Financial life in a big town

The Dow ended an up-and-down week with a 21-point decline; still, thanks to Monday’s big gain, the index picked up 187 points on the week.

In Colorado, Crocs reached a 27-month high close on upbeat earnings, and Venoco and Golden Star Resources also advanced on the session.

The Dow Jones Industrial Average finished the trading day at 10,653.56, down 21.42 points (0.2 percent).

The S&P 500 closed at 1,121.64, down 4.17 points (0.37 percent).

The NASDAQ Composite finished at 2,288.47, down 4.59 points (0.2 percent).

Among actively traded Colorado stocks, Crocs Inc. (CROX) led the day’s gainers percentagewise, up 10.89 percent ($1.37) to close at $13.95. The gain brought the stock to its highest close since April 2008.

The Niwot shoemaker on Thursday reported improved second-quarter profits due to further strengthening of its global wholesale and retail businesses.

Other Colorado gainers:

• Venoco Inc. (VQ) — Up 2.27 percent (38 cents) to $17.13.

• Golden Star Resources Ltd. (GSS) — Up 2.11 percent (9 cents) to $4.35.

• Royal Gold Inc. (RGLD) — Up 2.01 percent (92 cents) to $46.76.

• Forest Oil Corp. (FST) — Up 1.38 percent (43 cents) to $31.50.

• Level 3 Communications Inc. (LVLT) — Up 1.31 percent (2 cents) to $1.16.

Among actively traded Colorado stocks that declined on the day was Kodiak Oil & Gas Corp. (KOG), down 9.46 percent (33 cents) to close at $3.16.

Other Colorado decliners:

• SM Energy Co. (SM) — Down 2.89 percent ($1.20) to $40.27.

• QEP Resources Inc. (QEP) — Down 2.64 percent (92 cents) to $33.97.

• DCT Industrial Trust Inc. (DCT) — Down 2.63 percent (13 cents) to $4.81.

• Molson Coors Brewing Co. (TAP) — Down 2.29 percent ($1.07) to $45.68.

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Another Johnson & Johnson manufacturing plant — this one making heartburn and gas relief drugs Pepcid, Imodium and Mylanta — was cited for a pattern of quality lapses similar to those seen at the company’s shuttered Tylenol plant.

Earlier this month, safety inspectors from the Food and Drug Administration issued a "Form 483" to Johnson & Johnson’s Lancaster, Pa., plant.

A Form 483 is issued after an FDA inspection finds problems with a company’s manufacturing practices.

The Lancaster plant is owned by Johnson & Johnson-Merck Consumer Pharmaceuticals, a joint venture of J&J and Merck (MRK, Fortune 500), but is operated by the company’s McNeil division.

McNeil, which makes pain and cold drugs such as Tylenol and Motrin, is under investigation by the FDA and lawmakers in connection with successive recalls of those drugs over the past year. McNeil shut its plant in Fort Washington following a scathing FDA inspection report of the factory in May that cited 20 manufacturing violations.

This latest setback for Johnson & Johnson is raising questions about lax quality standards at its over-the-counter drug factories and the possibilty of a pattern that could result in the FDA hitting the company with another warning letter or tougher oversight at its plants.

Disturbing pattern

The latest inspection report on the Lancaster plant, released by the FDA on Wednesday, cites 12 violations of good manufacturing processes, at least five of which were also observed at the Fort Washington plant.

One expert said the violations observed at the Lancaster plant are "very serious."

"If this is going on in Johnson & Johnson plants that make over-the-counter drugs, is this indicative of what is going on in other parts of the company’s business?" said David Rosen, who worked at the FDA for 14 years. Rosen is now with with law firm Foley & Lardner and advises major pharmanceutical companies on FDA regulations and compliance.

In an conference call with analysts this week, Johnson & Johnson’s chief financial officer Dominic Caruso declined to comment on whether other company plants had received Form 483 reports payday loans.

At both plants, inspectors questioned whether lab procedures and controls were adequate to assure products "conform to appropriate standards of strength, quality and purity."

