Petrobras Capital Plan to Boost Reserves by 35 Percent

Reuters

 

Brazil's state-run oil company Petrobras's (PBR.N) proven oil reserves could rise 35 percent as a result of access to new fields through an oil-for-shares swap, the company chief executive said on Thursday.

"We are going to have a 35 percent increase in proven reserves, strengthening production growth in a sustainable pace," Chief Executive Jose Sergio Gabrielli said during a conference call.

He said the company by 2014 or 2015 could incorporate those reserves, which are distributed in at least six fields. He added that the company's reserves are currently 14 billion barrels.

Gabrielli added that oil production would also increase as a result of the new fields, but declined to provide a time frame or changes to existing output forecasts.

"The strategic view of the transaction is that we will have a possible increase in the production growth rate of Petrobras as a whole," he said.

Petrobras will trade $43 billion worth of shares for access to 5 billion barrels held in the offshore areas, a transaction linked to a stock offering for minority shareholders that could raise as much as $25 billion.

Big-name retailers Gap, Zara hit the international Internet

USA Today

 

LONDON — As spending in malls and stores remains sluggish, the strength of online fashion sales is enticing big-name international retailers to join the move into cyberspace.

Spanish clothing store Zara began selling online in Britain this week, hot on the heels of U.S. retailer Gap's first Internet shop outside the United States and just ahead of a planned launch by Sweden's H&M.

"It's becoming the new normal," says Jeremy Baker, consumer analyst at ESCP Europe Business School in London. "Companies need to have a presence online to compete."

Zara, which also went live in France, Germany, Italy, Portugal and Spain, already has around 4.5 million fans on social networking site Facebook and its iPhone application has been dowloaded 3.5 million times.

Converting just a fraction of those to its new shopping site would give the company, owned by Inditex Group, significant revenues.

"There is clearly demand for Zara product online," said Simon Chinn, retail consultant at Verdict Research. "It will comfortably complement its extensive store estate, adding an extra level of service for its customers."

Inditex recently overtook Gap (GPS) as the world's biggest clothing retailer by sales and Chief Executive Pablo Isla indicated that the group would launch online sites for its other brands, which include Massimo Dutti and Bershka.

Gap, meanwhile, launched sites for both its main brand and more expensive offshoot, Banana Republic, last week. Like Zara, it plans a wider rollout in Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Spain and Sweden.

Toby Lenk, president of Gap Direct has described selling online as an "efficient way to reach new international customers and test the waters for our brands."

That's particularly the case for Banana Republic — a brand that's been given big props by fashion editors across a broad range of publications in Britain but has yet to open a store outside the capital.

While going online makes cost-efficient sense for larger chains that already have well-stocked warehouses, analysts say it is fast becoming a necessity for any retail company to stay in business.

Internet sales are expected to grow to $145 billion in western Europe by 2014, up from $86 billion last year, according to consulting firm Forrester.

Asos, the market leader, which sells quickly updated fashions that copy those worn by celebrities, reported a 54% surge in sales in the first quarter of this year, compared with a year earlier.

Analysts say it's no coincidence that Internet leisure shopping is on the rise at a time that many people are feeling cash-strapped and over-worked — it both saves valuable time and often lets consumers feel they're not really spending money.

"You click, you don't put money on the table," says Baker.

Ten Environmentally Friendly Tips To Save Money and Energy

This summer season has been one of the hottest recorded throughout many areas around the globe. The average global temperatures for this year may exceed those of 1998. If that is case, it would result in two of the hottest years on record in the last 13.

The National Academy of Sciences recently released data involving 1,400 climate researchers around the globe. Roughly 97% make the claim that humans are the cause of global warming.

If you are concerned about the future of the environment, here are ten environmentally friendly tips you can take that also have a return on investment — they can help sustain the earth as well as your monthly global cash flow.

1. Fix your home's energy leaks. Over a fifth of energy consumption in the U.S. occurs within people's homes, says the Department of Energy. That's an average expenditure of $2,400 a year. Half of that figure goes to home heating and cooling, much of which results in waste. To prevent energy leaks, insulate ceilings and walls, and seal cracks and gaps. The simplest Cuyahoga County home remodeling fixes can make a tremendous impact. "Often people have so many small leaks around the home that it's the equivalent of having a three-foot by three-foot window wide open," says president of the Washington-based nonprofit Alliance to Save Energy.

