Financial life in a big town

LITTLE ROCK, Ark. — Wal-Mart Stores Inc. announced a program Thursday in which its workers can receive college credit from the online American Public University and receive a tuition discount from the school.

The company also said it will commit $50 million over three years to help workers pay for books and tuition above the reduced tuition rate. After the reduction, tuition will cost $212.50 per undergraduate credit hour and $255 for graduate credits.

Wal-Mart Chief Administrative Officer Tom Mars said the program grew out of a larger commitment to cultivate talent within the company. The plan is open to domestic workers at Walmart and Sam’s Club stores.

Alicia Ledlie, Wal-Mart senior director for associate development, said nearly three-quarters of Wal-Mart workers contacted in a survey said they preferred online study to attending a local college.

Ledlie said Wal-Mart looked at 81 colleges, including brick-and-mortar schools, and found American Public University, based in Charles Town, W.Va., to be the best fit.

Wal-Mart workers receive job training in areas ranging from ethics to retail inventory management, for which they can receive credit, she said.

Sara Martinez Tucker, a former U.S. undersecretary of education who is on Wal-Mart’s external advisory council, said Wal-Mart would have had to form a tremendous coalition of schools to offer a similar program through local community colleges and universities.

Tucker said it is helpful to employees because they don’t have to apply for reimbursement from their employer.

Students won’t have to pay for credits awarded based on their training.

American Public University, with 70,000 students, offers more than 100 certificate and degree programs.

The credit for training can be applied mainly to business- and retail-related courses. Wal-Mart said the school will have evaluated for credit jobs held by 70 percent of Wal-Mart workers by 2012. That covers about 1 million workers.

Wal-Mart also offers scholarships through its foundation and offers assistance to workers seeking GEDs.

Wal-Mart executives said the link with the school will help workers attain better jobs both inside and outside the company.

Tucker noted that if 10 percent of Wal-Mart’s U.S. workers get degrees, "that would be like adding three Ohio State’s worth of graduates."

American Public University is accredited in various ways, including national accreditation by the Accrediting Commission of the Distance Education and Training Council. It is run by for-profit American Public Education Inc.

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In one of the most gut-wrenching hours in Wall Street history, the Dow plunged almost 1,000 points Thursday before recovering to close down 348, as erroneous trading in Procter & Gamble and several other stocks sparked a massive selloff.

Fears about the spread of the European debt crisis dragged on stocks through the early afternoon. But the selling picked up in intensity and the Dow reached its nadir at around 2:40 p.m. ET.

The selling was a result of technical glitches that caused some stocks, including Dow component Procter & Gamble (PG, Fortune 500), to plunge 37% to $39.37 per share from the close of $62.12 Wednesday. The consumer products maker recovered most of that loss by the close, ending just 2% lower.

But the faulty P&G trading was responsible for 172 of the 998.50 points that the Dow Jones industrial average (INDU) lost at its worst, the biggest one-day point decline on an intraday basis in Dow Jones history.

Accenture, 3M, Sotheby’s and other stocks may have been impacted by similar problems. (For details,click here)

At the closing bell, the Dow was down 348 points, or 3.2%, to end at 10,520.32. The Dow’s biggest one-day point decline on a closing basis was Sept. 29, 2008, when it fell 777.68, which had also been the previous intraday mark.

The S&P 500 index (SPX) slipped 38 points, or 3.2%. The Nasdaq composite (COMP) dropped 83 points, or 3.4%.

"On the Dow, we were down 400 to 800 points in five minutes, it was horrifying," said Art Hogan, chief market strategist at Jefferies & Co.

Beyond the erroneous trades, the selling pressure of the last few days has been more technical than fundamental, said Hogan. He said the market collapsed some major technical support levels, and could be in for more selling Friday.

However, there are a few factors that could help stabilize the market Friday, said Peter Cardillo, chief market economist at Avalon Partners, including news on Greece.

