By CSPAN, www.youtube.com
The US Secretary of the Treasury Henry Paulson, The Fed chairman Ben Bernanke, SEC chairman Christopher Cox and Federal Housing Finance Agency director James Lockhart are giving testimony before senate committee.
By Reuters, www.reuters.com
Below is the part of Ben Bernanke's speech:
"Let me come to the critical point: I believe that under the Treasury program, auctions and other mechanisms could be devised that will give the market good information on what the hold-to-maturity price is for a large class of mortgage-related assets. If the Treasury bids for and then buys assets at a price close to the hold-to-maturity price, there will be substantial benefits.
"First, banks will have a basis for valuing those assets and will not have to use fire sale prices. Their capital will not be unreasonably marked down. Second, liquidity should begin to come back to these markets. Third, removal of these assets from balance sheets and better information on value should reduce uncertainty and allow the banks to attract new private capital. Fourth, credit markets should start to unfreeze. New credit will become available to support our economy. And fifth, taxpayers should own assets at prices close to the hold-to-maturity values, which minimizes their risk.
"Now how to make this work. To make this work, we do need flexibility in design of mechanisms for buying assets and from whom to buy. We do not know exactly what the best design is. That will require consultation with experts and experience with alternative approaches.
"Second, understanding the concerns and the worries of the committee, we cannot impose punitive measures on the institutions that chose to sell assets. That would eliminate or strongly reduce the participation and cause the program to fail.
"Remember the beneficiaries of this program are not just those who sell the assets, but all market participants in the economy as a whole.
"But finally and very importantly, this is not to say the financial institution should not be reformed. It should be, it's critical. I agree with the Treasury secretary, the Federal Reserve will give full support to fundamental reform of the financial industry.
"But whatever reforms the Congress makes should apply to the whole industry, whether they participate in this program or not. So in summary, I believe that under the Treasury authority being requested, a program can be undertaken that will help establish reasonable hold-to-maturity prices for these assets.
"Doing that will restore confidence and liquidity to financial markets and help the economy recover without an unreasonable fiscal burden on taxpayers. So I urge you to act as soon as possible. Thank you."
Wednesday, September 24, 2008
Monday, September 22, 2008
Stocks, Money Markets or Real Estate - Where to put your money?
By Ab, ibtalk.blogspot.com
(UPDATED) Definitely not in Money markets if you have more than ten years before your retirement! Why not? Because inflation will wipe-out your interest returns, the yields on T-Bills are low due to higher demand for them, uncertainty on how government is going to repay its astronomical National Debt and finally there are too many better alternatives for your cash than Money market and these are the alternatives that I'm going to talk about.
If you live in US and consider yourself very risk averse and the stocks is not an option for you then you should consider buying a house! Yes, exactly when everybody is selling them you should start hunting for one of course given that you have couple of hundred thousands of cash.
According to S&P/Case-Shiller Home Price Index the value of residential housing market around 20 metropolitan areas in US has dropped 17.9% since Q2 2006. And don't forget that index represents only average price while the range of house prices might be significant depending on the area.
This kind of opportunity doesn't come every year, so if you've got cash and don't want to deal with stocks then this is the way to go. Spend next six months searching for a bargain, then buy it and put it for rent. Doing so you will collect revenue from renting your property which you may treat as cash dividend and also long term capital gains from appreciation in the value of your property. I believe you won't have problems with renting your place with all these foreclosures (at the end people have to sleep somewhere) and you won't have problems with selling your house at a higher price sometime in the future since your purchase price supposedly will be much lower than the prices we had in 2006.
Don't forget that cheaper US dollar makes home prices very attractive to foreign investors!
For those of you who are willing to buy stocks you should consider oil stocks (particularly Canadian Oil Sands) and US corporations with significant business abroad especially in Europe and China. Let me tell you first that I'm not going to recommend you specific stocks since you should be the one to decide when to enter and when to exit. However I'm going to give you few reasons on why I think oil stocks and US companies with international business should be on your watch list.
You may have noticed recently that the price for oil on demand concerns has dropped from highs of $145 per barrel during summer time to about $90 per barrel couple of weeks ago-and as I write this article it's trading at around $120 per barrel.
In my view the recent drop in oil price is reasonable and justifies investors' concerns about the demand. However I think the decrease in demand is true in the short term but won't hold true in the long term and there are several strong reasons for that.