2. Swap out your home's light bulbs. The common home has up to 46 throughout the house, says the Department of Energy. However only five of them are energy-efficient. These can slash lighting energy bills by 75%. Not a fan of CFs? Matt Patsky, the CEO of Trillium Asset Management, says new LEDs are much better. They can slash power consumption by 95% and emit a better light than traditional bulbs. They cost more, however prices are dropping rather quickly.

3. Turn the heat off in an empty house or a house when everyone is sleeping. Look into a programmable thermostat for residential heating.

"They typically pay for themselves in three months," says ASE's Ms. Callahan. They can drop your home heating and cooling bills by 10%, she says.

4. Evaluate your home's appliances. Replace any old ones with new, energy-efficient models. Today's more efficient models have an EnergyStar seal from the Department of Energy. They typically use around 30% less energy than older models that lack the seal, experts say. With respect to your TV: The larger the screen, the more power it is sucking up. The same idea applies to PCs. Take into consideration the number of refurbished computers you have around the home as well as how long they remain on and idle throughout the day (if not week).

5. Similar to the tip above: stop leaving your used PCs and home entertainment systems on standby overnight. Although the screen is black, they still use power. Power strips make it more convenient to switch everything off at one time.

6. Get the most from taxpayer green incentives. For instance, the government is currently offering to pay up to $1,500 of your costs on items like insulation other Medina County home remodeling investments that save energy. Your state government may be offering additional incentives. Look for deals like these at DSIRE, the Database of State Incentives for Renewables & Efficiency.

7. Get a hold on your hot water heater. It is by far one of the biggest energy users as well as easiest approaches to evaluate your home's energy financial risk management. Turn down the thermostat and wrap insulation around the heater and the pipes. Typically, they are set at around 140 degrees. According to The Energy Department, that is way too high. They suggest dropping it down to 115 to 120 degrees.

8. Invest in a more-efficient vehicle. Highly-efficient hybrids can be costly, but director of pricing and analysis at car experts Edmunds, Jessica Caldwell, claims there are numerous deals available at the moment that can bring the price down. You don't need to go hybrid or buy tickets to all of the upcoming green trade show exhibits. Caldwell says the Versa by Nissan gets around 29 miles to the gallon and has a price tag of $16,000. If a new vehicle is not an option, consider ideas like energy saving truck bed accessories. Extang, an affiliate of BedRug - maker of truck bed liners and truck bed carpet, claims that by purchasing an Extang truck tonneau, you save up to 10% in gas mileage.

9. Get an energy audit of your home's power consumption. By investing a few hundred dollars, experts using high-tech gadgets will analyze your home and offer insights as to what you can do to make your home more efficient. Getting a home audit can help you rethink your home heating and air conditioning, as well as identify potential sources of renewable energy, from geothermal heat pumps to solar water heating solutions.

10. Invest in an e-book reader. If you enjoy reading and read often, these little devices are very green. Books and magazines are not: they do a lot of damage to the environment, from cutting trees to manufacturing and distribution. The senior research analyst at the CleanTech Group, an environmental consulting firm, has calculated the figures. In essence, a gadget like the Kindle has about the same influence on the environment as about 23 books, or 280 newspapers, or 177 magazines.

Going green exhibits a change that is both healthy for the earth and the wallet. Take these tips to heart as well as the home, and start living a more environmentally friendly way of life.

More than 400 US Banks Will Fail: Roubini

CNBC

Even if the US and European economies manage to avoid a double dip, it will still feel like a recession, while more than half of the 800-plus US banks on the "critical list" are likely to go bust, according to renowned economist Nouriel Roubini of Roubini Global Economics.

The second half of the year will remain weak as tailwinds become headwinds, Roubini told CNBC on the shores of Lake Como, Italy at the Ambrosetti Forum economics conference.

"In the second half, fiscal policy becomes a headwind, no more cash for clunkers," Roubini said. "The positive scenario is that growth will be below par."

Roubini recently said the chance of a double-dip recession in the US was now more than 40 percent.

"The big risk is that there will be a downturn in markets that could impact the bond, the equity and the credit markets," he said.

“Job losses have been higher, the US jobs number will show that. There is no private sector jobs growth," he said. "Consumption is weak, exports are weak and housing is weak."

"If there is no final sales and no final demand, companies will not invest," he added.

New Normal Coming and More Banks Will Fail

Roubini said he believes hopes of decoupling will be dashed as the slowdown in the US impacts China, Japan and the euro zone.