"The key is to get Germany’s vote tomorrow in favor of the Greek aid package from the European Union," he said. "If that happens, that could help calm fears and stabilize the market."

Friday’s big April jobs report could end up being a non-event, said Donald Selkin, chief market strategist at National Securities. "We’ve had good economic reports all week and it hasn’t happened."

The CBOE Volatility (VIX) index, Wall Street’s so-called fear gauge, closed at 34.16, its highest finish since May 4, 2009. Earlier, it had spiked as high as 40.71, a 62% jump and its biggest one-day surge since February 2007.

Selkin said that often when the VIX gets over 40 that can be a sign that the selling has been overdone, which could be good. But with the fear gauge closing below that level, it may not provide a boost Friday.

"International markets are obviously going to get hit over night and futures are pointing to a weak open in the U.S.," Selkin said.

Gold spiked above $1,200, the euro plunged to a more than 1-year low against the dollar and oil prices fell. Treasury prices rallied, sending the corresponding yields lower as investors sought safety in government debt prices.

The run from the euro and into the dollar and U.S. government debt was a classic flight to quality, said Ted Weisberg, NYSE floor trader, Seaport Securities. He said that the continued weakness of the euro was going to be a big drag on the markets as it pummels dollar-traded commodities and also hurts companies that do a lot of business overseas.

After the close, both the Securities and Exhange Commission and the Commodity Futures Trading Commission said that they would be looking into the unusual trading that took place Thursday.

Movers: All 30 Dow components slid, with oil components Chevron and Exxon Mobil, financial leader JPMorgan Chase, and tech names Hewlett-Packard and IBM among the big losers. 3M, Boeing and United Technologies added to the weakness.

Market breadth was positive no fax pay day loans. On the New York Stock Exchange, winners beat losers 17 to 1 on volume of 2.58 billion shares. On the Nasdaq, advancers topped decliners seven to one on volume of 4.48 billion shares.

European debt problems accelerate: Stocks have been sliding on and off for the last two weeks as investors mull the ramifications of the growing debt crisis in Europe.

While European leaders have pledged to provide Greece with $146 billion in loans over the next three years, attempts by the nation to institute certain "austerity" measures to bring down the deficit have sparked riots and other violent outbursts.

Meanwhile, investors are concerned that the size of the bailout will make Europe less able to help Spain, Portugal and other debt-plagued nations. The so-called PIIGS also include Italy and Ireland.

"There’s no question that Europe and Greece, and specifically the fear of contagion, is what’s driving the market lower," said Hank Smith, chief investment officer at Haverford Investments.

"Having said that, we also have to be cognizant that the market was due for a pullback at a minimum, and possibly a correction," he said.

He noted the market hasn’t had a correction - technically defined as a selloff of 10% on a closing basis - for at least 14 months.

A slew of good - but not great - retail sales reports from the nation’s chain stores, and a report that showed weekly jobless claims dropped were also in focus.

Economy: The number of Americans filing new claims for unemployment fell to 444,000 last week from a revised 451,000 the previous week. Economists surveyed by Briefing.com thought claims would fall to 440,000.

Continuing claims, a measure of Americans who have been receiving benefits for a week or more, dropped to 4,594,000 from a revised 4,653,000 in the previous week. Economists expected 4,600,000 continuing claims.

The report was released one day ahead of the government’s closely watched April jobs report, due Friday morning. That report is expected to show employers added 187,000 jobs to their payrolls after adding 162,000 in March, according to economists surveyed by Briefing.com.

The growth is considered a step in the right direction, but the number of new jobs is not yet enough to keep up with the number of new entrants in the labor market.

The unemployment rate, generated by a separate survey, is expected to hold steady at 9.7%.

Corporate news: Troubled mortgage lender Freddie Mac (FRE, Fortune 500) reported an $8 billion quarterly loss Wednesday and also said it needs another $10.6 billion from the federal government. The company was put into conservatorship by the government during the height of the financial crisis in 2008, along with its sister company Fannie Mae (FNM, Fortune 500).

