Finance news. My opinion.

February 28, 2010

Alkermes drug application put on ice

Filed under: business — Tags: , — Professor @ 1:39 pm

The snow storms that slammed the mid-Atlantic region this month shut down government agencies around Washington, D.C., long enough for the U.S. Food and Drug Administration to delay its review of Alkermes Inc.’s new drug application for diabetes therapy exenatide.

Waltham, Mass.-based Alkermes (Nasdaq: ALKS), which co-developed the drug with Amylin Pharmaceuticals Inc. and Eli Lilly and Co., said the FDA is adding five days to its review of exenatide, moving its action date out to March 12 cash advance payday loan.

Exenatide is intended to be an extended-release medication for Type 2 diabetes designed to deliver continuous therapeutic levels of exenatide in a single weekly dose. The application for exenatide’s once-weekly formula was submitted in May 2009 and accepted by the FDA in July 2009.


February 25, 2010

China New Village Makes Chanos See Dubai 1,000 Times

Filed under: money — Tags: , , — Professor @ 11:15 am

The township of Huaxi in the Yangtze River Delta is a proud symbol of how Chinese communists embraced capitalism to lift 300 million people out of poverty during the past three decades.

Its leaders took a farm community with bamboo huts and ox carts in the 1970s and transformed it into an industrial and commercial powerhouse where today many of its 30,000 residents live in mansions and most have a car. Per-capita income of 80,000 yuan ($11,700) — almost four times the national average — allows Huaxi to claim it’s China’s richest village.

Huaxi is also emblematic of the country’s construction and real estate boom. Communist Party officials there are building one of the world’s 30 tallest buildings, a 2.5 billion yuan, 328-meter (1,076-foot) tower. The revolving restaurant atop the so-called New Village in the Sky offers sweeping views of paddy fields, fish ponds and orchards, Bloomberg Markets reports in its April issue.

Marc Faber, publisher of the Gloom, Boom & Doom Report, says China is overdoing it. “It does not make sense for China to build more empty buildings and add to capacities in industries where you already have overcapacity,” Faber told Bloomberg Television on Feb. 11. “I think the Chinese economy will decelerate very substantially in 2010 and could even crash.”

Huaxi has an even more ambitious project coming up: a 6 billion yuan, 538-meter skyscraper that would today rank as the world’s second tallest. The only loftier building is the new Burj Khalifa in Dubai.

Dubai Times a Thousand

Such undertakings figured in warnings hedge fund manager Jim Chanos delivered in January that China is Dubai times a thousand. The costs of wasteful investments in empty offices and shopping malls and in underutilized infrastructure will weigh on China, Chanos, president of New York-based Kynikos Associates Ltd., said in a speech at the London School of Economics. “We may find that that’s what pops the Chinese bubble sooner rather than later.”

China has defied the global recession of the past two years and remained the fastest-growing major economy. Gross domestic product soared 10.7 percent in the fourth quarter. The government has provided 4 trillion yuan in stimulus spending and encouraged banks to lend a record 9.59 trillion yuan last year, trying to bridge the gap until demand for exports rebounds or domestic consumption takes off.

Risk for Commodities

Last month, banks lent a further 1.39 trillion yuan — almost one-fifth of the target amount for the whole of 2010. Also in January, foreign direct investment climbed 7.8 percent to $8.13 billion. Retail sales during last week’s Lunar New Year holiday rose 17.2 percent from the same period in 2009, according to the Ministry of Commerce.

While China’s resilience has helped support the world economy, raising demand for energy and raw materials, the bursting of a bubble would have the opposite effect. Government efforts to wean the economy off its extraordinary support may roil markets.

In January, the central government ordered banks to curb lending, which put China’s stock market into reverse. In a sign, in part, of how dependent the world has become on China, stocks and currencies slumped in places such as Australia and Brazil that supply commodities to the People’s Republic. On Feb. 12, the eve of the one-week Lunar New Year holiday, China for the second time in a month ordered banks to set aside more deposits as reserves. The Shanghai Composite Index has fallen 8 percent year-to-date, after gaining 80 percent in 2009.

Bidding Up Prices

“If the Chinese economy decelerates or crashes, what you have is a disastrous environment for industrial commodities,” said Faber, who oversees $300 million at Hong Kong-based Marc Faber Ltd.

The stimulus tap that Beijing turned on has flowed to projects such as its 2 trillion yuan high-speed-rail network. The 221 billion yuan Beijing-Shanghai line has surpassed the Three Gorges Dam as the single most expensive engineering project in Chinese history.

