EVEN MORE BAD SONY BATTERIES

The news got worse for Sony this morning as Toshiba announced the recall of 830,000 Sony-made batteries and Dell broadened its recall to include 100,000 more Sony-made batteries. This brings the total of recalled Sony batteries to approximately 7 million.

AP

MORE BAD SONY BATTERIES

Lenovo and IBM recalled 526,000 notebook computer batteries made by Sony after a notebook computer caught fire at Los Angeles International Airport. This brings the total recall of Sony-made batteries to over 6 million - 4.1 million in Dell notebooks and 1.8 million in Apple notebooks.

Reuters

HP GENERAL COUNSEL QUITS, PLEADS FIFTH

Hewlett-Packard General Counsel Ann Baskins, who helped oversee the leak probe that is at the center of controversy, resigned today and invoked her right not to testify before a House panel investigating the leak investigation in order to avoid incriminating herself. Having trouble keeping up with all of the rumors, testimony, and resignations? Check out the Forbes timeline and article.

Forbes Timeline
Forbes Article

CORPORATE CROOKS PAY STEEP PRICE

Two white collar criminals partially responsible for corporate scandals paid for their misdeeds on Monday. Andrew Fastow, former Chief Financial Officer at Enron, was sentenced to six years in prison for his role in one of the most infamous corporate scandals in United States history. Bernard Ebbers, former Chief Executive Officer at WorldCom, began serving his 25-year prison sentence for his part in an $11 billion accounting fraud.

Reuters

MEDIAN HOME PRICE FALLS

Among a slew of housing data released recently, one of the more telling numbers about the current housing market was a 1.7% decline in the median home price, the first in more than ten years. At the August sales rate, there is a 7.5 month supply of homes, the largest inventory since 1993.

Reuters

AMERICAN IDOL MOST EXPENSIVE AD BUYS

American Idol will command between $550,000 and $700,000 for each 30-second commercial spot on the upcoming season, making it the most expensive regular television show ad spots for the third year in a row.

Advertising Age

$24 MILLION A DAY MAN

Casino billionaire Sheldon Anderson has earned $23.6 million every day for the past two years according to Forbes, accumulating wealth more quickly than anyone in history, as far as the magazine could determine.

Forbes has produced its latest list of the 400 richest Americans. Bill Gates leads the list again with a net worth of approximately $53 billion.

Full coverage at Forbes.com

FED LEAVES RATE UNCHANGED

The Federal Open Market Committee left the Fed funds rate target at 5.25% at their Wednesday meeting. This seems to indicate that at least for now, the Fed believes it does not need to take action to tame inflation. The markets responded favorably.

Reuters

HP CEO DIRECTLY INVOLVED IN LEAK INVESTIGATION

The New York Times, Washington Post, and Wall Street Journal are all reporting that HP CEO Mark Hurd likely played a more direct role in the media leak investigation than had previously been disclosed.

AP at Yahoo!

CHRYSLER MAKING CUTS, FACING PROBLEMS

DaimlerChrysler AG's Chrysler Group is cutting production 16% for the second half of the year and CEO Dieter Zetsche has said he will consider further restructuring measures. Zetsche said the cuts are necessary because:

1. the increased price of gasoline has changed consumer preferences;
2. slowing demand for big trucks; and
3. rising health-care costs for unionized American workers.

These problems have also hurt Ford and General Motors, but came as more of a surprise at Chrysler where they had put together twelve consecutive profitable quarters.

WSJ.com

YAHOO STOCK FALLS

Yahoo executives announced at a conference today that advertising sales have slowed, particularly in the automotive and financial services industries, causing the company to lower third quarter revenue estimates to the lower end of analysts expectations. This announcement caused Yahoo's stock to drop as much as 13% this afternoon and has negatively impacted Google, eBay, and others.

Reuters
TheStreet.com
WSJ.com

FY2006 BUDGET DEFICIT SMALLER THAN EXPECTED?

