Economic Calendar

Tuesday, March 20, 2012

Asian Stocks Fall After China Raises Fuel Prices; Oil Retreats

By Lynn Thomasson - Mar 20, 2012 10:00 AM GMT+0700

Asian shares dropped after China increased gasoline and diesel prices for the second time in less than six weeks. Gold fell and oil snapped two days of gains in New York amid speculation supplies are rising.

The MSCI Asia Pacific Excluding Japan Index (MXAPJ) lost 0.3 percent as of 11:12 a.m. in Tokyo. The Shanghai Composite Index slid 0.8 percent, while Standard & Poor’s 500 Index futures were little changed. Australian bond yields rose while crude dropped 0.6 percent to $107.50 a barrel. Gold for immediate delivery slid 0.4 percent to $1,658.40 an ounce.

“Higher energy costs and falling profits may worry investors that the economy is slowing even further,” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. in Shanghai.

Signs the U.S. economy is improving don’t dispel risks that include rising gasoline prices and a weak housing market, Federal Reserve Bank of New York President William C. Dudley said yesterday. China’s retail gasoline prices will increase as much as 6.6 percent, according to data compiled by Bloomberg. Reports later today may show U.S. housing starts gained in February and U.K. inflation slowed for a fifth month, according to economists surveyed by Bloomberg.

Transurban Group (TCL), Australia’s biggest operator of toll roads, dropped 2.6 percent in Sydney trading after the company’s biggest shareholder sold a 7.9 percent stake at a discount. Sun Hung Kai Properties Ltd. (16), a Hong Kong property developer, lost 1.6 percent after saying an executive director was arrested as part of an investigation into alleged bribery.

Refiners Rally

SK Innovation Co., South Korea’s largest oil refiner, advanced 2 percent. Korea Gas Corp. and Hong Kong and China Gas Co. rose at least 2.8 percent. Gasoline advanced to a 10-month high in New York yesterday on speculation that refinery closures will lower supply as peak driving season approaches.

Oil dropped for the first time in three days. U.S. inventories climbed to the highest level in six months last week as processors idled units and imports from Canada increased, according to a Bloomberg News survey before a government report tomorrow.

U.S. housing starts probably climbed to a 700,000 annual rate last month from a 699,000 pace in January, according to the median estimate of economists surveyed by Bloomberg.

To contact the reporter on this story: Lynn Thomasson in Hong Kong at

To contact the editor responsible for this story: Alexander Kwiatkowski at


Microsoft Said to Finish Windows 8 in Summer, With October Debut

By Dina Bass - Mar 20, 2012 3:47 AM GMT+0700

Microsoft Corp. (MSFT) will finish work on Windows 8 this summer, setting the stage for personal computers and tablets with the operating system to go on sale around October, according to people with knowledge of the schedule.

The initial rollout will include devices running Intel Corp. (INTC) and ARM Holdings Plc (ARM) chips, making good on Microsoft’s promise to support both standards, said the people, who declined to be named because the plans are confidential. In embracing ARM technology, Microsoft is using the same kind of processors as Apple Inc.’s iPad. Still, there will be fewer than five ARM devices in the debut, compared with more than 40 Intel machines.

The Microsoft booth at the 2010 International Consumer Electronics Show on Jan. 7, 2010 in Las Vegas. Photographer: Justin Sullivan/Getty Images

The timing would let Microsoft target Christmas shoppers with the new software, which works with touch-screen devices as well as laptops and desktop PCs. The Redmond, Washington-based company, which hasn’t announced timing for the Windows 8 release, aims to take back sales lost to the iPad and reinvigorate the sluggish PC market. Apple (AAPL) released the third version of the iPad this month, creating an even bigger challenge for Microsoft.

“If they miss the September-October timeframe, they’re going to be stuck without being able to ship anything in 2012,” said Michael Gartenberg, an analyst at Stamford, Connecticut- based Gartner Inc. “The last thing Microsoft wants to have is a situation where there are no compelling Windows tablets at a time when the new iPad looks like it’s going to be a good seller for the holidays.”

April Event

Microsoft will host an event for its industry partners in early April, the people said. The company will spell out its release strategy for Windows 8, giving more details on timing and marketing, they said.

There will be fewer ARM-based devices in the rollout because Microsoft has tightly controlled the number and set rigorous quality-control standards, said one of the people. The new version of Windows will be the first to use ARM processors, which are most commonly found in smartphones. Windows 7, the current version, only works with Intel’s technology. Three of the Windows 8 ARM devices will be tablets, the people said.

