Economic Calendar

Tuesday, March 27, 2012

Nokia to Sell $99.99 Windows Phone Via AT&T to Take On Apple

By Scott Moritz - Mar 27, 2012 3:55 AM GMT+0700

AT&T Inc. (T) plans to start selling a Nokia Oyj smartphone with Microsoft Corp. (MSFT) software for half of what it charges for the iPhone, as the device’s makers seek to break Apple Inc. (AAPL) and Google Inc. (GOOG)’s dominance of the U.S. market.

The Lumia 900, which runs on AT&T’s network using faster, so-called long-term-evolution technology, will start selling for $99.99 on April 8, the second-largest U.S. wireless carrier said today in a statement. The latest iPhone and newest handsets running Google’s Android software typically start at $199.

Nokia is counting on Microsoft’s Windows Phone software to reignite sales in the U.S., where the iPhone, Android makers such as Samsung Electronics Co. (005930) and Research In Motion Ltd. (RIM)’s BlackBerry control 92 percent of the market. Microsoft is trying to increase its share of the mobile software market to expand beyond the slower-growing personal-computer market.

“The pricing is aggressive,” said Avi Greengart, an analyst at research firm Current Analysis in Teaneck, New Jersey. “They are hoping to use price to get people to buy a product with an operating system they aren’t familiar with.”

To get the $99.99 price, customers need to sign up to a two-year contract with AT&T. The Dallas-based carrier will also sell the phone without a contract for $449.99, said Steven Schwadron, an AT&T spokesman.

Those price points suggest that AT&T is subsidizing each Lumia by about $350. That compares with a $450 subsidy for the the cheapest version iPhone 4S, which sells for $199 with a contract and $649 without one.

Must Win

Nokia Chief Executive Officer Stephen Elop, a former Microsoft executive, started rebuilding the Espoo, Finland-based company’s smartphone strategy around the Windows Phone operating system last year. Nokia had previously focused on its own MeeGo and Symbian operating systems.

Nokia and Microsoft have said they are willing to spend money to fuel sales. Microsoft said last year it would pay Nokia $1 billion to develop and promote Windows phones. Elop said in October that marketing spending on the Lumia series would be triple the money spent on previous product sales promotions.

Microsoft, based in Redmond, Washington, rose 1.8 percent to $32.59 at the close in New York. Nokia advanced 0.4 percent at 3.99 euros in Helsinki. AT&T added 0.9 percent to $31.79.

The Lumia 900 has a 4.3-inch (11-centimeter) screen, larger than that of the iPhone, and an 8-megapixel camera. Customers can order it online starting March 30, AT&T said.

To contact the reporter on this story: Scott Moritz in New York at

To contact the editor responsible for this story: Peter Elstrom at


Green Mountain Founder Sold Stock Before Starbucks Threat

By Max Abelson and Leslie Patton - Mar 27, 2012 4:08 AM GMT+0700

Robert P. Stiller, founder and chairman of Green Mountain Coffee Roasters Inc. (GMCR), sold $66.3 million of his stock before it plunged the most in four months on news that Starbucks Corp. (SBUX) had developed a rival to its K-Cup brewer.

Stiller’s combined sales on Feb. 15 and 24 were his largest in a single month since at least 2003, when the stock traded below $2, data compiled by Bloomberg show. He would have received $13.7 million less had he sold after March 9, when the shares fell 16 percent on Starbucks’ introduction of a machine for home-brewing single cups of espresso and coffee, a challenge to Green Mountain’s Keurig system.

Green Mountain Coffee K-Cups at the company's visitor center and cafe in Waterbury, Vermont on Feb. 18, 2011. Photographer: Herb Swanson/Bloomberg

“We recently learned of Starbucks’ planned initiative in the espresso-based single-cup category,” Green Mountain said in a March 9 regulatory filing, a day after the machine was announced. “However, we were not made aware of any additional capabilities.” Spokesmen for Green Mountain wouldn’t specify when it learned of the plan.