Stronger corporate profits have caused an increase in federal corporate tax receipts, making it likely that the actual federal deficit for fiscal 2006, which ends September 30, is lower than the projected $296 billion projected by the White House Office of Management and Budget and is in line with, or perhaps below, the forecast of $260 billion by the Congressional Budget Office.

Reuters

CHRYSLER LOSS ESTIMATE MORE THAN DOUBLES

DaimlerChrysler AG announced that it expects the Chysler division to lose nearly $1.52 billion in the third quarter, up from earlier estimates of $630 million. From The Wall Street Journal:

In a statement, the automaker raised its estimate of the Chrysler Group third-quarter operating loss from €500 million to be €1.2 billion due to "excess inventory, non-competitive legacy costs for employees and retirees, continuing high fuel prices and a stronger shift in demand toward smaller vehicles." The company also said its competitors have "further increased margin and volume pressures – particularly on light trucks - by making significant price concessions."

WAL-MART TO ISSUE CREDIT CARD IN CHINA

Wal-Mart Stores Inc. will announce the issuance of its first credit card in China today. According to The Wall Street Journal, analysts believe it will be the first card issued by a foreign retailer in China. Currently less than 5% of the population of China has a credit card. Wal-Mart has approximately 60 stores in China and will initially introduce the credit card in six stores, eventually rolling it out across the country.

FORD ANNOUNCES MORE CUTS

Ford Motor Company announced more cost cutting moves that will be implemented through 2008 to save the company approximately $5 billion. The company also updated future financial projections. Some highlights:

• 33% cut in salaried workers, approximately 14,000 employees (includes 4,000 employees terminated in first quarter of 2006)
  
• Buyout offer on contract of all remaining UAW United States hourly workers
• Closing or selling all Automotive Component Holdings by end of 2008
• Full-year profitability in North America before 2009
• Suspension of dividend on common and Class B stock beginning in fourth quarter

Ford Press Release

MODEST INCREASE IN AUGUST CPI

The consumer price index data released this morning shows that inflation advanced 0.2% in August, and is up 3.8% since August 2005. The major contributor to inflation over the past year has been energy, which is up 15.1% over the past year, but only 0.3% in August. Core CPI, which excludes food and energy, was up 2.8% over the past year.

All figures listed here are NSA, or not seasonally adjusted.

Bureau of Labor Statistics Press Release

ELECTRICITY RATES TO RISE APPROXIMATELY 25%

Residents of Illinois, long the beneficiaries of an electricity rate freeze, will soon be paying approximately 25% more for electricity according to the results of the recent energy auction. On Thursday, the Illinois Commerce Commission voted to accept the results of the auction to supply residential customers with electricity, while rejecting the results of the auction to suppy larger commercial customers.

Chicago Tribune

MICROSOFT GIVES MORE DETAILS ON ZUNE

Some details of Microsoft's Zune digital music and video player have been revealed via earlier leaks and regulatory filings, but the company officially announced some features and photos of the device today. Check out Gizmodo for some pictures or CNET News.com for Microsoft's strategy.

AN INTERESTING OIL/GASOLINE TAX PROPOSAL

With oil prices hovering near $64 per barrel this morning after falling from $78 in mid-July, now might be the time to seriously consider Richard Koo's proposal to increase the gasoline tax simultaneously in China and the United States to 100%. Sound crazy? Read the article before you decide.

BusinessWeek

APPLE'S "IT'S SHOWTIME" ANNOUNCEMENT

Apple's press conference today unveiled the expected movie download service, upgrades to the iPod series of digital music and video players, video games designed to be played on video iPods, and a product named iTV which allows TV playback of videos stored on a computer. The movies are available for download now, some iPod upgrades are available now with others to come in the next few months, the video games are available now, and the iTV device will be available in the first quarter of 2007.