First, the decrease in demand is not as significant as the decrease in oil price. For the first eight months of 2008 the total oil consumption fell 4% and netted 20.4 million barrels per day in August.
Second, world demand for oil is expected to grow thanks to developing countries like China and India where with improvements in quality of life, the number of cars on the road is also increasing. Any attempt on US side to decrease demand for oil by becoming more efficient and producing more hybrid and electric cars won’t be enough to offset a growth in world demand.
Third, as you may know the supply of oil is limited: it’s becoming more difficult and costly to search for new reserves and we can’t really expect a spike on the supply side; also, the cost of producing consumer grade fuel is increasing due to the low quality of crude. One may argue that Canadian oil sands have enough proven reserves to last for 80 years. However, the problem with oil sands is that it’s difficult and very costly to rapidly increase production, thus the Canadian oil supplies won’t be enough to meet the world’s growing needs. (I will be writing an article on Canadian Oil Sands so stay tuned).
These were the major factors in favour of oil price increase. However, there is one viable substitute to oil and that is Natural Gas. There is plenty of it in Russia and Alaska and it is the only fuel that can decrease demand for oil within the intermediate term. But if you invest in oil stocks whenever the price for oil is below $100 per barrel you shouldn’t have to worry about natural gas because such an entry point gives you enough upside potential before people around the world start aggressively fuelling their cars with natural gas.
Now let's see why US companies with significant international business should be your first choice.
In case you haven't been paying attention to the latest GDP numbers, the economy grew at annualized 3.3% and almost half of it was due to 13.2% increase in exports. The major reason for such export growth is weaker US dollar when compared to foreign currencies. In addition if congress will approve Paulson's plan for $700 billion bailout that will put additional pressure on US dollar as money supply increases. Low interest rates in US make it even tougher for dollar as investors move their deposits abroad.
As dollar weakens, US goods and services become more attractive to foreigners making US companies more competitive on international arena. Another factor in favor of US exports is the fact that the cost of goods produced in countries like China and India has dramatically increased in the past several years making them less cost competitive with US products.
That's why if you focus on companies that have revenue flow diversified across different countries, and especially those companies in the technology and manufacturing sectors, then you should be able to withstand any market downturns better than those companies which operate solely in the domestic market.
You should also note, that in international markets the competition is tougher than in domestic market. This is especially true for domestic companies trying to gain market share in foreign markets and that's why such natural disadvantage forces companies to be more aggressive, innovative and creative to be able to compete and succeed. And those who succeed in global markets become virtually unbeatable when it comes to competition in the domestic market.
(UPDATED) Definitely not in Money markets if you have more than ten years before your retirement! Why not? Because inflation will wipe-out your interest returns, the yields on T-Bills are low due to higher demand for them, uncertainty on how government is going to repay its astronomical National Debt and finally there are too many better alternatives for your cash than Money market and these are the alternatives that I'm going to talk about.If you live in US and consider yourself very risk averse and the stocks is not an option for you then you should consider buying a house! Yes, exactly when everybody is selling them you should start hunting for one of course given that you have couple of hundred thousands of cash.
According to S&P/Case-Shiller Home Price Index the value of residential housing market around 20 metropolitan areas in US has dropped 17.9% since Q2 2006. And don't forget that index represents only average price while the range of house prices might be significant depending on the area.
This kind of opportunity doesn't come every year, so if you've got cash and don't want to deal with stocks then this is the way to go. Spend next six months searching for a bargain, then buy it and put it for rent. Doing so you will collect revenue from renting your property which you may treat as cash dividend and also long term capital gains from appreciation in the value of your property. I believe you won't have problems with renting your place with all these foreclosures (at the end people have to sleep somewhere) and you won't have problems with selling your house at a higher price sometime in the future since your purchase price supposedly will be much lower than the prices we had in 2006.
Don't forget that cheaper US dollar makes home prices very attractive to foreign investors!
For those of you who are willing to buy stocks you should consider oil stocks (particularly Canadian Oil Sands) and US corporations with significant business abroad especially in Europe and China. Let me tell you first that I'm not going to recommend you specific stocks since you should be the one to decide when to enter and when to exit. However I'm going to give you few reasons on why I think oil stocks and US companies with international business should be on your watch list.
