Finance and Economic

After four leaderless months, Yahoo named Scott Thompson as its new CEO on Wednesday — choosing an outsider to take over the helm despite shareholders’ calls to sell the company.

Thompson was previously the president of PayPal, an eBay (, Fortune 500) subsidiary. His appointment, which becomes official January 9, follows the ouster of former CEO Carol Bartz — who was unceremoniously fired by the company’s board via phone in September.

Shares of Yahoo (, Fortune 500) closed 3.1% lower Wednesday.

In a prepared statement, Thompson called Yahoo "an industry icon" with a "rich history." Although that’s true, Yahoo has struggled mightily in recent years. The company gave up on search two years ago, a market that it once led. It is also losing ground with its other cash cow, display advertising, to new entrants to the market such as Google (, Fortune 500) and Facebook.

On a conference call following the announcement, journalists and analysts hammered Thompson on those points. He said he needs time on the job to develop strong answers.

"It’s too early for me to have any informed opinion as to the display space, what’s going on there and what’s happening next," Thompson said on the call. "I have a lot to learn, and it’s still very early days … but down in that data we’re going to find ways to innovate and compete."

Roy Bostock, chairman of Yahoo’s board of directors, was also on the call and jumped in to answer many of the hardball questions.

"What we’re doing at Yahoo, you can call it a turnaround, but it’s really building on strong assets," Bostock said.

Will Yahoo sell itself? Despite Bostock’s insistence Yahoo can stand alone, the company’s weakness has attracted buyout interest from a long list of both private equity firms and tech titans. Reports in late October said Google was preparing a bid, in addition to Microsoft (, Fortune 500), which offered to buy Yahoo for more than $47 billion in 2008 and was turned down no checking account payday advance. Reports last month said Chinese Internet company Alibaba, of which Yahoo owns a stake, is preparing a takeover bid.

Yahoo co-founder Jerry Yang and other board members have privately told four major private equity firms that the board would not support a takeover offer for the entire company, Fortune reported on Wednesday.

Several groups of activist shareholders had pushed Yahoo’s board to sell the company, but bringing in an outside CEO makes that possibility more remote.

An analyst on the conference call asked Thompson whether he "see[s] Yahoo as public or private" in the future.

Thompson got out half a word before Bostock jumped in: "We are a public company, with roughly a $20 billion market cap. We don’t see that changing right now."

But earlier in the call, Bostock said Yahoo is "considering a wide range of business investments" and other options. He stressed several times during the call that "the primary focus will be on core business."

That leaves Yahoo room to shed more of its vast product portfolio. It began winnowing in late 2010, killing off struggling services like its Buzz community news site and aging AltaVista search engine. Yahoo also thinned its blogs and sold off bookmarking service Delicious.

Thompson said his aim is "to return this business to one of the great iconic brands. I have a core belief that what happens in the next five years, and the next ten, is almost impossible to imagine."

He closed the call by saying, "I’m genuinely excited to be here. I would not be here if I didn’t think the future of this brand could be spectacular."

Yahoo chief financial officer Tim Morse had been serving as interim CEO, and he will return to his former position once Thompson takes the helm. Morse will also join the company’s board. 

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Construction spending jumped in November as builders spent more on single-family homes, apartments and remodeling projects.

The Commerce Department said Tuesday that spending on construction projects rose 1.2 percent in November, following a revised 0.2 percent drop in October. The increase was the third in four months and the largest since a 2.2 percent rise in August.

The November increase pushed spending to a seasonally adjusted annual rate of $807.1 billion, still barely half the $1.5 trillion that economists consider healthy. Analysts say it could be four years before construction returns to health levels.

Home construction has begun a gradual rebound and likely added to the nation’s economic growth in 2011. The chief reason is apartments are being built almost twice as fast as two years ago. Renting is the only option for many people who have lost their jobs, their homes or both.

For November, private residential construction increased 2 percent in November to a seasonally adjusted $522.3 billion. It was the fifth consecutive gain.

Single-family construction rose 1.5 percent while multi-family construction including apartments rose 1.3 percent. The category that covers home remodeling rose 9.5 percent.

Nonresidential construction was unchanged at an annual rate of $243.7 billion, Spending on hotels and hospitals rose but those gains were offset by weakness in other areas. Spending on office buildings dropped 1.3 percent and the category that includes shopping centers fell 0.8 percent.

Spending on government projects rose 1.7 percent to an annual rate of $284.9 billion. That followed a 1.8 percent drop in October. State and local construction gained 1.3 percent and federal building activity increased 5.3 percent. But even with those gains, activity in the government sector was down 5.3 percent from a year ago.

