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The fate of a $35 billion Air Force contract is out of the hands of the military.
Boeing Co. said Monday it will formally protest the refueling tanker contract awarded to European Aeronautic Defence and Space Co. and Northrop Grumman Corp.
While that official protest, to be filed Tuesday, puts the contract under review of the Government Accountability Office, it doesn’t take Air Force officials out from under intense pressure.
Those officials return Tuesday to Capitol Hill, where rhetoric and furor have accompanied the high-stakes deal since the Air Force late last month gave the job to a European company instead of an American one.
The backlash has been led by lawmakers from Washington, Kansas and other states that would have gained jobs had Boeing won. Air Force officials have said the impact on American jobs was not one of their criteria for awarding the contract.
The contract to replace 179 air-to-air refueling tankers is the first of three Air Force awards worth as much $100 billion to replace its entire fleet of nearly 600 tankers over the next 30 years.
Following a debriefing by Air Force officials Friday, Boeing questioned the fairness of the competition, citing “inconsistency in requirements, cost factors and treatment of our commercial data.”
The Chicago-based aerospace company “found serious flaws in the process that we believe warrant appeal,” Boeing’s chairman and chief executive, Jim McNerney, said in a statement.
The company argued that the Air Force changed its method for evaluating the two tankers even after issuing a request for proposals. These changes allowed a larger tanker to be competitive even though the Air Force originally had called for a medium-size plane. Air Force officials have indicated that the larger size of the tanker offered by the EADS/Northrop team helped tip the balance in its favor.
“We didn’t think they wanted a bigger plane,” Jim Albaugh, head of Boeing’s Integrated Defense Systems unit, said last week. Albaugh said this is why Boeing based its offering on Boeing’s 767, noting that “we were discouraged from offering the 777,” a bigger aircraft that would have been more comparable to the winning bid.
Once Boeing files its protest, the GAO will have 100 days to issue a ruling. A protest could delay execution of the tanker contract by nearly a year, according to Loren Thompson, a defense analyst with the Lexington Institute, a think tank.
In a statement, Northrop Grumman said the tanker competition was “the most rigorous, fair and transparent acquisition process in Defense Department history.”
The Air Force selection of EADS, the European parent of Boeing rival Airbus, and Northrop Grumman of Los Angeles came as a major surprise. Boeing has been supplying refueling tankers to the Air Force for nearly 50 years.
With anger mounting on Capitol Hill, top Air Force officials - including Air Force Secretary Michael Wynne, Air Force Chief of Staff T. Michael Moseley and Sue Payton, the Air Force’s assistant secretary for acquisition - are scheduled to testify this week at a series of congressional hearings.
“This is one of the worst decisions I’ve ever seen,” said Rep. Norm Dicks, a Democrat from Washington State, which is home to many Boeing jobs. Dicks said he will work to block the decision or push for a new tanker competition.
The EADS/Northrop Grumman team plans to perform its final assembly work in Mobile, Ala., although the underlying plane would mostly be built in Europe. It would also use General Electric Co. engines built in North Carolina and Ohio.
Northrop Grumman estimates building the tanker would produce 2,000 new jobs in Mobile and support 25,000 jobs at suppliers nationwide.
Boeing would have performed much of the tanker work in Everett, Wash., and Wichita, Kan., and used Pratt & Whitney engines built in Connecticut. The company said a win would have supported 44,000 new and existing jobs at Boeing and more than 300 suppliers in more than 40 states. But even if Boeing had won the deal, critical parts of its tankers would have come from other countries, including Japan and Italy.
Sen. Richard Shelby, R-Ala., said he remains confident that the GAO will uphold the Air Force decision and added that he want to “keep the Congress out of the procurement business.”
Thompson said Boeing will have a tough time overturning the Air Force decision. “This was the most rigorous and complete weapons award that the Air Force has done in mo Northrop’s shares fell 62 cents to $78.39.

via AOL

WASHINGTON (AP) — Boeing Co. on Monday said it will formally protest a $35 billion Air Force contract awarded to European Aeronautic Defence and Space Co. and Northrop Grumman Corp.

Boeing’s chairman and CEO, Jim McNerney, said in a statement the Chicago-based aerospace company “found serious flaws in the process that we believe warrant appeal.”

The award to replace 179 air-to-air refueling tankers is the first of three major Air Force contracts to replace its entire fleet of nearly 600 aging tankers and could be worth $100 billion over the next 30 years.

Boeing (BA, Fortune 500), which was debriefed by Air Force officials on Friday about why EADS and Northrop Grumman won the high-stakes deal, said Monday that it had “serious concerns” about the fairness of the competition, citing “inconsistency in requirements, cost factors and treatment of our commercial data.”

“This is an extraordinary step rarely taken by our company, and one we take very seriously,” McNerney said.

Representatives from EADS and the Air Force did not immediately have any comment.

Boeing hinted at the basis for its protest, claiming the Air Force changed its method for evaluating the two tankers even after issuing a request for proposals. These changes allowed a larger tanker to be competitive even though the Air Force originally had called for a medium-sized plane, Boeing said. Air Force officials have indicated that the larger size of the tanker offered by the EADS/Northrop team helped tip the balance in its favor.

Sen. Patty Murray, D-Wash., who represents a state that is home to many Boeing jobs, continued to criticize the Air Force’s decision after Boeing announced its plans to protest the deal.

“The Air Force’s short-sighted decision to place the future of America’s aerospace industry and national security in the hands of an illegally subsidized foreign competitor is simply wrong for America,” Murray said.

Once Boeing files its protest, the Government Accountability Office will have 100 days to issue a ruling. A protest could delay execution of the tanker contract by nearly a year, according to Loren Thompson, a defense analyst with the Lexington Institute, a think tank. 

via CNN

VIENNA, Austria (AP) - Oil prices rose Friday, extending the previous day’s gain of more than $2 a barrel as U.S. trade deficit figures spurred hopes that the U.S. economy might escape a serious downturn.
Gasoline futures surged by more than 4 cents a gallon.
The March contract for light sweet crude on the New York Mercantile Exchange rose 99 cents to $96.45 a barrel in electronic trading by afternoon in Europe.
Brent crude futures rose 6 cents to $95.22 a barrel on the ICE Futures exchange in London.
The U.S. Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole - an indication the U.S. is exporting more goods. This led investors to think U.S. energy demand would not be as weak as feared.
U.S. Federal Reserve Chairman Ben Bernanke’s suggestion that the central bank is prepared to again cut interest rates also helped boost light, sweet crude by $2.19 to settle at $95.46 a barrel Thursday in New York.
That was its highest close since Jan. 9. The contract has risen in 4 of the past 5 sessions, adding more than US$6 in a little over a week.
“Energy prices are strong,” proclaimed the Schork Report, edited by energy analyst Stephen Schork, saying that benchmark crude “despite Bernanke’s ’sluggish’ view of the U.S. economy appears primed for another run at $100.”
Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.
Energy investors were also buying after a federal judge’s decision Wednesday to confirm an earlier ruling freezing $300 million in a bank account owned by the Venezuelan state oil company.
Exxon Mobil is challenging Venezuela’s nationalization of an oil project. A British court’s earlier decision to temporarily freeze up to $12 billion in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.
Prices gained despite forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.
That sentiment was echoed by the Organization of Petroleum Exporting Countries. It said Friday that weakening world economic growth and demand prospects and ongoing increases in U.S. and European crude and gasoline inventories may lead it to reduce output in efforts to avoid a steep fall in prices.
In its monthly report, OPEC, responsible for about 40 percent of global oil production, cut its 2008 global oil demand growth forecast by 100,000 barrels a day to 1.2 million barrels a day - an increase of about 1.4 percent from this year.
OPEC is scheduled to meet March 5 in Vienna to review its production policy.
Heating oil futures were up 1.39 cents to $2.6805 a gallon while gasoline price surged over 4 cents to $2.5179 a gallon.
Natural gas futures were basically flat at $8.777 per 1,000 cubic feet.

