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Yahoo loses key AT&T business

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yahoo headquarters

As Yahoo continues to weigh offers from potential bidders, its current display ad and search business has taken a hit.

AT&T(T, Tech30) said Wednesday that it would be ending part of a 15-year-old deal with the company. It's moving management of its online portal, AT&T applications, and search to another company, Synacor (SYNC).

The Wall Street Journal first reported the break on Wednesday.

AT&T confirmed the split in a statement, saying the transition would take place over the next one to two years. It will not have any impact on AT&T email, which will continue to be hosted by Yahoo (YAHOF).

Related: Yahoo is for sale; bidders line up; Marissa Mayer is toast

"It is another step as we integrate the entertainment and services our customers want. Our customers will not have to take any actions during this transition. This deal does not impact email addresses," said AT&T.

In a news release announcing the new contract, Synacor estimated the revenue from the deal at around $100 million a year after the transition is completed.

Under the expiring deal with Yahoo, visitors to att.net are redirected to att.yahoo.com where they are greeted with a Yahoo search bar and the latest Yahoo news. Yahoo search also appears in other AT&T products.

"We are honored to have been selected from among the contenders AT&T considered in their evaluation process," said Himesh Bhise, Synacor's CEO, in the release.

Yahoo declined to comment on the matter.

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The cost of the massive, 4-month gas leak around Los Angeles has climbed to $665 million

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FILE - In this Nov. 3, 2015, file photo, provided by Southern California Gas Co., SoCalGas crews and technical experts attempt to safely stop the flow of natural gas leaking from a storage well at the utility's Aliso Canyon facility near the Northridge section of Los Angeles. Sempra Energy says costs from a massive gas leak in Los Angeles have reached 5 million. In an SEC filing in February, SoCalGas, which is owned by Sempra, estimated costs of less than half that, 0 million to 0 million. The massive gas leak that spewed uncontrollably for nearly four months drove thousands of Los Angeles residents to leave their homes. It was capped in late February. (Javier Mendoza/SoCalGas via AP, File)

SoCalGas crews and technical experts attempt to safely stop the flow of natural gas leaking from a storage well at the utility's Aliso Canyon facility near the Northridge section of Los Angeles in November 2015. Sempra Energy says costs from a massive gas leak in Los Angeles have reached $665 million.

The estimated cost of a massive gas well blowout that spewed methane uncontrollably for nearly four months and uprooted 8,000 Los Angeles families has more than doubled to $665 million, Sempra Energy announced Wednesday.

San Diego-based Sempra had estimated costs of $330 million in its annual report in February, but that was before courts forced its Southern California Gas Co. to continue paying to house thousands of relocated residents.

The gas leak at the Aliso Canyon storage facility was the largest-known release of climate-changing methane in U.S. history, according to scientists. It spewed an estimated 107,000 tons of methane over 16 weeks.

The blowout reported Oct. 23 sickened residents in Porter Ranch and surrounding San Fernando Valley suburbs who complained of headaches, nausea, nosebleeds and other symptoms as the foul-smelling gas wafted over neighborhoods.

SoCalGas has pointed out that public health agencies have found the air quality in the area has returned to normal, though many residents have continued to complain of maladies since the leak was capped in February. Some 3,700 households remain in short- or long-term housing, many because of fears of returning until they are assured their homes are clean and safe.

Dennis Arriola, president and chief executive of SoCalGas, said that 54 percent of relocated residents had returned home and more were returning each week.

He said the latest cost estimates, which were included in Sempra's first-quarter earnings, reflected the expectation the company will continue to pay housing for relocated families until June 7 when another court hearing is scheduled.

Judges have repeatedly extended orders for the company to pay relocation costs while the Los Angeles County Department of Public Health tests homes for carcinogens and other compounds found in natural gas.

The company has begun moving families from hotels to apartments, which it said was being done to provide more space and amenities such as kitchens. Arriola said it also allowed the company to cut costs because it won't have to pay $45 per person each day for meals.

gas leak california los angelesA woman holds a sign while attending a public hearing before the South Coast Air Quality Management District (AQMD) regarding a proposed stipulated abatement order to stop a nearby massive natural gas leak, on January 16, 2016 in Granada Hills, near Porter Ranch, California.Arriola said the lion's share of the latest cost estimate — 70 percent — is for relocation expenses. The other 30 percent is split equally between: costs for stopping the leak and investigating its cause; and legal and other costs.

The estimates do not account for possible damages from 138 pending lawsuits or civil or criminal penalties that could be brought by a swarm of government agencies investigating the leak.

The company said it has four types of insurance policies to cover more than $1 billion in costs. In its first-quarter earnings report Wednesday, Sempra said SoCalGas has recorded an insurance receivable of $660 million.

Sempra said the estimated costs had no material impact on earnings in the quarter. Net income for Sempra was down 28 percent from the same quarter last year and earnings fell short of Wall Street expectations.

Arriola said the company expects an investigation into the cause of the leak to be completed by early 2017.

He reiterated plans to complete a battery of tests on the remaining 114 wells at the field so the company can resume storing gas underground.

Aliso Canyon is the largest gas storage facility west of the Mississippi River and a major source of energy for the Los Angeles area. Energy officials have warned of possible blackouts this summer if it is not able to operate.

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Media|Tribune Publishing Says No to Gannett’s $815 Million Offer

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The Los Angeles Times building. The owner of the newspaper, Tribune Publishing Company, rejected an unsolicited offer from Gannett.

Two weeks after the Gannett Company went public with an unsolicited bid to acquire Tribune Publishing Company, Tribune’s board formally responded with a firm answer: No.

On Wednesday, Tribune Publishing, which owns newspapers including The Los Angeles Times and The Chicago Tribune, sent a letter to Gannett saying its board had unanimously rejected the $815 million takeover offer, which included debt and other liabilities and represented a significant premium above Tribune’s share price.

“The board believes that the price reflected in the proposal understates the company’s true value and is not in the best interests of our shareholders,” the letter said.

Gannett’s bid was an unconventional move in the newspaper industry, and Tribune’s rejection was not surprising. Still, the reply ratchets up the pressure on Gannett, which can now choose to walk away or try to assuage shareholders’ objections.

“This announcement reaffirms our concern from the outset that Tribune’s board never intended to engage with us, necessitating that we make our proposal public,” John Jeffry Louis, chairman of the Gannett board, said in a statement. “It is unfortunate that Tribune’s board would deny their shareholders this compelling, immediate and certain cash value by rejecting our offer without making a counterproposal or otherwise negotiating or providing any constructive feedback.”

Gannett, which owns USA Today, went public on Monday with its intent to solicit so-called withhold votes ahead of Tribune’s annual shareholder meeting. This tactic, infrequently used in the world of deal making, encourages shareholders of the target company to essentially boycott their votes for director nominees. Gannett said it had filed preliminary proxy materials, urging investors to withhold their votes in the election of eight directors. The move is primarily symbolic, in that it will probably not block the nominees from being elected.

“We intend to give Tribune shareholders the opportunity to send a clear message to the Tribune board that its lack of engagement with our board and management team regarding our highly compelling premium offer for $12.25 per share in cash is unacceptable,” Gannett’s chief executive, Robert Dickey, said in the statement on Monday.

Gannett missed the nomination window to submit its own slate of directors, a move that might have put even more pressure on Tribune’s board.

On April 12, Gannett sent a letter to Tribune Publishing’s management team with an offer of $12.25 a share. After waiting two weeks for an answer, Gannett tried to bring Tribune Publishing to the table by disclosing the bid and corresponding letter. If the acquisition were to go through, it would expand Gannett’s portfolio to nearly 120 newspapers and give it more of a presence in major markets, including Los Angeles, Chicago and Baltimore.

