Bizzia » Business News

Mortgage Rates Fall for Second Week

Mark Ellis — Thu, 09 Jul 2009 18:00:31 +0000

Those who missed out and did not refinance their mortgage earlier this year when mortgage rates were at longtime lows may soon have another chance. The average 30-year-fixed rate mortgage stands at 5.2 percent, down from 5.32 percent last week, compared to an average of 6.37 percent just a year ago.

The main cause behind the falling mortgage rates seems to be the struggling job market, with skyrocketing unemployment numbers creating market concerns. Unemployment is at 9.5 percent, the highest rate since 1983, and 467,000 jobs were shed across the country in June alone.

People are already taking advantage of the situation. The Mortgage Bankers Association reported an 11 percent increase in mortgage applications this week, mostly due to a sudden interest in refinancing and the largest amount of home purchase applications in three months. It remains to be seen whether or not mortgage rates will continue to fall, but the murky outlook for the labor market will probably keep mortgage rates in check for now.

Image: Flickr

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Citigroup Shakes up Executives

Mark Ellis — Thu, 09 Jul 2009 17:58:08 +0000

Troubled financial institution Citigroup has decided to move around several of its executives in what appears to be an attempt to quell the concerns that federal regulators have had about the company. Former president and chief operating officer of FleetBoston Eugene Mcquade has been tapped to become chief executive of Citibank, while CFO Ned Kelly will be replaced by chief accounting officer John Gerspach.

Federal regulators from the Federal Deposit Insurance Corporation have long criticized Citigroup’s management for its apparent lack of experience in retail and commercial banking. Mcquade has the plenty of the kind of experience that the FDIC has been looking for in Citigroup’s executive bench.

Kelly’s replacement also seems to be a move that aims to draw criticism away from Citigroup. As the chief financial officer, Kelly was one of the primary executives as far as interacting with regulators is concerned, but Kelly turned out to elicit an unwelcome amount of regulator criticism and concern as he went about his duties.

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TiVo and Best Buy Become Allies

Mark Ellis — Thu, 09 Jul 2009 17:55:39 +0000

In a move that looks mutually beneficial, at least on paper, TiVo announced today that it would form a marketing alliance with electronics retailer Best Buy. Although the financial details of the deal have not yet been released, the deal would involve TiVo providing its recording technology to Best Buy’s own brand of televisions and other electronics.

TiVo stands to benefit greatly from partnering up with Best Buy, the top specialty consumer electronics retailer in the country. Putting TiVo recording technology in Best Buy’s electronics would boost TiVo’s sales. In return, Best Buy would benefit from consistent advertising on TiVo’s on-screen recording systems, such as in a showcase area.

The alliance also will involve aspects of each brand becoming present in the other’s electronics, but the details of such a plan have not yet been released. TiVo may even go so far as to develop a user interface that will only be used on products purchased from Best Buy. The company may also look into developing a system for Best Buy exclusive brands.

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GumGum Adds $2.6 Million in Second Round

Stephen Kersey — Thu, 09 Jul 2009 03:58:31 +0000

Los Angeles-based startup GumGum has raised $2.6 million in their second round of funding. This brings their total to about $3.8 million. The company’s first round of funding was about $1 million from First Round Capital and Crosscut Ventures last year.

Image: sxc.hu

GumGum was founded in 2006 by Ophir Tanz and provides an image licensing and monetization platform that allows websites and blogs to secure images for their sites. Advertisers and publishers alike have found GumGum to be useful to their businesses.

GumGum offers two usage models. One is a pay-per-use program that permits publishers to license content on a CPM basis, while the other uses ad-supported licensing. The ad-supported model is free to publishers in exchange for advertising unit being displayed along side the content.

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Feds Pick 9 Firms to Run PPIP Program

Stephen Kersey — Thu, 09 Jul 2009 03:57:00 +0000

On Wednesday, the government tapped nine financial firms to run toxic asset programs. The firms were selected from a pool of over 100 applicants. They will have 12 weeks to raise $500 million each. The investments will be matched by the Treasury Department and further supplemented from debt financing. The financial firms chosen to take part in this scaled down program aimed at helping banks include:

Image: sxc.hu

BlackRock (BLK, Fortune 500)
AllianceBernstein (AB)
Oaktree Capital Management
Invesco (IVZ)
Angelo, Gordon & Co.
Marathon Asset Management
RLJ Western Asset Management
The TCW Group
Wellington Management Company

CNNMoney’s David Ellis says:

Under the program, the government will run auctions between the banks selling assets and investors buying them. The aim is to effectively create a market. The goal is to help cleanse the balance sheets of many of the nation’s largest banks and help get credit flowing again.

The goverment investment will be up to $30 billion to help the program get started. In addition to the nine firms, 10 women-owned and minority-owned asset management firms were also seleted to take part as partners.

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Are States Blind to the Big Picture?

