Delta-Northwest Deal Grounded

The pilots' unions of the two commercial airlines cannot agree on how to create a seniority list for a combined venture After years of speculation and rumor about airline mergers, it appeared that the long-awaited era of consolidation of the nation's commercial carriers was finally at hand: Delta Air Lines (DAL) was negotiating to merge with Northwest Airlines (NWA), a marriage that was certain to force other major carriers to find partners of their own. But, as in the past, the prospect of megamergers in the airline industry turned out to be one more mirage—with the pilots of Delta and Northwest torpedoing the latest wave of deals. On Mar. 17 the head of Delta's pilots' union told members in a letter that he and his counterparts at Northwest had been unable to reach an agreement on how to create a seniority list for the combined airline. And with Delta and Northwest executives having effectively made that a precondition of the broader merger, the deal was dead—with only recriminations to follow. "We approached the negotiating table not at an extreme, but in the middle; not adversarial, but cooperative. The other committee took a different approach," Lee Moak, the head of Delta's pilots, wrote to members, declining to publicly identify Northwest as the discussion partner. Profitability Isn't Out of the Question While Delta management wouldn't discuss the latest setback, it's clear they are proceeding on the assumption a deal won't happen. Less than 24 hours after Moak sent his missive to the other pilots, Delta management announced a sweeping restructuring plan designed to counter the recent spike in fuel prices (BusinessWeek.com, 3/12/08). The surge above $110 per barrel this week is likely to cost the airline an extra $2 billion this year. In a presentation to Wall Street investors, Delta President Ed Bastian said the Atlanta carrier would cut 2,000 jobs and ground dozens of planes to keep the airline in the black. "It is not out of the question for Delta to be profitable this year," Bastian told investors. "We're moving quickly to take care of managing our business." In addition to the job cuts, Bastian said the carrier plans to scale back the number of domestic flights by 10% this year, largely by reducing the number of direct flights between smaller cities that don't connect through one of its hubs. Also on Tuesday, United Airlines (UAUA) said it would cull 15 to 20 planes from its fleet this year as part of an effort to reduce unprofitable flights. Pressure to Negotiate a Deal At Delta, Bastian says the airline will shift some of its planes into the international arena (BusinessWeek.com, 5/7/07), by beefing up service to underserved markets in countries such as Africa, China, and India. "We're going places where others aren't," he said. "It's truly new white spots—markets where there is no U.S. competitor." As for the prospects of a merger, Bastian declined to comment, saying only, "We are proponents of consolidation, but it has to be the right deal." Already, some Wall Street analysts are questioning whether Delta management was in fact committed to making the Northwest merger happen. To be sure, there was pressure on Delta Chief Executive Richard Anderson to negotiate a deal: Many of the hedge funds that bought Delta debt during the carrier's 2005 bankruptcy—and converted it into sizable equity stakes when the airline emerged from Chapter 11 the following year—were pushing management to pursue a merger. And when Anderson asked the pilot unions from Delta and Northwest to find a way to combine the seniority lists for both carriers, it appeared to be a prudent move to avoid the pilot infighting that has poisoned the merger between the former US Airways Group (LCC) and America West. But looking back, Anderson—who before joining Delta last year had served as CEO of Northwest—had to have known enough about each of the pilots' unions to think it unlikely they would find common ground. With hundreds of Delta pilots opting to retire before the bankruptcy, the remaining pilots were on average far younger than their peers at Northwest. That meant that in a merger, many Delta pilots would be bumped back to flying smaller planes—an action that would also have meant taking a pay cut. Industry Consolidation Delayed And when Northwest pilots refused to cede too much ground on the seniority issue, Delta pilots opted to walk. "Pilots are like a bunch of spoiled kids, and it would have required adult supervision to make the merger work," says Roger King, airline analyst for CreditSights, an institutional research firm in New York. "It's a testament to management's impotence that the deal wasn't done—or more probably, to management's real desire to not do the deal. I think they pursued the merger just to get the shareholders off their backs." King belongs to the camp that believes airline mergers are overrated, with the integration issues—such as appeasing the pilots' unions—outweighing any benefits. And that's particularly the case, he says, with Delta and Northwest, where there's so little overlap in their route structures that the cost savings would be negligible. The management teams "were looking at years of execution risk, without any huge economic benefits," he says. If Delta and Northwest opt not to force the pilots back to the table—and Bastian's presentation suggests Delta has already moved on—that eliminates the pressure on other carriers to respond. All of which suggests the prospect of airline mergers will be a topic of debate and speculation for years to come.

Delta to eliminate 2,000 jobs, trim domestic routes

Hammered by record fuel costs and the weakening national economy, Delta Air Lines Inc. says it plans to cut up to 2,000 jobs through voluntary payouts offered to half of its workforce. Orlando International Airport's third busiest carrier says it will reduce domestic flights while adding more international routes and it will stay open to merging with another airline. Delta President and Chief Financial Officer Edward H. Bastian delivered the news Tuesday at the 2008 JPMorgan Aviation and Transportation Conference in New York. Delta also filed with the SEC the heart of Bastian's remarks in a memo he and CEO Richard Anderson sent to employees today. Bastian noted that in the past three months, fuel prices have jumped nearly 20 percent and the airline's 2008 fuel bill is now expected to increase by nearly $900 million more than it projected for the year and $2 billion more than 2007. Oil hit $112 a barrel Monday. In April, Delta (NYSE: DAL) will offer two buyouts to U.S., non-pilot employees -- a total of about 30,000 people. Delta also has identified 700 managerial and administrative jobs for elimination. The job cuts -- about 3 percent of its workforce -- will save it up to 10 percent in costs this year. Bastian says global expansion would be the key to the airline's long-term success. This summer, more than 40 percent of its capacity will be dedicated to international flying, where fares better cover higher fuel costs. Fuel prices and a weakening domestic economy have put significant pressure on the profitability of Delta's U.S. network, Bastian says. Delta is cutting domestic capacity by an another 5 percent by August -- a 10 percent year-over-year domestic reduction. The airline said the cuts would come from parking 15 to 20 mainline aircraft and 20 to 25 regional jets. Delta also will thin frequencies and reduce point-to-point routes. Delta is aiming to recover fuel price increases in its ticket prices. In the past year, Delta has regularly increased systemwide domestic fares, boosted fuel surcharges, increased international fares and increased select service fees, Bastian says. Delta is targeting $550 million in productivity initiatives for 2008 to save money. Bastian says Delta has identified $200 million in capital expenditures to be deferred or eliminated. It will sell mainline and regional aircraft as they are removed from the schedule to improve liquidity and eliminate overhead. As Delta's potential merger with Northwest Airlines seemed to be unraveling Tuesday, Bastian emphasized Delta will continue to explore its strategic options. Delta emerged from bankruptcy in April 2007. It posted net income of $1.6 billion on $19.2 billion in revenue last year, compared with a net loss of $6.2 billion on $17.5 billion in revenue in 2006. However, the airline had a net loss of $70 million on $4.7 billion in revenue in the fourth quarter, and noted a 26 percent rise in fuel prices.

