Finance and Economic

British bank Standard Chartered is reportedly shifting thousands of its bankers to Apple Inc.'s iPhone from Research in Motion Ltd.'s Blackberry devices.

"It's a group-wide initiative involving wholesale and consumer banks globally," a spokeswoman for Standard Chartered told Reuters.

Bankers until now have for the most part been restricted to RIM's (NASDAQ:RIMM) BlackBerry as the standard device issued by their firms, largely because of security concerns with Apple's (NASDAQ:AAPL) smartphone in the past.

"If more companies switch to the iPhone, this is of course bad news for RIM," Lu Chialin, an analyst at Macquarie Securities told Reuters. "However, it will take a long time for companies to do their own internal testing before deciding to change, so it will be a while before it has any effect on RIM."

A study by NPD Group last week said RIM was No. 1 in first quarter U.S. market share with 36 percent, with Google Inc. (NASDAQ:GOOG) No. 2 at 28 percent and Apple No. 3 at 21 percent.

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Two Whole Foods Markets Inc. (Nasdaq: WFMI) executives were promoted today and one was added to the company's board of directors.

Co-Presidents and Chief Operating Officers Walter Robb and A.C. Gallo were granted their own titles Thursday. The two have shared the roles since October 2004.

Robb was elevated to co-CEO with founder John Mackey and joins the Austin-based natural grocer's board, while Gallo goes on as sole president and COO.

"Walter and A.C. are brilliant retailers, and their contributions to Whole Foods Market's success have been immeasurable. Due in large part to their operational leadership, we successfully managed through 2009, the most difficult year in our company's 30-year history," Mackey said.

Robb started working for Whole Foods in 1991 after selling his operating lease for the future Mill Valley, Calif. store. He ended up opening and operating that store as a team leader until his promotion to president of the northern pacific region in July 1993. Under his leadership, the region grew from two to 17 stores, completed four acquisitions and was a top-performing region for five years.

Robb became executive vice president of operations in 2001, co-COO in 2003 and co-president in 2004.

Gallo transferred to Whole Foods after 15 years with Bread & Circus, which was acquired by Whole Foods in 1992. He was promoted to vice president of the northeast region in 1994 and then to president in 1996. During his tenure, the Northeast region grew from eight stores to 16, including two acquisitions and the first New York City story.

Gallo became executive vice president of operations in 2001, co-chief operating officer in 2003 and co-president in 2004.

Whole Foods posted its quarterly earnings Wednesday, posting 147 percent net income growth.

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Two Phoenix companies have been selected for the 2010 Inner City 100, a list of the fastest-growing inner-city businesses in the U.S. compiled by the Initiative for a Competitive Inner City and Bloomberg BusinessWeek.

The program recognizes successful inner city companies and their CEOs as role models for entrepreneurship, innovative business practices and job creation in America’s urban communities.

The two Phoenix companies selected are Auction Systems Auctioneers and Appraisers (No. 27) and Meyer and Lundahl Manufacturing Co. (No. 67).

The rankings were announced at an awards dinner on Wednesday in Boston bad credit pay day loans.

“The Inner City 100 winning companies exemplify America’s remarkable potential and the road to future economic recovery,” Mary Kay Leonard, president and CEO of ICIC. “These extraordinary companies demonstrate the market possibilities that exist within our inner cities. If we can leverage these possibilities, we can create jobs, income and wealth for local residents and produce the next chapter of American innovation and opportunity.”

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One would think that the merger of United and Continental airlines, a marriage that would create the world’s largest carrier, would be enough to rouse shareholders knocked unconscious by years of losses. But while the companies’ shares both gained more than 2% following Monday’s announcement, the news still held all the excitement and economic potential of a two-family garage sale.

That’s not to say that the airlines, and the industry overall, aren’t in desperate need of consolidation should they ever hope to earn a consistent profit. It’s just that the joining of two companies with rickety balance sheets, below-investment-grade bond ratings and a dubious history of making money is hardly the type of event that gets the investment world leaping from its Herman Miller chairs.