by AOL

“Traders still focus on worries about the Exxon Mobil (XOM, Fortune 500) versus Venezuela contest as well as hopes that the U.S. may sidestep a possible economic recession,” said Tim Evans, an analyst at Citigroup, in a research note.

Word that the U.S. has given international nuclear regulators evidence that diplomats say shows Iran is actively trying to build a nuclear bomb gave investors another reason to buy.

But many analysts questioned oil’s recent price strength, arguing that underlying supply and demand fundamentals suggest prices should be falling.

“I actually cannot justify this rally,” said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill, echoing the sentiments of many.

Indeed, forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, call for slower demand growth this year due to the weakening economy.

At the pump, meanwhile, gas prices rose 0.7 cent overnight to a national average of $2.979 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, have inched higher in recent days in response to oil’s move higher.

Other energy futures also rose Thursday. March heating oil futures added 5.1 cents to settle at $2.6666 a gallon on the Nymex while March gasoline futures rose 8.62 cents to settle at $2.4761 a gallon.

Venezuela wants to beat Exxon

IEA: Economic woes to hit oil demand
by CNN

VIENNA, Austria (AP) - Oil prices rose Friday, extending the previous day’s gain of more than $2 a barrel as U.S. trade deficit figures spurred hopes that the U.S. economy might escape a serious downturn.
Gasoline futures surged by more than 4 cents a gallon.
The March contract for light sweet crude on the New York Mercantile Exchange rose 99 cents to $96.45 a barrel in electronic trading by afternoon in Europe.
Brent crude futures rose 6 cents to $95.22 a barrel on the ICE Futures exchange in London.
The U.S. Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole - an indication the U.S. is exporting more goods. This led investors to think U.S. energy demand would not be as weak as feared.
U.S. Federal Reserve Chairman Ben Bernanke’s suggestion that the central bank is prepared to again cut interest rates also helped boost light, sweet crude by $2.19 to settle at $95.46 a barrel Thursday in New York.
That was its highest close since Jan. 9. The contract has risen in 4 of the past 5 sessions, adding more than US$6 in a little over a week.
“Energy prices are strong,” proclaimed the Schork Report, edited by energy analyst Stephen Schork, saying that benchmark crude “despite Bernanke’s ’sluggish’ view of the U.S. economy appears primed for another run at $100.”
Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.
Energy investors were also buying after a federal judge’s decision Wednesday to confirm an earlier ruling freezing $300 million in a bank account owned by the Venezuelan state oil company.
Exxon Mobil is challenging Venezuela’s nationalization of an oil project. A British court’s earlier decision to temporarily freeze up to $12 billion in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.
Prices gained despite forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.
That sentiment was echoed by the Organization of Petroleum Exporting Countries. It said Friday that weakening world economic growth and demand prospects and ongoing increases in U.S. and European crude and gasoline inventories may lead it to reduce output in efforts to avoid a steep fall in prices.
In its monthly report, OPEC, responsible for about 40 percent of global oil production, cut its 2008 global oil demand growth forecast by 100,000 barrels a day to 1.2 million barrels a day - an increase of about 1.4 percent from this year.
OPEC is scheduled to meet March 5 in Vienna to review its production policy.
Heating oil futures were up 1.39 cents to $2.6805 a gallon while gasoline price surged over 4 cents to $2.5179 a gallon.
Natural gas futures were basically flat at $8.777 per 1,000 cubic feet.

by AOL

“Traders still focus on worries about the Exxon Mobil (XOM, Fortune 500) versus Venezuela contest as well as hopes that the U.S. may sidestep a possible economic recession,” said Tim Evans, an analyst at Citigroup, in a research note.

Word that the U.S. has given international nuclear regulators evidence that diplomats say shows Iran is actively trying to build a nuclear bomb gave investors another reason to buy.

But many analysts questioned oil’s recent price strength, arguing that underlying supply and demand fundamentals suggest prices should be falling.

“I actually cannot justify this rally,” said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill, echoing the sentiments of many.

Indeed, forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, call for slower demand growth this year due to the weakening economy.

At the pump, meanwhile, gas prices rose 0.7 cent overnight to a national average of $2.979 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, have inched higher in recent days in response to oil’s move higher.

Other energy futures also rose Thursday. March heating oil futures added 5.1 cents to settle at $2.6666 a gallon on the Nymex while March gasoline futures rose 8.62 cents to settle at $2.4761 a gallon. 

Venezuela wants to beat Exxon

IEA: Economic woes to hit oil demand
by CNN

VIENNA, Austria (AP) - Oil prices rose Friday, extending the previous day’s gain of more than $2 a barrel as U.S. trade deficit figures spurred hopes that the U.S. economy might escape a serious downturn.
Gasoline futures surged by more than 4 cents a gallon.
The March contract for light sweet crude on the New York Mercantile Exchange rose 99 cents to $96.45 a barrel in electronic trading by afternoon in Europe.
Brent crude futures rose 6 cents to $95.22 a barrel on the ICE Futures exchange in London.
The U.S. Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole - an indication the U.S. is exporting more goods. This led investors to think U.S. energy demand would not be as weak as feared.
U.S. Federal Reserve Chairman Ben Bernanke’s suggestion that the central bank is prepared to again cut interest rates also helped boost light, sweet crude by $2.19 to settle at $95.46 a barrel Thursday in New York.
That was its highest close since Jan. 9. The contract has risen in 4 of the past 5 sessions, adding more than US$6 in a little over a week.
“Energy prices are strong,” proclaimed the Schork Report, edited by energy analyst Stephen Schork, saying that benchmark crude “despite Bernanke’s ’sluggish’ view of the U.S. economy appears primed for another run at $100.”
Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the dollar is falling.
Energy investors were also buying after a federal judge’s decision Wednesday to confirm an earlier ruling freezing $300 million in a bank account owned by the Venezuelan state oil company.
Exxon Mobil is challenging Venezuela’s nationalization of an oil project. A British court’s earlier decision to temporarily freeze up to $12 billion in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.
Prices gained despite forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.
That sentiment was echoed by the Organization of Petroleum Exporting Countries. It said Friday that weakening world economic growth and demand prospects and ongoing increases in U.S. and European crude and gasoline inventories may lead it to reduce output in efforts to avoid a steep fall in prices.
In its monthly report, OPEC, responsible for about 40 percent of global oil production, cut its 2008 global oil demand growth forecast by 100,000 barrels a day to 1.2 million barrels a day - an increase of about 1.4 percent from this year.
OPEC is scheduled to meet March 5 in Vienna to review its production policy.
Heating oil futures were up 1.39 cents to $2.6805 a gallon while gasoline price surged over 4 cents to $2.5179 a gallon.
Natural gas futures were basically flat at $8.777 per 1,000 cubic feet.

by AOL

“Traders still focus on worries about the Exxon Mobil (XOM, Fortune 500) versus Venezuela contest as well as hopes that the U.S. may sidestep a possible economic recession,” said Tim Evans, an analyst at Citigroup, in a research note.