Green Mountain is struggling to hold market share as it braces for the September expiration of its main patents on K- Cups. The plastic pods have dominated single-serve coffee making in the U.S., with flavors including Gloria Jean’s Butter Toffee Coffee and Wolfgang Puck’s Jamaica Me Crazy blends. As other companies prepare their own machines, the Waterbury, Vermont- based brewer’s stock has almost halved to $53.51 in the six months through last week.

The shares dropped 2 percent to $52.45 at 4:30 p.m. in New York, after reaching as high as $54.75 during the session.

Must Abstain

“It’s something that the SEC would want to look at,” said James D. Cox, a securities law professor at Duke University in Durham, North Carolina. “If he has inside information, he has to withdraw from the market.” Florence Harmon, a Securities and Exchange Commission spokeswoman, declined to comment.

Starbucks informed Green Mountain of its plans before its announcement, according to Alisa Martinez, a spokeswoman for the Seattle-based company. She wouldn’t elaborate. Darren Brandt, a spokesman for Green Mountain, declined to comment on behalf of the company and Stiller.

Stiller reduced his direct stake last month by 6.9 percent, selling a total of 1 million shares, according to regulatory filings with the SEC. The sales aren’t marked as so-called 10b5- 1 transactions, a type of pre-programmed trade that managers set up in advance to show they aren’t basing decisions on inside information. Starbucks’ March 8 announcement after the close of trading sent Green Mountain’s stock down the next day. By the end of last week, it had regained 1.8 percent.

Stiller’s Background

Stiller, the second-biggest shareholder of Krispy Kreme Doughnuts Inc. (KKD) and the largest stakeholder of pizza chain Noble Romans Inc. (NROM), also co-founded the rolling paper maker E-Z Wider. He founded Green Mountain in 1981 as a small Vermont cafe and remains the largest individual shareholder with 13.4 million shares, or 8.7 percent of the company, according to Bloomberg data. Stiller was listed as 68 in a February proxy statement.

The company has faced criticism from hedge-fund manager David Einhorn, who in October questioned its accounting and said its market share has peaked.

“With Green Mountain’s patents expiring this fall, Starbucks’ entry is part of the competitive onslaught hitting Green Mountain,” said Einhorn, 43, president of New York-based Greenlight Capital Inc., in an e-mail earlier this month.

Stiller submitted paperwork dated Aug. 4 to the SEC showing he wanted to sell as much as 2 million shares. He sold only 500,000 that day, a separate filing shows.

Rival Machines

Even if those documents showed intent to further reduce his stake, the February trades would be “problematic” if he had information from Starbucks about its plans, said Onnig Dombalagian, a professor at Tulane University Law School in New Orleans and former fellow at the SEC.

Green Mountain says its K-Cup system and a new brewer, called Vue, are different from the new Starbucks machine, called Verismo. Green Mountain’s machines use “low pressure to extract maximum flavor,” as opposed to espresso machines using “high pressure and high temperature to produce a more intense taste profile,” according to its March 9 statement.

Starbucks had an existing agreement to sell coffee for Green Mountain’s K-Cup system before introducing the Verismo. On March 21, the companies said Starbucks will also sell cups that work with the Vue. Green Mountain jumped 10 percent on that announcement.

Stiller’s trades probably aren’t the most important of the “smorgasbord of cases” the SEC could be interested in, Boston University School of Law professor Tamar Frankel said. The commission’s resources “are not unlimited -- far from it.”

To contact the reporters on this story: Max Abelson in New York at; Leslie Patton in Chicago at

To contact the editors responsible for this story: David Scheer at; Robin Ajello at


U.S. Stocks Advance Following Bernanke’s Comments

By Rita Nazareth - Mar 27, 2012 3:45 AM GMT+0700

U.S. stocks advanced, sending the Standard & Poor’s 500 Index to the highest level since May 2008, after Federal Reserve Chairman Ben S. Bernanke said that accommodative monetary policy is still needed to spur jobs.