Mark Martin, a spokesman for Microsoft, declined to comment, as did Intel’s Jon Carvill. Representatives of Nvidia Corp. (NVDA), Texas Instruments Inc. (TXN) and Qualcomm Inc. (QCOM), the three chip companies that are supplying ARM-based processors to the makers of the new computers, referred questions on the availability of devices to Microsoft.

More than 103 million tablet devices will be sold in 2012, with sales rising to 326.3 million in 2015, according to Gartner. For now, Apple remains dominant, accounting for two- thirds of the market in 2012, Gartner estimates. The company’s share will drop to 46 percent by 2015, while Microsoft’s percentage will climb to 11 percent.

Difficult Adjustment

Getting Windows 8 ready for Intel processors is the easier part -- Windows has always run on Intel chips. The full version of Windows has never run on ARM products, meanwhile, so that process is taking longer. When Microsoft released a test version of Windows 8 for developers in September, the software only ran on Intel technology.

Steven Sinofsky, president of the Windows business, has said repeatedly that Microsoft plans to have both ARM and Intel- based systems available when Windows 8 is released.

“Our collective goal is for them to ship at the same time,” he said in an interview last month. “I wouldn’t be saying it’s a goal if I didn’t think we could do it.”

To contact the reporters on this story: Dina Bass in Seattle at

To contact the editor responsible for this story: Tom Giles at


Bales Faced Losing Houses as He Fought 6,700 Miles Away

By Peter Robison, James Nash and Alison Vekshin - Mar 20, 2012 5:59 AM GMT+0700

A world away from the isolated camp in the plains southwest of Kandahar, Afghanistan, where U.S. soldiers seized homemade bombs and weapons caches in nighttime raids, Robert Bales’s other life was crumbling.

The Army sniper’s home in Lake Tapps, Washington, where wife Karilyn once made Impossibly Easy taco pie and watched Mickey Mouse Clubhouse with his young daughter, was to be sold for $50,000 less than what they’d paid. They’d already defaulted on another home, scheduled for public auction in 2009 after the couple fell $15,644.19 behind in payments. Bales had failed to get the promotion that stood to ease their financial stress.

Staff Sgt. Robert Bales, 1st platoon sergeant, Blackhorse Company, 2nd Battalion, 3rd Infantry Regiment, 3rd Stryker Brigade Combat Team, 2nd Infantry Division, in 2011. Source: Spc. Ryan Hallock, 28th Public Affairs/U.S. Army via Bloomberg

March 14 (Bloomberg) -- Michael Courts, a retired U.S. army colonel who served at Joint Base Lewis-McChord in Washington state, talks about the base's Madigan Army Medical Center and mental health-care treatment for service members and veterans. Lewis-McChord was the home base of a U.S. Army staff sergeant who is accused of killing at least 16 civilians in Afghanistan villages. Courts, who is now a city council member in nearby DuPont, Washington, spoke with Bloomberg's Alison Vekshin and Britton Staniar yesterday. (Source: Bloomberg)

March 16 (Bloomberg) -- John Henry Browne, a lawyer representing the U.S. army sergeant held in connection with the killings of 16 civilians in Afghanistan, discusses his communication with the soldier and his family. Emma Scanlan and Richard Adler also spoke at the news conference yesterday in Seattle, about 50 miles (80 kilometers) north of Joint Base Lewis-McChord, the soldier's home station. (Source: Bloomberg)

Sometime before dawn on March 11, the Army alleges, the decorated veteran hiked to two villages and killed 16 Afghanistan civilians including women and children in their homes. A U.S. official has said family stress and alcohol may have combined to prompt the shootings. Friends, neighbors and experts in post-traumatic stress disorder contend that something else must have driven a man they know as unfailingly polite to such horrific acts.

“It is PTSD plus something,” said Harry Croft, a former Army doctor who has reviewed about 7,000 cases of post-traumatic stress disorders. “To kill innocent women and children indicates to me that something happened during these killings that was simply more than the product of PTSD,” said Croft, who’s the author of “I Always Sit with My Back to the Wall,” a book aimed at people who suffer from PTSD.

‘Not Thinking’

“He was not thinking of his family,” Croft said. “I do not think he was thinking about the children. I do not think he was thinking about the women. I do not think he was thinking about the reprisals.”