Credit Suisse Spent $1.8M Lobbying

Credit Suisse Spent $1.8M Lobbying in 2007 on Financial Market Regulation, Mortgage Caps WASHINGTON (AP) -- Credit Suisse Securities, a unit of Swiss financial services company Credit Suisse Group, spent $1.8 million last year to lobby on financial market regulation and other issues. The company lobbied on issues related to hedge fund supervision, securities regulation, reform of Fannie Mae and Freddie Mac, executive compensation and rules for reviewing foreign investment in the United States, according to a disclosure form posted online Feb. 13 by the Senate's public records office. Credit Suisse and many other large banks have lobbied to increase the size of the mortgages that can be purchased by the Fannie and Freddie, the two U.S. mortgage finance agencies, from $417,000 to $729,750. That cap was temporarily raised for mortgages in high-cost areas in the economic stimulus package signed by President Bush last month. The company spent $880,000 in the second half of last year to lobby on the same issues. Lobbyists are required to disclose activities that could influence members of the executive and legislative branches, under a federal law enacted in 1995.

Nokia Lobbied on Patent, Visa Reforms

Nokia Rings Up $540,000 in 2007 to Lobby Government on Patent, Immigration Reforms and Trade WASHINGTON (AP) -- Nokia Corp. spent $540,000 in 2007 to lobby on patent and immigration reform legislation among other numerous issues. The the world's largest mobile phone maker spent $430,000 lobbying on its own behalf in the second half of 2007, according to a disclosure form posted online Feb. 13 by the Senate's public records office. The Finnish company also lobbied on data security, intellectual property, tax credits for research and development, recycling programs, and Internet- and trade-related matters. The technology industry, facing increasing global competition, has lobbied intensely for more visas for highly skilled foreign professionals, more funding for U.S. math and science education programs and a permanent extension of tax credits for research and development. Nokia lobbied Congress, the Federal Trade Commission, the Federal Communications Commission, the White House and other agencies. It spent $110,000 in the first six months of 2007 to lobby on largely the same issues. Lobbyists are required to disclose activities that could influence members of the executive and legislative branches, under a federal law enacted in 1995.

GlaxoSmithKline Spent $8.2M on Lobbying

GlaxoSmithKline Spent $8.2 Million Last Year Lobbying on Drug-Related Issues WASHINGTON (AP) -- British pharmaceutical maker GlaxoSmithKline PLC spent more than $8.2 million last year lobbying the federal government on pharmaceutical issues. Glaxo advocated against patent-reform legislation that could weaken legal protections on drug patents. Technology companies supported efforts aimed at improving the U.S. patent system, but drug makers argued it could weaken patent protections by reducing infringement penalties. The patent-reform bill passed the House last year, but is pending in the Senate. ADVERTISEMENT The company also lobbied for increased funding for the Food and Drug Administration. Glaxo opposed a proposal by House Democrats that would have allowed the government to negotiate drug prices for seniors in Medicare. Currently private health insurers serve as the go-between drug companies and seniors. The measure, aimed at wringing lower prices from drug companies, stalled in the House after President Bush threatened to veto it. Lobbyists for the company also promoted free-trade agreements with Peru, Colombia, Panama. Congress approved the agreement with Peru late last year; the others are still under consideration. London-based Glaxo spent $4.6 million on lobbying in the second half of 2007, according to a government disclosure form posted online Feb. 13. Under a federal law enacted in 1995, lobbyists are required to disclose activities that could influence members of the executive and legislative branches.

Yahoo sees growth up, argues for higher Microsoft bid

NEW YORK (Reuters) - Yahoo Inc (YHOO.O) said on Tuesday it is on track to meet its 2008 earnings forecast and gave a rosy revenue view for the next two years as it makes a case for a higher takeover price from Microsoft Corp (MSFT.O). The remarks allayed concerns about Yahoo's financial performance this quarter, since it would have less room to negotiate with Microsoft if those numbers fell short, analysts said. Yahoo, whose shares rose as much as 7 percent, will take its case to investors in meetings this week. "They're putting this out to say we're not falling apart," said Martin Pyykkonen of Global Crown Capital. "They're putting very general, pie-in-the sky comments out there that, while not impossible ... look kind of aggressive." Microsoft has not yet sweetened its $42 billion bid, and a recent Reuters poll showed many analysts expect the software maker to prevail in the Yahoo takeover without doing so. But Yahoo, which reaffirmed its financial forecasts for the first quarter and full-year 2008, argued on Tuesday that its acceptance of an offer would immediately propel several key businesses for Microsoft. "Yahoo provides meaningful strategic value and warrants a significant acquisition premium above its equity value," the company said in an investor presentation filed with the U.S. Securities and Exchange Commission. Microsoft had no immediate comment. ACCELERATED GROWTH IN 2009, 2010 Yahoo believes it can nearly double operating cash flow to $3.7 billion in 2010. It forecast a rise in revenue, excluding payments to affiliates, to $8.8 billion from an estimated $5.7 billion this year. "Yahoo is positioned for accelerated financial growth -- we have a powerful consumer brand, a huge global audience and a highly profitable operating model," Yahoo co-founder and Chief Executive Jerry Yang said in a statement. Yahoo said it first presented the three-year view to its board on December 2007, well before Microsoft made its offer public on February 1. The forecasts are based on revenue and cash flow growth that outpace median estimates from six analysts for both 2009 and 2010, Yahoo said in its filing. Key growth areas for the company include Internet display and video advertising, where it expects $1.9 billion in added revenue over the next three years, excluding payments to affiliates. It also expects $1.4 billion in added search revenue, a growth rate that would keep it in line with the market as a whole. These and other factors would provide immediate benefits to Microsoft if a deal was reached, the company said. Yahoo said its assets would move Microsoft from a "sub-scale" position in Internet search and display, enhance its foothold in Asia and potentially shift a loss-making online business to significant profitability. It estimated the market value of holdings in Asia at about $9 per share, not including private assets of China's Alibaba Group, and said its board is continuing to evaluate all of its strategic alternatives. Shares of Yahoo rose 6.6 percent to $27.56 on the Nasdaq. Microsoft gained 1.9 percent to $28.94.