The Seattle Times
IGN.com
AP

BEARS SHUTOUT OF PACKERS MEANS FREE FURNITURE

The Chicago Bears 26-0 rout of the Green Bay Packers means that 206 lucky customers of World Furniture Mall in Plano will receive their money back for furniture purchased over the Labor Day weekend. Store owner Randy Gonigam, a huge Bears fan, designed the promotion so that all furniture up to $10,000 per customer would be free if the Bears held the packers to zero points. Fortunately for Gonigam, he had an insurance policy that will reimburse him for the nearly $300,000 in furniture sold during the promotion.

Chicago Tribune

MAYOR DALEY VETOES BIG BOX WAGE ORDINANCE

Chicago Mayor Richard Daley vetoed the "big box" wage ordinance which would have required retailers with over $1 billion in annual sales and 90,000 square feet of retail space to pay employees a minimum wage of $9.25 per hour and $1.50 per hour in benefits, rising to $10 per hour and $3.00 in benefits by 2010. According to the Illinois Retail Merchants Association, 42 stores with 7,500 employees would have been impacted by the ordinance. According to MarketWatch, "news of the veto buoyed shares of Wal-Mart, which were up 1.4% at $47.35 in afternoon trading. Target shares rose, as well, trading up 1.4% at $51.25."

Reuters

COCA-COLA & NESTLE TO COMPETE WITH STARBUCKS

Coca-Cola and Nestle are developing machines that will goof-proof gourmet coffee drink creation so that talented baristas are not needed. Coca-Cola will enter the high-end hotel and restaurant market with a beverage system called Far Coast and the quick-service restaurant market with a different system called Chaqwa. Nestle is targeting theme parks, movie theaters, and fast food restaurants with its Nescafe Specialty Solutions' bag-in-a-box system.

While Coca-Cola and Nestle may not compete directly with Starbucks in head-to-head competition in company-owned coffee shops, competing indirectly by giving consumers another choice in the already fragmented coffee market could cause problems for Starbucks. Estimates are that 35-39% of customers purchase their coffee from convenience stores currently, while 38% get coffee at coffee shops or local restaurants.

Advertising Age

SPORTINGBET.COM DROPS 40% AFTER ARREST

Shares of online casino and sports bookmaker SportingBet.com resumed trading this morning in London and promptly lost 40% of their value. Prior to the arrest of a company executive in the United States last week, the company was valued at approximately $1.87 billion U.S., but in trading this morning the value has fallen to $1.12 billion U.S., wiping out over $700 million. Trading in shares of the bookmaker was halted last Thursday following the arrest.

Times of London Online

OPEC MEETS TODAY

The Organization of Petroleum Exporting Countries, OPEC, will meet today in Vienna, Austria, to discuss oil output in member countries. Analysts expect OPEC to maintain its nearly full production quota of 28 million barrels per day. Oil prices have dropped from a high of $78.40 in mid-July to below $67 per barrel.

International Herald Tribune
WSJ.com

APPLE TO OFFER MOVIE DOWNLOADS?

Apple appears ready to announce on Tuesday that the company will offer movie downloads. The company's representatives are keeping mum, but invitations have been distributed for a press conference at a movie theater in California on Tuesday which coincides with the first day of the annual Apple Expo in Paris - a perfect time for getting maximum exposure for such an announcement.

International Herald Tribune
The New York Times

FORD PAYS NEW CEO $18.5 MILLION UP FRONT

New Ford CEO Alan Mulally received an up-front payment of $18.5 million to take over the trouble automobile manufacturer. Mulally will also receive a $2 million annual base salary, 4 million stock options, and 600,000 restricted stock units, while an incentive plan that includes a $3.5 million target bonus and other incentives will likely boost his base salary considerably higher.

AP

NOTRE DAME FANS SPEND BIG MONEY

With the Notre Dame football team ranked #4 in the AP and #5 in the USA Today polls, Irish fans are paying big money for tickets, hotel rooms, and even parking due to short supply and strong demand.

