties, says construction is now up to the 10th floor on an environmentally friendly office building in Portland called First & Main.

Set to open in 2010, it is to include retail space and about 346,000 square feet of office space that isn't yet leased, as well as a place for cycling commuters to park bikes and shower, and paneling in the lobby made from old stadium seats.

Mr. Sklar notes that in some cities numerous companies are cutting space as they face takeovers or restructurings. Compared with that, having a company like Vestas put space on the market so it can expand doesn't seem so bad, he says. "In the context of other cities, we're in good shape," Mr. Sklar said.

Google Suggest, a drop-down feature in Google Search that auto-completes prospective searches as users type them in, now features sponsored links.

The ads currently only appear for select users. So far, two formats have been noted: a sponsored search-style text box (at left, via Groove Commerce), and a clickable URL at the top of the search suggestions, like this example provided by Oh! Nuts (via Search Engine Land):

As of October, Google commanded 72% of the US search market. Given that each box appears to house just one ad each, the space has the potential to yield premium impressions to sponsors that appear. The search giant hasn't revealed whether it plans to charge more for such placement; but if the feature is formalized, it will likely be folded into AdWords.

Google's is currently on a mission to build ad inventory across properties where none previously existed. It is also testing a number of search improvements for select users, including search results that feature reviews and other local data.

Last month it started running text ads on its Finance pages. It eventually plans to incorporate them in News pages.

Previous advertising restrictions have also been relaxed. In November Google abolished its ban on beer ads on AdWords; last week it did the same for hard alcohol and liqueur ads.

As posted by: Wall Street Journal

Coca-Cola Co. is expected to launch a drink in the U.S. this week containing a natural, calorie-free sweetener, intensifying a race with PepsiCo Inc. to dominate a new generation of noncarbonated beverages. Coke is pushing ahead even though the Food and Drug Administration as of Sunday hadn't issued a formal blessing of the ingredient.

Coke plans to market three flavors of a juice drink in its Odwalla line that contain the sweetener, derived from the herb stevia, according to people familiar with Coke's plans.

Pepsi has several drinks ready to go in the U.S. market with the sweetener -- three flavors of a zero-calorie SoBe Lifewater and an orange-juice drink called Trop50, containing half the calories and sugar of OJ. But Pepsi is waiting for the FDA to clear the additive. "We're ready to go the moment we get the green light," Massimo d'Amore, Pepsi's Americas beverage chief, told investors at a conference last month. In August Pepsi began selling an enhanced water drink with the sweetener in Peru, where stevia is approved. Many things are natural like Natural Baby Clothes, Green Tea, Black Tea and Natural Lawn Care.

Coke also aims to put the sweetener in a version of Glaceau Vitaminwater early next year, according to Beverage Digest, an industry newsletter. A Coke spokesman declined to comment on the company's product-launch plans.

Stevia is approved for use in at least 12 countries and as a dietary supplement in the U.S. But after some studies suggested adverse health effects from stevia-based products, such as potential mutations in the livers of rats, the FDA concluded in the early 1990s that data weren't sufficient to allow its use as a food additive.

Coke, Pepsi and companies they are working with say their sweetener -- called Truvia by Coke and PureVia by Pepsi -- is more highly purified than the versions of stevia used in those tests, and that new data have been submitted to the FDA. Cargill Inc., which teamed up with Coke, and Whole Earth Sweetener Co., which is working with Pepsi, say research they sponsored and submitted to the FDA in May found it to be safe.

The FDA said it doesn't have a specific date for completion of the review.

The FDA's go-ahead -- in the form of a "no objection" letter -- isn't required under the voluntary notification program through which the sweetener is being evaluated. But an official notice would help the companies assure consumers and retailers -- and ensure that the companies avoid the embarrassment of pulling a product off the market if the FDA does indeed object.

Consumer advocates have criticized the FDA's voluntary program for new ingredients as too industry-friendly. "Companies should not be allowed to market a food ingredient before the FDA has reviewed the data and concluded that it is safe," said Michael Jacobson, executive director of Center for Science in the Public Interest, a consumer watchdog group.

Cargill, which spent six years developing the sweetener, defends the FDA notification process as transparent because the company sought comment from outside experts, including critics, and published research findings in a scientific journal earlier this year. "We're confident in the safety of the ingredient," said Amy Boileau, Cargill's manager of regulatory and scientific affairs. "If the agency had questions or concerns, we would know." Coke is a large company that requires Lawn Care.

Underscoring its confidence ahead of the FDA's word, Cargill began selling a tabletop version of the sweetener in the U.S. in July and is launching an ad campaign Monday to build sales. The campaign, developed by Ogilvy & Mather, focuses on the natural derivation of the sweetener, with visuals of the stevia leaf.

Whole Earth Sweetener Co., a unit of Merisant Co., also sells a tabletop version of PureVia but is holding off on marketing for the moment. "We want to have the FDA's support first," said a spokesman.

A natural, good-tasting, no-calorie sweetener has long been the beverage industry's holy grail. But stevia's success isn't guaranteed: Not every beverage tastes good with it, and the drinks made public thus far are relatively small and not big brand sodas. Both Coke and Pepsi are also evaluating other potential new sweeteners.

As posted by: Wall Street Journal

FRANKFURT -- German engineering company Siemens AG and U.S. authorities are expected to settle a longstanding bribes-for-business investigation Monday with a record $800 million fine -- almost 20 times higher than the largest previous penalty under the U.S. Foreign Corrupt Practices Act.

Documents filed with a U.S. court Friday by the U.S. Justice Department and the Securities and Exchange Commission allege corruption reaching the top echelons of Siemens management. The conglomerate allegedly spent more than $1 billion bribing government officials around the globe -- including former Argentine President Carlos Menem -- to win infrastructure contracts in recent years.

A Siemens building in Munich

The detailed claims of wrongdoing could trigger more fines and arrests in other parts of the world for Munich-based Siemens, people familiar with the matter said. Siemens, which makes everything from wind turbines to high-speed trains, is being investigated for corruption in at least 10 other countries. German authorities could announce a separate fine of several hundred million dollars as early as Monday in a parallel probe, said people familiar with the matter.

At the same time, the U.S. court documents state that Siemens, Europe's largest engineering company by revenue, took aggressive steps to ferret out corruption after the bribery scandal erupted in late 2006. The recent steps, which the Justice Department described as "extraordinary" in a court filing, factored into the Justice Department's decision to not press for a fine as high as $2.7 billion, according to the Justice Department's sentencing memorandum.

U.S. authorities have used a carrot-and-stick approach by rewarding remedial action as they ramp up prosecutions under FCPA, enacted in 1977 to clamp down on overseas bribery. The proposed settlement nonetheless dwarfs the largest previous FCPA fine of $44 million, levied last year against a subsidiary of Houston-based oil-services company Baker Hughes Inc. for $4 million in alleged bribes paid to government officials in Kazakhstan.

Under the accord between Siemens and the Justice Department and SEC, the company will admit inadequate internal controls and doctoring its books. But it won't formally plead guilty to bribery charges. That will allow it to keep bidding for public-sector infrastructure projects in the U.S., according to people familiar with the matter.

A Siemens spokesman confirmed the company is close to a settlement with U.S. authorities.

The federal U.S. District Court for the District of Columbia is scheduled to rule on the plea bargain at a Monday hearing. If the court approves the settlement, Siemens would pay a criminal fine of $450 million to the Justice Department and $350 million in civil damages to the SEC. The company also would have a U.S.-approved external compliance monitor for as many as four years.

The SEC claims Siemens made at least 4,283 bribe payments totaling $1.4 billion alone between March 2001 and September 2007. Misconduct was "systematic" and involved "employees at all levels of the company, including former senior management," the SEC said in a court filing.

The filing details alleged bribes to government officials in 10 countries, including payments to supply transit systems in Venezuela; medical equipment in China, Vietnam and Russia; power equipment in Iraq and Israel; refineries in Mexico; and telecommunications equipment in Nigeria and Bangladesh.

It accuses Siemens of paying more than $40 million in bribes to senior government officials in Argentina between 1998 and 2004 to try to secure a contract to make national identification cards. Illicit payments included "at least $2.6 million" in 1998 and 1999 to Mr. Menem, who was Argentina's president at the time, and two other senior government officials, according to the SEC filing. Mr. Menem has in the past denied illegal payments from Siemens.

U.S. prosecutors claim Siemens employed several methods to conceal bribes, including sham consulting contracts. The Justice Department also claims that Siemens used "removable Post-It notes" with affixed signatures to obscure audit trails and "cash desks" where employees could fill "empty suitcases" with as much as €1 million ($1.3 million) to pay bribes.

The SEC filing alleges that Siemens's management board ignored and suppressed frequent "red flags." It accuses the company's former chief financial officer, Heinz-Joachim Neubürger, of taking insufficient action in 2003 after auditors flagged suspicious payments in Nigeria and of misleading the company's nonexecutive supervisory board on other compliance matters.

Mr. Neubürger left Siemens in 2006 and has denied any wrongdoing. He and at least two other former management-board members remain criminal suspects in a continuing bribes-for-business probe by German prosecutors, according to people familiar with the matter. Prosecutors are working through a list of about 300 suspects and more indictments are expected after German courts recently handed out suspended prison terms to three former managers.

Siemens paid a €201 million fine to German authorities last year and didn't contest the charges after a court ruled the company had paid €12 million in bribes to government officials in Nigeria, Russia and Libya to win telecom-equipment contracts. A follow-up settlement with German authorities, expected to be announced in the coming days, involves alleged bribes at other business units.

U.S. prosecutors will argue for some leniency at Monday's court hearing in Washington. They will highlight how Siemens has replaced all but one management-board member and hired hundreds of compliance officers after a dawn raid by German police in November 2006.

The Justice Department said Siemens also took "aggressive steps" to preserve evidence after the raid and has shared more than 100,000 pages of documents with U.S. authorities. "The reorganization and remediation efforts have been extraordinary," the Justice Department added in a court filing.

Amid the scandal, Siemens has paid more than €850 million to external consultants since late 2006 -- including more than €200 million to the U.S. law firm Debevoise & Plimpton LLP, which investigated corruption allegations and regularly reported its findings to the Justice Department and SEC.

The German company also said earlier this year it would launch civil proceedings that seek financial damages from 11 former management-board members for failed oversight earlier this decade. The targeted individuals under investigation for negligence and failed oversight include former chief executives Heinrich von Pierer and Klaus Kleinfeld, both of whom have denied any wrongdoing.

As posted by: Wall Street Journal

Retailers everywhere are expecting lousy holiday sales. But one group is bracing for an especially harsh season: small, independent businesses without the cash cushions or price-slashing abilities of the major chains.

Many small companies already are struggling this year due to sharp drops in consumer spending, the credit crunch and the overall bad economy. Grim holiday sales could be enough to force many that rely heavily on the holiday season to shut their doors permanently.