You may have noticed recently that the price for oil on demand concerns has dropped from highs of $145 per barrel during summer time to about $90 per barrel couple of weeks ago-and as I write this article it's trading at around $120 per barrel.
In my view the recent drop in oil price is reasonable and justifies investors' concerns about the demand. However I think the decrease in demand is true in the short term but won't hold true in the long term and there are several strong reasons for that.
First, the decrease in demand is not as significant as the decrease in oil price. For the first eight months of 2008 the total oil consumption fell 4% and netted 20.4 million barrels per day in August.
Second, world demand for oil is expected to grow thanks to developing countries like China and India where with improvements in quality of life, the number of cars on the road is also increasing. Any attempt on US side to decrease demand for oil by becoming more efficient and producing more hybrid and electric cars won’t be enough to offset a growth in world demand.
Third, as you may know the supply of oil is limited: it’s becoming more difficult and costly to search for new reserves and we can’t really expect a spike on the supply side; also, the cost of producing consumer grade fuel is increasing due to the low quality of crude. One may argue that Canadian oil sands have enough proven reserves to last for 80 years. However, the problem with oil sands is that it’s difficult and very costly to rapidly increase production, thus the Canadian oil supplies won’t be enough to meet the world’s growing needs. (I will be writing an article on Canadian Oil Sands so stay tuned).
These were the major factors in favour of oil price increase. However, there is one viable substitute to oil and that is Natural Gas. There is plenty of it in Russia and Alaska and it is the only fuel that can decrease demand for oil within the intermediate term. But if you invest in oil stocks whenever the price for oil is below $100 per barrel you shouldn’t have to worry about natural gas because such an entry point gives you enough upside potential before people around the world start aggressively fuelling their cars with natural gas.
Now let's see why US companies with significant international business should be your first choice.
In case you haven't been paying attention to the latest GDP numbers, the economy grew at annualized 3.3% and almost half of it was due to 13.2% increase in exports. The major reason for such export growth is weaker US dollar when compared to foreign currencies. In addition if congress will approve Paulson's plan for $700 billion bailout that will put additional pressure on US dollar as money supply increases. Low interest rates in US make it even tougher for dollar as investors move their deposits abroad.
As dollar weakens, US goods and services become more attractive to foreigners making US companies more competitive on international arena. Another factor in favor of US exports is the fact that the cost of goods produced in countries like China and India has dramatically increased in the past several years making them less cost competitive with US products.
That's why if you focus on companies that have revenue flow diversified across different countries, and especially those companies in the technology and manufacturing sectors, then you should be able to withstand any market downturns better than those companies which operate solely in the domestic market.
You should also note, that in international markets the competition is tougher than in domestic market. This is especially true for domestic companies trying to gain market share in foreign markets and that's why such natural disadvantage forces companies to be more aggressive, innovative and creative to be able to compete and succeed. And those who succeed in global markets become virtually unbeatable when it comes to competition in the domestic market.
Friday, September 19, 2008
One Trillion Dollar And Counting Financial Crisis...what should average Joe do?
By Ab, ibtalk.blogspot.com
I'm assuming if you have been following the news a little bit then I don't need to explain you why we got in to this mess on Wall Street. Here are some actions that Fed and US Treasury attempted to stabilize markets and to stop the domino effect in the past months:
First, Fed and US Treasury quickly arranged the bailout of Bear Sterns by JP Morgan and guaranteed short-term credit line of $30 billion to cover any liquidity shortage associated with acquisition of Bear Sterns;
Second, Fed and US Treasury opened a credit line of $300 billion for major investment banks on Wall Street to cover their bad debts and to increase the liquidity to avoid bank runs and ease investors’ worries. Apparently that wasn’t enough!
Third, US Government bailed out Fannie Mae and Freddie Mac by taking control over two mortgage giants and taking responsibility to cover their losses from mortgage-backed securities that may reach up to $200 billion.
Fourth, US Treasury rejected Lehman Brothers request for loan at a critical time which resulted in LB’s bankruptcy and DOW plunging 500 points and even worth sell off on the world markets especially in Russian and Chinese ones. That same day it was certain that if US Governments wouldn’t act quickly and lend AIG money the company would go bankrupt and that would result in even worth crisis along the globe since AIG is the world’s largest insurance company that operates globally and has more than $1 Trillion in assets! So the next day AIG was given a whopping $85 billion two-year loan at about 11% annual rate and in exchange government became a major shareholder of the company holding about 80% of the shares. Actually this was a good business deal for government!