Equity LifeStyle Properties Stock Rises

Equity LifeStyle Properties Shares Rise As Analyst Forecasts Above-Average Profit Growth NEW YORK (AP) -- Shares of Equity LifeStyle Properties Inc. are rising after an analyst initiated started covering the stock and rated it "Outperform." In a note to clients Tuesday, Keefe, Bruyette & Woods analyst Bill Carrier said the real estate investment trust is positioned for above-average earnings growth. Shares jumped $3.55, or 7.6 percent, to close at $50.22 Tuesday. Shares have traded between $39.70 and $57.35 in the past 12 months. Carrier said the Chicago-based company represents an attractive investment because it owns high-quality properties in good locales, with more than half of its sites in retirement hotspots such as Florida, Arizona and California. "Even during this period of slow new home sales, in our view, Equity LifeStyle Properties is well positioned to grow earnings at an above-average pace with below-average risk," Carrier said. Carrier forecasts 2008 earnings of $3.24 per share and a target price of $53.

Fed delivers 3/4 point cut

WASHINGTON/NEW YORK (Reuters) - The Federal Reserve slashed U.S. interest rates on Tuesday, boosting Wall Street, which was already higher on stronger-than-expected investment bank earnings. Tuesday's three-quarters of a percentage point rate cut was less than the full percentage point many in the market had expected, but the Fed left the door open to an additional reduction. However, it noted its future action would take inflation concerns into consideration. ADVERTISEMENT "A lot of people were hoping for a full percentage point, so a lot of people are probably disappointed," said Robert MacIntosh, chief economist at Eaton Vance Management, in Boston. "I don't think they should be. Inflation is an issue." Global stock markets were up early in the day in anticipation of the Fed's move and on stronger-than-expected earnings news from Goldman Sachs Group Inc (NYSE:GS - News) and Lehman Brothers Holdings Inc (NYSE:LEH - News). By the end of U.S. trading, the Dow Jones industrial average (DJI:^DJI - News) jumped 420 points, or 3.5 percent, while the Nasdaq and S&P 500 indices rose more than 4 percent. The dollar soared to its largest single-day gain against the yen in nine years and rallied against the euro as traders responded to the less-than-expected rate cut. But U.S. Treasuries fell as investors poured into stocks. The Fed's action, taken on an 8-2 vote of its policy committee, was part of an intense effort by the central bank to avert a deep recession and financial market meltdown. The move took benchmark overnight rates down to 2.25 percent, the lowest since February 2005. "The Fed's action is yet another forceful move in its attempts to alleviate the liquidity crunch and to shore up a rapidly weakening economy," said Arun Raha, a senior economist with Swiss Re, in New York. "It clearly does not believe that the action it took last week to expand its securities lending program, or its emergency measures over the weekend to increase market liquidity, are enough. The economy is in, or close to, a recession, but increasing oil prices have kept inflationary pressures from abating, complicating the Fed's task." MARKET, ECONOMIC STRESS The central bank has now cut rates by an aggressive 3 percentage points since mid-September, including 2 points since the start of the year. In addition, it has said in recent days it would provide around $400 billion worth of liquidity to thaw frozen credit markets. "Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters," the central bank said. "There's been tremendous panic, people throwing the baby out with the bath water, preparing for a Category 5 hurricane, and that presents a buying opportunity," said Chip Hanlon, president of Delta Global Advisors Inc in Huntington Beach, California. Goldman Sachs, which has largely avoided the mortgage-related losses that have plagued much of Wall Street, said first-quarter earnings fell by half as it recorded steep losses on corporate loans and other assets. Yet the results at the largest U.S. investment bank exceeded expectations. Lehman Brothers, whose shares have been pummeled in recent days on concern it is the most vulnerable to troubled mortgages and leveraged loans next to Bear Stearns (NYSE:BSC - News), suffered a sharp fall in bond trading revenue but benefited from rising merger advisory revenue. RISKS REMAIN, READY TO ACT In a statement outlining its rate move, the Fed said downside risks to economic growth remained even in the wake of the rate cut, suggesting an openness to lowering borrowing costs further if needed. However, in the first double-dissent since September 2002, two officials -- Philadelphia Federal Reserve Bank President Charles Plosser and Dallas Fed chief Richard Fisher -- voted against the decision. They preferred less-aggressive action out of a concern sharp rate cuts could further fuel inflation. Still, the Fed said it expected inflation to ease, partly because unemployment looked set to rise. "The Fed has shown that they are focused on getting the economy back on its feet first and foremost, and they will worry about inflation later," said K. Daniel Libby, senior portfolio manager at Sands Brothers Select Access Fund in Greenwich, Connecticut. The rate action came two days after the central bank announced up to $30 billion in financing to facilitate the sale of cash-strapped investment bank Bear Stearns, an unusual intervention bank officials said was necessary to prevent cascading defaults in the financial system. Its backing for JPMorgan Chase and Cos (NYSE:JPM - News) agreement to buy Bears Stearns was one of a number of emergency steps the Fed announced on Sunday. It also said it would extend loans to a wider array of Wall Street firms, not just commercial banks, for the first time since the Great Depression. In addition, the Fed lowered the interest rate on "discount window" lending by a quarter-point on Sunday. On Tuesday, in concert with its decision to cut its target for overnight interbank lending by three-quarters of a point, it lowered the discount rate again by a matching amount, to 2.5 percent. "The Fed is not only providing low-cost oxygen to the markets at a critical point in the business and credit cycle, it has also increased the flow of this oxygen quite significantly," said Brian Bethune, an economist for Global Insight in Lexington, Massachusetts.