Karilyn Bales, in a statement today, extended her family’s condolences to the victims and said she can’t shed any light on how “such a terrible thing” happened. “What has been reported is completely out of character of the man I know and admire,” she wrote.

The polite neighbor who answered “yes, ma’am” also had a dark side, once completing court-ordered anger counseling to resolve an assault charge. A high school football player who grew up in a Cincinnati suburb, he was unfulfilled in early attempts to establish a direction in life. Bales left college without finishing and helped start an investment firm in Florida that closed after 16 months.

A Purpose

The military he entered less than two months after the Sept. 11, 2001 terrorist attacks gave him a purpose. It also burdened his young family, as four combat deployments lasting more than 1,000 days left Bales’s wife alone caring for their children, Quincy, now 5, and Bobby, 2, according to a blog she kept chronicling struggles with housework and appointments. Their stresses were compounded by $506,250 in mortgage debt they took on in 2006 at the height of the U.S. housing boom, records show.

The nation’s military families are taking the brunt of repeated deployments as Middle East engagements continue more than 10 years after the Sept. 11 attacks. More than 107,000 of 570,000 active-duty troops have been dispatched more than three times since Sept. 11, military figures show. About 21 percent of Iraq and Afghanistan veterans who sought medical treatment from 2004 to 2009 were diagnosed with PTSD, the Congressional Budget Office said in a February report.

Showing Strains

While none of that can excuse or explain the murder of women and children, former soldiers say it does show why an all- volunteer force prosecuting a decade of war may show strains.

A soldier at Joint Base Lewis-McChord, where Bales was based, threatened to blow up the barracks over the weekend in the latest incident at a station under scrutiny for suicides, killings and other crimes. Military police took the unnamed suspect into custody, according to Lieutenant Colonel Gary Dangerfield, a spokesman for the installation.

“We’re going on 11 years since this started,” Mike Courts, a retired army colonel who is now a council member in the nearby city of DuPont, said in an interview last week. “I think we’re seeing the results of repetitive deployments.”

John Henry Browne, Bales’s lawyer, called his client “in general very mild-mannered” with “a very strong marriage” at a news briefing last week, denying that alcohol or marital stress were factors. The possibility of post-traumatic stress disorder and the adequacy of his screening for a concussive head injury will be examined, according to the lawyer.

The U.S. Army will probably file “really bad” charges on March 22 against Bales, Browne said in an interview today.

‘Really Bad’

“We know what they are going to say -- it’s something really bad,” Browne said in Lansing, Kansas, near the Fort Leavenworth base where Bales is detained. The two men planned to meet today and tomorrow, said Browne, whose only previous contact with Bales was a brief phone call last week.

Navy Captain John Kirby, a Pentagon spokesman, declined today to comment on Browne’s remarks except to say “look to Kabul for release of the charges,” a reference to the U.S. Army’s operations there. Kirby said Bales also has been assigned military counsel.

Bales, 38, grew up in Norwood, Ohio, a Cincinnati suburb of 19,000, on a residential street near a United Dairy Farmers’ plant. He graduated from Norwood High School in 1991.

The youngest of five brothers, Bales was a guard and linebacker on the football team, said Michael Blevins, a neighbor who considered Bales his role model.

‘Little Guy’

“He was always the one to stand up for the little guy,” Blevins, 35, said, remembering that Bales spent time with a neighbor boy who had cerebral palsy.

Sitting on the porch of his mother’s house across from the former Bales family home, Blevins kept saying of the killings in Afghanistan: “That’s not Bobby.”

Bales starred on Norwood’s team before he lost his starting middle linebacker position as a junior to freshman Marc Edwards, according to “Odyssey: From Blue Collar, Ohio to Super Bowl Champion,” a 2010 biography of Edwards by Aaron M. Smith. Edwards would go on to play for the New England Patriots and other National Football League teams.

The NFL player would remain friendly with Bales, crediting his teammate as an early mentor who helped him learn the position. “That was huge motivation for me,” Edwards is quoted as saying in the book. “This guy was a junior and one of the stars of the team and he’s sucking up his pride to help me out.”

Stock Broker

After high school, Bales first studied physical therapy and then decided he wanted to get into finance, Blevins said.

He attended the College of Mount St. Joseph, a private, liberal arts school in suburban Cincinnati, for two semesters in 1991 to 1992, said Jill Eichhorn, the college’s communications manager. Bales went to Ohio State University in Columbus from 1993 to 1996 and studied economics, though he didn’t graduate, university spokesman Jim Lynch said in a telephone interview.