Some beneficiaries of the government efforts have plowed their loans into real estate and stocks. Property prices across 70 cities jumped 9.5 percent in January from a year earlier, according to government data.

Bridge of Strength

Instead of concentrating on their core businesses, giant state-owned enterprises, or SOEs, have bet on real estate, according to Zhang Xin, a former Goldman Sachs Group Inc. analyst who’s chief executive officer of Soho China Ltd., the biggest property developer in Beijing’s central business district. “All the SOEs are bidding the prices up to the sky,” Zhang told China International Business, a magazine backed by China’s Ministry of Commerce, in December. That’s despite office vacancies in China’s capital being at record highs, according to Boston-based commercial real estate company Colliers International.

Chanos, a short-seller who was early to warn about Enron Corp., is one of a growing number of investors sounding the alarm. “Right now, the Chinese market is overheating,” George Soros said in a Jan. 28 interview.

Local-government officials have wasted stimulus funds by replacing infrastructure that was fine in the first place. State media complained in May 2009 that party chiefs in Jianyang, Sichuan province, decided to help boost the local economy by rebuilding a bridge that was in such good condition it had emerged unscathed a year earlier from the earthquake that killed 70,000 people. The so-called Bridge of Strength withstood a demolition crew that tried to blast it to pieces with dynamite, the official China Daily reported.

Real Estate or Soybeans?

Another example Chanos has cited is the city of Ordos, where party officials have built an entire new downtown on the windswept grasslands of Inner Mongolia, 25 kilometers (15 miles) outside the existing municipality of 1.5 million people.

Mark Mobius, meanwhile, is sticking with China. The executive chairman of Templeton Asset Management is encouraged that the government is pulling back some of its extraordinary economic support. “We see the government’s tightening of lending as a positive because it moderates the risk to some degree,” says Mobius, who oversees $34 billion. “This is a correction in an ongoing bull market.”

Chris Ruffle, who helps manage $19 billion for Edinburgh- based Martin Currie Ltd., also remains confident China will avoid a bust. “It’s not a highly leveraged situation,” says Ruffle, who works in Shanghai. “I was in Japan in the 1980s, and that was a bubble. Here in China, we are nowhere near that.”

Still, even Mobius says investors have to be wary. He got rid of an investment in a Chinese food company after discovering that it was using funds to buy apartments instead of to process soybeans.


February 20, 2010

Walgreens to buy rival drugstore Duane Reade

Filed under: finance — Tags: , , — Professor @ 6:39 am

Walgreen Co. announced Wednesday it is buying New York-based rival drugstore chain Duane Reade Holdings Inc. to expand its reach in the metropolitan area.

The $1.1 billion cash transaction, which includes some debt and is pending regulatory approval, is Walgreen’s largest retail acquisition to date and is expected to close in the current fiscal year ended Aug. 31.

Through the deal, Deerfield, Ill.-based Walgreens (WAG, Fortune 500) drugstore, which currently operates 70 stores in New York City out of 7,100 nationwide, will acquire all 257 Duane Reade locations in New York City, as well as its corporate office and two distribution centers.

"Duane Reade is a compelling strategic acquisition that will immediately provide Walgreens with a leading position in the largest drugstore market in the United States," said Walgreens chief executive and president Greg Wasson in a statement. "The transaction is consistent with the capital allocation objectives we outlined last fall, which included investing in strategic opportunities that reinforce the company’s core strategies and meet return requirements."

The deal will also give Walgreens an edge over its national rival CVS Caremark (CVS, Fortune 500), which operates just over 7,000 drugstores across the nation.

"Walgreens lags its rival CVS in the New York metro area," said Craig Johnson, retail industry expert and president of retail consultancy Customer Growth Partners. "So this deal now allows Walgreens to leapfrog over its competitor and give it the kind of dominance in New York City that it has in Chicago, where it is headquartered."

Duane Reade, owned by private equity firm Oak Hill Capital Partners, boasts the highest sales per square foot in the retail drugstore industry in the nation, and its sales reached an unaudited $1.8 billion in 2009.

"We are very pleased that this national leader has recognized the successful transformation under way at Duane Reade," said Duane Reade chief executive and chairman John Lederer in the statement.

Customer Growth Partners’ Johnson said the deal will also benefit shoppers.

"This is also a win-win for consumers. Walgreens is bringing the skill, capital and management strength of one of the top two pharmacies operating in the country to Duane Reade," he said. "This will certainly enhance the merchandise and shopping experience for Duane Reade consumers."