Smallcaps Can Test Investors' Patience

Investing in Small-Cap Stocks During Downturn Can Require Patience, Strong Stomach NEW YORK (AP) -- Investors who managed to remain calm during Wall Street's latest tempest could find they have what it takes to invest in small-cap stocks. While they often outperform many of their larger rivals, small-capitalization stocks tend to show more volatility. And it often requires the hand of a deft investor to pluck the sound picks from amid the shaky ones. ADVERTISEMENT This year hasn't been easy for small-cap investors. The concerns about bad mortgage debt, tightness in credit and the overall economy that have battered that rest of Wall Street have leaned somewhat harder on small-cap stocks. The Russell 2000 index of smaller companies is down 11 percent for the year, while the Standard & Poor's 500 index, which tracks large-cap companies, is off about 9.4 percent. Mark Crennan, who works as a markets analyst, said he doesn't worry about the size of the companies he invests in with his own money but that when he does look at small-caps now he is more closely examining their balance sheets. With the credit markets having dried up compared with only a few months ago, it's more important than in years past for small-cap companies to be on sound financial footing. That's partly because companies that could once grow by gobbling up rivals are now finding it harder and more expensive to tap into the credit markets. Small-cap companies often show bigger moves than the rest of the market on sizable up or down days. Crennan noted that there is no guarantee that smaller stocks will snap back and outperform larger issues as they did for much of the first part of the decade. Jonathan Vyorst, portfolio manager of the Paradigm Value Fund, said while many investors flock to bigger companies for safety during economic slowdowns, such moves are now less appealing because so many investors have already shifted their holdings to favor bigger names. Vyorst, who helps run the small-cap value fund with about $113 million in assets, said there are bargains to be found for investors who can stomach the outsize ups and downs that many small stocks show. "Right now there are plenty of companies you can find that are selling at dirt-cheap prices that require you maybe to put up with volatility for a half year or year. Their values are real. Nobody makes money in this business without being very conscious of what the valuation of the stock is and what they're paying for it," he said. And of course not all small-cap names are poised to move higher should the economy begin to show signs of recovery. Wall Street's glum mood in recent months shows that few investors are expecting a quick turnaround in the economy. "It's definitely a spotty market because there is a tremendous amount of volatility," he said. He said some small-cap companies are at levels well above what their profit levels justify, while others are cheap by comparison. "This is clearly a stock pickers market," he said. "There are plenty of good small-cap companies out there that have been cut in half. It's going to be a tougher time but that's how you make your money." Stephen Wood, senior portfolio strategist of Russell Investments, is cautious about small-caps. He notes that the classic situation in which small-cap stocks can do well is when the economy is beginning to climb out of recession. He added that the punishing atmosphere on Wall Street these days doesn't offer investors an ideal time for making significant changes to portfolios, he said. He cautions investors against making big moves into smallcap stocks given the uncertainty gripping Wall Street over where the economy is headed. "I don't think you should jettison where you are but I don't know that you want to proactively overload in this environment." Wood said investors looking to make bets should instead search for well-managed operations of any size and be willing to wait for returns. "The stock market is a very effective mechanism to take money from the impatient and give it to the patient," he said.

Millennium Pharmaceuticals Shares Rise

Millennium Pharmaceuticals Shares Rise; Cowen Analyst Expects Upbeat 1st-Quarter Velcade Sales NEW YORK (AP) -- Shares of Millennium Pharmaceuticals rose, while Cowen and Co. analyst Rachel McMinn expects sales of the company's key drug to rise. The stock rose 84 cents, or 6.3 percent, to close at $14.25 Tuesday. Shares have traded between $9.49 and $17.19 over the past 52 weeks. McMinn, in a note to investors, said sales of the blood-cancer treatment Velcade are likely tracking ahead of Wall Street expectations and she expects first-quarter sales of $77.4 million. Meanwhile, the company presented updates to its development pipeline during Cowen's annual health care conference, she noted. On Monday, the company said it plans to initiate a midstage brain-tumor treatment study on its MLNM0518 drug candidate in combination with Genentech during the second half of 2008. Also, it plans to move its cancer treatment candidate MLN8237 into a larger midstage study.

Morgan Stanley CEO Pay Package Is $1.5M

Morgan Stanley CEO John Mack Receives Compensation Valued at $1.5 Million for Fiscal 2007 NEW YORK (AP) -- Morgan Stanley on Friday said Chief Executive John Mack received compensation valued at about $1.5 million in fiscal 2007, a year when the investment bank's profit plunged 57 percent. Mack did not receive a bonus in 2007 because of the company's losses due to the subprime crisis. Morgan Stanley lost $3.59 billion during the fourth-quarter because of risky bets on mortgage-backed securities. None of the executive committee members at Bear Stearns Cos., the fifth-biggest securities firm, are taking bonuses after a $1.9 billion write-down during the fourth quarter. Meanwhile, Merrill Lynch & Co. CEO Stan O'Neal was ousted from his job and didn't receive any 2007 bonus. However, Mack did receive an $800,000 salary and $399,153 of other compensation, according to a filing with the Securities and Exchange Commission on Friday. Among the perks was $355,000 spent on his personal use of the corporate jet. Morgan Stanley also credited Mack with $335,805 in above-market returns on his nonqualified deferred compensation plans. While the filing listed $40.2 million in stock awards for Mack in December 2006, or within the company's fiscal 2007 year, the proxy noted those awards applied to fiscal 2006. The AP's total pay calculations include executives' salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the Securities and Exchange Commission. Morgan Stanley reported in December that full-year profit fell to $3.21 billion from $7.47 billion a year earlier. The company is about two weeks from completing its first quarter of 2008, and more write-offs from the subprime crisis is expected. Morgan Stanley, which has lost 20 percent of its market value this year, dropped 30 cents to $42.32 in composite trading on the New York Stock Exchange at 4 p.m.