Word that the U.S. has given international nuclear regulators evidence that diplomats say shows Iran is actively trying to build a nuclear bomb gave investors another reason to buy.

But many analysts questioned oil’s recent price strength, arguing that underlying supply and demand fundamentals suggest prices should be falling.

“I actually cannot justify this rally,” said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill, echoing the sentiments of many.

Indeed, forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, call for slower demand growth this year due to the weakening economy.

At the pump, meanwhile, gas prices rose 0.7 cent overnight to a national average of $2.979 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, have inched higher in recent days in response to oil’s move higher.

Other energy futures also rose Thursday. March heating oil futures added 5.1 cents to settle at $2.6666 a gallon on the Nymex while March gasoline futures rose 8.62 cents to settle at $2.4761 a gallon. 

Venezuela wants to beat Exxon

IEA: Economic woes to hit oil demand
by CNN

BEIJING (AP) - China’s trade surplus grew by 22.7 percent in January over the same month last year as foreign demand for exports stayed strong despite worries about slowing global growth, according to data reported Friday.
The latest figures appeared likely to fuel demands by China’s trading partners for action on trade barriers and currency controls. Some American lawmakers are calling for punitive tariffs on Chinese goods if Beijing fails to act quickly.
January’s trade gap totaled $19.5 billion, the government’s Xinhua News Agency said, citing data from the Chinese customs agency.
Exports in January rose 26.7 percent to $109.7 billion, while imports grew by 27.6 percent to $90.2 billion, according to Xinhua.
But compared to previous months, the surplus shrank. It was the first time since April that China reported a monthly trade gap below $20 billion. In December, it totaled $22.7 billion, and in October it reached an monthly record of $27 billion.
China has continued to rack up multibillion-dollar monthly surpluses despite government efforts to rein in exports of steel, plastics and other goods that it deems too dirty or energy-intensive.
Economists say a slowing American economy might cut demand for Chinese goods slightly, but they still expect China to continue to run a large surplus with the United States.
Friday’s trade data suggested that China could expect strong growth this year despite a possible slowdown in the United States, a key export market.
The managing director of the International Monetary Fund said Friday that China might be affected by a U.S. slowdown but its economy still should expand by about 10 percent this year. That would be down from 11.4 percent growth in 2007.
“While we are experiencing a decrease in growth in advanced economies, it is even more necessary than before to have a high level of growth in China,” said Dominique Strauss-Kahn, who was in Beijing for meetings with Chinese leaders.
Beijing also has tried to rein in exports of wheat and other grains in order to increase domestic supplies and cool an inflation spike blamed on shortages of pork and grain.
Chinese leaders say they are not actively pursuing large surpluses.
The multibillion-dollar influx of export revenues has strained Beijing’s ability to restrain pressure for prices to rise. The central bank drains billions of dollars a month from the economy through bond sales and has piled up $1.53 trillion in reserves.
No monthly figures on China’s trade with the United States or other individual partners were immediately reported.
On Thursday, the U.S. Commerce Department said the annual U.S. trade deficit with China rose by 10.2 percent in 2007 to a new all-time high of $256.3 billion. Trade figures in the U.S. and China are calculated differently.
Critics of China’s trade record are pushing Beijing to ease barriers to imports and currency controls that they say keeps the country’s yuan undervalued. They say that gives China’s exporters an unfair advantage and adds to its surpluses.
Strauss-Kahn said he urged Chinese leaders to ease currency controls, saying a more flexible exchange rate would help to achieve their goal of reducing reliance on exports.
“More domestic demand growth will be what China needs, not export-driven growth,” he told reporters.
Pressure on China for action is expected to increase as the American presidential election campaign progresses, with the Democrats arguing that the U.S. trade deficit with China has contributed to the loss of more than 3 million manufacturing jobs since 2000.
China says its trade surplus with the world last year rose 47.4 percent to $262.2 billion.

by AOL

BEIJING - China’s global trade surplus in January rose 22.7 percent compared with the year-earlier period to $19.5 billion, a state news agency reported Friday.

The figure, reported by the Xinhua News Agency, appeared likely to fuel foreign criticism of Beijing’s swollen surpluses and calls by some American lawmakers for punitive tariffs on Chinese imports.

The January trade gap was well below October’s record monthly high of $27 billion. It was the first month since last April that China’s trade gap was below $20 billion.

by MSN

NEW ALBANY, Ohio (AP) - Abercrombie & Fitch Co. said Friday that its fourth-quarter earnings rose 9 percent on increased sales from its expanding Hollister Co. chain that cater to teens and its abercrombie stores for children.
The apparel retailer said it earned $216.8 million, or $2.40 per share, for the quarter ended Feb. 2, compared with a profit of $198.2 million, or $2.14 per share, a year ago. Fourth-quarter sales rose 8 percent to $1.23 billion, from $1.14 billion. The year-ago quarter had an extra week.
Analysts surveyed by Thomson Financial expected profits of $2.36 per share excluding one-time items on revenue of $1.25 billion.
Sales at stores open at least a year, considered to be a key indicator of a retailer’s strength, were down 1 percent for the quarter.
At the end of the quarter, Abercrombie operated 447 Hollister Co. stores compared with 390 stores the year before and 201 abercrombie stores compared with 177 stores the year before.
For the year, Abercrombie earned $475.7 million, or $5.20 per share, compared with $422.2 million, or $4.59 per share, the previous year. Sales rose 13 percent to $3.75 billion for the year, up from $3.32 billion a year ago. There was an extra week in the year-ago period. Same-store sales fell 1 percent for the year.
Wall Street was looking for profits of $5.16 per share on revenue of $3.8 billion for the year.
Abercrombie, based near Columbus, also had 355 Abercrombie & Fitch stores, 22 Ruehl stores and three Gilly Hicks stores at the end of the fiscal year. It has six stores in Canada and an Abercrombie store in London.
On the Net: http://www.abercrombie.com

by AOL

CHICAGO (Reuters) - Abercrombie & Fitch Co posted a 9 percent increase in quarterly profit on Friday, helped by higher prices for its clothes.

Fourth-quarter net profit at the apparel retailer was $216.8 million, or $2.40 per share, compared with $198.2 million, or $2.14 per share, a year earlier.