Duane Reade, which opened its first location on Broadway between Duane and Reade streets in Manhattan in 1960, will continue to operate under its name after the transaction closes. About 60% of Duane Reade stores are located in Manhattan, while 30% are in outer boroughs and 10% are outside the city.

Though Walgreens expects acquisition charges will lower its earnings per share during the first 12 months after the deal closes, the drugstore projects it will help cut costs by between $120 million and $130 million by the third year.

Shares of Walgreens fell 1% in early trading.  


February 17, 2010

The next crisis: Commercial real estate

Filed under: legal — Tags: , , — Professor @ 12:42 am

A congressional watchdog panel warned on Thursday that mounting commercial real estate losses could endanger the banking system and thwart economic recovery.

A total of $1.4 trillion in commercial real estate loans will require refinancing in the next four years, the Congressional Oversight Panel said in a report. More than half of those loans are underwater, written for properties whose value has dropped like a rock.

The expected losses when loans go bad could hit between $200 billion to $300 billion and threaten 3,000 small and mid-size banks with a disproportionate share of commercial real estate assets on their books, according to the panel.

The report is intended to "wave a red flag" to the White House and Congress that the commercial real estate loan market is going to get a lot worse before it gets better.

"We’re at a point where even as TARP is ramping down another major challenge in our economy is ramping up," said Elizabeth Warren, the oversight panel’s chairwoman. "We need to start now, before the system is on the brink of collapse to figure out a plan," she added.

The panel’s research found that 2,988 banks are heavily invested — with more than three times their assets tied up — in commercial real estate loans. Of that number, 2,500 banks each have less than $1 billion in assets.

Indeed, many such smaller banks have already failed. Small bank failures"will intensify sharply over the next few years," Warren said.

"When commercial properties fail, the result is a downward spiral of economic contraction, as these are the same small banks that create jobs and boost economic activity," she said Business Card Holders.

Solutions: The panel offers a number of possible solutions for policymakers to head off a commercial real estate crisis. For example, it says the Treasury Department should "stress test" banks that are concentrated in commercial real estate loans.

Treasury Secretary Tim Geithner said at a congressional hearing last fall that "it is not realistic or feasible" to review such a large number of banks in a detailed level.

The oversight panel also suggested that the federal government should consider other remedies, including injecting capital into these small banks, buying their toxic assets or guaranteeing loans.

Bank regulators could also simply allow banks to extend underwater loans rather than requiring them to recognize losses, but the panel worries that such a move could delay a rebound in bank lending. But the panel also worries that massive writedowns throughout the banking system could stymie lending and create a "negative bubble."

"There’s a need for a nuanced response," Warren said. She said that banks should recognize some commercial real estate losses, but that regulators should monitor them closely to ensure that losses don’t spiral downward and drag down the larger economy. 


February 13, 2010

Honda recalls 438,000 cars for airbag hazard

Filed under: economics — Tags: , , — Professor @ 6:09 am

Honda announced it is expanding a previously announced recall to replace an airbag inflator in an additional 438,000 vehicles worldwide, including 379,000 in the United States.

In a statement posted on its Web site late Tuesday, Honda said the driver’s airbag inflators in these certain vehicles may expand with too much pressure, which can cause the inflator casing to break and could result in injury or death.

The expanded recall includes 2001 and 2002 Accord, Civic, Odyssey, CR-V, and selected 2002 Acura TL vehicles, the statement said. Honda said there have been 12 incidents related to the airbag inflator problem.

One Honda Pilot car and one Acura CL vehicle may also be affected, the spokesman said.

The original recall involving this issue was announced in November 2008 for 2001 and 2002 models of Accords and Civics as well as some 2002 model year Acura TL vehicles, a Honda spokesman told It affected 3,940 U.S. vehicles, and 265 in Canada and Mexico.

Last summer, Honda added 510,150 cars to the recall worldwide, including 443,727 additional units in the United States payday loans in 1 hour.

The recall now affects a total of 952,118 vehicles, with more than 826,000 in the United States.

Although none of the reported problems occurred after July 2009, Honda said it was still expanding the recall because it could not be sure that the inflators in the aforementioned vehicles would work correctly.

Honda said it will notify affected customers by mail and phone with instructions on how to have their vehicles inspected and updated at an authorized dealer. The entire production of each of the models in question is not necessarily included in the recall.

Last month, Honda announced a separate recall of 646,000 2007 and 2008 Fit, City and Jazz models worldwide, after a fire hazard involving a power window switch resulted in a death in South Africa. 


February 11, 2010

Toyota trouble round-up: What to do now

Filed under: marketing — Tags: , , — Professor @ 12:45 pm

Problems with Toyota cars are cropping up faster than the automaker can deal with them. Following two different recalls for problems involving accelerator pedals on various models comes the revelation of braking problems in the iconic Prius.

