H1-B Cap Hit in Record Time

Employers looking to keep skilled foreign workers on staff in 2008 this week rushed to file some 150,000 petitions with the U.S. agency doling out 65,000 H1-B visas.

Yet the U.S. Citizen and Immigration Service announced this week it had reached its limit for 2008 H1-B visa petitions within a day of the set deadline. The government agency reported it had received about 150,000 applications for 65,000 slots by Monday afternoon and that it would not review petitions received after April 3. In fact, all petitions received on or after April 4 will be immediately rejected.

According to the USCIS, the Immigration Act of 1990 H-1B nonimmigrant visa category lets U.S. employers augment the existing labor force with highly skilled temporary workers. H-1B workers are admitted to the United States for an initial period of three years, which may be extended for an additional three years.

The much-sought-after H1-B visa helps U.S. employers keep foreign citizens in specialty occupations, including architects, engineers, computer programmers, accountants, doctors and college professors, among other professions.

Technology companies in particular look to increase the cap to double its current limit. For instance, the Information Technology Industry Council (ITIC), whose backers include Apple , Dell , eBay and Intel , last year asked that the cap be raised to 115,000.

As for available 2008 H-1B visas, the USCIS will subject the petitions received on April 2 and April 3 to a computer-generated random-selection process, according to an agency press release. The agency does not expect to conduct the random selection for several weeks, considering the high volume of filings.

All petitions not randomly selected by the USCIS will be returned to the applicants and are eligible to be resubmitted on April 1, 2008, when another lot of H-1B visas become available for fiscal 2009.
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ConAgra addressing problems that led to peanut butter recall

Now that it has identified the conditions that allowed a salmonella outbreak in peanut butter – a leaky roof and a faulty sprinkler – ConAgra Foods Inc. has to rebuild more than just parts of its plant. It has to rebuild trust.

After a nearly two-month investigation, the Omaha company determined that the moisture helped the salmonella grow and contaminate peanut butter at its Georgia plant last year, sickening more than 400 people nationwide.

Its Peter Pan brand will return to stores in July, the company said.

Persuading consumers to buy it won’t be easy, but the brand’s long history should help it, said Joe Marconi, who teaches marketing at DePaul University in Chicago.

“What they have to do is reassure a nervous public,” said Marconi, who wrote “Crisis Marketing: When Bad Things Happen to Good Companies.”

Consumers now will want to know more about what the company is doing to prevent any future problems like the one that allowed raw peanuts and peanut dust to come into contact with finished peanut butter, Marconi said.

The company plans to redesign the Georgia plant to provide greater separation between raw peanuts and the finished product, said ConAgra spokeswoman Stephanie Childs. The plant also will get a new roof and modern equipment.

And ConAgra plans to develop new testing to ensure its peanut butter is safe. Before this recall, none of the company’s recent routine testing of equipment and peanut butter had detected salmonella.

ConAgra has hired a microbiologist with three decades of experience in food production to oversee food safety, Childs said.

“We are learning that salmonella is more common in peanuts than we originally felt,” said Michael Doyle, who runs the University of Georgia’s Center for Food Safety. He agreed to lead an advisory panel to help the company improve its procedures.

“Don’t be complacent about these products simply because there’s been a long history without problems,” Doyle warned.

The company traced the outbreak to three problems at its Sylvester, Ga., plant last August, Childs said.

The roof leaked during a rainstorm, and the sprinkler system went off twice because of a faulty sprinkler, which was repaired.

The moisture from those events mixed with dormant salmonella bacteria in the plant that Childs said likely came from the raw peanuts and dust.

The plant was cleaned thoroughly after the roof leak and sprinkler problem, but the salmonella remained and somehow came in contact with peanut butter before it was packaged, she said.

The Food and Drug Administration last inspected the plant in February 2005 and found no problems, agency spokesman Michael Herndon has said. Herndon did not immediately return calls for comment Thursday.

ConAgra recalled all its peanut butter in February after federal health officials linked it to cases of salmonella infection. At least 425 people in 44 states were sickened, and lawsuits have been filed against the company.

The recall covered all Peter Pan peanut butter and all Great Value peanut butter made at the Sylvester plant since October 2004. That plant is ConAgra’s only peanut butter plant.

ConAgra plans to reopen its Georgia plant in early August.

While renovations are being done, Peter Pan will be made at another company’s plant. The renovations will add to the $50 million to $60 million recall cost company officials already had announced.

Before the recall, ConAgra sold $150 million worth of peanut butter each year. Initially, the company will not resume making Great Value peanut butter for Wal-Mart.

The company’s other brand names include Healthy Choice, Chef Boyardee and Orville Redenbacher.

Salmonella sickens about 40,000 people a year in the United States and kills about 600. It can cause diarrhea, fever, dehydration, abdominal pain and vomiting.

Most cases of salmonella poisoning are caused by undercooked eggs and chicken. The only previously known salmonella outbreak in peanut butter – in Australia during the mid-1990s – was blamed on unsanitary plant conditions.
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Retailers Join Forces To Track Theft Rings

Two of the shopping industry's largest trade groups are joining forces with the FBI to create a database that tracks retail crime gangs, which they say are becoming increasingly organized.

About 35 companies are participating in the database, including Limited Brands; American Eagle Outfitters; Mervyns and Bealls department stores; and Macy's, owned by Federated Department Stores. The Law Enforcement Retail Partnership Network, or LERPnet, is slated to launch Monday for retailers. Law enforcement will have access in a few months.

The Retail Industry Leaders Association and the National Retail Federation, which have each launched similar databases recently, teamed up to create the new online catalogue. About 14,000 incidents have been recorded in the NRF database alone.

Although theft has always existed in retail, technology has broadened criminals' reach and allowed them to become more sophisticated. The industry estimates it lost $37.5 billion to theft and fraud in 2005, a 20 percent jump over the previous year.

Gangs often steal items from several stores, then sell the goods for about 70 percent of the retail value at online auction sites in a practice known as "e-fencing."

"They go back to the home base and sell the product," said Tim O'Connor, vice president of asset protection for RILA. "It's normal to see them go up and down the East Coast with a U-Haul full of stuff."

In other cases, the gangs may even return items to stores with fraudulent receipts for the original value, plus tax. Among the most commonly stolen items are Crest Whitestrips, DeWalt tools, Duracell batteries and Gillette razor blades, said Joseph LaRocca, vice president of loss prevention for the NRF. He estimated that shoppers pay 1.5 percent of each dollar to make up for stolen products.

"Ultimately, consumers pay higher prices," he said. "It's like a hidden crime tax."

Stores say organized retail gangs have exploited the lack of communication between businesses. An NRF survey last year showed 81 percent of retailers said they had been affected by organized retail crime, and nearly half had seen an increase in such activity in stores.

The database allows retailers to enter the details of crimes at their stores for others to view. They can also search for incidents at other stores by type or geographic region and receive e-mail alerts when entries that fit their specifications are added. Law enforcement officials can also monitor the site for patterns or trends. The combined database is expected to eventually track hundreds of thousands of crimes at scores of retailers.

"This is a significant financial loss," LaRocca said. "Retailers are fighting back against these sorts of crimes."

The project represents a remarkable amount of cooperation in an industry that is fiercely competitive and secretive. Still, it remains to be seen how actively retailers will share information.

Membership costs $1,200 a year plus a one-time set-up fee for retailers; law enforcement access is free. The database allows retailers to list not only the type of crime and how it was committed, but also witnesses and the license plate numbers of vehicles involved. Retailers can even upload pictures and video.

But those are all voluntary options. Retailers, who tend to be circumspect when it comes to letting the competition in on information, can hide their company names from other users if they are leery of sharing sensitive data.

The partnership will "better help us to track and fend ourselves proactively so that these things don't happen," O'Connor said. "We can prosecute them better by combining forces."

LaRocca said two big-box chains in Southern California recently used the database to link burglaries at their stores. It also could help law enforcement officers connect crimes in different counties or states.

"We'll also use it in a proactive manner so that we can use it as predictive analysis and get ahead of the groups," said A.J. Turner, section chief for the gangs and criminal enterprise division at the FBI.
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Switching Tracks With a South Korean Pact

THE free trade agreement the United States signed with South Korea last week could be the most important step in the nation’s trade policy since the North American Free Trade Agreement went into effect 13 years ago. If Congress approves it, the slashed tariffs could lead to billions of dollars of new trade. Yet it could also symbolize a shift away from global trade negotiations, which were supposed to help poor countries to grow.

Those negotiations, called the Doha Development Round by the World Trade Organization, have been stalled for the better part of two years. In addition, the Free Trade Area of the Americas — a proposed regional free trade zone — has run into substantial opposition from the new leftists of South and Central America. The bilateral option — two-way trade deals — is the only game in town right now.

According to Kimberly A. Elliott, a senior fellow at the Center for Global Development and the Peterson Institute for International Economics, the Korean deal could divert trade away from the poor countries that might have benefited from a worldwide agreement — and it also subtracts from the credibility of the W.T.O. as a viable option for opening markets.

President Bush’s trade representatives — Robert B. Zoellick, Rob Portman and now Susan C. Schwab — have always said that the United States would pursue a three-track approach in opening markets for American consumers and producers, seeking bilateral, regional and global free trade agreements. If progress along one track stalled, they have always said, their efforts would then be directed to the others. The bilateral agreement with South Korea is the largest payoff so far from their strategy.

Why is it so important? South Korea ranks just behind the European Union, United States, Japan, China and Hong Kong as an exporter. It shipped $284 billion worth of merchandise in 2005, the last year for which the World Trade Organization offers global statistics. That amount, which was three times India’s exports, was also equivalent to the total merchandise shipped by the world’s bottom 118 economies, ranked by the same metric.

All but 30 of those economies are also members of the W.T.O. So signing a free trade agreement with South Korea could be as economically important as signing agreements with 88 of the group’s 150 members. Given the intense and growing trade relationship between the United States and South Korea, it could be even more important.