World markets: In overseas trading, European markets tumbled, with France’s CAC 40 down 2.2%, Germany’s DAX down 0.8% and London’s FTSE down 1.5%.

Asian markets fell. Japan’s benchmark Nikkei index lost 3.3% as investors reacted to the European debt crisis after a long holiday. The Hong Kong Hang Seng lost 1% and the Shanghai Composite lost 1%.

The dollar and commodities: The dollar rallied early versus the euro, with the European currency falling to its lowest level since March of 2009. But by late day, the dollar had turned lower. It also fell versus the Japanese yen.

U.S. light crude oil for June delivery dropped $2.86 to settle at $77.11 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $22.30 to settle at $1,197.30 per ounce.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.40% from 3.55% Wednesday. Treasury prices and yields move in opposite directions.

– Staff reporters Hibah Yousuf and Julianne Pepitone contributed to this report. 

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Retail sales posted the biggest single monthly gain on record in March, the seventh straight month of increases and a signal of rebounding consumer spending.

Sales tracker Thomson Reuters, which looks at monthly same-store sales for 28 chains, said Thursday that March sales increased 9.1% over last year, the biggest monthly gain since it began keeping records in 2000. Thomson had expected only a 6.3% increase.

Same-store sales, or sales at stores open at least a year, are a key indicator of retailers’ performance.

"This is obviously a very strong showing," said Scott Hoyt, senior director of consumer economics at Moody’s Economy.com, "but it’s very much driven by special factors."

The chain stores received a boost in March from unusually warm weather, Easter shopping and improved consumer confidence, Thomson said in its report.

Hoyt also noted bad weather in February could have contributed to pent-up demand, and March enjoyed relatively easy comparisons over the year.

"The Easter calendar shift is a huge factor, and March’s gain will be at the expense of April’s figures," Hoyt said. "Many retailers and analysts say you should combine the two months for a true indicator of what’s going on, so we’ll have to see what happens next month."

Still, March’s report was welcome news for the retail industry, for which the recession has been marked by numerous store closings and the bankruptcy of entire chains such as Circuit City.

The data are also important to the overall recovery, as consumer spending fuels two-thirds of the economy. In a separate report last week, a research group’s report showed consumer confidence rose in March after a sharp drop the previous month.

Higher-end women’s apparel store The Limited (LTD, Fortune 500) handily beat expectations, reporting a 15% increase over the year. Thomson Reuters had predicted only a 6.8% jump.

Many teen clothing retailers also posted strong numbers. Aeropostale (ARO) had the strongest sales so far at a 19% increase, while Zumiez (ZUMZ) gained 13.2%.

But other teen apparel stores posted the biggest misses. That included the upscale Abercrombie & Fitch (ANF), which reported only a 5% increase, missing Thomson’s expectation of a 6.6% rise. Alternative clothing store Hot Topic (HOTT) reported the weakest sales, down 7.5%, but that was better than the predicted 11.2% drop.

In the luxury sector, department store chain Nordstrom posted a 16.8% same-store sales increase, versus expectations for a 10.6% gain.

BJ’s Wholesale (BJ, Fortune 500) reported the strongest increase among discounters, at 10.6%. Costco (COST, Fortune 500) saw a 10% jump, beating estimates of a 9.3% gain. 

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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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Lines reportedly thinned out quickly at Best Buy and Apple Inc. stores Saturday but when the dust had settled on the iPad's first day of sales an estimated 600,000 to 700,000 had been sold.

Piper Jaffray analyst Gene Munster's issued that assessment of sales in stores and pre-orders, doubling his pre-launch estimate.

The first iPhone took 74 days to hit 1 million sales, while the subsequent iPhone 3G and Phone 3GS both hit the million mark in three days.

Fortune reported that as of 7:30 Saturday night, only one of the 20 stores contacted by Munster's team said they had run out of iPads.

Twitter messages on Sunday morning however reported sellouts at many Best Buys and some Apple stores, including in Palo Alto and San Jose.

