Business and Finance

SEATTLE–The link between Microsoft Corp.’s fortune and the health of the personal computer market has rarely been clearer than in the software maker’s fiscal third quarter.

For the first time in Microsoft’s 23-year history as a public company, revenue fell year-over-year as PC shipments tumbled. Earnings sank 32 per cent.

The shortfall again illustrated the toll the recession has taken on the world’s largest software maker, even though Microsoft (NASDAQ:MSFT) remains one of the richest and most profitable companies. In January, Microsoft said it needed to resort to its first mass layoffs, cutting 5,000 jobs. On Thursday afternoon, it announced it would do away with merit pay increases for employees in the next fiscal year.

Microsoft did not issue earnings guidance for the rest of the year, and it offered no hope for a rebound in the current quarter.

"I didn’t see any improvement at the end of the quarter that gives me encouragement that we’re at the bottom and coming out of it," said Chris Liddell, Microsoft’s chief financial officer.

On Friday at a technology forum in Cologne, Germany, Microsoft’s chief executive, Steve Ballmer, said the company expects to have to deal with a weak economy for at least the next several years.

"We are planning essentially for the economy to contract," Ballmer said. "That may take two, three, four years, partly depending on government policy to ease some of the pain. Then we will see growth again."

Redmond, Wash.-based Microsoft said that in the quarter that ended March 31, profit totalled US$2.98 billion, or 33 cents per share. In the same quarter of 2008, Microsoft earned $4.39 billion, or 47 cents per share.

Microsoft’s profit included a $290 million charge for severance from some of the layoffs announced in January. The software maker also wrote down $420 million related to investments that lost value.

Excluding those items, Microsoft said it would have earned 39 cents per share, matching the estimate of analysts surveyed by Thomson Reuters.

Microsoft avoided a steeper drop in profit by slashing costs in several areas, such as sales and marketing, which it cut by nine per cent to $3 billion.

Revenue in the last quarter slipped six per cent to $13.6 billion, missing analysts’ expectations for $14.1 billion.

Even so, Microsoft shares were up $1.11, 5.9 per cent, at $20.03 in trading Friday morning.

"It was not expected to be a very good quarter, and I think it was not a great quarter, but you’ve seen a lot of not-great quarters in last month or so," said Cowen and Co payday loan lender. analyst Walter Pritchard.

Microsoft makes most of its profit selling the Windows operating system and business software such as Office, and those divisions have been hammered over the last six months as consumers and businesses sharply cut their technology spending. The holiday quarter, which ended in December, was the PC industry’s worst in six years, according to research groups IDC and Gartner Inc. In the following quarter, computer shipments sank about 7 per cent.

Even the brightest spot in the PC market – tiny, recession-friendly laptops known as netbooks – had a downside for Microsoft, because those inexpensive computers run a cheaper version of Windows XP, Microsoft’s last-generation operating system.

The Windows division’s profit fell 19 per cent to $2.5 billion, and its sales sank 16 per cent to $3.4 billion in the last quarter. The division that makes Office saw its profit drop 8 per cent to $2.9 billion on revenue that declined 5 per cent to $4.5 billion.

Both divisions were cushioned to some extent by businesses that renewed bulk software licenses at about the same pace as usual.

Microsoft’s online advertising business widened its quarterly loss, and its entertainment and devices division, which makes the Xbox 360 game console and the Zune media player, swung to a loss from the prior year.

Microsoft said the current quarter would probably still be weak in the markets for PCs and computer servers. Other technology companies have offered mixed assessments about whether a recovery is in sight.

Last week, Intel Corp. CEO Paul Otellini raised some hopes when he said the PC market had bottomed out in the first quarter. On Thursday, EMC Corp. CEO Joe Tucci predicted that spending on information technology "has reached or is very near the bottom" and should rebound in the second half of this year. He made those comments even as EMC reported that first-quarter profit dropped 23 per cent and the company planned more cost cuts.

Other executives have been more cautious. "I don’t know how someone could say we’ve hit bottom in the current economic climate," Dirk Meyer, the CEO of Intel’s main rival, Advanced Micro Devices Inc., said Tuesday.

Even as Microsoft and EMC reported profit and revenue declines Thursday, two e-commerce companies fared better.