With a couple more bilateral deals like this one, the W.T.O. could seem an afterthought, or at least not worth the effort. And, indeed, the United States has already been talking trade with Brazil, and its nuclear pact with India could open the door to economic talks. Those two nations also happen to be two crucial negotiating parties at the W.T.O., and they might be just the first countries whose attention might be seduced away from the global negotiations.

“Assuming that this deal is going to be passed by both houses, which is not guaranteed, then clearly Japan is going to be looking to do a deal,” Ms. Elliott said. A free trade agreement with Japan, the world’s second-biggest economy — if you don’t count the European Union, which negotiates as one party for trade — would trump any other negotiations.

Yet as Ms. Elliott hinted, there’s still a long way to go before even the Korean agreement becomes law. Timing is not a problem, because the agreement was signed before the president’s authority to submit trade pacts to Congress for an up-or-down vote expires at the end of June. But there is already some dissent among unions and automakers, who see jobs being lost to Asia, as well as members of Congress concerned that South Korea is blocking exports of American beef.

“It’s going to be hard,” said John B. Taylor, a professor of economics at Stanford who was under secretary of the Treasury for international affairs from 2001 to 2005. “Some of the unions are lining up against it, and some forces are looking for some significant modification.” That’s true both in the United States and in South Korea, whose farmers, fearing the destruction of their livelihoods, have been among the most vocal opponents of free trade talks.

Because of the strategic importance of the American relationship with South Korea, however, a deal could be tough for anyone to stop.

“The idea that we would turn down a trade agreement with Korea on any basis, given the sensitive political arrangements in that area, and their neighbors to the north, is somewhat daunting,” said Mickey Kantor, a former United States trade representative and secretary of commerce. “There’ll be legitimate pressure to try and get something done here, regardless of the provisions of the agreement.”

Mr. Kantor noted that most previous two-way trade agreements have been signed with small economies, with largely strategic rather than economic goals. For example, the United States has pursued agreements throughout the Arab world, having signed deals with Jordan, Bahrain and Morocco, in order to build support for its foreign policy objectives. But a deal with South Korea, Mr. Kantor said, would be the first major step in many years toward opening markets.

AND not everyone thinks that it will shift attention away from the global talks. “For those that are concerned about the United States being unilateral or looking for coalitions that are not so broad, they’re wrong,” Professor Taylor said.

He suggested that the South Korean agreement could give a spur to the W.T.O. negotiations, provided that Congress renewed the president’s trade negotiating authority in the summer.

“This is a way that the United States can show tremendous leadership on a multilateral basis,” he said. “For Congress not to give that extension would set that whole effort back substantially.”

Ms. Elliott, however, argued that it would be hard to push the global talks forward without more involvement from American businesses, which, she said, have so far taken relatively little interest. A trade agreement with South Korea will give them little reason to change that attitude.
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New price tag for ethanol: More pollution

But given the administration's full-throated backing for ethanol, industry officials and their supporters on Capitol Hill are confident that the EPA will proceed with the new rule despite complaints from environmental advocates and local officials.

The White House already helped write the rule change, according to e-mails that suggested wording to strengthen the case for lower standards.

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said the change could benefit his fast-growing industry. He said he knew of some ethanol producers who had been hoping to expand under the terms of the new rule but had decided to proceed rather than wait.

In response to critics, he said, "There are always going to be people out there who say 'No, no, no' to something like this. But really, it is just a matter of what regulatory regime plants must follow and what is equitable."

More pollution

As proposed by the EPA, the rule would increase the amount of pollution allowed before an ethanol plant is considered a "major air emitter." The threshold now is 100 tons annually; the new threshold would be 250 tons. The move would mean most ethanol plants would not have to install the most effective air pollution equipment on the market. However, the higher threshold would not apply to plants in St. Louis and other areas that already have severe air pollution problems.

Being categorized as a major polluter can mean a longer permitting process, costly construction delays and more expensive air pollution equipment.

Deep down in the dense proposal, the EPA noted what environmentalists fear could occur at plants now just beneath the current, 100-ton limit: "Changing the facility classification … could allow these sources to increase their emissions by more than 149 tons and still remain minor sources."

In first proposing the new rule more than a year ago, the EPA asserted that Congress never intended for ethanol plants to be categorized with chemical facilities and other big polluters.

Many plants have been designed to produce less ethanol to avoid stricter environmental rules, ethanol producers told the EPA.

Echoing industry sentiments, the environmental agency wrote that failing to make the change "could potentially stymie the growth of the ethanol production industry which, in turn, could lead to reduced energy diversification and independence in this country."

The proposed rule reflected another industry concern: There is no consistent government regulation at present because alcohol distillation for liquor is regulated at the 250-ton threshold, as is another less-used form of ethanol production.

Environmental advocates, as well as state and local air pollution control officials, contend that the public would suffer by allowing the burgeoning industry to construct new plants or upgrade existing facilities without the best available equipment to capture or destroy pollutants.

William Becker is the executive director of the National Association of Clean Air Agencies, which represents more than 200 air pollution control agencies in states and localities. He said the reclassification would diminish regulation overnight.

"There's a pattern here of putting roadblocks in the path of states and localities to do their jobs," he said. "With the stroke of a pen, the administration would be redefining the importance of regulating these facilities."

Echoed Frank O'Donnell, executive director of the Washington-based nonprofit Clean Air Watch: "It will mean more pollution from ethanol refineries and more breathing problems for people who live near them."

Politicians on board

The proposed shift became known as the "Thune rule" after efforts by Sen. John Thune, R-S.D., to persuade the EPA to look differently at ethanol plants.

The freshman senator talked up the new rule to his colleagues in Congress and organized letters to the EPA last year that carried more than 30 signatures from senators and House members. Among those who signed letters were Sen. Christopher "Kit" Bond, R-Mo., and former Sen. Jim Talent, R-Mo.

Missouri Gov. Matt Blunt also submitted comments to the EPA endorsing the change. Blunt's letter called the new rule "very supportable from an environmental standpoint."

The rule would be a major departure from the EPA's effort to rein in air pollution from ethanol production.

Declaring what the agency referred to as a suspected "pattern of non-compliance," the EPA in 2002 began a campaign to force ethanol plants to clean up their emissions.

The agency has since won several multimillion-dollar settlements, forcing compliance with air pollution rules and installation of advanced pollution-control equipment known to regulators as Best Available Control Technology, state-of-the art equipment that captures and destroys pollutants before they reach the air.

Four years ago, Decatur, Ill.-based Archer Daniels Midland, a major ethanol producer, agreed to spend $350 million to upgrade air pollution equipment at agricultural processing plants, including ethanol plants, in 16 states.

In 2005, a small Missouri plant, Golden Triangle Energy of Craig, paid $30,000 in penalties for Clean Air Act violations and agreed to install pollution-control equipment.
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Systems to Prevent Rollovers to Be in All New Cars by 2012

All new vehicles will be required to have antirollover technology by the 2012 model year, the government said yesterday.

The Transportation Department said the technology, called electronic stability control, could save 5,300 to 9,600 lives annually and prevent up to 238,000 injuries a year once it was fully deployed into the nation’s fleet.

“Like air bags and like seat belts, 10 years down the road we’re going to look back and wonder how the E.S.C. technology was ever lived without,” the transportation secretary, Mary E. Peters, said at the New York International Auto Show.

Electronic stability control senses when a driver may lose control of the vehicle and automatically applies brakes to individual wheels to help stabilize it and avoid a rollover.

Many vehicles, including sport utility vehicles, already have the technology, and several automakers have outlined plans to make it a standard feature in future cars. The mandate has been widely supported in the industry because of its far-reaching safety benefits.

“There seems to be general recognition from auto manufacturers and the suppliers and safety advocates that this is technology that will save” thousands of lives, said Nicole R. Nason, administrator of the National Highway Traffic Safety Administration.

More than 43,000 people are killed annually on the nation’s roadways; more than 10,000 of them die in rollover accidents, although only 3 percent of crashes involve rollovers.

Ms. Peters said nearly 40 percent of 2007 vehicles already had the technology, including about 90 percent of S.U.V.’s.

The traffic safety administration said the proposal would cost about $111 a vehicle on those that already include antilock brakes, or $479 a vehicle for the entire system.

The requirement was first proposed last year, and the final regulations include a swifter phase-in plan. Stability control will be phased in starting with the 2009 model year, when 55 percent of new vehicles will need to have it. By the 2011 model year, it will be in 95 percent of new vehicles.
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Fed Suspended In Student Loan Probe

A federal education official implicated in an investigation of the student loan industry has been suspended from his job, while subpoenas were issued Friday on the nation’s largest student lender.

The Education Department placed Matteo “Matt” Fontana on paid administrative leave Friday. Fontana, a department employee since November 2002, has overseen a student financial aid database for the past two years. He did not return phone messages seeking comment.

Fontana is the first current government official embroiled in a probe led by New York State Attorney General Andrew Cuomo focusing on conflicts of interest between lending companies and universities.

Cuomo has sent letters to and requested documents from more than a hundred schools for information about any financial incentives the schools or their administrators may have derived from doing business with certain lenders, such a gifts, junkets, and awards of stock.

A common practice exposed by Cuomo is a revenue-sharing agreement, whereby a lender pays back a school a fixed percentage of the net value loans steered its way. Lenders particularly benefit when schools place them on a short list of “preferred” lenders, since 3,200 firms nationwide are competing for market share in the $85 billion a year business.

Two-thirds of American college students leave school with loan debt, with the average among graduating seniors being $19,202, according to the most recent National Postsecondary Student Aid Study.

Three large universities – Columbia, University of Texas-Austin, and University of Southern California – this week suspended their financial aid directors for owning stock during their tenure in Education Lending Group, which has since merged with Student Loan Xpress, the nation’s eight largest student loan provider.