(Reporting by Brad Dorfman; editing by Jeffrey Benkoe)

by MSN

VIENNA, Austria (AP) - Oil prices rose Friday, extending the previous day’s gain of more than $2 a barrel as U.S. trade deficit figures spurred hopes that the U.S. economy might escape a serious downturn.
The March contract for light sweet crude on the New York Mercantile Exchange rose 40 cents to $95.76 a barrel in electronic trading by afternoon in Europe.
The U.S. Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole - an indication the U.S. is exporting more goods. This led investors to think U.S. energy demand would not be as weak as feared.
U.S. Federal Reserve Chairman Ben Bernanke’s suggestion that the central bank is prepared to again cut interest rates also helped boost light, sweet crude to settle at $95.46 a barrel Thursday, an increase of $2.19 on the New York Mercantile Exchange.
That was its highest close since Jan. 9. The contract has risen in 4 of the past 5 sessions, adding more than $6 in a little over a week.
“Energy prices are strong,” proclaimed the Schork Report, edited by energy analyst Stephen Schork, saying that benchmark crude “despite Bernanke’s ’sluggish’ view of the U.S. economy appears primed for another run at $100.”
Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Energy investors were also buying after a federal judge’s decision Wednesday to confirm an earlier ruling freezing $300 million in a bank account owned by the Venezuelan state oil company.
Exxon Mobil is challenging Venezuela’s nationalization of an oil project. A British court’s earlier decision to temporarily freeze up to $12 billion in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.
Prices gained despite forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.
Brent crude futures slipped 28 cents to $94.88 a barrel on the ICE Futures exchange on Friday in London.
Heating oil futures slid marginally to sell for $2.6635 a gallon while gasoline prices were up marginally to $2.4799 a gallon.
Natural gas futures gained 3.8 cents to trade at $8.810 per 1,000 cubic feet.

by AOL

“Traders still focus on worries about the Exxon Mobil (XOM, Fortune 500) versus Venezuela contest as well as hopes that the U.S. may sidestep a possible economic recession,” said Tim Evans, an analyst at Citigroup, in a research note.

Word that the U.S. has given international nuclear regulators evidence that diplomats say shows Iran is actively trying to build a nuclear bomb gave investors another reason to buy.

But many analysts questioned oil’s recent price strength, arguing that underlying supply and demand fundamentals suggest prices should be falling.

“I actually cannot justify this rally,” said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill, echoing the sentiments of many.

Indeed, forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, call for slower demand growth this year due to the weakening economy.

At the pump, meanwhile, gas prices rose 0.7 cent overnight to a national average of $2.979 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, have inched higher in recent days in response to oil’s move higher.

Other energy futures also rose Thursday. March heating oil futures added 5.1 cents to settle at $2.6666 a gallon on the Nymex while March gasoline futures rose 8.62 cents to settle at $2.4761 a gallon. 

Venezuela wants to beat Exxon

IEA: Economic woes to hit oil demand
by CNN

SAN FRANCISCO, Feb. 14, 2008 (Thomson Financial delivered by Newstex) — The oil services sector tracking stock hit a one-month high before turning slightly lower Thursday, amid another day of rising crude oil prices.
The Oil Services Holdrs ETF (OIH) slipped 0.3% to $169.38. The ETF had been up as much as 1.4% earlier in the session at $172.19, the highest price seen since Jan. 17.
March crude futures rose $1.63 to $94.90, and reached a 5-week high of $95.44 in intraday trading, fueled by a surge in natural-gas prices.
The gain in oil prices followed inventory data out Wednesday that showed crude stocks rose 1.1 million barrels during the week ending Feb. 8, but far less than expectations of a rise of 3.2 million barrels.
On Thursday, the Energy Information Administration said working gas in storage fell by 120 billion cubic feet equivalent to 1,942 bcfe, the lowest level seen since the week ending May 11. That sent March natural-gas futures up 3.6% to a 3 1/2-month high of $8.686 per million British thermal units.
Shares of the OIH’s more heavily weighted components were mixed. Transocean Inc. (NYSE:RIG) fell 0.9% to $130.05, Schlumberger Ltd.’s (NYSE:SLB) shares inched up 1 cent to $84.90, Baker Hughes Inc.’s (NYSE:BHI) shares eased 0.3% to $67.19 and Halliburton Co. (NYSE:HAL) advanced 1.2% to $36.08.
Brigid Gaffikin
bg/tk1
Copyright Thomson Financial News Limited 2007. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

by CNN

VIENNA, Austria (AP) - Oil prices rose Friday, extending the previous day’s gain of more than $2 a barrel as U.S. trade deficit figures spurred hopes that the U.S. economy might escape a serious downturn.
The March contract for light sweet crude on the New York Mercantile Exchange rose 40 cents to $95.76 a barrel in electronic trading by afternoon in Europe.
The U.S. Commerce Department said Thursday the trade deficit fell in December and for 2007 as a whole - an indication the U.S. is exporting more goods. This led investors to think U.S. energy demand would not be as weak as feared.
U.S. Federal Reserve Chairman Ben Bernanke’s suggestion that the central bank is prepared to again cut interest rates also helped boost light, sweet crude to settle at $95.46 a barrel Thursday, an increase of $2.19 on the New York Mercantile Exchange.
That was its highest close since Jan. 9. The contract has risen in 4 of the past 5 sessions, adding more than $6 in a little over a week.
“Energy prices are strong,” proclaimed the Schork Report, edited by energy analyst Stephen Schork, saying that benchmark crude “despite Bernanke’s ’sluggish’ view of the U.S. economy appears primed for another run at $100.”
Bernanke said the Fed is ready to act again in response to deteriorating economic conditions. Interest rate cuts support oil prices because they tend to weaken the dollar. Crude futures offer a hedge against a falling dollar, and oil futures bought and sold in dollars are more attractive to foreign investors when the greenback is falling.
Energy investors were also buying after a federal judge’s decision Wednesday to confirm an earlier ruling freezing $300 million in a bank account owned by the Venezuelan state oil company.
Exxon Mobil is challenging Venezuela’s nationalization of an oil project. A British court’s earlier decision to temporarily freeze up to $12 billion in Venezuelan oil assets drew threats from President Hugo Chavez to cut off all oil sales to the U.S.
Prices gained despite forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, that call for slower demand growth this year due to weakening economies.
Brent crude futures slipped 28 cents to $94.88 a barrel on the ICE Futures exchange on Friday in London.
Heating oil futures slid marginally to sell for $2.6635 a gallon while gasoline prices were up marginally to $2.4799 a gallon.
Natural gas futures gained 3.8 cents to trade at $8.810 per 1,000 cubic feet.

by AOL

“Traders still focus on worries about the Exxon Mobil (XOM, Fortune 500) versus Venezuela contest as well as hopes that the U.S. may sidestep a possible economic recession,” said Tim Evans, an analyst at Citigroup, in a research note.

Word that the U.S. has given international nuclear regulators evidence that diplomats say shows Iran is actively trying to build a nuclear bomb gave investors another reason to buy.