Leading online retailer Amazon.com Inc. said profit rose 24 per cent and revenue jumped 18 per cent. And Netflix Inc. posted a 68 per cent leap in profit, as more people turned to its DVD-by-mail service as an affordable entertainment option during the recession.

Source

WASHINGTON — The global economy is expected to lurch into reverse this year for the first time since World War II with appalling consequences for nations large and small — trillions of dollars in lost business, millions of people thrust into hunger and homelessness and crime on the rise.

And the pain won’t stop this year, the International Monetary Fund declared Wednesday, for what it said was "by far the deepest global recession since the Great Depression." To cushion the blow and head off further damage next year, the IMF is calling for more stimulus projects from the world’s governments, including major spending for public works projects.

Even with many countries taking bold steps to turn things around, the global economy will shrink 1.3 percent this year, the IMF predicted in its dour forecast.

"We can be fairly confident that in 2010 or even 2011, economies will not be back to normal," said IMF chief economist Olivier Blanchard. "Which means that governments should today basically think at least about contingent plans for infrastructure spending. … Next year will be too late."

Even the projected 1.3 percent drop could leave at least 10 million more people around the world jobless, some private analysts said.

Allen Sinai, chief global economist at Decision Economics, thinks the global decline will be worse — closer to 2 percent, which would mean 15 million to 25 million more people out of work paydayloans.

"The global downturn guarantees that countries all over the world will be hit with extraordinarily high unemployment rates," Sinai said. "And, with the tremendous number of unemployed people comes the possibility of political unrest."

Also rising crime as millions more are forced into poverty and out of their homes, he and others said.

"By any measure," the downturn is the deepest since the Great Depression of the 1930s, the IMF said in its latest World Economic Outlook. "All corners of the globe are being affected."

The IMF’s outlook for the U.S. is even bleaker than for the world as a whole: It predicts the American economy will shrink 2.8 percent this year, the biggest decline since 1946.

That’s generally in line with the predictions of many U.S. analysts, who expect a figure in the range of 2.5 percent to 3 percent.

Source

Bridgeton-based Cass Information Systems Inc. reported a small drop in first-quarter earnings due to the economy’s impact on the transportation industry.

The provider of transportation, utility and telecom invoice payment and information services reported net income of $3.9 million, or 42 cents a share, compared with $4 million, or 43 cents a share, during the same quarter a year ago instant cash advance no fax.

The company said new business helped offset a 21 percent drop in base customer volumes. Cass also said it used cost control measures to reduce operating expenses by $70,000, despite a $313,000 increase in pension expense.

Source

Anheuser-Busch plans to outsource two small operations that supply signs and trinkets, a change that will put about 100 employees in Missouri and Illinois out of work.

The company expects to close a warehouse in Mt. Vernon, Ill. later this year. The company said it is working with local leaders and “interested parties” to identify an appropriate use for the facility about 80 miles southeast of St. Louis. The Mt. Vernon site housed the company’s “Point-of-Sale Fulfillment” operation - a fancy title for the signs and displays on store shelves and aisles. “Direct Premium,” an operation that managed small promotional items and was based at A-B’s St. Louis campus, will also shut down.

Neither change will be immediate, and all affected employees will be offered a severance package, according to Anheuser-Busch online cash loans. The cuts are included in the 1,400 layoffs Anheuser-Busch announced in early December.

“Before this decision, we had identified a need to make significant infrastructure upgrades that would have required a substantial investment,” Dan Hoffman, vice president of brand creative services at Anheuser-Busch, said in a statement. Hoffman said the decision stemmed from “an extensive review” of the company’s business model that began more than a year ago.

Source

Procrastinators, start your engines. Or at least, fire up your laptops. You have until Wednesday to file your 2008 tax return.

Just over 92 million returns were filed with the Internal Revenue Service through Friday — about two-thirds of the 141.2 million expected this year.

The total is expected to be about 10 percent below last year’s, when many people who weren’t required to file sent in returns so they could claim economic stimulus checks. But even with the reduced expectations, there’s still plenty of people who have put off the task.

Both the number of refunds and the average refund size are up so far this season. IRS statistics show almost 78 million refunds were sent out so far, up 3.4 percent from a year ago. The average refund jumped 11 percent, to $2,705.