"There are some independent retailers that will do fine, but the bulk of them will see a very, very difficult year," says Craig Johnson, president of Customer Growth Partners LLC, a New Canaan, Conn., retail consulting and analysis firm. He expects overall holiday sales to rise 1.2% this year, the worst year-over-year increase since 2001. But even if shoppers do outspend the bleak predictions, they will still gravitate toward large discounters like Wal-Mart Stores Inc. and BJ's Wholesale Club Inc. -- and low-priced goods. Many small retailers market good like Plumeria Jewelry, Herbal Tea, Natural Baby Clothing, Black Tea and Unique Jewelry

Most independent retailers don't have the margins to compete on price. So, many are scrambling to find a competitive model this year -- offering exclusive gift items, giving more personalized service or hosting events and fund-raisers to lure in more foot traffic. Others are seeking customers in new markets.

"They really have to be creative in finding ways to get people shopping at their stores and can't depend on the same things they were doing before," Mr. Johnson says.

Charles Mayer & Co., an upscale Indianapolis boutique selling china, crystal and decorative accessories with roughly $1 million in annual sales, recently hosted an evening fund-raiser for the Indianapolis Symphony Orchestra, attended by about 150 guests. Crystal and tableware designer William Yeoward greeted guests at the event and signed his pieces and books. Owner Claudia Ryan, who opened the store in a popular shopping district in 1992, served hors d'oeuvres and wine and raffled off door prizes.

The event, which cost Ms. Ryan just under $5,000, generated about $14,000 in book and crystal sales -- twice what the boutique brings in on a busy holiday-season day. Ms. Ryan says it was positive marketing for the store and led to more sales and interest in the store's William Yeoward pieces before and after the event.

The store has cut holiday inventory by 10% due to the slow economy. "We're trying to stay very focused and careful and very cautiously optimistic," Ms. Ryan says. November sales were down substantially, she says, but December sales are, so far, keeping pace with last year.

Ms. Ryan also is keeping her store open late on Thursdays in December, and offering more gift recommendations to regular customers. She recently asked sales associates to keep detailed notes on customers' purchases and interior-design preferences on the computer, so the employees could call or email them when items they might like come in.

"I think that's an area where we can compete," Ms. Ryan says. "How can a big department store really know its customer?"

Stephen Hoch, a retailing expert at the University of Pennsylvania's Wharton School in Philadelphia, says small retailers need to be innovative about their marketing and use a personalized approach to compete against the big retailers that are "drowning them out" with advertising right now.
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For Solo Business Owners, No Holiday Slowdown

"They really have to go back to that mailing list of prior customers and make a direct appeal and send a compelling offer, such as a private sale or special event," he says. "The local guys need to be local, need to be relevant, need to be personal and play to their strengths."

Small businesses, Mr. Hoch adds, shouldn't be afraid to haggle on prices with prospective customers that are particularly price-sensitive.

Surfin' Seafood LLC, a Seattle-based seller of freshly caught flash-frozen seafood that it delivers to homes, typically does about 20% of its annual sales around the holidays. But this year, holiday-season sales are expected to fall to only 10% of total sales, as fewer corporations buy the packaged seafood as holiday gifts for employees and customers.

Holiday gift packages, which include a variety of holiday-themed fish and shellfish, generally sell for $85 to $195. This year, though, the company introduced a $50 gift package with fewer pieces to appeal to more price-conscious consumers. And the company is playing up the packages' appeal as a way to give an environmentally friendly gift that's also practical in this economy since it's eaten.

Co-owners Tina Montgomery and Jennifer Hanseler, who deliver a lot of the seafood themselves, also are heavily promoting gift certificates and have extended the deadline for shipping packages in time for Christmas.

While a horrible holiday season is unlikely to put them out of business, the partners are worried about what an extended downturn will mean for their business. "If it was just a few months that [sales] are down, it wouldn't be a problem," says Ms. Montgomery. "If this is long term, then I think we're more nervous."

Other small retailers are trying to hold on through the holidays by finding new channels of potential business. "It's very concerning that the market is so soft in what is usually our most profitable time of the year," says Vicki Updike, vice president of marketing and merchandising at Miles Kimball Co. of Oshkosh, Wis., which produces retail catalogs under several brands. Sales are down about 10% this holiday season over last year's season.

So in October, the 400-employee company began sending out 50,000 catalogs to residents of Canada through a company called Canada Post, which helps retailers handle the logistics of shipping products into the country. So far, the results have been "encouraging," Ms. Updike says, with revenue per order from Canada about double that of U.S. orders. The company plans to continue expanding into Canada and hopes it will help boost sales during the holidays and in the months ahead.

"I think we're in survival mode right now," she says.

As posted by: Wall Street Journal

"Chinese Democracy," the notoriously long-in-coming Guns N' Roses album, hasn't turned out to be the big hit that Best Buy Co. expected when it scored the exclusive rights to sell the CD in the United States.

That's bad news for the nation's biggest electronics chain by sales, which paid millions of dollars up front for 1.3 million copies of an album that has sold just 318,000 copies in the U.S. during its first two weeks in stores -- and looks destined for bargain bins.

Despite considerable curiosity about singer W. Axl Rose's marathon production -- which took well over a decade, prompting the makers of Dr Pepper to declare that if the album ever came out, they would give a soft drink to every consumer in America -- "Chinese Democracy" entered the Billboard charts in third place after being released Nov. 23. Then sales plunged 78% in the second week, to just 57,000, according to Nielsen Soundscan.

The disappointing performance of "Chinese Democracy," which was distributed by Universal Music's Interscope Geffen A&M label group, comes at a tough time for Best Buy. The Richfield, Minn., company recently warned that sales for the last third of its fiscal year ending Feb. 28 could fall 5% to 15% from a year earlier. The company is expected to post lower quarterly earnings Tuesday.

Best Buy declined to discuss "Chinese Democracy." In an interview before the album's debut, Gary Arnold, the retailer's senior entertainment officer, predicted it would be the rock record of the year.

Reached for comment, Guns N' Roses manager Irving Azoff predicted the album would ultimately sell well, adding: "The race is far from over."

The album's poor showing contrasts with the success of AC/DC's "Black Ice," which is sold exclusively in the U.S. by Wal-Mart Stores Inc. "Black Ice" made its debut at No. 1 on the Billboard album charts after it was released by Columbia Records in October; it has sold about 1.6 million copies in the U.S., with about six million copies shipped world-wide.

Whereas Best Buy backed "Chinese Democracy" with a marketing campaign centered solely on the album, Wal-Mart saw "Black Ice" as a way to sell more than music. The company hawked AC/DC T-shirts and an exclusive AC/DC version of MTV Networks' Rock Band videogame.

"As we looked at AC/DC's loyal fan base, that's when this idea came about: How do we pull in the music with other things?" Gary Severson, Wal-Mart's senior vice president for entertainment and electronics, said in an interview. "Some artists allow you that opportunity."

AC/DC has served as a youth icon for decades. It came into the release of "Black Ice" with the most popular back catalog of any band other than the Beatles, even though its music isn't available through download services such as Apple Inc.'s iTunes Store.

Columbia Records Chairman Steve Barnett said the Sony Corp.-owned label began the marketing groundwork for "Black Ice" before AC/DC was in the studio, mindful of the band's lasting power. "Almost every avenue to connect with youth culture in America, we took," Mr. Barnett said in an interview.

"Chinese Democracy" generated its share of publicity, thanks in part to the negative reaction Mr. Rose's album title elicited from the Chinese government. But while AC/DC did its part to ensure its album's success -- it granted dozens of magazine interviews, and 50-something guitarist Angus Young put on his iconic schoolboy outfit for another world tour -- Mr. Rose went AWOL.

The reclusive singer declined interviews with Rolling Stone and the New York Times, according to people familiar with the matter. He also didn't complete a music video in time to promote "Chinese Democracy," which diminished Interscope's ability to advertise the album online and on television, and undercut Best Buy's ability to promote it on monitors in stores.

Nonetheless, Interscope is unlikely to be hurt by the sales because Best Buy agreed not to return any of the 1.3 million discs it bought. Interscope and Universal Music are owned by Vivendi SA of France.

During a question-and-answer session on a fan Web site last week, Mr. Rose remarked that "it very well could be true" when a questioner suggested his detachment was hurting sales. But, he added, "What I have to say a lot of people have no desire to hear."

While "Chinese Democracy" has failed to catch on with radio stations, Mr. Rose's record company is betting on a heavy rotation of another sort to boost sales. Two cuts from the album were included in "StripJoints," a CD compilation packaged with Exotic Dancer magazine that went out to 2,500 sexually oriented clubs.

"It's always nice to present music to people when they're having a good time," said Bob Chiappardi, chief executive of Concrete Marketing, which was hired for the strip-club promotion. "It's all about association."

As posted by: Wired.com

In June 2005, a balding, slightly overweight, perpetually T-shirt-clad 26-year-old computer consultant named Dan Kaminsky decided to get in shape. He began by scanning the Internet for workout tips and read that five minutes of sprinting was the equivalent of a half-hour jog. This seemed like a great shortcut—an elegant exercise hack—so he bought some running shoes at the nearest Niketown. That same afternoon, he laced up his new kicks and burst out the front door of his Seattle apartment building for his first five-minute workout. He took a few strides, slipped on a concrete ramp and crashed to the sidewalk, shattering his left elbow.

He spent the next few weeks stuck at home in a Percocet-tinged haze. Before the injury, he'd spent his days testing the inner workings of software programs. Tech companies hired him to root out security holes before hackers could find them. Kaminsky did it well. He had a knack for breaking things—bones and software alike.

But now, laid up in bed, he couldn't think clearly. His mind drifted. Running hadn't worked out so well. Should he buy a stationary bike? Maybe one of those recumbent jobs would be best. He thought about partying in Las Vegas ... mmm, martinis ... and recalled a trick he'd figured out for getting free Wi-Fi at Starbucks.

As his arm healed, the details of that Starbucks hack kept nagging at him. He remembered that he had gotten into Starbucks' locked network using the domain name system, or DNS. When someone types google .com into a browser, DNS has a list of exactly where Google's servers are and directs the traffic to them. It's like directory assistance for the Internet. At Starbucks, the port for the low-bandwidth DNS connection—port 53—was left open to route customers to the Pay for Starbucks Wi-Fi Web page.

So, rather than pay, Kaminsky used port 53 to access the open DNS connection and get online. It was free but super-slow, and his friends mocked him mercilessly. To Kaminsky that was an irresistible challenge. After weeks of studying the minutiae of DNS and refining his hack, he was finally able to stream a 12-second animated video of Darth Vader dancing a jig with Michael Flatley. (The clip paired the Lord of the Sith with the Lord of the Dance.)

That was more than a year ago, but it still made him smile. DNS was the unglamorous underbelly of the Internet, but it had amazing powers. Kaminsky felt drawn to the obscure, often-ignored protocol all over again.