In 1997, Edwards and Bales, identified in the book as a Columbus, Ohio, stock broker, spent a weekend together at the PGA Memorial Tournament in Columbus watching golf, “drinking a couple beers,” and singing at a dueling piano bar, according to the book.

“People were watching us make complete idiots of ourselves, but we were having an absolute ball,” Edwards says in the book. “We were talking to girls, we were dancing. It was fun.”

Bales started Spartina Investments Inc., based in Doral, Florida, in 1999, with Edwards and Bales’ brother, Mark. It dissolved after 16 months, according to state records.

‘Business Relationship’

“Marc had a brief and very limited business relationship with Mr. Bales,” said Marina Ein, a spokeswoman for the former NFL player. It ended “as a result of marketplace forces at the time and other issues,” and “did not affect the friendship,” she said.

In a statement, Edwards called Bales “one of my oldest and best friends” and said the tragedy “has saddened my wife and me greatly and caused us great concern on Bob’s behalf.”

Before enlisting, Bales lived in Jensen Beach, Florida, according to the Army, and records there show he registered to vote as a Republican in St. Lucie County.

Bales’ enlistment in the Army, on Nov. 8, 2001, set him on a new course. He won medals for superior performance and spoke proudly of his combat experiences. He spent nine years at Lewis- McChord, the largest base in the western U.S., in the Second Battalion, Third Infantry Regiment of the Third Stryker Brigade.

Sense of Duty

“He wanted to be a soldier,” said Tim Burgess, 59, a retired warehouse worker who was a neighbor of Bales’s in Auburn, Washington, and remembered him talking about it with a sense of duty more than “rah-rah-rah.”

Court records show Bales was arrested at a hotel in Tacoma, Washington, in 2002 for investigation of assault in a case Browne said involved a woman he dated before he married his wife, according to the Associated Press. The lawyer didn’t return a call seeking comment on the case.

Bales, listed in his driver’s license at the time as five feet, 9 inches (1.75 meters) tall and 230 pounds (104 kilograms), pleaded not guilty. He underwent 20 hours of anger management counseling and the charge was dismissed, according to Tacoma Municipal Court records.

He left for combat in Iraq a year later, serving from Nov. 1, 2003, to Oct. 1, 2004, the Army says.

Wife Karilyn

The next year, he married Karilyn Primeau, according to the blog his wife later set up. She now works for Amaxra Inc., a Redmond, Washington, business communications company, according to the firm. Her LinkedIn profile lists her as an associate technical project manager and says she earlier worked for Washington Mutual, the Seattle lender that filed for bankruptcy in 2008 and was taken over by JPMorgan Chase & Co. (JPM)

“The Bales Family Adventures” blog and the companion “BabyBales” site were closed to public view after Robert Bales was identified as the shooting suspect. The sites were linked to others associated with Karilyn Bales and an e-mail that uses her maiden name. Karilyn Bales didn’t respond to an e-mailed request for comment.

The couple lived in Auburn at a house Karilyn owned for about a year. They moved when Karilyn became pregnant, according to neighbor Burgess. At the time, in 2005, Bales was nursing a war-related injury to his foot and walked with a pronounced limp, he said. Bales’s lawyer has said he lost part of his foot.

“He wanted to go back over there,” Burgess said. “His mission was to rehabilitate himself, to get back into another combat situation and get over there.”

Karilyn’s dad, who drove a brand-new Ford diesel pickup truck, took the couple out on his boat, Burgess said. Bales bought a new Ford Mustang, he said.

‘Total Military’

Edith Bouvette, 52, remembers when Bales once helped an elderly neighbor fix her roof. “He was always, ‘yes, ma’am, yes sir,’” Bouvette said. “Total military.”

The Baleses bought a four-bedroom home with 2.25 bathrooms in Lake Tapps, Washington, in 2005 for $280,000, county property records show. They rented the other home to neighbors, according to Burgess, vice president of the local homeowners association.

On June 19, 2006, Army records show, Bales returned to war, where his service coincided with the surge in Iraq ordered by George W. Bush.

With Karilyn’s baby on the way, the couple borrowed $506,250 on two residential properties in October 2006, public records show -- $178,500 on the Auburn house and $327,750 on the Lake Tapps home. Karilyn had a power of attorney to sign on her husband’s behalf, the records show.

While it’s unclear what his wife was earning, the debt was a stretch on the salary of a staff sergeant -- more than $60,000 a year, based on military pay scales.