"In Europe, Germany is strong but the rest of the continent is pretty dismal," he said. "The rest of the world cannot cope without the prop of the US consumer. Chinese growth in the second half will be 7 percent."

“Get used to it," Roubini said. "Deleveraging has to continue as governments and consumers deleverage in the developed world."

"We have to expect the new normal," he added. "We do not need a double dip for it to feel like recession."

“The biggest banks have been backstopped, but 800-plus small- and medium-sized banks in the US remain on the critical list and half of those will go bust," Roubini said.

Roubini said corporate and consumer debt problems will get worse and that there are more problems ahead in the commercial and residential property market.

"Policy makers are running out of bullets, the problem is we need fiscal consolidation, fiscal policy is constrained by the debt problem, monetary policy is becoming ineffectual," he said.

Roubini, known as Dr. Doom to most and voted as Roubini the Realist by CNBC.com readers, said further quantitative easing is pointless as interest rates are already low.

"We are in a liquidity trap and we have insolvency problems," he said.

“What we need is credible spending plans over the medium term on health care, welfare and retirement age," Roubini said. "This will create a fiscal constraint lasting well into next year."

"The best growth over the next 18 months will come from the domestically-focused Brazil, which will outgrow China for the first time in 20 years," he added.

Fears Growing Over Global Food Supply‏

CNBC

Russia announced a 12-month extension of its grain export ban on Thursday, raising fears about a return to the food shortages and riots of 2007-08. The FT reports.

 

Russia announced a 12-month extension of its grain export ban on Thursday, raising fears about a return to the food shortages and riots of 2007-08 which spread through developing countries dependent on imports.

The announcement by Vladimir Putin came as the UN’s Food and Agriculture Organization called an emergency meeting to discuss the wheat shortage, and riots in Mozambique left seven dead.

The unrest in Maputo, in which 280 people were also injured, followed the government’s decision to raise bread prices by 30 per cent. Police opened fire on demonstrators after thousands turned out to protest against the price hikes, burning tyres and looting food warehouses.

Although agricultural officials and traders insist that wheat and other crop supplies are more abundant than in 2007-08, officials fear the deadly Mozambique riots could be replicated.

The 2007-08 food shortages, the most severe in 30 years, set off riots in countries from Bangladesh to Mexico, and helped to trigger the collapse of governments in Haiti and Madagascar.

The Russian announcement extended an export ban first announced last month until late December 2011, sending wheat and other cereals prices to near a two-year high.

The FAO said that “the concern about a possible repeat of the 2007-08 food crisis” had resulted in “an enormous number” of inquiries from member countries. “The purpose of holding this meeting is for exporting and importing countries to engage.”

Russia is traditionally the world’s fourth-largest wheat exporter, and the export ban has already forced importers in the Middle East and North Africa, the biggest buyers, to seek supplies in Europe and the US.

Mr Putin said Moscow could “only consider lifting the export ban after next year’s crop has been harvested and we have clarity on the grain balances”. He added that the decision to extend the ban was intended to “end unnecessary anxiety and to ensure a stable and predict-able business environment for market participants”.

“This is quite serious,” said Abdolreza Abbassian, of the FAO in Rome. “Two years in a row without Russian exports creates quite a disturbance.” Dan Manternach, chief wheat economist at Doane Agricultural Services in St Louis, added: “This is a wake-up call for importing nations about the reliability of Russia.”

Jakkie Cilliers, director of South Africa’s Institute of Security Studies, said there was concern over a repeat of the protests of 2008: “That certainly strengthened a return of the military in politics in Africa.”

European wheat prices on Thursday hit €231.5 a ton, just shy of last month’s two-year high of €236. Wheat prices have surged nearly 70 percent since January, and analysts forecast further rises after Russia’s decision and concerns about weather damage to Australia’s crop.

Workers Bear Larger Share of Health Care Premiums

USA Today

 

Workers are paying a larger portion of their health insurance costs as businesses shift more of the burden to their employees to help ride out the economic downturn, an annual study shows.

The average employee contribution toward premiums for family coverage climbed 14% this year to nearly $4,000, according to a report by the Kaiser Family Foundation and the Health Research and Educational Trust released Thursday. Contributions for single coverage grew 15%. But total premiums — the amount split by the employer and employee — rose a modest 3% for family coverage and 5% for single employees this year.