Last but not least, problems seamed getting worse. Even after announcement of AIG’s bailout the DOW plunged more that 400 points. It was time for government’s major intervention, the time for big actions on the part of Bush’s administration and Treasury secretary Henry Paulson – a man who had the power during this crisis that no one had before for centuries in US history.
So President’s administration came up with a plan to buy all bad debts associated with sub-prime mortgages from institutions in financial industry and the price tag they set was starting at estimated $700 billion with possibility to pay as much as $1 Trillion, yes a Trillion with a capital “T”!!!
Personally I don’t know if this is the solution for the problem. Yes, it will help banks recover sooner but the root cause of the problem is not mortgages but the people who are not able to earn enough money to pay for their homes and bills. Moreover all the money that government spent so far during this crisis was tax payers’ money and nothing in this world is free – somebody has to pay for all this and that’s going to be us, the tax payers.
Now if you take in account the National Debt that as of September 2008 was $9.7 Trillion and add all the additional costs of these bailouts and huge spending on wars in Iraq and Afghanistan then by middle of the next year we may sit at $11 Trillion easily!
And so I wonder if life of average American will improve since hugely increased government spending will require higher taxes or higher borrowing which eventually needs to be repaid either way through higher taxes or smaller government spending which I doubt will happen any time soon.
If you are average investor who already owns stocks then you are probably thinking whether you should stick to your investments or get rid of them and move to money markets. In your case I would stick with my investments since selling them at current prices is the worst thing you can do. Don’t forget that in most cases after financial crisis has happened the markets usually recover to their previous levels in one to two year period. Switching to money markets with intention to wait until markets start to recover is a bad option. You have to understand that timing the market's ups and downs on a constant basis is literally impossible thus you don’t want to be in a situation when you sell your stocks at distressed prices and buy T-bills at premium prices just to see your stock reverse and head up while your T-bills fall down. So unless you are very lucky there is imminent danger to realize huge losses.
However, if you don’t own any stocks but thinking whether you should be investing at this time or wait a bit then you should consider this option. At this moment there are plenty of high quality stocks that you can buy at prices you usually don’t get. As I said in the previous paragraph it’s impossible to time the ups and downs of the market thus you should invest only part of your savings. If after you took positions in certain stocks and their value went significantly below your purchase price then you should take a hard look at them and see if there are company specific problems or is it just a broad market effect that drove stock prices down. In case there are no company specific problems and you think the stock you own is still a good choice then you should consider additional purchases to your initial investment. This strategy allows you to use the dollar cost averaging effect meaning that average price of all your stocks will be lower thus minimizing your downside risk and maximizing your upside potential.
Remember that it’s your responsibility to determine which stocks are of a good quality and which ones are risky. Because each person has his or her own definition of good stocks I withhold my suggestions and opinion on such matter not to influence your decisions.
I'm assuming if you have been following the news a little bit then I don't need to explain you why we got in to this mess on Wall Street. Here are some actions that Fed and US Treasury attempted to stabilize markets and to stop the domino effect in the past months:First, Fed and US Treasury quickly arranged the bailout of Bear Sterns by JP Morgan and guaranteed short-term credit line of $30 billion to cover any liquidity shortage associated with acquisition of Bear Sterns;
Second, Fed and US Treasury opened a credit line of $300 billion for major investment banks on Wall Street to cover their bad debts and to increase the liquidity to avoid bank runs and ease investors’ worries. Apparently that wasn’t enough!
Third, US Government bailed out Fannie Mae and Freddie Mac by taking control over two mortgage giants and taking responsibility to cover their losses from mortgage-backed securities that may reach up to $200 billion.
Fourth, US Treasury rejected Lehman Brothers request for loan at a critical time which resulted in LB’s bankruptcy and DOW plunging 500 points and even worth sell off on the world markets especially in Russian and Chinese ones. That same day it was certain that if US Governments wouldn’t act quickly and lend AIG money the company would go bankrupt and that would result in even worth crisis along the globe since AIG is the world’s largest insurance company that operates globally and has more than $1 Trillion in assets! So the next day AIG was given a whopping $85 billion two-year loan at about 11% annual rate and in exchange government became a major shareholder of the company holding about 80% of the shares. Actually this was a good business deal for government!
