Modern News

By Alexei Oreskovic

SAN FRANCISCO (Reuters) – Yahoo Inc plans to integrate Twitter into its collection of websites, as the company seeks to enhance the appeal of its online properties with popular social networking features.

The partnership will allow web surfers to view the short, 140-character messages created by Twitter users, dubbed Tweets, directly within Yahoo sites as well as to publish their own Twitter messages without leaving Yahoo.

The move, which Yahoo announced late on Tuesday, comes a couple of months after Yahoo announced a similar deal with Facebook, the world’s No.1 social networking site.

Earlier this month, Google Inc unveiled a new service dubbed Google Buzz that replicated many of the social networking features that have made services like Twitter and Facebook Internet success stories.

Facebook and Twitter – which said on Monday that users of its service generate more than 50 million Tweets every day – pose an increasing threat to established Internet giants like Yahoo and Google whose businesses depend on selling online ads to large audiences.

In January, Facebook overtook Yahoo to become the second most visited website in the United States, according to a recent report by web analytics firm Compete. A separate study by comScore showed Yahoo maintaining its No.2 rank with roughly 164 million unique U.S. visitors, while Facebook was the No.4 site with 112 visitors, behind third-ranked Microsoft Corp.

Yahoo said that beginning on Tuesday its Internet search engine results will display up-to-the-second Tweets about various topics, matching the so-called “real time search” capabilities that Google and Microsoft announced in their own respective deals with Twitter last year.

Yahoo also plans to display a live stream of Tweets within other online properties including its email service and sites devoted to sports, entertainment and finance later this year.

Yahoo executives said that the company was looking at ways to make Twitter messages relevant to each property, such as by customizing the selection of messages that appear alongside an article about a particular sporting event, for example.

“We believe that the content and context side of things is very unique,” Yahoo Vice President of Communities Jim Stoneham told Reuters in an interview.

Yahoo would not comment on any financial terms involved in the deal with Twitter.

According to some media reports, Microsoft and Google paid a combined $25 million for the right to include Twitter data in their search results.

(Reporting by Alexei Oreskovic; editing by Carol Bishopric)

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Richard Teitelbaum of Bloomber has posted an intriguing story on the AIG rescue orchestrated by the New York Fed under the direction of Timothy Geithner, now Secretary of the Treasury.

The main cause of AIG’s demise was its credit default swap (CDS) business. CDS transactions guarantee debt issues should the obligor be in danger of default. The following sequence of events left the US taxpayer holding a very, very large bag:

-big investment banks underwrite huge amounts of securities with new and complex structures

-the banks hedge their risk by purchasing CDS contracts from entities like AIG, which issues $62.1 billion of such swaps. Goldman Sachs is the largest purchaser at $17.2 billion, followed by Merrill Lynch at $13.2 billion.

-the securities (remember the underwriters put the deals together) turn out to be lousy credits, despite often rosy credit ratings, and badly flawed structurally to boot. Their values plummet, triggering the CDS payouts.

-AIG can not make the payments, thus becoming insolvent

-the Fed bails out AIG, and orders it to pay the CDS obligations in full to the banks (who started the mess). Prior to the Fed’s intervention, AIG had been trying to negotiate a discounted payout- i.e. a “haircut”.

It’s a mind-boggling scenario. The banks could go into overdrive creating risk because of their CDS fallback, and the Fed spared the banks the consequences of creating so much risk that it took the CDS issuer down. Given the banks’ role in creating the exotic securities, marketing them, and hiding (knowingly or unknowingly) their credit deficiencies, they should have been on the hook for the consequences. But, fellow taxpayers, YOU paid for the consequences.

The whole sorry tale is just another example of the distortions and unfair outcomes when private companies can game a government program, however well-intentioned and even essential the program might be (as I believe the bailout was).

Ugh!

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LONDON (Reuters) – Digital dumping is on the rise, according to a survey, with growing numbers of people preferring to use email and social networking Web sites to break up with their partners.

Over one third of 2,000 people polled (34 percent) said they had ended a relationship by email, 13 percent had changed their status on Facebook without telling their partners and six percent had released the news unilaterally on Twitter.

By contrast, only two percent had broken up via a mobile phone text.

The rest had split up the old-fashioned way by face-to-face conversation (38 percent) and by telephone (eight percent).

