World financial news

MetroPCS Communications Inc., a wireless phone company known for its no-contract, prepaid service, posted a 2009 profit of $176.8 million.

The company credits an expansion into northeastern U.S. states and a broadening of its rate plans for its 2009 success.

Richardson-based MetroPCS (NYSE: PCS) posted an annual profit of $176.8 million, or 49 cents per share, on revenue of $3.5 billion in 2009. That is up from the company’s profit of $149 million, or 42 cents per share, on revenue of $2 cash advance america.8 billion in 2008.

For the fourth quarter of 2009, MetroPCS posted a profit of $33.1 million, or 9 cents per share, on revenue of $930 million. That compares to a profit of $14.6 million, or 4 cents per share, on revenue of $723.6 million for the fourth quarter of 2008.

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Davenport, Iowa — Lee Enterprises, the publisher of the St. Louis Post-Dispatch and other newspapers, painted an improved financial picture over a year ago for its shareholders Wednesday, citing better revenue trends and deeper-than-expected cost reductions.

Mary Junck, Lee chairman and chief executive, told shareholders at the company’s annual meeting that Lee newspapers and digital products are reaching nearly 7 of 10 adults weekly in its markets. Its newspapers also are reaching 6 of 10 younger readers, or those 18 to 29 years old.

"The effectiveness of our products, coupled with our intensive sales culture, continues to keep Lee ahead of the industry in advertising revenue performance," she said, adding that Lee has outperformed the industry every quarter throughout the recession.

Lee reported Wednesday that total revenue fell 9.2 percent in January from a year ago, the first time since 2008 that revenue didn’t show a double-digit decline. For the quarter ended Dec. 27, Lee’s revenue dropped 13.8 percent.

Carl Schmidt, Lee chief financial officer, reminded shareholders that a year ago, Lee predicted it would reduce its 2009 cash costs by $100 million. In reality, the company cut $147 million in cash costs, a decrease of 17.9 percent.

Among the cuts was retiree health care at the Post-Dispatch, Lee’s largest newspaper. The decision, announced in December, as well as ongoing union negotiations, prompted more than a dozen Post-Dispatch retirees to attend the annual meeting at Lee’s headquarters.

Several retirees quizzed Lee executives about the decision, expressing their dismay at the action.

Junck said Lee, as well as many newspaper companies, "had to make a lot of tough choices" in 2009.

Shannon Duffy, the business representative for the St. Louis Newspaper Guild, said the change affected 80 retirees, but the union fears the same change could be passed on to another 150 retirees represented by the contract now being renegotiated.

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Senate Democrats are expected to take up President Obama’s call and start rolling out their employment creation package by week’s end.

With the balance of power shifted in the Senate, Democrats have moved away from introducing a comprehensive bill similar to the $154 billion legislation passed by the House in December. Instead, the Democrats will likely push through smaller measures in stages.

"First of all, we do not have a jobs bill," said Senate Majority Leader Harry Reid, D-Nevada, on Tuesday. "We have a jobs agenda that we’re working on."

At the top of the list: Renewing existing highway legislation for a year, which is expected to result in one million jobs, Reid said. Also, enacting small business and job creation tax credits. And extending Build America Bonds, a stimulus measure that helps states and municipalities fund capital construction projects.

The president’s fiscal 2011 budget, unveiled Monday, would direct $50 billion to job creation measures, including clean energy initiatives and road projects.

"Infrastructure is where the jobs are, and we need to move in that direction rapidly," Reid said.

Coming next: Enacting the president’s Cash for Caulkers proposal, which would subsidize making homes and buildings more energy efficient, and extending the stimulus grants for surface transportation.

The first job creation bill was unveiled on Wednesday. The measure, promoted by Sens. Charles Schumer, D-N.Y., and Orrin Hatch, R-Utah, would absolve any private-sector employer who hires a worker who’s been unemployed for at least 60 days of paying the 6.2% share of the employee’s Social Security payroll tax for the rest of 2010.

Also, employers who keep these workers on the payroll continuously for a year would be eligible for a non-refundable $1,000 tax credit on their 2011 tax returns.