Both plants were cited for failing to properly review an unexplained manufacturing discrepancy in a batch of drugs and for not properly following up on consumer complaints about products made at the facilities.

Specifically, the FDA’s report on the Lancaster plant noted that the staff failed to follow up on several consumer complaints, including instances where consumers said they found mint-flavored Pepcid tablets mixed inside the same bottle as berry-flavored tablets. There were also multiple complaints about a product lot for "lack of effect."

Experts said "lack of effect" could mean that the product was not producing the desired result when used. The FDA report did not name the product. Also, inspectors said the plant’s complaint coordinator did not initiate an investigation of the product.

However, the report did not mention the possibility or need for a product recall.

Additionally, regulators said the Lancaster factory didn’t properly document equipment malfunctions or keep adequate maintenance records. Inspectors said they found unlabeled test tubes filled with product sitting out on a counter. The factory also didn’t properly clean utensils used in the drug making process.

One industry expert, who did not want to be named, said he would not be surprised if the FDA is pondering further action on the Lancaster plant, such as a warning letter or a consent decree. Under a consent decree, the plant would be able to continue production, but would have constant third-party inspection.

The FDA and Johnson & Johnson declined to comment on the possibility of further enforcement action against the company. 

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A North Carolina software developer has picked up Sunbelt Software Inc., which employs 250 people in Clearwater and offices around the world. The sale will soon create a spin-off company offering Sunbelt’s software distribution business.

Terms of the deal were not disclosed.

GFI Software, based in Cary, N.C., was most interested in Sunbelt’s Vipre technology, which the software infrastructure products provider said it could use in its e-mail security and Web security services group, according to a release.

Alex Eckelberry, Sunbelt’s chief executive officer, told the Tampa Bay Business Journal in an e-mail that the extent of the impact the acquisition will have has not been worked out yet. He will remain with the newly merged company, as will Mark Patton as vice president of research and development, Eric Sites as chief technology officer, and Bill Emerick as senior vice president of products and services.

Sunbelt co-founder Stu Sjouwerman will retire but remain with Sunbelt’s various publications including WServerNews, Win7News and SecurityNews online payday loans.

“It’s an exciting day for us here at Sunbelt, and I believe sincerely that this acquisition was in the best interests of all parties,” Eckelberry said. “Not only our shareholders and employees, but most importantly, our customers and partners.”

Both companies are working to integrate various sales, marketing, finance and technology teams.

“Our goal is to make the combination as seamless as possible to our customers and partners,” Eckelberry said.

GFI already has plans to sell Sunbelt’s software distribution business, which was started more than 16 years ago and has operated separately from the technology side of the company, it said in a release.

Sunbelt Software, a TBBJ Best Places to Work finalist last year, presented at the Florida Venture Forum’s 2009 Venture Capital Conference in Naples. The company was founded in 1994.

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Lincoln County Bancorp and its Peoples Bank and Trust Co. subsidiary of Troy, Mo., reached an agreement last week with the Federal Reserve Bank of St. Louis “in recognition of their common goal to maintain the financial soundness” of the two financial entities, the Federal Reserve Board said Monday.

Under the agreement, dated June 14, Peoples Bank must file plans to strengthen credit risk management practices, strengthen commercial real estate concentrations, real estate appraisal practices and asset improvement. The plans primarily are due within 60 days of the agreement.

According to the agreement, the bank also must get prior approval to extend, renew or restructure any loans that are criticized in the Fed’s examination of the bank that began Sept. 8, 2009.

Peoples Bank also must charge-off or collect all assets classified as a “loss” in the Fed’s examination report.

The holding company and bank must submit a joint written plan to each maintain sufficient capital.

Peoples Bank is to submit to the Fed a written business plan for the rest of 2010 to improve the bank’s earnings and overall condition. The holding company has to submit a written statement of its planned sources and uses of cash for 2010.

Neither Lincoln county Bancorp or Peoples Bank are to declare or pay dividends without prior approval from the Fed.

Donald Thompson is chairman of both Lincoln County Bancorp and Peoples Bank and Trust Co.