Free Business Book Is Web Sensation

Oprah Plug Makes Free Internet Download of Business Book, 'Women & Money' Web Sensation NEW YORK (AP) -- The Oprah touch doesn't just work for traditional books. More than 1 million copies of Suze Orman's "Women & Money" have been downloaded since the announcement last week on Winfrey's television show that the e-book edition would be available for free on her Web site, http://www.oprah.com. "I believe `Women & Money' is the most important book I've ever written," Orman said in a statement released Saturday by Winfrey. "So this was not about getting people to buy the book, but getting them to read it, and that was the intention behind this offer." According to Saturday's statement, more than 1.1 million copies of Orman's financial advice book were downloaded in English, and another 19,000 in Spanish. The demand compares to such free online sensations as "The 9-11 Commission Report," which the federal government made available for downloads, and Stephen King's e-novella, "Riding the Bullet." The publishing community has endlessly debated the effects of making text available online, with some saying that free downloading is a valuable promotional tool and others worrying that sales for paper editions would be harmed. The Authors Guild and the Association of American Publishers each have sued Google for its plans to scan and index books for the Internet. The offer for "Women & Money," originally released a year ago by Spiegel & Grau, a division of Random House, Inc., has not kept people from buying the traditional version. As of Saturday, the book ranked No. 6 on Amazon.com. The paper edition of "The 9-11 Commission Report," published in 2004 by W.W. Norton and Co., was a best seller for months. "I can tell you that with respect to the `9-11 Report,' the free download did not seem to hurt sales at all," Norton publisher Drake McFeely told The Associated Press on Saturday. "There were people who wanted it quickly, in a less convenient form, and that was clearly a different market from the people who wanted the traditional book." He said free downloading of books does concern publishers, but "if Norton had been given the opportunity for an Oprah Winfrey plug, and part of the deal was making the book free online, we would have gladly taken it."

Uranium Mining Advocates Seek Risk Study

Advocates of Virginia Uranium Mining Aim for Risk Study; Deposit Possibly Worth $10 Billion CHATHAM, Va. (AP) -- You couldn't say Walter Coles Sr. is sitting on a pot of gold. Close, though. The hundreds of acres of rolling Virginia farmland in his family for five generations contain the largest unmined uranium deposit in the nation, worth an estimated $10 billion. The existence of the deposit has been known since the 1980s, but a spike in the price of uranium has renewed interest in mining it. That is cause for hope by advocates in a region with an economy crippled by the loss of the textile and tobacco industries and angst among residents who fear radiation contamination. Coles and his partners have formed Virginia Uranium Inc., but can't pull ore out of the ground right now. Virginia has a moratorium on uranium mining that was imposed in 1983, when a now-defunct company called Marline Uranium considered extracting the ore in this corner of Pittsylvania County. If Coles' company eventually is permitted to mine the ore, it would be the first such enterprise on the East Coast. The most that can happen anytime soon is that the Virginia General Assembly will approve a study of whether uranium mining can be done safely, and what controls are needed to protect the environment and residents. That is what Coles wants, and he has offered to pay the bill, which could be $1 million. "This project will never happen if it doesn't have the support of the broader population of Virginia," said Walter Coles Jr., who gave up an investment career in New York to help set up his father's business. "This study is a way for the people to become educated and understand the issues." The elder Coles suggested the National Academy of Sciences as the best choice for a scientific analysis of the risks, and the bill sponsored by Sen. Frank Wagner, R-Virginia Beach, has been amended to specify that agency to conduct the study. Virginia Uranium's foes don't mind a study, but they don't think the state should conduct one in partnership with a private company. They also think it should be done by health care professionals who are knowledgeable about the effects of radiation, not theoretical scientists. "Snake handlers are not afraid of snakes," said Jack Dunavant, chairman of Southside Concerned Citizens, which is leading the opposition. The Coleses acknowledge uranium mining's links to cancer from operations in Western states in the 1950s and 1960s that operated with few controls. But they say regulations are more stringent -- and technology has improved in recent years -- to minimize the risk to miners and to the community from the radioactive dust that is left after uranium ore is milled and turned into yellowcake. Opponents, 200 of whom turned out for a recent forum, aren't convinced. They're concerned that the fine dust, called tailings, will get into their air and water. Dunavant is worried that radiation will contaminate the Banister River, which runs within five miles of the uranium site. Downstream, it flows behind his house and on into a lake that is a source of drinking water for Virginia Beach, the state's largest city with 435,000 residents. One plan of attack is to persuade area governments to enact ordinances making companies responsible for environmental hazards they cause. One town council did so recently. Marline withdrew in the 1980s not because the opposition drove it out but because the price of uranium fell. From a low of $7 a pound in 2003, the price has risen to $90 to $100, renewing interest in the 110 million pounds of ore on the Coles family property. Marline is out of business, but Virginia Uranium's president and CEO is Norman Reynolds, a geologist whose calculations led to discovery of the deposit more than 25 years ago. The elder Coles said he was somewhat taken aback, though, that opponents "felt that the only reason I was doing this was corporate greed." If money were his only interest he could have sold out, he said. Within the past two years, large corporations have offered him and his sister millions for the 900-acre property. "They wanted to move my brick home down there that was built in 1810," said Coles, who moved back to Pittsylvania County about five years ago after two stints in the Army and a 30-year-career in the foreign service. Coles and a neighboring family that has a small part of the deposit decided that instead of selling, they would form their own company and look into mining the ore, which is on the surface and is believed to reach a depth of 1,500 feet. "Sure I'd like to make a little money off of it," Coles said. But, he added: "We thought it would be a great asset to the community. So many people are essentially suffering today in this part of the country." So far Virginia Uranium has 12 employees, but Coles expects it would hire 300 or more for a mining operation that would last about 30 years. The company, which has bought about 2,000 acres of farmland around the site, has 31 Virginia investors. Coles hopes it will go public in six months to a year.