"This proposal isn’t about more and more government spending; it’s about tax relief to get employers hiring again," Hatch said.

Democrats’ other measures, however, aren’t likely to get as warm a reception from the GOP. Already, several Republican senators have come out against using TARP bank bailout funds to jumpstart lending to small businesses and raising taxes on the wealthy.

"If you’re in business now and you’re trying to figure out what the future is, you’re looking at health care taxes, you’re looking at capital gains taxes going up, dividend taxes going up," Senate Republican Leader Mitch McConnell of Kentucky said on CNN’s State of the Union on Sunday. "If you are a small business and pay taxes as an individual taxpayer, your taxes are going up. So, is that a great environment in which to expand employment? I think the answer is no."

Since Obama outlined his job creation push in his State of the Union speech last week, he has traveled up and down the East Coast promoting his small business initiatives. These include jumpstarting small business lending by giving $30 billion in TARP funds to banks and providing these firms with a $5,000 tax credit for each addition to their payrolls.

"Today, one in 10 Americans still can’t find work," Obama said in Nashua, N.H., on Tuesday. "That’s why jobs has to be our number one focus in 2010. And we’re going to start where most new jobs start — with small businesses." 

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Australian bank lending rose by the most in 11 months, adding to signs of an economic rebound that may prompt central bank Governor Glenn Stevens to raise interest rates next week for a record fourth straight meeting.

Loans provided by banks and other finance companies advanced 0.3 percent in December from November, when they rose 0.1 percent, the Reserve Bank of Australia said in Sydney today. Lending increased 1.5 percent from a year earlier.

Today’s report may increase pressure on Stevens to boost the benchmark lending rate by a quarter percentage point to 4 percent as early as Feb. 2. The nation’s economy, which skirted the global recession in 2009, is forecast to accelerate this year, driven by a surge in consumer confidence and the biggest hiring boom in more than three years.

“It’s very heartening,” said Savanth Sebastian, an economist at Commonwealth Bank of Australia in Sydney. “Consumers are quietly rejoicing in the improving economic environment and are a bit more willing to borrow and spend.”

Credit growth “will continue to track higher this year, and in the second half of the year business credit will start to strengthen,” he said.

The Australian dollar rose to 89.07 U.S. cents at noon in Sydney from 89 cents just before the report was released. The two-year government bond yield was unchanged at 4.22 percent.

Rate Bets

Traders are betting there is a 62 percent chance of a quarter-point increase in Australia’s overnight cash rate target to 4 percent at the central bank’s meeting next week, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 11:58 a.m. Prior to today’s report, the chances of a move were 60 percent.

Lending in December rose three times more than the 0.1 percent median estimate of economists surveyed by Bloomberg News. Loans to consumers to buy houses climbed 0.7 percent from November and 8.2 percent from a year earlier.

Credit provided to consumers for purchases other than housing advanced 0.7 percent from a month earlier for an annual decline of 0.4 percent.

Demand for credit rose after employers added 135,700 jobs in the four months through December, the biggest four-month gain since 2006, pushing down the jobless rate to an eight-month low of 5.5 percent, a report showed on Jan. 14. Consumer confidence jumped in January by the most in six months, a survey by Westpac Banking Corp. showed last week.

The International Monetary Fund said this week that Australia’s gross domestic product will expand 2.5 percent this year and 3 percent in 2011. In October, it forecast 2 percent growth in 2010.

Lending to companies dropped 0.2 percent in December from the previous month, taking the annual decline to 7 percent, today’s report showed.

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In the aftermath of a severe earthquake in Haiti late Tuesday, Twitter is playing a critical role in collecting donations to help disaster victims.

Fundraising efforts by the American Red Cross and rapper Wyclef Jean were two of the top 10 trending topics on Twitter early Wednesday. Both organizations asked Twitter users to text a number to make a donation that would be added to their cell phone bills.

The International Federation of the Red Cross estimated that 3 million people were affected by the 7.0-magnitude quake, the center of which was located near capital city Port-au-Prince.