In addition to Peoples Bank and Trust Co., Lincoln County Bancorp.’s subsidiaries are: People’s Bank of Altenburg, Mo., in Perry County; Bank of Louisiana, Mo., in Pike County; Exchange Bank of Missouri in Fayette, Mo., in Howard County; and Exchange Bank of Northeast Missouri in Kohoka, Mo., in Clark County. The company also owns an unregulated subsidiary, Vacations, a travel agency.

As of March 31, Lincoln County Bancorp had combined total deposits of $584.7 million, and combined total assets of $707.9 million as of Peoples Bank and Trust Co. had total assets of $415.9 million as of March 31.

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A flood of temporary Census workers in May led to the biggest jump in jobs in ten years, the government reported Friday.

Employers added 431,000 jobs in the month, up from 290,000 jobs added in April. It was the biggest gain in jobs since March 2000.

But Census hiring was responsible for 411,000 of May’s increase in employment. Private sector employers also added 41,000 jobs in the period, well below the 218,000 private sector job gains in April. Government payrolls other than Census declined by 21,000 jobs in May, due largely to job cuts by state and local governments.

It was a disappointing number for private sector hiring, as economists surveyed by Briefing.com had forecast an overall gain of 500,000 in May. U.S. stocks traded sharply lower on the report, with the Dow Jones industrial average down more than 200 points in midday trading.

"This is a timely reminder that, although the economic outlook is improving, the recovery is still pretty fragile," said Paul Ashworth, senior U.S. economist for Capital Economics.

Despite the spike in hiring, the unemployment rate declined only modestly, to 9.7% from 9.9% in April. Economists had forecast it would decline to 9.8%.

After nearly two years of constant job losses, the U.S. economy has added 982,000 jobs so far in 2010, adding workers in every month, a sign that the labor market is improving beyond the short-term Census jobs. But the modest gain shows that employers are still cautious about adding staff.

Christina Romer, chair of the White House Council of Economic Advisers, said the lower unemployment rate was encouraging, even if the slowing of private sector job growth was reason for concern.

But Republicans were quick to criticize the report as proof that the Obama administration had taken the wrong path on trying to create jobs.

"Let me be clear — during challenging times, a job is a job," said Rep. Eric Cantor, the House Republican Whip. "Yet government jobs that are paid for by taxing small business people and borrowing from the Chinese are not signs of a healthy economic recovery."

Rep. Carolyn Maloney, D-NY, said she was encouraged by the numbers in the report, and that it was important to recognize how much the labor market has improved.

"The job picture is very different from what it was a year ago," said Maloney, one of the chairs of Congress’ Joint Economic Committee. "We’re on an upwards trend. The road to recovery is bumpy, but we’re trending in the right direction."

Shrinking gains: Just over half of private sector industries added jobs in the month, while 46% continued to shave jobs from their payrolls. Job gains in the private sector were far more widespread during the previous three months.

Manufacturers added 29,000 jobs in the month, but that was balanced out by a 35,000 job loss in construction. Retailers also trimmed 6,600 jobs and financial firms cut 12,000 jobs. Some sectors that added jobs, such as leisure and hospitality or health care, posted their smallest gains in months.

The Census Bureau wasn’t the only employer adding temporary jobs, as there was a gain of 31,000 jobs in temporary help services.

Scot Melland, CEO of Dice Holdings, a provider of specialized career Web sites, said he was surprised by the weak private sector hiring. A semi-annual survey by his firm had found employers in the process of stepping up hiring. Despite the disappointing numbers, he still expects job growth to pick up through the rest of this year.

"You don’t want to read too much into one months’ results," he said. "It could be a month of digestion and we move on from here. The indicators are still positive."

Bright spots: The good news in the report beyond Census was in hours worked, which increased to an average of 33.5 hours from 33.4. That helped to lift weekly wages and also cut the number of part-time workers who wanted full-time jobs by 343,000, as workers who had their hours cut during the recession were put back on full-time status.