Retail in Focus This Week on Wall Street

With Retail Sales Report Due This Week, American Consumer Is Under Wall Street's Microscope NEW YORK (AP) -- Americans are paying more attention to how much they spend on each box of cereal, tank of gasoline and pair of pants -- and Wall Street is, too. This week's data on the U.S. consumer, particularly the Commerce Department's Wednesday report on January retail sales, are going to be monitored closely by investors for clues to how sunken home prices, high energy costs and job cuts are affecting spending. "Retail sales are a big indicator at this point of the mindset of the consumer," said Kim Caughey, equity research analyst at Fort Pitt Capital Group. Government data and company executives alike have suggested that U.S. consumers are having to pare back their discretionary spending to buy necessities. After the generally dismal sales figures reported by individual retailers last week, economists polled by Thomson Financial/IFR last Friday predicted that the government would say that overall retail sales dipped 0.3 percent in January after a similar slump in December. "If it comes in well below what's expected, that could send the market into another tailspin," said Jennifer Ellison, principal at San Francisco-based Bingham, Osborn & Scarborough, which manages $2.1 billion in investments. Then on Friday, the University of Michigan will release its preliminary February reading on consumer sentiment. It is not a perfect predictor of how Americans will spend their money, but it will serve as the most up-to-date reading on how they are feeling about the economy. "It's pretty widely anticipated that consumer sentiment is declining," Ellison said. After posting its best week since March 2003, the Dow Jones industrial average last week logged its worst week since that same volatile month due to a sharply contracting service sector, uneasiness about bond insurers and other worrisome signs that the housing and credit markets may keep stifling growth. The Dow fell 4.40 percent last week, the Standard & Poor's 500 index lost 4.60 percent, and the Nasdaq composite index dropped 4.50 percent. The Dow stands 14 percent below its Oct. 9 record close of 14,164.53 but remains about 4.7 percent above the 15-month lows it sank to in January. Many market watchers say it is practically inevitable that the Dow will retest its lows -- essentially, fall back to those levels while investors wait and see if it falls further or bounces back up. Wall Street is hoping the bulk of the weakness in the economy has passed, whether it counts as a recession or not. If it's mostly over, the stock market may have already hit, or neared, its bottom. "If we're in a recession now, which is pretty likely, we've probably seen most of the worst of the downside to the stock market," Ellison said. "The market tends to rebound when the economy reaches its worst quarter." Earnings from companies this week -- including Hasbro Inc., General Motors Corp., Coca-Cola Co., Deere & Co., Vonage Holdings Corp., and Goodyear Tire & Rubber -- could be indicative of spending patterns by both individuals and businesses. Discussions about the global economy from the weekend's Group of Seven meeting in Tokyo of the world's finance ministers may also move the market this week. According to S&P analyst Howard Silverblatt, stock markets around the globe lost a combined $5.2 trillion in January, one of the worst ever starts to the year. Emerging markets on average dropped more than 12 percent, and all 26 developed markets tumbled as well, by an average of nearly 8 percent.

Yahoo Board to Spurn $44B Microsoft Bid

Yahoo Board Intends to Turn Down Microsoft's Unsolicited $44.6 Billion Takeover Bid SAN FRANCISCO (AP) -- Yahoo Inc.'s board will reject Microsoft Corp.'s $44.6 billion takeover bid after concluding the unsolicited offer undervalues the slumping Internet pioneer, a person familiar with the situation said Saturday. The decision could provoke a showdown between two of the world's most prominent technology companies with Internet search leader Google Inc. looming in the background. Leery of Microsoft expanding its turf on the Internet, Google already has offered to help Yahoo avert a takeover and urged antitrust regulators to take a hard look at the proposed deal. If the world's largest software maker wants Yahoo badly enough, Microsoft could try to override Yahoo's board by taking its offer -- originally valued at $31 per share -- directly to the shareholders. Pursuing that risky route probably will require Microsoft to attempt to oust Yahoo's current 10-member board. Alternatively, Microsoft could sweeten its bid. Many analysts believe Microsoft is prepared to offer as much as $35 per share for Yahoo, which still boasts one of the Internet's largest audiences and most powerful advertising vehicles despite a prolonged slump that has hammered its stock. Yahoo's board reached the decision after exploring a wide variety of alternatives during the past week, according to the person who spoke to The Associated Press. The person didn't want to be identified because the reasons for Yahoo's rebuff won't be officially spelled out until Monday morning. Microsoft and Yahoo declined to comment Saturday on the decision, first reported by The Wall Street Journal on its Web site. Yahoo's board concluded Microsoft's offer is inadequate even though the company couldn't find any other potential bidders willing to offer a higher price. Without other suitors on the horizon, Yahoo has had little choice but to turn a cold shoulder toward Microsoft if the board hopes to fulfill its responsibility to fetch the highest price possible for the company, said technology investment banker Ken Marlin. "You would expect Yahoo's board to reject Microsoft at first," Marlin said. "If they didn't, they would be accused of malfeasance." But by spurning Microsoft, Yahoo risks further alienating shareholders already upset about management missteps that have led to five consecutive quarters of declining profits. The downturn caused Yahoo's stock price to plummet by more than 40 percent, erasing about $20 billion in shareholder wealth, in the three months leading up to Microsoft's bid. Seizing on an opportunity to expand its clout on the Internet, Microsoft dangled a takeover offer that was 62 percent above Yahoo's stock price of just $19.18 when the bid was announced Feb. 1. Yahoo shares ended the past week at $29.20. Led by company co-founder and board member Jerry Yang, Yahoo now will be under intense pressure to lay out a strategy that will prevent its stock price from collapsing again. What's more, Yang and the rest of the management team must convince Wall Street that they can boost Yahoo's market value beyond Microsoft's offer. Yahoo's shares traded at $31 as recently as November, but have eroded steadily amid concerns about the slowing economy and frustration with the slow pace of a turnaround that Yang promised last June when he replaced former movie studio mogul Terry Semel as Yahoo's chief executive officer. This isn't the first time that Yahoo has spurned Microsoft. The Redmond, Wash.-based company offered $40 per share to buy Yahoo a year ago only to be shooed away by Semel, according to a person familiar with the matter. The person didn't want to be identified because that bid was never made public. Yahoo now may want that Microsoft to raise its price to at least $40 per share again. That would force Microsoft to raise its current offer by about $12 billion -- a high price that might alarm its own shareholders. Microsoft's stock price already has slid 12 percent since the company announced its Yahoo bid, reflecting concerns about the deal bogging down amid potential management distractions, sagging employee morale and other headaches that frequently arise when two big companies are combined. Although it isn't involved directly in the deal, Google is the main reason Yahoo is being pursued by Microsoft. Yahoo has struggled largely because it hasn't been able to target online ads as effectively as Google. Microsoft believes Yahoo's brand, engineers, audience and services will provide the company with valuable weapons in its so far unsuccessful attempt to narrow Google's huge lead in the lucrative Internet search and advertising markets. As it examined ways to thwart Microsoft, Yahoo considered an advertising partnership with Google -- an alliance long favored by analysts who believe it would boost the profits of both companies. It was unclear Saturday if Yahoo's plans for boosting its stock price include a Google partnership, which would probably face antitrust issues. A Microsoft takeover of Yahoo would also be scrutinized by antitrust regulators in the United States and Europe. The antitrust uncertainties could be cited as one of the reasons that Yahoo's board decided to spurn Microsoft.