For this weekend's Penn State game:

• Hampton Inn regular rate $129 night, $400 night with three-night minimum
• Comfort Suites regular rate $109, $245 with two-night minimum
  
• $59 each for tickets at face value, sold for $1,600 each on eBay
• One parking pass sold for $500 on eBay

For the University of Michigan game on September 16, the South Bend Marriott raised its rate for a double room from $149 per night to $649.

WSJ story at SouthBendTribune.com

U.S. CRACKING DOWN ON ONLINE GAMBLING?

Peter Dicks, chairman of Sportingbet, an online gambling site that allows gambling on casino games as well as sports wagering, was arrested in New York on a Louisiana warrant Wednesday night. The arrest comes two months after then CEO David Carruthers of BetOnSports was arrested on a flight layover at Dallas-Fort Worth airport. U.S. government officials claim that it is illegal to operate an online casino or sports wagering operation that allows people within the United States to gamble. In the past, officials had seemingly looked the other way as online gambling grew in the U.S., but the two arrests this summer of online gaming executives seem to indicate that a crackdown may be under way.

Reuters
International Herald Tribune

GM INCREASES WARRANTY ON ALL NEW VEHICLES

General Motors has announced that it will boost the powertrain warranty on all 2007 vehicles to five years or 100,000 miles.

From the WSJ article, "GM is counting on the new warranty plan to give consumers who still perceive GM cars and trucks as lagging in quality a reason to consider its vehicles, Mr. LaNeve [head of marketing and sales in North America] said. He said GM vehicles have made quality improvements, but acknowledged that there is still an image gap among some consumers. Due to improved quality, GM has been able to cut warranty repairs by 40% over the past five years."

WSJ.com
TheStreet.com

WAL-MART ABANDONS ONE-SIZE-FITS-ALL APPROACH

In an effort to boost sluggish sales, Wal-Mart Stores Inc. has abandoned its one-size-fits-all approach to retailing where all stores stock nearly the same inventory, regardless of location, in favor of tailoring the inventory to fit the customer base in the immediate area surrounding the store. The Wall Street Journal reports that Wal-Mart stores will be customizing their inventory in each store to better appeal to six distinct groups they are targeting - African-Americans, Hispanics, suburbanites, rural residents, empty-nesters, and the affluent.

Wal-Mart is hoping to give a boost to lagging same-store sales. In 2005, the company grew same-store sales at 3%, compared to 9% in 1999. Target, a major competitor, grew same-store sales at 6% in 2005, and has consistently bested Wal-Mart's numbers in 2006.

WSJ.com
MSN Money

GERMANY AND ITALY CONSIDER TAX INCREASES

German Chancellor Angela Merkel has announced that she intends to increase the value-added tax, a type of national sales tax, from 16% to 19% in 2007. Italian Prime Minister Romano Prodi has expressed a desire to raise some capital gains taxes and perhaps introduce an inheritance tax. Both countries are running deficits that exceed the European Union's ceiling of three percent of GDP and intend to use the tax revenues to cut the deficit.

International Herald Tribune

INTEL ELIMINATES 10,500 JOBS

After the market close, as rumored, chip-maker Intel announced the elimination of 10,500 jobs, which represents about 10% of its workforce. The cuts are expected to save Intel up to $3 billion per year by 2008. The severance package costs for the dismissed workers is estimated at $200 million. Intel has experienced declining profits and a loss in market share that many attribute to Intel's delayed and ineffective response to rival AMD's 2003 introduction of the innovative Opteron and Athlon 64 chips.

Reuters

GOOD NEWS FOR CHEVRON

Chevron has had a very good start to this week. First, the company revealed that a test field in the Gulf of Mexico could hold three billion to fifteen billion barrels of oil. To put it into perspective, fifteen billion barrels would approximately double United States oil reserves according to Kristina Shevory of TheStreet.com. The announcement put pressure on oil prices today as light, sweet crude closed down $0.59 at $68.60 on the Nymex. The second piece of good news for Chevron was the announcement that President Idriss Deby of Chad is willing to negotiate a settlement with Chevron and Petronas over the tax dispute that caused him to expel both companies last week.