But the management team at Tribune seemed to think that remaining independent was the better course. In a statement, Justin C. Dearborn, the chief executive of Tribune Publishing, said the company was “in the early stages of a compelling transformation” and that the board was “confident that the execution of our stand-alone strategic plan will generate shareholder value in excess of Gannett’s proposal.”

During an earnings call with investors on Wednesday, Mr. Dearborn said The Los Angeles Times planned to open seven overseas news bureaus this year.

He also addressed Gannett’s offer.

“I want to be clear that we did not seek or encourage this proposal, and the board has not been trying to sell the company,” he said. “I also want to reiterate that Gannett’s repeated claims that our board did not take this proposal seriously are misleading and disingenuous.

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ES Morning Update May 5th 2016

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Futures hit the falling trendline of resistance afterhours and briefly pushed through it (hitting 2060) before falling back to trade sideways riding that trendline.

The MACD's on this 2 hour have more room to go up but the 60 minute chart is rolling over suggests a pullback in the morning and then a turn back up later on.

Looking at the various time frame on the ES Futures and the SPX Cash we do appear to be close to a short term bottom.  While the 60 minute chart on the futures acts like it's going to rollover and push the market down the other time frame charts suggest that the market isn't ready to collapse yet as they want to turn up for a few days or so.  And since we had brief pierce of the falling trendline of resistance afterhours and are currently choppy sideways this suggests the pullback should be small as the market wants to go back up through that trendline again and try to hit the next falling trendline up a little higher.

Patternwise we are making an "Inverted Head And Shoulders" pattern on this 2 hours chart and the smaller timeframe charts as well.  What we might see is the futures drift down some early riding that falling trendline to reset the overbought 60 minute chart and make a slightly deeper "Right Shoulder" for the IH&S pattern.  That would leave the afternoon session and/or Friday for the breakout to the upside to happen.  It would also make an ABC pattern of wave up from yesterday's low, which the breakout wave would be the C wave up to end the pattern sometime later today or Friday morning.

That is my preferred scenario and the one I see that has the best odds.  However, we still only came close to the 2042 target on the SPX Cash (about 2035 on the ES Futures) and it's still possible that this first attempt rallying up fails to make an ABC up and just drops at the open and makes another lower low today.  If so, then I'm still going with the same target zones of 2035 on this futures chart and 2042 on the SPX cash.  On the pullback (for either scenario) the first support is the 2045.75 level from the prior low on 4/29 and then of course the "Head" of this IH&S pattern, which was yesterday's low 2039.00... break that and 2035 is next followed by 2026.

Tribune Publishing rejects Gannett’s bid

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Tribune Publishing, which owns the Los Angeles Times, Chicago Tribune and nine other daily newspapers, said Wednesday its board of directors has rejected Gannett's $815 million offer to buy the company.

"Tribune Publishing’s board has unanimously determined that Gannett’s opportunistic proposal understates the company’s true value and is not in the best interests of its shareholders," Tribune said in a statement.

Tribune shares rose 4.4% to $11.50 in after-hours trading.

On April 25, Gannett, which owns USA TODAY and 107 local news properties, revealed its offer to buy Tribune Publishing for $12.25 per share and assume $390 million of Tribune's debt, bringing the total value of the bid to $815 million. Gannett CEO Robert Dickey, who submitted the offer in a private letter to Tribune's board on April 12, said he chose to go public with the offer due to Tribune's "continued refusal to begin constructive discussions with us."

Tribune's board has since hired bankers to review the offer, but its management has maintained that it prefers to run the company on its own with a new strategy formed by Michael Ferro, the company's chairman and its single-largest shareholder, and Tribune CEO Justin Dearborn.

"Tribune Publishing is in the early stages of a compelling transformation, with a well-defined strategic plan to drive increasing monetization of our important brands, capitalize on the global potential of the LA Times and significantly accelerate our conversion of content to revenue through an enhanced digital strategy,” Dearborn said in a statement Wednesday.

Tribune announced Wednesday that it had suffered a loss in the first quarter of this year.

Tribune's board is open to evaluating "any credible proposal," but for now, Tribune will begin executing its strategy that includes investing more in content and deploying "programmatic" advertising-buying technology more widely at its news properties, Dearborn said in a call with analysts Wednesday afternoon. As part of expansion, the L.A. Times plans to open seven foreign bureaus, including outposts in Hong Kong, Seoul and Mexico City.

Dearborn also said the company will create a business unit called Tronc to sell more digital ads. According to the U.S. Patent and Trademark Office’s record on Tribune’s trademarking of the term, the unit’s new services will include “compilation, production and dissemination of advertising matter” and “social media strategy and marketing consultancy services.”

"I believe we have a fundamental advantage in that we create more original curated content," Dearborn said.

“Likely, this will be a test of wills,” said Ken Doctor, a media analyst who writes about the news business at his site, Newsonomics.com. “Tribune chairman Michael Ferro will try to stonewall Gannett, while Gannett must decide how much public and legal pressure it is willing to exercise to win the company. I expect this test of wills will be decided sooner than later. In this case, while Tribune management passions may be high, the numbers are on Gannett's side — and numbers usually triumph in these cases.”

He added, “Given the poor Tribune revenues …Tribune has a hard time justifying a greater value for the company than Gannett has offered.”

As the earnings call began, analysts were told Dearborn wouldn't answer questions about the Gannett offer. Ferro, who became Tribune's board chairman in February after buying a 16.6% stake for $44.4 million and expanded the board to 10 members from seven, didn't participate in the call.

"Gannett’s opportunistic proposal understates the company’s true value and is not a basis for further discussion," Dearborn said. "The board is confident that the execution of our standalone strategic plan will generate shareholder value in excess of Gannett’s proposal.”

Tribune, based in Chicago, also said Wednesday it swung to a loss in the first quarter as rising circulation revenue couldn't offset an advertising sales drop and higher expenses.

Net loss for the three-month period ending March 27 totaled $6.5 million vs. $2.5 million of net profit a year ago.

Per-share earnings, after adjusting for some items, including employee buyout costs, were 23 cents, below 25 cents estimated by analysts who were polled by S&P Global Market Intelligence.

Revenue was relatively flat at $398.2 million.

Advertising sales fell 4.4% to $214.7 million due to "softening" in print ad sales, it said. Circulation revenue rose 11.4% to $121.8 million as the company raised rates. Total digital revenues rose 15% to $55 million.

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Two Tesla Production Chiefs to Leave Ahead of Biggest Challenge Yet

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Two top manufacturing executives are leaving Tesla Motors Inc., including the global head of production, at a time when the electric-car company is about to release its most important car: the mass-production Model 3.

Greg Reichow, Tesla's vice president of production and one of its highest-paid executives, and Josh Ensign, vice president of manufacturing, will leave the company. A Tesla spokesperson confirmed both departures and said Reichow will remain until his replacement is found.

A person familiar with the situation who isn't authorized to speak about the matter said the executive changes are linked to delays, glitches, and a recall that have bedeviled Tesla's Model X. Tesla denied any connection between the departures and production problems with its SUV. "This is not about the Model X," said a Tesla spokesperson. "After being at Tesla for over five years and leading its production team for the past three years, Greg Reichow has announced his intention to take a leave of absence from Tesla so that he can have a well-earned break."

The latest high-level personnel changes brings to five the total number of Tesla vice presidents who have left the company this year, and Reichow marks the biggest departure. He served as the leader of car production and had been one of Tesla's highest-compensated employees, making almost $6.4 million in cash, stock, and options in the last two years, according to company filings. Tesla did not elaborate on Ensign's plan to leave.