Twitter lit up with posts from around the globe, including some tweets from Haitians who had no other way to communicate amid the chaos. Donation efforts on the site mobilized quickly amid the first natural disaster to strike since the social media site took off.

At about 6:30 p.m. ET Tuesday, the American Cross tweeted that it was pledging an initial $200,000 to assist those affected.

Shortly after midnight, @RedCross updated: "You can text "HAITI" to 90999 to donate $10 to Red Cross relief efforts in #haiti." The "hashtags" denote topics, and users can search the Twitterverse for keywords.

Wyclef Jean, a musician formerly of the popular group The Fugees, used his account @Wyclef to post news updates and quickly raise funds low interest rate personal loans.

Jean, who is from Haiti, founded Yéle Haiti in 2005 to build global awareness for the country, the poorest in the Western Hemisphere. At about 6:30 p.m. ET, he tweeted: "Please text "Yele" to 501501 to donate $5 to YELE HAITI.Your money will help with relief efforts. They need our help..please help if you can."

About an hour later, it seemed the system had been overwhelmed with people looking to give aid. @Wyclef posted a message: "Our 501501 Yele donation system is down. It will be fixed shortly please standby."

As the day progressed, more celebrities tweeted to urge their followers to donate. Actor Rainn Wilson of "The Office" posted on his Twitter account to support the organization Planting Peace, which works primarily with orphanages in Haiti.

"House" star Olivia Wilde tweeted that she will send personalized videos to those who donate $100 or more if they email her their electronic receipts.

To follow CNN’s Twitter feed devoted to breaking news in Haiti, click: http://twitter.com/cnnbrk/haiti  

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I’ve been writing about investing for nearly a quarter of a century. And if I’ve learned one thing after counseling Money readers through three recessions, three stock market crashes, and two derivatives debacles (yes, two: 14 years before the recent flare-up with mortgage-backed securities, derivatives tripped up several government income and money-market funds), it’s this: Savvy investing need not be complicated. Just focus on what’s most important to stay on the path to financial success and filter out all the noise along the way.

To do just that, follow this four-step program:

1. Don’t obsess over the "best" investments.

Cable-TV investing shows may make you feel like a slouch if you’re not constantly searching for hot new investments. But I’ve seen too many Next Big Things turn into the Next Big Letdowns — limited partnerships in the ’80s and, recently, mutual funds that replicate hedge fund strategies, to name two.

In reality, smart investing is more about assembling a group of tried-and-true assets that give you diversification than trying to predict tomorrow’s top gainers. "I’d rather have mediocre funds in the right mix of categories than great funds without an underlying allocation strategy," says Charlottesville, Va., financial planner David Marotta.

The reason is that asset classes, more than individual picks, drive your long-term returns. Creating a well-rounded portfolio isn’t that hard. Marotta figures you need only five or six funds that cover key assets such as large and small U.S. stocks, foreign shares, and bonds — plus maybe another that invests in natural resources, real estate, or other inflation hedges.

2. Think long term, not year to year.

Birthdays and anniversaries are the milestones of our lives. So it’s not surprising that we tend to think in annual terms when gauging our portfolios. Yet it’s dangerous to think of investing as a sprint rather than a marathon.

Why? If you’re seeking the best gains over the next 12 months, you’ll naturally gravitate toward more volatile investments because they’ll give you a better shot at big short-term gains. But your odds of picking those winners year in and year out are extremely slim.

"It’s like someone on a hot streak at the roulette wheel," says York University finance professor Moshe Milevsky. "You know it’s not going to last." What’s more likely to happen is that you’ll end up in investments that go down just as quickly as they went up.

3. Keep a tight rein on costs.

When was the last time you heard someone brag about his razor-thin mutual fund expenses? Probably never. That’s because high returns are a lot sexier than low fees.

Still, you’re better off paying as much attention, if not more, to what your funds charge than to past performance. "The probability of a manager outperforming going forward is small," says Financial Engines chief investment officer Christopher Jones. "But fees are far more predictable." And remember that every dollar you pay in fees reduces the returns you get to keep — and that can add up over the long haul.