Companies that offer benefits still pay at least 70% of the total premium, on average, for their workers. But this year, companies passed most of the premium increases on to employees instead of absorbing them as they usually do, something researchers had not seen before, Kaiser CEO Drew Altman said.

"It just speaks to the depths of the recession and the pressure that employers have been under to hold the line on costs while, I think, trying as best they can to avoid layoffs," he said.

Instead of simply working rising coverage costs into their budgets, companies are finding new ways to push more of the financial burden on employees and trying to make them think more about what they're spending for care, said Paul Frontsin, director of the health research program for the nonprofit Employee Benefit Research Institute.

"There's lots of trade-offs employers can make to maintain health benefits when costs are going up," said Frontsin, who wasn't involved in the Kaiser study.

For instance, a growing number of workers are covered by health insurance that requires them to pay a deductible of $1,000 or more before most coverage starts. The Kaiser study found the most striking increase among small companies, where 46% of workers are enrolled in these high-deductible plans, up from 16% in 2006.

Some companies also are trying to steer employees toward preventive care, in an effort to cut long-term costs. They're reducing or eliminating the price workers pay for things like primary care visits, diabetes treatments or blood pressure testing that can ward off more expensive care down the road.

"The coverage that employees get is looking less and less like the coverage that their parents used to get," Altman said.

Altman said premium growth may have slowed for this year's benefits, which would have been calculated in 2009, because of the recession and the possibility of health care reform. He said they've seen restrained premium hikes from insurers in the past when Congress has debated reform.

But it didn't slow for everyone. At the National World War I Museum in Kansas City, Mo., premiums for the 26 covered employees rose 18% last year and about 12% for the current benefits year, said Chief Financial Officer Jeff Walker.

He said museum supervisors were trying focus more on educating staff about the best use of health care, and they're considering offering gym memberships as part of a wellness program.

"I think we all know the cost for these insurance plans is going to continue to increase," he said. "This can't be a long-term solution for us."

The nonprofit Kaiser and the research trust surveyed more than 3,000 randomly selected companies from across the country earlier this year for its annual report.

Burger King Agrees to $3.3 Billion 3G Capital Offer

Bloomberg

 

Burger King Holdings Inc. agreed to be acquired by 3G Capital, a New York investment firm backed by Brazilian investors, for $3.3 billion in the biggest restaurant acquisition in at least a decade.

The $24-a-share price is 46 percent more than Miami-based Burger King’s close Aug. 31, before reports of a deal surfaced. Under the terms of the agreement, the second-largest U.S. burger chain can solicit superior bids through Oct. 12, according to a statement today.

The chain’s sales growth has slowed for two straight years as consumers ate out less during the U.S. economic slump. Burger King, which trails only McDonald’s Corp. in the U.S., has seen a slower recovery than its larger rival as its clientele suffered more from the recession, said Tom Forte, an analyst at New York- based Telsey Advisory Group.

“Burger King’s heavy user -- young, male, and more likely to be a minority -- has had a higher rate of unemployment than the McDonald’s consumer,” Forte said in a telephone interview.

The transaction with New York-based 3G amounts to about $4 billion including debt. The purchase would eclipse the 2007 sale of OSI Restaurant Partners Inc., the parent of Outback Steakhouse, as the biggest restaurant deal since Bloomberg started compiling data more than a decade ago.

Burger King rose $4.73, or 25 percent, to $23.59 at 4:02 p.m. in New York Stock Exchange composite trading. The gain was the largest since May 2006, when the company went public.

Trading of bullish Burger King options surged to a record Aug. 25, a week before today’s announcement. Volume for calls to buy the stock jumped Aug. 25 to 37,427, or almost 20 times the average during the preceding four weeks, data compiled by Bloomberg show. Call trading exceeded that level yesterday, reaching 54,284, after the Wall Street Journal said the company was in talks to be sold.

Deal Valuation

The deal values Burger King at 9 times earnings before interest, taxes, depreciation, and amortization in the year ended June 30. Over the past five years, U.S. restaurant acquisitions closed at a median multiple of 8.2, according to Bloomberg data.

Transactions in the restaurant industry have picked up as the U.S. economy begins to recover, with rival chains such as Wendy’s/Arby’s Group Inc. attracting interest. 3G has shown interest in fast-food chains in the past, disclosing last year that it owned about 4.2 million shares of Wendy’s/Arby’s. 3G’s disclosure of holdings as of June 30 didn’t show any Wendy’s/Arby’s shares.