Fontana once owned 10,500 shares of stock in the Education Lending Group, according to a prospectus the student loan company filed with the Securities and Exchange Commission in September 2003 prior to a public stock offering. With a trading price at the time of $9.54 a share, Fontana stood to earn close to $100,000 from the sale, a substantial profit if he, like other investorts had acquired shares for $1 each. His actual buy and sale prices have not been disclosed. Along with Cuomo's office, the Education Department's inspector general and general counsel are reviewing the matter.

Student Loan Xpress is owned by CIT Group Inc., a publicly-traded financial services company with $74 billion in managed assets.

On Friday, Cuomo’s office issued subpoenas to CIT and Student Loan XPress for any and all information about stock sales, transfers, or offers to any federal, state, local government officials or employees.

The attorney general also issued subpoenas to the nation’s largest student lender, Sallie Mae, for any information regarding employees who also worked at the Department of Education over the past six years.

That would include Fontana, who worked on information technology for Sallie Mae from 1994 to 2001, and his boss at the Education Department, Theresa “Terri” Shaw, the head of Federal Student Aid, which administers federal loans and grants to 11 million people, according to the department’s website. Shaw worked at Sallie Mae from 1980 to 1999, rising to senior vice president and chief information officer.

“No matter what the subpoena is, we look forward to cooperating with it,” said Sallie Mae spokesman Tom Joyce.

In addition, Friday, Education Secretary Margaret Spellings asked University of Texas-Austin financial aid director Larry Burt to resign from the Advisory Committee on Student Financial Assistance, an independent committee created by Congress and launched in 1988 to advise Congress and the Education Secretary on student aid policy.

Burt, like USC’s Catherine Thomas, once owned and sold 1,500 shares in Education Lending Group (EDLG) stock in 2003 for a profit exceeding $14,000, according to financial records obtained by Cuomo’s office.

Columbia’s David Charlow, who owned five times as many shares in EDLG, earned more than $100,000 from his sale in 2005, according to the attorney general.

USC Vice Provost Jerome Lucido said on Friday the Thomas case “appears to be isolated to a single individual who may have violated our policies.” In a letter to students, faculty, and staff, Lucido continued, “We believe there have been no adverse financial consequences for our students and their families.”

Lucido said USC had temporarily removed Student Loan Xpress from its recommended lender list “pending a complete review of the facts.”

Earlier this week, two of the most expensive schools in the country, the University of Pennsylvania and New York University, agreed to contribute more than a $1 million each – proceeds from recent revenue-sharing agreements with Citibank Student Loan Corporation – into a fund that will reimburse past borrowers about $500 apiece.

Thirty-one other schools joined Penn and NYU in adopting a code of conduct that prohibits revenue-sharing with lenders, requires schools to disclose why they chose preferred lenders, and bans financial aid officers and other school officials from receiving more than nominal gifts from lenders.

Citibank Student Loan Corporation, the nation’s second largest student lender, became the first financial institution to adopt the code of conduct.
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U.S. Plans WTO Case Against China on Movies, Books

The U.S. may file a complaint at the World Trade Organization as early as next week over what it calls China's piracy of copyrighted movies and books, according to four people briefed by the Bush administration.

Officials have prepared two cases, one saying China sets too high a value on pirated movie or music disks before prosecuting violators, and another objecting to restrictions on the sale of foreign books and movies in the nation, they said. The people, three industry officials and one lawyer, spoke on condition they not be identified.

China's illegal copying of movies, music and software cost companies $2.2 billion in 2006 sales, according to an estimate by lobby groups representing Microsoft Corp., Walt Disney Co., and Vivendi SA. The WTO complaints are the first by the U.S. against China for breaching intellectual property rights, in a country where copying has extended to bags, golf clubs and even shampoo.

``The U.S. believes that now it's time to put more pressure'' on China, five years after the country became a WTO member, said Standard Chartered Plc's economist Stephen Green in Shanghai. ``The U.S. believes that China has clearly infringed rules that it agreed to play by,'' prompting the action, he said.

China's 2006 trade surplus against the U.S. widened to a record $232.5 billion, prompting U.S. lawmakers including Michigan Democrat Sander Levin and Pennsylvania Republican Phil English to blame the gap on the yuan's value and China's piracy of patented goods.

`Competitive Advantage'

In a letter to President George W. Bush in October, House Speaker Nancy Pelosi and other lawmakers said that ``no country in the world has done more to undermine American intellectual property than China.''

Wang Xinpei, a spokesman for China's commerce ministry in Beijing, couldn't be reached to comment on the U.S. plan to file the WTO complaint. Sean Spicer, a spokesman for the U.S. Trade Representative's office in Washington D.C., declined to comment.

U.S. complaints were imminent, Trade Representative Susan Schwab said on Feb. 22.

``We're all going to run out of patience at some point, and that's going to be sooner rather than later,'' she said.

Last week, the Bush administration decided to levy duties on imports of coated paper from China to compensate for Chinese subsidies to exporters.

Procedure of Complaint

Under WTO procedures, the U.S. will formally ask for consultations with China when it files its complaints. Only after 60 days can the U.S. ask for an independent panel to adjudicate the dispute.

``China has continued to demonstrate little success in actually enforcing its laws and regulations in the face of the challenges created by widespread counterfeiting, piracy and other forms of infringement,'' the U.S. trade office said in a report this week. ``One major factor is China's chronic underutilization of deterrent criminal remedies.''

The U.S. plan may not escalate into a formal complaint, said Li Yushi, deputy director of the Chinese commerce ministry's research institute.

``This is just another turn of focus by the U.S. government in dealing with its widening trade deficit with China,'' Li said today in Beijing. ``The administration understands that China has made efforts in IPR protection, as well as our limitations in enforcing the effort.''

Still Rampant

Pirated DVDs including Time Warner Inc.'s Academy Award- winning movie ``The Departed'' still sell for less than $1 on the streets of Chinese cities including Beijing and Shanghai.

``It's all about the economics of movies,'' said Liu Ping, who sells pirated DVDs including ``The Departed'' and Warner's ``300'' for as little as 5 yuan (65 U.S. cents) at the Wangfujing subway station in Beijing. ``No one wants to pay 60 yuan for a movie when they can watch a DVD for 5 yuan.''

A reason for piracy could be the limits placed on U.S. publishers and movie companies. Overseas publishers are only allowed to sell non-Chinese books, magazines and newspapers through five-star hotels while movie studios can only show a limited number of overseas films every year in China.

``IPR is critical to the U.S. because it is a tool by which it can control technology and industries around the world,'' said Guan Anping, managing partner of Beijing-based corporate law firm Anping & Partners. ``It's a powerful tool to control nations like China, which are dependent on low-cost manufacturing.''

Bush administration officials and industry lobbyists were still debating the specifics of the U.S. complaints case late yesterday. The administration may still adjust or delay the complaints to account for new announcements from China. Twice in the past year, the U.S. was poised to file a complaint only to delay at the last moment.

Chance for Reprieve?

China this week announced a crackdown on hawkers of counterfeit goods and halved the criminal thresholds for prosecuting pirates. Possession of 500 pirated DVDs, rather than 1,000, would lead to criminal prosecution, the Supreme People's Court said yesterday, according to a notice issued by the Chinese Embassy in Washington.

People who make more than 2,500 illegal copies of music, movies or software can be jailed for up to seven years under the new rules, the notice said.

``When Chinese film stars see their movies sold for 7 yuan on DVD, they'll appreciate how important intellectual property right is,'' said Jing Ulrich, Chairman of China Equities at JPMorgan, at a media forum today in Beijing. ``Chinese companies will be keen to protect intellectual property when they create some of the leading technology themselves.''
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Alabama firm recalls dog biscuits

Sunshine Mills Inc., an Alabama firm that sells dog biscuits at a number of retailers including Wal-Mart Stores Inc., became the latest -- and maybe the last -- to join a list of manufacturers that have recalled pet products made with contaminated wheat gluten , the Food and Drug Administration said yesterday.

The agency also said Menu Foods Ltd. , the company that last month triggered one of the nation's largest pet food recalls, is expanding its voluntary market withdrawal that has already recalled 60 million cans and pouches of wet pet food.

The dog biscuits were sold under such names as Ol' Roy Peanut Butter Biscuit, Nurture Chicken & Rice, Pet Life, and Lassie Lamb and Rice Biscuit.

The FDA said it has tracked down the suspect wheat gluten, imported from China , inspected the firm that imported the thickener and those that purchased it, and can now say with "confidence" there is no evidence, to date, to suggest it entered the human food supply. The wheat gluten was tainted with melamine, a chemical used as a fertilizer and to make plastics.

This week, the FDA said the suspect gluten wound up at plants that manufacture food for humans as well as pets. "We're not aware of any leads that warrant follow up," Michael Rogers , director of FDA's division of field investigations , said yesterday.

Since Menu Food's recall began March 16 , the FDA has gotten 12,000 complaints, assigned more than 400 employees to the investigation, and tested 430 suspect samples. ChemNutra Inc. , of Las Vegas , imported roughly 1.7 million pounds of wheat gluten from Xuzhou Anying Biologic Technology Development Co. , one of its Chinese suppliers. ChemNutra said it shipped the product from its Kansas City warehouse to three pet food manufacturers and to one distributor that it said only supplies pet food companies.

The FDA said 55-pound paper sacks of wheat gluten that ChemNutra imported tested positive for melamine , in some cases at high concentrations. "Between 5 and 10 percent of the product that was sold as wheat gluten was, in effect, melamine, " said Stephen F. Sundlof , director of FDA's Center for Veterinary Medicine.

After the FDA traced ChemNutra's tainted wheat gluten to Sunshine Mills, the company agreed to withdraw dog biscuits that it markets at grocery stores, pet food specialty stores, and such retail stores as Wal-Mart.

For now, the FDA has confirmed 16 pet deaths connected to melamine, but Sundlof acknowledged "this is a number we recognize is nowhere near the reality."