Maybe the painkillers loosened something in his mind, because as Kaminsky began to think more deeply about DNS he became convinced that something wasn't right. He couldn't quite figure it out, but the feeling stuck with him even after he stopped taking the pain pills. He returned to work full time and bought a recumbent stationary bike. He got hired to test the security of Windows Vista before it was released, repeatedly punching holes in it for Microsoft. Still, in the back of his mind, he was sure that the entire DNS system was vulnerable to attack.

Then last January, on a drizzly Sunday afternoon, he flopped down on his bed, flipped open his laptop, and started playing games with DNS. He used a software program called Scapy to fire random queries at the system. He liked to see how it would respond and decided to ask for the location of a series of nonexistent Web pages at a Fortune 500 company. Then he tried to trick his DNS server in San Diego into thinking that he knew the location of the bogus pages.

Suddenly it worked. The server accepted one of the fake pages as real. But so what? He could now supply fake information for a page nobody would ever visit. Then he realized that the server was willing to accept more information from him. Since he had supplied data about one of the company's Web pages, it believed that he was an authoritative source for general information about the company's domain. The server didn't know that the Web page didn't exist—it was listening to Kaminsky now, as if it had been hypnotized.

When DNS was created in 1983, it was designed to be helpful and trusting—it's directory assistance, after all. It was a time before hacker conventions and Internet banking. Plus, there were only a few hundred servers to keep track of. Today, the humble protocol stores the location of a billion Web addresses and routes every piece of Internet traffic in the world.

Security specialists have been revamping and strengthening DNS for more than two decades. But buried beneath all this tinkering, Kaminsky had just discovered a vestige of that original helpful and trusting program. He was now face-to-face with the behemoth's almost childlike core, and it was perfectly content to accept any information he wanted to supply about the location of the Fortune 500 company's servers.

Kaminsky froze. This was far more serious than anything he could have imagined. It was the ultimate hack. He was looking at an error coded into the heart of the Internet's infrastructure. This was not a security hole in Windows or a software bug in a Cisco router. This would allow him to reassign any Web address, reroute anyone's email, take over banking sites, or simply scramble the entire global system. The question was: Should he try it?

The vulnerability gave him the power to transfer millions out of bank accounts worldwide. He lived in a barren one-bedroom apartment and owned almost nothing. He rented the bed he was lying on as well as the couch and table in the living room. The walls were bare. His refrigerator generally contained little more than a few forgotten slices of processed cheese and a couple of Rockstar energy drinks. Maybe it was time to upgrade his lifestyle.

Or, for the sheer geeky joy of it, he could reroute all of .com into his laptop, the digital equivalent of channeling the Mississippi into a bathtub. It was a moment hackers around the world dream of—a tool that could give them unimaginable power. But maybe it was best simply to close his laptop and forget it. He could pretend he hadn't just stumbled over a skeleton key to the Net. Life would certainly be less complicated. If he stole money, he'd risk prison. If he told the world, he'd be the messenger of doom, potentially triggering a collapse of Web-based commerce.

But who was he kidding? He was just some guy. The problem had been coded into Internet architecture in 1983. It was 2008. Somebody must have fixed it by now. He typed a quick series of commands and pressed enter. When he tried to access the Fortune 500 company's Web site, he was redirected to an address he himself had specified.

"Oh shit," he mumbled. "I just broke the Internet."

Paul Vixie, one of the creators of the most widely used DNS software, stepped out of a conference in San Jose. A curious email had just popped up on his laptop. A guy named Kaminsky said he'd found a serious flaw in DNS and wanted to talk. He sent along his phone number.

Vixie had been working with DNS since the 1980s and had helped solve some serious problems over the years. He was president of the Internet Systems Consortium, a nonprofit that distributed BIND 9, his DNS software. At 44, he was considered the godfather of DNS. If there was a fundamental error in DNS, he probably would have fixed it long ago.

But to be on the safe side, Vixie decided to call Kaminsky. He picked up immediately and within minutes had outlined the flaw. A series of emotions swept over Vixie. What he was hearing shouldn't be possible, and yet everything the kid said was logical. By the end of the third minute, Vixie realized that Kaminsky had uncovered something that the best minds in computer science had overlooked. This affected not just BIND 9 but almost all DNS software. Vixie felt a deep flush of embarrassment, followed by a sense of pure panic.

"The first thing I want to say to you," Vixie told Kaminsky, trying to contain the flood of feeling, "is never, ever repeat what you just told me over a cell phone."

Vixie knew how easy it was to eavesdrop on a cell signal, and he had heard enough to know that he was facing a problem of global significance. If the information were intercepted by the wrong people, the wired world could be held ransom. Hackers could wreak havoc. Billions of dollars were at stake, and Vixie wasn't going to take any risks.

From that moment on, they would talk only on landlines, in person, or via heavily encrypted email. If the information in an email were accidentally copied onto a hard drive, that hard drive would have to be completely erased, Vixie said. Secrecy was critical. They had to find a solution before the problem became public.

Andreas Gustafsson knew something was seriously wrong. Vixie had emailed the 43-year-old DNS researcher in Espoo, Finland, asking to talk at 7 pm on a hardwired line. No cell phones.

Gustafsson hurried into the freezing March evening—his only landline was the fax in his office a brisk mile walk away. When he arrived, he saw that the machine didn't have a handset. Luckily, he had an analog phone lying around. He plugged it in, and soon it let off an old-fashioned metallic ring.

Gustafsson hadn't spoken to Vixie in years, but Vixie began the conversation by reading aloud a series of numbers—a code that would later allow him to authenticate Gustafsson's emails and prove that he was communicating with the right person. Gustafsson responded with his own authenticating code. With that out of the way, Vixie got to his point: Find a flight to Seattle now.

Wouter Wijngaards got a call as well, and the message was the same. The Dutch open source programmer took the train to the airport in Amsterdam, got on a 10-hour flight to Seattle, and arrived at the Silver Cloud Inn in Redmond, Washington, on March 29. He had traveled all the way from Europe, and he didn't even know why. Like Gustafsson, he had simply been told to show up in Building Nine on the Microsoft campus at 10 am on March 31.

In the lobby of the Silver Cloud, Wijngaards met Florian Weimer, a German DNS researcher he knew. Weimer was talking with Chad Dougherty, the DNS point man from Carnegie Mellon's Software Engineering Institute. Wijngaards joined the conversation—they were trying to figure out where to have dinner. Nobody talked about why some of the world's leading DNS experts happened to bump into one another near the front desk of this generic US hotel. Vixie had sworn each of them to secrecy. They simply went out for Vietnamese food and avoided saying anything about DNS.

The next morning, Kaminsky strode to the front of the conference room at Microsoft headquarters before Vixie could introduce him or even welcome the assembled heavy hitters. The 16 people in the room represented Cisco Systems, Microsoft, and the most important designers of modern DNS software.

Vixie was prepared to say a few words, but Kaminsky assumed that everyone was there to hear what he had to say. After all, he'd earned the spotlight. He hadn't sold the discovery to the Russian mob. He hadn't used it to take over banks. He hadn't destroyed the Internet. He was actually losing money on the whole thing: As a freelance computer consultant, he had taken time off work to save the world. In return, he deserved to bask in the glory of discovery. Maybe his name would be heralded around the world.

Kaminsky started by laying out the timeline. He had discovered a devastating flaw in DNS and would explain the details in a moment. But first he wanted the group to know that they didn't have much time. On August 6, he was going to a hacker convention in Las Vegas, where he would stand before the world and unveil his amazing discovery. If there was a solution, they'd better figure it out by then.

But did Kaminsky have the goods? DNS attacks were nothing new and were considered difficult to execute. The most practical attack—widely known as cache poisoning—required a hacker to submit data to a DNS server at the exact moment that it updated its records. If he succeeded, he could change the records. But, like sperm swimming toward an egg, whichever packet got there first—legitimate or malicious—locked everything else out. If the attacker lost the race, he would have to wait until the server updated again, a moment that might not come for days. And even if he timed it just right, the server required a 16-bit ID number. The hacker had a 1-in-65,536 chance of guessing it correctly. It could take years to successfully compromise just one domain.

The experts watched as Kaminsky opened his laptop and connected the overhead projector. He had created a "weaponized" version of his attack on this vulnerability to demonstrate its power. A mass of data flashed onscreen and told the story. In less than 10 seconds, Kaminsky had compromised a server running BIND 9, Vixie's DNS routing software, which controls 80 percent of Internet traffic. It was undeniable proof that Kaminsky had the power to take down large swaths of the Internet.

The tension in the room rose as Kaminsky kept talking. The flaw jeopardized more than just the integrity of Web sites. It would allow an attacker to channel email as well. A hacker could redirect almost anyone's correspondence, from a single user's to everything coming and going between multinational corporations. He could quietly copy it before sending it along to its original destination. The victims would never know they had been compromised.

This had serious implications. Since many "forgot my password" buttons on banking sites rely on email to verify identity, an attacker could press the button, intercept the email, and change the password to anything he wanted. He would then have total access to that bank account.

"We're hosed," Wijngaards thought.

It got worse. Most Internet commerce transactions are encrypted. The encryption is provided by companies like VeriSign. Online vendors visit the VeriSign site and buy the encryption; customers can then be confident that their transactions are secure.

But not anymore. Kaminsky's exploit would allow an attacker to redirect VeriSign's Web traffic to an exact functioning replica of the VeriSign site. The hacker could then offer his own encryption, which, of course, he could unlock later. Unsuspecting vendors would install the encryption and think themselves safe and ready for business. A cornerstone of secure Internet communication was in danger of being destroyed.

David Ulevitch smiled despite himself. The founder of OpenDNS, a company that operates DNS servers worldwide, was witnessing a tour de force—the geek equivalent of Michael Phelps winning his eighth gold medal. As far as Ulevitch was concerned, there had never been a vulnerability of this magnitude that was so easy to use. "This is an amazingly catastrophic attack," he marveled with a mix of grave concern and giddy awe.

It was a difficult flight back to San Francisco for Sandy Wilbourn, vice president of engineering for Nominum, a company hired by broadband providers to supply 150 million customers with DNS service. What he heard in Redmond was overwhelming—a 9 out of 10 on the scale of disasters. He might have given it a 10, but it was likely to keep getting worse. He was going to give this one some room to grow.

One of Wilbourn's immediate concerns was that about 40 percent of the country's broadband Internet ran through his servers. If word of the vulnerability leaked, hackers could quickly compromise those servers.

In his Redwood City, California, office, he isolated a hard drive so no one else in the company could access it. Then he called in his three top engineers, shut the door, and told them that what he was about to say couldn't be shared with anyone—not at home, not at the company. Even their interoffice email would have to be encrypted from now on.

Their task: Make a change to the basic functioning of Nominum's DNS servers. They and their customers would have to do it without the usual testing or feedback from outside the group. The implementation—the day the alteration went live to millions of people—would be its first real-world test.