Mark Ellis — Thu, 09 Jul 2009 01:06:46 +0000

According to a government report released today, struggling states have been using their piece of the stimulus money pie to solve immediate problems, rather than to establish the framework for fiscal strength in the future. The Government Accountability Office report reveals that many states have been divesting money from long-term programs to prevent layoffs and keep state initiatives afloat.

One of the hardest-hit sectors of most states is education, with states funneling money from education to other needs. School district officials across the country have expressed their concern over the lack of funding that has left many of them unable to expand educational programs, build new schools, or maintain the kind of quality educations to which children should be entitled.

Another example of mismanaged funds, according to the Government Accountability Office, is the funds set aside for infrastructure in many states. Instead of waiting for environmental clearance and other important steps, plenty of states have opted for pavement improvements that do not need any extensive work.

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Army Gives Out $15 Billion in Contracts

Mark Ellis — Thu, 09 Jul 2009 01:02:28 +0000

DynCorp International Inc. and Fluor Corp. are the fortunate companies that the Army will pay up to $15 billion over the next five years to build army bases and other military necessities. The Pentagon has yet to decide exactly how much of the $15 billion it will need to pay to meet its needs.

Defense contractors have the potential to rake in the profits because of the fact that Afghanistan is much less developed than Iraq as far as U.S. military concerns go. KBR Inc., the previous company in charge of several infrastructural contracts throughout the Middle East, lost the bidding for this round of contracts. The company may lodge a protest after reviewing the deal.

Although the U.S. military has had several of problems with defense contractors in the past, the Pentagon is making sure that this round of contracts goes smoothly. Military officials are also carefully deciding how to approach the counterinsurgency, taking care to send in only as many soldiers are actually needed.

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Amgen Has Investors Convinced

Mark Ellis — Thu, 09 Jul 2009 00:59:49 +0000

Investors quickly showed their confidence in biotechnology company Amgen when it announced promising study results for denosumab, an experimental treatment for bone loss. However, analysts predict that Amgen will have a difficult time dethroning Novartis, the company behind Zometa and Amgen’s direct competitor in the bone-loss treatment market.

Amgen’s stock rose 15 percent in early trading, settling at $59.50 a share at the end of the day. Industry experts are worried that the sudden rise in Amgen’s stock has set expectations for the company that it might not be able to meet. Denosumab will not even be approved by the FDA until October, and even then, the FDA might decide to not approve it at all.

Working in Amgen’s favor is the fact that denosumab has proven to be wholly more effective than Zometa in treating bone loss in breast cancer patients whose cancer spread. Analysts predict that Amgen could bring in around $1 or $2 billion each year just from selling denosumab to breast-cancer patients and much more if they sell the drug to other osteoporosis patients.

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Newmont Mining Fined $500,000

Stephen Kersey — Wed, 08 Jul 2009 03:59:58 +0000

Newmont Mining has been fined in excess of $500,000 by federal regulators due to the death of an employee two years ago. The fine, which came from the Mine Safety and Health Administration, cites safety violations.

In addition to Newmont Mining getting fined, the MSHA also decided to fine four of the company’s supervisors to the total tune of $60,000.

The death occurred in an underground Nevada gold mine called Midas Mine. Thomas Daniel Shaw, the miner who died, reportedly was operating a loader when he dropped into a sinkhole and fell to his death.

After the fall, it took nearly two weeks to recover Shaw’s body. About 5,000 pounds of material had to be removed to reach his body.

“Management engaged in aggravated conduct constituting more than ordinary negligence,” said a MSHA report, “in that it was aware of previous subsidence.”

Headquartered in Denver, Colorado, Newmont Mining has approximately 15,000 employees. They have active miners working in a number of countries including the United States, Australia, New Zealand and Indonesia.

Newmont Mining Gold Mine (Image: Flickr)

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Small Business Transactions on the Decline

Stephen Kersey — Wed, 08 Jul 2009 03:55:45 +0000

According to BizBuySell, the number of small businesses being sold declined during the second quarter of 2009. BizBuySell, which is the largest online marketplace for purchasing or selling a small business, also says that valuations are down as well over the same time period.

Image: BizBuySell.com

The culprit? BizBuySell believes that the current economic woes are negatively affecting this field.

Said the GM of BizBuySell, Mike Handelsman: “These numbers are not surprising as the economy continues to deter the consummation of business transactions at all levels. There is no doubt that a large number of business transactions are not being closed simply due to the lack of available buyer capital and bank financing. While there are more potential buyers in the market due to high unemployment levels, they don’t have the capital or the risk-profile they’ve had during better times. To make matters worse, banks just aren’t willing to back business purchase transactions to the same level that they have in the past.”

According to their second quarter report, the year-over-year decline in completed transaction got cut in half. BizBuySell also reported a 20% decrease in the median sales prices of completed transactions.

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