Scientific literature only covers the industrial chemical's minimal toxicity in rodents . Because wheat gluten is used sparingly in finished pet food products, cats and dogs were exposed to lower amounts than rodents. That could mean that melamine is more toxic for dogs and cats, or is simply a more obvious chemical marker that hints at more elusive poisons in the tainted shipment. Regardless, the FDA believes all of the bad wheat gluten will soon be off store shelves. "Barring any unforeseen new information, we should have it all wrapped up," Sundlof said.

But some pet owners are still jittery, including Kimberly Miller, a Holden woman who bagged all her Husky's pet treats that contain wheat gluten, expecting one day they will be recalled as well.

Miller said the sad memory of her cat, Nikki , remains fresh. The calico suffered kidney failure after eating Price Chopper wet cat food. "She just kept getting weaker and weaker and weaker . . . and she would stumble. She would fall. Then, she couldn't jump any more. She'd try to jump and miss and fall," Miller said.

Menu Foods later recalled the food Miller's cat ate.

The FDA "might have found all of the wheat gluten. But is that really the only contaminant?" she said.

Los Angeles billionaire sets conditions for purchasing Chrysler

Los Angeles billionaire Kirk Kerkorian's Tracinda company said Friday that his 4.5-billion-dollar bid for Chrysler would be based on "a true partnership" of the automaker's management, workers and investors.

The company said what Kerkorian's camp has "in mind is a true partnership of all the constituencies -- the company's management, all of its employees (both union and non-union) and the investors bringing the necessary new funds to the company to enable it to substantially enhance its product spending -- the life blood of any auto company".

"What we are talking about is a transformation in the way the risks and rewards in a large enterprise are shared -- an arrangement in which the interests of all constituencies are more fully aligned than in today's typical structure," the company said in a statement.

"We acknowledge that such an approach cannot be 'forced' on any of the parties, but rather can only be achieved with all parties feeling as if they are the recipients of a fair deal," the statement said.

Tracinda's offer to purchase Chrysler was announced Thursday. The bid is about one-fifth of what Kerkorian offered for Chrysler in 1995. Last year, Chrysler lost 1.5 billion.

In a letter to the board of Chrysler parent company DaimlerChrysler AG, Tracinda officials also offered to post a 100-million-dollar deposit to ensure exclusive negotiating rights on the sale.

According to The Detroit News, other bidders for the company include Blackstone Group and Cerberus Capital Management and Magna International Inc.

Kerkorian was named by the Los Angeles Business Journal last year as the richest man in Los Angeles, with an estimated worth of 9.3 billion dollars.

Born to Armenian immigrants in Fresno in 1917, Kerkorian, who never attended college, made billions of dollars in investments in Las Vegas casinos, airlines, and MGM studios -- which he later sold.

He was Chrysler Corp.'s largest shareholder in the 1990s. Last year, Kerkorian sold his holdings in General Motors after a failed proposal to merge the company with Renault and Nissan Motor Co.

Napster subscriber count rises

Napster didn't get as many subscribers as it had hoped from its purchase of the customer base of AOL Music Now, but still got a big boost.

Digital musicstore said Tuesday that of the approximately 350,000 subs AOL had when the two companies made their deal in January, 225,000 opted to switch over to Napster.

Netco had agreed to pay AOL $15.6 million if all subs came over. As a result of the shortfall, payment will be reduced, though Napster hasn't yet disclosed the exact amount.

Combined with the 40,000 net subs Napster added on its own in the quarter ending March 31, that brings its total number of paid monthly subscribers up to 830,000. Company claims that's more than Rhapsody, its biggest competitor in the online music subscription biz.

Rhapsody parent company, RealNetworks doesn't break out exact sub numbers for that service from its other music offerings, making the claim impossible to judge.

Revenue was about even with the previous quarter at over $28 million. Napster will disclose full financial results in May.

Shares in Napster were up 4% at $4.30 Tuesday on the news.
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Dollar falls below US81c

THE dollar lost ground to noon, after two weeks of solid gains, after the central bank left interest rates on hold.
At 12 noon AEST, the domestic unit was trading at 0.8085/93, down from yesterday's close of 0.8147/50.

The currency traded between a low of $US0.8065 and a high of 0.8138 during the morning session.

The dollar was trading at its high just before 0800 AEST but slid to its lowest level just minutes after the Reserve Bank of Australia (RBA) announced official interest rates would stay put at 6.25 per cent.

RBC Capital Markets senior economist Su-Lin Ong said market views on whether or not the central would hike this month were split ahead of the RBA announcement.

"We think it was a pretty close decision," she said.

Economists surveyed by AAP were split on whether there would be a rate rise, with nine of the 19 expecting an increase.

Despite the dollar's fall this morning, Ms Ong said there was still strong support for the local unit.

"We also have to look at the global backdrop which is very strong, base metal prices are high and the terms of trade are at their strongest in 50 years," she said.

"You might see a near-term shock and softness but I think people will look at an opportunity to buy the currency."

Ms Ong said the market is now evenly split on whether the RBA will lift interest rates next month as it awaits inflation data for the first quarter of 2007, due out on April 24.

"It's a bit early to call."

The local dollar was likely to climb back above the $US0.8100 mark in the lead-up to the next RBA board meeting on May 1.

The RBA last raised interest rates in November.
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Endesa break-up is not an original idea

The break-up of Endesa is not an original idea.

Gas Natural, the Catalan utility, proposed the sale of up to $11.8bn worth of assets to overcome competition concerns around its €22bn ($29.3bn) offer for Spain's biggest electricity provider in September 2005.

However, when Wulf Bernotat and Fulvio Conti, the chief executives of Eon and Enel respectively, sat down at the Four Seasons hotel in Geneva 10 days ago to discuss a carve-up of Endesa, the motives were somewhat different.

Antitrust obstacles were no longer the main concern, but rather the swift resolution of a shareholder impasse that threatened to drag out one of Europe's most complex takeover battles for at least another six months.

Gas Natural had long fallen by the wayside. Enel and Acciona, the Spanish construction group, had just announced plans for a joint €43.3bn offer for Endesa, against Eon's €40bn tender offer.

With a joint 46 per cent of the company, and the support of the Spanish government and its 3 per cent stake, the Italo-Spanish partnership was certain to thwart Eon's quest for 50 per cent of the company.

However, with a six-month moratorium on any formal bid by the duo, and the threat of legal action by Eon, Enel and Acciona, too, faced an uncertain future.

With some coaxing from the authorities, Mr Bernotat and Mr Conti sat down to work out a truce.

According to people familiar with the matter, the initial discussions were inconclusive.

However, any lingering doubts about the need for a deal were rapidly dispelled when, at 8pm the following day, Caja Madrid, the Spanish savings bank, threw its weight behind the Eon bid.

By ceding its 10 per cent stake to the German group, while retaining its voting rights, the bank offered Eon a fighting chance of a respectable 25 per cent position.

It also created a voting block that may have rendered the Enel-led partnership's equity holding politically toothless.

The counter-attack had been promoted by Endesa's board, which appeared prepared to use company by-laws on voting restrictions and conflicting interests to keep Enel and Acciona off the board and out of management indefinitely.

Eon was now in a good position to negotiate, and talks with the Enel-Acciona bloc began in earnest in the second part of last week.

On Monday, after less than a week of discussions, they signed the agreement in the offices of Spanish legal firm Perez Llorca in central Madrid.

"The three parties knew Endesa inside out, having studied it for ages," said a person familiar with the process.

"There was therefore very little dispute about who would get what parts," he added.

Essentially, Eon agreed to renounce the shares tendered to it under its current offer in return for about €10bn worth of Endesa's mainly non-Iberian European assets.

Mr Conti on Monday night described the accord as "a good solution within the Spanish environment, and for Endesa itself".

"Endesa remains the main and most formidable player in the energy sector in Spain," he told the Financial Times.

"At the same time, by giving Eon a small list of domestic assets, this creates even more competition in the Spanish market."

The sale of Spain's Italian business is particularly attractive to both sides, said Mr Conti.

By shedding the asset, Enel will avoid competition issues in its main market, while Eon will get the foothold in Italy it has always wanted.
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Mortgage lender begins bankruptcy proceedings

Mortgage lender New Century Financial Corp. proved the old adage Monday: the bigger they are, the harder they fall.

The Irvine, Calif., company was once the largest independent company specializing in "subprime" mortgages to borrowers considered high credit risks. And on Monday, it became the largest subprime lender to file for bankruptcy, firing 3,200 workers and saying it would aim to sell its remaining operations.

"It is our hope that potential buyers will be in a stronger position than we are to employ many of our associates on an on-going basis," Chief Executive Brad A. Morrice said in a statement.

The bankruptcy filing and layoffs of more than half of New Century's workforce is the latest sign of a larger subprime shakeout, which was triggered by a sharp rise in loan delinquencies. More than two dozen lenders have been closed, sold or forced to cease subprime operations.

Will Spires was among those laid off at New Century. As he sees it, he's not just leaving a company -- he's leaving an industry. He plans to look for work as a salesman or finance manager at a car dealership.

"We made decent money," selling New Century loans, said Spires, an account manager in Houston. "But people are still buying cars, the car dealers are still in business, and New Century is not."

Work throughout the sector is drying up. Many subprime borrowers obtained loans with no down payments, often without having to prove their income, and with low introductory teaser rates, hoping to refinance before their payments shot up.

But as lenders tighten standards amid rising defaults and weakening home prices, many of these borrowers won't qualify for new loans.

Countrywide Financial Corp. in Calabasas, Calif., the No. 1 U.S. mortgage lender, has estimated that 60 percent of its subprime customers have adjustable-rate loans that they would be unable to obtain under guidelines proposed by federal bank regulators, said analyst Zach Gast of the Center for Financial Research and Analysis, a Rockville, Md., company that advises big investors such as hedge funds.

Gast said that when the industry stabilizes, it will be dominated by large commercial and investment banks, such as Wells Fargo & Co. of San Francisco and London-based HSBC, the No. 1 subprime lender in the U.S. last year. For these banks, subprime lending is just one facet of their business.