The construction industry was hit hard by the housing bust and has had trouble recovering since the recession ended more than two years ago.

Severe budget problems have squeezed state and local governments while the federal government has come under pressure to get control of soaring budget deficits.

Private builders haven’t fared much better. While their spending increased, they have scaled back on construction plans and are working from depressed levels.

Builders in November broke ground on homes at a seasonally adjusted annual rate of 685,000. That was a 9.3 percent jump from October and the fastest pace since April 2010.

Builders should start at least 600,000 homes this year. That’s up from 587,000 last year and 554,000 in 2009 _ the worst year on record. Still, that’s half the number that economists expect in a healthy market.

While construction may be turning around, home sales are still weak. This year will likely end up as the worst for new-home sales in history.

While new homes represent less than one-fifth the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

Builders are struggling to compete with weak demand because of still-high unemployment and a glut of homes on the market because of foreclosures and short sales _ where lenders accept less for a house than the mortgage on the home is worth. Those homes are selling for at an average discount of 20 percent, which is lowering neighboring home values.

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President Barack Obama will waste little time getting back in front of voters following a 10-day Hawaiian vacation spent largely out of the spotlight.

Air Force One was due to land in Washington on Tuesday morning after an overnight flight from the island of Oahu. The president is returning from vacation the same day Republican presidential candidates square off in the Iowa caucuses, the first nominating contest of the 2012 campaign.

Obama plans to make his presence in the campaign known quickly.

The president will host a live web chat with supporters in Iowa on Tuesday night as the caucuses are unfolding. The following day, Obama will travel to Cleveland for an event focused on the economy.

Obama aides said the president will seek to draw a contrast with his GOP challengers during Wednesday’s trip to Ohio, a state sure to figure prominently in the presidential campaign.

Obama returns to Washington facing further debate on extending payroll tax cuts, the same issue that consumed Washington during the final days of December.

Congress broke through a stalemate just days before Christmas, agreeing to extend the cuts for two months. Lawmakers will get back to work later this month to negotiate a full-year extension of the cuts, which Obama supports.

White House officials say the tax cut extension is the last “must-do” legislative item on Obama’s agenda this year. His strategy for his fourth year in office will focus largely on taking executive actions that do not need approval from lawmakers as he seeks to break away from a deeply unpopular Congress.

The payroll tax cut debate almost prevented Obama from taking his annual Christmas trip to Hawaii faxless pay day loans. He delayed the trip nearly a week, finally departing on Dec. 23, just hours after Congress finalized the two-month extension.

The president, wife Michelle and daughters Malia and Sasha stayed largely out of the public eye during their trip to Oahu, the island where Obama was born and mostly raised.

The Obamas stayed in a multimillion-dollar oceanfront rental on Kailua Beach, near Honolulu, and surrounded themselves with a close-knit group of family and friends. That included Obama’s sister, Maya Soetoro-Ng, who lives on Oahu, and several of the president’s childhood friends.

Obama’s outing consisted largely of trips to the gym and golf course at Marine Corps Base Hawaii near his vacation rental. The first family also made a few outings around the island, including a snorkeling trip to popular Hanauma Bay and a stop for shave ice, a Hawaiian snow cone.

The president also took his family to the East-West Center, a research and exhibition center that is displaying the anthropological work of his late mother.

Aides say Obama spent a bit of time on vacation brainstorming ideas for his Jan. 24 State of the Union address, where he will lay out an agenda that also will serve as the basis for his campaign message. He also was briefed by a small cadre of traveling advisers on some of the international issues looming in 2012, including renewed threats from Iran and a request from Yemen’s outgoing, autocratic president to come to the U.S. for medical treatment.

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Iran’s navy said Sunday it test-fired an advanced surface-to-air missile during a drill in international waters near the strategic Strait of Hormuz, the passageway for one-sixth of the world’s oil supply.

Iran’s state TV said the missile, named Mehrab, or Altar, is designed to evade radar and was developed by Iranian scientists. The report said the missile was tested Sunday but provided no further details.

A leading Iranian lawmaker said the sea maneuvers serve as practice for closing the Strait of Hormuz if the West blocks Iran’s oil sales. After top Iranian officials made the same threat a week ago, military commanders emphasized that Iran has no intention of blocking the waterway now.

The exercise covers a 1,250-mile (2,000-kilometer) stretch of water beyond the Strait of Hormuz, including parts of the Indian Ocean and the Gulf of Aden.