It was a daunting task, but everyone who had been in Redmond had agreed to do the same thing. They would do it secretly, and then, all together on July 8, they would release their patches. If hackers didn't know there was a gaping DNS security hole before, they would know then. They just wouldn't know exactly what it was. Nominum and the other DNS software vendors would have to persuade their customers—Internet service providers from regional players such as Cablevision to giants like Comcast—to upgrade fast. It would be a race to get servers patched before hackers figured it out.

Though the Redmond group had agreed to act in concert, the patch—called the source port randomization solution—didn't satisfy everyone. It was only a short-term fix, turning what had been a 1-in-65,536 chance of success into a 1-in-4 billion shot.

Still, a hacker could use an automated system to flood a server with an endless stream of guesses. With a high-speed connection, a week of nonstop attacking would likely succeed. Observant network operators would see the spike in traffic and could easily block it. But, if overlooked, the attack could still work. The patch only papered over the fundamental flaw that Kaminsky had exposed.

On July 8, Nominum, Microsoft, Cisco, Sun Microsystems, Ubuntu, and Red Hat, among many others, released source port randomization patches. Wilbourn called it the largest multivendor patch in the history of the Internet. The ISPs and broadband carriers like Verizon and Comcast that had been asked to install it wanted to know what the problem was. Wilbourn told them it was extremely important that they deploy the patch, but the reason would remain a secret until Kaminsky delivered his talk in Las Vegas.

Even as Kaminsky was giving interviews about the urgency of patching to media outlets from the Los Angeles Times to CNET, the computer security industry rebelled. "Those of us ... who have to advise management cannot tell our executives 'trust Dan,'" wrote one network administrator on a security mailing list. On one blog, an anonymous poster wrote this to Kaminsky: "You ask people not to speculate so your talk isn't blown but then you whore out minor details to every newspaper/magazine/publishing house so your name can go all over Google and gain five minutes of fame? This is why people hate you and wish you would work at McDonald's instead."

With a backlash building, Kaminsky decided to reach out to a few influential security experts in hopes of winning them over. He set up a conference call with Rich Mogull, founder of Securosis, a well-respected security firm; researcher Dino Dai Zovi; and Thomas Ptacek, a detractor who would later accuse Vixie and Kaminsky of forming a cabal.

The call occurred July 9. Kaminsky agreed to reveal the vulnerability if Mogull, Dai Zovi, and Ptacek would keep it secret until the Vegas talk August 6. They agreed, and Kaminsky's presentation laid it out for them. The security experts were stunned. Mogull wrote, "This is absolutely one of the most exceptional research projects I've seen." And in a blog post Ptacek wrote, "Dan's got the goods. It's really f'ing good."

And then, on July 21, a complete description of the exploit appeared on the Web site of Ptacek's company. He claimed it was an accident but acknowledged that he had prepared a description of the hack so he could release it concurrently with Kaminsky. By the time he removed it, the description had traversed the Web. The DNS community had kept the secret for months. The computer security community couldn't keep it 12 days.

About a week later, an AT&T server in Texas was infiltrated using the Kaminsky method. The attacker took over google.com—when AT&T Internet subscribers in the Austin area tried to navigate to Google, they were redirected to a Google look-alike that covertly clicked ads. Whoever was behind the attack probably profited from the resulting increase in ad revenue.

Every day counted now. While Kaminsky, Vixie, and the others pleaded with network operators to install the patch, it's likely that other hacks occurred. But the beauty of the Kaminsky attack, as it was now known, was that it left little trace. A good hacker could reroute email, reset passwords, and transfer money out of accounts quickly. Banks were unlikely to announce the intrusions—online theft is bad PR. Better to just cover the victims' losses.

On August 6, hundreds of people crammed into a conference room at Caesars Palace to hear Kaminsky speak. The seats filled up quickly, leaving a scrum of spectators standing shoulder to shoulder in the back. A group of security experts had mockingly nominated Kaminsky for the Most Overhyped Bug award, and many wanted to know the truth: Was the massive patching effort justified, or was Kaminsky just an arrogant, media-hungry braggart?

While his grandmother handed out homemade Swedish lace cookies, Kaminsky took the stage wearing a black T-shirt featuring an image of Pac-Man at a dinner table. He tried for modesty. "Who am I?" he asked rhetorically. "Some guy. I do code."

The self-deprecation didn't suit him. He had the swagger of a rock star and adopted the tone of a misunderstood genius. After detailing the scope of the DNS problem, he stood defiantly in front of a bullet point summary of the attack and said, "People called BS on me. This is my reply."

By this time, hundreds of millions of Internet users were protected. The bomb had been defused. The problem was, there was little agreement on what the long-term solution should be. Most discussion centered around the concept of authenticating every bit of DNS traffic. It would mean that every computer in the world—from iPhones to corporate server arrays—would have to carry DNS authentication software. The root server could guarantee that it was communicating with the real .com name server, and .com would receive cryptological assurance that it was dealing with, say, the real Google. An impostor packet wouldn't be able to authenticate itself, putting an end to DNS attacks. The procedure is called DNSSEC and has high-profile proponents, including Vixie and the US government.

But implementing a massive and complicated protocol like DNSSEC isn't easy. Vixie has actually been trying to persuade people for years, and even he hasn't succeeded. Either way, the point might turn out to be moot. Kaminsky ended his Las Vegas talk by hinting that even darker security problems lay ahead. It was the type of grandstanding that has made him a polarizing figure in the computer security community. "There is no saving the Internet," he said. "There is postponing the inevitable for a little longer."

Then he sauntered off the stage and ate one of his grandma's cookies.

As posted by: Wall Street Journal

WASHINGTON -- Big-city mayors will arrive on Capitol Hill Monday to lobby for more federal spending to be funneled to urban areas that they say drive the country's economic engine.

The push comes after a strong Democratic turnout in metropolitan areas helped President-elect Barack Obama -- who is set to become America's first urban president in almost half a century -- win by such a decisive margin in November.

A delegation of mayors, including Michael Bloomberg of New York and Antonio Villaraigosa of Los Angeles, plans to ask the federal government to distribute funds directly to cities instead of going through state governments. The group is set to present a list of more than 4,600 infrastructure projects that they say are "ready to go."

Tom Cochran, executive director of the U.S. Conference of Mayors, which is organizing Monday's event, said the next administration has signaled that it will coordinate financing for projects for an entire metropolitan area instead of dealing with cities and suburbs separately, Cites like High Point Homes and Raleigh Real Estate.

"I am of the opinion, based on our conversations with President-elect Obama, that he gets it," said Mr. Cochran. "You can't just have a transportation system that stops at the city line."

Mr. Obama's transition office is drawing up plans to create a White House office on urban policy, which would report directly to the president, to coordinate funding for cities from different federal agencies. Mr. Obama has pledged to provide new funding for job training, education and grants for local governments and organizations.

Such stances helped Mr. Obama win over urban voters in November. While he didn't make significant new inroads to rural or exurban areas that President George W. Bush had won by large margins, Mr. Obama racked up bigger margins in cities than any Democrat in decades -- in part by registering new voters and increasing the Democratic share of the vote among minority groups, especially blacks and Latinos.

A delegation of mayors, including Michael Bloomberg of New York (above), plans to ask the federal government to distribute funds directly to cities instead of going through state governments.

For all Mr. Obama's campaign rhetoric of bridging the country's divides, the 2008 election actually saw a widening in the gap between urban and rural voters, according to a Wall Street Journal analysis of the returns. Mr. Obama won 56% of the vote in metropolitan areas, up from the 51% that voted Democratic in the previous two presidential elections. But he won only 42% of votes in exurbs and rural areas, a much-smaller advance over his predecessors.

Democrats saw some of their biggest gains in so-called emerging suburbs, the outskirts of cities that have grown rapidly in recent years. Mr. Obama's margin of victory in Virginia's Loudoun and Prince William counties, located outside of Washington, D.C., increased by double digits compared to Democratic candidate John Kerry's in 2004. Mr. Obama racked up similar gains in Hamilton and Hendricks counties, which surround Indianapolis.

On the campaign trail, Mr. Obama talked often about the need for government to address the housing crisis that has left some city neighborhoods pockmarked with foreclosed or abandoned homes. When pocketbook issues like energy and jobs took center stage, he continued to make education -- a key concern for suburbanites -- a top priority.

Democrat strategist Ruy Teixeira, who has studied the demographics of the electorate, said the party's success in courting suburban voters may be due to a need for more infrastructure and government services.

"It's not just a leave-me-alone kind of thing anymore," Mr. Teixeira said. "The identity of the Republican Party -- hard-right social issues on the one hand and let's-just-cut-people's-taxes on the other -- just doesn't fit as well into these areas as it used to."

Mr. Obama will be the first president from a big city since John F. Kennedy took the oath of office in 1961. Mr. Obama spent four years of his youth in Jakarta, one of the world's most-populous cities. He went to college in Los Angeles and New York City and law school outside of Boston, before settling in Chicago to live and work.

As posted by: Wall Street Journal

TV networks have long hoped digital dollars would help offset declines in traditional ad spending, but now even online video is showing some signs of faltering amid the recession.

General Electric's NBC Universal, at an investor conference last week, warned of a slowdown in ad spending on high-end Internet video. The company's NBC broadcast network streams many of its shows online, both on its own Web site and through Hulu.com, the sixth-most-popular video Web property, according to market tracker comScore Inc.

"The most surprising thing to us is how fast the digital marketplace has come to a standstill in the fourth quarter," said Jeff Zucker, chief executive of NBC Universal, during the conference.

Online video is still expected to be one of the highlights of the digital-ad market. When it revised its forecasts for U.S. online ad spending earlier this month, research firm eMarketer predicted that online video-ad spending by U.S. advertisers would grow 45% to $850 million in 2009.

By contrast, Bernstein Research forecast last month that total TV advertising would fall 1.9% this year, and another 5% next year, to $65 billion for 2009.

Despite its small footprint, online video has gotten advertisers excited, as they shift dollars to the Web to keep pace with the amount of time consumers spend watching videos there. But the eMarketer forecast is down from earlier projections of 49% growth and, as the recession forces marketers to scrutinize every penny, no area is immune.

Hulu, a joint venture of NBC Universal and News Corp., which offers programming from NBC, Fox and other networks, says its overall revenue is growing month to month, and that revenue per minute of video watched grew in November from October. But while advertising on the site was sold out as recently as August, it is no longer. (News Corp. also publishes The Wall Street Journal.)

"Clearly the environment today is different than it was four months ago," says Hulu Chief Executive Jason Kilar, adding that the venture "will be ahead of plan for 2008."

The slowing growth in video advertising also highlights some of the obstacles that threaten to keep the sector from reaching the lofty heights its popularity has suggested. Some media buyers say premium online video entertainment is still too difficult to buy, the rates are too high and the audiences are too small.

The industry has yet to settle on a single ad format, so marketers have to change the technical details of their ads to fit the specifications of different sites.

"There still is a lot of inefficiency," says Adam Shlachter, senior partner and group director at WPP media-buying firm MEC Interaction.