Last but not least, problems seamed getting worse. Even after announcement of AIG’s bailout the DOW plunged more that 400 points. It was time for government’s major intervention, the time for big actions on the part of Bush’s administration and Treasury secretary Henry Paulson – a man who had the power during this crisis that no one had before for centuries in US history.
So President’s administration came up with a plan to buy all bad debts associated with sub-prime mortgages from institutions in financial industry and the price tag they set was starting at estimated $700 billion with possibility to pay as much as $1 Trillion, yes a Trillion with a capital “T”!!!
Personally I don’t know if this is the solution for the problem. Yes, it will help banks recover sooner but the root cause of the problem is not mortgages but the people who are not able to earn enough money to pay for their homes and bills. Moreover all the money that government spent so far during this crisis was tax payers’ money and nothing in this world is free – somebody has to pay for all this and that’s going to be us, the tax payers.
Now if you take in account the National Debt that as of September 2008 was $9.7 Trillion and add all the additional costs of these bailouts and huge spending on wars in Iraq and Afghanistan then by middle of the next year we may sit at $11 Trillion easily!
And so I wonder if life of average American will improve since hugely increased government spending will require higher taxes or higher borrowing which eventually needs to be repaid either way through higher taxes or smaller government spending which I doubt will happen any time soon.
If you are average investor who already owns stocks then you are probably thinking whether you should stick to your investments or get rid of them and move to money markets. In your case I would stick with my investments since selling them at current prices is the worst thing you can do. Don’t forget that in most cases after financial crisis has happened the markets usually recover to their previous levels in one to two year period. Switching to money markets with intention to wait until markets start to recover is a bad option. You have to understand that timing the market's ups and downs on a constant basis is literally impossible thus you don’t want to be in a situation when you sell your stocks at distressed prices and buy T-bills at premium prices just to see your stock reverse and head up while your T-bills fall down. So unless you are very lucky there is imminent danger to realize huge losses.
However, if you don’t own any stocks but thinking whether you should be investing at this time or wait a bit then you should consider this option. At this moment there are plenty of high quality stocks that you can buy at prices you usually don’t get. As I said in the previous paragraph it’s impossible to time the ups and downs of the market thus you should invest only part of your savings. If after you took positions in certain stocks and their value went significantly below your purchase price then you should take a hard look at them and see if there are company specific problems or is it just a broad market effect that drove stock prices down. In case there are no company specific problems and you think the stock you own is still a good choice then you should consider additional purchases to your initial investment. This strategy allows you to use the dollar cost averaging effect meaning that average price of all your stocks will be lower thus minimizing your downside risk and maximizing your upside potential.
Remember that it’s your responsibility to determine which stocks are of a good quality and which ones are risky. Because each person has his or her own definition of good stocks I withhold my suggestions and opinion on such matter not to influence your decisions.
Sunday, September 14, 2008
How to immigrate to Canada?!
By Ab, ibtalk.blogspot.com
All the time I was being asked by people about immigration to Canada Canada or living outside of Canada
All the time I was being asked by people about immigration to Citizenship and Immigration
Who can apply—Six selection factors and pass mark
Saturday, September 13, 2008
Damn It Feels Good To Be A Banker - Wall St. musical!
Some of you probably have already seen this video that's circulating on the web but if you haven't seen it then you should check it out! It is Wall St. musical where consultants are telling Investment Bankers how crappy their job is and then being lectured by IBs what a losers consultants are! Any comments would be appreciated :)
Wednesday, September 10, 2008
Pentagon delays $35B Air Force tanker decision
By Stephen Manning and Donna Borak, AP Business Writers
WASHINGTON (AP) -- The Defense Department has again delayed plans to award a $35 billion contract for Air Force refueling planes, handing a victory to defense contractor Boeing Co. and leaving the politically charged decision for the next president.