The 9.7-inch touch-screen iPads sold over the weekend are priced starting at $499 and for now include only the ability to connect to the Internet via Wi-Fi.

Versions that are also capable of running on AT&T's 3G wireless network are scheduled to go on sale at the end of the month.

CEO Steve Jobs, his wife and daughter visited the Palo Alto Apple store themselves, while co-founder Steve Wozniak made another of his celebrated "regular guy" visits to a company store at Valley Fair mall in San Jose.

Tech blogger Robert Scoble posted a video on YouTube of what it was like to be the first iPad customer at the Apple store in Palo Alto.

The Better Business Bureau cautioned that scams have cropped up around the country in connection with the iPad launch, some of which offer victims a free iPad in exchange for a consumer's credit card number or other personal information.

The BBB said consumers should buy their iPad directly from Apple or an authorized retailer.

Click here to read more Business Journal stories about the iPad launch.

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Shares of Blockbuster Inc. sank 30 percent Wednesday after the video rental chain warned that it may have to file for Chapter 11 bankruptcy protection.

Competition from DVD-by-mail company Netflix Inc. and DVD vending machines operated by Coinstar Inc. have eroded the Dallas company’s revenue even as it staggers under a heavy debt load.

Blockbuster said in a regulatory filing late Tuesday that it was suffering "significant liquidity constraints" and could have to file for bankruptcy protection if it was unable to convince creditors to restructure a big chunk of its debt or business continued to deteriorate.

The company has had to close about 1,300 stores and wants to shut down hundreds more. It had about 5,200 stores worldwide in January, excluding franchised shops. About 3,500 of those were in the U.S.

The company is trying to update its business, setting up video-rental kiosks like those run by Coinstar and offering a DVD-mailing service. It added 2,000 kiosks in 2009 and expects to have more than 10,000 by the middle of this year — but NCR Corp., which operates the kiosks, is "under no obligation" to install or run them, Blockbuster said bad credit personal loan lenders.

Blockbuster is also pursuing several measures to help shore up cash. It wants to sell some of its international business, and it is pursuing a debt-for-equity swap to help alleviate its debt burden. It wants to swap all or part of its senior subordinated notes for common stock. It said it owed $975 million under senior secured notes and senior subordinated notes as of Jan. 3. Even if the swap goes through, it could significantly dilute current shareholders.

Meanwhile, the company predicts further declines in its sales. The chain said it expects a key sales measure to drop in the mid-single digits to high single digits in 2010 — and a "further deterioration" could leave it unable to service its debt, leading to default.

The company’s key sales measure sank 16 percent in the fourth quarter — a dismal holiday season performance despite higher advertising. It lost $435 million compared to a loss of $360 million in the last three months of 2008.

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Medicine Shoppe and Medicap pharmacists in seven states sued Cardinal Health in federal court Tuesday, alleging the health care products distributor failed to make good on promises it made when it asked them to switch to a new franchise agreement.

The lawsuit filed in U.S. District Court in Columbus, Ohio, says franchise holders who agreed to the change offered in March 2009 are paying lower fees than others, while all are getting fewer supports and services from the Cardinal-owned Medicine Shoppe International Inc. and Medicap Pharmacies Inc. It says many who have the lower fees were charged "grossly unfair" penalties to switch from their old agreements.

Pharmacists want a return of penalties paid and for all franchisees to be charged the lower fees or be allowed to cancel their franchise agreements, said St free 3-in-1 credit report. Louis attorney David Harris, who represents the pharmacists. Plaintiffs include Medicine Shoppe franchisees in California, South Dakota and Kansas and Medicap franchisees in Pennsylvania, Idaho, Iowa and North Carolina.

Harris said the suit seeks class-action status and could include more than 600 franchises that account for $1 billion in drug sales for Cardinal. Most signed 20-year agreements.

Medicine Shoppe, which Cardinal acquired in 1995, had been based in Earth City but the pharmacy chain moved its headquarters to Dublin, Ohio, last year.