The drill, which could bring Iranian ships into proximity with U.S. Navy vessels that operate in the same area, is Iran’s latest show of strength in the face of mounting international criticism over its nuclear program. The West fears Iran’s program aims to develop atomic weapons _ a charge Tehran denies, insisting it’s for peaceful purposes only.

The 10-day exercise drew significant attention after the Iranian warnings about closing the strait. Iranian military officials later appeared to back away from that threat.

A spokesman for the exercise, Rear Adm. Mahmoud Mousavi, made a similar conciliatory comment on Sunday.

“We won’t disrupt traffic through the Strait of Hormuz. We are not after this,” the semiofficial ISNA news agency quoted him as saying.

Prominent lawmaker Ismail Kowsari offered a different view. He said the war games are part of Iran’s preparations to close the vital waterway if sanctions are imposed.

“Iran’s armed forces have practiced operations to close the Strait of Hormuz several times,” the semiofficial Fars news agency quoted Kowsari as saying Sunday.

“If we feel that the enemies want to prevent our oil exports, definitely we will close the Strait of Hormuz,” he said.

Mousavi said the missile that was tested Sunday is one of the newest in the navy’s arsenal.

“It’s equipped with state-of-the-art technology and a built-in system that enables it to thwart jammers,” Mousavi told state TV. One way to deflect surface-to-air missiles is to confuse their guidance systems.

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Missouri Gov. Jay Nixon will name the state’s new top job creation official on Friday, his office said Thursday.

The new director of the Department of Economic Development will replace David Kerr, who’s stepping down this month after a little more than two years in the post.

The former AT&T executive and Kansas Commerce Secretary worked to significantly boost Missouri’s exports and led an overhaul of the state’s strategic economic development plan. He also played a key role in negotiations with both Ford and General Motors about plant expansions in the state.

But his tenure was also marked by sluggish job growth and, in recent months, controversy over a sugar plant deal gone awry in Moberly. Meanwhile, efforts by the Nixon administration to re-tool Missouri’s menu of economic incentives largely stalled in the General Assembly. Kerr replaced Nixon’s first economic development chief, St. Louis attorney Linda Martinez, who lasted less than a year in the job.

Whoever takes the seat next will do so ahead of a re-election campaign in which the economy is expected to be a major issue. They will also take the seat on the eve of a Legislative session where tax credits will, again, likely see much debate.

Nixon will visit Kansas City and Springfield (though not St. Louis) to make the announcement.

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The U.S. Treasury again shied away from labeling China a currency manipulator on Tuesday, but it rapped the country for not moving quickly enough on exchange rate reforms.

Some U.S. politicians have argued that China has gained an unfair competitive edge in global markets by keeping the yuan artificially low to boost exports, and pressure has mounted in Congress for President Barack Obama to punish China.

But the administration prefers to tread softly and use diplomacy to effect change. The U.S. Treasury, in a semi-annual report, as usual said that statutes covering a designation of currency manipulator “have not been met with respect to China.”

It repeated its standard line that appreciation in the yuan has been too slow, calling it “insufficient.”

“Treasury will closely monitor the pace of appreciation and press for policy changes that yield greater exchange rate flexibility, a level playing field, and a sustained shift to domestic demand-led growth,” it said in the report to Congress on international economic and exchange rate policies.

The value of the yuan, which Beijing manages closely, has risen 4 percent against the dollar this year and 7.7 percent since China dropped a firm peg against the greenback in June 2010. The Peterson Institute for International Economics recently estimated the yuan was undervalued by 24 percent against the dollar, down from 28 percent earlier in the year. It attributed the change to both Beijing’s policy of gradual currency appreciation and higher Chinese inflation.

At the heart of the friction between the two countries is a U.S. trade deficit with China that swelled in 2010 to a record $273.1 billion from about $226.9 billion in 2009. The cumulative Jan-Oct deficit with China is on track to top that this year, running at around $245.5 billion.

The Senate this year for the first time passed a bill that would require the administration to slap penalties on Chinese imports if it fails to adopt market-based exchange rates. While the measure has made no progress in the lower chamber and is unlikely to become law, it shows the mounting U.S. frustration with its vital trade partner.

President Obama at the November APEC meetings, in his toughest words yet, told President Hu Jintao that China must play by global trade rules and act like “a grown-up.”

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But U.S. Treasury Secretary Timothy Geithner has said the law on the FX report, which requires the administration to determine whether U.S. trade partners are deliberately undervaluing their currencies, is a poor tool to push Beijing on the yuan.

