MICROSOFT HAS BEST REPUTATION WITH CONSUMERS

The eighth annual survey to determine the U.S. corporations with the best and worst reputations showed that Microsoft jumped from number seven in 2005 to number one in 2006. While there is much to take away from the survey, it is interesting to note the Wal-Mart fell from 29th in 2005 to 40th in 2006.

WSJ.com

INITIAL U.S. GDP FIGURES SHOW 3.4% GAIN IN 2006

The Commerce Department released its initial fourth quarter gross domestic product figures this morning showing a 3.5% seasonally adjusted annualized growth rate for October through December of 2006. That bested a 2% growth in the third quarter and put the initial 2006 GDP growth at 3.4%, compared to 3.2% in 2005 and 3.9% in 2004.

A closer look at the data released shows that an important inflationary statistic, personal consumption expenditures (PCE), actually declined in the fourth quarter at an annual rate of 0.8%, the biggest drop since 1954 and the first since 1961.

From USA Today:

Excluding volatile food and energy prices, the so-called core PCE index was
up at a 2.1% annual rate, still slightly above the Fed's assumed comfort range
of 1% to 2%. Economists were expecting the core PCE index to advance 2.2%.

WSJ.com

MICROSOFT'S WINDOWS VISTA ON SALE TUESDAY

Microsoft's newest operating system, Windows Vista, intended to replace Windows XP, will become available to consumers at some retailers starting at 12:01 a.m. Tuesday morning. The operating system has been available to many corporate clients since November. Most reviews I've read indicate that while it is a major advance, most consumers should stick with Windows XP on older computers instead of upgrading and wait to get Windows Vista preinstalled on their next new computer. Many of the more sophisticated features in Vista require more memory than most older computers have and a high-end graphics card.

USA Today

SUPER BOWL ADS GENERATE PROFIT ONLINE

Most people have heard that CBS is charging up to $2.6 million for one 30-second ad spot on the Super Bowl. The hefty price tag can be justified by the likely 90 million viewers in a fragmented television landscape where more viewers have migrated to niche cable shows and many view less TV to spend time playing video games or surfing online.

What most people probably don't know is that sites like USA Today and IFilm have started charging for "pre-roll" ads, ads that will have to be viewed before Super Bowl ads when surfers go to those sites to view Super Bowl ads after the game. In 2006, IFilm's site experienced a 157% surge in traffic the week after the Super Bowl going from 1 million unique visitors the week before to 2.6 million the week after the game.

WSJ.com

INTEL & IBM BREAKTHROUGH TO EXTEND MOORE'S LAW

Gordon Moore, co-founder of Intel, predicted in 1965 that innovations in integrated circuit materials, designs, and other innovations would allow for the number of transistors on an integrated circuit to double every two years. This is known as Moore's Law. An announcement on Friday by IBM and Intel should extend Moore's Law into the foreseeable future. The innovation uses a new exotic material in the manufacture of integrated circuits and will allow chips to be made with circuitry as small as 45 nanometers, which is 1/2000th the width of a human hair.

Reuters

PRESIDENT BUSH UNVEILS HEALTH INSURANCE PLAN DETAILS IN STATE OF THE UNION ADDRESS

As expected, President Bush outlined some details of his controversial health insurance plan in last night's State of the Union Address. His plan calls for an end to tax-free premiums in employer-provided health insurance plans, making the premium paid taxable income. To offset some of the tax burden, all taxpayers who either have employer-provided health insurance or purchase their own insurance would receive a deduction of $15,000 for a family plan or $7,500 for an individual. Currently, the average cost of an employer-provided family plan is $11,500, while the average for individual plans is $4,300.

From USA Today:

"For a lot of people, it would be a bonanza," says Joe Antos of American Enterprise Institute. He and other supporters of the plan say it would encourage employers to offer less-generous insurance plans. They say generous plans drive up the cost of health care.

Paul Fronstin of the Employee Benefit Research Institute says the proposal might lead more employers to drop coverage. Some employers might also find that younger, healthier workers would opt out of company plans to buy their own insurance, leaving sicker, more expensive workers behind, he says.

YAHOO TO REPORT EARNINGS TODAY

Yahoo will report fourth quarter earnings today and will likely give an update on the slow customer migration from its old keyword search advertising to the new "Panama" system, which works much more like Google's Adwords. Investors hope Panama will help Yahoo narrow the growing gap in online ad sales.

WSJ.com

PRESIDENT BUSH PROPOSES HEALTH INSURANCE TAX CHANGES

In his weekly radio address this morning, President Bush said that he wants to change tax codes to make insurance more affordable for the uninsured. From The Wall Street Journal:

"Rising health care costs are making insurance too expensive for millions of our citizens," Mr. Bush said Saturday in his weekly radio address. To remedy the situation without hiking taxes or creating a new entitlement program, he says the tax code can be rewritten to treat health insurance more like home ownership.

"The current tax code encourages home ownership by allowing you to deduct the interest on your mortgage from your taxes," Mr. Bush said. "We can reform the tax code, so that it provides a similar incentive for you to buy health insurance."

Mr. Bush didn't outline the nuts and bolts of his tax-code proposal, but it is expected to include capping some taxpayers' ability to exclude employer-based healthcare benefits from their income, subjecting them to federal income tax. Savings could go toward tax credits for lower-income people who buy health insurance or for state insurance pools.