But many analysts questioned oil’s recent price strength, arguing that underlying supply and demand fundamentals suggest prices should be falling.

“I actually cannot justify this rally,” said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill, echoing the sentiments of many.

Indeed, forecasts this week from the Energy Department and the International Energy Agency, an energy policy adviser to the industrialized world, call for slower demand growth this year due to the weakening economy.

At the pump, meanwhile, gas prices rose 0.7 cent overnight to a national average of $2.979 a gallon, according to AAA and the Oil Price Information Service. Retail prices, which typically lag the futures market, have inched higher in recent days in response to oil’s move higher.

Other energy futures also rose Thursday. March heating oil futures added 5.1 cents to settle at $2.6666 a gallon on the Nymex while March gasoline futures rose 8.62 cents to settle at $2.4761 a gallon. 

Venezuela wants to beat Exxon

IEA: Economic woes to hit oil demand
by CNN

SAN FRANCISCO, Feb. 14, 2008 (Thomson Financial delivered by Newstex) — The oil services sector tracking stock hit a one-month high before turning slightly lower Thursday, amid another day of rising crude oil prices.
The Oil Services Holdrs ETF (OIH) slipped 0.3% to $169.38. The ETF had been up as much as 1.4% earlier in the session at $172.19, the highest price seen since Jan. 17.
March crude futures rose $1.63 to $94.90, and reached a 5-week high of $95.44 in intraday trading, fueled by a surge in natural-gas prices.
The gain in oil prices followed inventory data out Wednesday that showed crude stocks rose 1.1 million barrels during the week ending Feb. 8, but far less than expectations of a rise of 3.2 million barrels.
On Thursday, the Energy Information Administration said working gas in storage fell by 120 billion cubic feet equivalent to 1,942 bcfe, the lowest level seen since the week ending May 11. That sent March natural-gas futures up 3.6% to a 3 1/2-month high of $8.686 per million British thermal units.
Shares of the OIH’s more heavily weighted components were mixed. Transocean Inc. (NYSE:RIG) fell 0.9% to $130.05, Schlumberger Ltd.’s (NYSE:SLB) shares inched up 1 cent to $84.90, Baker Hughes Inc.’s (NYSE:BHI) shares eased 0.3% to $67.19 and Halliburton Co. (NYSE:HAL) advanced 1.2% to $36.08.
Brigid Gaffikin
bg/tk1
Copyright Thomson Financial News Limited 2007. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

by CNN

NEW YORK (AP) - U.S. stocks headed for a moderately lower opening on Friday as investors awaited readings on consumer sentiment and industrial production.
The preliminary Reuters/University of Michigan survey on consumer sentiment for February is due in the first hour of trading. The findings can help illuminate how consumers are feeling about the economy.
Consumers uneasy about the future can grow more reluctant to open their wallets - an alarming prospect for Wall Street as consumer spending accounts for more than two thirds of economic activity.
Wall Street is also awaiting data on industrial production, which could indicate the degree to which the economy is slowing.
A slowing economy remains foremost in investors’ minds. In testimony before the Senate Banking Committee on Thursday, Federal Reserve Chairman Ben Bernanke issued a sobering but not entirely unexpected prediction that economic growth in much of 2008 is likely to be “sluggish” before gathering strength later in the year. He also warned further losses were likely at banks from soured mortgages.
Stocks lost more than 1 percent Thursday, a day after putting up a gain of similar magnitude. The back-and-forth days, which have become almost commonplace, illustrate the uncertainty that has gripped Wall Street in recent months.
Dow Jones industrial average futures fell 63, or 0.51 percent, to 12,333. Standard & Poor’s 500 index futures fell 7.80, or 0.58 percent, to 1,343.30, while Nasdaq 100 index futures fell 13.50, or 0.75 percent, to 1,780.75.
Government bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.77 percent from 3.82 percent late Thursday. The dollar wax mixed against other major currencies, while gold prices rose.
Light, sweet crude oil rose 36 cents to $95.82 in premarket electronic trading on the New York Mercantile Exchange.
Overseas, Japan’s Nikkei stock average finished off 0.03 percent. In afternoon trading, Britain’s FTSE 100 fell 1.37 percent, Germany’s DAX index fell 1.61 percent, and France’s CAC-40 fell 1.59 percent.
On the Net:
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com

by AOL

U.S. stocks opened mostly lower Friday, pointing to what would be another weekly decline, as worries about the U.S. economy returned to the forefront.

“With the economy either in recession or very close to being in one, we favor buying bonds on sell-offs,” said Tom DiGaloma, head of Treasury trading at Jefferies & Co.

The Dow Jones Industrial Average (DJI) fell 73 points to 12,205, with 22 of its 30 components falling in early action.

Broader indexes were mixed.

The S&P 500 (SPX) declined 2.86 points to 1,334.05, while the technology- laden Nasdaq Composite (RIXF) climbed 9.72 points to 2,302.75.

Friday brings more talk from Federal Reserve officials, on the heels of a speech in Hawaii late Thursday by Janet Yellen, president of the Federal Reserve Bank of San Francisco. Yellen, who isn’t a voting member of the Federal Open Market Committee, said the U.S. would probably avoid a recession but experience lackluster economic growth in coming months.

Since the middle of September, the Fed has cut its target lending rate to 3% from 5.25% as signs of economic trouble heightened. The Fed’s moves included an emergency cut of fully three quarters of a percentage point in late January.

December wholesale inventories figures are due out at 10 a.m. Eastern.

The dollar was little moved against rivals, and yields on 10-year Treasury notes fell to 3.7%.

In commodities trading, oil futures added 94 cents to $89.05 a barrel and gold futures rose $6.60 to stand at $916.60 an ounce.

Among Dow stocks, Coca-Cola Co. (KO) won an upgrade to outperform from peer perform at Bear Stearns, with the broker citing the good results at PepsiCo ( PEP) and other global consumer companies. Coca-Cola’s shares made early gains.

Fellow blue chip McDonald’s (MCD) also moved higher, gaining in the wake of January sales results.

Meanwhile, shares of MBIA Inc. (MBI) fell 0.6% at the open, lower after the world’s largest bond insurer, which is trying to hang onto its AAA rating, priced $1 billion in common shares to raise capital.

McAfee (MFE) rose 9.4% ater the software maker’s 63% quarterly profit drop proved less steep than anticipated.

Alcatel-Lucent (ALU) posted higher fourth-quarter revenue than forecast, though the telecom-equipment maker warned of a first-quarter operating loss and halted its dividend. Shares opened lower.

An explosion and a fire at an Imperial Sugar (IPSU) refinery has left dozens of people injured, with six workers still missing, according to news service reports.

Overseas, the Nikkei 225 ended 1.4% lower, hurt by disappointing machinery orders data. But most European stocks rebounded, with the DAX 30 up 0.2% in Frankfurt.

U.S. stocks climbed on Thursday as bargain hunters returned to the market, hit by three days of losses that left the Nasdaq in bear-market territory.