"It’s not the kind of behemoth that it would have looked like 20 years ago," says Robert Poole, director of transportation policy at the non-partisan Reason Foundation. "Airlines are kind of has-beens."

That fact can be best told in the numbers: The combined airline’s estimated post-merger market capitalization of $8 billion is 3% of Apple Computer’s, based on Monday’s close. Airlines as a whole lost $50 billion in the last decade. In this industry, mergers are more like a wounded man trading in one crutch for a pair: It’ll be easier for him to get around, but he’ll be no less hobbled.

Where’s Justice?

Not surprisingly, given the industry’s troubles, it’s hard to imagine that even a more labor- and consumer-friendly Justice Department — as opposed to the Bush-appointed crew that approved the Delta-Northwest merger in 2008 — will put up much resistance to the United-Continental deal.

And that’s not just because of the relative dearth of route overlap between the two airlines — a grand total of seven routes in the third quarter of 2009, according to data provided by Oliver Wyman’s planestats.com. The difficulty in shrinking capacity within the current industry structure argues heavily in favor of further concentration.

Industrywide capacity shrunk 8% from 2007 to 2009, but it was too little to offset cratering demand caused by the recession. Even with planes being parked in the desert, average airfares dropped approximately 8% during the same period, according to the BTS. "There in no pricing power. None," said industry analyst Vaughn Cordle of Washington, D.C.-based Airline Forecasts.

A marriage of convenience

So shouldn’t this mega-merger be the kind of jolt that finally gives airlines the ability to raises prices (instead of just adding on ridiculous fees) and get out of the jam? It’s one thing to take out a few seats; it’s another to be able to rid yourself of planes en masse.

Well, not exactly. For one, airline mergers are notoriously tricky. The pilots of US Airways and America West, who merged in 2005, are still fighting over who has seniority.

And even a united United-Continental won’t have that much sway. A decade ago, the major carriers controlled 80% of the market; by the end of this year it will be closer to 50% and Cordle sees it soon heading to 40%. Consolidation isn’t about increasing power, it’s about staying alive.

Cordle’s firm estimates that without the merger, the five current legacy carriers — Delta-Northwest, American, United, Continental and US Airways — face $20 billion in additional costs by 2014 from rising fuel prices, airport facility charges and security and labor hikes. The United-Continental merger should allow those airlines alone to save $3 billion in such costs, he said.

Even one of the industry’s low-cost competitors welcomes the merger. Virginia Gambale, a director at JetBlue, said the company is pleased with the deal, noting that the industry’s fragile state and mercurial fortunes make it difficult to engage in long-term planning. "As we deal with less players in the market, it makes it easier to decide where and how we will compete," she said. "Uncertainty breeds its own inefficiency." 

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Facebook unveiled a host of changes at its f8 developers conference that are already ruffling some users’ feathers.

Many of the changes take advantage of big revisions that Facebook made to its privacy settings in late March. Those changes opened the door to allow select third-party Web sites the ability to access and store some users’ personal information. (See correction below)

Those sites can use that information to show what a user’s Facebook friends have been doing on their sites. CNN, IMDB.com and ESPN.com are among the first sites signing up to use the technology. So if you’re a Facebook user reading CNN.com, you’ll be able to see what all your Facebook friends are looking at, view recommended stories and see which friends liked which stories.

Users will be able to share more of the outside Web with their social network.

"This is the most transformative thing we’ve ever done for the Web," said Facebook Chief Executive Mark Zuckerberg in his keynote address Wednesday. "These new technologies will help create instantly social and personalized experiences on the Web."

But even before the announcement, critics expressed concern about the privacy implications of such a service. A similar program called Beacon, unveiled in 2007, caused such a stir among users that the company canned it last year.

Some experts say Facebook learned from its mistakes with Beacon, but it still needs to frame the argument better to get its customers on board. Instead of waiting until Wednesday, Facebook somewhat covertly made the proposed change to its privacy policy late last month and opened it up for public comment.