FORD MOTOR COMPANY HIRES NEW CEO

In a move that came as a bit of a surprise, Bill Ford stepped down as CEO of Ford Motor Company today, but will remain as Chairman. The announcement came after the market closed. The Ford family owns a 40% voting stake in the company.

Alan Mulally, an executive with Boeing, will take over as CEO. Mulally had been considered for Boeing CEO last year, but was passed over in favor of former 3M executive Jim McNerney.

Ford is in the middle of a restructuring designed to return the world's second largest automobile manufacturer to prominence and profitability. Bill Ford is quoted in the AP story as having written an email stating that the turnaround effort "required the additional skills of an executive who has led a major manufacturing enterprise through such challenges before."

AP
MarketWatch

ILLINOIS ELECTRICITY AUCTION

The price consumers pay for electricity in Illinois is likely to rise sharply on January 1, 2007. For nine years, Illinois consumers have enjoyed a rate freeze as deregulation has been slowly phased in. A Dutch auction on Tuesday, September 5, will allow providers to bid on supplying electricity, with the low bid winning. The Illinois Commerce Commission approved the controversial bidding and approval system in January. Governor Blagojevich, among many others, has spoken out against the process. According the the St. Louis Post-Dispatch, rates for some consumers could rise as much as 20% to 50%.

Chicago Sun-Times
St. Louis Post-Dispatch

AUGUST UNEMPLOYMENT

• 4.7%, down from 4.8% in July
• Average time unemployed spent looking for work = 17.4 weeks
• 7.1 million unemployed
• 128,000 added to payrolls, up from 121,000 in July
• 8.8% of African Americans, lowest since July 2001
• 5.3% Hispanics

U.S. Department of Labor, Bureau of Labor Statistics

CAN APPLE CONTINUE DIGITAL MUSIC DOMINANCE?

Apple currently has about a 75% market share in the digital music player market with its successful iPod series, and is the dominant digital music provider with its iTunes service selling nearly one billion downloads per year. Competition ranging from the SanDisk Sansa E280 to the Microsoft Zune digital music players, and MTV's Urge , upstart Spiral Frog, and a myriad of other music download and subscription services (Napster, Ruckus, and Yahoo! Music, to name but a few), threaten to topple the Apple digital music dominance and cash cow.

Focus: Taking a bite of Apple, by Paul Durman and Dominic Rushe

August Auto Sales

Auto and Light Truck Sales
August 2006 vs. August 2005
Winners

• Toyota +17.0% (240,178 vs. 205,362)
  
• Hyundai +6.0%
• GM +3.9% (only second increase of 2006, market share of 24.4%, 363,521 vs. 349,806)
  

Losers

• Ford -11.6% (SUVs & trucks -20.8%, cars +8.5%, 253,976 vs. 287,235)
  
• Chrysler Group -4.2% (includes Chrysler, Jeep, & Dodge, 179,165 vs. 187,085)
  
• Honda -3.2% (includes Acura, light trucks +14.8%, cars -14.5%, 151,253 vs. 156,173)
• Nissan -2.7% (includes Infiniti, 89,848 vs. 92,365)
  

Data listed are from company reports, AP, and industry tracking firm Autodata Corporation estimates taken from Reuters and WSJ articles.

AP at Kiplinger's Personal Finance
Reuters
WSJ.com (subscription required)

Positive Economic Data

U.S. Consumer Spending

• +0.8% in July
• +0.4% in June

Core Price Index for Personal Consumption Expenditures
Core PCE excludes food and energy and is a favorite inflation measure of the Federal Reserve.

• +0.1% in July
• +2.4% August 2005-July2006
• Fed generally considers +2.0% upper limit of acceptable core inflation

Bloomberg.com