(END) Dow Jones Newswires 02-08-08 0958ET Copyright (c) 2008 Dow Jones & Company, Inc.
by CNN

Feb. 8, 2008 (Thomson Financial delivered by Newstex) —

NEW YORK (AP) - Stocks were poised to open lower Friday in what would be the fourth loss in five sessions as investors awaited any clues about the economy’s direction.
Concerns about a recession were likely to again influence trading after Wall Street managed to rise Thursday for the first time this week. San Francisco Federal Reserve President Janet Yellen said Thursday that the possibility of such a contraction can’t be ruled out, and other central bank officials are scheduled to speak Friday.
Investors are also waiting for more economic data. U.S. wholesale trade inventories due at 10 a.m. EST might show distributors in December limited their stockpiles amid weak retail sales.
Dow Jones industrial average futures fell 78, or 0.61 percent, to 12,200. Standard & Poor’s (NYSE:MHP) 500 index futures fell 10.70, or 0.80 percent, to 1,329.50, and Nasdaq 100 index futures fell 12.75, or 0.72 percent, to 1,754.25.
The dollar was mixed against other major currencies, while gold prices rebounded.
Light, sweet crude oil rose 55 cents to $88.66 a barrel in premarket trading on the New York Mercantile Exchange.
In corporate news, McAfee Inc. (NYSE:MFE) was expected to move higher after the software maker reported better-than-expected fourth-quarter profit late Thursday.
Alcatel-Lucent (NYSE:ALU) was expected to rise after the telecom equipment maker reported higher fourth-quarter revenue than forecast. However, it warned of a first-quarter operating loss and suspended its dividend.
Weyerhaeuser Co. (NYSE:WY) (TSX:WYL) swung to a fourth-quarter loss as the deteriorating U.S. housing market cut into demand for lumber — a downturn the paper and wood products company expects will continue through 2008. Earnings are expected later in the session from Chevron Corp. (NYSE:CVX) and Beckman Coulter Inc. (NYSE:BEC)
Bond insurer MBIA Inc. (NYSE:MBE) (NYSE:MBI) , which has been trying to raise capital to maintain its crucial ‘AAA’ financial strength rating, said late Thursday it has boosted the size of a public stock offering to $1 billion from the $750 million it announced one day earlier.
Overseas, Japan’s Nikkei average closed down 1.44 percent. In Europe, Britain’s FTSE 100 fell 0.10 percent, Germany’s DAX index rose 0.17 percent, and France’s CAC-40 fell 0.16 percent.

by CNN

Feb. 12, 2008 (Thomson Financial delivered by Newstex) —

NEW YORK (AP) - U.S. stocks headed for a higher open Tuesday after General Motors Corp. (NYSE:GM) said it is offering a fresh round of buyouts and billionaire investor Warren Buffett offered to help out troubled bond insurers.
GM said it is offering buyouts to all 74,000 of its U.S. hourly workers who are represented by the United Auto Workers. GM also reported losses of $38.7 billion in 2007, the largest annual loss for an automotive company.
In an interview on CNBC, Buffett said his Berkshire Hathaway (NYSE:BRK A) holding company offered a second level of insurance on up to $800 billion in municipal bonds. He made the reinsurance offer to bond insurers Ambac, MBIA and FGIC.
Investors also appeared pleased by a plan by the six largest mortgage lenders to help at-risk borrowers with all types of mortgages retain their homes. The plan, called Project Lifeline, is expected to be announced Tuesday by the Treasury Department and the Department of Housing and Urban Development, a person familiar with the plan told The Associated Press. The person confirmed earlier news reports about the plan but spoke on condition of anonymity because it had not yet been made public.
Adding to investors’ somewhat upbeat mood, Credit Suisse Group (NYSE:CS) sharply reduced its estimate of how much exposure it has to subprime mortgage debt. Switzerland’s second largest bank said its debt tied to subprime mortgages, those given to borrowers with poor credit, fell to 1.6 billion francs ($1.45 billion) from 3.9 billion francs at the end of September. Its fourth-quarter net profit fell 72 percent because of write-downs.
Stock futures rose a day after Wall Street achieved moderate gains. The increase Monday followed a week that saw stocks end sharply lower.
Dow Jones industrial average futures rose 87, or 0.71 percent, to 12,325. Standard & Poor’s (NYSE:MHP) 500 index futures rose 10.10, or 0.75 percent, to 1,348.30. Nasdaq 100 index futures gained 12.50, or 0.70 percent, to 1,809.75.
Bond prices fell after Buffett’s announcement. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.68 percent from 3.63 percent late Monday.
The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude fell 87 cents to $92.72 per barrel in premarket electronic trading on the New York Mercantile Exchange.
In corporate news, GM’s fourth-quarter loss totaled $722 million, or $1.28 per share, in the fourth quarter, compared with net income of $950 million a year earlier. Much of the loss relates to $622 million in costs tied to restructuring at Delphi Corp. (OOTC:DLPIV) (OOTC:DPHIQ) , GM’s former parts business.
The bond insurer news pleased investors. Buffett says one firm rejected his offer and he is still waiting to hear from the other two.
Bond insurers write policies that promise to cover payments to bondholders if the entity that issued the bonds defaults. Reinsurance provides a second level of insurance on those bonds.
The offer would only back municipal bonds, Buffett says, and not other risky and complicated financial instruments.
Diversified manufacturer 3M (NYSE:MMM) said late Monday it would pay a quarterly dividend of 50 cents, an increase of 4.2 percent over its previous payout. The decision by 3M, which makes products such as Scotch tape and Post-It notes, to boost its dividend is welcome news for investors amid a time of economic uncertainty.
Overseas, Japan’s Nikkei stock average closed up 0.04 percent and Hong Kong’s Hang Seng index rose 1.35 percent. In afternoon trading, Britain’s FTSE 100 rose 1.52 percent, Germany’s DAX index rose 1.82 percent, and France’s CAC-40 advanced 2.26 percent.

by CNN

U.S. stocks turned mostly lower Friday as worries persisted about the economy, with technology among the sole bright spots, lifted in part by online retailer Amazon.com Inc.’s buyback plan.

“Going by market action, we have not fully discounted the strong probability of a recession,” said Al Goldman, chief market strategist at A.G. Edwards. Listen to Goldman.

The Dow Jones Industrial Average (DJI) was down 59.5 points to 12,187.5, off session lows that had the blue-chip index sliding nearly 100 points.

Of the Dow’s 30 components, 21 posted losses, fronted by American Express Co. (AXP), down 5.1%.

Blue-chip gains were led by McDonald Corp. (MCD), up 2.5%, in the wake of sales results that had the fast-food giant continuing its growth spurt in January. .

Another blue chip, Coca-Cola Co. (KO), climbed 1.6% after its upgrade to outperform from peer perform at Bear Stearns, with the broker citing solid results at PepsiCo (PEP) and other consumer companies with a global reach.

Other stocks advancing on the blue-chip index included technology shares, with Microsoft Corp. (MSFT) up 1.5% and Hewlett-Packard Co. (HPQ) up 2.9%.