"Greg and the team deserve a lot of credit for building an all-new manufacturing organization from the ground up and for making Model S and Model X a reality," said Tesla Chief Executive Officer Elon Musk in an e-mail to Bloomberg. "We're confident that with the strength of the team, high-quality manufacturing at Tesla will continue." In the same e-mail provided by Tesla, Reichow added: "My belief in Tesla's ability to successfully deliver great cars and inspire the world to drive electric remains as strong as ever."

While Tesla described Reichow's exit as a leave of absence—and other executives have left and rejoined—the company also said Reichow will be involved in handing off his responsibilities to a successor to ensure uninterrupted production.

The launch of Tesla’s Model X, which Reichow helped oversee, was marred by delays. Musk has publicly taken responsibility for what he described as engineering "hubris" that packed too many new features into the first version of the SUV, including the double-hinged "falcon-wing" doors and mono-post seats. The Model X was delayed by more than 18 months, following missed launch dates for previous models. Several thousand of the earliest Model X vehicles were recalled over problems with the seats.

“In retrospect,” Musk said in September, “we would not have had so many features and functionality.”

The company has been working to resolve the problems. Model X deliveries have been increasing, and reviews have been positive. Tesla will report first-quarter earnings after the close of stock trading on Wednesday.

Other senior executives who have left Tesla this year include Michael Zanoni, vice president of finance and worldwide controller; James Chen, vice president of regulatory affairs and deputy general counsel; and Ricardo Reyes, vice president of global communications. Tesla said that of 40 executive positions filled in the last year, only one has left. Half the people who report directly to Musk have been at the company for more than five years.

Reichow joined Tesla in April 2011. He had previously worked at U.S. solar panel manufacturer SunPower for more than seven years, according to his profile posted on LinkedIn, which cited no prior auto industry experience. Ensign joined Tesla in June 2014 after working at Honeywell for more than a decade. Ensign could not immediately be reached for comment.

Next up for Tesla may be its biggest manufacturing and production challenge yet: building the Model 3. The $35,000 mass-market electric car received deposits for 400,000 reservations in the weeks after the March 31 unveiling of the prototype. Before the designated launch date of late 2017, Tesla needs to massively ramp up production capacity—first for the Model X, then for the batteries that power all of Tesla's vehicles, and finally for the Model 3 itself. Much of that effort will now fall to an as-yet-unnamed top production executive.

Two top manufacturing executives are leaving Tesla Motors Inc., including the global head of production, at a time when the electric-car company is about to release its most important car: the mass-production Model 3.

Greg Reichow, Tesla's vice president of production and one of its highest-paid executives, and Josh Ensign, vice president of manufacturing, will leave the company. A Tesla spokesperson confirmed both departures and said Reichow will remain until his replacement is found.

A person familiar with the situation who isn't authorized to speak about the matter said the executive changes are linked to delays, glitches, and a recall that have bedeviled Tesla's Model X. Tesla denied any connection between the departures and production problems with its SUV. "This is not about the Model X," said a Tesla spokesperson. "After being at Tesla for over five years and leading its production team for the past three years, Greg Reichow has announced his intention to take a leave of absence from Tesla so that he can have a well-earned break."

The latest high-level personnel changes brings to five the total number of Tesla vice presidents who have left the company this year, and Reichow marks the biggest departure. He served as the leader of car production and had been one of Tesla's highest-compensated employees, making almost $6.4 million in cash, stock, and options in the last two years, according to company filings. Tesla did not elaborate on Ensign's plan to leave.

"Greg and the team deserve a lot of credit for building an all-new manufacturing organization from the ground up and for making Model S and Model X a reality," said Tesla Chief Executive Officer Elon Musk in an e-mail to Bloomberg. "We're confident that with the strength of the team, high-quality manufacturing at Tesla will continue." In the same e-mail provided by Tesla, Reichow added: "My belief in Tesla's ability to successfully deliver great cars and inspire the world to drive electric remains as strong as ever."

While Tesla described Reichow's exit as a leave of absence—and other executives have left and rejoined—the company also said Reichow will be involved in handing off his responsibilities to a successor to ensure uninterrupted production.

The launch of Tesla’s Model X, which Reichow helped oversee, was marred by delays. Musk has publicly taken responsibility for what he described as engineering "hubris" that packed too many new features into the first version of the SUV, including the double-hinged "falcon-wing" doors and mono-post seats. The Model X was delayed by more than 18 months, following missed launch dates for previous models. Several thousand of the earliest Model X vehicles were recalled over problems with the seats.

“In retrospect,” Musk said in September, “we would not have had so many features and functionality.”

The company has been working to resolve the problems. Model X deliveries have been increasing, and reviews have been positive. Tesla will report first-quarter earnings after the close of stock trading on Wednesday.

Other senior executives who have left Tesla this year include Michael Zanoni, vice president of finance and worldwide controller; James Chen, vice president of regulatory affairs and deputy general counsel; and Ricardo Reyes, vice president of global communications. Tesla said that of 40 executive positions filled in the last year, only one has left. Half the people who report directly to Musk have been at the company for more than five years.

Reichow joined Tesla in April 2011. He had previously worked at U.S. solar panel manufacturer SunPower for more than seven years, according to his profile posted on LinkedIn, which cited no prior auto industry experience. Ensign joined Tesla in June 2014 after working at Honeywell for more than a decade. Ensign could not immediately be reached for comment.

Next up for Tesla may be its biggest manufacturing and production challenge yet: building the Model 3. The $35,000 mass-market electric car received deposits for 400,000 reservations in the weeks after the March 31 unveiling of the prototype. Before the designated launch date of late 2017, Tesla needs to massively ramp up production capacity—first for the Model X, then for the batteries that power all of Tesla's vehicles, and finally for the Model 3 itself. Much of that effort will now fall to an as-yet-unnamed top production executive.

 

 

 

More bad news for Priceline. Outlook stinks

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Priceline still flying high despite CEO scandal

It's been a tough couple of days for Priceline.

The online travel giant warned on Wednesday that its earnings for the second quarter would fall far below Wall Street's expectations. Priceline's stock plunged nearly 10% in early trading on the news.

The tepid outlook comes just one week after Priceline (PCLN, Tech30) said that its CEO Darren Huston was leaving the company due to an inappropriate relationship with an employee.

Chairman Jeffery Boyd -- who was CEO before Huston -- has returned to the CEO role on an interim basis.

During Priceline's conference call with analysts, Boyd said Priceline has started to look for a permanent CEO but he offered no prediction as to how long the search may take.

Related: Priceline CEO out over affair with employee

Boyd is taking over during a tumultuous time for the travel industry. Boyd said that Priceline was seeing weakness in France following the terrorist attacks in Paris in November. He did not mention last month's Brussels terrorist attacks though.

But chief financial officer Daniel Finnegan noted during the conference call that there was some soft demand in certain international markets due to "safety concerns."

Cantor Fitzgerald analyst Naved Khan said in a report Wednesday morning that Priceline's outlook might be overly cautious due to lingering fears about terrorism following the Brussels attacks.

Investors are also worried about the impact of the Zika virus on travel companies. But Boyd and other Priceline executives did not discuss that as a reason for the weak second quarter guidance.

Related: Brussels terror attacks slam travel sector

Priceline did take a more than $50 million charge in the quarter though -- due to what the company described as the "deteriorating economic and political situation in Brazil."

The political upheaval in Brazil, where many are calling for the ouster of president Dilma Rousseff, could continue to be bad news for Priceline if it leads to fewer people traveling to the upcoming Summer Olympics in Rio later this year.

Priceline, which also owns Booking.com, Kayak and restaurant reservation site OpenTable, isn't the only travel stock that's suffering.

Shares of Expedia (EXPE) are down 9% in 2016 -- despite surging last week following the report of a surprise profit. TripAdvisor (TRIP), which Priceline has a booking partnership with, is down nearly 25%.

