Financial life in a big town

A Quincy tool-rental company has filed to liquidate under Chapter 7 of the U.S. bankruptcy code.

Optimum Equipment LLC, which does businss as U-Rent It Tool, listed assets of less than $50,000 and liabilities in the range of $1 million to $10 million.

In its filing, Optimum ownership says creditors hold $2.78 million in unsecured claims. The filing states there are no secured claims.

Optimum is represented in the bankruptcy by attorney David B. Madoff of Madoff and Khoury in Foxborough.

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After gaining near-universal admiration for its moral stand against China just under a month ago, Google quickly got knocked off that pedestal.

Last week, the search giant was hit with two major lawsuits over Google Books and Google Buzz, three public advocacy groups jointly filed a privacy complaint against Google with the Federal Trade Commission, and, most critically, the FTC readied an antitrust challenge to Google’s deal for mobile advertising company AdMob.

"When you get to be the size of Google, you can expect legal battles to be constant," said Andrew Frank, Google analyst at Gartner. "This is going to be a continuing source of friction for them."

Whether or not Google’s legal woes ultimately hurt the company’s long-term profitability or stock price remains to be seen.

"The AdMob episode highlights the fact that Google may be entering a difficult phase with respect to its attempts to expand into adjacent businesses," said Tim Boyd, senior Internet analyst at MKM partners, in a note to investors. "Mobile advertising is of particular importance to Google’s longer-term growth strategy. The loss of AdMob would serve as a significant setback."

Boyd held his rating on Google at "neutral" because "increased antitrust risk could remain a significant sentiment overhang."

Any risk that Google may face more antitrust issues could cause a big wrinkle in the company’s growth prospects, according to Richard Fetyko, analyst at Merriman Curhan Ford.

Google already dominates the search market, and Fetyko says there are only a couple real growth opportunities: Mobile is one, and display ads are another. Google is still a relatively small player in both those markets, but strong growth in either space could raise regulators’ eyebrows, he said.

Still, others think that this latest slurry of legal trouble is not much to worry about, especially because Apple may have inadvertently helped Google’s cause. Last Thursday, a day after the news came out about the FTC’s antitrust concerns, Apple (AAPL, Fortune 500) introduced its new mobile advertising business, called "iAd," which will compete directly with AdMob faxless pay day loans.

That changed most analysts’ sentiment about the FTC’s chances against Google.

"Though AdMob is the mobile ad leader, it is only generating $100 million of revenue a year in a market that takes in $30 billion in the United States alone," said Trip Chowdry, analyst at Global Equities Research. "The fact that Apple came up with its own ad platform shows the space is evolving. It will be difficult for the FTC to block the deal."

As for the two lawsuits and the privacy concerns, most analysts just shrugged their shoulders.

"I think there’s merit to comparisons with Microsoft (MSFT, Fortune 500)," said Frank. "There’s a sense that the incumbent is always the biggest target. But none of this has the nature of a fatal setback."

"It’s irrelevant; this is just the cost of doing business," said Chowdry. "I expect solid numbers from Google in the future. Investors should only think about Google’s innovations."

Google is set to report its first-quarter financial results on Thursday after the bell, and profit and sales are both expected to soar. The consensus estimate of analysts surveyed by Thomson Reuters is for earnings per share of $6.58 on revenue of $4.9 billion, up 21% from year-ago levels.

Shares of Google (GOOG, Fortune 500) rose $1.33 to $588.10 Wednesday. Google’s stock has failed to keep pace with the tech-heavy Nasdaq Composite this year. While the Nasdaq has risen 9.5%, Google has fallen 5.6%.

Investors initially sold off the company’s stock during its standoff with China in January, as many viewed the announcement as turning Google’s back on 700 million Internet users. When it became clear that Google was not leaving behind China’s mobile market, Google’s shares gained back some lost momentum. 

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Fewer cities reported severe unemployment in February, according to a government report released Wednesday.

There were 29 metropolitan areas that reported unemployment rates at or above 15% in February, down from 35 in January, the Bureau of Labor Statistics reported.

California and Michigan continue to report the hardest hits, as they have for months. Of the cities with jobless rates of 15% or more, 13 were in California and four were in Michigan.