Altering the tax benefits for employer-provided health care involve far-reaching changes to the tax code affecting millions of taxpayers and companies. Bush's Advisory Panel on Federal Tax Reform proposed in November 2005 to limit the tax benefit for employer-provided health care to $11,500 for families and $5,000 for singles. The recommendation, which has languished with the tax panel's other reform proposals, came after witnesses told the tax panel the existing federal tax subsidies for health insurance were benefiting rich workers while raising insurance prices for the poor and increasing the number of uninsured.

GM SALES DOWN 1% IN 2006

General Motors announced that sales declined 1% from 2005 to 9.09 million vehicles in 2006. Part of the decline can be attributed to rental car companies purchasing 75,000 fewer vehicles from the company last year. A closer look at the numbers shows that sales outside of the United States actually increased last year to 4.97 million, 55% of the total vehicles sold.

Rival Toyota estimates that it sold 8.8 million vehicles in 2006 and plans to build 9.42 million in 2007. Recently, most analysts have predicted it is a matter of when, not if, Toyota sells more vehicles than GM and takes over the global leader.

USA Today

STARBUCKS DROPPING GROWTH HORMONE MILK

Responding to criticism from consumer groups concerned about the lack of testing and data regarding rBGH, a growth hormone given to some dairy cows to increase milk production, Starbucks has pulled growth hormone milk products from many of its stores and is expected to go companywide when new milk sources can be found. Earlier this month Starbucks announced it would quit selling food containing trans fats at half of the company's U.S. outlets. Starbucks has a long history of responding to consumer requests and is known as a leader in corporate social responsibility.

From USA Today:

Starbucks Coffee is ending its use of milk products that contain an artificial growth hormone, starting in much of the West and New England. Less than a month after announcing that the chain would stop selling items with trans fats in half its U.S. stores, Starbucks said Tuesday it had begun buying only milk products without bovine growth hormone in those areas. Starbucks has not raised prices and is working with suppliers on the cost of milk, half and half, whipping cream and eggnog, spokeswoman Sanja Gould told the Seattle Post-Intelligencer. Starbucks has 5,668 stores in the United States, but the number affected by the change was not immediately available. It covers company-owned Starbucks outlets in Washington, Oregon, Idaho, Alaska, Montana, Northern California and New England. Earlier this month Starbucks announced plans to stop selling food containing trans fats at half the company's U.S. outlets. The move comes after Starbucks was targeted in a campaign by consumer groups critical of the use of an artificial hormone known as rBGH, which is given as a supplement to dairy cows to increase milk production. For more than a decade, some advocacy groups have asserted that there has not been enough research on the effects in humans of milk products from cows that were given the hormone, which is administered to dairy cattle during the middle phase of lactation to boost milk production. "We are actively engaged with all our dairy suppliers to explore converting our core dairy products to be rBGH-free in our U.S. company-owned stores," Starbucks spokesman Brandon Borrman told Reuters. "It is something we're aiming for."

SIRIUS & XM SATELLITE RADIO CONSIDERING MERGER?

According to The Wall Street Journal, rivals Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. seem to be considering a merger, but any combination of the only satellite radio providers would face serious legal and regulatory antitrust hurdles from the Justice Department Antitrust Division, the Federal Trade Commission and the Federal Communications Commission. According to Reuters, FCC Chairman Kevin Martin today said, "There's a prohibition on one entity owning both of those licenses," making a merger seem unlikely, but he did leave the door open by saying that the FCC would review any transaction submitted to it.

While Sirius and XM are the only satellite radio providers in the United States, they might be able to get over most antitrust and competition hurdles by arguing that satellite radio competes with traditional terrestrial radio, MP3s, Internet radio, and even cellphones.

While both Sirius and XM have added millions of users, totalling more than 12 million, neither has approached profitability. In the past 12 months, Sirius stock price has fallen more than 35% while XM has dropped more than 40%.

DEBIT CARDS: PIN USE VERSUS SIGNATURES

Here are a few facts regarding debit cards from The Wall Street Journal:

• According to Visa, a typical supermarket pays 24 cents in fees when a customer buys $40 in groceries with a debit card using a PIN.
• The same $40 purchased with a debit card using a signature costs the supermarket 35 cents in fees.
• If the customer uses a credit card to make the same $40 purchase, the supermarket may pay more than 50 cents in fees.
  
• Electronic payments (debit and credit transactions) surpassed the use of cash and checks for the first time in 2003.
• Nearly 67% of the 6.2 billion transactions processed by Visa in the three months ended September 30 were debit card transactions.

What does this mean for businesses?

1. Consumers prefer to make electronic payments, so nearly all businesses must offer this option.
2. Fees for debit PIN transactions are lowest, so nearly all businesses should have a PIN touch pad. Currently there are about six million merchant locations that accept credit and debit card payment, but only about two million have the pad technology in place to allow for PIN transactions.
3. To strongly encourage debit PIN transactions, payment terminals that scan cards should automatically default to PIN for scanned debit cards.
   

To most consumers, the difference between PIN and signature transactions is merely one of preference and convenience. To businesses, it is a serious bottom-line consideration. That is why J.C. Penney, Sears, and Sonic, among others, are in the process of installing new systems to encourage the less expensive debit PIN transactions.