Delta(DAL), American (AAL), United Continental (UAL) and most other major airline stocks have been hit hard this year too as investors fret about a slowdown in travel.

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Sprint Shuffles More Numbers Around, Actual Profits Remain Out Of Reach

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Sprint Corp. (NYSE:S) can spin the numbers however it wants. It can also selectively pat itself on the back for all the ways it outperformed rivals AT&T (NYSE:T) and Verizon (NYSE:VZ) last quarter. What the company can not do, however, is change the absolute number of dollars it has flowing out of its coffers relative to the number it has coming in. And it's from this overarching fiscal perspective where the wireless carrier's first quarter numbers begin to paint a familiar, troubling picture again.

Different, But the Same

In its defense, Sprint is trying to solve a Rubik's Cube. As was the case with the vexing toy from the 80s, every solution the company finds for one aspect of its business disrupts a different aspect of its business. Lower prices draw more customers in, but lower prices make it near impossible to squeeze a profit from those customers. Raining in capital expenditures beefs up the bottom line, but capital spending is necessary to create the network capacity needed to facilitate subscriber growth. Selling assets creates liquidity right now, but creates an even bigger financial burden later.

It's this reality that was largely overlooked on Tuesday following the release of Sprint's Q1 numbers. Shares gained a little more than 5% in the wake of the superficially good news, but upon closer inspection of all the numbers, it becomes clear that very little has changed for the better in terms of successfully marketing a wireless service that's sustainable... let alone profitable.

The highlights: For its fiscal year ending in March, Sprint turned an operating profit for the first time in nine years. It was an operating profit it's only $310 million, and on a net basis the company still lost nearly $2.0 billion. Given where the company was at this point a year ago though, measurable progress could be considered a success... at least in terms of direction.

Ditto for EBITDA. Indeed, last year's EBITDA of $8.1 billion was 36% stronger than the prior year's; the EBITDA in Q4 alone.

And on the cost-cutting front, Sprint touted the fact that it's already realized $1.3 billion worth of its planned $2.0 billion worth of savings for its and selling, general and administrative (SG&A) expenses.

Problem(s): The "D" in its EBITDA -- which isn't included in the company's operating income tally -- is taking a huge toll on the bottom line; the "I" isn't exactly tiny either. And, per-customer revenue is slipping, yet the cost delivering service to those customers isn't. Sprint is still technically on a path to insolvency without significant improvements in the way it attracts, retains, and serves its subscribers. So far, CEO Marcelo Claure only managed to move some things between and on the company's balance sheet and income statement, without making any actual Improvement where they needed to be made.

In that a picture says a thousand words, the graphic below that compare Sprint's Q4-2014 financial snapshot to the Q4-2015 reality tell the tale as well if not better than any written explanation.

Data provided by Thomson ReutersClick to enlarge

What gives? A couple of things.

As for the ramp-up in depreciation expenses, that's simply the result of a switch from a subsidy-driven phone sales model to a lease-driven one. Sprint said it would happen pretty much the way it's panned out. From a bottom-line perspective, the maneuver will be nothing more than a wash in the end.

For the other increased expenses, well, the company may have culled SG&A costs, that means little if it's simply added cost elsewhere (which it did). Last quarter's GAAP net loss grew from -$224 million to -$554 million. The cost-cutting thus far has done more damage than good.

Bottom Line for Sprint

The company, along with a small but vocal group of shareholders (with a vested interest and exiting the positive and eliminating the negative), have already been quick to point out that in the recently-completed quarter the wireless carrier added more postpaid phone subscribers than AT&T or Verizon managed to.

All told, Sprint picked up 22,000 new phone customers as part of an addition of 56,000 new accounts (non-phone included). Verizon lost 8000 postpaid phone accounts during the first quarter, while AT&T lost a whopping 363,000 phone customers.

Nevertheless, AT&T still added 129,000 (net) postpaid accounts of some sort, well Verizon added 640,000 new accounts during Q1.

And unlike Sprint, AT&T and Verizon didn't have to cut prices to rock-bottom levels to win customers over. Sprint's average revenue per postpaid user rolled in at $51.68 last quarter… the lowest figure in years, and accelerating an already alarming trend.

The company could own an entire universe of spectrum, and use it to spur liquidity in a myriad of ways. Until Sprint begins to Garner new customers numbering in the hundreds of thousands rather than the tens of thousands though - and until those new customers each start generating more revenue than they're generating now (which will require its own trend break) - none of the financial engineering will actually matter. At some point Claure must meaningfully grow the business . If it hasn't happened yet….

Disclosure:I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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New York City Board Could Freeze One-Year Stabilized Leases for Another Year

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About 400 tenants and their supporters packed a meeting Tuesday to urge the city’s Rent Guidelines Board to decrease rents.

New York City’s rent-stabilized tenants could see another rent freeze this year for one-year leases after a vote on Tuesday by members of the city’s Rent Guidelines Board.

The board voted 5 to 4 to consider a 0 percent to 2 percent increase on one-year leases — and 0.5 percent to 3.5 percent on two-year leases — when it sets its annual rent guidelines this summer for the approximately one million stabilized apartments in the city. The range is the same as last year, which led to the first rent freeze in the board’s history for one-year leases and a historically low increase of 2 percent on two-year leases.

Last year was the first time all nine members of the board had been appointed by Mayor Bill de Blasio, a Democrat.

“We’re committed to establishing rent adjustments that are fair, grounded in the data, and that reflect real-life conditions in our neighborhoods,” Austin Finan, a spokesman for the mayor’s office, said.

The board’s vote was a preliminary step before public hearings and a final decision on June 27. The final rent levels could go up or down, but the board, which represents both tenants and landlords as well as members of the public, has usually stayed within its proposed range of possibilities in the final vote.

Reports by the rent board’s staff show that the price index of operating costs for rent-stabilized properties decreased 1.2 percent this year and that landlords’ net operating income grew by 3.5 percent in 2014, the most recent data available. It is the 10th straight year that income has outpaced expenses, the research shows.

But landlord groups say that the numbers do not present a full picture of costs and that, especially with the 0 percent or paltry rent increases approved in recent years, many owners are not making enough to maintain their aging buildings.

The Rent Stabilization Association, a landlord group with 25,000 members, had called for a 4 percent increase for one-year leases and 7 percent for a lease of two years.

“It’s time for a reasonable rent increase,” Jack Freund, executive vice president of the group, told the board during testimony at a meeting last month.

There were positive economic signs for tenants, the board’s research shows, with rising employment and wages and fewer evictions last year. Still, the most recent figures in 2014 showed that most rent-stabilized tenants could not afford their apartments, based on the federal standards that consider housing affordable if a household’s rent does not exceed 30 percent of its income.

The median rent and utilities-to-income ratio for stabilized tenants was 36.4 percent, the figures showed.

On Tuesday night, a crowd of about 400 tenants and their supporters packed an auditorium at the CUNY Graduate Center in Midtown Manhattan to chant and wave signs demanding a “rent rollback” and “no more homeless.” The audience grew more contentious when a group of tenants stopped the proceedings by rushing to the front of the auditorium to protest the voting down of a proposal to decrease rents by board members.

“Shame, shame,” the group yelled, among other chants, for about 10 minutes.

“There’s some disappointment, but it’s lower than I thought it would be,” Monica Duke, 49, a tenant from Harlem, said of the board’s decision. “I’m pleased it’s not higher. I’ve seen tenants being evicted in my building and become homeless.”

The new guidelines will be in effect for lease renewals between Oct. 1 and Sept. 30, 2017.