The S&P 500 (SPX) dropped 5.89 points to 1,331.02 by early afternoon. The technology-laden Nasdaq Composite (RIXF) remained in positive turf, up 7 points to 2,300.03, boosted by plans by Amazon.com (AMZN) to buy back as much as $1 billion worth of common stock.

Amazon shares advanced 3.3%.

CNet Networks Inc. (CNET) also helped lift the Nasdaq, with the media company recently up 4.3% amid speculation that Google Inc. might be looking to buy a stake.

Volume on the New York Stock Exchange neared 692 million, and declining stocks topped those advancing about 3 to 2. On the Nasdaq, 1.1 billion shares exchanged hands, and advancers outran declining issues, also by roughly 3 to 2.

Treasury prices rallied, sending yields on 10-year Treasury notes down to 3.669%.

“With the economy either in recession or very close to being in one, we favor buying bonds on sell-offs,” said Tom DiGaloma, head of Treasury trading at Jefferies & Co.

On the New York Mercantile Exchange, oil futures added $3.54 to trade at $ 91.65 a barrel, and gold futures climbed $12.5 to stand at $922.5 an ounce.

Fed factors

In economic news, the Commerce Department reported inventories at U.S. wholesalers climbed 1.1% in December, the largest gain since August 2006. .

Friday was also set to bring more talk from Federal Reserve officials, on the heels of a speech in Hawaii late Thursday by Janet Yellen, president of the Federal Reserve Bank of San Francisco. Yellen, who isn’t a voting member of the Federal Open Market Committee, said the U.S. would probably avoid a recession but experience lackluster economic growth in coming months.

Since the middle of September, the Fed has cut its target lending rate to 3% from 5.25%, as signs of economic trouble heightened. The Fed’s moves included a large emergency cut of three-quarters of a percentage point in late January.

“The U.S. and global economies are looking decidedly shakier, in terms of both the tone of the high-frequency data flow and the fault lines in financial markets,” said Ethan Harris, an economist at Lehman Brothers

Other issues

Shares of MBIA Inc. (MBI) were up 1% after the world’s largest bond insurer — which is trying to hang on to its AAA rating — priced $1 billion in common shares to raise capital. .

McAfee (MFE) rose 7.9% after the software maker’s 63% quarterly profit drop proved less steep than anticipated.

Alcatel-Lucent (ALU) posted higher fourth-quarter revenue than forecast, though the telecom-equipment maker warned of a first-quarter operating loss and halted its dividend. Shares opened lower.

An explosion and a fire at an Imperial Sugar (IPSU) refinery has left dozens of people injured, with six workers still missing, according to news reports.

Overseas, the Nikkei 225 ended 1.4% lower, hurt by disappointing machinery orders data. But European stocks retained gains. .

U.S. stocks had climbed Thursday as bargain hunters returned to the market, hit by three days of losses that left the Nasdaq in bear-market territory.

(END) Dow Jones Newswires 02-08-08 1316ET Copyright (c) 2008 Dow Jones & Company, Inc.
by CNN

PARIS (AP) - Telecommunication equipment titan Alcatel-Lucent sees global economic woes causing it uncertainty in 2008 after the newly merged company survived a choppy 2007, reporting a fourth-quarter loss Friday and scrapping its dividend for last year.
The Franco-American company had some good news, however: Sales rose, and it swung to an operating profit in the fourth quarter.
Analysts said the results were slightly better than expected and that the company’s grim outlook reflects the difficult market overall.
Rivals Telefon AB LM Ericsson and Nokia Siemens Networks have already given downbeat forecasts for the market in 2008 amid falling orders. Shares in all three companies rose initially on Alcatel-Lucent’s earnings report.
Alcatel-Lucent reported a net loss of $3.76 billion in the quarter ending Dec. 31 and $5.12 billion for the year, as it booked $3.71 billion in write-downs in the quarter related to the reduced value of assets inherited from Lucent Technologies Inc.
Revenue for the fourth quarter rose to $7.61 billion, up 18 percent from the same period in 2006 and above analysts’ forecasts.
Operating profit amounted to $441 million, compared to a loss of about $4 million a year earlier. Operating profit excludes one-time items such as restructuring costs and asset sales, but is often used as a yardstick for a company’s basic business activity.
The fourth quarter normally sees strong revenues for telecommunications equipment makers, and the latest figures were up - but from a disappointing total in the fourth quarter of 2006, during which Alcatel SA of Paris completed its acquisition of Lucent Technologies Inc. of Murray Hill, New Jersey.
Alcatel-Lucent suspended its dividend for 2007, citing uncertainty for this year.
“While the long-term prospects of our industry remain good, the macroeconomic environment has created uncertainty in our markets in the last few months,” CEO Patricia Russo said in a statement.
The company predicted a first-quarter loss in 2008 because of a seasonal drop in revenue of 20 percent to 25 percent. Chief Financial Officer Hubert de Pesquidoux said he hoped the second quarter of 2008 would be better.
Alcatel-Lucent said it forecasts the global communications equipment and related services market in 2008 to be “flat to slightly up” at a constant euro-dollar exchange rate and “slightly down” at the current rate.
Russo seemed to be lowering investors’ expectations for the second year of the combined operation after the company’s bullish expectations for 2007. After a string of profit warnings last year, Russo faced down bouts of speculation that she or chairman Serge Tchuruk were under pressure to quit.
The company is also in the midst of a painful restructuring that foresees 12,500 job cuts. Alcatel-Lucent said it cut 6,700 jobs in 2007, for a total of 77,400.
Alcatel-Lucent is starting to show that underlying restructuring is working despite a tough market, and investors should see improving fundamentals this year and next, Exane BNP Paribas analyst Alexander Peterc said in a research note.
Analyst Richard Windsor of Nomura, however, said, “It looks to us like there is little or no delivery of savings to investors but rather to customers.”
When it was conceived, the Alcatel-Lucent merger was designed to boost margins through cost and research and development savings, while improving the joint company’s pricing power with telecom operators, its largest customers. But intense competition in the industry means many of the savings have been used on discounts passed on to customers.
Alcatel-Lucent’s share price has plunged about 60 percent over the previous 12 months on the back of a string of profit warnings and concern over growth prospects for 2008.
Alcatel-Lucent shares closed up slightly at $6.03 in Paris after bobbing up and down earlier. Its U.S.-traded shares fell 25 cents, or 4 percent, to close at $6 in New York.

by AOL

PARIS - Alcatel-Lucent, the Franco-American telecommunications equipment maker, posted a loss Friday of about $3.8 billion for the fourth quarter, said it would scrap its 2007 dividend and predicted a rocky 2008.

Alcatel-Lucent reported a net loss of 2.58 billion euros in the quarter ending Dec. 31, as it booked 2.52 billion euros ($3.71 billion) in write-downs related to the reduced value of assets inherited from Lucent Technologies Inc.

Still, the company said sales rose and it swung to an operating profit in the last three months of 2007.

Revenue for the fourth quarter rose to 5.23 billion euros ($7.61 billion), up 18 percent from 4.42 billion euros in the same period in 2006. That was above the 4.92 billion euros forecast by analysts.