WASHINGTON (AP) -- The Defense Department has again delayed plans to award a $35 billion contract for Air Force refueling planes, handing a victory to defense contractor Boeing Co. and leaving the politically charged decision for the next president.Defense Secretary Robert Gates told lawmakers Wednesday that he ended the current round of bidding on the tankers because the Pentagon's plan to pick a winner by the end of the year no longer seemed possible given the complexity of the project and the rancor between Boeing and rival Northrop Grumman Corp. He said a delay would provide a "cooling off" period.
"We can no longer complete a competition that would be viewed as fair and objective in this highly charged environment," Gates said in statement prepared for testimony before the House Armed Services Committee.
The decision represents a major win for Boeing in its lengthy and bitter struggle with Northrop for the lucrative contract for 179 planes that could eventually include the right to build many more. Boeing recently threatened to back out, saying the Pentagon's timeline and terms unfairly favored the larger plane proposed by Northrop. That would have left Northrop as the only bidder.
Boeing welcomed the Pentagon's decision, saying it will allow "the appropriate time for this important and complex procurement to be conducted in a thorough and open competition."
The Pentagon has tried and failed for seven years to award a contract to replace its aging fleet of current tankers that refuel military planes in flight. Some of the planes are nearly 50 years old, and senior defense officials have said they need to be replaced soon.
In 2004, Boeing lost the contract amid an ethics scandal that resulted in prison terms for a former senior company official and a former high-ranking Air Force official. A team of Northrop and Airbus parent European Aeronautic Defense and Space Co. was awarded the contract earlier this year, but bidding was reopened after a Government Accountability Office report found serious flaws with the Air Force's decision. The Pentagon had hoped to make a new contract decision by Dec. 31.
But Boeing and its congressional supporters exerted heavy pressure on the Defense Department to defer its decision, with company officials saying they needed at least six months to come up with a new bid. Top Boeing officials met several times with the Air Force and Pentagon after the release last month of a draft version of the latest contract guidelines.
In those discussions it became clear that "one of the competitors would not or could not conform to the timeframes" laid out by the guidelines, according to Pentagon spokesman Chris Isleib. That meant a contract award this year was not possible.
The struggle between the two major defense contractors has been especially bitter, with each waging sharp-edged public relations and lobbying campaigns in Washington. Capitol Hill support also is divided, with lawmakers from Boeing's industrial base in Washington state and Kansas battling their counterparts from Alabama who back Northrop's plans to build a manufacturing plant in Mobile, Ala., that will employ 1,500 people.
Sen. Richard Shelby, R-Ala., said Wednesday that the Pentagon was putting "politics over pilots." Republican Rep. Jo Bonner of Mobile said Pentagon leaders "have an urgent military need yet are simply giving up efforts to address that need."
Northrop spokesman Randy Belote said the company was disappointed in the Pentagon's decision, noting recent statements from senior Air Force officials that cited a pressing need for new planes.
"With this delay, it is conceivable that our warfighters will be forced to fly tankers as old as 80 years of age," Belote said.
But Washington state's Democratic senators welcomed the delay. Patty Murray called it a "reality check on a procurement process that got very complicated and a little muddied," while Maria Cantwell said Boeing was able to convince the Pentagon that the tight timeline made it difficult for the company to bid.
Gates' announcement means it will be left to the winner of this November's presidential election between Democrat Barack Obama and Republican John McCain to sort out the contract. The next president takes office Jan. 20.
Obama spokeswoman Wendy Morigi said the senator from Illinois has called for an independent review of the tanker deal, and "is committed to getting this important contract right." McCain's campaign was not immediately available for comment.
Boeing supporters are wary of McCain, who was a critic of the original plans to lease tankers from Boeing, calling it wasteful. He also later helped pressure the Pentagon to make concessions to Northrop over issues such as the plane's size.
Jim McAleese, a Virginia-based defense analyst, said McCain would likely scale back plans, opting instead to refurbish existing aircraft or try to use commercially leased planes for refueling. "McCain will take it back to the very bare bones," he said.
The Air Force currently flies Boeing refueling jets. For the new plane, Boeing has proposed a version of its 767 commercial jet. Northrop and EADS have proposed a variant of the Airbus A330 passenger jet, which can carry more fuel. Some defense analysts have suggested Boeing may submit a bid using its larger 777 commercial jet.
The Pentagon plans to ask for money it its fiscal year 2009 budget request for maintenance of the current fleet and planned to continue funding those planes through fiscal 2015. Isleib said some money slated for the new tanker contract will be used to maintain the current planes.