Delta, Northwest Inching Closer to Deal

Person Close to Delta, Northwest Combination Talks Says Airlines Inching Closer to Deal. ATLANTA (AP) -- Delta Air Lines and Northwest Airlines are inching closer to a combination that would create the nation's largest carrier, and if a deal is reached it could be announced next week, a person briefed on the discussions told The Associated Press on Wednesday. Delta's board of directors is expected to meet over the next several days, the person said without elaborating on the topic of the meeting. The person, who was not authorized to talk as the negotiations entered a sensitive stage and asked not to be named, said one point of contention has been what Northwest Chief Executive Doug Steenland's role would be at the combined company. Delta has a growing presence across the Atlantic and a strong hub in Atlanta, home to the world's busiest airport. Northwest has strong routes across the Pacific and its main hub is in Minneapolis. It wasn't clear if other issues like the combined company's name, its headquarters location and labor issues had been fully resolved, but management structure with few exceptions had, the person said. Atlanta-based Delta Air Lines Inc. has said repeatedly that if it were to combine with another carrier it would want to be in control, which could mean its CEO, Richard Anderson, remaining in his post and Delta's chairman, Daniel Carp, remaining in his. Anderson, who was CEO of Eagan, Minn.-based Northwest Airlines Corp. when it began a drive to cut labor costs before he left in the fall of 2004, was replaced by Steenland. But Steenland actually carried out the cuts, leading to a mechanic's strike in 2005 and deep concessions forced on the other unions, which took effect last year while Northwest was in bankruptcy. The person briefed on the discussions cautioned that things could change since Delta also has been talking to Chicago-based UAL Corp.'s United Airlines about a combination, and there have been reports that other carriers have been talking among themselves about possible deals. A Delta spokeswoman said she could not comment beyond the airline's past statements that it its reviewing its strategic options, including a possible combination transaction. A spokeswoman for Northwest declined to comment. A United spokeswoman declined to comment. Minnesota Gov. Tim Pawlenty has pointed out that Northwest has made financial commitments to keep its headquarters and a hub in Minnesota. Northwest would give up $215 million in financial incentives at the airport between now and 2020 if it moves its headquarters out of Minnesota. Meanwhile, U.S. Rep. Jim Oberstar, D-Minn., has made clear his opposition to airline consolidation, saying last month, "We did not deregulate aviation in 1978 to create consolidation of the industry, but rather to expand competition." One of the biggest factors driving renewed talk of consolidation has been the sharp increase in fuel prices, among the industry's biggest costs. Jet fuel costs have surged along with the price of oil. The clock is ticking to get any deals accomplished quickly, some observers say. That's because industry observers believe a combination has a better chance of surmounting the considerable political and regulatory hurdles under the current administration than under President Bush's successor. United CEO Glenn Tilton told analysts at the company's annual investors day in Chicago on Tuesday that he wouldn't predict the timing of any consolidation but "it's important that it happens for the industry to be successful." United and Houston-based Continental Airlines Inc. are widely viewed as possible partners if consolidation goes ahead, and Tilton is believed to have made overtures about a combination long ago. Their route networks are seen as complementary, with Chicago-based United strong in the Pacific and internationally but lacking the presence in the Atlantic and Central America of Continental, which has a hub in Newark, N.J., and multiple connections out of its home hub in Houston to Mexico and Latin America. AP Business Writers Joshua Freed in Minneapolis and Dave Carpenter in Chicago contributed to this report.

Stocks Extend Tuesday's Drop

Wall Street Gives Up Early Gains After Fed Official Says Inflation Remains a Worry NEW YORK (AP) -- Wall Street pulled back for the third straight day Wednesday as investors still uneasy about the economy sold off after a Federal Reserve official suggested rising inflation could prevent the central bank from making further interest rate cuts. Although the economic slowdown is a big concern, "we must not lose sight of the other part of the Fed's dual mandate -- which is price stability," Federal Reserve Bank of Philadelphia President Charles Plosser said, according to Dow Jones Newswires. The economy has been weakening but costs remain high, leading some economists to believe that the United States is headed for a troubling predicament known as stagflation. Plosser's comments were not surprising, particularly since he is known for being more apt to argue against a rate cut than other Fed members. Nonetheless, the speech -- along with a dismal sales report from Macy's -- cut short a rebound from Tuesday's plunge that gave the Dow Jones industrials their biggest percentage drop since Feb. 27,2007. The reminder about inflation also sapped some of Wall Street's relief over better-than-expected fourth-quarter productivity and labor cost data and profit results from Walt Disney Co. "It just shows you the market's really skittish and temperamental," said Jim Herrick, director of equity trading at Baird & Co. "I really believe the market is driven by emotion, that there's this want to test the lows again." "There's no smoking gun here; we get one bad number, one good number. .... We're probably going to chop around here until investors get a better feel on this recession-or-no-recession question," said Phil Orlando, chief equity market strategist at Federated Investors. The Dow fell 65.03, or 0.53 percent, to 12,200.10, after rising more than 100 points in earlier trading. On Tuesday, the blue-chip index dropped 370 points, or 2.93 percent, after the Institute for Supply Management reported a surprising January contraction in the U.S. service sector -- news that bolstered the argument that the nation is in recession. The Dow also lost 108 points on Monday, but because it rallied so strongly last week, it remains above the 15-month low it sank to in late January. Broader stock indicators also gave up gains Wednesday. The Standard & Poor's 500 index fell 10.19, or 0.76 percent, to 1,326.45, and the Nasdaq composite index fell 30.82, or 1.33 percent, to 2,278.75. Government bond prices remained lower on the stronger-than-anticipated economic data. The yield on the 10-year Treasury note, which moves opposite its price, rose to 3.60 percent from 3.56 percent late Tuesday. Stocks have been extremely volatile lately, given the uncertainty in the market about whether a recession is here, how long it might last, how deep it might be and how it may affect corporate profits. "You'll find pockets of differentiation in the economy, but the overarching theme is that things are slowing down," said John O'Donoghue, co-head of equities at Cowen & Co. Macy's Inc. on Wednesday afternoon said sales at stores open at least a year fell 7.1 percent in January compared to the same month a year ago, worse than expected. The department store operator also said it is cutting 2,550 jobs. Macy's fell $1.16, or 4.6 percent, to $23.94. Corporate profits for the fourth quarter have been all over the map, but generally, they have been decent outside the financial and consumer discretionary sectors. Walt Disney posted a 26 percent decline in profit late Tuesday, but the results beat expectations. The company -- one of the 30 companies that make up the Dow Jones industrials -- reported a 9 percent rise in revenue, thanks in part to successful brands such as ESPN, "High School Musical" and "Hannah Montana." Disney shares rose $1.43, or 4.8 percent, to $31.50. Time Warner Inc. on Wednesday posted a profit decline in its fourth quarter. But excluding the effect of a year-ago gain from the sale of AOL's online access business in Europe, profit rose due to better results at the media conglomerate's cable TV and movie operations. Time Warner rose 31 cents, or 2 percent, to $15.71. And late Tuesday, JDS Uniphase Corp., which makes communications test and fiber-optic network equipment, said its fiscal second-quarter earnings of fell slightly year-over-year but widely surpassed Wall Street estimates. JDS Uniphase shot up $2.64, or 26 percent, to $12.80. The dollar was mixed against other major currencies, while gold prices rose. Light, sweet crude oil dropped $1.27 to $87.14 a barrel on the New York Mercantile Exchange. The Russell 2000 index of smaller companies fell 9.09, or 1.30 percent, to 692.49. Declining issues outnumbered advancers by about 5 to 3 on the New York Stock Exchange, where consolidated volume came to 3.89 billion shares, down from 4.18 billion on Tuesday. Overseas stocks were mixed. Japan's Nikkei stock average dropped 4.7 percent and Hong Kong's Hang Seng index fell 5.4 percent. In Europe, Britain's FTSE 100 rose 0.13 percent, Germany's DAX index rose 1.22 percent, and France's CAC-40 rose 0.83 percent.