Job seekers are also somewhat less discouraged, as the number of unemployed workers who wanted jobs but had stopped looking for work declined by 114,000.

But the problem of long-term unemployment continued to worsen as those out of work more than six months rose to a record 6.8 million, or nearly half of all unemployed workers.

"The U.S. unemployment rate is likely to be higher for longer during the current recovery due to a structural mismatch between workers and jobs," said John Silvia, chief economist for Wells Fargo Securities 

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The Illinois Senate Labor Committee has approved legislation authorizing a controversial plan to divert sales taxes to finance developer Bruce Holland’s construction of a $380 million, 400-acre entertainment, retail and restaurant project in Marion, Ill.

Rep. John Bradley, D-Marion, and Sen. Gary Forby, D-Benton, sponsored the bill. The legislation now heads to the full Senate for consideration. The Illinois House of Representatives approved the legislation earlier this month by a vote of 79-35.

The development, which will include a mix of destination and entertainment businesses, retail stores and restaurants, has the potential to create 6,000 jobs during construction and 5,685 full-time jobs when completed, Holland said.

Holland, with Millennium Development and Holland Construction, scaled back the project, originally intended for Glen Carbon, Ill., and moved it south after Metro East lawyers blasted it and argued it would drain their tax bases.

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Suburban Journals publisher Tom Wiley is leaving the company to be publisher of the New Haven Register and senior publisher of the Journal Register Co.’s Connecticut media group.

The Suburban Journals is a subsidiary of Lee Enterprises Inc., based in Davenport, Iowa. Lee also owns the St. Louis Post-Dispatch.

Wiley was named publisher of the Journals in February, replacing Bob Williams when he became publisher of The Southern Illinoisan in Carbondale, also a Lee subsidiary.

"This is a fantastic opportunity for Tom," said Kevin Mowbray, president and publisher of the St. Louis Post-Dispatch. "His innovation, energy and creativity have helped us launch new products and improve existing ones."

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Sales and profits increased significantly in the first quarter at LaCrosse Footwear Inc.

The Portland-based boot maker (NASDAQ: BOOT) earned $1.6 million, or 25 cents per share, in the quarter ended March 27, on $34.2 million in sales, up from a loss of $692,000, or a loss of 11 cents per share, on sales of $25.9 million in the same quarter last year.

The company easily beat analyst expectations. Analysts polled by Thomson Financial Network expected a loss of 1 cent per share and sales of $28.7 million.

LaCrosse credited the strong quarter to robust demand from the U.S. government and niche markets.

As previously reported, it plans to open a new factory in Portland to keep up with demand.

Results were released after the market closed. Shares close down less than 1 percent at $15.27 in Thursday trading. They have a 52-week range between $7.42 and $17.42.

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When you’re done with your tax return, your first instinct may be to stash it in a drawer and put it out of your mind until next year. That would be a mistake.

A smarter move would be to think of your return as a financial snapshot. Here are some questions to consider:

— Should you adjust your withholding? If you’re getting a fat refund, it’s smart to reduce withholding so you receive that money during the year. If you’re writing a big check each April, you might see that as an interest-free loan. But if you pay the bill with a credit card or other loan, chances are you’re better off paying as you go.

— Are you saving for retirement? If your job offers a 401(k) plan with an employer match, you benefit twice, because you’ll save on taxes and get those matching funds. If you don’t have a plan at work, that makes an Individual Retirement Account or Roth IRA even more important.

— Did you itemize deductions? IRS statistics show that only about 35 percent of returns include itemized deductions. That means millions are missing out on tax savings, and for many it’s because of sloppy record keeping.

— Is it time to buy a house — or pay off your mortgage? With housing prices and interest rates still low, you may find it’s the right time to purchase a home. In contrast, Eisenberg said some could benefit from paying down their mortgage. If the interest deduction is no longer substantial, it’s worth considering.

— Did you file your first joint re turn, or have kids? If you’re recently married or you’re a new parent, it’s a good time to reassess your insurance needs and make sure you’ve updated your financial paperwork and records.

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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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