Among metro areas with populations of 1 million or more, Detroit reported the highest jobless rate at 15.3%, while Riverside, Calif., was second at 14.7%.

Meanwhile, New Orleans, Oklahoma City and Washington, D.C., had the lowest jobless rates among the big cities, all reporting rates below 7%.

El Centro, Calif., which is highly affected by seasonal agriculture jobs, continued to post the highest unemployment rate at 27.2%, followed by two other mid-sized agricultural areas in California: Merced at 22.1% and Yuba City at 21.6%.

The Labor Department’s Metropolitan Area Employment and Unemployment Summary breaks out unemployment rates by city and lags the nationwide jobs report by about a month.

The Labor Department’s latest national report, released on Friday, showed the U.S. economy gained 162,000 jobs in March, more than any other month in the last three years. The unemployment rate remained stubbornly high, holding steady at 9.7%. 

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Banks have pared their reliance on central banks and governments for liquidity support as the worst financial crisis since the Great Depression ebbs, according to a study by the Bank for International Settlements.

“The take up of many measures has declined,” economist Petra Gerlach wrote in the study, published in the Basel, Switzerland-based BIS’s latest quarterly review.

The report comes as central banks such as the U.S. Federal Reserve trim some of the emergency programs they introduced to combat the crisis. The Fed has completed its purchase of U.S. Treasuries, while the European Central Bank conducted a final auction of 12-month funds in December. The Bank of Japan stopped its purchases of commercial paper and corporate bonds.

The shift “seems to reflect” the increased ability of banks to raise funds in markets, although it may also be the result of some lending programs becoming more restrictive, Gerlach said. She also said support may need to be removed to avoid distorting competition and so banks don’t have an excuse not to postpone repairing balance sheets quick cash.

While the decline in demand for liquidity is “clearly good news,” some institutions are relying more on governments and central banks than others, Gerlach said.

“This suggests that a differentiated exit strategy is desirable,” she said. “Such an approach would aim for a timely discontinuation of public support while taking into account that some financial institutions remain weak.”

The BIS also noted that banks within the European Union had a combined exposure of more than $200 billion to sovereign debt in Greece, Spain and Portugal at the end of the third quarter of last year. That dwarfs the exposures of the U.S. and Japan, where combined exposure is less than $20 billion.

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Simon Property Group Inc. late Wednesday reiterated its interest in buying General Growth Properties Inc. despite General Growth’s announcement that it has reached a $2.6 billion equity deal with Brookfield Asset Management Inc.

If approved by a bankruptcy court judge, the deal announced Feb. 23 by Chicago-based General Growth (Pink Sheets: GGWPQ) would allow the operator of the Regency Square Mall to exit Chapter 11 bankruptcy protection and possibly avoid being taken over.

Officials with Simon (NYSE: SPG), based in Indianapolis, called the deal between General Growth and Brookfield “inferior and highly conditional.”

Last week, Simon offered General Growth $10 billion, including $9 billion in cash. A total of $7 billion would have gone to creditors and $3 billion to shareholders.

In a letter to Simon executives, General Growth officials rebuffed the offer, saying it was “not sufficient to pre-empt the process we are undertaking to explore all avenues to emerge from Chapter 11 and maximize value for all the company’s stakeholders cash advance america.”

After learning of General Growth’s deal with Brookfield, Simon officials accused General Growth officers of not following the due-diligence process it referred to.

“General Growth’s proposed recapitalization amounts to a risky equity play on the backs of its unsecured creditors,” Simon officials said in the release. “While continuing to block the immediate and certain 100 percent cash recovery provided by Simon’s offer, General Growth has pre-empted its own self-proclaimed ‘process’ in favor of a highly speculative and risky plan to attempt to raise $5.8 billion of new capital in today’s uncertain markets.”

General Growth filed for protection under Chapter 11 of the U.S. Bankruptcy Code in April last year. In December, it won court approval to restructure about $10.25 billion of its debt on 103 of its 200 properties.

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Bills that would change intrastate access charges — the fees phone companies charge each other for their customers’ in-state long-distance calls.

HB1750 > Introduced by Rep. Timothy Jones, R-Eureka — This one has already passed the House and has been sent to the Senate. It would reduce intrastate charges by 50 percent over 10 years. Exempts companies with fewer than 25,000 lines. Contains no explicit approach for companies to make up any revenue lost.