New Century, by comparison, had all its eggs in the subprime basket.

The 12-year-old company weathered the last big shake-out in the industry during the late 1990s and then grew "gigantic -- and arrogant too, cocky," said analyst Matthew Howlett at the investment firm Fox-Pitt, Kelton.

Morrice and co-founders Robert K. Cole and Edward F. Gotschall made tens of millions of dollars each in salary, bonuses and stock options. Striving to take its image mainstream, New Century had adopted the slogan "A New Shade of Blue Chip."

But its loans performed no better than average for a subprime lender, Howlett said. And its operational safeguards, from guarding against inaccurate appraisals to accounting for losses, appear to have been inadequate, he said.

"It just seems like the whole operation was fast and loose, and it finally caught up with them," Howlett said.

Independent subprime companies generally sell their loans to Wall Street firms, which can force the lenders to buy back mortgages that go quickly into default. New Century stunned investors and triggered its eventual downfall on Feb. 7, when it announced it had grossly underestimated the losses it would suffer as a result of numerous loan repurchase demands.

It was hit almost immediately by a wave of shareholder lawsuits contending its top executives had made millions exercising stock options while concealing the company's troubles from other shareholders.

The company then disclosed that it was under investigation by federal prosecutors and the Securities and Exchange Commission for its accounting practices and stock sales by top executives.

The filing for Chapter 11 bankruptcy protection, made in federal court in Wilmington, Del., had been anticipated since March 9, when New Century stopped lending after its Wall Street partners cut off its funding. More recently, at least two of the partners, Barclays and Morgan Stanley, had moved to seize and sell pools of its mortgages to satisfy their claims against the Irvine-based mortgage lender.

The layoffs announced Monday comprised 54 percent of the company's staff, and came mainly at New Century's shuttered loan-origination arm, for which no buyer has emerged.

Carrington Capital Management, a Connecticut hedge fund, has agreed to pay US$139 million for a separate operation where about 550 other employees work, a servicing business that bills borrowers and collects payments, the company said.

New Century's remaining interests in loans, its only other significant asset, will be sold for a net gain of US$50 million, Morrice said.
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Tax preparation outlets targeted for alleged fraud

The Justice Department is trying to shut down 125 tax preparation outlets that it says have filed false returns containing more than $70 million in bogus deductions.

In court documents filed in Chicago, Atlanta, Detroit and Raleigh, N.C., the government targeted five businesses associated with Jackson Hewitt Tax Services, the nation's second-largest tax preparation company, behind H&R Block.

IRS Commissioner Mark Everson described the case as the "largest enforcement action of its kind." He said franchise employees are accused of improperly claiming tax credits for such things as fuel purchases and numbers of household dependents on behalf of an undisclosed number of customers.

The fraudulent returns were aimed at either inflating customer refunds or reducing their tax payments, according to court documents. In one case, a barber whose return was filed with one of the targeted franchises claimed a fuel tax credit for buying 25,000 gallons of gasoline for business use.

"The customer would have had to drive 1,370 miles each day, seven days a week to consume that much fuel in one year, leaving little if any time to cut hair," the Justice Department alleged court papers.

Some of the franchises' managers and employees, according to the court documents, received kickbacks from customers in exchange for the preparation of falsified tax returns.

Everson said that he was "very disturbed" by the allegations, which largely involved customers of modest means. Those people were "sucked into schemes" that may leave them liable for thousands of dollars in unpaid taxes and penalties, Everson said.

Jackson Hewitt did not immediately respond to requests for comment.

Farrukh Sohail, identified in court documents as maintaining ownership interests in all five franchises, could not be reached for comment Tuesday.

Overall, the franchises filed more than 105,000 federal income tax returns last year. The actual number of fraudulent returns was not disclosed.

Court documents showed that substantial numbers contained errors or fraudulent information.

In one sample audit of 268 returns prepared by a Georgia outlet, 264 were found to be "fraudulent or erroneous," according to a review by the franchise's former regional manager, court papers said.

In some cases, tax preparers "have sold or sell Social Security numbers" to claim inflated numbers of household dependents for the purpose of driving down the customers' tax obligations, according to the court documents.

"The fraudulent use and attempted use of phony dependents on tax returns ... is pervasive," the documents say.

Within the franchise operations, the court documents outline a "drive" for customer volume and profit "at the expense of accuracy and honesty."

At one Atlanta store, "managers frequently explain to employees that (the outlet) will lose business if turns away customers suspected of providing fraudulent information," the court papers state.

"The managers therefore directed employees to not question or turn away such customers, but instead prepare and file their tax returns," the court papers say.
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Australian Stocks Climb to a Record High, Led by Commonwealth

Australian stocks rose to a record high as the central bank refrained from raising interest rates. Commonwealth Bank of Australia and Woolworths Ltd. led gains among stocks that rely on domestic demand.

Coles Group Ltd. jumped after Wesfarmers Ltd. and buyout firms led by Pacific Equity Partners offered A$19.7 billion ($16 billion) in a record takeover for an Australian company.

BHP Billiton led resources shares higher after copper prices climbed to a five-month high in New York.

``There are no weak links in this market,'' said Michael Birch, who helps manage A$160 million at Wallace Funds Management in Sydney. ``Commodities prices are still driving mining shares, takeover deals show no sign of abating, and the central bank's interest rate decision definitely took some of us by surprise.''

The S&P/ASX 200 Index added 65.30, or 1.1 percent, to 6078.70 as of 1:02 p.m. in Sydney. About 13 stocks gained for every six that fell. The index is heading for a record close and has recouped all of its 6.5 percent slide since peaking at 6044.00 on Feb. 26.

New Zealand's NZX 50 Index rose 0.2 percent to 4184.99 as of 3:02 p.m. in Wellington.

Commonwealth Bank, the nation's second-biggest lender, added 49 cents, or 1 percent, to A$50.82. Woolworths, the biggest retailer, rose 43 cents, or 1.6 percent, to A$27.68.

Steady Rates

The Reserve Bank of Australia today kept its benchmark interest rate unchanged at a six-year high 6.25 percent as it awaits an inflation report later this month that economists say may force it to raise borrowing costs in May. Thirteen of 25 economists surveyed by Bloomberg News expected no change.

While the economists in Bloomberg's survey were almost evenly split over today's decision, currency and futures traders had expected an increase. Investors' expectations for economic growth may be boosted by the central bank's decision. Higher borrowing costs damp consumer spending and curb lending.

Coles, the nation's second-biggest retailer, jumped 82 cents, or 5.1 percent, to A$16.93. Wesfarmers, Australia's biggest home- improvement retailer, is offering A$16.47 a share in cash or stock, the company said, or 8 percent more than a Kohlberg, Kravis Roberts & Co.-led bid that Coles rejected in October.

Shares of Coles are now above the price of Wesfarmers takeover offer on expectations it may not be enough to win support.

Wesfarmers climbed A$1.37, or 3.7 percent, to A$38.28.

Higher Metals

BHP, the world's biggest mining company by market value and production, climbed 53 cents, or 1.8 percent, to A$30.62. Rio Tinto Group, the second-biggest by market value and third by production, rose A$1.80, or 2.3 percent, to A$80.70.

A measure of six metals traded on the London Metal Exchange, including copper and zinc, jumped 4.2 percent, the biggest gain since Feb. 13. Copper climbed 3.8 percent and nickel surged 6.6 percent. In New York copper jumped 4.3 percent in New York to a five-month high.

The S&P/ASX 200 Index's futures contract for June added 0.7 percent to 6115. The broader All Ordinaries Index rose 1.1 percent to 6060.50.

The following shares also rose or fell. The stock symbols are in brackets after the company names.

Australian stocks:

Austar United Communications Network Ltd. (AUN AU), added 7.5 cents, or 4.6 percent, to A$1.70. The pay-television company controlled by U.S. billionaire John Malone, said it has received ``preliminary, incomplete and highly conditional'' approaches.

Bank of Queensland Ltd. (BOQ AU), which has offered A$2.5 billion ($2 billion) for regional Australian rival Bendigo Bank Ltd., gained 20 cents, or 1.2 percent, to A$17.54. The company said first-half profit rose 21 percent to A$48.4 million after it opened new branches and sold more home loans.

CSL Ltd. (CSL AU) gained A$1.31, or 1.6 percent, to A$84.81. The drugmaker asked for U.S. approval of a seasonal flu vaccine in the U.S., said Paul Perreault, an executive vice president for the company's CSL Biotherapies unit. CSL is seeking priority review, which may gain clearance for the shots by Sept. 30. That would allow sales as early as October, he said.

Nexus Energy Ltd. (NXS AU) jumped 9 cents, or 10 percent, to 95 cents. The oil and gas explorer said it found more natural gas than expected at a well on the Crux field off northwestern Australia.

QBE Insurance Group Ltd. (QBE AU), the world's best- performing insurance stock the past year excluding China, rose 57 cents, or 1.8 percent, to A$32.53. The company reiterated full- year profit will rise at least 20 percent.

Segue Resources Ltd. (SEG AU) gained 11.5 cents, or 19 percent, to 71.5 cents. The company said it found ``significant'' nickel deposits at its Pardoo project in Western Australia state.

New Zealand stocks:

Guinness Peat Group Plc (GPG NZ), a London-based investor which owns 16 percent of Premier Investments Ltd., added 6 cents, or 2.6 percent, to NZ$2.37. GPG gained 1.8 percent yesterday after Premier agreed to sell its 5.9 percent stake in Coles Group Ltd. Premier gained NZ$1.1 billion from the sale and is likely to return capital to shareholders, the Australian said, citing Chairman Ron Brierley.

ING Property Trust (ING NZ), New Zealand's third-largest publicly traded property investor, dropped 4 cents, or 3 percent, to NZ$1.30. ING said it may spend NZ$200 million ($144 million) to acquire properties in Japan as New Zealand's high prices limit returns.