In particular, media buyers question whether the prices TV networks charge to advertise next to their top-tier online attractions are worth it. Rates are around $40 per thousand views, which can be more expensive than buying ads on conventional TV.

These rates are left over from a time when major marketers stuck with TV-network Web sites as safe, predictable outlets on the online frontier. They were hesitant to advertise with Internet companies that relied on user-created video, which could range from cute to wildly inappropriate.

That is starting to change, as Internet companies produce higher-quality content and new models for advertising. Marketers increasingly are working with companies like Broadband Enterprises and BrightRoll that can create original entertainment, as well as compile and resell the ad space of multiple partners. This lets the marketers buy ads to appear before bigger audiences at cheaper rates.

Meanwhile, some TV networks are distributing their programs on an array of sites to expand the audience they sell to advertisers. CBS says growth in online-video ad spending across a panoply of sites -- including Time Warner's AOL, Microsoft's MSN and its own CBS.com -- is outpacing the growth of the audience.

CBS says it expects fourth-quarter ad-revenue growth from online video of its network programs to be in the high double digits, compared with a year earlier, but that it's too early to forecast the first quarter of 2009.

"The market's challenged," says Neil Ashe, president of CBS Interactive. "But we're outperforming what I expected us to do in the fourth quarter given the economic environment."

ABC, a unit of Walt Disney Co., says its fourth-quarter online-video ad revenue is up from a year earlier, but it is tempering its expectations for 2009 given the weak economy.

Unilever, a top-spending marketer, says it is continuing to shift more ad dollars to digital, and that online video is an important part of its strategy. The consumer-product giant spreads its ad dollars across both the traditional TV networks and Internet companies.

"There is a lot of quality content that is not coming from the networks at this point," says Rob Master, Unilever's director of media for North America.

As posted by: Wall Street Journal

WASHINGTON -- A commission of technology experts will propose consolidating cyber security work under a top White House official and using diplomatic, intelligence and military tools to confront threats in cyberspace.

The new White House post is likely to be the most controversial of the commission's recommendations, which will be released Monday. In its report, the commission compared the job to that of the director of national intelligence. The cyber chief would report to the president and have his own staff of 10 to 20 people who would work with a beefed-up National Security Council cyber staff and federal agencies to implement the president's cyber policies.

U.S. agencies from the Pentagon to the Department of Homeland Security as well as Pentagon contractors have experienced major cyber break-ins. Intelligence officials estimate U.S. losses from cyber breaches to be in the multiple billions of dollars.

Under the Bush administration, the Department of Homeland Security has been the public face of cyber-security efforts, but the commission concluded it isn't equipped to handle a threat with military, criminal and intelligence components.

The commission's recommendation to update the government's legal authorities to protect and defend cyberspace in the U.S. is likely to incite furious debate. Rewriting laws to enhance the government's investigative powers in cyberspace will raise many of the same privacy issues that Congress encountered in its debate over expanding surveillance powers.

Recommendations on new approaches to cyber security are meant to stop acts such as those allegedly committed by Gary McKinnon, accused of hacking the Pentagon's computer system.

The Center for Strategic and International Studies assembled the commission in August 2007 after a spate of cyberattacks at several federal agencies.

In setting up the commission, CSIS chose members who were expected to land in either a Democratic or Republican White House. Its four chairmen are a bipartisan group, including the top Democrat and Republican on the House Homeland Security subcommittee that handles cyber security.

"This will be at least part of the template of the incoming team and part of the template for the incoming Congress," said James Lewis, project director for the commission and chief of the technology policy program at CSIS.

President-elect Barack Obama's transition team is expected to use the commission's recommendations to help chart a path for the sprawling $15 billion cyber-security initiative launched this year by the Bush administration.

Mr. Obama, who promised to make cyber security a top priority, has created a separate group on his transition team dedicated to cyber security, led by Paul Kurtz, a member of the commission and a former cyber-security aide to the National Security Council in the Clinton and Bush administrations, according to several people familiar with the transition. A handful of other commissioners also are working for the transition.

Some of the commission's recommendations parallel proposals Mr. Obama made on the campaign trail. Mr. Obama criticized the Bush administration for being too slow to address cyber threats and vowed to create "a national cyber adviser" who would report directly to the president.

An Obama transition team spokeswoman declined to comment on the report.

"America's failure to protect cyberspace is one of the most urgent national security problems facing the new administration," the commissioners write. The battle in cyberspace, they say, "is a battle we are losing."

The holiday season is notoriously stressful for people with drinking problems and overeating issues. But times have never been tougher for those diagnosed with a controversial disorder called "compulsive buying," or "shopaholism."

On Black Friday, the day after Thanksgiving and the first official day of the holiday shopping season, 31-year-old confessed shopaholic Nikki Ebben was holed up in her bedroom in Appleton, Wis., while her husband went to Wal-Mart to snag a $500 flat-screen TV. Ms. Ebben, who has maxed out 15 credit cards and racked up more than $80,000 in debt, says she vowed to stay away from stores. Still, she couldn't resist the temptation of e-commerce, particularly the appeal of 30% off and free shipping. While her husband was gone, she spent $400 at Toysrus.com and Target.com, using money from the couple's joint bank account.

"I went crazy," admits Ms. Ebben, whose mother stopped speaking to her for a time because she owed her parents so much money.

"I told her, 'We're retired now. We can't afford to bail you out,' " says Ms. Ebben's mother, Judy Patrie.

Anybody who has gotten a deal on a car, a dress or an electronic gadget can relate to the euphoric thrill that comes with shopping. But this year, the combination of retailers' aggressive discounting and current economic anxiety "is a disaster" for people who feel a compulsion to shop, says Terrence Shulman, a social worker and founder of the Shulman Center for Compulsive Theft and Spending, in Franklin, Mich.

The bombardment of promotional emails and discount coupons from retailers this season is "like giving matches to a pyromaniac," says April Benson, a New York psychotherapist who specializes in the disorder.

Ms. Benson urges her clients to unsubscribe from retailers' email lists, block television channels like QVC and avoid "danger zones," such as Wal-Mart on Black Friday. The silver lining of the current economic crisis, she says, is that many compulsive shoppers are seeing their credit lines cut off, and that is forcing them to reckon with their illness. The problem: They often have no money left to pay for therapy, which frequently isn't covered by insurance.
'Oniomania'

Compulsive buying was first identified in 1915 by a German doctor who called it "oniomania" for the Greek term "onios," which means "for sale." It isn't listed in the American Psychiatric Association's catalog of officially recognized psychiatric disorders. But, because of a growing body of evidence that compulsive buying is itself a disorder -- not just a symptom of something else -- it is under consideration for inclusion in the next edition, to be released in 2011.

A group of Stanford University researchers caused a stir in 2006 when they reported in the American Journal of Psychiatry that about 5.8% of the U.S. population can be said to have "compulsive buying behavior," characterized by an abnormal preoccupation with shopping, purchasing of unnecessary items and adverse consequences, like "impaired social or occupational functioning, and/or financial problems." The researchers, who conducted a random survey of 2,513 people, were surprised to find that it affects men and women almost equally -- about 6% of women and 5.5% of men. Compulsive buyers tend to be younger (mean age 39.7 years, as opposed to 48.7 years for other respondents in the survey), and earn under $50,000 a year.

This month, the Journal of Consumer Research published another study of compulsive buying, using broader diagnostic criteria, which found that the prevalence of compulsive buyers in the U.S. could be 8.9% or higher. The study, conducted by marketing professors at the University of Richmond who surveyed 1,200 people, also found that compulsive shoppers are more likely to be anxious, materialistic, have low self-esteem and harbor negative feelings that are relieved by shopping.

Candy Thompson, a 30-year-old single mother of four in Indiana, attributes her shopping binges to bipolar disorder. In recent months, she says ballooning debt and other financial pressures have forced her to cut spending. But she nevertheless posted an ad recently on craigslist seeking "pointy toed boots and heels."

"I am a shopaholic and...I need to build my collection," she wrote in the ad. She says she already owns 220 pairs of shoes.

Ms. Ebben says she's embarrassed by her experience, but she agreed to be interviewed in hopes that she could raise awareness of the problem. "This disease has such a profound effect and complicates the lives of so many people," she says.

Until she was fired for shopping on the job this year, Ms. Ebben worked as a sales-training manager for a cosmetics retailer, where she earned about $50,000 a year. She says she amassed a collection of hundreds of beauty products that still remain unopened at her home.

But she really started to spiral out of control in 2006, she says, when she and her husband, Jim, moved into a bigger house. Compelled by an urge to decorate, she began splurging on furniture, home decor and clothing, such as 17 pairs of designer jeans that cost up to $400 a pair. One day, she drove home in a new $30,000 Mini Cooper, purchased with a loan from the dealership.

Ms. Ebben's biggest weakness, she admits, was the Internet. "I loved the high I got when I clicked the 'submit' button when ordering clothes online," she says. "I knew it was wrong, but I didn't care."

A new study that will be published in the Journal of Retailing in 2009 suggests that consumers with compulsive-buying tendencies prefer shopping online because the Internet enables them to avoid social interactions and to purchase stuff on the sly.

Compulsive shoppers are often ridiculed, dismissed or even celebrated in American pop culture. For example, a romantic comedy to be released in February is called "Confessions of a Shopaholic," based on a best-selling novel of the same title. In the movie, the severely indebted lead character keeps an emergency credit card encased in a block of ice in her freezer.

To Ms. Benson, the psychotherapist, tongue-in-cheek ads from retailers are particularly offensive. She uses a Barneys New York flier from several seasons ago advertising a "Psychotherapy Sale" in her lectures. This season, Barneys' Web site has a video in which creative director Simon Doonan urges women to "go mental in the shoe department," adding that buying a pair of Christian Louboutin boots is "the best way for relieving holiday tension."

Says Mr. Doonan: "Shopping is undeniably a more positive way to medicate your blues than knocking back gin and tonics. Shopping is enjoyable. Anything which gives people pleasure and enjoyment has the potential to get out of hand."

Meanwhile, Saks Fifth Avenue this season offered 12 months of no interest and no payments for people who spend $2,000 or more in a single day, a deal that Mr. Shulman says is like a "crack dealer saying, 'Come here, try a sample.' "

Saks spokeswoman Julia Bentley says that "our customers are smart and savvy about their spending," adding that only those meeting "strict credit standards" were eligible for the deal.

Ms. Ebben says that the first time she reached out for help, in 2002, she called a therapist who "literally laughed at me." And when she attended her first Debtors Anonymous meeting this month, her husband, who used to joke that his wife was "just materialistic," came along.

At the time, Mr. Ebben said he didn't quite believe that shopaholism was really a disorder. But when the person leading the meeting read off a list of characteristics of compulsive debtors, he says of his wife, "It fit her to a T."

Tribune Co. is preparing for a possible filing for bankruptcy-court protection as soon as this week, according to people familiar with the matter, in a sign of worsening trouble for the newspaper industry.