Instead, the United States prefers to argue for change at its regular closed-door meetings with Chinese officials. It also uses international economic forums, such as the Group of 20 leading nations and the International Monetary Fund, to ramp up public pressure on Beijing to move more quickly to a more-flexible currency.

China is the biggest foreign holder of U.S. Treasuries, with about $1.1 trillion, a position that gives it leverage in international economic negotiations. Foreign exchange traders had not expected a change of U.S. tactics.

“It’s not very surprising. It’s sort of sliding it in under the radar. They’re (Treasury) really not in a position to make any major moves at this point,” said Sean Incremona, an economist at 4Cast in New York.

The Treasury Department has not labeled a country a currency manipulator since July 1994, when it cited China. A designation would require the United States to step up negotiations with Beijing on the yuan’s value.

The yuan slipped on Tuesday as strong dollar demand from corporations offset a record high mid-point fixed by the People’s Bank of China. The central bank set an all-time high dollar/yuan mid-point in an apparent move to let the yuan rise a little more at the end of 2011 so as to make the yuan’s full-year nominal appreciation look bigger, traders said.

Some U.S. manufacturers, which have been hit hardest by competition from China and other emerging economies, would still prefer the U.S. government to take a harder line.

“China’s currency is still enormously undervalued,” said Scott Paul, executive director of the Alliance for American Manufacturing, an industry lobby for hard-hit textile, steel and labor groups.

“I’m disappointed that President Obama has now formally refused six times to cite China for its currency manipulation, a practice which has contributed to the loss of hundreds of thousands of American manufacturing jobs.”

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Verizon Wireless was working to get its 4G network back up and running on Wednesday, following a nationwide outage that began in the early morning hours.

Customers across the country, from California to Ohio to Virginia, took to Verizon’s forums to complain that service was knocked out, though gripes were mostly limited to the new 4G LTE data network, which Verizon began to roll out a year ago. Voice calls, texts and 3G data were unaffected, according to the company.

Verizon (, Fortune 500) spokesman Tom Pica confirmed that service returned to normal at around 2 p.m. ET after engineers worked all morning to fix the issue. He did not comment on the cause of the problem.

It was the second nationwide outage in as many weeks for Verizon’s 4G network, and the third since April. That’s a tough pill to swallow for Verizon, which has built its brand on network reliability.

The bad news for Verizon and its customers is that wireless infrastructure experts expect this isn’t the last time the 4G network will go down. Since Verizon was the first company in the world to deploy a 4G LTE network at any great scale, it is dealing with the usual early adopter growing pains.

"Verizon is a pioneer, and it’s suffering the fate that all pioneers face," said Ken Rehbehn, analyst at Yankee Group.

Indeed, each new wave of network technology involves some degree of pain. When the last next-generation network (3G) first deployed, it was brought down by widespread capacity constraints that the carriers had not anticipated. Most notably, AT&T’s (, Fortune 500) 3G network became close to unusable in New York and San Francisco following Apple’s (, Fortune 500) launch of the iPhone 3G in 2008.

4G is a myth (and a confusing mess)

So what’s the trouble with Verizon’s 4G network? Verizon isn’t saying, and it would be very unusual for a network operator to reveal specifics about why it’s having a problem. But experts believe it has to do with the complexities of LTE, which is a much more intricate technology than its predecessors cash advance.

Unlike previous systems that use switches to control traffic, 4G uses "cores," that act like large, centralized command-and-control centers. Switches covered city blocks, but 4G cores are now serving multiple states. If one goes out, entire regions could lose service.

Since it’s a nationwide event, experts believe all the cores may have been affected by a software or hardware issue.

"This is truly indicative of a larger problem," said Robert Laracuente, vice president of business development at Telenetworks in Puerto Rico. "Best case scenario, some routing isn’t programmed as it should be. The worst case scenario is an undetected hardware fault that systemically disrupts the network under certain conditions."

Because this has happened three times now, Laracuente said it would be surprising if Verizon faced a software problem, since the company prides itself on its scrutiny of its engineering. If it is a hardware malfunction, that can be very hard to detect and prevent in the future.

"This is a whole new paradigm of network technology, so I expect that issues will continue to occur," said Akshay Sharma, analyst at Gartner.

Next-generation networks are based end-to-end on Internet Protocol, which routes packets of information over the Internet rather through circuits. That makes 4G about 10 times faster and gives it significantly more capacity for data traffic than 3G, but it also brings a new host of issues to the table.

