Friday July 4th, 2008
by: Ed Mayberry, July 4, 2008 4:07:00 am
The number of newly laid off people signing up for unemployment insurance rose sharply last week. The Labor Department, in a new report Thursday, says new applications jumped by 16,000 to 404,000, the highest level since late March, for the sixth straight month of job cuts. The increase was bigger than economists were expecting. They were forecasting claims to rise to around 385,000. A year ago, jobless claims stood at 322,000. The four-week moving average of claims, which smooths out weekly volatility, rose last week to 390,500--the highest since early October 2005.
After growing for two months, the nation's services sector declined unexpectedly in June. The Institute for Supply Management says its reading on the non-manufacturing sector of the economy dropped to 48.2 in June from May's reading of 51.7. A reading below 50 indicates the sector is contracting. Economists were forecasting a reading of 51.0. The ISM says the decline was due to a sharp fall in new orders and the impact of rising oil prices. The sector had been growing modestly, while much of the rest of the economy stalled.
Treasury Secretary Henry Paulson says he expects high oil prices to keep the world in an economic slowdown. Paulson is in London wrapping up a conference with British Treasury Chief Alistair Darling and other banking executives. He also made stops in Russia and Germany. Paulson acknowledges there is no short term answer to bring down oil prices. Both he and Darling told reporters the U.S. and Britain need to reduce dependence on oil, cut foreign energy imports and promote investment in renewable alternatives. Saudi Arabia's oil minister says in spite of the new record, his country has no plans to boost production any more.
The British airline Virgin Atlantic said that an alliance between British Airways, American Airlines and the Spanish airline Iberia should be blocked. The objection from the British Airways competitor comes amid reports that the three alliance members are close to applying for U.S. antitrust immunity to form a trans-Atlantic joint venture. The Financial Times reports the three airlines aim to reach an accord on profit and revenue sharing this month. BA and Fort Worth-based American have failed in the past to win an exemption from U.S. antitrust laws to work more closely together because of their dominance at London's Heathrow Airport. That's where the pair have more than half the capacity to and from the United States. However, they're expected to argue that the competitive situation has changed since the "open skies" agreement between the United States and the European Union came into force in March. That deal allows airlines to fly to and from any point in the United States and the EU. That would allow more airlines to fly into Heathrow, if they can obtain landing and take-off slots. But Virgin Atlantic said an alliance would still be anticompetitive.
A new federal report says regulators must make changes to ensure that airlines correct safety violations like those that happened at Southwest Airlines. The report by the Transportation Department's inspector general says more inspectors should review safety cases before they're closed. It also says inspectors should be barred from immediately going to work for airlines that they monitor. The Federal Aviation Administration agrees with several of the suggestions but rejected an idea to rotate inspectors so they don't become too close to particular airlines. But the FAA only partly accepted another recommendation designed to protect whistle-blowers like those who publicized problems at Dallas-based Southwest.
The Screen Actors Guild is asking for more time to study the final contract offer made by major Hollywood studios. The Alliance of Motion Picture and Television Producers, which represents the studios, said both sides met Wednesday for four hours to discuss the offer. The meeting was held a day after the contract between SAG and the studios expired. The guild asked for more time to examine the offer and said it would contact the studios on Monday. No further meetings are scheduled. The alliance said in a statement it is hopeful the guild will accept the final offer, which it said would add $250 million in compensation to actors over three years.
A state auditor's report says such challenges as obtaining seasoned state workers and high turnover among IBM employees are slowing a multimillion-dollar collaboration between Texas and IBM. The seven-year, $863 million IBM project is aimed at streamlining the information technology operations of 27 Texas agencies. But the state audit says it was 273 days behind schedule as of April. Lara Coffer is director of Technology Center Operations for the state's Department of Information Resources, which manages the contract. She says the major challenge has been the complicated nature of working with 27 different agencies and their disparate equipment and procedures. Coffer says she expects to make up some ground and complete the project by December 2009. That's a few months after the original September 2009 deadline for completion. Officials have said the project should save taxpayers $25 million over the contract's first two years and $159 million over the term of the contract, which started in April 2007.
The Bureau of Land Management says there won't be a moratorium on applications to build solar plants on public lands. The BLM had wanted to put new applications on hold during a comprehensive review of potential environmental impacts. That review was not scheduled to be completed until May 2010 and there's been strong public opposition to a delay. The bureau has yet to approve a solar project on federal land. The solar projects that are already built or under way in the U.S. are on private property. The announcement came as solar industry officials told a Senate panel in New Mexico there's a burning need to tap the sun's energy. Solar currently generates only a tenth of one percent of U.S. electricity. But lawmakers say concentrated solar power could be as cheap as wind or natural gas within five or ten years.
Microsoft reportedly hopes to snap up Yahoo!'s online search operations with the help of News Corp. and Time Warner. Microsoft's takeover bid of Yahoo! earlier this year had been thwarted by the Internet icon. The latest twist in Microsoft's convoluted courtship caused Yahoo!'s shares to rise more than three percent in Wednesday's sinking stock market, even though the chances of a deal getting done still seemed remote. The Wall Street Journal reports Microsoft is trying to recruit News Corp., Time Warner's AOL or other media partners to put together a joint bid that would slice Yahoo! into pieces. Under the reported breakup plan, Microsoft would emerge with Yahoo!'s online search operations, the main object of the software maker's desire.
Chief Executive Michael Dell has bought about $100 million worth of Dell in recent days. Those shares are still near a five-year low after having rallied this spring. According to a regulatory filing after Tuesday's market close, the Round Rock-based computer company says its founder bought more than 4.5 million shares for $99.7 million. He bought those shares in three separate deals from June 27th through Tuesday. The splurge leaves him owning more than 250 million shares directly or indirectly. That's close to 11 percent of the company's stock for a total value at Wednesday's close of more than $5.6 billion. That amount doesn't include options dell holds on still more stock. Dell founded the company in his college dorm room in 1984. It grew to be the world's largest maker of personal computers but lost that title to Hewlett-Packard in 2006. Dell had stepped aside as CEO but resumed the position in January 2007 after the company's growth slowed. Dell is increasingly selling machines through retailers instead of directly to customers over the phone and the Internet.
Attitude rather than availability may be why more people don't have high-speed Internet access. A study by the Pew Internet and American Life Project finds that only 14 percent of dial-up users who were asked say they're stuck with the older, slower technology because they can't get broadband in their neighborhoods. Thirty-five percent say it's because broadband prices are too high, while another 19 percent say nothing would persuade them to upgrade. The remainder have other reasons or do not know. Overall, Pew found that 55 percent of American adults now have broadband access at home, compared with 47 percent a year earlier and 42 percent in March 2007. Only ten percent now have dial-up access.