SB698 > Introduced by Sen. John Griesheimer, R-Washington — Would lower rates by 50 percent over five years. Companies serving high-cost areas would be allowed to raise their rates to make up the lost revenue.

SB 785 > Introduced by Sen. Kurt Schaefer, R-Columbia — Would reduce rates by 45 percent, but would offset those losses through a state universal service fund, supported by fees on companies that provide Internet-based phone service and mobile radio service. The act also exempts companies with fewer than 25,000 lines.

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Shares of Macy’s Inc. fell about 1 percent Monday afternoon after a Deutsche Bank analyst downgraded the stock to “hold” from “buy.”

According to a MarketWatch report, analyst Bill Dreher Jr. said the department store chain’s “My Macy’s” initiative, which consolidated merchandising and tailored it to local markets, hasn’t produced the expected results.

“Macy’s decentralization initiative is developing awkwardly and will likely need years of refinement before demonstrating significant traction," Dreher said in the MarketWatch story. He also lowered his first-quarter earnings forecast to $1.21 per share from $1.25. Analysts. on average, expect earnings per share of $1.18.

Shares of Macy’s (NYSE: M) lost about 1.5 percent, or 24 cents, to $15.69 in Monday afternoon trading.

Macy’s, with corporate offices in Cincinnati and New York, operates about 850 department stores in 49 states, the District of Columbia, Guam and Puerto Rico.

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NEW YORK – A more upbeat outlook on jobs pushed Americans' confidence in the economy higher in December for the second month in a row, a survey released Tuesday said.

Consumers' expectations for the job market over the next six months reached their highest level in two years, but Americans remain gloomy about their current prospects.

Meanwhile, a closely watched home price index released Tuesday showed that home prices rose for the fifth month in a row in October, but the recovery continues to be uneven with only 11 of the 20 metro areas tracked showing gains.

The U.S. Conference Board said its consumer confidence index rose to 52.9, up from a revised 50.6 in November, but the reading is still far short of the 90 that would signify a solid economy. In October, consumer confidence was 48.7.

Economists surveyed by Thomson Reuters predicted a reading of 52 for December.

The index, which hit a historic low of 25.3 in February, had enjoyed a three-month climb from March through May, fuelled by signs that the economy might be stabilizing. The road has been bumpier since June as rising unemployment has taken a toll on consumers.

Economists watch consumer sentiment because spending on goods and services for consumers accounts for about 70 per cent of U.S. economic activity by federal measures.

Stocks extended their increases into a seventh day following readings. In morning trading, the Dow Jones industrial average rose 23.05, or 0.2 per cent, to 10,570.13.

One key component of the Confidence index that measures consumers' outlook over the next six months rose to 75.6 from 70.3 last month, the highest level since December 2007, when the index was 75.8. But the survey's other main component, which measures shoppers' current assessment, actually fell to 18.8 from 21.2.

The survey of 5,000 households ran Dec. 1 through 21.

"Regarding income, however, consumers remain rather pessimistic about their short-term prospects and this will likely continue to play a key role in spending decisions in early 2010," Lynn Franco, director of The Conference Board Consumer Research Center said in a statement.

Still, many retailers are breathing sighs of relief after the holiday selling season turned out better than expected, according to MasterCard Advisors' SpendingPulse, which track all forms of payment, including cash.

However, even though shoppers saw their confidence improve slightly and bought a bit more, they've been cautious in their spending. During the Christmas season, they focused on practical items for loved ones and even for themselves, while shying away from buying gift cards and opting for deeply discounted items instead.

Experts say such patterns might remain for several years amid unemployment that could be stubbornly high.

The unemployment rate dipped in November to 10 per cent, down from a 26-year high of 10.2 per cent in October. Some analysts worry it will again start to rise in coming months and won't peak until hitting 10.5 per cent next summer.

Still, businesses cut their payrolls by a net of just 11,000 jobs in November, the smallest decrease since the recession started two years ago, according to the November job report.

For December, economists surveyed by Thomson Reuters expect that the unemployment rate will tick up to 10.1 per cent, but they also expect no job losses on net when the government reports figures Jan. 8.