The Morgan Stanley Cyclical Index of companies most-tied to the economy rose 1.3 percent. Apple Inc. (AAPL) jumped 1.8 percent to a record as the world’s most-valuable technology company said it plans to increase investment in China. Inc. (AMZN) and JPMorgan Chase & Co. (JPM) climbed at least 2.2 percent to pace gains among the largest companies. Pfizer Inc. (PFE) added 1.6 percent as health-care shares rose the most among 10 S&P 500 groups.

Specialist Paul Cosentino, right, directs trading in shares on the floor of the New York Stock Exchange. Photographer: Richard Drew/AP Photo

March 26 (Bloomberg) -- Bloomberg's Carol Massar reports on the performance of the U.S. equity market today. The Standard & Poor's 500 Index rallied 1.4 percent to close at 1,416.51 at 4 p.m. New York time, returning to its highest level in almost four years. (Source: Bloomberg)

March 26 (Bloomberg) -- Michael Gayed, chief investment strategist at Pension Partners LLC, and Matthew McCormick, vice president and portfolio manager at Bahl & Gaynor Inc., talk about investing and the U.S. stock market. They speak with Trish Regan, Adam Johnson on Bloomberg Television's "Street Smart." Peter Kiernan, chief executive officer of Kiernan Ventures, also speaks. (Source: Bloomberg)

March 26 (Bloomberg) -- Fed Chief Ben Bernanke says accommodative policy is needed to cut the unemployment rate. Bloomberg's Betty Liu speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)

March 26 (Bloomberg) -- Federal Reserve Chairman Ben Bernanke said while he’s encouraged by the unemployment rate’s decline to 8.3 percent, continued accommodative monetary policy will be needed to make further progress. Bloomberg's Mike McKee reports that Bernanke's view is not held by all on the Federal Reserve. He speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)

Audio Download: Blackrock’s Doll Cold on Treasuries, Warm on Stocks

The S&P 500 advanced 1.4 percent to 1,416.51 at 4 p.m. New York time, erasing last week’s loss and posting the fourth- biggest gain of 2012. The Dow Jones Industrial Average added 160.90 points, or 1.2 percent, to 13,241.63 today. The Russell 2000 Index (RTY) of small companies rallied 1.9 percent to 846.13, the highest level since July. About 6.2 billion shares changed hands on U.S. exchanges, or 6 percent below the three-month average.

“Bernanke is in a difficult situation because the Federal Reserve is mostly relying on the Fed’s speech as opposed to money to move markets,” said David Kelly, who helps oversee about $394 billion as chief market strategist at JPMorgan Funds in New York. “What he’s trying to say is that they’re going to be pretty slow to remove stimulus.”

Equities rose as Bernanke said in a speech that while he’s encouraged by the unemployment rate’s decline, the economy still needs help. The number of Americans signing contracts to buy previously owned homes held in February near an almost two-year high, a sign that the real estate market may be stabilizing.

Bailout Fund

Gains in stocks were also driven by speculation the European Union will increase the size of its bailout fund. European finance ministers meet March 30 to discuss raising a 500 billion-euro ($664 billion) ceiling on the region’s financial firewall. Chancellor Angela Merkel said Germany may back plans for the temporary and permanent euro-area rescue funds to run in parallel.

“Europe took care of a liquidity problem, but the solvency concern still remains,” E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia, said in a telephone interview. His firm manages about $107 billion. “Some action to bolster the firewall would be viewed as positive.”

All 10 groups in the S&P 500 rose today as some of the largest companies rallied. The Dow Jones Transportation Average, a proxy for the economy, gained 1.4 percent. The KBW Bank Index added 1.5 percent as 23 of its 24 stocks rose. increased 4 percent to $202.87. JPMorgan climbed 2.2 percent to $46.17.