To gauge the effect of costs, I used Morningstar’s database to sort all large-cap stock funds with 15-year records into four groups, based on expenses. I then compared each group’s average annualized 15-year returns. Result: The higher a group’s fees, the lower its average return. This mirrors an analysis that Burton Malkiel and Charles Ellis (two heavyweights in the investing world) include in their new book, The Elements of Investing.

4. Keep a tighter rein on yourself.

During my career at Money, I’ve seen stock prices fall more than 20% in a single day (Oct. 19, 1987) and twice drop by roughly half over longer periods (March 2000 to October 2002 and October 2007 to March 2009).

But if those crashes led to similarly steep losses in your portfolio, you can’t blame the market entirely for your misfortune. More often than not, to paraphrase Shakespeare, the fault is not in the markets, but in ourselves. When things are going well we tend to get overconfident and plow more money than we should into risky assets, making us overly vulnerable to downturns. And when a setback inevitably arrives, says Santa Clara University economist Hersh Shefrin, "We bail out and focus so much on safety that we’re not positioned to capture gains when the market turns around, which it typically does very quickly."

Rather than swinging between euphoria in up markets and depression in down ones, you’re better off keeping your emotions — and strategy — on an even keel. Granted, achieving that Zen-like outlook is easier said than done. But the more you can maintain your equanimity and resist Wall Street’s entreaties to fiddle with your investments, the fewer mistakes you’ll make — and the more wealth you’ll end up with in the long run.  

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Bombardier

$405M contract awarded

Bombardier Inc. has received an order from Spain’s national rail operator to maintain a fleet of high-speed trains for 14 years, the Montreal-based transportation equipment maker announced Thursday.

RENFE will pay $917 million (U.S.) to Bombardier and Spanish railway vehicle maker Talgo to maintain the new trains. Bombardier’s share of the contract comes to $405 million.

The maintenance work will take place at RENFE’s depots in Spain.

Rusal

$2.6B U.S. IPO planned

Russian aluminum giant UC Rusal will try to raise as much as $2.6 billion (U.S.) by selling shares in Hong Kong in late January to reduce its mountain of debt, the company said Thursday.

Moscow-based Rusal – run by tycoon Oleg Deripaska – is seeking to sell more than 1.6 billion shares at a price between 12.50 Hong Kong dollars ($1.61 U.S.) and $9.10 (Hong Kong), according to the filing with Hong Kong’s stock exchange.

The potential proceeds range from $1.9 billion (U.S.) to $2.6 billion.

Washington Times

Paper to axe 40% of staff

The Washington Times will slash newsroom staff by more than 40 per cent and eliminate its sports section as it revamps to focus on politics, business and investigative reporting.

The newspaper’s Thursday edition announced the layoffs and said the last sports section would appear Friday. Among those let go was managing editor David Jones.

A new print edition will be launched Monday.

Diners Club

BMO completes buyout

BMO Financial Group announced Thursday that it has completed the acquisition of the Diners Club North American franchise from Citigroup. The acquisition, announced in November, puts BMO among the top commercial card issuers in North America.

BMO said the purchase will accelerate the bank’s expansion into the travel-and-entertainment card sector, particularly in the United States.

Marvel

Holders okay Disney deal

Shareholders of Marvel Entertainment Inc., home of Spider-Man and the Hulk, have approved the company’s acquisition by The Walt Disney Co., as expected.

Shareholders of the 70-year-old comic-book company voted at a special meeting Thursday.

With the $4.3 billion (U.S.) deal, Disney gets Marvel’s stable of more than 5,000 characters. Most of them are obscure, but several have been the basis for blockbuster movies in recent years.

From the Star’s wire services

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Venezuela’s President Hugo Chavez has threatened to expel Japanese carmaker Toyota unless it produces an all-terrain model of 4×4 vehicles used for public transport in poor and rural areas.

The fiery socialist, in a speech late on Wednesday, also said he would not hesitate to expel and expropriate plants from other Asian and U.S. automobile companies operating in Venezuela if they failed to share technology with locals.

