UAL POSTS $190 MILLION PROFIT

UAL Corp., parent of United Airlines, reported a $190 million net income for the third-quarter, putting together back-to-back profitable quarters for the first time in over six years. The company entered bankruptcy in in late 2002 and emerged in February of 2006. Some positive signs for UAL include being profitable despite high fuel prices, which caused an 8% increase in operating costs, and passenger revenue increased 10% on United's Atlantic flights despite the London terrorism scare in August.

WSJ.com

CIRCULATION DOWN AT MAJOR NEWSPAPERS

According to data released Monday, circulation for most major newspapers was down over the past six months. Average daily circulation at 770 papers was down 2.8%, while circulation for 619 Sunday papers was off 3.4%. Many of the nation's biggest newspapers experienced serious declines. The Boston Globe was down 6.7% Monday through Friday and nearly 10% on Sunday. The Los Angeles Times was down 8% Monday through Friday and 6% on Sunday.

The New York Times

CORE PCE EASES

The core personal consumption expenditures, a favorite inflationary measure of the Federal Reserve that excludes food and energy, rose by 0.2% in September. This gives the year previous a 2.4% core PCE, down slightly from August's 2.5%, but still considerably higher than the preferred top end of 2%. With the high, but easing core PCE, and the slow GDP growth, many observers believe the Fed will sit on the sidelines, not changing interest rates until it becomes more clear which is of greater concern - inflation or economic growth.

WSJ.com

KFC TO DROP TRANS-FAT COOKING OIL

KFC announced that it will stop frying items in trans-fat cooking oil in all United States and Canadian restaurants by the end of April of 2007. KFC operates over 5,500 U.S. outlets and 786 in Canada. KFC already uses no trans-fat cooking oil in many countries, including China.

Reuters

TOYOTA TO BUILD TWO NEW NORTH AMERICAN FACTORIES

A Japanese newspaper reported today that Toyota will build two new factories in the North America. The report speculates that the first plant will be operational in 2009, be located in the United States, and produces the popular Yaris model. The second plant will come on line in 2010 and produce sport utility vehicles.

Reuters

U.S. GDP ADVANCES MEAGER 1.6%

The Bureau of Economic Analysis of the Department of Commerce released an advanced estimate of real GDP for the third quarter of 2006 showing an increase of 1.6%. The GDP grew at 2.6% in the second quarter. The 1.6% growth was the slowest in three years.

Bureau of Economic Analysis

MICROSOFT ANNOUNCES VISTA UPGRADE PROGRAM

This week, Microsoft introduced the Vista upgrade program, intended to make consumers comfortable with purchasing computers during the holiday season and upgrading to the new Vista operating system when it is released in late January. Some retailers will chip in and make the upgrade free, while consumers who purchase from certain vendors will simply receive a coupon for a discounted upgrade. You can find details about the program at PC World.

CRUDE OIL PRICES FALL BELOW $61

The Louisiana Offshore Oil Port reopened after closing due to bad weather and that seems to have forced oil prices downward. As of 5:00 a.m. Friday, light-sweet crude is trading at $60.10 per barrel. While the oil port was closed, 3.3 million barrels of oil could not be offloaded, causing a temporary reduction in oil inventories and a spike in price to over $61.

Reuters

MICROSOFT POSTS SOLID Q1 NET INCOME

Microsoft reported a first quarter net income of $3.48 billion, or 35 cents per share, versus $3.14 billion, or 29 cents per share, a year ago. Revenue from server and database products increased 17%, showing strong sales growth in both Windows Server 2003 and SQL Server 2005. Office 2007 and Windows Vista are set for corporate launch this quarter and will be released to consumers next quarter.

"The server business has been going gangbusters for this company for several years now,'' said Charles Di Bona, an analyst with Sanford C. Bernstein in San Francisco. He rates the shares "outperform'' and said he doesn't own them. "It's a hidden gem. It's a real growth engine for the company.''

Bloomberg

MERCEDES UP, CHRYSLER DOWN

DaimlerChrysler posted quarterly net income of $679 million, down from $1.07 billion a year ago. Chrysler posted a $1.46 billion operating loss, while Mercedes operating profit soared to $1.24 billion from $547 million. Rumors have started circulating that parent DaimlerChrysler may be ready to sell ailing Chrysler.

Reuters
WSJ.com

GM POSTS SMALL NET LOSS

General Motors reported a net loss of $115 million for the quarter, or 20 cents per share, much better than the same quarter last year when the auto maker lost $1.66 billion, or $2.94 per share. In another positive sign, GM had a U.S. market share of 25.1% for the quarter, its best result this year.

Reuters

WRIGLEY NAMES CEO OUTSIDE OF THE FAMILY

William Wrigley Jr. Company, the popular chewing gum manufacturer, named William Perez, former Nike CEO, as the first non-family Wrigley CEO in the history of the company. Wrigley shares surged over 15% on the surprising news.

Reuters

IBM SUES AMAZON

IBM sued Amazon yesterday claiming that the online seller is infringing on five IBM e-commerce patents. IBM appears to be interested in seeking a licensing agreement for the patents and avoiding a lengthy court battle.