In recent days, as Chicago-based Tribune continued talks with lenders to restructure its debt, the newspaper-and-television concern hired investment bank Lazard Ltd. as its financial adviser and law firm Sidley Austin to advise the company on a possible trip through Chapter 11 bankruptcy, people familiar with the matter say.

A Tribune spokesman said the company doesn't comment on rumors or speculation. Tribune owns eight major daily newspapers, including the Los Angeles Times, Chicago Tribune and Baltimore Sun, plus a string of local TV stations.

A spokeswoman for Lazard didn't respond to requests for comment. Representatives of Sidley Austin couldn't be reached for comment.

Tribune's latest actions underscore the deepening distress enveloping Tribune and other newspaper publishers. Their businesses are being battered by dwindling advertising sales, and many are carrying debt loads that are unmanageable in current market conditions. Industry insiders expect some papers will need to fold in coming months or seek protection from creditors to reorganize.

Tribune has been on wobbly footing since last December, when real-estate mogul Samuel Zell led a debt-backed deal to take the company private. Tribune has stayed ahead of its $12 billion in borrowings with the help of asset sales. Now, however, shrinking profits are tightening the noose.

The company's cash flow may not be enough to cover nearly $1 billion in interest payments due this year, and Tribune owes a $512 million debt payment in June.

One of Tribune's most pressing concerns: The company is likely to be in violation of debt terms that limit borrowings at the end of the year to nine times its adjusted profits. The ratio stood at 8.3 at the end of the second quarter, before Tribune reported an 83% decline in operating profit for the three months ended Sept 28.

Violations of such debt covenants have become commonplace for newspaper companies as their profits have ebbed. Lenders so far have been willing to give the companies a pass in exchange for higher interest rates and other concessions, but Tribune has little wiggle room. Terms of the company's debt already are so loose and its financial standing so unsteady that a covenant waiver may not help.

To be sure, a restructuring outside of bankruptcy court remains an option for Tribune. Executives have indicated that its talks with lenders are amicable, and it remains possible the two sides can agree to rework the company's borrowings on their own, as other newspaper publishers are doing.

Tribune's hiring of Lazard, meanwhile, brings it a firm experienced in debt restructuring, and one that has become a go-to adviser for newspaper companies in financial distress.

Even as its financial performance worsens, Tribune has some options. A sale of its Chicago Cubs baseball team is under way, and Tribune owns valuable stakes in businesses including the cable-TV channel Food Network.

Tribune already has auctioned off pieces of the company, including the Long Island, N.Y., daily Newsday to raise cash. Now, frozen credit markets have depressed sale prices.

Selling off more newspapers may not be a viable alternative because buyers are scarce and Tribune may be better off holding onto the profits from its papers.

Hip retailer Abercrombie & Fitch Co. suffered dismal November sales results last week, and one reason may be a bold tactic that is backfiring: while rivals are aggressively slashing prices to battle the weak economy, Abercrombie has refused to join the rush to discount.

Teen retailer American Eagle Outfitters Inc. had a buy-one-get-one-half-price sale this month for all its tops; Quiksilver Inc. marked down $50 shorts to $30; Aeropostale Inc. slashed some prices 70%. But Abercrombie's gray polo shirt is selling for $60, not much less than it did 18 months ago, when teenagers were still flocking to the mall.

Markdowns are the knee-jerk reaction of most retailers when inventories pile up and demand drops. But they can unleash an avalanche of problems. The hefty margins that fuel these companies' growth can vanish. Even when the economy picks up, troubles can linger as established brands find it difficult to regain pricing power and appeal.

Traditionally, only the very upper crust of the luxury market has been able to hold firm in tight times. This year, however, brands from Chanel to Versace have let their prices slip by as much as 10% in an effort to make up for sagging sales.

That's left Abercrombie, which made its name marketing preppy chic, largely alone in following its own strategy for dealing with the downturn -- more or less ignoring it. The company is pushing forward with an aggressive overseas expansion. It has kept inventory stock at similar levels to those before the slump. And it says under no conditions will it reduce its prices for customers any more than usual.

Wall Street has begun to question the soundness of Abercrombie's no-discount pledge. The stock has tumbled nearly 80% from its January high of around $80, in part because of the pricing strategy. Some analysts now rate the stock a "sell."

"We hear your concerns," said Chairman and Chief Executive Michael Jeffries in an earnings call with analysts last month, but "promotions are a short-term solution with dreadful long-term effects." Marking down clothes now could lead to the brand being seen as something cheap, he explained.

Even in good times, Abercrombie has always shied away from big promotions, though it does try to clear out merchandise at the end of a season. The company's determination to keep prices high as the economy sours has already cost it dearly during the holiday season, which accounts for an estimated 30% of total teen retail sales.

Last week Abercrombie reported that November sales in stores open more than a year dived nearly 28% from the year before, significantly worse than at competitors who discounted. Pacific Sunwear of California Inc. said same-store sales fell 10%, while American Eagle's same-store sales slid 11%.

These sales figures, however, mask a problem for the discounting stores: falling margins. Gross margins at American Eagle slid 6.4 percentage points to 41% of sales in the third quarter, while at Pacific Sunwear they fell 4.9 percentage points to 28.7% of sales. Abercrombie, meanwhile, closed the quarter with relatively high gross margins of 66% of sales, with a much smaller decline of 0.2 percentage point.

Abercrombie resisted discounting in 2001, when a downturn sent consumer spending crashing. As competitors slashed prices, Abercrombie actually raised them on some items. But the 2001 recession lasted eight months. The current recession is already in its 12th month. The longer it lasts, the more pressure Abercrombie will come under to relent on prices.

"The worry here is at a certain point they have to cry 'uncle' and capitulate on the pricing," says Kimberly Greenberger, an analyst at Citi Investment Research, adding that the company might rethink its strategy if the recession continued more than 18 more months. Still, Ms. Greenberger, who recently upgraded her own "sell" rating to a "hold," says she appreciates the management's "very long patience in being able to tolerate negative sales" even if its immediate benefit to investors is murky.

Abercrombie's general counsel, David Cupps, says the company is "well positioned to deal with a tough market," adding that cutting prices would be cutting the quality of merchandise. "We're not going to follow the promotional pied piper," he says.

But as more competitors cut, consumers are becoming accustomed to getting clothes on the cheap. So far, Abercrombie has differentiated itself from its competitors by delivering a unique atmosphere in its brick-and-mortar stores, which feature dark, nightclub lighting, along with racy ads where the women are young and men go topless. Yet the store's image isn't enough to lure Megan Tysoe, 20, who says she and her friends skip Abercrombie for cheaper chains like Forever 21 and H&M. "Some of my roommates' parents have decreased their allowances," causing less spending, she says.

Abercrombie is betting that those outside the U.S. feel differently. In the next year it plans to open six stores in places like Milan and Copenhagen, which will complement its fleet of 22 U.S.-based "tourist" stores catering to foreign visitors in places like Las Vegas and New York.

3M Co. cut its 2008 earnings outlook amid slumping volume and projected 2009 profits below analysts' estimates as the demand woes are expected to continue and warrant further cost-cutting by the manufacturing giant.

"During these difficult economic times, we will continue to aggressively manage our costs," said Chairman and Chief Executive George Buckley ahead of an investor and analyst meeting later Monday, at which the company will detail how it will react to the slumping global economy.

Like many firms with a global presence, 3M has seen demand for many of its products decline amid the economic slowdown. Its display and graphics division, which makes films that brighten screens on flat-screen televisions and computer monitors and was once one of its most profitable, has been hit particularly hard by increased competition and lower demand for the goods on which the films are used.

Citing an expected 10% decline in fourth-quarter volume, excluding acquisitions, and unfavorable currency rates, 3M lowered its 2008 earnings estimate to $5.10 and $5.15 a share from October's view of $5.40 and $5.48.

Organic volume is expected to fall 3% to 7% next year, with the stronger dollar resulting in sales being 6% to 7% lower than the otherwise would have. As such, 3M projected 2009 earnings of $4.50 to $4.95 a share on margins "consistent with" 2008. Analysts surveyed by Thomson Reuters were expecting earnings of $5.31.

The company announced Friday that it is cutting 1,800 jobs and urging some workers to take time off without pay or take vacation time in December. The company had about 75,000 employees and those job cuts are expected to save the firm $170 million next year.

The celebrated openness of the Internet -- network providers are not supposed to give preferential treatment to any traffic -- is quietly losing powerful defenders.

Google Inc. has approached major cable and phone companies that carry Internet traffic with a proposal to create a fast lane for its own content, according to documents reviewed by The Wall Street Journal. Google has traditionally been one of the loudest advocates of equal network access for all content providers.

At risk is a principle known as network neutrality: Cable and phone companies that operate the data pipelines are supposed to treat all traffic the same -- nobody is supposed to jump the line.

But phone and cable companies argue that Internet content providers should share in their network costs, particularly with Internet traffic growing by more than 50% annually, according to estimates. Carriers say that to keep up with surging traffic, driven mainly by the proliferation of online video, they need to boost revenue to upgrade their networks. Charging companies for fast lanes is one option. In order to gain a fast track, Google will need to utilize Atlanta Colocation, Fort Lauderdale Colocation, Miami Colocation, Las Vegas Colocation, NYC Colocation or Houston Colocation.

One major cable operator in talks with Google says it has been reluctant so far to strike a deal because of concern it might violate Federal Communications Commission guidelines on network neutrality.

"If we did this, Washington would be on fire," says one executive at the cable company who is familiar with the talks, referring to the likely reaction of regulators and lawmakers.

Separately, Microsoft Corp. and Yahoo Inc. have withdrawn quietly from a coalition formed two years ago to protect network neutrality. Each company has forged partnerships with the phone and cable companies. In addition, prominent Internet scholars, some of whom have advised President-elect Barack Obama on technology issues, have softened their views on the subject.

The contentious issue has wide ramifications for the Internet as a platform for new businesses. If companies like Google succeed in negotiating preferential treatment, the Internet could become a place where wealthy companies get faster and easier access to the Web than less affluent ones, according to advocates of network neutrality. That could choke off competition, they say.

For computer users, it could mean that Web sites by companies not able to strike fast-lane deals will respond more slowly than those by companies able to pay. In the worst-case scenario, the Internet could become a medium where large companies, such as Comcast Corp. in cable television, would control both distribution and content -- and much of what users can access, according to neutrality advocates.

The developments could test Mr. Obama's professed commitment to network neutrality. "The Internet is perhaps the most open network in history, and we have to keep it that way," he told Google employees a year ago at the company's Mountain View, Calif., campus. "I will take a back seat to no one in my commitment to network neutrality."

But Lawrence Lessig, an Internet law professor at Stanford University and an influential proponent of network neutrality, recently shifted gears by saying at a conference that content providers should be able to pay for faster service. Mr. Lessig, who has known President-elect Barack Obama since their days teaching law at the University of Chicago, has been mentioned as a candidate to head the Federal Communications Commission, which regulates the telecommunications industry.