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Maine’s lobstermen are working harder for less, as demand drops for their expanding harvest.

Lobstermen pulled in a robust 76.3 million pounds in 2009, according to the Maine Department of Marine Resources. That’s the largest harvest in years, according to state records and estimates, but only in terms of volume.

The 2009 take was worth $223.7 million, which is about $22 million less than the prior year, according to the department. State statistics show that the harvest has dropped in value, year-to-year, since 2005, when it totaled nearly $318 million.

As with most things, the recession is to blame. Cash-strapped consumers are avoiding delicacies such as lobsters, driving down the overall price, according to George Lapointe, commissioner of the Maine Department of Marine Resources.

"I think it’s largely a function of supply and demand, and the world economic condition," he said. "Lobster is a luxury product."

Lapointe said the price of lobster managed to "claw its way" back to a range of $2.75 to $3 per pound in 2009, after slumping to $2 to $2.50 in the fall of 2008. That pales in comparison to five years ago, he said, when lobstermen were getting $4 to $4.50 per pound.

Lobstering is an essential part of Maine’s economy, he said, providing about $500 million in annual revenue to coastal communities. He said the tourism industry has managed to hold up, despite the recession, but visitors to Maine only account for one-sixth of lobster purchases.

Lapointe said cruise ships, which are traditionally among the largest consumers of lobsters, are cutting back on their purchases and this has been painful for lobstermen.

"They are certainly in a financial squeeze right now," he said. "When they fish harder, they use more bait and more fuel, and those are huge costs for them."

Lapointe said fuel cost is consuming as much as 40% of a lobsterman’s take, up from 10% to 15% in recent years.

More lobsters, less money

David Cousins, president of the Maine Lobstermen’s Association and a lobsterman for 42 years, said the 2009 harvest was the biggest since the early 1990s, when the annual take peaked at an estimated 100 million pounds. But that is little comfort, considering the dropping prices and increasing costs.

"Our business is based on a $4 dollar-plus lobster [per pound]," said Cousins. "When you’re getting $2.90 a pound, you’re going the wrong way and it just doesn’t work anymore.

The cost of Atlantic herring, an abundant fish used as bait in lobster traps, jumped to a range of 25 to 30 cents per pound from 3 cents in the mid-1990s, said Cousins. The cost of bait now consumes 20% of gross revenue for lobstermen, compared to 2% in mid-1990s, he said.

"Our [net] income has dropped by 35% to 40%, and sometimes 50%, because of increased cost of fuel and increased cost of bait," Cousins said.

This spells trouble for the industry and some lobstermen have lost their boats to bank foreclosures, he said.

"There are a lot of people who are in serious trouble up here, because they have a lot of money out on their business - they owe for boats and traps and houses and trucks and all that," Cousins said.

But getting out of this hardscrabble business isn’t much of an option for most lobstermen, despite its difficulties, he added.

"People are hanging on as long as they can, because there aren’t any jobs any more," Cousins said. 

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Americans backed off from their holiday spending pace in January, but retail sales rose for a third month in a row compared with a year earlier, largely because of higher gas prices, according to figures released Wednesday.

Analysts expect the modest spending pace to improve, though it will be far from robust as high unemployment and tight credit show little sign of disappearing payday loan lenders.

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Solar power company GreenVolts Inc. hired Uday Bellary as its chief financial officer.

Bellary worked previously at Atrica Inc., where he was CFO and helped the company raise $34 million in equity and debt. That company was ultimately bought by Nokia Siemens Network. He was also CFO of Metro Optix. and MMC Networks.

GreenVolts’ CEO David Gudmundson will be his boss. Gudmundson took over as CEO in October, when previous CEO Gary Beasley left for a job in private equity.

Fremont-based GreenVolts makes “concentrating photovoltaic” technology — systems that track the sun and with mirrors that focus sunlight onto solar cells for greater generating efficiency.

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