"It’s not a surprise that the feedback has been quite negative so far," said Augie Ray, social networking analyst for Forrester Research. "Facebook needs to start framing these issues in ways that make the benefits to consumers clear. They’re being much more transparent, but there’s still a lot of room for improvement."

Despite some pushback from users, the move is part of a big effort from Facebook to continue to grow beyond facebook.com.

"It’s evident that Facebook wishes to expand its reach," said Ray. "Facebook has created a very effective and valuable destination site that eats up enormous amounts of users’ time, but for the most part, users have to go to facebook.com to get that value."

Big changes

Universal "like" button: One of the major new items that users will see is a "like" button displayed on Web sites outside of Facebook. The social network will collect that data to better understand and map its users preferences.

The "like" button on Facebook broadcasts what photos, comments or posts a user likes. Facebook announced Wednesday that "like" buttons will start to show up across the Internet, enabling users to share items with friends even when they’re not physically on facebook.com.

For instance, liking "The Godfather" on IMDB.com will put that movie in a user’s movie interests section of their Facebook page. Liking a baseball player on ESPN.com will put up-to-date information about that player in a user’s news feed.

To compliment the universal "like" button, Facebook has changed its internal "Become a Fan" button to "like" as well.

Facebook also will provide a Facebook "social bar" tool that third-party Web sites can display at the bottom of a page, which will let users access some Facebook features without leaving the site, including chat, and activity streams. Similarly, Facebook said third-party Web sites will soon be able to host a number of Facebook features on their sites.

New profiles, new pages: Facebook is changing users’ profile pages so that the "pages" section will no longer appear in a separate section on the bottom of the "info" page. Those pages will be brought up to the "interests" section.

Users will be asked to convert their interests into fan pages: Is one of your interests "The Beatles?" Well, now you can become a fan of The Beatles in a single click. By default, users will receive notifications from their fan pages in their news feed.

Facebook also added new privacy settings that allow a user to control who sees all of those connections.

Community pages: So what about interests like "hiking," "napping" or "cooking," which don’t have Facebook pages? Now they do.

Facebook unveiled about 6.5 million "community pages" this week, which take the "fan page" concept and apply them to ideas, locations or interests.

Currently, community pages are pretty rudimentary. A user can see posts from friends related to that topic as well as what the overall public is saying about it. There is also a link to a Wikipedia article on the subject. Users can’t yet add any content to these pages, but that ability will come soon.

Real-time search: Also among the biggest announcements is real-time search on third-party search sites, similar to Twitter’s service. Facebook announced that users’ public posts will be available for search on sites like Google and Bing.

"It remains to be seen how consumers would adopt real-time search of Facebook feeds," said Ray. "It’s a different kind of search from Google and Twitter — would you want to search on Google to see what your friends say?"

Correction: An earlier version of this story failed to state when the privacy changes were made. They were made on March 26. 

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Running with the herd is the most popular way to invest, because everyone will commend you for heading in the right direction.

Taking a contrarian view, on the other hand, opens you to ridicule from your peers. You may seem out of step, as if you missed getting the proper message or aren’t smart enough to grasp the obvious.

"Contrarian investing is basically going against the grain and doing the opposite of what the majority is doing," explained Paul Merriman, editor of www.fundadvice.com in Seattle. "Most people are emotional market timers, and this is indicated by their huge commitment right now to bonds."

Stock investing in general has probably been the most significant contrarian investment of the past year because investors have been so wary, Merriman believes. Many stock gains were missed as a result.

"The approach to contrarian investing is to look for companies in situations that are misunderstood and out of favor," said David Decker, manager of Janus Contrarian Fund, which used the market downturn of 2008 and early 2009 to snap up stocks such as Apple Inc.

"Just keep in mind that the market is right quite often, so being a ‘knee-jerk’ contrarian is dangerous because a good return shouldn’t be dependent on the future unfolding in the perfect fashion you envision."