"What’s this that Toyota doesn’t want to make the ‘rustic’ model here?" Chavez said, during a ceremony in Caracas to hand owners the keys to economically produced cars that Venezuela’s government has imported from Argentina.

"We must force them. And if they don’t, then they should leave and we’ll bring another company in … The Chinese want to come and they make ‘rustic’ models."

During a decade in power, Chavez has nationalized large swathes of the Venezuela economy — including the oil and power sectors — as part of his "21st century revolution" but has so far left car manufacturing relatively untouched.

He turned on Toyota, the world’s biggest automaker, when a transporter said there was a scarcity of all-terrain models to serve people in under-privileged areas.

Caracas’ poor mainly live in hillside slums, while many rural areas lack decent roads, meaning tough 4×4s are the main means of transport.

Chavez ordered his Trade Minister Eduardo Saman to carry out a "severe inspection" of Toyota, and warned other companies they must start sharing technology with Venezuelans.

"You tell the people at Toyota that they have to produce this model and we are going to impose a quota, and if they don’t meet it, we will punish them," he told Saman, adding that the state would not hesitate to expropriate Toyota’s facilities and pay appropriate compensation.

Car industry in trouble

Following Chavez’s speech, Toyota has asked the Japanese government to verify the true intentions of his remarks as he has not contacted the company on the issue, Toyota’s Tokyo-based spokesman Yuta Kaga said on Friday.

Spokesmen for Toyota’s Venezuelan unit, which operates an assembly plant in the eastern state of Sucre, were not available to comment on Thursday.

But a source at the company said Toyota had stopped assembling the model in question — which he identified as Land Cruiser 70 — in 2007, with the government’s full knowledge.

It planned to import instead, but had not received the necessary licence, he added.

"The government was informed, it can’t be a surprise," the source said, adding that most Toyota managers were on holiday but were communicating with each other about Chavez’s speech.

In addition to Toyota, Japan’s Mitsubishi as well as Hyundai and General Motors have assembly plants in South America’s top oil-exporting nation, whose people are known for their love of cars.

"Companies who come here to set up must be ready to transfer technology to us," Chavez said.

"If they don’t want to, they should go away. I invite them to pick up their things and go," he added, saying companies from allies like China, Russia, Belorussia and Iran were ready to take their place.

Lack of access to dollars at the official exchange rate, and labor disputes, have combined with a recession to hit the automobile industry hard in Venezuela this year.

According to latest figures from the Venezuela Automobile Chamber, car sales in November were down 40 percent at 10,075 units, compared with the same month last year. 

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The U.S. economy remains mired in a recession, prospects for next year are weak and home prices may resume declines, Harvard University economics professor Martin Feldstein said.

“The recession isn’t over,” Feldstein said today in an interview on Bloomberg Radio in New York. “It will be a while before we have enough information to know if the recession ended.”

Feldstein is a former president of the National Bureau of Economic Research and remains a member of the group’s Business Cycle Dating Committee, the panel charged with determining when recessions begin and end. His comments are at odds with those of the panel’s chairman, Robert Hall, who said early this month that the recession may have ended.

Employers in the U.S. cut 11,000 jobs in November, the fewest in 23 months, and the unemployment rate unexpectedly fell to 10 percent from 10.2 percent, a government report showed on Dec. 4.

The report “makes it seem that the trough in employment will be around this month,” Hall said in an interview on the day the figures were released. “The trough in output was probably some time in the summer. The committee will need to balance the midyear date for output against the end-of-year date for employment.”

The economy has lost more than 7.2 million jobs since the recession began in December 2007. The total number of workers collecting unemployment checks as well as those taking extended government benefits totals about 10 million, according to Labor Department statistics released today.

‘Extended Period’

The Federal Reserve yesterday repeated its pledge to keep interest rates “exceptionally low” for “an extended period” and said the “deterioration in the labor market is abating.”

Ben S. Bernanke won backing for a second term as Fed chairman today in a 16-to-7 vote by the Senate Banking Committee. The nomination next goes to a vote of the full Senate.