Kermadec Property Fund (KPF NZ), a New Zealand real estate investor, added 2 cents, or 1.9 percent, to a three-month high of NZ$1.10. The fund's property assets gained about NZ$8.8 million in value in the four months ended March 31, ahead of the NZ$3.6 million gain forecast in its prospectus. That boosts the fund's net tangible asset value by about 9 cents a share to NZ$1.15, the company said.

Michael Hill International Ltd. (MHI NZ), New Zealand's largest jewelry chain, jumped 30 cents, or 3.2 percent, to a record NZ$9.60. The company will expand into the U.S. and United Kingdom once its Canadian operations are established and making a profit, the New Zealand Herald reported, citing Chief Executive Officer Mike Parsell.

Telecom Corp. (TEL NZ), New Zealand's largest telephone company, dropped 6 cents, or 1.2 percent, to NZ$4.86. Telecom may give shareholders less than half the NZ$2.24 billion from the sale of its Yellow Pages unit because of costs to expand in Australia and build faster networks. It may return NZ$1.1 billion from the sale, probably in a stock buyback, according to the median estimate of 10 analysts in a Bloomberg News survey.
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Comcast Shores Up Regional Strength With Patriot Buy

Cable giant Comcast Latest News about Comcast extended its regional reach Tuesday, announcing that it will buy privately held Patriot Media & Communications for around US$483 million in cash.

The deal gives Comcast control of a tightly focused regional network Get FREE CDN for 3 Months. PEER 1 Dedicated Hosting. Click Here. with about 81,000 video subscribers mainly focused in the central New Jersey area, not far from Comcast's home base of Philadelphia. Several of the areas served by Patriot are contiguous to Comcast's existing service base.

Comcast expects to close the deal sometime in the third quarter; however, it will require regulatory approval.
A Complementary Buy

"Patriot Media systems are fully upgraded, have superior demographics, strong penetration of advanced products and, best of all, they geographically complement our systems," said Comcast President and Chief Operating Officer Stephen B. Burke. Comcast will move quickly to begin offering its new customers "advanced products and services," he added.

Though relatively minor in scope for Comcast -- already the country's largest cable provider -- the deal is a reminder of the value that cable companies place on having broad reach as they gear up to compete head-to-head with telephone companies.

Separately, Comcast reached a deal with Insight Communications, under which the two cable providers will split several shared geographic markets in the Midwest.

That deal will give Comcast direct control of about 1.2 million customer accounts in Illinois in exchange for the carrier taking on about $1.3 billion in debt from the partnership with Insight.
Driven by Demographics

The Patriot deal, meanwhile, was seen being driven largely by demographics. The cable provider has one of the highest per-subscriber revenue rates in the country, thanks to the area's high per-capita income level.

Those revenue rates may help explain the relatively high price tag for the purchase as well, as Comcast will likely be able to sell expansive bundles of services to those customers, including video-on-demand, digital video recorder service, high-speed Internet and emerging services still being developed.

The per-subscriber purchase price is "the highest since the telecom bubble" but may be justified because the system Forge ahead and stay on budget with simple to install HP server technology., while small, has some of the "best operating metrics of any cable system," Sanford Bernstein analyst Craig Moffett told the E-Commerce Times.
Arming for Battle

Growing its reach helps Comcast in multiple ways. In addition to giving it a broader base to sell next-generation video services to -- as it obtains the local licenses to do so -- it also provides near-term revenue growth.

The company has set a high bar for itself in that area, posting record subscriber growth rates in its fourth quarter as more customers Email Marketing Software - Free Demo signed up for bundles of cable, high-speed Internet access and VoIP (Voice over Internet Protocol) services.

Both telecom and cable companies are seeing strong growth rates in broadband Internet service in particular, even though the market has matured recently, Leichtman Research Group principal analyst Bruce Leichtman told the E-Commerce Times. In fact, more new broadband subscribers were added in 2006 than in 2005, he added.

Now, however, carriers need to focus on driving revenue and profits from those subscribers.

"It is increasingly important for providers to focus on gaining profitable subscribers," Leichtman noted.
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Housing Goes Up, Oil Down, Pushing Dow to Five-Week High

Stocks surged Tuesday, with the Dow Jones industrials closing at a five-week high, as the housing market showed new-found vigor and oil prices fell to bolster investors' confidence in the economy.

The Dow rose 128 points, to 12,510.30. It was the Dow's highest close since Feb. 26, the day before it plunged 416 points. The Dow is now back in positive territory for the year and 276 points below its record close of 12,786.64 on Feb. 20.

Broader stock indicators also soared, with the Standard & Poor's 500-stock index up 13.22, to 1437.77, and the Nasdaq composite index up 28.07, to 2450.33.

The National Association of Realtors index for pending sales of existing homes rose in February at a seasonally adjusted annual rate of 0.7 percent. Although the index is below where it was a year ago, the result was stronger than investors expected and reassured them that the housing sector, while weak, is not being battered by the struggling lenders of subprime mortgages.

Other data Tuesday also suggested the American consumer is strong: A report from Redbook Research showed consumers spent more at chain stores in March than they did in February.

A decline in crude oil prices as tensions eased between Britain and Iran also encouraged investors. High energy prices contribute to inflation, which can crimp spending and hurt the chance of lower interest rates. Light sweet crude closed at $64.64 a barrel, down $1.30 on the New York Mercantile Exchange.
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Oil Trades Little Changed After Falling on Iran-U.K. Talks

Crude oil was little changed in New York after falling the most in more than three weeks yesterday on signs the dispute over Iran's capture of 15 British navy personnel may be resolved without disrupting oil supplies.

Both sides want an ``early resolution of this issue through direct talks,'' U.K. Prime Minister Tony Blair said in a statement late yesterday. A U.S. Energy Department report today will probably show gasoline inventories rose because of imports and increased refining rates.

``Since the recent spike followed the escalation of tensions, the de-escalation of tensions simply has to push the price lower,'' said Dariusz Kowalczyk, chief investment strategist at CFC Seymour Ltd. in Hong Kong. ``Products will be more important in today's release than crude so higher levels of products are likely to exert downward pressure on price.''

Crude oil for May delivery was at $64.66 a barrel, up 2 cents, in after-hours electronic trading on the New York Mercantile Exchange at 10:50 a.m. in Singapore.

The contract fell $1.30, or 2 percent, to $64.64 yesterday, the biggest one-day decline since March 9. Futures touched $68.09 a barrel on March 27, the highest since Sept. 6, and closed near $66 a barrel each of the previous three sessions.

``We seem to be getting somewhere with this Iranian situation,'' said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach, California. ``If we see a build in unleaded gasoline in the inventory report that is really going to do some damage to this market.''

In London, Brent crude oil for May settlement was at $67.87 a barrel, up 6 cents, in electronic trading on the ICE Futures exchange at 10:52 a.m. Singapore time.

Iranian Stance

Iran, the world's fourth-largest oil producer, seized the marines and sailors in the Persian Gulf on March 23. It says the group entered its territorial waters while searching merchant ships. Britain says the boarding party was in Iraqi waters at all times.

Iranian Vice President Parviz Davudi said the standoff may be resolved ``soon'' if the U.K. acknowledges the naval crew entered Iran's waters illegally, Agence France-Presse reported.

The U.K. was today awaiting a response from Iran over a proposal for ``direct bilateral discussions.''

About a quarter of the world's oil flows through the Strait of Hormuz, a narrow waterway between Iran and Oman at the mouth of the Persian Gulf.

Gasoline Inventories

Gasoline for May delivery was at $2.0170 a gallon, down 0.07 cents, in after-hours trading after falling 1.2 percent to $2.0177 yesterday, its third straight decline.

A U.S. Energy Department report today will probably show gasoline supplies in the world's largest oil user fell by 150,000 barrels last week, according to a Bloomberg News survey of 14 analysts, the smallest decline in eight weeks.

U.S. gasoline use peaks during the summer vacations starting with the Memorial Day holiday late May. The North Atlantic hurricane season, which often disrupts oil output and refining along the Gulf of Mexico coast, runs from June 1 through Nov. 30.

Five major hurricanes may form this year, though the season will be less active than in 2004 and 2005, forecasters from Colorado State University said yesterday. There is a 74 percent chance of major storm striking land, with the odds about even for landfall on the eastern seaboard or the Gulf of Mexico.

Hurricanes Katrina and Rita smashed rigs and pipelines, flooded refineries and did more than $81 billion of damage on the Gulf coast in 2005.

Technical Indicators

Crude oil stockpiles probably rose 500,000 barrels, from 328.4 million a week earlier, based on the median estimate from the analyst survey. Refinery utilization probably rose a third week to 87.6 percent, an 11-week high. The Energy Department will publish its report at 10:30 a.m. in Washington.

Oil prices have a limited downside according to technical indicators used by traders to predict price movements, said CFC's Kowalczyk.

Crude will find support at around $64 a barrel based on the 50 percent retracement level found using Fibonacci analysis. That is halfway between the record high of $78.40 a barrel on July 14 and January's low of $49.90.

The next level of support is around $63.48 a barrel or the same price as the 200-day moving average, said Kowalczyk. A moving average takes the average of the previous days closing prices.

``There will be some difficultly moving lower because of these technical levels,'' said Kowalczyk.
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ENERGY MATTERS: 25% Odds Of Big Hurricane In Refining Belt

The odds are one in four that at least one major hurricane will hit the Gulf Coast regions that are home to 27% of U.S. refining capacity this season, according to forecasters at Colorado State University.

That's nearly twice the likelihood that was witnessed last century, forecaster Phil Klotzbach said.

An active season that sees at least one hurricane hit the Gulf Coast may lead to a replay of the events of 2005, when energy prices skyrocketed following crude oil and natural gas supply disruptions caused by hurricanes.

In a forecast released Tuesday, the widely watched Colorado State team said they expect the 2007 hurricane season, which runs from June 1 to Nov. 30, to be "very active" with 17 named storms, nine hurricanes and five major hurricanes, which pack winds of 111 miles an hour or more.