“Digital Dumping will soon take over when it comes to ending a relationship,” said Sean Wood, Marketing Manager for DateTheUk dating service for whom the survey was carried out.

“It’s often easier, quicker and avoids any misunderstandings.”

(Editing by Paul Casciato)

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(Reuters) – U.S. technology giant Intel Corp <INTC.O> is planning to set up a $2 billion fund to invest in U.S. companies, the Wall Street Journal said, citing people familiar with the matter.

The chipmaker, which has a unit that invests in many technology companies, is in talks with venture capital firms to seek investment ideas, the daily said.

The investment plan would not require raising additional capital, the business daily said, adding that the response to Intel’s proposal was not immediately known.

Intel Chief Executive Paul Otellini is scheduled to give a speech Tuesday at the Brookings Institution, the paper said.

Brookings said in its invitation to the event that Otellin’s speech will focus partly on “the need to create a culture of investment in the United States,” according to the paper.

Intel could not be immediately reached by Reuters for comment outside regular U.S. business hours.

(Reporting by Archana Shankar in Bangalore; Editing by Mike Nesbit)

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By Tarmo Virki, European technology correspondent

HELSINKI (Reuters) – The cellphone market will rebound more strongly strongly than expected this year as improving economies boost spending on new gadgets and handset vendors push cheap smartphones, research firm Gartner said on Tuesday.

The market fell 1 percent in 2009, the first decline in eight years as consumers cut spending amid recession.

But Gartner analyst Carolina Milanesi said she now expects the market to grow 11-13 percent this year, compared with the firm’s December forecast for a 9-percent increase.

“The economy seems to be stabilizing more into a recovery trend than we forecast back in December,” Milanesi said.

“Sales will return to low-double-digit growth, but competition will continue to put a strain on vendors’ margins.”

Gartner is more optimistic than the top cellphone maker Nokia, which has forecast growth around 10 percent, and also slightly ahead of analysts consensus of 11 percent in a Reuters poll this month.

Gartner sees smartphone market volume growing a whopping 46 percent from 172.4 million sold last year, boosted by cheaper models. The most affordable now cost just over $100 excluding operator subsidies.

Gartner said it expects average sale prices in 2010 to fall more slowly than last year — when intense competition hurt pricing in markets such as China and India — helped by an improving economy and consumers upgrading to cheap smartphones.

(more…)

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By Antony Bruno

DENVER (Billboard) – It’s been more than six years since then-Microsoft CEO Bill Gates admitted that Apple caught the company “flat-footed” in the digital music market and directed his team to make up for lost ground, according to recently surfaced internal e-mails.

To date, Microsoft’s effort to address the digital music market has largely focused on its Zune player and Zune Pass subscription service, which have won favorable reviews but few customers. But with the recent unveiling of its Windows Phone 7 Series operating system at the Mobile World Congress conference in Barcelona, Microsoft hopes to reboot its struggling digital music strategy.

Even the well-received Zune HD device, introduced last fall, hasn’t been enough to convince music fans to convert to the Zune Pass. The company says it has sold only 3.8 million players since 2006, and NPD Group estimated in November that it has a 2 percent share of the U.S. portable media player market, compared with 70 percent for Apple’s iPod.

(more…)

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By Edward Krudy

NEW YORK (Reuters) – U.S. stocks fell on Tuesday as consumer sentiment dropped sharply and house prices unexpectedly dipped, denting optimism about a economic recovery.

Concerns about the economy overshadowed better-than-expected quarterly earnings from retailers, including Home Depot Inc <HD.N>. The top U.S. home improvement chain beat estimates and raised its profit forecast, sending its shares up 1 percent to $30.62.

The February consumer confidence data fell in February to the lowest in 10 months, and the Standard & Poor’s/Case-Shiller indexes unexpectedly slipped in December. The releases followed an unexpected decline in business sentiment in Germany, which pressured overseas markets and fed uncertainty among investors who were worried about the U.S. Federal Reserve’s plans for interest rates and worries over possible sovereign debt defaults in Europe.

“Overall, there’s not a lot of positive stuff to see,” said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut. “With equity markets having retraced about two-thirds of their recent decline, today’s report (on consumer sentiment) could be the catalyst that leads to profit taking.”