‘$300,000 Houses’

“I’ve rarely seen staff sergeants who lived in $300,000 houses,” said John S. Odom Jr., a retired Air Force judge advocate and partner in Jones, Odom & Politz LLP law firm in Shreveport, Louisiana. “Other than the fact that his job was as an infantryman carrying a rifle and supervising a squad of infantrymen, he isn’t different than if he had been a lineman for the local power company.”

Daughter Quincy arrived Dec. 11, 2006, Karilyn Bales wrote in her blog. As Quincy, 7 pounds, eight ounces, was getting her first bath, Karilyn’s cell phone rang. “It was Bob calling from the airport in Kuwait!!” she wrote. “It was so good to hear his voice. I told him how the birth went and he got to hear Quincy squeaking in the background.”

Returning home with the baby a few days later, her phone rang again. It was Bales; he was in Dallas and would be home soon. “We would be a family,” she wrote.

Najaf Battle

The next month, in January 2007, Bales and his unit fought in the Battle of Najaf near the Euphrates River. They found villagers and family members of Iraqi fighters in the aftermath of the battle, also known as the Battle of Zarqa, which left 250 insurgents dead, according to a 2009 report by the Northwest Guardian, the military-authorized newspaper at his base.

They piled the injured on litters. Some had lost limbs or eyes, according to the report.

“We’d go in, find some people that we could help, because there were a bunch of dead people we couldn’t, throw them on a litter and bring them out to the casualty collection point,” Bales was quoted as saying.

His second deployment ended in September 2007. A year later, Bales was charged in the municipal court of a town near his home after a single-vehicle rollover that damaged property, AP reported. He told police he fell asleep at the wheel and paid a fine to get the charges dismissed, AP said.

Easter Eggs

Bales’s wife wrote of decorating Easter eggs, swimming at a local pool and trying to keep up with dishes and laundry. “Quincy is a much better egg hunter than last year, which was really fun to witness and enjoy with Bob,” she wrote.

In August 2009, Bales left for Iraq for a third time. “I had bad dreams and a pit in my tummy from missing Bob,” Karilyn wrote. “Thankfully I got a text message from Bob at 2pm, he was on the plane to Maine.”

Two months later, the couple’s Auburn house was scheduled to be auctioned at the entrance to the King County Administration Building.

The Baleses owed $15,644.19 on the house plus $1,333.46 in trustee’s fees, according to the auction notice. The auction subsequently was canceled without explanation. A Bank of America Corp. filing in King County in August 2011 said the couple was $16,978 in arrears on the rental property.

‘Do Not Occupy’

The home, visited yesterday, is a discolored light blue. Tire rims, an oil pan and part of a drivetrain rust outside in the driveway. A “Do Not Occupy” sign from the Auburn building department is displayed on the door, along with other signs in the window warning against unauthorized entry.

The homeowners association president, Bob Baggett, said the couple had lapsed on making $120 annual maintenance dues payments for at least two years.

“I suspect they fell on hard times financially,” Baggett said. “It could have been a matter of priorities.”

In March 2011, with their household further expanded by son Bobby, Bales failed to win promotion to sergeant first class, Karilyn wrote in her blog. The family was “disappointed after all of the work Bob has done and all the sacrifices he has made for his love of his country, family and friends.”

Bales, with 10 years of military service, would have received about $431 more a month for a total of $5,673 a month in salary if he had been promoted to sergeant first class, according to a pay calculator on the website of Army Times Publishing Co.

They hoped to make the best of the situation by going on an “adventure” instead -- with assignments in Germany, Italy or Hawaii their top options, Karilyn Bales wrote.

‘In Shock’

“Who knows where we will end up,” she said. “I just hope that we are able to rent out the house so we can keep it. I think we are both still in shock.”

Instead, in December, Bales left for Afghanistan, the Army says.

“He and the family were told that his tours in the Middle East were over, and then literally overnight that changed,” lawyer Browne told reporters last week.

The accused soldier’s job in Afghanistan was providing “force protection” for a Special Forces compound, according to a U.S. official familiar with the case.

The Panjwai plain where he was based is densely dotted with villages whose local mullahs helped found the Taliban movement in 1994. The district has remained a Taliban stronghold since NATO’s International Security Assistance Force, or ISAF, took control in heavy fighting in 2006.

Joint Patrols

U.S. forces there typically conduct joint patrols with the Afghan National Army in the villages surrounding their bases, seizing homemade bombs, weapons caches and hashish, according to ISAF news releases over the past seven months.