3G is an investment vehicle whose main investors are three Brazilian business partners -- Jorge Paulo Lemann, Marcel Herrmann Telles and Carlos Alberto da Veiga Sicupira, according to three people with knowledge of the matter. The men founded Brazilian investment bank Banco de Investimentos Garantia SA and agreed to sell to Credit Suisse Group AG in 1998 for at least $675 million.

Lemann’s Background

Lemann, 71, whose personal fortune was estimated by Forbes magazine at $11.5 billion this year, and his partners also own stakes in Anheuser-Busch InBev NV, the world’s biggest brewer, and Brazilian retailer Lojas Americanas SA.

3G is run by managing partner Alexandre Behring, who joined in 2005 after previously working at a buyout firm founded by Lemann. Before the Burger King deal, 3G focused mostly on investments in public equities. In a U.S. regulatory filing, it disclosed holdings of about $1 billion in stocks as of June 30, including its biggest position, CSX Corp.

3G in 2007 joined with London-based TCI Fund Management LLP to start a proxy contest for board seats at CSX, the largest U.S. railroad. Behring eventually won a seat.

3G was in the news in July when a partner at the firm, Marc Mezvinsky, married Chelsea Clinton, the daughter of U.S. Secretary of State Hillary Clinton and former President Bill Clinton.

Chidsey’s Role

John Chidsey, Burger King’s chief executive officer, will remain CEO through a transition period, according to the statement. Chidsey will then become co-chairman of the board along with Behring.

Burger King gets about two-thirds of its revenue from the U.S. and Canada. The chain also operates in Latin America, Europe and parts of Asia. Total sales fell 1.4 percent to $2.5 billion in the year ended June 30, Burger King said last week.

TPG Inc., Bain Capital LLC and Goldman Sachs Group Inc. bought Burger King from Diageo Plc in 2002 before selling shares to the public again four years later. The three own about one- third of Burger King and agreed to tender their shares into the offer.

Lazard Ltd., J.P. Morgan Securities LLC, and Barclays Capital advised 3G. Burger King was advised by Morgan Stanley and Goldman Sachs Group Inc. 3G Capital’s legal advisers were Kirkland & Ellis LLP, and Burger King’s were Skadden, Arps, Slate, Meagher & Flom LLP and Holland & Knight LLP.

Disney Reaches Deal With Time Warner Cable, Bright House

The Wall Street Journal

 

Walt Disney Co. said it reached a long-term agreement that will provide customers of cable-television providers Time Warner Cable Inc. and Bright House Networks Inc. with a wide swath of programming from Disney's units.

The companies didn't disclose financial details, but media giants such as Disney have been gaining an increasing share of their revenue from fees paid by cable, satellite and fiber video providers.

The deal—called Disney's most expansive content agreement so far—includes the recently announced Disney Junior, a new 24-hour basic channel for preschool-age children, parents and caregivers that will debut in 2012; ESPN3.com, ESPN's live sports broadband network; a new authenticated service that will let subscribers watch ESPN, ESPN2 and ESPNU through their broadband services as well as mobile Internet devices; and a new super-highlight channel, developed with Time Warner Cable, called ESPN Goal Line, that will take fans around the best matchups each Saturday during the NCAA football season. A similar service called ESPN Buzzer Beater will be available for the college basketball season.

"We are pleased to have reached an agreement without any interruption in service," said Time Warner Cable Chairman and Chief Executive Glenn Britt.

Several cable providers have come to standoffs that threatened their subscribers' access to major events before striking new deals with media companies in the past few years.

Time Warner Cable, the second-largest cable operator in the U.S., was involved in a high-profile war with News Corp. over rights fees that threatened to black out Fox on its systems in January. News Corp. also owns The Wall Street Journal.

Then, Disney threatened to pull the signal of its New York ABC affiliate from more than 3 million Cablevision Systems Corp. customers if it didn't receive more compensation. After U.S lawmakers threatened to intervene, the two sides reached an agreement in time for viewers in New York to see ABC's March telecast of the Academy Awards.

Time Warner Cable serves the New York City area, southern California, Texas, Ohio and the Carolinas. Bright House Networks, the ninth-largest U.S. multichannel video programmer distributor, has 2.4 million customers in several large cities, including Tampa Bay and Orlando, Fla.; Indianapolis; Detroit; and Birmingham, Ala.