Richard Aboulafia, an aerospace analyst with the Teal Group, said the current tankers should be able to continue flying. "This replacement program has been delayed for decades. Another year or two isn't going to matter," he said.
Share of Chicago-based Boeing fell $2.31 to $61.71 Wednesday, while Los Angeles-based Northrop dropped 80 cents to $69.99.
Associated Press Writers Ben Evans, Pauline Jelinek, Matthew Daly and Ann Sanner contributed to this report.
Tuesday, September 9, 2008
Apple unveils new iPods but shares slip
By Jordan Robertson and Jessica Mintz, AP Technology Writers
SAN FRANCISCO (AP) -- Apple Inc. CEO Steve Jobs took the wraps off a revamped line of iPods on Tuesday and trumpeted a truce with NBC Universal that means the TV network will begin selling programs again on iTunes.
The iPod announcements were largely expected, and investors were less than energized, sending Apple's shares down $6.24, 4 percent, to close at $151.68
The iPod upgrades Jobs revealed Tuesday in a theater in San Francisco include two slick new Nano models, oval-shaped devices that Jobs said are the thinnest iPods Apple has ever made. They are less than a quarter-inch thick.
A $149 version comes with 8 gigabytes of memory (enough for 2,000 songs); a 16-gigabyte version (which holds 4,000 songs) is $199.
The new models acknowledge the incredible appetite for iPods -- Jobs said Apple has sold 160 million iPods since their introduction in 2001, making them the runaway leader among portable music players. But Apple has to work hard to differentiate them from the iPhone, Apple's cell phone/iPod/Internet device that threatens to cannibalize some of the demand for iPods.
Jobs also showed off three new versions of the iPod Touch, which is much like an iPhone except that doesn't make calls. An 8-gigabyte version of the new model will sell for $229; a 16-gigabyte Touch will be $299 and a 32 GB model will be $399.
Apple hopes the 32-gigabyte unit will appeal to people who download a lot of games and other programs, and wouldn't be able to store them all on an iPhone, which tops out at 16 gigabytes. Jobs said people have downloaded a "mind-blowing" 100 million applications for iPhones and iPod Touch devices since Apple began offering the programs online two months ago.
"We don't think of it as cannibalization," said Philip Schiller, Apple's senior vice president of product marketing. "As long as they want an Apple product, we're happy."
Ross Rubin, an analyst with market researcher NPD Group, said Apple's focus on the Nano and its new features indicates otherwise. Among the new twists: A "shake to shuffle" feature that lets people mix up their iPod playlists by giving the device a hard, abrupt shake.
Jobs also showed off a new "genius" feature in iTunes and the iPod's onboard software. If a user clicks the genius button while listening to a song, the program automatically creates a new playlist of similar songs from the user's own library. The software determines similarity in part by analyzing which songs other people have together in their libraries.
In the deal with NBC, the television network is coming back to iTunes a year after pulling out in a dispute over the prices Apple charges for shows it sells on the online service. At that time, programming controlled by NBC Universal, a unit of General Electric Co., made up an estimated 40 percent of the video downloads on iTunes.
At the height of the spat, Apple said NBC had sought more than double the wholesale prices for its shows, which would have resulted in shows selling for $4.99 each. NBC disputed that, and said it wanted only to be able to sell programs at different prices.
But with its muscle in the market for digital downloads, Apple largely appears to have won the battle. NBC's programming will sell for the same prices as other TV shows available on iTunes. High-definition shows, a new addition for iTunes, will sell for $2.99 each. Shows in standard definition cost $1.99. Some older shows are available for 99 cents apiece.
NBC was able to wring some concessions. Jean-Briac Perrette, NBC Universal's president for digital distribution, said NBC will be allowed to bundle programs together and set prices for those packages as well as for full seasons of shows. Apple wasn't willing to budge on those requests in earlier negotiations.
Perrette said NBC is "thrilled to be back on iTunes" but noted the network also has "a lot of other avenues" to sell shows online, including its own site and a video Web site, Hulu.com, that it created with News Corp.
Jobs gave the start of the event some buzz by flashing a message on a screen behind him: "The reports of my death are greatly exaggerated."