The latest forecast calls for a busier season than was projected in December, when 14 named storms, seven hurricanes and three intense hurricanes were projected.

The long-term average is 9.6 named storms, 5.9 hurricanes and 2.3 intense hurricanes.

Klotzbach said the season won't be as active as the 2005 season, which was the busiest ever and featured destructive Katrina and Rita. These two storms played havoc with the Gulf Coast refineries and shut in much offshore oil output and closed down natural gas production in the Gulf.

The April forecast is identical to that issued last year at this time, which proved to be greatly overstated, as El Nino weather conditions and large volumes of atmospheric dust from West Africa altered conditions that feed an active hurricane season.

The 2006 season was less active than normal, with 10 named storms, five hurricanes and two major hurricanes. In 2006, no hurricanes made landfall in the U.S.

Klotzbach said the forecasters have more confidence in this year's projections, because El Nino - the unusual warming of the waters of the equatorial Pacific Ocean - was considered to be a wild card. The appearance of El Nino altered the conditions that would have allowed a more intense storm season to occur.

"There's more confidence this year," he said in an interview. "The season may prove to be less (intense than the forecast), but I'd be very surprised to see it be uneventful."


Elements For A Busy Season

Veteran Colorado State forecaster William Gray said current conditions, including a neutral-to-weak La Nina phenomenon are "a recipe for greatly enhanced Atlantic basin hurricane activity." La Nina, the opposite of El Nino, is the unusual cooling of equatorial Pacific Ocean temperatures.

Overall, the forecasters see the probability that a major hurricane will make landfall along the U.S. coastline at 74%, compared with an average of 52% for the 20th century. The chances of landfall along the East Coast, including the Florida peninsula, are 50%, compared with a long-term 31% average.

There is a 49% chance of a major hurricane making landfall along the Gulf Coast, from the Florida Panhandle west to Brownsville, Texas, compared with a long-term average of 30%.

An Energy Matters review of regional landfall data published by Colorado State shows a 65.5% likelihood of a named tropical storm hitting in the region stretching from Cameron County to Harris County, Texas, where U.S. refineries with capacity of nearly 3 million barrels a day are located. That compares with a last-century average of 43.8%.

Chances of one or more hurricanes making landfall in the region are 47.1%, compared with 29.1% long term, while the likelihood of one or more intense hurricanes hitting is 22.2%, compared with 12.7% long term.

The greatest likelihood for landfall by one or more major hurricanes comes in the region from Iberia, La., to Holmes, Fla., home to 1.78 million barrels a day of refining capacity. This section of the Gulf Coast refining belt was devastated by Katrina.

Chances of a major strike in the area are 26.7%, compared with 15.5% long term. The likelihood of one or more named tropical storms in the region is 77.2% versus 55.1% in the last century.

Taken together, the two regions which hold about 4.75 million barrels a day of refining capacity, equal to 27.3% of the nation's total, have about a 25% chance of being struck by one or more intense hurricanes this season.


Quiet At Texas-Louisiana Border

The coastal region from eastern Texas to western Louisiana, which houses refineries with 1.9 million barrels a day of capacity, has relatively low odds of being hit by a major hurricane, at 4.3%, compared with 2.4% long term.

Klotzbach said the area including refinery towns of Beaumont and Port Arthur, Texas, and Lake Charles, La., has a low historical average of landfall by hurricanes, despite being in a storm-prone neighborhood.

In fact, anxious oil traders on the New York Mercantile Exchange, who may be bidding up oil futures contracts on anticipation of an active Gulf hurricane season may be more in harm's way than the refineries in eastern Texas and western Louisiana, forecasts show. The region including the Bronx and Westchester, not far from Nymex's Manhattan locale, and running up through Nantucket, Mass., has a greater chance of being hit by an intense hurricane. Odds for a major hurricane strike in the region this season are 8.1%, compared with 4.4% long term.
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Pet Foof Recall Nervous Owners Seek Answers

Dog and cat owners, after frantically switching pet foods and scrutinizing their animals for signs of kidney distress for over two weeks, have lots of unanswered questions:

Are foods not on the Food and Drug Administration's recall list really safe? After all, the recall has expanded a couple of times after reassurances.

How many dogs and cats have died -- in the country and in Maryland, Virginia and the District? How many are sick?

Pet owners might not get answers soon. There is no centralized database for veterinarians to report sick pets, no way to report sudden or perplexing series of deaths. As the investigation proceeds, further recalls are possible.

"What people shouldn't be doing is panicking, and that's what they're doing," said veterinarian Jerry Goldfarb of Fairfax Animal Hospital. "There's a lot of misinformation out there."

The FDA, responsible for enforcing the safety of the food supply for pets as well as humans, has struggled with the scope of the tainted pet food issue, which began when Menu Foods reported March 16 that a number of cats and dogs that ate its foods had died and issued a recall. Since then, the FDA has been swamped with more than 10,000 complaints -- almost twice as many as it got on all topics last year. The agency, headquartered in Rockville, has assigned more than 400 employees, three field labs and 20 district offices to tracking suspect shipments, fielding phone calls and testing pet food samples, an FDA spokesman said.

Although the FDA is confirming just 16 pets dead, some state veterinary associations have collected far higher numbers: Michigan's reports 46, and Oregon's reports 35. Neither Maryland nor Virginia's veterinary associations collect that sort of data and instead refer callers to the FDA.

The Veterinary Information Network, a group of 30,000 veterinarians and students, is doing a nationwide survey after its members sent in unsolicited reports of more than 500 illnesses and 104 deaths.

Gina Spadafori, a syndicated newspaper pet columnist who contributes to the popular PetConnection.com, noted that the Web site has received almost 3,000 unconfirmed reports of pet deaths. Although acknowledging that that number is probably too high, she said, "Even if a fraction of these can be confirmed, we're talking about hundreds of dead pets. The problem is there is no coroner for pets."

In her upcoming column, she said she will urge the FDA to set up a system for veterinarians to send and receive information about animal health, which she called a "canary in the coal mine" for public health. She also urged improved labeling on pet food packages, so consumers know who makes the food and its ingredients and how to reach those suppliers.

The issue first came to public attention when Menu Foods of Canada announced a recall of its "cuts and gravy"-style dog and cat food. The company sold the pet food under nearly 100 brand names through popular supermarkets, pet specialty stores and mass merchandisers. (For a complete list of recalled products, see http://www.fda.gov.) Dry foods were considered unaffected.

The FDA said in its official statements that any commercial pet food that had not been recalled should be safe.

Then other manufacturers began issuing recalls, including one of a dry cat food brand. The New York State Food Laboratory reported finding aminopterin, a rat poison, is some samples of recalled cat food. Days later, the FDA said it was unable to duplicate the findings and identified the contaminant in wheat gluten as melamine, a substance used to make plastics and in other industrial uses. The FDA barred a Chinese company from shipping any more tainted wheat gluten to the United States.

"First, it was rat poison; now, it's some kind of plastic," cat owner Kathleen Thompson of Fairfax said yesterday. She took her previously healthy 5-year-old cat, Matilda, to the vet as a precaution after the first recall was announced. Matilda showed no symptoms but had eaten some of the recalled pet food. The vet discovered that Matilda had kidney failure. "If it could happen to our pets, it could happen to us," Thompson said.

But none of the contaminated wheat gluten that led to the U.S. recall of pet food went to manufacturers of food for humans, the ingredient's importer said yesterday. Stephen Miller, chief executive of ChemNutra of Las Vegas, told the Associated Press that the Chinese wheat gluten his company imported all went to companies that make pet foods, although he would not name the companies.
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Pickup Trucks at the Crossroads

The U.S. full-size pickup truck market is at an historic crossroads, as new-product introductions are increasing competition and demand remains below the peaks of recent years. One sign of the slowdown: According to press reports, Ford Motor (F) said on Apr. 3 that sales of its F-Series pickup truck, one of its most profitable vehicles, dropped 15% in March, with the weakness exacerbated by a contractual dispute with engine maker Navistar International.

This segment has long been one of the most important profit contributors for General Motors (GM; S&P credit rating B), Ford (B), and the Chrysler unit of Germany's DaimlerChrysler (DCX; BBB), who dominate the market, so developments in the pickup market will have a sizable effect on their efforts to return to profitability in North America.

Full-size pickups account for about 22% of the U.S. automakers' aggregate unit sales (27% of Ford's light-vehicle sales, 22% of GM's, and 17% of Chrysler's, based on 2006 data) and have a far greater effect on profitability because of these vehicles' larger contribution margin. Standard & Poor's Ratings Services believes these companies' sales of full-size pickups will remain highly profitable, helping partially offset the steep cash losses of recent years in their North American automotive operations and diminishing sales and overall profits from the large and midsize sport-utility vehicle (SUV) segments.
In a League of Their Own

GM, Ford, and Chrysler together control more than 90% of the U.S. full-size pickup market, making it one of the last refuges of their dominance in North America. By comparison, the three companies have 72% of the midsize SUV market (see charts 1 and 2). We don't expect any dramatic deterioration in the Big Three's pickup share anytime soon, but increased competition from Japan's Toyota Motor (TM; AAA) seems likely to at least chip away at profitability in this segment, even if it remains a distant fourth in unit sales of large pickups for the foreseeable future.

SUV sales, which have fallen much more dramatically in recent years (down 9.2% and 15.6%, respectively, in 2006 following sharp declines in both segments in 2005). Our expectation reflects in part the greater functionality of pickup trucks, which are not as easily replaced by the popular new crossover utility vehicles (CUVs). Many pickups are used for commercial applications.

The relative resilience of the full-size pickup segment also reflects high customer loyalty, both to specific brands and to the segment as a whole. Still, a 10% sales decline in this important segment is a concern, and a recession or further erosion in the housing market would likely take an additional toll on sales, at least in the short term.
Toyota Gets Aggressive

Last month Toyota began selling new versions of its Tundra full-size trucks. The Tundra was introduced nearly a decade ago, but previous versions were considered too small to make a significant dent in the popularity of the Ford F-150, Chevrolet Silverado, or Dodge Ram. However the 2007 version of the Tundra is not only larger than its predecessors, but also is being built in the U.S. at an all-new assembly plant in Texas—not coincidentally, the state with the highest concentration of pickup buyers.