"IP by its nature is not resilient from day one," Sharma said. "You don’t get resiliency and quality of service for free — you have to engineer that in. That’s a new wrinkle that adds to the challenge."

Verizon’s 4G customers may have to get used to a few bumps as their first-of-its-kind technology gets all the glitches smoothed out. It’s the price pioneers always pay.  

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NATO warplanes bombed three Libyan state TV satellite transmitters in Tripoli overnight, targeting facilities that have been used to incite violence and threaten civilians, the military alliance said Saturday.

A series of loud explosions echoed across the capital before dawn. There was no immediate comment from Libyan officials on what had been hit, but state TV was still on the air in Tripoli as of Saturday morning.

NATO said the airstrikes aimed to degrade Libyan leader Moammar Gadhafi’s “use of satellite television as a means to intimidate the Libyan people and incite acts of violence against them.”

“Striking specifically these critical satellite dishes will reduce the regime’s ability to oppress civilians while (preserving) television broadcast infrastructure that will be needed after the conflict,” the alliance said in a statement posted on its website.

It said Gadhafi’s inflammatory TV broadcasts were intended to mobilize his supporters.

In addition to the three TV transmitters, during the past 24 hours alliance aircraft targeted military vehicles, radars, ammunition dumps, anti-aircraft guns, and command centers near the front lines in the east and west, NATO said in a statement.

The attempt to silence the government’s TV broadcasts comes at a sensitive time for the rebels, who appeared to be in disarray after the mysterious death of their chief military commander. Abdel-Fattah Younis’ body was found Thursday, dumped outside the rebels’ de facto capital of Benghazi, along with the bodies of two colonels who were his top aides. They had been shot and their bodies burned.

NATO too has been increasingly embarrassed by the failure of its bombing campaign, now in its fifth month, to dislodge Gadhafi’s regime. With the fasting month of Ramadan due to start in August, there is growing realization within the alliance that the costly campaign will drag on into the autumn and possibly longer.

NATO had originally hoped that a series of quick, sharp strikes would quickly force Gadhafi to give up power. The alliance has carried out about 6,500 strike sorties and a total of 17,000 sorties since March.

Eight NATO members have been participating in air campaign in Libya: the U.S., Britain, France, Belgium, Canada, Norway, Denmark and Italy. They have carried out a total of more than 6,500 strike sorties.

But this coalition has been gradually fraying amid growing public opposition in Europe to the costs of the campaign _ estimated at more than a billion euros _ at a time of budget cuts and other austerity measures.

The United States was the first to limit its participation, deciding to only provide support to the European allies. Then Italy withdrew its only aircraft carrier and part of its air force contingent. Meanwhile, Norway has announced it will pull all of its F-16 warplanes out of the operation by Monday.

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Big Oil continued to make big money in the second quarter.

Industry giants Exxon Mobil and Royal Dutch Shell on Thursday reported a surge in earnings, helped by higher prices for oil, gasoline and other fuels. Even BP, still paying for the Gulf oil spill, made more than $5 billion in the quarter.

The windfall drew jeers from environmental groups that oppose tax subsidies for the industry. They said it shows the industry doesn’t need extra help from the government, especially at a time when lawmakers need to chop billions of dollars from the budget.

“Why should those who are posting record profits be exempt from sharing the sacrifices we all will be making?” said Jacqueline Savitz, senior campaign director for Oceana, an environmental advocacy group.

President Obama said in April that he wanted to cut roughly $4 billion in government subsidies for oil companies. The industry argues that doing so will discourage oil companies from developing fields in the U.S.

Argus Research analyst Phil Weiss noted that oil profits appear huge in comparison to almost any other industry, but they’re relatively tame when considering how expensive it is to extract oil from the ground no credit check payday loans. Exxon, for example, earned $10.7 billion after taking in a whopping $125.5 billion from April to June. That’s a profit margin of less than 10 percent, much lower than margins for pharmaceutical, technology or service companies, Weiss said.

“Those businesses have much richer bottom lines,” he said.

As they announced their quarterly profits, oil executives said they’ll devote billions of dollars more to finding new deposits that will eventually bring more supply to the market. Much of that attention will be focused on the U.S.

In the April-June period, Exxon’s profits jumped 41 percent. Shell’s net income nearly doubled to $8.7 billion and BP earned $5.6 billion compared with a loss of $17.2 billion last year. All three missed Wall Street expectations, however, as they reported weaker oil production from fields outside the U.S. Foreign entitlement contracts force them to take less oil as prices rise, analysts said.

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