Operating profit amounted to 303 million euros ($441 million), versus a loss of 3 million euros a year earlier. Operating profit excludes one-time items such as restructuring costs and asset sales, but is often used as a yardstick for a company’s basic business activity.

The fourth quarter normally sees strong revenues for telecommunications equipment makers. But the latest figures were up from a disappointing total in the fourth quarter of 2006, during which Alcatel SA of Paris completed its acquisition of Lucent Technologies Inc. of Murray Hill, N.J.

Despite the rise in fourth-quarter sales, Alcatel-Lucent painted a somber picture for 2008. Its American CEO Patricia Russo linked the forecast to the larger global economic picture.

“While the long term prospects of our industry remain good, the macroeconomic environment has created uncertainty in our markets in the last few months,” Russo said in a statement.

Rivals Telefon AB LM Ericsson and Nokia Siemens Networks, the joint venture between Nokia Corp. and Siemens AG, have already given downbeat forecasts for the market in 2008.

Alcatel-Lucent said it would suspend its 2007 dividend because of the uncertain outlook for 2008. The company predicted a first-quarter loss in 2008 because of a seasonal drop in revenue of 20 percent to 25 percent.

Alcatel-Lucent said it forecasts the global communications equipment and related services market in 2008 to be “flat to slightly up” at a constant euro-dollar exchange rate and “slightly down” at the current rate.

Russo seemed to be lowering investors’ expectations for the second year of the combined operation after the company’s bullish expectations for 2007. After a string of profit warnings last year, Russo faced down bouts of speculation that she or chairman Serge Tchuruk were under pressure to quit.

Russo predicted the company would recover market share in the GSM and WCDMA mobile-phone technologies in 2008. “We’re going to do everything we can to gain share in 2008.” WCDMA, or Wideband Code-Division Multiple Access, is a third-generation wireless technology.

Alcatel-Lucent’s share price has plunged about 60 percent over the previous 12 months on the back of a string of profit warnings and concern over the growth prospects for the telecommunications equipment market in 2008.

Alcatel-Lucent were down 1.4 percent to 4.07 euros ($5.93) in afternoon trading in Paris after bobbing up and down earlier. Its U.S. shares fell 20 cents, or 3.3 percent, to $6.05 in morning trading in New York.

Alcatel-Lucent reported a net loss of 3.52 billion euros ($5.12 billion) for all of 2007. The loss stemmed primarily from the goodwill writedown.

Excluding the non-cash write-downs, Alcatel-Lucent posted an adjusted fourth-quarter loss of 48 million euros ($69.9 million) compared with a loss of 618 million for the same quarter a year earlier. The adjusted loss for 2007 was 433 million euros ($630 million) compared to a profit of 522 million euros ($760 million) in 2006.

The 2006 fourth-quarter and yearly results were unusual, however, because they were calculated based on 11 months of Alcatel earnings and one month of the combined Alcatel-Lucent.

by MSN

(Updates with CFO comments; breakdown by segment)
PARIS, Feb. 8, 2008 (Thomson Financial delivered by Newstex) — Alcatel-Lucent (NYSE:ALU) reported a 2.58 bln eur net loss for fourth-quarter 2007, mainly due to a writedown on its CDMA mobile and IP multimedia (IMS) activities, where sales growth has been slower than expected.
The group’s adjusted net loss, not including the 2.52 bln eur writedown, was 48 mln eur, narrowing from a proforma net loss of 618 mln eur a year earlier.
Sales in the fourth quarter were 5.234 bln eur, up 18.4 pct from proforma 4.421 bln a year earlier and above both consensus and the group’s own expectations.
The sector is traditionally strong in the fourth quarter of the year and the group had promised a ’solid ramp-up’ in sales.
Alcatel-Lucent said that this growth reflects stronger IP and optics activities, a recovery of the GSM business and the ramp-up of high-speed WCDMA.
According to a consensus of analyst forecasts compiled by Thomson Financial, net profit in the fourth quarter was seen at 242 mln and sales at 5.005 bln.
Alcatel-Lucent said in a statement that in light of the results ‘and of a more uncertain market outlook … the board has determined that it is prudent to suspend dividend payment for 2007′.
Adjusted operating profit was 303 mln eur in the fourth quarter, swinging from a loss of 3 mln, translating to a margin of 5.8 pct after a negative margin a year earlier and the company said this improvement reflected higher volumes and, ‘to a lesser extent, a reduction in our operating expenses.’
The company had promised 600 mln eur savings in operating costs for 2007, based largely on planned job cuts.
It said 6,700 posts were removed in the full-year but 1,400 were added, in what chief financial officer Hubert de Pesquidoux told a conference call with journalists was ‘in-sourcing.’
Operating expense savings in 2007 totalled around 280 mln eur, the company said.
De Pesquidoux said the group expects an adjusted operating margin of 2.5-5.0 pct in the full-year 2008.
Adjusted gross profit was 1.694 bln eur after 1.447 bln a year earlier, translating to a gross margin of 32.4 pct after 32.7 pct a year earlier.
Looking ahead, Alcatel said seasonal factors will bring a loss at the adjusted operating level for the first quarter of 2008 and, ‘while the long term prospects of our industry remain good, the macroeconomic environment has created uncertainty in our markets in the last few months’.
It said its ‘initial projections for 2008′ point to a global telecommunications equipment and related services market with growth ‘flat to slightly’ up at constant eurodollar rates and slightly down at constant rates.
Alcatel said its net cash position was 271 mln eur at Dec 31 2007 compared with negative 124 mln a year earlier and that the funding status of pensions and other post retirement benefits totaled 2.806 bln eur at year-end, up from 2.436 bln at end-September
By activity, carriers sales were 3.734 bln eur in the fourth quarter, up from pro forma 3.214 bln, with wireline climbing 15 pct to 1.691 bln from 1.470 bln as strong growth in optical offset a 5 pct slide in DSL lines deliveries to 8.3 mln.
Over full-year 2007, DSL lines deliveries increased 8 pct, but Alcatel-Lucent had warned in October that the housing slump in the US had hit orders of new lines late in the year.
Wireless sales jumped 26 pct to 1.570 bln eur from 1.249 bln a year earlier, driven primarily by higher sales in GSM and WCDMA, where revenues more than doubled sequentially as the group started to deploy contracts booked at the start of the year.
Adjusted operating operating profit from carrier activities was 94 mln eur, after a pro forma loss of 73 mln a year earlier, with the margin at 2.5 pct. The group did not give a breakdown by segment.
Adjusted operating operating profit from enterprise operations was 56 mln eur, up from 49 mln, with the margin at 12.9 pct, up from 11.9 pct.
Services had adjusted operating operating profit of 107 mln eur, up from 35 mln, with the margin climbing to 10.5 pct from 4.4 pct.
De Pesquidoux said Alcatel-Lucent now has 7.28 bln eur of goodwill remaining on its balance sheet from the merger.
Copyright Thomson Financial News Limited 2007. All rights reserved.
The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

by CNN