Decker’s Janus Contrarian Fund is up 64 percent over the past 12 months with a three-year annualized decline of 4 percent. This "no-load" (no sales charge) fund requires a $2,500 initial investment and has an annual expense ratio of 1 percent.

His largest stock holding, the Florida-based St. Joe Corp. real estate development firm, is an out-of-favor investment he researched well. The stock had fallen 33 percent in 2007 and 32 percent in 2008, but gained 19 percent last year and is up 15 percent in 2010.

Although the company still isn’t making money, usually a bad sign, it owns land worth considerably more than its current stock price, he believes. With the Northwest Florida Beaches International Airport opening near Panama City, the economic development in the region is going to expand. The fact that St. Joe owns the land around the airport has yet to be reflected in its stock price, he noted.

Investors interested in a contrarian approach either invest in a fund that is truly contrarian; find an advisor with that mindset; or research, on their own, good companies with temporary woes.

"A lot of statistical work has shown that if you bought out-of-favor stocks you would have done significantly better than the market in almost every decade since they started measuring it," said David Dreman, chairman and chief investment officer for Dreman Value Management LLC in Jersey City, N.J. "Contrarian investing is a form of value investing with a powerful research background that has worked well for 40 years."

His Dreman Contrarian Small Cap Value Fund "R" is up 65 percent over the past 12 months and has a five-year annualized return of 5 percent. This no-load fund requires a $2,500 initial investment and annual expense ratio of 1.38 percent.

An indication that Dreman is a true believer in contrarian philosophy: He invests a considerable portion of his own net worth in the fund.

He prefers companies with strong cash flow, accelerating returns on invested capital and smart management — putting money in them when their stock price is temporarily cheap. He invests across all types of industries as well as overseas markets.

"There are two possible problems with contrarian investing," cautioned Merriman. "First, value can underperform growth for a decade and you give up on it; or, second, in a depression the contrarian choices are likely the first ones to go under because they already have their own problems."

Contrarian is nonetheless a philosophy espoused by some of the best investors.

Bill Gates and Warren Buffett bought into Republic Services Inc., the second-largest waste collection firm, last November. They didn’t expect high growth, but rather consistent growth and an eventual return to favor, Merriman said. The firm’s ownership of landfills is impressive, and new competitors in the field are limited.

"If the fundamentals of a company are pretty good but for some reason or another it is out of favor, it should do well over the long run," said Dreman.

At the beginning of 2009 Dreman was buying unwanted financial stocks such as JPMorgan Chase & Co., PNC Financial Services and Wells Fargo, as well as out-of-favor oil service companies such as Devon Energy Corp., Apache Corp. and Chesapeake Energy Corp. The future of both groups was too bright to overlook, he believed.

"We look for an asymmetrically positive risk/reward in which the downside is relatively limited and the upside disproportionately large, then build a portfolio around those companies," said Decker. "As long as the company isn’t about to go bankrupt, the question is how much the market has priced in bad news and whether the price is attractive enough."

Major holdings in Janus Contrarian besides St. Joe include Kinder Morgan Management LLC, British American Tobacco Plc., DIRECTV Group Inc., CB Richard Ellis Group Inc. and Japan Tobacco Inc.

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Home sales in Sacramento rose significantly in March compared to the previous month, according to data released Thursday from analyst MDA DataQuick. The firm tracks sales of all types of homes, single-family homes, attached condos and new homes.

Sales increased 41 percent in the four-county Sacramento area from February, but remained at virtually the same level as March last year.

The median sales price in Sacramento county stood at $173,000, a 4.8 percent increase from a year ago. Prices in Yolo County were also higher, by 4,6 percent to $250,000 no faxing pay day loans. But the median price in El Dorado County was down 10 percent to $306,000 and was down 11.8 percent in Placer County to $317,000, DataQuick said.

On Wednesday, Sacramento-based analyst Trendgraphix reported a similar spike in existing home sales from February, which the company attributed to expiring tax credits.

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Bruton Smith, chief executive of Speedway Motorsports Inc., saw a drop in his compensation last year to $1.7 million.

Smith received $1.9 million in 2008.