3PAR Insiders Reap Windfall

The Wall Street Journal

 

 

Hewlett-Packard Co.'s bidding war with rival Dell Inc. over 3PAR Inc. has created a $2.1 billion windfall for insiders and investors at the small data-storage company, but the proceeds won't be evenly split.

Nearly $800 million will go to three venture-capital firms—Mayfield Fund, Menlo Ventures and Worldview Technology Partners—that remain among the Fremont, Calif., company's biggest shareholders. Collectively the three still own 38% of 3PAR.

Almost $100 million will go to 3PAR's chief executive, David Scott. His payout eclipses the combined proceeds for the company's three founders.

Mr. Scott, who left H-P to become 3PAR's CEO in 2001, owned 2.9 million 3PAR shares as of June 30, according to a recent regulatory filing. At the $33-a-share deal price, the executive's 4.6% stake in the company is worth $95.7 million.

Jeffrey Price, one of the founders and the "P" in 3PAR, will walk away with $41.4 million for his 2% stake. Ashok Singhal, the founder who contributed the "A" to the company name, owned 570,000 shares as of June 3, which would give him $18.8 million in the deal.

Messrs. Price and Singhal, who had been engineers at Sun Microsystems before starting 3PAR, remain employees of the company and share the title of chief technical officer. The third founder and the "R" in the company name, Robert Rogers, left in 2001 and was replaced as CEO by Mr. Scott. 3PAR declined to say how many shares, if any, Mr. Rogers still holds.

Outsiders too have seen the value of their holdings grow. Fidelity Research & Management, whose mutual funds held a 12.2% stake in 3PAR as of June 30, was the largest institutional shareholder. The value of its stake has tripled to $252 million, if Fidelity has held onto its shares.

3PAR was founded in 1999 and sold shares in a recapitalization round in early 2004 to new and existing investors. It went public Nov. 16, 2007, at $14 a share, but its stock soon slumped and was trading below $10 before H-P and Dell opened their bidding war last month.

Mayfield Fund, Menlo Ventures, Worldview Technology Partners and a number of others invested a total of $183 million into 3PAR over the years. After the IPO, they mostly held onto their stakes. Mayfield and Worldview declined to comment. Menlo didn't respond to requests for comment.

At H-P's $33 offer price, Menlo stands to take home $309.3 million, Worldview would receive $276.6 million and Mayfield, $204.6 million. That collective $790.5 million is more than three times the $231 million value of their holdings about a month ago.

H.P. to Work With Hynix on New Computer Memory Chips

NY Times

 

SAN FRANCISCO — Hewlett-Packard said Tuesday that it would commercialize a new computer memory technology with Hynix, the South Korean chip maker.

Hynix’s agreement to build computer memories using a technology H.P. scientists developed called memristors indicates that more computer memory will be packed in even smaller devices in the second half of this decade. The two companies said the memristors will be commercially available in about three years.

To date, the memristor’s most likely application is for dense nonvolatile memories, which is what is used in flash memory cards for products like cameras and PCs. It is not out of the question, however, that it might play a role in other kinds of chips, including microprocessors, in the future.

The agreement to build the memory chips validates the work of Leon O. Chua, a University of California, Berkeley, electrical engineering professor. In 1971, he proposed a fourth basic circuit element (the other three are the resistor, capacitor and inductor) and called it a memristor, or memory resistor, as a simpler alternative to transistors. The idea languished for many years before a team of H.P. researchers found a way to use it in 2006. Since then, memristors have attracted industrial, academic and military interest, but have not gone beyond being laboratory curiosities.

Competing in the memory business will not be an easy battle. Memristors are still viewed as laboratory and academic experiments by the majority of the world’s leading semiconductor firms, most of whom have settled on a competing technology known as Phase Change Memory, or P.C.M. However, H.P. scientists said they traveled the world discussing memristors with all of the leading chip makers before settling on their commercial development agreement with Hynix, the world’s second-largest maker of memory chips behind Samsung Electronics.

“Right now the memristor outperforms flash,” said Stan Williams, an H.P. Labs scientist who has led the development effort. He said the tiny switches could be turned on and off more than 100 times as fast as flash, use a tenth of the energy and have a much greater lifespan.