Reuters

EX-ENRON CEO GETS 24 YEARS IN PRISON

Jeffrey Skilling was sentenced to 24 years in prison yesterday for his part in a financial fraud that destroyed Houston-based Enron. Skilling was also ordered to pay $45 in restitution to Enron investors.

Reuters

FORD POSTS HUGE LOSS

Ford Motor Company reported a $5.8 billion quarterly loss today, its largest in 14 years.

Reuters

OPEC OIL PRODUCTION CUT INEFFECTIVE

Traders do not seem to believe that members of OPEC will truly cut production by 4%, as agreed upon October 19. According to Saturday's Washington Post, oil closed Friday below $57 per barrel for the first time in 2006. While it is in OPEC members best long-term interests to cut production, the short-term incentive of producing and selling as much as possible at high prices is too tempting to pass up. This leads to increasing supply and inventories, and lower prices result in the short-term and long-term markets.

For an interesting piece on the possible irrelevance, or at least ineffectiveness, of OPEC, check out this Street.com article by Christopher Edmonds.

APPLE SHINES IN EARNINGS REPORT

Apple Computers Inc. posted a 27% increase in net income in the fourth quarter as sales of iPods and Macintosh computers surged. Apple sold 8.7 million iPods compared to 6.5 million in the fourth quarter of last year. The company also sold 1.6 million Macs for $2.21 billion, a record for quarterly sales. Shares surged 6% in after-hours trading.

WSJ.com

MATTEL NET INCOME INCREASES 6.1%

Toy maker Mattel posted positive quarterly results as sales of TMX Elmo, Barbie, and Cars toys all sold well. According to WSJ.com, TMX Elmo, the 10th-anniversary edition of the popular Sesame Street character, "is the single biggest pre-ship launch before the holidays in Mattel's history. The toy has created a buzz in the wider toy industry and is leading to earlier holiday shopping. It is also becoming the hardest toy to find this season."

WSJ.com

WAL-MART TO ACQUIRE CHINESE HYPERMARKET CHAIN

Wal-Mart announced this afternoon that it plans to acquire Chinese hypermarket chain Trust-Mart in a multi-step arrangement, taking possession of 31 stores initially, before taking over the remaining 70-100 stores. According to WSJ.com, hypermarkets "are giant stores that sell a wide range of general merchandise and food." In our area, the term supercenter or superstore is more widely used to refer to these stores. Prior to this acquisition, Wal-Mart had 66 stores in China, 61 of which are hypermarkets. The Wal-Mart/Trust-Mart deal must be considered by Chinese regulators before proceeding.

WSJ.com

OIL STAGES MINI-RALLY

Crude oil prices rose for a third consecutive day and closed at just over $60 a barrel after trading for a little more than $57 last week. The increase in price seems to be tied to a scheduled meeting of OPEC members on October 19. At the meeting, it is likely that cutting production to weaken supply and stabilize or increase price will be considered.

NYMEX
Bloomberg

PRESIDENT SIGNS UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT

As expected, President Bush signed a port security bill yesterday that had the Internet Gambling Enforcement Act attached, effectively making it illegal to fund an online gambling account or cash winnings from such an account.

WashingtonPost.com

WAL-MART ORDERED TO PAY $78 MILLION IN DAMAGES

A jury in Philadelphia ruled today that Wal-Mart must pay $78 million in damages for forcing workers to work through scheduled breaks. The violations occurred between March of 1998 and May of 2006. Wal-Mart is expected to appeal the ruling.

Reuters

OIL HITS NEW LOW FOR YEAR

In London trading, contracts for light sweet crude traded for as little as $57.24, the lowest contract price since December 19, 2005. Contracts on the NYMEX for November delivery currently stand at $57.41. The reason for the decline seems to be that traders do not believe that OPEC will be able to enforce an output cut and U.S. inventories are increasing.

Forbes
NYMEX

CHINA TRADE SURPLUS HITS RECORD

With a September trade surplus of $15.3 billion, China's surplus for 2006 in the first nine months stands at $110.9 billion, surpassing last year's record of $102 billion.

WSJ.com

BUDGET DEFICIT SMALLER THAN EXPECTED

The fiscal year ended September 30 and it was a record year for revenues and expenditures. The Treasury Department issued a report indicating that the deficit this past year came in at $247.7 billion. Here are the results for the past 10 years in reverse order.

2006 = $247.7 billion deficit
2005 = $318.7 billion deficit
2004 = $412.7 billion deficit
2003 = $377.6 billion deficit
2002 = $157.8 billion deficit
2001 = $128.2 billion surplus
2000 = $236.2 billion surplus
1999 = $125.6 billion surplus
1998 = $69.3 billion surplus
1997 = $21.9 billion deficit

Reuters

APPLE TO ANNOUNCE WIRELESS VIDEO IPOD?