On March 12, villagers in southern Afghanistan buried 16 men, women and children shot dead in their homes after the killings by the accused soldier later identified as Bales.

Back at home, Karilyn had approached realtor Phillip Rodocker to list their house in Lake Tapps as a “short sale,” for less than the mortgage balance, according to Rodocker, who listed the house. Purchased for $280,000, it went on the market March 12 for $229,000. Karilyn called on March 13 and asked to cancel the sale because of a “family emergency,” Rodocker said.

Bales’s friends say they don’t want to believe the charges are true. Blevins said he exchanged Facebook messages with the soldier about three weeks ago in which Bales said he was looking forward to his son’s 3rd birthday.

“They always say you never know somebody, what’s in their heart, but that kid’s got the biggest heart anywhere there is,” said Blevins’ sister Michelle Caddell, who also lives on the street where he grew up. “I can’t see that kind of person living inside there, unless something completely destroyed his whole entire being.”

To contact the reporters on this story: Peter Robison in Seattle at; James Nash in Los Angeles at; Alison Vekshin in San Francisco at

To contact the editors responsible for this story: John Walcott at; Jeffrey Taylor at


Apple to Pay Dividend, Buy Back Stock to Return Some of Cash

By Adam Satariano - Mar 20, 2012 5:32 AM GMT+0700

Apple Inc. (AAPL) will pay its first dividend in 17 years and buy back $10 billion in stock, heeding investors who urged it to return part of the $97.6 billion in cash amassed by robust demand for iPhones and iPads.

Shareholders will receive a quarterly dividend of $2.65 a share starting in the period beginning July 1, Cupertino, California-based Apple said today in a statement. The buybacks will begin in the fiscal year starting Sept. 30 and happen over three years, the company said.

Apple’s dividend may provide a short-lived economic boost to some pockets of the economy, said Richard Sichel, CIO of Philadelphia Trust Co., which manages $1.6 billion and holds Apple in some funds. Photographer: David Paul Morris/Bloomberg

March 19 (Bloomberg) -- Tim Cook, chief executive officer of Apple Inc., speaks on a teleconference about the company's plans to initiate a quarterly dividend of $2.65 a share and buy back $10 billion of stock and talks about the benefits of the moves. (This is an excerpt. Source: Bloomberg)

March 19 (Bloomberg) -- Apple Inc., the maker of the iPhone and iPad, plans to initiate a quarterly dividend of $2.65 a share and authorized a $10 billion share buyback, moves that return some of its $97.6 billion in cash and investments to shareholders. Dominic Chu reports on Bloomberg Television's "In the Loop." (Source: Bloomberg)

March 19 (Bloomberg) -- Paul Hickey, co-founder of Bespoke Investment Group, talks about Apple Inc.’s plans to pay a dividend and buy back $10 billion of its stock, returning some of its $97.6 billion in cash and investments to shareholders. He speaks with Betty Liu, Dominic Chu and Josh Lipton on Bloomberg Television's "In the Loop." (Source: Bloomberg)

March 19 (Bloomberg) -- Bloomberg's Cris Valerio reports that Apple Inc. plans to pay a dividend and buy back $10 billion of its stock, returning some of its $97.6 billion in cash and investments to shareholders as demand for iPhones and iPads boosts earnings. She speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)

March 19 (Bloomberg) -- Mike Abramsky, an analyst with RBC Capital Markets, talks about Apple Inc.'s announcement today that it plans to initiate a quarterly dividend of $2.65 a share and authorized a $10 billion share buyback. Abramsky speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

March 19 (Bloomberg) -- Barton Biggs, managing partner and co-founder of Traxis Partners LP, talks about Apple Inc.’s announcement today that it plans to initiate a quarterly dividend of $2.65 a share and authorized a $10 billion share buyback. Biggs speaks with Betty Liu and Dominic Chu on Bloomberg Television's "In the Loop.” (Source: Bloomberg)

March 19 (Bloomberg) -- Scott Kessler, head of technology equity research at Standard & Poor’s, talks about Apple Inc.'s plans to pay a dividend and buy back $10 billion of its stock, returning some of its $97.6 billion in cash and investments to shareholders as demand for iPhones and iPads boosts earnings. Kessler speaks on Bloomberg Television's "InBusiness With Margaret Brennan." (Source: Bloomberg)

March 19 (Bloomberg) -- Lawrence Haverty, a portfolio manager at Gamco Investors Inc., talks about Apple Inc.’s announcement today that it plans to initiate a quarterly dividend of $2.65 a share and authorized a $10 billion share buyback. Haverty speaks with Betty Liu on Bloomberg Television's "In the Loop.” (Source: Bloomberg)

Apple’s cash pile has swelled amid surging demand for its products, such as the iPhone and iPad. Photographer: David Paul Morris/Bloomberg

Chief Executive Officer Tim Cook is showing more willingness than co-founder Steve Jobs to channel part of cash and investments directly to investors. The move will cost $45 billion over three years, Cook said, and may broaden Apple’s shareholding base by attracting fund managers who only hold dividend-paying companies.