Of course, one of the reasons many people wait until the last minute to file is because they owe taxes, or suspect they do, while those expecting a refund tend to file early. That means the influx of last-minute returns is likely to push the refund rate and average amount down slightly, once all returns are processed.

If you haven’t sent in your return yet, here are some things to keep in mind:

1. Deductions. Before automatically taking the standard deduction, try this quick test suggested by Bob Scharin, senior tax analyst from Thomson Reuters’ Tax & Accounting business, to see if you’re better off itemizing. Add up your mortgage interest, real estate taxes and the amount of state and local tax withheld listed on your W-2. If you live in a state with no income tax, use the sales tax deduction calendar on www.IRS.gov and substitute that figure.

If your total comes to more than the standard deduction, you’ll benefit from itemizing.

2. Tax credits. If your income declined last year, you might be eligible for tax credits you couldn’t claim in the past. The earned income tax credit, child care credit and the Hope and Lifetime Learning education credits are all income-based, so even if you couldn’t claim them before, check to see if you can now. Unlike itemized deductions, credits are subtracted from your tax liability dollar for dollar.

3. Medical costs. Be aware that medical costs that equal 7 bad credit cash loan.5 percent or more of your adjusted gross income are deductible. If you had a major medical expense last year, or several smaller ones, it’s worth adding up your receipts to see if they meet the threshold. This is another area that might benefit many whose income fell.

4. Investments. If you’re planning to claim investment losses, make sure you know their basis, or the value when you first got the stocks, bonds or mutual funds, said Tom Ochsenschlager, vice president of tax at the American Institute of Certified Public Accountants. He said he’s found that some brokerages are "not very accurate" at calculating basis values. There are some Web-based calculators, but the best resource is the original paperwork.

5. Charitable deductions. The IRS has tightened rules for charitable deductions, and you now must have paperwork to back up any donations you claim. "Make sure you’ve got that documentation before you put it on the form," Ochsenschlager said.

6. Homebuyer tax credit. If you plan to buy a house this year, Scharin suggested seeking an extension from the IRS instead of filing. A new $8,000 first-time homebuyers credit for purchases through Dec. 1 can be claimed on last year’s taxes, Scharin noted, so it could make sense to delay filing until the closing.

NEED MORE TIME?

Six-month extensions require filing IRS Form 4868, and you will have to pay estimated taxes if you think you owe the IRS.

If you don’t have an extension approved, make sure you file your return. The penalties for filing late are much harsher than the penalties for late payment. So go ahead and send in your 1040, even if you need to work out a payment arrangement.

Most tax experts advise filing electronically, which many taxpayers can do for free through the IRS’s FreeFile program. But for hard-core procrastinators, or those who want to file old-fashioned paper returns, the U.S. Postal Service keeps many post office branches open until midnight on April 15 to make sure you get that all-important postmark.

Source

OTTAWA – Canada's trade minister is warning the collapse of struggling automakers General Motors and Chrysler could have a domino effect on more stable car companies.

Stockwell Day spoke with Honda executives during his two-day trade mission to Japan and said today they share his concern that if one automaker goes down, even those on a firmer footing could follow.

"We agreed that the supply chain in North America really serves all of the automakers and, if a main company goes down, it will pull supply chains down with it," Day said.

"That will affect other automakers whose position may not be as precarious."

The trade minister spoke by teleconference from Japan, where he wrapped up his trade mission to Tokyo and Nagoya.

His remarks followed Industry Minister Tony Clement's candid admission this week that no automaker is too big to fail.

"If – again, underline the if – if there started to be failure, that would affect all auto companies," Day said. "It's important that the industry survives, because what hurts one could hurt the other my credit score."

GM and Chrysler have been teetering on the brink of bankruptcy for months because of falling sales, high costs, heavy debts and a broad-based shortage of credit from commercial lenders.

Their position became even more precarious in late March after they failed to meet conditions laid out by Washington and Ottawa for tapping into billions of dollars of taxpayer aid to help them retool.

The two governments have given Chrysler until the end of April – and GM until the end of May – to re-submit restructuring programs to help their long-term survival.

Meantime, the Conservative government will provide nearly $1 billion in guarantees aimed at restoring confidence to skittish consumers and parts suppliers that deal with struggling car companies.