Gross domestic product expanded at a 2.8 percent annual pace in the third quarter after shrinking for each of the previous four quarters. Growth will average 2.6 percent next year, according to the median forecast in a Bloomberg News survey of economists early this month.

Restrained consumer spending suggests “2010 is going to be a very weak year,” said Feldstein, 70, who was chairman of the White House Council of Economic Advisers during the Reagan administration.

“Thrift in the long run is a very good thing, but increasing thrift as you come out of a recession is going to be a drag,” he said easy to get unsecured personal loans.

Housing Market

Regarding the residential property market, where the recession initially emerged, Feldstein said the Obama administration’s effort to revive the housing market is a failure and home prices will continue to decline.

“It was just not well enough designed,” Feldstein said. “They ended up failing.” That suggests the housing slump will “continue to push down house prices,” he said.

“We saw a little pause in home-price declines in the summer but I think that was because of the first-time home buyers program,” Feldstein said. “We’re not going to get that boost.”

The U.S. House voted Dec. 11 to tighten rules for derivatives and create powers to break apart healthy financial firms that pose a risk to the economy. The House rejected a “cram-down” amendment that would have given federal judges the power to lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court.

Mortgages Modified

Lenders permanently modified 31,382 of the 4 million mortgages targeted for loan relief under the Obama administration’s main foreclosure prevention plan through last month, the Treasury Department announced on Dec. 10.

Economic reports today suggested the government’s efforts to revive growth with fiscal stimulus may be working for now, Feldstein said in a separate interview on Bloomberg Television. “The danger is we will run out of steam,” he said.

The index of leading economic indicators rose for an eighth consecutive month in November, a sign growth will extend into the first half of 2010. The Conference Board’s gauge of the outlook for the next three to six months increased 0.9 percent after climbing 0.3 percent in October.

Manufacturing in the Philadelphia region expanded in December for the fifth month, led by sales and employment gains. The Federal Reserve Bank of Philadelphia’s general economic index climbed to 20.4 this month. Readings greater than zero signal growth. The bank’s district covers parts of Pennsylvania, New Jersey and all of Delaware.

(In the U.S., hear Bloomberg Radio on satellite radio: Sirius Channel 130 and XM Channel 129. In New York City, tune to WBBR 1130 on the AM dial.)

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The Supreme Court again Monday turned away the latest challenge to Chrysler’s bankruptcy and sale to Italian automaker Fiat.

The justices declined an appeal filed by three Indiana state pension funds which hold a portion of Chrysler’s nearly $7 billion in secured debt. The court said the issue is moot since the Chrysler sale was formally completed six months ago.

The three funds — representing police officers and teachers — sought greater compensation for their share of the debt.

A federal appeals court — as well as a bankruptcy judge — approved the sale of the Chrysler assets.

The financially troubled domestic automaker had filed for bankruptcy April 30, and at the time pinned its future on the restructuring plan pushed by the White House.

Chrysler had been trying to leave behind its debt as part of the Chapter 11 process, a step that would wipe out much of the Indiana pension funds’ holdings.

The funds held about $42 million, or less than 1%, of Chrysler’s debt.

Lawyers for the funds argued to the Supreme Court that the Obama administration improperly used money from a federal bailout to help Chrysler. That money was designed, they say, to help only struggling financial institutions payday loan lenders.

Indiana Treasurer Richard Mourdock said the pension funds are secured creditors and, therefore, deserved a say in the outcome. They said they were no longer were seeking to block the sale but simply wanted to recover money for their investors.

Both Chrysler and the federal government said the sale to the Italian automaker had to be completed quickly to ensure domestic jobs were not lost and to keep Chrysler financially afloat for the long term.

The Justice Department, in a filing with the high court, said the president had the authority to tap into the Troubled Asset Relief Program (TARP) to help Chrysler. "As an economic matter … blocking the transaction would undoubtedly have grave consequences," wrote Solicitor General Elena Kagan.

The deal with Fiat and Chrysler was finalized in June, but legal appeals continued. The new company for now is to be owned jointly by the federal government, an autoworker’s union retiree fund and Fiat.

The case is Indiana State Police Pension Trust v. Chrysler LLC (09-285). 

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