I'm usually suspicious of rumors and tend not to believe them, especially when they are speculating about the latest buzz at Apple, but this one seems to have some credibility, so I'll pass it along. According to tech blog engadget, Apple seems poised to make an announcement regarding a future version of the video iPod that will support wireless connectivity and sport widescreen video. The timing seems about right to counter the offensive put on by Microsoft's Zune (November 14 release date), SanDisk's Sansa, and a myriad of other competitors attempting to capture market share Apple's dominant iPod.

GOOGLE TO BUY YouTube

Google has agreed to buy video site YouTube for $1.65 billion in stock, according to Reuters. While investors bid Google stock up over $431 in after hours trading, some, including Mark Cuban, think this was not a wise purchase.

SONY LOOKING FOR ANOTHER CEO?

Sony Chairman Nobuyuki Idei said Monday that the next CEO of Sony would likely "be a Japanese, young generation, 40-45". That comment will no doubt lead some to believe that Welshman Howard Stringer, current CEO, who has presided over the lithium-ion battery recall fiasco and the current problem with PlayStation 3, could be in some trouble going forward. Even if one were to interpret such a comment as innocent, it would hardly be considered a vote of confidence for Stringer. Sony stock has dropped approximately 15% since August 15 as the bad news just keeps on coming.

Reuters

5-YEAR LOW IN UNEMPLOYMENT

The Bureau of Labor Statistics reported that unemployment dropped to 4.6% in September, a five-year low. Only 51,000 nonfarm jobs were created in September, but that was offset by an unexpectedly high 188,000 new jobs in August. There are 6.9 million unemployed people in the United States, according to the Labor Department definition of unemployed.

MICROSOFT VISTA NEARLY READY FOR RELEASE

Vista, the new operating system from Microsoft, is on track for a November release to corporate clients and is expected to be available to retail customers in January. RC2, which stands for release candidate 2, a beta (test version) with fixes for bugs in RC1, was released Friday.

Microsoft is in an odd position of releasing the operating system to the public after the upcoming Christmas buying period, so it is widely expected that the company will offer free and/or discounted versions to those who make new computer purchases starting October 28. The company has not made an official announcement on this.

Microsoft announced Wednesday that they will attempt to prevent pirated copies of Vista by reducing the functionality of any copy that is not registered and certified as genuine within 30 days. The company has used this sort of reduced functionality with pirated copies of Windows XP, but has upgraded the mechanism and hopes to severely limit pirated copies of the operating system.

Reuters

STARBUCKS GOAL IS 40,000 STORES

Starbucks officials raised their long-range goal yesterday from 30,000 to 40,000 stores worldwide, with a split of 20,000 inside the U.S. and 20,000 international locations. The international expansion will focus on expanding in China, and opening stores in Brazil, Russia, India, and Egypt. The company also plans to roll out hot breakfast sandwiches in nearly all locations due to a successful pilot this past year.

Anne Saunders, senior vice president for global strategy, said, "The customer base is broadening and becoming more diverse". Starbucks has experienced growth in several important demographics - women, Hispanics, and non-college graduates.

Investors drove the company's stock up $2.73 yesterday to $38.69, a 7.6% increase.

WSJ.com
Reuters

OPEC TO CUT OIL PRODUCTION

The Organization of Petroleum Exporting Countries will cut oil production, thus limiting the supply, by 1 million barrels. This will be OPECs first production cut since 2004 and amounts to slightly more than 3% of OPEC production.

Reuters

CRIMINAL CHARGES FILED IN HP PROBE

The California Attorney General filed criminal charges Wednesday against former Chairman Patricia Dunn and four others for illegal activities committed during Hewlett-Packard's investigation of a Board leak. The AG said that there was currently no evidence of criminal conduct by current CEO and Chairman Mark Hurd, but that the investigation remains open. Chief Deputy AG Robert Anderson said, "We haven't cleared anyone at this point."

Reuters

TOYOTA IS "800-POUND GORILLA"

Toyota continued its dominance over the big three U.S. automakers by growing sales of cars 18.4% and trucks 34.9% in September. GM and Chrysler saw sales slide in September, while Ford sales were up 4.7%. "They're [Toyota] this 800-pound gorilla out there that nobody can stop," said Erich Merkle, an analyst with Grand Rapids-based auto consulting company IRN Inc.

AP
Reuters

FOREIGN GAMBLING STOCKS PLUMMET

In response to a new law designed to eliminate online gambling, shares of PartyGaming, Sportingbet, and 888 Holdings plunged today on the London Stock Exchange, wiping out $7 billion of market value according to Bloomberg, $6.5 billion according to Reuters. The law is expected to be signed by President Bush in the near future. Many believe that this is the first step in a plan to eventually license, regulate, and tax online gambling provided by U.S.-based gaming companies.

Bloomberg
Reuters

CHINA TO CONTINUE STRONG ECONOMIC GROWTH

The People's Bank of China has forecast 10.5% growth this year and 9.5% for the first half of 2007. This is in line with an estimate of 10% growth put forward by the National Bureau of Statistics last week. In addition to the strong economic growth, inflation is mild in China, likely coming in at 1.5% this year.

AP