Here’s a rundown of the problems, the cars involved and what to do if your car’s caught up in any of this.

Prius brakes

What’s the problem? Under certain conditions, particularly at relatively low speeds when traveling over rough or potholed roads, drivers have complained of a brief, but significant, delay in brake performance.

Is it being blamed for crashes? Yes, at least four crashes in the U.S. have been reported, allegedly as a result of this problem.

What cars are involved? 2010 model year Toyota Priuses made before January, 2010. Toyota is also investigating whether the Lexus HS250h hybrid, which shares its mechanical parts with the Toyota Prius, might have a similar problem.

Is there a recall? No, at least not yet.

Is there a fix for it? None has been announced yet, but Toyota has fixed the problem on cars coming off the assembly, so there does seem to be some sort of solution. Now Toyota has to figure out how to get that change made to cars already on the road.

What should I do? The safest thing to do, of course, would be not to drive the car until the problem has been fixed. If you do drive, be aware of the problem and allow extra following distance and be begin to stop a little sooner for red lights and stop signs, especially if the road is choppy.

David Champion, Consumer Reports’ head of auto testing, also reminds drivers not to lift off the brake pedal if they feel a loss of power. Instead, keep your foot pressed down hard on the brake pedal and don’t pump the brakes.

Sticky gas pedals

What’s the problem? Over time, gas pedals in some cars become sticky. At first, they just become a little harder to push down and when you lift your foot off the gas, they’re slower to come back up. In the worst case, the pedal on these cars can become stuck part way down.

Is it being blamed for crashes? There have been no crashes or injuries reported as a result of this problem.

What cars are involved? Toyota’s 2009-2010 RAV4, Corolla and Matrix models; the 2005-2010 Avalon; 2010 Highlander; 2007-2010 Tundra and the 2008-2010 Sequoia; and some 2007-2010 Camrys (only those with gas pedal assemblies made by a specific Toyota supplier; your dealer can check). No Lexus or Scion models are involved.

Is there a recall? Yes , 2.3 million vehicles.

Is there a fix for it? Yes. Toyota dealers can install a small metal plate that reduces wear on the plastic parts involved.

What should I do? Get your car fixed as soon as you can. If your gas pedal starts to feel sticky, stop driving immediately, Toyota says. Pull over in a safe place, then call a dealer.

If the pedal becomes stuck part way down, applying the brakes should be enough to slow the car and bring it under control. Don’t pump the brakes, though. That will just weaken your power brakes. Instead, press and hold the brakes. Also, at the same time, you can shift the transmission into neutral, which will stop the engine from driving the wheels.

Keep in mind that these situations are rare occurrences.

Floor mat pedal entrapment

What’s the problem? In some cars, gas pedals can become stuck on the edge of afloor mat, particularly when thick all-weather floor mats are used or when floor mats are stacked on top of one another. In this case, the pedal can be stuck almost all the way to the floor, creating a particularly dangerous situation.

Is it being blamed for crashes? Yes, there have been crashes and some deaths on account of this problem.

What cars are involved? 2008-2010 Highlander, 2009-2010 Corolla, 2009-2010 Venza, 2009-2010 Matrix, 2009-2010 Pontiac Vibe (a version of the Matrix), 2007-2010 Toyota Camry, 2005-2010 Avalon, 2004-2009 Prius, 2005-2010 Tacoma, 2007-2010 Tundra and the 2007-2010 Lexus ES350, 2006-2010 IS250 and the 2006-2010 IS350.

Is there a recall? Yes 5.3 million vehicles have been recalled for floor mats.

Is there a fix for it? Yes. Dealers will alter the shape of the gas pedal to prevent it becoming stuck on the floor mat even when thick or stacked floor mats are used. In some cars, the floor area under the gas pedal may also be reshaped slightly to make more room.

What should I do? Get your car fixed as soon as possible. If your car hasn’t been fixed yet remove your floor mats.

If your gas pedal becomes stuck in the "floored" position, immediately shift the transmission to "Neutral" and press hard on the brake pedal. Don’t pump the brakes but apply even, firm pressure. 


February 6, 2010

Colorado Business Hall of Fame inducts 8

Filed under: term — Tags: , , — Professor @ 7:18 pm

The Colorado Business Hall of Fame inducted eight business notables Thursday night during its annual induction banquet at the Hyatt Regency Denver at the Colorado Convention Center.

Junior Achievement-Rocky Mountain Inc. and the Denver Metro Chamber of Commerce operated the event, and UMB Bank was the underwriter.