But some argue other car manufacturers, including Ford, will stay standing even if GM and Chrysler go down. Auto analyst Dennis DesRosiers estimates such a collapse will result in the loss of 100,000 jobs, at most.

Source

The U.S. economy is grim, and the Federal Reserve is “duty bound to apply every tool” to clean up the financial system and clear a path for a return to sustainable growth, Richard Fisher, president of the Dallas Fed, said on Wednesday.

But he said monetary policy alone would not be enough to resuscitate the economy, adding fiscal stimulus was critical in providing a spark for U.S. growth.

“Monetary policy accommodative techniques are necessary but insufficient to the task,” Fisher told a symposium hosted by a private think tank in Tokyo.

“The trick to fiscal policy is to provide the spark, to provide the right incentives, get the small and medium-sized firms create jobs again, create dynamism in the economy without planting the seeds of inflation.”

Fisher, who is not a voting member on the Fed’s policy-setting committee this year, said the U.S. economy probably shrank in the just-ended first quarter of 2009 at a rate similar to the 6.3 percent annual decline posted in the fourth quarter of 2008. He gave no timeline for a potential recovery.

“The men and women who operate our businesses and create and sustain employment have assumed a defensive crouch,” he said in a speech to the forum sponsored by the Japan Center for Economic Research in Tokyo. “The result is an American economy in stasis.”

With firms doing all they can to cut costs, and especially the cost of labor, the jobless rate is likely to hit 10 percent by year-end compared with 8.5 percent in March, he said. “Presently, the risk is deflationary job destruction.”

With the world “groaning with excess capacity,” rising inflation will probably not be an issue for the next couple of years, Fisher said faxless payday loan online. “The problem with regard to maintaining price stability most certainly is not inflation.”

Fisher said the Fed has been “dramatically proactive and highly innovative” in attempting to resurrect the credit markets and halt the deep economic recession that started in the United States in December 2007.

“We are duty bound to apply every tool we can to clean up the mess that our financial system has become,” he said.

Although the Fed has run up its balance sheet dramatically and will do so further based on its current commitments, Fisher said fears that dollar-based fixed-income portfolios would be debased have been “unfounded” so far.

“The problems facing the largest competitive currency, the euro, are perhaps even more substantial than those confronting the United States,” he said.

“Demand for U.S. Treasuries … will be determined by their attractiveness relative to alternatives and they may be judged more, rather than less, attractive under most reasonable future scenarios.”

The Fed is determined to “short-circuit” any inflationary consequence of its balance sheet growth, and is in the process of acquiring new tools to help, Fisher said.

“We realize … we are at risk of being perceived as monetizing the fiscal largess of Congress” and that by intervening in mortgage-based securities and other markets could be seen as blurring the lines between fiscal and monetary policy — a threat to the Fed’s independence, he said.

(Additional reporting by Ros Krasny; Editing by Leslie Adler and Rodney Joyce)

Read more

DETROIT – General Motors Corp. would still prefer to avoid bankruptcy protection while restructuring, but "if it’s required, that’s what we’ll do," new CEO Fritz Henderson said yesterday.

President Barack Obama and his auto industry task force have indicated that bankruptcy protection "may very well be the best solution for the company to achieve these goals," Henderson told CNN’s State of the Union.

That’s why, "when you look at the situation, we said, `Okay, we’ll spend the time to try to complete the work, more aggressive work, outside of the court process, but if it’s required, that’s what we’ll do.’"

Obama had said GM’s initial plans to become viable didn’t go far enough affordable health insurance. Last week, he told the company it had 60 days to make more cuts and get more concessions, or it would not get any more government help. The administration also forced out Rick Wagoner as CEO.

In Canada, both GM and Chrysler have also been told they haven’t met requirements for long-term government bailout loans and that more concessions are needed from unions, creditors and others.

The federal and Ontario governments have demanded that the Canadian Auto Workers get back to the bargaining table with GM.

Source

Luxembourg on Friday said it should be taken off a “grey list” of countries that do not comply fully with standards for catching tax cheats, as France called for sanctions on uncooperative states.

The Group of 20 leading industrialized and emerging nations pledged on Thursday to crackdown on jurisdictions that fail to cooperate in cross-border tax evasion cases.

