Investing in Innovation in a Downturn

Investing in Innovation in a Downturn
4/5/2009

Many companies pull back on research and development in tough times. WSJ's Jennifer Merritt speaks with Martin S. Roth of the University of South Carolina about how this move could leave them to peril.

Video Link on MarketWatch

The Chairman, Ben Bernanke Part 1 and 2 CBS Video

The Chairman Part 1

If you think your job is tough, consider Ben Bernanke`s. As Chairman of the Federal Reserve, the task of reviving the U.S. economy falls largely on his shoulders. Scott Pelley has the interview.



The Chairman Part 2

Federal Reserve Chairman Ben Bernanke candidly speaks to Scott Pelley about his personal life, as both visit his old high school and how the current financial crisis is affecting Main Street America.

Bernanke May Need to Ramp Up Fed’s Asset Purchases
March 17 (Bloomberg) -- Chairman Ben S. Bernanke and Federal Reserve policy makers may have to ramp up their purchases of mortgage securities and other assets after the economy and job market deteriorated further since they last met.
The Federal Open Market Committee, gathering today and tomorrow in Washington, needs to redouble its efforts after the central bank’s balance sheet shrank 17 percent from a $2.3 trillion December peak, Fed watchers said. The retreat came even as Bernanke acknowledged the chance that the unemployment rate will exceed 10 percent for the first time in a quarter century.
“It takes massive balance-sheet expansion to generate significant easing in financial conditions,” said Andrew Tilton, an economist at Goldman Sachs Group Inc. in New York who used to work at the Treasury. “More needs to be done.”
This week’s FOMC meeting could mark a shift toward more aggressive monetary expansion to fight deflation after demand waned for many of the Fed’s existing programs. One top consideration is an increase in the pace and size of a $600 billion program to buy bonds issued and backed by U.S. housing agencies such as Fannie Mae, analysts said.

Google on the way to the $200 boundary?

Google struggles to rebound to $300

(Source: By John Letzing, MarketWatch
Last update: 4:30 p.m. EDT March 9, 2009)
SAN FRANCISCO (MarketWatch) -- Shares of Google Inc. remained below the $300 mark Monday, as investors soured on the search giant in the wake of sobering comments made by its chief executive last week.
(GOOG 290.89, -17.68, -5.7%) stock dipped below $300 on Friday for the first time since late January, and closed Monday's session more than 5% lower at $290.89.
The shares' slide comes roughly a week after Chief Executive Eric Schmidt told an audience at a technology conference that he doesn't see the economy rebounding until 2010. In addition, analysts have issued increasingly negative outlooks for the online-advertising industry. See related story on Schmidt's comments..
Google has also taken the unusual step of allowing employees to exchange their stock options, a move that some analysts have criticized as short-changing outside investors.
On Friday, the company disclosed in a regulatory filing that it's allowing employees -- who may have seen their options become virtually worthless thanks to the falling stock price -- to acquire new options priced at $308.57.
Google has said it needs to implement the stock-option exchange to help retain top talent. However, the net effect is to potentially enable company insiders to profit from gains in Google's stock price in advance of investors who bought shares in the recent past.
The move also comes as Google, along with its peers, is facing increasingly difficult online-advertising conditions.
Last week, Thomas Weisel Partners analyst Christa Quarles lowered her estimates for Google's current fiscal year as well as for 2010, citing "sustained and perhaps increasing weakness in the online-advertising market."

Japan, the world’s second-largest economy is shrinking.

Japan, the world’s second-largest economy shrinking, worst since 1974 Oil Shock

Feb. 16 (Bloomberg) -- Japan’s economy shrank at an annual 12.7 percent pace last quarter, the most since the 1974 oil shock, as recessions in the U.S. and Europe triggered a record drop in exports.
Gross domestic product fell for a third straight quarter in the three months ended Dec. 31, the Cabinet Office said today in Tokyo. The median estimate of 26 economists surveyed by Bloomberg News was for an 11.6 percent contraction.
Exports plunged an unprecedented 13.9 percent from the third quarter as demand for Corolla cars and Bravia televisions collapsed amid a slump that the Group of Seven nations said will persist for most of 2009. Toyota Motor Corp., Sony Corp. and Hitachi Ltd. -- all of which forecast losses -- are firing thousands of workers, heightening the risk a decline in household spending will prolong the recession.
“The economy is in terrible shape and the scary part is that we’re likely to see a similar drop this quarter,” said Seiji Adachi, a senior economist at Deutsche Securities Inc. in Tokyo. “All we can do is wait for overseas demand to pick up.”
The Nikkei 225 Stock Average fell 0.4 percent at the close in Tokyo, extending the year’s losses to 13 percent. The yen rose to 91.59 per dollar from 91.76 on speculation Japan will refrain from taking measures to weaken the currency. The yen’s 18 percent gain over the past year has compounded exporters’ woes by eroding the value of their overseas sales.

Worse Than U.S., Europe
The world’s second-largest economy shrank 3.3 percent from the third quarter, today’s report showed. That compared with the U.S.’s 1 percent contraction and the euro-zone’s 1.5 percent decline, which was the sharpest in at least 13 years.
“There’s no doubt that the economy is in its worst state in the postwar period,” Economic and Fiscal Policy Minister Kaoru Yosano said in Tokyo. “The Japanese economy, which is heavily dependent on exports of autos, electronics and capital goods, has been severely hit by the global slowdown.”

Wall Street's year in turmoil

Wall Street's year in turmoil (Reuters Video, 03:47 Report)
Dec 30 - 2008 was a roller coaster ride of bad news leaving investors bracing themselves for what's next.
2008 went from bad to worse. The housing crisis led to a devastating credit freeze that spread to the banks and eventually infected the entire U.S. financial system, crushing confidence in the U.S. economy.

Advertisers slashing budgets due to economic downturns.Bad news for mobile sites,

Mobile advertising answers questions about its future
November 7, 2008 — 11:01am ET | By Jason Ankeny
One third of marketers plan to slash their advertising budgets this year to account for the economic downturn, according to a recent survey conducted by the Association of National Advertisers, and three prominent industry forecasters--Barclays Capital, Myers Publishing and Wachovia--predict ad spending for traditional media outlets like TV, radio, magazines and newspapers will decline even further in 2009. While none of that bodes well for the immediate future of mobile advertising, there seems to be little doubt the mobile platform offers an increasingly viable promotional channel: Consumer research issued by mobile community provider Limbo and market analysis firm GfK Technology states mobile ad awareness increased 33 percent during the first nine months of 2008, compared to just six percent growth in overall mobile phone usage.


Google Finally Gets A "SELL" Rating!
Finally, we've reached the first real sign of a bottom in Google's stock price: A sell-side analyst now rates the stock "SELL." Most of the Street is still bullish, so we probably need a few more frustrated sorry-I-blew-you-up downgrades before we reach the bottom, but this is definitely encouraging. Merriman Curhan Ford analyst Richard Fetyko, via Barrons: "Click volume and search ad pricing are under pressure, and so we are initiating coverage with a Sell rating. Google is likely to be among the first to rally as the economy stabilizes; however, near term, we see downside to consensus estimates and believe that investors will get a better entry point in the next six months."