According to a company filing with the Securities and Exchange Commission, Smith was paid a salary of $600,000 and received nonequity incentives of $1.1 million last year.

He received a salary of $600,000 and nonequity incentives of $1.3 million in 2008.

Speedway Motorsports (NYSE:TRK) is a Concord-based promoter of motorsports entertainment. The company owns and operates Charlotte Motor Speedway, Atlanta Motor Speedway, Bristol Motor Speedway in Tennessee, Infineon Raceway in California, Kentucky Speedway, Las Vegas Motor Speedway, New Hampshire Motor Speedway and Texas Motor Speedway near Fort Worth.

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St. Louis — Eminent domain might yet be used to give land to developer Paul McKee.

But it could also be used to take his land away.

That prospect was raised recently when the Missouri Department of Transportation launched eminent domain proceedings against a McKee-owned holding company over five properties it owns around the foot of the yet-to-be-built Mississippi River bridge.

And while both MoDOT and McKee say the actual use of the controversial land-taking process is unlikely, the filing serves as a reminder that the developer doesn’t hold all the cards in his $8.1 billion plan to rebuild a distressed swath of north St. Louis.

The case, filed in St. Louis Circuit Court on Friday, concerns roughly three acres McKee’s Northside Regeneration LLC owns along Cass Avenue and Mullanphy Street, north of downtown, in the planned footprint of the new bridge. For months, McKee has been negotiating with MoDOT over price and rights-of-way, but the two sides haven’t reached a deal yet.

To meet requirements for federal funding on the $640 million bridge, MoDOT must make clear that it will acquire all the land it needs, said regional counsel Philip Morgan. So, the department filed paperwork to start eminent domain.

"It’s just part of our normal process. We acquire real estate all the time," he said. "Most of it we acquire by negotiation. Some of it invariably ends up in my office."

A hearing has been set for May 24, and the process will go forward from there. In the meantime, Morris said, talks continue and MoDOT is open to a deal. McKee said one is near.

"We’re very, very close," he said. "I think we’re days away from having it settled."

The threat of eminent domain — used by McKee, not upon him — has hung over NorthSide since it was unveiled last year. Despite repeated promises by both the developer and city officials that it won’t be used on owner-occupied homes, fear remains that people will be forced to move to make way for the project.

That fear is behind a lawsuit against NorthSide, which is now being considered in St. Louis Circuit Court. A ruling is expected in May by Judge Robert Dierker, the same judge who now may be asked to consider MoDOT’s request for McKee’s land, if an agreement is not reached.

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Gas prices in Denver rose again over the last week, the latest in several weeks of increases, with the average price of premium gas nearing $3 a gallon, according to the American Automobile Association’s Daily Fuel Gauge Report.

Monday’s average price for regular-grade gasoline in Denver is $2.66-5/10ths, up 2 cents in a week and up about 21 cents from its $2.46 price in mid-February, when prices began a slow rise, AAA says.

Mid-grade gas in Denver averages about $2.85, up 2.2 cents from a week ago. Premium gas is $2.98, up 2.3 cents in a week, and diesel is $2.84, up 2 cents in a week.

Oil prices have been gaining recently and surpassed $85 cents a barrel early Monday.

The highest price ever recorded for regular gas in Denver was $4.00-6/10ths a gallon on July 17, 2008. A year ago Monday, regular cost $1.95 a gallon.

Statewide Monday in Colorado, the average price of regular gas is about $2.71, AAA says, while mid-grade is $2.90, premium $3.03 and diesel $2.89.

Nationwide, regular gas costs an average of $2.83 Monday, up 2.8 cents from a week ago and up 9.2 cents from a month ago.

Colorado is again among the 10 states with the cheapest gas, AAA says. Pump prices are lowest this week in Colorado, Texas, Oklahoma, Missouri, Arkansas, Mississippi, Tennessee, South Carolina, New Jersey and New Hampshire.

The Fuel Gauge Report is compiled for the AAA by the Oil Price Information Service with the help of Wright Express.

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