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ES Morning Update May 4th 2016

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Futures did rally yesterday after a midday low but fail to hold it this morning.  This throws the ABC up pattern out the window.

MACD's still oversold now and that 2035 support zone looks to be the target for this gap down this morning.

This move down of course changes the wave count.  The market was weak yesterday on the rally up, which was a clue that the count could be wrong and now it's clear it was.  The other scenario I spoke of was that we might still be in a larger C wave down from the 2094 high on 4/27, which suggests we are in the final 5th wave down inside that C wave down.  I think I posted in the chatroom that 1.618% of the A puts the C wave around that 2035 zone (give or take a few points either way of course).

The move down we are having now just doesn't seem like the start of anything big yet.  When this bottoms today/tomorrow there should still be another series of wave up... which "could" take us back up to a double top from the 4/20 high of 2100 on the futures and 2111 on the SPX cash.  It should be a lower high but I wouldn't be shocked at all if they didn't briefly pierce through it to run the stops of all the bears before rolling over for real.  I can't say for sure that's the plan but on the daily chart of the SPX Cash that 2111 makes a nice "Head" with the "Left Shoulder" at the 2075 4/1 high.  I think at this point they are planning on making a right shoulder before they tank it.  How high up they rally is unknown right now.

The overall picture tells me we are still going down to that last FP we got on the SPY but the "when" part is unknown.  I was looking for it to have already started since we hit the upside FP of 210 on the SPY back on 4/20, and that still "could" be the high but they don't seem ready to just drop it off a cliff yet... hence my speculation of a right shoulder first.  The reason I was expecting us to go down further first was based on a comparison to the 2116 SPX high to the 2019 SPX low back in early November.  That was almost a hundred points down and I thought we'd do something similar here.  But if we stop around the 2035 zone on the futures then we are under 70 points off the high, much less then expected.

On the SPX there is huge support around the 2042 level on a "Daily Close"... meaning that if (when, as it coming... but probably not today) we close below that level we should drop like a rock.  This level is the 320 MA on the Daily chart, and extremely important for the bulls to hold.  So I fully expect a bounce from that zone, which looks like it will be hit today.  Then we should start the ABC rally up I was looking for previously, but it should be a stronger one and last longer.  It will be the move up that creates the right shoulder on the daily chart.  Again, I don't know how high it's going but odds favor it lasting all this week and into early next week.

Automakers report strong April sales, but their shares fall on economic worries

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Automobiles for sale at a car dealership in Carlsbad, Calif. Wall Street analysts say the industry is close to a cyclical peak and warned that inventories need to be trimmed.
Detroit automakers reported another month of strong demand from U.S. consumers for trucks and sport-utility vehicles on Tuesday, but their shares dropped as analysts focused on signs the world’s second-largest auto market has little room to grow.Ahead of the final tally for U.S. light vehicle sales in April, General Motors estimated the seasonally adjusted annualized selling rate will be 17.6 million vehicles. That was more than the 17.5 million vehicles expected by analysts polled by Reuters. U.S. auto sales in 2015 hit a record 17.4 million vehicles.

Wall Street analysts say the U.S. auto market is close to a cyclical peak and that more production cuts, which hurt profits, could be needed to keep inventories of vehicles from ballooning later in the year.

“We continue to believe sales growth will be muted this year,” Joseph Spak of RBC Capital said in a note to investors.

Inventory data issued Tuesday pointed to some possible “risk to North American production over the coming months,” Spak added.

The sluggish pace of U.S. economic growth adds to concerns that the auto industry recovery could run out of fuel.

GM and Ford shares were down more than 1 percent, generally in line with the broader market, while Fiat Chrysler Automobiles fell more than 2 percent.

GM and Ford said sales to individual consumers were still growing. But because GM has been cutting back on low-profit sales to rental car companies and other fleets, its overall April U.S. sales fell by 3.5 percent.

GM’s results were among many that highlighted a divide in the market between slumping sales of traditional sedans, and robust demand for pickup trucks and SUVs.

GM said sales of the Chevrolet Silverado pickup truck rose nearly 9 percent in April compared to a year earlier. However, sales of GM’s Cadillac CTS and ATS luxury sedans plummeted 23 percent and 18 percent, respectively.

Other luxury brands also had weak results in April, especially for cars. Toyota’s Lexus luxury division suffered a 26 percent decline in sales of cars such as the large LS sedan, although sales of Lexus brand SUVs rose 20 percent.

German luxury car maker BMW said sales of its BMW brand passenger cars fell 6.5 percent, while its SUV sales fell 9.7 percent.

The chief executives of two leading auto dealer groups, AutoNation and Group 1 Automotive, had warned in April that automakers should start curbing production, particularly of slow-selling luxury sedans.

Still, April U.S. sales for Ford, Honda and Nissan all beat analysts’ expectations. Ford’s sales rose 4 percent from a year earlier, Fiat Chrysler Automobiles was up 5.6 percent and Toyota, No. 3 in the U.S. market, rose 3.8 percent. Honda’s sales rose 14.4 percent.

 

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McDonald’s Starts Serving Up Garlic Fries in San Francisco

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McDonald's is amping up its French fries in four locations in San Francisco.

The Golden Arches is offering "Gilroy Garlic Fries" to consumers in the Bay Area for a limited time. The made to order fries are tossed with a puree mix of garlic, olive oil, Parmesan cheese, parsley and salt.

If successful in this small test market, McDonald's will make the specialty fries available in around 250 restaurants throughout the San Francisco Bay Area.

Read More from CNBC: Burger King Rivals Spark Hot Dog War on Twitter

"McDonald's is committed to listening to our customers as seen by All Day Breakfast," Michael Haracz, manager of culinary innovation at McDonald's USA, said in a statement. "We're proud of the work done by local franchisees and the regional team to create this menu item with locally-sourced garlic and we look forward to introducing Gilroy Garlic Fries to our customers in the Bay Area."

The Golden Arches are no stranger to trial runs of potential menu items.

Some 125 stores in Milwaukee are slated to sell Johnsonville Brats for a limited time, seven years after discontinuing the sausages in chains.

Read More: McDonald's Offers All-You-Can-Eat Fries Promotion

The burger giant is also testing out smaller and larger Big Macs in Texas and Ohio restaurants. The Grand Mac is an attempt to compete with chains like Smashburger and Five Guys that serve larger burgers, while the Mac Jr. is simply easier to eat on the go, according to The Street.

In addition, McDonald's will host a limited-time all-you-can eat french fry promotion during the grand opening of its new location in Missouri this July.

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All 17 Sports Authority stores in Arizona could close

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March 2 -- Howard Davidowitz, chairman at Davidowitz & Associates, and Brian Belski, chief investment strategist at BMO, examine the Chapter 11 filing by Sports Authority and the potential for more bankruptcies in the retail industry.

All 17 Sports Authority stores in Arizona could be sold or close after a decision by the retailer not to pursue a Chapter 11 reorganization.

The filing last week in bankruptcy court in Wilmington, Del., reported originally by Forbes.com, means up to all 450 or so Sports Authority stores nationwide could be liquidated in an auction set for May 16 as the $64 billion sporting-goods industry continues to consolidate.

A previous bankruptcy filing by Sports Authority Holdings, based in Englewood, Colo., indicated that about one-third of the chain's stores would close, including three in the Valley and seven overall in Arizona. The retailer's website lists 17 Arizona stores – 12 in the Valley, three in Tucson and one each in Yuma and Casa Grande.

The company didn't immediately respond to requests for comment. Sports Authority is owned by Leonard Green & Partners, a Los Angeles-based private-equity firm with an array of retailing, medical, health, entertainment and other businesses. In addition to Sports Authority, the company owns three dozen businesses ranging from Aspen Dental, David's Bridal and Jo-Ann Stores to Lifetime Fitness, a dialysis-treatment chain and even the Palms Casino Resort in Las Vegas.