The shifting positions concern some purists. "What they're talking about is selling you the right to skip ahead in the line," says Ben Scott, policy director of Free Press, a Washington-based advocacy group. "It would mean the first part of your business plan would be a deal with AT&T to get into their super-tier -- that is anathema to a culture of innovation."

Advocates of network neutrality believe it has helped the Internet drive the technology revolution of the past two decades, creating hundreds of thousands of jobs.

The concept of network neutrality originated with the phone business. The nation's longtime telephone monopoly, nicknamed Ma Bell, and its regional successors were prohibited from giving any public phone call preference in how quickly it was connected. When the Internet first boomed in the 1990s, content largely traveled via telephone line, and the rule survived by default.

The carriers picked up the unflattering nickname "dumbpipes," underscoring their strict noninterference in the Internet traffic surging over their networks. The name heightened resentment among the carriers toward the soaring wealth of the content providers, such as Amazon.com Inc., that couldn't exist without the networks of the telecom and cable companies.

In August 2005, amid a deregulatory environment, the FCC weakened network neutrality to a set of four "guiding principles." The step had the effect of making the FCC's power to enforce network neutrality subject to interpretation, emboldening those looking for ways around it.

Stirring the waters further, major phone companies including AT&T and Verizon announced they intended to create new fast lanes on the Internet -- and would charge content companies a toll to use it. They claimed Internet companies had been getting a free ride.

That unleashed a firestorm of criticism. A diverse group including Internet companies Google, Microsoft and Amazon joined the likes of the Christian Coalition, the National Rifle Association and the pop singer Moby in what they characterized as a fight to "save the Internet." The coalition claimed such steps could endanger freedom of speech.

Advocates of network neutrality also claimed that dismantling the rule would be the first step toward distributors gaining control over content, since they could dictate traffic according to fees charged to content providers. The fortunes of a certain Web site, in other words, might depend on how much it could pay network providers, rather than on its popularity.

That concern would grow if the carriers themselves offer content, which some have tried, with mixed success. AT&T, the country's largest broadband provider, recently launched its own online video service, called VideoCrawler, to compete with YouTube and others.

"One way AT&T can win that competition is to give their own video service preferential treatment on their network," says Robert Topolski, a networking engineer based in Portland, Ore. An AT&T spokesman says the company has no plans to give VideoCrawler preferential treatment on its network.

Mr. Topolski discovered that Comcast was slowing a video file-sharing service called BitTorrent. That discovery eventually led to sanctions against Comcast by the FCC. Comcast has appealed the decision, arguing the FCC did not have the authority to make such a ruling.

In 2006, Microsoft felt strongly enough about the issue that it wrote Congress to declare that saving network neutrality "could dictate whether the U.S. will continue to lead the world in Internet-related technologies."

The debate eventually reached a stalemate. Legislation to codify network neutrality failed to pass, and carriers backed off their plans for a tiered Internet.

During his presidential campaign, Mr. Obama spoke frequently about the Internet, which was a critical tool in his grass-roots effort to reach new voters, and the importance of network neutrality. "Once providers start to give privilege to some Web sites and applications over others, then the smaller voices get squeezed out," he told Google employees a year ago when he campaigned at the company. "And then we all lose."

But some of those who advise the new president on technology have changed their view on network neutrality. Stanford's Mr. Lessig, for one, has softened his opposition to variable service tiers. At a conference, he argued that carriers won't become kingmakers so long as the faster service at a higher price is available to anyone willing to pay it.

"There are good reasons to be able to prioritize traffic," Mr. Lessig said later in an interview. "If everyone had to pay the same rates for postal service, than you wouldn't be able to differentiate between sending a greeting card to your grandma versus sending an overnight letter to your lawyer."

Some telecom experts say that broadband is the most profitable service offered by phone and cable companies, and they are simply trying to offset declining revenue from their traditional phone business.

In the two years since Google, Microsoft, Amazon and other Internet companies lined up in favor of network neutrality, the landscape has changed. The Internet companies have formed partnerships with phone and cable companies, making them more dependent on one another.

Microsoft, which appealed to Congress to save network neutrality just two years ago, has changed its position completely. "Network neutrality is a policy avenue the company is no longer pursuing," Microsoft said in a statement. The Redmond, Wash., software giant now favors legislation to allow network operators to offer different tiers of service to content companies.

Microsoft has a deal to provide software for AT&T's Internet television service. A Microsoft spokesman declined to comment whether this arrangement affected the company's position on network neutrality.

Amazon's popular digital-reading device, called the Kindle, offers a dedicated, faster download service, an arrangement Amazon has with Sprint. That has prompted questions in the blogosphere about whether the service violates network neutrality.

"Amazon continues to support adoption of net neutrality rules to protect the longstanding, fundamental openness of the Internet," Amazon said in a statement. It declined to elaborate on its Kindle arrangement.

Amazon had withdrawn from the coalition of companies supporting net neutrality, but it recently was listed once again on the group's Web site. It declined to comment on whether carriers should be allowed to prioritize traffic.

Yahoo now has a digital subscriber-line partnership with AT&T. Some have speculated that the deal has caused Yahoo to go silent on the network-neutrality issue.

An AT&T spokesman said the company should be able to strike any deal it sees fit with content companies. Yahoo said in a statement that carriers and content companies "should find a consensus on how best to ensure that Americans have access to a world-class Internet."

Google, with its dominant market position and its perceived ties to the Obama team, may hold the most sway. One of President-elect Obama's most visible supporters during the campaign was Eric Schmidt, Google's chief executive officer. Mr. Schmidt remains an adviser during the transition.

Google's proposed arrangement with network providers, internally called OpenEdge, would place Google servers directly within the network of the service providers, according to documents reviewed by the Journal. The setup would accelerate Google's service for users. Google has asked the providers it has approached not to talk about the idea, according to people familiar with the plans.

Asked about OpenEdge, Google said only that other companies such as Yahoo and Microsoft could strike similar deals if they desired. But Google's move, if successful, would give it an advantage available to very few.

The matter could come to a head quickly. In approving AT&T's 2006 acquisition of Bell South, the FCC made AT&T agree to shelve plans for a fast lane for 30 months. That moratorium expires in the middle of next year. A Democratic lawmaker has already promised new network-neutrality legislation early in 2009. And a new chairman of the FCC could take a stricter position on forcing companies to comply with network neutrality.

Richard Whitt, Google's head of public affairs, denies the company's proposal would violate network neutrality. Nevertheless, he says he's unsure how committed President-elect Obama will remain to the principle.

"If you look at his plans," says Mr. Whitt, "they are much less specific than they were before."

As posted by: Wall Street Journal

The secret to running a successful information-technology department is knowing how your company makes money, not running counter to the corporate culture and never falling in love with technology.

That's according to Peter Whatnell, chief information officer at Sunoco Inc. Mr. Whatnell has been in charge of technology for the oil company since 2001. He also was recently elected president of the Society for Information Management, a professional organization for technology executives.

Mr. Whatnell spoke to The Wall Street Journal about how the economic downturn is affecting IT departments and the way businesses use technology, and how IT can keep itself relevant. Here are edited excerpts of that conversation.

THE WALL STREET JOURNAL: How is the economy affecting the information-technology world?

MR. WHATNELL: It's having a huge impact. Basically you've had to throw away any plan you've put together prior to the end of August and start over again. It's caught a lot of people by surprise and now we have to quickly adjust our plans for next year [because much less money is available for new projects], not just for the state of the overall economy but for our individual companies' outlook.

WSJ: How does this downturn compare to the tech bubble earlier in the decade?

MR. WHATNELL: The tech meltdown was narrowly defined in terms of it was just that part of the market. This time, the general economy is in disarray. It's not just a national event, but a global one. At the same time, it is a much more complicated situation than what happened in the past.

It's a cliche to say that the rate of change in IT has never been greater -- every year for the past 15 years people have said that. Which doesn't make it untrue, of course. But the changes are now really at the core of what service IT provides. It is not just outsourcing, but the expectations of the business community in terms of their exposure to easy-to-use, cheap-to-acquire consumer technology in their personal lives [such as iPhones and free online email accounts like Yahoo Mail]. They expect to see that replicated in their commercial lives. And IT departments -- perhaps for good reasons -- have been slow to react.

WSJ: What are the good reasons?

MR. WHATNELL: You have security issues and support issues and compatibility issues. It adds complexity. That's not a reason for not seriously considering things. And one of the things I would say, to quote another cliche, is never waste a good crisis. The coming 12 months are going to force organizations like mine and others to consider nontraditional ways of delivering IT.

WSJ: What are some examples of nontraditional IT?

MR. WHATNELL: [The traditional approach would be] putting a PC on someone's desktop, giving them the Microsoft Office suite and a few other applications. That costs several hundred dollars to provide. And [when the alternative is to] buy that from a Web-based provider for $50 a year, you have to seriously look at that.
Cheaper Alternatives

WSJ: You've said that you would consider moving to a cheaper alternative such as Google's email system if you could get 90% of the functionality for 10% of the cost. Why?

MR. WHATNELL: It is not such an unreasonable assertion to make if you talk to people about the products they use and how much they use them. Most people use spreadsheets and word processing and PowerPoint. But most people just scratch the surface of what is available in these applications. When it comes to spreadsheets, they use addition, subtraction and maybe long division. The number of people who use functions and other complicated features is a much smaller part of the population. It's a very important part of the population, because generally speaking people who need the more advanced functionality are the people who are most important to your business. Frankly [moving to a cheaper but less functional system] would be a pure cost play.

WSJ: How do you decide which projects make the cut when you're tightening your budget?

MR. WHATNELL: They tend to be those things that save money rather than those that make money. It's not that you don't want to make money. It's that cost-saving projects tend to be easier to measure and are more predictable because you are not dependent on the vagaries of how a customer is going to behave to a new product or how a distributor is going to react to a new channel. I think that is the reality of working [in] tough times.

WSJ: What is a project that you are cutting?

MR. WHATNELL: We have a standard refresh rate for equipment: every four years for desktops; every three years for laptops. We stopped doing that in May and we won't resurrect that plan again probably until the spring of 2010.

[Refreshing computers] improved our reliability and our ability to have standardized rollouts. It was only when we were trying to tighten our belts earlier this year that we asked ourselves, "What would happen if we didn't get new PCs for 15 months? And was anyone actually complaining that they couldn't deliver a product, that they couldn't get cash to a bank, that they couldn't execute a trade because their computer was too old?" Of course not.
Changing Work Habits

WSJ: How big a factor is asking people to change the way they work in an IT project?

MR. WHATNELL: We try to introduce technology that will make the company more successful, but a lot of times to achieve that success people have to change the way that they work. It's a consequence rather than an objective. We have three measures when we are looking to approve a project: First, what does this project do to support the company's strategy. The second is what is the business case. And the third is around risk. One of the components we look at under risk is organizational change. The more change that a project would introduce, the more risky we consider the project. That doesn't mean that you don't do it, but the attention you give to the change-management activities has to be far higher.