Pushed by France and Germany, the G20 agreed that countries should sign up to global rules on sharing tax information, with a commitment to cooperate when cheating is suspected.

Faced with the threat of being added to a blacklist, Luxembourg, Switzerland, Austria, Monaco and others signed up to standards drawn up by the Paris-based Organization for Economic Co-operation and Development just ahead of the G20 summit.

The OECD put Luxembourg, Austria and Belgium — all European Union member states — on a “grey list” of countries that have agreed to improve transparency standards but have not yet signed the necessary double taxation accords.

Luxembourg said the list was “fatuous.”

“I find the treatment of certain states to be incomprehensible,” said its prime minister and finance minister, Jean-Claude Juncker.

“We will negotiate double-taxation agreements. When we do that, we will disappear from this list,” he added on arrival for a meeting of euro zone finance ministers in Prague.

Austrian’s finance minister, Josef Proell, said the OECD list on tax havens must be discussed further free car insurance quotes.

“As a member of the OECD, I expect to be listened to and to be able to join in the discussion and to take a joint decision,” Proell said.

“We have already given information in individual cases, without legal steps being taken. We do not need, because of that (the G20 declaration), to tackle banking secrecy as it exists in Austria in our banking practice law,” Proell said.

Diplomats said the aim of the grey list was to put pressure on countries that have just signed up to the OECD rules to implement them quickly.

French Finance Minister Christine Lagarde said nobody could object to transparency.

“How can you be furious against a principle which consists of saying that you need transparency? That taxes are paid where they should be? The money that finances terrorism, the networks which escape thanks to obscure corners of the world, continue to finance such scandalous and uncertain causes,” she told reporters.

“If certain states refuse transparency, we need the arsenal of sanctions that is already planned and on which the finance ministers have worked and which we will submit at the next G20 in September,” Lagarde said. 

Read more

U.K. house prices unexpectedly rose for the first time since October 2007 after the Bank of England’s interest-rate cuts attracted buyers to the property market, Nationwide Building Society said.

The average cost of a home jumped 0.9 percent in March from the previous month to 150,946 pounds ($218,000), the mortgage lender said in a statement today. All 13 economists in a Bloomberg News survey predicted a drop.

Mortgage approvals rose to a nine-month high in February, evidence the slump in housing transactions may be starting to ease. The Bank of England reduced the benchmark interest rate to a record low of 0.5 percent last month and started buying assets with newly created money to fight Britain’s recession.

“It is far too soon to see this as evidence that the trough of the market has been reached,” Fionnuala Earley, chief economist at Nationwide, said in the statement. “The willingness of borrowers to return to the market is encouraging and likely to in part reflect the falling cost of borrowing.”

Economists predicted a 1.5 percent drop on the month, according to the median survey estimate. Home values fell 15.7 percent from a year earlier, compared with a 17.6 percent annual drop in February, Nationwide said.

U.K. homebuilder Bellway Plc plans to “step on the gas” in land purchases as house prices may not fall much further, Chief Executive Officer John Watson said March 31. “There may well be further falls, but it’s not going to be another 25 percent, so you’re getting nearer to a bottom,” he said free business card templates.

‘Green Shoots’

Central bank policy maker Spencer Dale said last week that there are signs the U.K. housing market has stabilized, though it still looks in a “bad state.” Economists at UBS AG and Goldman Sachs Group Inc. said last month that there may be evidence of “green shoots” as mortgage approvals pick up.

Banks granted 38,000 home loans in February, up from a trough of just 27,000 in November, Bank of England data showed this week. Lenders have hoarded cash after racking up more than $1.2 trillion in losses worldwide.

The bank has started to buy 75 billion pounds of corporate and government bonds to stimulate spending and revive growth by lowering borrowing costs. Prime Minister Gordon Brown has also offered banks including Royal Bank of Scotland Group Plc billions of pounds in credit guarantees.

The U.K. economy shrank 1.6 percent in the fourth quarter, the most since 1980, and the Organization for Economic Cooperation and Development forecasts British gross domestic product will fall 3.7 percent this year.

A separate report showed labor unions clinched annual pay raises at a median 3.4 percent in the three months through February, down from 3.5 percent in the same period a year earlier, researcher Incomes Data Services said.

Source