“It was high time to do this,” said David Rolfe, chief investment officer of Wedgewood Partners Inc., which holds Apple shares.

The dividend will cost Apple about $10 billion a year and represents a yield of 1.8 percent on the stock’s closing price today. The company generated $16 billion in cash in the first quarter of fiscal 2012, which ended in December. Shaw Wu, an analyst at Sterne Agee & Leach Inc., predicts that Apple will generate about $75 billion in cash this year.

Apple rose 2.7 percent to $601.10, closing above $600 a share for the first time.

Top 10 Yield

“This is something that large shareholders have been asking for,” Wu said before the announcement.

Including instances where a company has scrapped and re- established dividends, today’s was the largest initiation for a company in the Standard & Poor’s 500 Index, surpassing Cisco Systems Inc.’s announcement of a $1.3 billion dividend in March 2011. Apple’s move pushed the dividend yield of the benchmark gauge of American equities to 2.14 percent, from 2.06 percent, Howard Silverblatt, S&P’s senior index analyst, said in an interview.

Apple’s dividend may provide a short-lived boost to some pockets of the economy, said Richard Sichel, CIO of Philadelphia Trust Co., which manages $1.6 billion and holds Apple in some funds.

“More than anything, it’s a psychological boost,” Sichel said.

At 1.8 percent, the yield on Apple’s dividend would be the tenth-highest among U.S. technology companies with market values larger than $10 billion, data compiled by Bloomberg show.

Intel, Microsoft Higher

It’s lower than that offered by Intel Corp., which yields 3.03 percent, based on today’s closing price, and Microsoft Corp., which yields 2.48 percent on that basis. It tops Cisco’s dividend yield of 1.59 percent and International Business Machines Corp.’s 1.46 percent yield.

After today’s announcement, Google Inc., owner of the most popular search engine, is now the only technology company with a market value of more than $100 billion that doesn’t offer a dividend.

The growing amount of money on Apple’s balance sheet followed the introduction of the iPhone, the best-selling smartphone, and the iPad, the leading tablet computer. The company last week began selling a third-generation iPad, which comes with a high-definition screen and faster processor. Apple sold more than 3 million iPads on its debut weekend, a record, Apple said in a separate statement today.

“It’s literally become a cash machine,” said Charlie Wolf, an analyst at Needham & Co. in New York.

Contrast With Jobs

Gene Munster, an analyst at Piper Jaffray Cos., said Jobs, who died in October, resisted efforts to get Apple to return money to shareholders.

“It would have been unheard of under Jobs’s watch,” said Munster. “This is just finance 101, but it looks like rocket science next to what they’ve done in the past.”

Of Apple’s $97.6 billion in cash and investments at the end of December, about $64 billion was overseas. Oppenheimer said Apple will only use money held in the U.S. for the dividend and buyback to avoid tax consequences.

A dividend is a boon to shareholders, including Apple employees, who have already seen the company’s stock rise 48 percent this year.

Fidelity Management, Apple’s largest shareholder, will make $128.81 million each quarter from the dividend, based on its holdings as of Dec. 31. Vanguard Group Inc., the second-biggest shareholder, will receive $98.54 million and State Street Corp. will make $92.12 million.

‘War Chest’

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future,” Cook said in the statement. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business.”

On the conference call, Cook said adding a dividend will expand Apple’s investor pool. Some investors will only buy shares in companies that pay a dividend.

Apple last paid a dividend in 1995, before Jobs returned as CEO and led the introduction of top-selling products including the iPod, iPhone and iPad. The final dividend, of 12 cents a share, was suspended amid leadership upheaval and dwindling computer-market share. According to a company filing, Apple’s cash, equivalents and short-term investments dropped by about half, to $491 million, in the year through Sept. 29, 1995.