Sporting-goods chains such as Sports Authority primarily sell equipment, footwear and apparel. Sales increases for the industry mirror the low single-digit growth rate for the economy overall, reported the National Sporting Goods Association. Competitors range from Dick's Sporting Goods, Big 5 and REI to mass-market retailers such as Walmart, Target and Amazon.com.

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Halliburton and Baker Hughes Call Off $35 Billion Merger

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The Justice Department sued last month to block the merger of Halliburton and Baker Hughes.

Halliburton and Baker Hughes, two big oil services providers, have decided to call off their $35 billion merger, a person briefed on the matter said on Sunday, after a long regulatory review that ended with the Justice Department seeking to block the deal.

The deal’s termination could be announced as soon as Sunday night, said the person, who spoke on the condition of anonymity. Halliburton will be required to pay Baker Hughes $3.5 billion as compensation for the breakup, according to the merger agreement. The termination fee, one of the biggest ever, was written into the merger agreement to reassure Baker Highes that Halliburton expected the deal to get done.

Since the merger was announced in November 2014, the oil industry has changed drastically. Commodity prices have plummeted, sending many energy companies into a tailspin, with some nearing bankruptcy. Combining the two oil field services companies may have helped to deter some of the effects from the deteriorating commodity prices. At the time the deal was signed, the companies estimated that they would save billions by combining operations and research and development.

But the Justice Department last month sued to block the deal, saying it would “eliminate vital competition, skew energy markets and harm American consumers.”

The Justice Department’s lawsuit was the latest example of the tough stance taken by the Obama administration against large deals. Last month, the drug company Pfizer abandoned its attempted $152 billion merger with Allergan after the Treasury Department came out with new tax-related rules that eliminated many of the benefits of the deal.

Shares in both Halliburton and Baker Hughes have surged about 20 percent since the Justice Department’s lawsuit was disclosed on April 6. Halliburton has about $10 billion of cash on its balance sheet that it could use toward the breakup fee or potentially other transactions, according to data by S&P Capital IQ.

Halliburton plans to discuss the transaction in greater detail during the company’s earnings call on Tuesday, the person said.

Bloomberg first reported that the deal would be terminated.

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CCSX train derails in Northeast Washington, leaking hazardous chemicals and disrupting travel

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A CSX freight train derailed in Northeast Washington early Sunday, spilling hazardous chemicals along a busy rail corridor. The wreck stranded some residents away from their homes, forced the closure of a Metro station and snarled traffic as emergency personnel sought to contain the leaks and clear the wreckage.

Officials said 14 rail cars of the 175-car train left the tracks. A rail engineer and a conductor had been aboard the train but were accounted for, authorities said. No evacuations were ordered, and no one was injured.

The cause of the wreck is under investigation, and the Federal Railroad Administration was at the scene Sunday.

Red Line service was suspended between Metro’s NoMa-Gallaudet and Brookland stations, and the Rhode Island Avenue station was closed. At least six blocks of Rhode Island Avenue NE were closed for much of the day.

The derailment occurred about 6:40 a.m. as the train was passing through Washington from Cumberland, Md., en route to Hamlet, N.C., CSX said. The crash site was near Ninth Street NE and Rhode Island Avenue NE. CSX said 94 cars were carrying mixed freight and 81 were empty.

A CSX freight train carrying hazardous material derailed near the Rhode Island Avenue Metro Station. (DC Fire and EMS)

The derailment, about 70 cars into the train, spilled half the liquid contents of a 15,500- gallon tanker containing sodium hydroxide, D.C. Fire and EMS Deputy Chief John Donnelly said. The liquid spilled onto the tracks and seeped into the ground below it.

Officials said there were no air- or water-quality issues at the scene.

CSX spokeswoman Melanie Cost said the company did not have a timeline on the cleanup or restoration of the tracks.

“First let me apologize to the community for the inconvenience and the alarm that the derailment caused this morning,” she said. “Every decision that we’re making is focused on the safety of the responders and the community.”

CSX described sodium hydroxide as a chemical “used to produce various household products, including paper, soap and detergents.” It is a chemical component similar to bleach or Drano, officials said. Two other rail cars were leaking chemicals that officials described as less hazardous.

By mid-morning, D.C. Mayor Muriel E. Bowser (D) said the chemical leak was contained. But more detailed inspections revealed further leaks, according to CSX. In addition to the tank car leaking sodium hydroxide, another tank car was found to be leaking calcium chloride, described as “non-hazardous,” while a third was leaking ethanol “slowly from the base of a valve,” CSX spokeswoman Kristin Seay said.

The wreckage was visible from high-rise apartments near the crash site: A zigzag pattern of mangled tankers and overturned freight cars sat beside the tracks below the Rhode Island Avenue Metro station. A set of wheels, still intact but missing its freight car, sat upright beside the track bed.Emergency personnel work at the scene after a CSX freight train derailed in Washington on Sunday. (Cliff Owen/AP)

Weekdays, the affected tracks are shared by Amtrak, MARC and CSX trains. The tracks also run parallel to the Metropolitan Branch Trail, popular with cyclists and runners. On Sunday, the trail was closed near the site of the derailment, and officials said it would remain closed indefinitely.

Metro spokesman Dan Stessel said barring any unforeseen circumstances, Red Line service would be restored Sunday night.

Stessel said CSX was working to upright a rail car that was leaking ethanol. When the leak is mitigated, he said, the Metro tracks would be turned back over to the agency, which would run test trains and probably restore service soon thereafter.

If for any reason CSX is not able to turn over the scene, Stessel said, “that could affect service into the morning.”

MARC announced major service disruptions for its Brunswick Line on Monday because of the derailment. Its trains will run as far south as Silver Spring, where Metro will accept passengers at no charge to continue their commutes into the District. In addition, the Amtrak line from Washington to Chicago will not run Monday, but the Northeast Corridor lines will run as normal, officials said.

According to the Centers for Disease Control and Prevention, the effects of exposure to sodium hydroxide can include irritated eyes, burning skin, loss of hair and swelling of the lungs. The odorless solid is white or colorless and is usually in flakes, beads or a granular form. Sodium hydroxide is especially dangerous when mixed with water, because the toxin when wet creates heat that can ignite flammable products. It was raining heavily Sunday morning near the crash site.

Donnelly said the amount that leaked did not put District residents at risk.

“The fumes should not cause you any problems, and you should not be able to smell them anywhere else,” he said.

In recent years, Washington residents and elected officials have voiced concerns about rail safety and the risk of having freight trains pass through residential neighborhoods and the seat of the federal government.

Residents of Navy Yard, a formerly industrial neighborhood that is now densely populated, fought a CSX plan to reconstruct the 110-year-old Virginia Avenue Tunnel in Southeast, a key piece of the region’s rail infrastructure that is just a mile away from the U.S. Capitol. CSX is now in the midst of the $170 million project, which includes twin tunnels built to allow for double-stacked trains.

One of the most hotly debated projects in recent years, the tunnel project revived concerns about the safety and security of the city’s railways, prompting the D.C. Council two years ago to allocate funding to conduct a comprehensive rail study that would provide an assessment of all rail service: passenger, commuter and freight.

Some residents say they fear they are at a greater risk of train derailments and that once the tunnel project is completed, CSX will increase the transportation of crude oil and other hazardous materials through the area.

CSX says it rarely transports crude oil through the District and does not carry hazardous substances such as compressed flammable gases and toxic and radioactive materials through the city.