The Dow Jones industrial average <.DJI> dropped 60.16 points, or 0.58 percent, to 10,323.22. The Standard & Poor’s 500 Index <.SPX> fell 8.84 points, or 0.80 percent, to 1,099.17. The Nasdaq Composite Index <.IXIC> lost 22.37 points, or 1.00 percent, to 2,219.66.

Investors were also confronted by a report from the Federal Deposit Insurance Corp that the total number of “problem” U.S. banks jumped 27 percent to 702 during the fourth quarter of 2009, reaching the highest level since 1993 amid signs the industry’s recovery is still shaky.

(Reporting by Edward Krudy; Additional reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)

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By Wanfeng Zhou and John Parry

NEW YORK (Reuters) – U.S. consumer confidence sagged to a 10-month low on worries about jobs while the housing market remains under strain, data revealed on Tuesday, underscoring the fragility of the economy’s recovery.

U.S. consumer confidence fell in February to the lowest in 10 months, as consumers’ short-term outlook on jobs worsened, according to a report from an industry group.

The Conference Board said on Tuesday its index of consumer attitudes fell to 46.0 in February from a revised 56.5 in the prior month. February’s reading is the lowest since April 2009.

The median of forecasts from analysts polled by Reuters was for a February reading of 55.0.

“This is just a flat-out bad report,” said Tom Porcelli, senior economist at RBC Capital Markets in New York.

(more…)

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By Steven C. Johnson, Kristina Cooke and David Lawder

NEW YORK/WASHINGTON (Reuters) – The only time the U.S. dollar ever took a serious shellacking in the marketplace, the wounds were almost entirely self-inflicted.

Facing mounting inflation and the escalating cost of the Vietnam War, President Richard Nixon, on August 15, 1971, took the United States off the gold standard, which had been in place since 1944 and required that the Federal Reserve back all dollars in circulation with gold.

The move amounted to a made-in-America double-digit devaluation, shocking the country’s foreign creditors.

Deep inside the New York Federal Reserve Bank’s fortress in lower Manhattan, Scott Pardee, then 34, was fielding frantic calls from central bankers around the world. They were demanding the United States cover the foreign exchange risk on their reserves.

“The whole roof came in on us,” recalled Pardee, a former New York Fed staffer who is now an economics professor at Vermont’s Middlebury College. “That is the kind of situation the U.S. doesn’t want to be in.”

Nearly 40 years later, the dollar still dominates world trade. At the height of the financial crisis in 2008, investors fled to the dollar as a temporary safe haven. But the dollar has been falling steadily since 2002, and as the world economy recovered last year, dollar selling resumed, reviving doubts about how long it could remain the world’s unrivaled reserve currency.

The Greek debt crisis, which has sent investors stampeding back into the U.S. currency, has provided a reprieve. The dollar has gained some 10 percent against the euro since December. And following the Fed’s decision last week to hike the discount rate it charges banks for emergency loans, the dollar rose even higher as some investors bet it would benefit from the eventual end to the Fed’s post-crisis regime of easy money.

But a number of economists, investors and officials here and abroad interviewed for this story say the longer-term prognosis is far from rosy.

(more…)

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NEW YORK (Reuters) – Wall Street paid out $20.3 billion in bonuses in 2009, up 17 percent from a year earlier, New York State’s comptroller said, as the financial industry recovered fitfully from a near meltdown.

Comptroller Thomas DiNapoli said on Tuesday profit for all of Wall Street could top $55 billion for 2009, nearly triple the previous record year. Last year, the U.S. economy began to stabilize as lenders raced to repay federal bailout money they had come to view as a stigma.

Average taxable bonuses on Wall Street rose to $123,850 in 2009, DiNapoli said in a statement. Compensation at Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley, three of New York’s biggest banks, rose 31 percent, he added.

The comptroller’s annual report on Wall Street pay is closely watched not only by Wall Street, but also by politicians eager to rein in runaway pay in a still-weakened economy where unemployment remains high and tax revenue remains depressed.

While bonuses are well below the level set in 2007 and are now more closely tied to company performance, DiNapoli acknowledged that many may consider them out-sized given the lingering problems in the economy.

“(F)or most Americans, these huge bonuses are a bitter pill and hard to comprehend,” he said.

(more…)

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