Jobs borrowed that line from Mark Twain in reference to obituary preparedness on Jobs that was accidentally posted by Bloomberg News and then retracted. News outlets regularly prepare obituary material on famous people.
Questions about Jobs' health swirled after he appeared gaunt at a recent Apple event. Apple has since said Jobs, 53, a survivor of pancreatic cancer, suffered from a bug and is better. He appeared thin but energetic Tuesday.
SAN FRANCISCO (AP) -- Apple Inc. CEO Steve Jobs took the wraps off a revamped line of iPods on Tuesday and trumpeted a truce with NBC Universal that means the TV network will begin selling programs again on iTunes.
The iPod announcements were largely expected, and investors were less than energized, sending Apple's shares down $6.24, 4 percent, to close at $151.68
The iPod upgrades Jobs revealed Tuesday in a theater in San Francisco include two slick new Nano models, oval-shaped devices that Jobs said are the thinnest iPods Apple has ever made. They are less than a quarter-inch thick.
A $149 version comes with 8 gigabytes of memory (enough for 2,000 songs); a 16-gigabyte version (which holds 4,000 songs) is $199.
The new models acknowledge the incredible appetite for iPods -- Jobs said Apple has sold 160 million iPods since their introduction in 2001, making them the runaway leader among portable music players. But Apple has to work hard to differentiate them from the iPhone, Apple's cell phone/iPod/Internet device that threatens to cannibalize some of the demand for iPods.
Jobs also showed off three new versions of the iPod Touch, which is much like an iPhone except that doesn't make calls. An 8-gigabyte version of the new model will sell for $229; a 16-gigabyte Touch will be $299 and a 32 GB model will be $399.
Apple hopes the 32-gigabyte unit will appeal to people who download a lot of games and other programs, and wouldn't be able to store them all on an iPhone, which tops out at 16 gigabytes. Jobs said people have downloaded a "mind-blowing" 100 million applications for iPhones and iPod Touch devices since Apple began offering the programs online two months ago.
"We don't think of it as cannibalization," said Philip Schiller, Apple's senior vice president of product marketing. "As long as they want an Apple product, we're happy."
Ross Rubin, an analyst with market researcher NPD Group, said Apple's focus on the Nano and its new features indicates otherwise. Among the new twists: A "shake to shuffle" feature that lets people mix up their iPod playlists by giving the device a hard, abrupt shake.
Jobs also showed off a new "genius" feature in iTunes and the iPod's onboard software. If a user clicks the genius button while listening to a song, the program automatically creates a new playlist of similar songs from the user's own library. The software determines similarity in part by analyzing which songs other people have together in their libraries.
In the deal with NBC, the television network is coming back to iTunes a year after pulling out in a dispute over the prices Apple charges for shows it sells on the online service. At that time, programming controlled by NBC Universal, a unit of General Electric Co., made up an estimated 40 percent of the video downloads on iTunes.
At the height of the spat, Apple said NBC had sought more than double the wholesale prices for its shows, which would have resulted in shows selling for $4.99 each. NBC disputed that, and said it wanted only to be able to sell programs at different prices.
But with its muscle in the market for digital downloads, Apple largely appears to have won the battle. NBC's programming will sell for the same prices as other TV shows available on iTunes. High-definition shows, a new addition for iTunes, will sell for $2.99 each. Shows in standard definition cost $1.99. Some older shows are available for 99 cents apiece.
NBC was able to wring some concessions. Jean-Briac Perrette, NBC Universal's president for digital distribution, said NBC will be allowed to bundle programs together and set prices for those packages as well as for full seasons of shows. Apple wasn't willing to budge on those requests in earlier negotiations.
Perrette said NBC is "thrilled to be back on iTunes" but noted the network also has "a lot of other avenues" to sell shows online, including its own site and a video Web site, Hulu.com, that it created with News Corp.
Jobs gave the start of the event some buzz by flashing a message on a screen behind him: "The reports of my death are greatly exaggerated."
Jobs borrowed that line from Mark Twain in reference to obituary preparedness on Jobs that was accidentally posted by Bloomberg News and then retracted. News outlets regularly prepare obituary material on famous people.
Questions about Jobs' health swirled after he appeared gaunt at a recent Apple event. Apple has since said Jobs, 53, a survivor of pancreatic cancer, suffered from a bug and is better. He appeared thin but energetic Tuesday.
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