In 2009, rainwater leaking into the Virginia Avenue Tunnel from the Southeast Freeway and Virginia Avenue weakened the earthen floor. A split rail caused the derailment of two locomotives and 13 loaded gondola cars transporting scrap metal. And in the spring of 2014, a CSX freight train derailed in downtown Lynchburg, Va., sending rail cars and burning crude spilling into the James River.

Monte Edwards, a trustee with the Committee of 100 on the Federal City, which serves as a watchdog on transportation and urban planning issues, said Sunday’s spill raised renewed concerns about the viability of shared freight and passenger tracks in the District.

Speaking for himself, he said the spill showed CSX’s disregard for rail safety and inspections in the District.

“This was a hydroxide that they spilled this time. Those are nasty things coming through,” he said, reflecting on what could have happened had the chemical spilled just a short distance south, near the Capitol.

“A spill like that [one] that just occurred here in Northeast, [if] that would occur near a grate or an entrance to a Metro station, it would flood the Metro station,” he said.

The spill underscores the need for the District to devise a comprehensive rail plan, similar to state plans required under the 2008 Passenger Rail Investment and Improvement Act, he said. The District Department of Transportation says it expects a rail plan to be completed as early as this summer.

“We would know what’s coming through,” Edwards said. “We would have inspectors. We would have rail safety officers.”

“We have said all along that derailments are very real and these trains are carrying hazardous materials,” said Maureen Cohen Harrington, a Navy Yard resident and member of DCSafeRails, the organization fighting against CSX transporting hazardous materials through the neighborhood. “And what happened today demonstrated that, and we are well aware that this could have been far worse.”

Peter Hermann, Perry Stein and Ashley Halsey III contributed to this report.
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SBA chief urges respect, support for small businesses

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Rhonda Abrams, Special for USA TODAY
11:01 a.m. EDT May 1, 2016

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Since 1963, the first week of May has been designed by the president of the United States as a time to celebrate entrepreneurs.

To mark the start of this year’s Small Business Week, small-business owner and USA TODAY contributor Rhonda Abrams sat down for a discussion with Maria Contreras-Sweet, the current administrator of the U.S. Small Business Administration. Contreras-Sweet, the founder of ProAmerica Bank, talked about technology, small-business lending and elaborated on some of the challenges — and resources — for the nation’s estimated 28 million small businesses.

She also encouraged shoppers to spend at their local stores.

“When you shop at a small business, 64 cents of that dollar stays right in your neighborhood,” she says. In turn, she adds, those stores could become a “destination” for more consumers, leading to more job creation in the community.

“Small businesses should be respected for the role they play: Two out of three net new jobs are created by small businesses,” she says. “This is the time to celebrate small businesses.”

Here are some of other thoughts from Contreras-Sweet:

Q:  What’s a main message that you would like to get out there during Small Business Week?

A:  Let’s level the playing field for small businesses. I see small businesses getting the run around at every turn. When a corporation arrives at a municipality and says, “We’re going to locate here,” that municipality says, “We’re going to give you tax breaks; we’re going to open up this for you.” When a small business shows up in City Hall, (they’re told) “Stand in line, take a ticket.”

We need to address the different needs of small business. We can create unique products, services, programs to be more responsive to the varying Americans across the country that are in different stages of their journey of entrepreneurship.

Q:  How is the SBA already addressing those varying needs?

A:  If someone is in their nascent stage, they can go into one of our Small Business Development Centers and get some counseling. If you’re a woman and you feel more comfortable amongst your peers, we have Women's Business Centers. If you’re a veteran, then you may want to visit one of our Veteran’s Business outreach centers.

Q:  For small businesses, finding and managing technology, keeping up with it, is really overwhelming. How can the SBA help small businesses handle technology-related challenges? 

A:  We recently launched the Small Business Tech Coalition (which provides technology-focused education and resources). We went through process of curating (the technologies small businesses need to get started). You may need Zenefits (which provides an online human resource management system), you may need Salesforce as a CRM (a system for customer relationship management) and you may need Facebook to get your message out. We put together a series of technologies, and over time, we’ll keep refreshing that.

Q:  Virtually every day, I get offers from new “alternative” small-business lenders. Currently, they’re fairly unregulated, some with interest rates as high as 40% to 60% per year. What’s appropriate for the government to do to protect small businesses?

A:  Let me give you three answers. One is that SBA has to use technology to make it easier and more efficient for people to get loans from the SBA. To that end, we put up a program called LINC. It’s like Match.com. Answer 20 questions. We route that to all of our banks in our network, they respond, and now you’re in the driver’s seat.

Next, (current SBA) bankers said our technology was old and antiquated. We’ve invested a lot of time and effort to make sure our portal to the lending institutions is much more efficient.

Thirdly, we’ve been meeting with online solutions (such as institutional investor, peer-to-peer and crowdfunding lenders) OnDeck, Kabbage, Kiva, Kickstarter. We have a duty to make sure there’s no abuse in the system, that people are getting the most rational rates, that there’s transparency, accountability, all the things you would expect us to be doing.

Q: In 2000, the funding for Small Business Development Centers was $88 million — about $122 million in today’s dollars. Last year’s allocation was $115 million. What can you tell us about these training and counseling centers?

A: SBDCs are marvelous resources for small businesses. SBDC consultants are passionate about the work. They help businesses navigate contracts with U.S. government and the corporate supply chain. SBDCs are gearing up and training to navigate small businesses through the international market. We’re bringing more technology capacity into these SBDC centers.

Edited for clarity and content

Follow Rhonda Abrams on Twitter: @RhondaAbrams

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Celebrate National Small Business Week

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Since 1963, the Small Business Administration has recognized outstanding entrepreneurs and small business owners through National Small Business Week. This year, the Greater Pensacola Chamber and the Florida Small Business Development Center at the University of West Florida are teaming up to promote the positive impact of small businesses on the Pensacola community.

“National Small Business Week provides an opportunity to honor Northwest Florida small businesses for their crucial role in job creation and healthy economic growth,” said Greater Pensacola Chamber President and CEO Clay Ingram. “We are pleased to partner with the Florida SBDC at UWF to show our appreciation and commitment to putting small businesses first.”

National Small Business Week will be celebrated today through Saturday. This year’s theme is Dream Big, Start Small. The Chamber and the Florida SBDC at UWF encourage small businesses to share their success stories and photos on social media with the hashtags #DreamSmallBiz, #PcolaChamber and #FloridaSBDCUWF.

“The Florida SBDC at UWF team is committed to serving local small businesses in our community,” said Kelly Massey, regional director. “For the last six years, we have delivered over 56,689 hours of professional consulting to 13,147 entrepreneurs and small business owners in the Panhandle region. We intend to make those numbers soar even higher within the next six years.”

For more information on National Small Business Week, visit www.sba.gov/nsbw.

To become involved in local promotion of National Small Business Week, contact the Chamber at news@pensacolachamber.com or 438-4081, or the Florida SBDC at UWF at sbdcmarketing@uwf.edu or 474-2528.

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Buffett: Straight talk from ‘Woodstock of Capitalism’

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Warren Buffett, speaking at Berkshire Hathaway's annual meeting Saturday, told his flock of followers that first-quarter earnings jumped 8.2% to $5.59 billion despite weakness in key insurance and railroad holdings, reiterated he's still on the lookout for big deals like January's $32 billion purchase of Precision Castparts, and advised mom-and-pop investors to build their stock portfolios around low-cost index funds that capture the long-term success of American businesses.

Saturday's event marks the first-time that Berkshire Hathaway and Buffett, the company's chairman and CEO, live streamed its annual shareholders meeting — dubbed the "Woodstock of Capitalism" — around the globe. Roughly 40,000 Berkshire investors made the pilgrimage to Omaha to be there in person.