Stocks Slip As Investors Mull Economy

Monday February 4, Stocks Fall After Week of Big Gains; Investors Shrug Off Stronger-Than-Expected Factory Report NEW YORK (AP) -- Wall Street fell Monday as investors, showing their cautious side after the market's best week in four years, cashed in profits while they debated their next move. The session's move lower continued even after a Commerce Department report showed that orders at U.S. factories rose by 2.3 percent in December -- the biggest increase since July. Analysts had been expecting a 2 percent increase after a 1.7 percent gain in November. While stocks showed little reaction to the factory orders report, Wall Street remains eager for any clues about the nation's economic health. Investors are awaiting quarterly earnings results late Monday from names such as media company News Corp. and fast-food chain operator Yum Brands Inc. The readings could help indicate whether Wall Street last week carved the beginnings of a sustainable recovery. Last week, the Dow Jones industrial average jumped 4.39 percent, the Standard & Poor's 500 index gained 3.75 percent, and the Nasdaq composite index advanced 4.87 percent. The Dow and the S&P 500 each showed their steepest gains since March 2003. Given the scope of the week's gains, a pullback Monday wasn't unexpected and perhaps reflected the normal ebb-and-flow of trading. In midmorning trading Monday, the Dow fell 56.25, or 0.44 percent, to 12,686.94. Broader stock indicators also lost ground. The S&P 500 index fell 8.34, or 0.60 percent, to 1,387.08, and the Nasdaq fell 13.36, or 0.55 percent, to 2,400.00. The Dow stands 10 percent below its record close of 14,164.53 from Oct. 9, but has regained almost 10 percent from the 15-month lows it hit in January. The Federal Reserve's second interest-rate cut in about a week helped boost stocks last week. Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.63 percent from 3.60 percent late Friday. The dollar was mixed against other major currencies, while gold prices fell. Light, sweet crude oil fell 17 cents to $88.79 per barrel on the New York Mercantile Exchange. In corporate news, Google Inc. said Sunday that Microsoft Corp.'s $42 billion bid for Yahoo Inc., announced Friday, amounts to an attempt to gain illegal control over the Internet. Google fell $11.30, or 2.2 percent, to $504.60, Microsoft rose 6 cents to $30.51 and Yahoo rose 70 cents, or 2.5 percent, to $29.08. Financial and homebuilder stocks, which helped drive last week's gains, fell. American Express Co., one of the 30 stocks that make up the Dow industrials, fell $1.32, or 2.7 percent, to $48.28 after UBS lowered its rating on the credit card company to "sell," according to Dow Jones Newswires. Other financial stocks lost ground as well and were among the steepest decliners Monday. Lehman Brothers Holdings Inc. fell $1.73, or 2.6 percent, to $64.27, while Citigroup Inc., which like American Express is a Dow component, declined 67 cents, or 2.3 percent, to $29.02. Homebuilders, which in recent months had come off their lows after investors fled housing-related investments, lost ground Monday. Lennar Corp. fell $1.21, or 5.6 percent, to $20.19, while KB Home fell $1.81, or 6.3 percent, to $26.94. Agricultural producer Archer Daniels Midland Co. said Monday its fiscal second-quarter profit rose 7 percent amid increased volumes and selling prices; it just missed Wall Street forecasts. ADM fell $1.55, or 3.4 percent, to $43.95. Wendy's International Inc. fell 78 cents, or 3.1 percent, to $24.40 after reporting its fourth-quarter earnings rose 42 percent amid increased profit margins but missed expectations. Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 205.9 million shares. The Russell 2000 index of smaller companies fell 9.06, or 1.24 percent, to 721.44. Overseas, Japan's Nikkei stock average closed up 2.69 percent, while Hong Kong's Hang Seng index jumped 3.77 percent and China's benchmark but often-volatile Shanghai Composite index jumped 8.13 percent after reports indicated the economic effects from harsh winter storms in China might not have been as bad as feared. In afternoon trading, Britain's FTSE 100 rose 0.04 percent, Germany's DAX index rose 0.69 percent, and France's CAC-40 fell 0.17 percent.