According to The Standard&Poor's/Case-Shiller index, home prices edged up 0.4 per cent to a seasonally adjusted reading of 145.36 in October from September. The index was off 7.3 per cent from October last year, nearly matching expectations of economists surveyed by Thomson Reuters.

The index is now up 3.4 per cent from its bottom in May, but still almost 30 per cent below its peak in April 2006.

The Conference Board survey showed that consumers' assessment of current conditions worsened in December. Those saying conditions are “bad" increased to 46.6 per cent from 44.5 per cent, while those saying business conditions are "good" decreased to seven per cent from 8.1 per cent.

Consumers' six-month outlook improved in December. Those anticipating business conditions will be better over the next six months increased to 21.3 per cent from 19.7 per cent, while those expecting conditions will deteriorate declined to 11.9 per cent from 14.6 per cent.

The outlook for the job market was also more positive. The percentage of consumers expecting more jobs to become available in the months ahead increased to 16.2 per cent from 15.8 per cent, while those expecting fewer jobs declined to 20.7 per cent from 23.1 per cent. However, the proportion of consumers anticipating an increase in their incomes declined to 10.3 per cent from 10.9 per cent.

13:01ET 29-12-09

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AMSTERDAM–Sweden said a last-ditch bid by Spyker Cars for Saab offered a thread of hope the iconic brand would survive, as talks between the Dutch luxury automaker and General Motors extended into the evening.

Russia-backed Spyker said on Sunday it had lodged a renewed fast-track offer to buy Saab from General Motors just two days after talks with GM over a rescue of the loss-making Swedish manufacturer collapsed.

The surprise new offer from Spyker – which made 43 luxury cars last year against Saab’s sales of 93,295 – was set to expire at 5 p.m. EST, but Spyker said it has extended that deadline until further notice.

"We hope, naturally, that even if it is a very, very slim thread of hope, there is a chance of finding some kind of solution to the question of Saab," Swedish Enterprise Minister Maud Olofsson told a news conference.

"It is very late, there is a very tight timetable and that means the situation is very difficult," she said after meeting with representatives of Saab and local authorities.

Spyker Cars said on Sunday it had submitted a new offer to GM, including an 11-point plan addressing issues that arose during the due diligence process for its old bid.

"We’ve had various discussions with them (Monday)," Spyker Cars chief executive Victor Muller told Reuters, adding that talks were "definitely" ongoing, but there was nothing new to report.

The Swedish government said it would allot 542 million Swedish crowns ($79 million Canadian) to measures, mainly for education and job schemes, to help deal with the thousands of jobs set to disappear if Saab was shut down.

Abandoning the 60-year-old Swedish auto brand would eliminate 3,400 jobs in Sweden and hit 1,100 Saab dealers, but General Motors raised hopes on Sunday when it said it would evaluate several new expressions of interest for Saab.

"We should be careful about fuelling new hopes in a situation where the people in Trollhattan, and at Saab and their subcontractors are thrown between hope and despair," Swedish Prime Minister Fredrik Reinfeldt told journalists.

Shares in Spyker Cars closed up 19.9 per cent in Amsterdam as its renewed approach to Saab sparked talk the Dutch firm – which had a market capitalization of just 26.6 million euros ($40.37 million) at Friday’s close – may exponentially expand operations and perhaps become profitable.

"The stock’s value is close to nothing but if they succeed to buy Saab, invest, and turn the company around then the shares can become valuable," said a Dutch analyst who declined to be named.

Swedish daily Svenska Dagbladet, citing unidentified sources, said the ownership structure backing the Spyker bid had been altered and that Russian parties were no longer involved. "That which was considered a problem has been solved," it quoted a source as saying.

Russian banking tycoon Vladimir Antonov holds an almost 30 per cent stake in Spyker Cars.

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American Water Works Co., the largest investor-owned U.S. water utility, purchased O’Fallon, Mo.-based Environmental Management Corp. Terms weren’t disclosed.

Environmental Management, which manages water and sewer projects in the United States and Canada. The company has about 300 employees, including 84 in the St payday loans. Louis area, and recorded 2008 revenue of $50 million.

The company, founded in 1980, was owned by the Linde Group, a German conglomerate.

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