As expected, the new Tundra's arrival is being accompanied by an aggressive advertising and marketing campaign in media channels that are popular among truck drivers. Even though Toyota received some poorly timed negative press in January when it announced a recall of 533,000 earlier-model Tundras and Sequoia SUVs because of a steering-related problem, proper handling of the recall will likely mitigate any long-term effect.

Toyota's goal is to sell 200,000 Tundras in the U.S. in 2007, up from 124,508 of the older versions sold in 2006. And the company expects to sell even more in the long term—the new San Antonio (Tex.) plant will have capacity for 200,000 vehicles, and Toyota's existing truck plant in Princeton, Ind., can build another 100,000.
Nissan Stays Stable

By meeting this year's sales objective, Toyota will increase its market share to about 9%, from 5.6% in 2006, which will still leave the lion's share of the market to Ford, GM, and Chrysler. The only other competitor, Nissan Motor's Titan model, entered the market in 2004 and has just over a 3% share, a level that has been stable for the past three years.

However, even a seemingly small increase in share by Toyota, particularly in conjunction with overall segment softness, could result in a larger hit on profitability if Ford, GM, and Chrysler are forced to compete more heavily on price in this segment than they have historically.
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Sale of Chicago Tribune already old news in Windy City

Competition among this town's daily newspapers used to be so intense that they would hijack a rival's delivery trucks and dump the contents into the Chicago River.

Chicago journalism inspired Broadway's "The Front Page" and produced icons such as Mike Royko. Reporters knew they had arrived when their byline was laminated and posted over the bar at the Billy Goat Tavern. The local legends of journalism are immortalized there: the curmudgeons and columnists, the men — and the occasional woman — who struck fear into the City Hall machine and told of life in the Windy City.

But that was years ago. Many of those names are yellowed and faded now. Some have been forgotten.

Which is why this city of big shoulders greeted this week's news of Tribune Co.'s sale of its media assets with a shrug.

"The media is no longer something people care about passionately in this town," said Michael Miner, a media reporter for the Chicago Reader, an alternative weekly. "The sale of the Cubs? Huge news. The newspaper? To most people here, it's a big 'So what?' "

On Monday, Tribune announced that Sam Zell, a Chicago real estate magnate, would buy one of the nation's largest public media companies. The $8.2-billion deal would give Zell control over the Chicago Tribune, the Los Angeles Times, cable TV network Superstation WGN and nearly 30 other TV stations, radio outlets and daily papers.

But as the sun warmed the Monday city and people here joined the morning rush-hour crush on Chicago's elevated train, the chatter revolved around one thing: Tribune's plans to sell the beloved — and legendarily cursed — Cubs after this baseball season.

Squeezed onto the blue line train in Oak Park, friends Drew Harrod and Derrick Godfrey spent their commute into the city quietly discussing the sale of a team that hasn't won a World Series since 1908 and speculating about its future in its Wrigley Field shrine.

"I'm actually hopeful for the first time in years that the team's luck could be turning," said Harrod, 31, a department store salesperson.

But, 33-year-old Godfrey worried, what if the Tribune sold the team to someone outside Chicago? "What if it's to someone worse than the Tribune?" he asked. "What if they move the team out of Wrigley?"

Harrod glared at Godfrey in horror. "No way. No way anyone's insane enough to do that."

Back in the 1920s and '30s, when at least 10 daily newspapers fought to grab readers' attention, the talk would probably have been as much about the sale's effect on the paper's news coverage as about the team's fate. Editors scrambled to boost their readership during the "Front Page" era — the play by Ben Hecht and Charles MacArthur about reporters who schemed and conned their way onto their newspapers' Page 1.

During the 1970s, the Chicago Tribune and its rival, the Sun-Times, regularly raided each other's newsroom staff. In the 1980s, after media baron Rupert Murdoch stepped into the ownership seat at the Sun-Times, the two papers waged a circulation war that included wooing readers with cash prizes and promotion freebies.

Over the decades, the Tribune tower has become a proud symbol of architecture and journalism. It still draws crowds of tourists and locals, who remain fascinated by the majesty of the gothic skyscraper and its quirky lore.

They clamor to find out tidbits from the past, such as when newspaper baron Col. Robert R. McCormick had a secret staircase built off of his 24th-floor office in the tower that led to a hidden refuge — just in case he needed to flee from enemies who might storm the building. They snap photographs inside the tower's ornate lobby, where the marble walls have famous quotes supporting free speech and 1st Amendment rights carved into them.

(A few spot that, in true journalistic fashion, there was a typo in one of the quotes. A word, "official," was supposed to be plural. The Tribune edited the quote by U.S. Chief Justice Charles Evans Hughes — squeezing in a small "s" — and let it be.)

Yet in recent years, the public's news habits shifted to the Internet and the traditional media industry consolidated. And the relationship readers have with their newspapers in Chicago and elsewhere changed.

"This is a town where people feel passion for things, and frankly no one's passionate about the Tribune," said Steve Rhodes, who runs the local media watchdog site, BeachwoodReporter.com. "They respect it. They respect the stories and the work the reporters do. But they're not passionate about it. It doesn't pull on people's heartstrings the way the Cubs do."

The push to sell the Tribune did make some locals nervous, particularly at a time when there has been a steady string of endings among the city's revered icons.

Late last year, Marshall Field's faded away when New York-based Macy's took over the department store chain. The Berghoff restaurant, known for obtaining the city's first post-Prohibition liquor license, closed up shop in 2005. So did City News Service, a scrappy outlet where author Kurt Vonnegut once worked.

Yet such closures come at a time when Chicago is booming, and the number of commercial and residential projects is on the rise. Just a decade ago, few people lived in the warehouse-heavy downtown streets of the South and West Loop. Now, thousands of young professionals, students and aging empty-nesters have moved into newly constructed high-rise condos, drawn by a burgeoning night life and easy access to the city's expansive Millennium Park.

The city enjoyed a boost when Boeing Co. moved its headquarters from Seattle to Chicago in 2001, and again with the rise of the futures markets — and the subsequent growth of the Chicago Mercantile Exchange and the Board of Trade.

To local business and city officials, the Zell deal came as a relief — in no small part because the decision to stay with a local owner could help maintain a Midwestern corporate culture that has long been the media giant's calling card.

"The Tribune is a historic corporate figure in this town, a part of Chicago's rich history," said Jerry Roper, president of the Chicagoland Chamber of Commerce, which covers a six-county region of northeastern Illinois. "To have a local owner, especially an entrepreneur, taking the helm is very appealing."

Among those watching the sale the closest were Tribune employees themselves. At WGN Radio, Tribune's news and talk station whose call letters came from its "World's Greatest Newspaper" slogan, the staff spent much of Monday fielding calls from the public and reporting on details of the deal.

But interest in the sale quickly waned there too: By the 5 p.m. broadcast, about nine hours after the Tribune sale was announced, it was already old news. Something else was the top story.
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M&T Shares Fall on Lower-Than-Expected Mortgage Bids

Shares of M&T Bank Corp., the New York bank partly owned by Warren Buffett's Berkshire Hathaway Inc., fell the most since 1998 after the firm cut its earnings forecast because of weaker-than-expected demand for mortgages.

The stock tumbled $9.88, or 8.5 percent, to $105.95 at 4:25 p.m. in New York Stock Exchange composite trading. The Buffalo, New York-based company last week cut its first-quarter profit forecast by $7 million because so-called Alt-A mortgages it tried to sell attracted lower bids than predicted. M&T also said rising defaults mean it must buy back some loans it previously sold.

Shares of mortgage lenders have dropped this year as defaults on subprime loans rose to a four-year high. Companies that offer Alt-A mortgages, a category considered at less risk of default, have said in the past month that investors are mistaking them for subprime lenders and unfairly punishing their shares.

M&T ``is among the first banks to report that recent issues in the subprime arena have, in fact, spread upward to `higher- quality' borrowers,'' wrote Joseph Fenech, managing director at Sandler O'Neill & Partners LP, in a note to investors. ``We would not be surprised to see similar-type pre-announcements from other banks.'' Fenech rates M&T stock a ``hold.''

Shares of IndyMac Bancorp Inc., another Alt-A lender, fell 4.4 percent and rival Impac Mortgage Holdings Inc. fell 5.2 percent. IndyMac's shares have lost almost a third of their value this year and Impac is down 46 percent. M&T Bank has fallen 13 percent in 2007. Today's decline was the biggest since Aug. 31, 1998.

New Century Bankruptcy

Surging defaults in subprime mortgages, those to borrowers with bad credit or high debt, have forced more than 30 lenders to close, cut operations or seek buyers since the start of 2006. New Century Financial Corp. today became the biggest subprime mortgage company to file for bankruptcy in the past year after being overwhelmed by customer defaults.

The loans M&T planned to sell didn't attract the offers the bank expected at auction, the company said on March 30 after the close of regular trading. M&T cut their value, resulting in after-tax costs of 7 cents a share. The loss on the loan buyback will cut profit by another $4 million, or 3 cents a share, the bank said.

``Even excluding the losses on the Alt-A portfolio, MTB still would have missed estimates by a notable margin,'' said A.G. Edwards Inc. analyst David George in a note to clients. He rates the shares ``hold.''

Alt-A mortgages, short for Alternative A, fall shy of the credit criteria of Fannie Mae and Freddie Mac, the two largest sources of mortgage money in the U.S. They often involve loans made with less proof of borrowers' income or assets, purchases of homes by investors or interest-only loans and ``option'' adjustable-rate mortgages, whose payments can fail to cover the interest owed.

M&T said it plans to keep $883 million of Alt-A home loans instead of selling them because management believes the bids don't reflect their true value.
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