Highlighting its turnaround since that period, Apple has surpassed Exxon Mobil Corp. (XOM) as the world’s most valuable company. The iPhone maker’s market value is $560.4 billion, based on today’s closing price. That compares with $410 billion for Exxon Mobil.

To contact the reporter on this story: Adam Satariano in San Francisco at

To contact the editor responsible for this story: Tom Giles at


Wendy’s Tops Burger King as Second-Largest U.S. Burger Chain

By Leslie Patton - Mar 20, 2012 3:27 AM GMT+0700

Wendy’s Co. (WEN) surpassed Burger King Holdings Inc. (BKC) in sales last year, making it the second-largest U.S. hamburger chain, according to Chicago-based researcher Technomic Inc.

Sales at Dublin, Ohio-based Wendy’s U.S. locations were $8.5 billion last year, while Miami-based Burger King’s sales were $8.4 billion, according to Technomic. McDonald’s Corp. (MCD), based in Oak Brook, Illinois, is the largest chain with $34.2 billion in sales at all of its U.S. stores in 2011.

A Wendy's Restaurant in Dublin, Ohio. Photographer: Jay LaPrete/Bloomberg

Wendy’s Chief Executive Officer Emil Brolick has sought to boost sales recently by promoting more expensive, premium burgers and has started remodeling its U.S. stores to lure consumers. Sales at the 500 largest U.S. dining chains advanced 3.4 percent to about $242 billion last year, compared with an increase of 1.8 percent in 2010, the researcher said.

Technomic will release its chain restaurant report on April 13.

Closely held Five Guys Burgers and Fries, with sales of $951 million last year, was listed as the fastest-growing chain with sales greater than $200 million. Five Guys is based in Lorton, Virginia.

Wendy’s fell 0.2 percent to $5.03, and McDonald’s rose 0.1 percent to $97.73 at the close in New York.

Burger King has attempted to gain market share and turn around declining same-restaurant sales in North America by revamping its menu with new French fries and soft-serve ice cream. 3G Capital Inc. bought Burger King in 2010 for about $3.93 billion.

To contact the reporter on this story: Leslie Patton in Chicago at

To contact the editor responsible for this story: Robin Ajello at


Facebook Is Said to Plan Paying 1.1 Percent Fee to Banks

By Douglas MacMillan and Serena Saitto - Mar 20, 2012 4:41 AM GMT+0700

Facebook Inc. (FB), the social- networking website seeking to raise $5 billion in an initial public offering, will pay underwriters a 1.1 percent fee, two people with knowledge of the company’s plans said.

The fee will be shared among Facebook’s underwriters, said the people, who asked not to be named because the details are private. Facebook has hired 31 banks to manage the IPO, including Morgan Stanley (MS) as lead underwriter. The lead bank typically earns a bigger cut of the total.

Mark Zuckerberg, chief executive officer and founder of Facebook Inc. Photographer: David Paul Morris/Bloomberg

A wall that has been written on by employees stands in the entry way at Facebook Inc.'s office in New York on Dec. 20, 2011. At 1.1 percent, the company will be paying its banks one-fifth the typical rate for IPOs. Photographer: Scott Eells/Bloomberg

At 1.1 percent, the company will be paying its banks one- fifth the typical rate for IPOs. Underwriters were paid an average of 5.48 percent in 127 offerings last year, Bloomberg data show. With larger IPOs, banks can often afford to take a smaller percentage fee, and high-profile offerings such as Facebook can lead to future business, making securities firms willing to accept less.

Jonathan Thaw, a spokesman for Menlo Park, California-based Facebook, declined to comment on banker fees.

Facebook said in a regulatory filing earlier this month that it received an $8 billion package of financing, including a $5 billion five-year revolving line of credit and a $3 billion 364-day bridge loan. The company also named 25 new underwriters.

Facebook had already named Morgan Stanley, JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS), Bank of America Corp. (BAC), Barclays Plc (BARC) and Allen & Co. to handle the deal.

The list of banks added to the offering this month includes Deutsche Bank AG (DBK), Credit Suisse Group AG and Citigroup Inc. (CLQ) Smaller banks were added as well, such as M.R. Beal & Co., Muriel Siebert & Co. and William Blair & Co.

Two people told Bloomberg in February that Facebook’s banks could collect a fee of 1 percent to 1.5 percent from the IPO.

To contact the reporters on this story: Douglas Macmillan in New York at; Serena Saitto in New York at

To contact the editors responsible for this story: Tom Giles at; Jennifer Sondag at