The storage densities are already staggering and will become even more impressive in the future. Next year the most advanced flash storage chips will have a capacity of roughly 64 billion bits per square centimeter, according to the industry’s annual road map. By 2014, that is expected to increase to 170 billion bits per square inch. Rice University scientists said that memristive storage devices could be five times as dense as the industry standard in 2014 and that the technology was more easily adaptable to three-dimensional packaging. That would make it possible to build even vastly denser chips.

H.P. researchers have described ways to design 1,000-layer memristor-based chips, although they acknowledged that with current manufacturing techniques such devices would not be practical.

Burger King Delivers Flame-Broiled Gap Higher On Buyout Rumor

Forbes

 

Burger King may go private according to the Wall Street Journal. Stock jumps 9%.

According to a Wall Street Journal report Wednesday, fast food giant Burger King Holdings  ( BKC -  news  -  people ), Inc. (BKC) is mulling a sale to one of several private equity firms interested in the famous burger retailer.

Burger King was taken public in 2006, following a previous buyout by a private equity conglomerate that included TPG, Bain Capital and Goldman Sachs ( GS - news - people ). That group bought BKC from British beverage company Diageo ( DEO - news - people ) in 2002 for around $1.5 billion.

The company now has a market cap of around $2.24 billion, and reports indicate one interested suitor is private equity firm 3i Group Plc, which is based in London.

Burger King shares rose 8.8% in morning trading Wednesday.

The Bottom Line
We have avoided shares of BKC since our early June 2008 coverage began, when the shares were trading at $28.25. The company has a dividend yield of 1.52%, based on last night’s closing stock price of $16.45. The stock has technical support in the $14-$16 price area. If the shares can firm up, we see overhead resistance around the $19-$20 price level. We would remain on the sidelines for now.

FDIC Finds 829 U.S. Banks at Risk

The Wall Street Journal

More Than One-Tenth of Total Are on 'Problem List' as Smaller Lenders Take Time to Recover

 

More than a 10th of U.S. banks remain at risk of failure even as some industry indicators, including credit quality, show some nascent signs of revival.

The Federal Deposit Insurance Corp. said Tuesday that 829 of the nation's roughly 7,800 banks were on its "problem list" at the end of June, up from 775 at the end of the first three months of the year. Already 118 banks have failed this year, well ahead of the pace set last year when 140 were seized by regulators.

Lending by U.S. banks also continues to be stunted; loan balances across all major loan categories fell during the second quarter, and total loan and lease balances fell 1.3%. Total assets for the industry fell 1% to $13.2 trillion during the quarter.

FDIC Chairman Sheila Bair said banks are starting to ease their lending standards for some types of loans but warned that "lending will not pick up until businesses and consumers gain the confidence they need to hire and spend."

She suggested regulators are closely watching for any indications of how the economy is affecting banks, but played down the potential effects of another downturn.

"I think if we did have a double-dip [recession], and we are not predicting that would happen, it would have a less profound impact," she said.

The results highlighted the diverging fortunes of larger banks and their smaller rivals. Major firms, which benefited from outsize government support at the height of the financial crisis, have been able to recover faster as evidenced by their ability to set aside less money for future loan losses. Smaller banks, conversely, increasingly make up a greater portion of the banks on the FDIC's list of troubled banks and continued to set aside more money for future loan problems.

The number of banks in the U.S. continued to fall; the FDIC said there were 104 fewer banks in the second quarter compared with the first quarter. And for the first time in the 38 years that data have been collected, the FDIC didn't add any new banks.

"The smaller banks are recovering, but it is at a slower rate," Ms. Bair said. "It hit the large banks first and then the community banks, so they will be lagging the larger banks in terms of coming out of this."

Banks' second-quarter profits totaled $21.6 billion, reversing a combined loss of $4.4 billion in the second quarter of 2009. The latest results were the highest quarterly earnings since before the financial crisis. The FDIC said nearly two-thirds of U.S. banks reported a year-over-year improvement in their quarterly results, though 20% of firms still reported a net loss.

For the first time since 2006 the number of loans at least three months past due fell, declining nearly 5%, and the number of loans charged off by banks declined across most major loan categories.

Banks boosted their results by setting aside less to cover future loan losses than they have in recent quarters. The agency said firms set aside a total of $40.3 billion to gird against future credit-quality problems. That still is high by historic standards, but the figure is the lowest total reported by the industry in two years.

"Lower loss provisions suggest that many banks see asset quality problems moderating," Ms. Bair said.

Still, more than 60% of banks, mainly smaller institutions, continued to boost their loss reserves.