Apple Rallies

Apple jumped 1.8 percent to a record $606.98. Chief Executive Officer Tim Cook visited the world’s most populous country, where store openings have trailed a forecast the company made two years ago. Cook had “great meetings” with Chinese officials, Carolyn Wu, a Beijing-based spokeswoman, said by phone, without identifying the officials.

A measure of health-care companies in the S&P 500 rose the most among 10 industries, adding 1.7 percent. Pfizer added 1.6 percent to $22.16. Tenet Healthcare Corp. (THC) had the second-biggest advance in the S&P 500, adding 5.5 percent to $5.54.

The U.S. Supreme Court opened historic arguments on President Barack Obama’s health-care overhaul by debating whether it should rule this year at all. The justices are considering whether an 1867 law bars them from ruling for now on the measure that requires almost every American to get health insurance by 2014 or pay a penalty.

Weight Loss

Arena Pharmaceuticals Inc. (ARNA) soared 25 percent to $3.01, the highest level since September 2010. The weight-loss pill maker faces an advisory panel on May 10 as Food and Drug Administration staff said in a report today that obesity treatment manufacturers may need to study the heart risks of their medicines before U.S. regulators weigh approval.

Edwards Lifesciences Corp. (EW) rallied 5.9 percent, the most in the S&P 500, to $75.51. The company’s Sapien device replaces damaged aortic heart valves as well as surgery, without cracking open the chest or triggering higher rates of stroke or death after two years, a company-funded study found.

Lions Gate Entertainment Corp. (LGF) added 4.5 percent to $15.18. “The Hunger Games” collected $155 million in weekend sales in the U.S. and Canada, a record opening for the company and for the month of March.

Safeway Inc. (SWY) declined 3.4 percent, the biggest loss in the S&P 500, to $20.42. The grocer was cut to neutral from outperform at Credit Suisse Group AG, meaning the firm expects the stock to perform in-line with the market over the next 12 months.

Since IPO

A123 Systems Inc. (AONE) tumbled 12 percent to $1.49, the lowest price since it went public in September 2009. The company said it’s replacing defective battery packs and modules it supplies to customers, including Fisker Automotive Inc., and that the flaw caused a Fisker Karma to shut down in a Consumer Reports test.

The S&P 500 today erased last week’s 0.5 percent decline and extended its monthly advance to 3.7 percent. The benchmark measure is poised for a fourth straight monthly gain, the longest winning streak since September 2009. The index has risen 13 percent in 2012 amid better-than-estimated economic and corporate data. It trades for 14.6 times reported earnings, below the average since 1954 of 16.4.

Hedge funds trailing the S&P 500 for the last five months are giving up on bearish bets and buying stocks at the fastest rate in two years.

Hedge-Fund Bullishness

A gauge of hedge-fund bullishness measuring the proportion of bets that shares will rise climbed to 48.6 last week from 42 at the end of November 2011, the biggest increase since April 2010, according to data compiled by the International Strategy & Investment Group. The Bloomberg aggregate hedge fund index gained 1.4 percent last month, lagging behind the S&P 500 by 2.65 percentage points.

Money managers struggling to catch up with the gains have contributed to the rally that pushed the S&P 500 up 27 percent since October.

Market bulls say they are a continuing source of cash that can move stocks higher. Bears say capitulating hedge funds are further evidence that equities have risen too far, too fast as economic growth remains sluggish, warning that the pool of potential buyers is being depleted.

“It’s encouraged me to gradually increase my exposure to stocks,” Barton Biggs, founder of hedge fund Traxis Partners LP in New York, said in a March 23 phone interview, referring to an improving economic outlook. “The shift has occurred gradually in the six or so months since the beginning of October. I’d be inclined to raise my net long further because the potential to the upside would be greater” should the S&P 500 fall 5 percent to 7 percent, he said.

To contact the reporter on this story: Rita Nazareth in New York at

To contact the editor responsible for this story: Nick Baker at