Heading into the closely watched gathering at the CenturyLink Center, where Buffett, 85, and long-time Berkshire vice chairman Charlie Munger, 92, are fielding questions for hours from journalists, analysts and everyday investors who own a piece of Buffett's Berkshire conglomerate are feeling flush.

Berkshire's A shares (BRK-A) are up 10.7% so far in 2016, soundly topping the 1% gain for the broad U.S. stock market, measured by the benchmark Standard & Poor's 500 stock index.

In the first half of the Q&A, Buffett addressed a wide variety of issues. Topics ranged from:

• The outlook for Precision Castparts, Berkshire's biggest acquisition ever.  "Precision," Buffett said, "will do better" under the Berkshire umbrella. Buffett said Precision Castpart's CEO Mark Donegan, who he called an "extraordinary" and "one of a kind" manager, would be freed up to make the business even better post-deal.

• Berkshire's thirst for future acquisitions. "We would love to find another three of four types of Precision Castparts," he said.

• Why auto insurer Geico's quarterly results fared worse than expected and trailed rival Progressive in the first quarter? "The frequency of accidents and the severity, or cost per accident, both of those went up quite suddenly and quite substantially," Buffett said.

• On the meteoric rise of online retailer Amazon.com and its Internet driven marketing power. "Charlie and I are not going to out-Bezos Bezos," said Buffett, referring to Amazon CEO Jeff Bezos.

• His take on the controversy surrounding one of his biggest holdings, Coca-Cola, and its role in causing health effects such as diabetes. Buffett defended Coke and his large daily consumption of Cherry Coke. "I have not seen evidence that I will reach 100 if I switch to broccoli or water," the 85-year-old Buffett said.

• The danger of derivatives to the financial system. Buffett who once famously said derivatives are "financial weapons of mass destruction," said they are still "a danger to the system," especially when used in "large quantities" and under adverse market circumstances big enough to cause "major discontinuity" in markets.

• Financial advice. Buffett, showing data over the past eight years that was part of a debt that shows owning a S&P 500 index fund outperformed five hedge funds by about 40 basis points, or 40%. Ignore the sales pitch from Wall Street, he says. And avoid the high-priced management fees.

"Very few (active fund managers) have an outstanding performance record," Buffet said. "And people you pay to identify them don't know how to identify them."

Added Munger: "Few in the universe exceed the market returns (on a regular basis). It's like finding a needle in a haystack."

When Buffett and Munger return after lunch, they will likely face queries on topics ranging from succession plans at Berkshire to the state of the U.S. economy and the stock market.

Buffett, best known for his stock-picking prowess and investment savvy, in recent years has shifted Berkshire's focus to buying businesses outright. And the deals are getting bigger and bigger.

In January, Berkshire closed on its largest acquisition ever, paying $32 billion for aerospace parts maker Precision Castparts. That mega-deal, which meets Buffett's definition of hunting for "elephants," follows a $12 billion deal for a more than 50% stake in ketchup maker H.J. Heinz a few years back, which has since merged with Kraft Foods of Macaroni & Cheese fame to form Kraft Heinz. Back in 2010, Buffett bought the railroad, Burlington Northern Santa Fe, for $27 billion.

At the end of 2015, Berkshire's top stock holdings included Wells Fargo, Coca-Cola, IBM and American Express. The list of businesses the sprawling conglomerate owns include paint maker Benjamin Moore, battery maker Duracell, insurer Geico and ice cream retailer Dairy Queen, to name a few.

Buffett's holdings touch virtually every corner of the U.S. economy, which makes his commentary that much more relevant.

In the minutes leading up to the webcast, Robert Miles, a Buffett scholar and author, let Yahoo Finance know what makes Buffett special: “He is just a regular guy that speaks the truth, unlike Wall Street."

It was a dreary, rainy day in Omaha, but that didn't keep the Buffett faithful away or dim their mood. Buffett followers came from as far away as Taiwan, Mexico and Australia, many were chanting "Buffett! Buffett! Buffett" in the long line outside the arena despite a driving rain.

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Yahoo CEO Marissa Mayer Made $36 Million Last Year Despite $6 Million Pay Cut

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Marissa Mayer

Yahoo paid Marissa Mayer $36 million in compensation last year despite the company’s shrinking revenue and profits. The CEO is also expected to receive a huge payout of $55 million if she is terminated after Yahoo is sold.

Yahoo revealed that its CEO Marissa Mayer's pay for 2015 got a significant cut, but still left her a hefty amount to take home.

The executive got nearly $36 million in total compensation, down almost 15 percent from the previous year's $42 million, according to a filing with the Securities and Exchange Commission on April 29.

Her base salary remained at $1 million, with most of the cuts coming from her stock option awards estimated to be valued at $9 million. This was largely the result of a 15 percent drop in Yahoo stock value over the past year. Stock value rises or falls depending on the profitability or failure of a business.

Given all the noise about Mayer's inability to turn her company's fortune around as revenue and profits continue to shrink, her compensation may still be too high. Comparatively, Google CEO Tim Cook's salary of $10.3 million in 2015 is a far cry from Mayer's $42 million in the same year even as Google was operating more profitably.

While her reported pay was $36 million, the Yahoo chief executive actually brought home an amount close to $14 million or just about 39 percent of what was reported because Yahoo's financial performance fell short of the projected goals.

The filing also disclosed that Mayer and other Yahoo executives decided to give up their bonuses in 2015.

Marissa Mayer is getting a lot of attention not only because her tenure at Yahoo may soon be over, but because history could remember her as the person who could not prevent the downfall of the great Yahoo, some analysts observe.

Other industry insiders are seeing hopes in Yahoo, but drastic moves may have to be explored. Sue Decker, a respected business executive who could have been Yahoo CEO, offered some unsolicited advice for the beleaguered Internet company.

Decker said in a CNBC interview on April 29 that Yahoo was involved in so many things without focusing and winning in one or two areas. She mentioned Google's dominance in search and Facebook's social niche, despite the two companies' interest in other areas like video and messaging.

Decker said that the road ahead will be tough for a change in leadership. But it must be done, with Yahoo going private again or becoming part of a much larger company in order to stay focused.

"I hope the next owner can do something to revitalize the spirit of the core things that made Yahoo very, very unique and create a distinction in consumers' minds about why they love Yahoo still," Decker said.

If Mayer is out of the picture as a result of the sale of the company, she could still receive a huge payout of about $55 million. The severance package includes restricted stock units and options and $3 million in cash.

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ES Morning Update May 3rd 2016

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Market is showing signs of weakness as it failed to rally up again on it's first up thrust to hit the falling trendline.

MACD's rolling over and "should" turn back up at some point today making a "higher low" then the prior -5 area low.

Yesterday I suggested we'd go up in some kind of ABC pattern to hit or come close to the falling trendline.  I still think that's possible, even with this morning having a gap down open.  While this could be the start of another big move down, or just an extension of last Thursday/Friday's C wave down, I think it has one more move up yet to come.

I'm looking for a move down this morning that should NOT break the prior low of 2045.75 last Friday which then should turn back up into Wednesday and/or Thursday for the completion of this ABC up.  At the open I suspect we'll see some early dip buyers that move it up a few points quickly, then we should go back down retest the premarket lows (currently at 2057.25) to lure in the bears.  It should go lower to take out those "stops" long the futures before the open but again, should NOT take out last Friday's low.  This is my higher odds forecast.

In the event we take out last weeks' low then the next support level is around the 2035 area from prior lows back in early April.  That horizontal support zone should hold the fall on the first hit of it.  Also we have a new falling trendline that is in that same 2035 zone (if the market fell today to make new lows).  That's your downside targets should my primary scenario fail today.  If not, then we should top out on Wednesday or Thusday for the ABC move up that I'm thinking has the highest odds of playing out.

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