The Colorado Business Hall of Fame is in its 21st year, and has more than 100 members.

The 2010 laureates:

• The Gart Brothers: Nathan, Melvin, Jerry and Mickey Gart — In 1928, Nathan Gart founded Gart Bros. Sporting Goods Co. Melvin Gart joined the business in 1946 and oversaw all the advertising.

Nathan’s two sons, Jerry and Mickey, also worked for the company. Jerry Gart joined full time in 1953. He also opened the first branch store — a camera store at 16th Street and Court Place in downtown Denver — and built it into the largest photographic outlet in the Rocky Mountain West.

He added sporting goods to the upper level and took charge of the business. Eventually, that led to a highly successful chain of sporting goods stores, including the Sportscastle at 10th Avenue and Broadway.

The Garts also came up with “Sniagrab” — bargains spelled backward — and turned it into the largest ski sale in the world. It starts every year during Labor Day weekend.

• James B. Wallace — He’s one of four partners of Bownlie, Wallace, Armstrong and Bander Exploration. After 17 years working in the oil business in Texas, Wallace and his associates moved the company to Denver in 1970. Soon, Joe Bander joined the partnership.

Brownlie, Wallace, Armstrong and Bander was active in the Rockies in the 1970s. In 1980, they formed BWAB Inc. and Brownlie, Wallace, Armstrong and Bander Exploration.

Wallace served on the board of directors of Tom Brown Inc. until its sale to EnCana Oil and Gas USA Inc. He currently serves on the boards of Delta Petroleum, Ellora Energy and Savant Resources.

The Denver Petroleum Club named him Man of the Year in 1981.

In 1986, the Independent Petroleum Association of the Mountain States named him Wildcatter of the Year, in recognition of his 30 years in oil and gas exploration.

The Colorado Petroleum Association named him Man of the Year in 1991, and the Rocky Mountain Oil & Gas Hall of Fame inducted him in 2004. He’s also a member of the All-American Wildcatters group and the 25-Year Club of the Petroleum Industry.

• Henry Bosco — His father owned the Denver Hotel in Glenwood Springs, and Henry Bosco worked at a variety of jobs there as he grew up.

In 1956, the owner of the Hot Springs property, Frank E. Kistler, decided to sell the property and retire. Bosco and his father, Mike, were two of the 22 investors who bought the property.

Bosco helped lobby for the location of Interstate 70's Eisenhower/Edwin Johnson Memorial Tunnel.

He served as general manager of the hot springs property from 1976-89. Today, he serves as president and board chairman.

The Glenwood Chamber Resort Association named Bosco Citizen of the Year in 2006. The Glenwood Chamber of Commerce has established the Bosco Tourism Business of the Year award, an annual award in honor of the Bosco family.

• Merle Catherine Chambers — In 1980, she founded and served as CEO of Axem Resources LLC, an independent oil and gas production firm. Chambers ran it for 17 years. She also became board chairman of Clipper Exxpress Co., a family-owned transportation business based in Illinois. Her father, Jerry Chambers, started that company.


February 3, 2010

Florida posts gain in online job vacancies

Filed under: marketing — Tags: , , — Professor @ 8:06 am

Florida is among a handful of states that posted the largest monthly gains in the number of online job postings, which were up by 25,500 in January, according to The Conference Board’s Help Wanted OnLine Data Series. Only California, with a 67,600 jump, had more.

"The last three months have shown a sharp upturn in employer demand for workers," said Gad Levanon, associate director of macroeconomic research at The Conference Board, in a news release. "These increases have brought us back near the labor demand levels that existed in November 2008, just prior to the huge losses resulting from the financial turmoil in the last quarter of 2008. This is very good news since these seasonally adjusted increases come in two months, when we normally see employers cut back on advertising for workers."

And, while that’s good news, the number of unemployed continues to exceed the number of advertised vacancies in all 52 of the metropolitan areas The Conference Board looks at.

In Miami, there were nine unemployed people for every five vacancies posted in November 2009, the latest month for which unemployment data was available.

Among the 10 occupation groups with the largest number of online advertised vacancies nationwide, office and administrative support occupations posted the largest January gain, up 74,100.

  • Advertised vacancies in management occupations were up 54,500 in January, to 427,400.
  • Computer and mathematical science professions rose 40,600 in January, to 514,700.
  • Labor demand for health care support occupations rose 6,500 to 119,000.

Demand for health care support workers has remained relatively steady throughout the recession, although the number of unemployed seeking work in this field has remained relatively high, The Conference Board noted.


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