WSJ: How important is it to network with colleagues in the industry?

MR. WHATNELL: I think it is critical. It's where a lot of ideas come from. It doesn't even have to be your industry. You could hear someone from a health system talking about how they use mobile devices to enable doctors to access medical information and you think, "I could use that same approach to help engineers who are working on a refinery site."

WSJ: Are you forthcoming when you talk to colleagues or are you worried about protecting competitive secrets?

MR. WHATNELL: I think there is a realization now that competitiveness does not derive from the raw technology. The competitive advantage doesn't come from having the same set of Lego bricks that everyone else has access to. It comes from taking that set of Lego bricks and understanding how they can be put together to understand specific issues that your business is facing in your industry. And how you put them together will be very different from someone else in a different company, even though they are a competitor.

The source of competitive advantage is knowing how IT can help your business. You should to be able to ask any CIO: Are you able to describe in three minutes or less how your company makes money? To me that's where it starts. And the answer isn't "we're in retail" or "we're in the insurance business" or "we're an oil company," because everyone is in retail or the insurance business or is an oil company.
The Biggest Challenge

WSJ: What is your biggest challenge and how are you using technology to do something about it?

MR. WHATNELL: The biggest challenge for us is that we are a commodity business in a mature industry. So the challenge is how we can, over the next 15 months, focus on our core activities so that we can be the low-cost provider in our industry. At a time when people are looking to reduce and to cut, how can we create an environment where the business wants to listen to IT about what we can do to cut expenses, to reduce their cycle time and improve their agility. Rather than just have them say, "You have to cut as well." We have an obligation to look at ourselves to find all the places where we can take cost out of the organization. The instinct in challenging times is to cut, cut, cut. But what is much more challenging is doing that and then leaving yourself in a position to talk to the business about how we can help.

WSJ: How do you do that?

Congressional investigators are probing drug maker Wyeth's practices concerning scientific-paper writing and whether its marketing employees help shape manuscripts for medical journals.

In separate letters to Wyeth and DesignWrite Inc., a medical-writing and -education company hired by Wyeth, Sen. Charles Grassley asked the companies to disclose payments he said were made to prepare certain articles and for information about how doctors were recruited to place their names on those articles. The articles, published in peer-reviewed medical journals, involved Prempro and other female-hormone-replacement therapies made by Wyeth. What Wyeth might fear on this issue is Qui Tam or a Whistleblower Lawyer.

The inquiries come as part of the Senate Finance Committee's examination of "medical ghostwriting," part of a broader probe into the influence of drug companies on the health-care industry. The committee collected internal Wyeth documents obtained during civil legal actions involving Prempro.

In his letters, Sen. Grassley, the committee's senior Republican, described ghostwritten manuscripts as those written or heavily developed by others -- including marketing or medical-education companies -- beyond the scientists named as primary authors on the manuscripts.

"The ghostwriting issue is important because it concerns the integrity of the scientific views expressed in medical journals," said Sen. Grassley in a statement. "Shedding light on the relationships between drug companies and authors helps establish accountability and safeguard the credibility of influential medical journals."

Wyeth, based in Madison, N.J., said it approaches scientists with ideas for articles and offers them the assistance of a professional medical writer. But the scientists retain complete editorial control, it said.

In a separate statement, Wyeth added that "this inquiry appears to represent an effort by plaintiffs' product liability attorneys to recycle arguments that have been rejected by judges and juries alike," It said it would comment further later. DesignWrite, of Princeton, N.J., couldn't be reached to comment.

Sen. Grassley is looking into possible ghostwriting practices of other major pharmaceutical companies, as well. Medical journals also have been scrutinized for several years for their role in maintaining scientific integrity for the papers they publish.

In the letter to Wyeth Chairman and Chief Executive Bernard J. Poussot, Sen. Grassley asks the company for information involving payment to study authors and to DesignWrite. Sen. Grassley also requests information concerning each author's involvement in the drafting of the manuscripts for all papers involving DesignWrite since 1995.

He also asks Wyeth to provide the same information about all other third-party-written manuscripts involving human drugs since 2000. Further, the Iowa Republican asks about how Wyeth's marketing employees are involved in the manuscript-drafting process.

As posted by: Wall Street Journal

Detroit Media Partnership L.P., which operates the Detroit Free Press and the Detroit News, is expected to announce next week that it will cease home delivery of the papers' print editions on most days of the week, according to people familiar with the company's thinking.

Detroit Media has not made a final decision, these people said. But the leading scenario set to be unveiled Tuesday calls for the Free Press, the 20th largest U.S. newspaper by weekday circulation, and the News to end home delivery on all but the most lucrative days -- Thursday, Friday and Sunday. On the other days, the company would sell single copies of abbreviated print editions at newsstands and direct readers to the papers' expanded digital editions.

The Free Press, owned by Gannett Co., and the News, owned by MediaNews Group, are operated by Detroit Media under a so-called joint operating agreement.

Weekday circulation for Detroit's two major newspapers has plunged.

The Free Press and the News would be the first dailies in a major metropolitan market to curtail home delivery and drastically scale back their print editions. Other newspapers are contemplating similar moves in response to the erosion of advertising and the rising costs of printing and delivery. In October the Christian Science Monitor said it will stop printing a daily newspaper in April and move instead to an online version with a weekly print product.

Newspaper groups have taken drastic steps lately to align costs with shrinking revenue, including massive staff cuts and efforts to consolidate functions through partnerships like the JOA in Detroit. As many of those measures have proved insufficient, publishers have taken a harder look at shifting away from print or abandoning it altogether to save on printing and distribution.

Even by industry standards, the Detroit papers have been hit particularly hard, a result of the troubled auto industry's impact on Michigan SEO. Dave Hunke, Detroit Media's chief executive, said in October, "It's time for us to look at some radical departures from our business model."

Weekday circulation has declined 15% at the Free Press and 22% at the News over the past five years, according to the Audit Bureau of Circulations. As of September, the Free Press had a weekday circulation of 298,243, including 200,110 home and mail subscribers. The comparable numbers at the News were 178,280 and 97,483.

To address the mounting problems, Detroit Media has been working with IDEO Inc., a design firm based in Palo Alto, Calif., for the past six months to help reinvent the papers. The results of their work are scheduled to be unveiled to employees on Tuesday.

The changes are likely to result in significant job cuts. Gannett, which owns 85 daily newspapers, recently said it was eliminating 2,000 positions as part of a 10% staff reduction. Two of its papers, USA Today and the Free Press, were not part of those reductions.

"The Detroit Media Partnership is looking at everything right now just like everyone else in the country," said Leland K. Bassett, a spokesman.

Because the Detroit papers will continue to publish daily electronic versions, the cuts are expected to come mostly, if not entirely, from outside the newsroom, according to people close to the situation.

Curtailing home delivery would bring the Detroit papers much needed savings, but would also carry considerable risk. At a time when newspapers are fighting to retain readers, steering those readers online instead of delivering their paper to the door could cause them to lose the habit of reading a paper daily.

Rumors about Detroit Media's plans have surfaced in recent days on the "Gannett Blog" run by former USA Today reporter Jim Hopkins.

As posted by: Wall Street Journal

Pressure is mounting on drug maker Elan Corp.'s chief executive and board as large shareholders voice dissatisfaction with the firm's performance.

CEO Kelly Martin, shown in November, is under fire from Elan shareholders for the drug firm's performance.

In a letter to the board Thursday, one shareholder called for the ouster of Chief Executive Kelly Martin, saying he has botched the marketing of the company's most important drug—Tysabri for multiple sclerosis and Crohn's disease—and wasted money on private jets and an excessive number of company offices. Elan Corp. could have used the help of Qui Tam or a Whistleblower Attorney.

The shareholder, Jack Schuler, is a former president of Abbott Laboratories and owns about 1% of Elan. Other large shareholders, in interviews, also expressed frustration with Tysabri sales and said they want Elan to add seasoned pharmaceutical executives to its management and board.

Elan, based in Dublin, is known for Tysabri and an experimental Alzheimer's drug, though the company isn't profitable. The company's shares on the New York Stock Exchange fell by 70% over a few days in late July to $9.93 after disappointing news about the drugs, and have slumped to around $7 since then.

In a reply to Mr. Schuler, Elan Chairman Kyran McLaughlin said "We reject your assertions about our management team," according to a copy of the letter reviewed by the Wall Street Journal. He wrote that the company is also "frustrated with our current stock price." But he called Tysabri a "success," noting that the drug is close to achieving annual global sales of $1 billion.

Mr. McLaughlin rejected the claim that Elan managers lack pharmaceutical marketing experience, and said that private jet use accounts for "only 20% of total travel costs." Mr. Martin had significantly cut costs over the years, he said. In a separate statement Friday, Elan said it would close two company offices, in New York and Tokyo, among other cost-cutting steps.

A company spokeswoman said Messrs. Martin and McLaughlin were unavailable to comment Friday.

Mr. Schuler, who has held board seats at Amgen Inc., Medtronic Inc. and other healthcare companies, said Elan and its marketing partner, Biogen Idec Inc., have done a poor job selling Tysabri and haven't overcome concerns about a rare side effect associated with the drug.

Mr. Martin and other top managers lack a "basic understanding of the pharmaceutical business," Mr. Schuler wrote, and called for their ouster, according to a copy of the letter reviewed by the Wall Street Journal.

A Biogen spokeswoman said the company is "incredibly committed" to Tysabri and aims to more than double the number of patients taking it to 100,000 by the end of 2010.

Another shareholder, Matt Strobeck, a partner at Westfield Capital Management Co., which owns about 4% of Elan, said in an interview Friday that there is a "frustrating" lack of pharmaceutical sales and marketing experience at Elan, which is reflected by the weak sales of key products. He said he recommended to Elan in September to add two pharmaceutical veterans to its board.

Tysabri is widely seen as effective at treating M.S. and Crohn's disease, a digestive condition, but a handful of patients taking the drug in recent years have developed a potentially deadly brain infection called progressive multifocal leukoencephalopathy, or PML.

Tysabri was removed from the U.S. market in 2005 after reports of three PML cases. MS patients clamored for the drug's return, and the Food and Drug Administration allowed it back on the market in July 2006. But two more PML reports in late July led to a sharp drop in Elan's stock.

Compounding the drop were the results of a small human study of Elan's Alzheimer's drug, which raised questions about the drug's safety and efficacy. Elan is developing the drug, bapineuzumab, with Wyeth.

Larry Feinberg, president of Oracle Investment Management Inc., which owns about 1% of Elan, says he is still upbeat on the Alzheimer's drug and other neurology treatments Elan is developing. But he said he has been telling the company "for years" that it needs to improve its marketing effort.

Mr. Feinberg said Elan also needs to cut its spending if it's to keep funding operations and meet large debt payments in 2011. The company has $1.8 billion in total debt, $1.2 of which is due in November 2011. Elan had $530 million in cash and short term investments at the end of September.