Finance Blog number 1

Ready to embark on the quest for an 800 credit score?

You’ll have to start by getting your exact score by shelling out $16 at myfico.com. (The best free scoring tool, the report card at Credit.com, gives you only a letter grade and a range your score probably falls into.)

You actually have three credit scores, one for each of the three major credit bureaus: Equifax, Experian, and TransUnion. Mortgage lenders pull all three.

Though based on the same model, these scores can differ — typically by no more than 15 to 20 points, says FICO spokesman Crag Watts — depending on how lenders report to the bureaus and how the bureaus include that information in the report.

At myfico.com, you have the option of buying only your Equifax or Trans-Union score; Experian doesn’t sell its FICO score to consumers. If you’re shopping for a home loan, get the two available to you.

Scores change whenever your creditors report new information — like your credit card balance — so if you’re in the market for a big loan, start monitoring your number six to 12 months beforehand.

You might also find it useful to sign up for a tool like Equifax’s Score Watch, which for $13 a month will alert you when your score shifts. For those who aren’t loan shopping, there’s no need to check your number more than twice a year, says Wayne Sanford. owner of credit consulting firm New Start Financial Corp.

And if you find out you’re not in the promised land? Don’t worry. You don’t need to be fanatical to get to 780. Those in the know say these moves matter most:

1. Stay on top of your credit reports. You’re entitled to one free copy per year from each bureau. Get ‘em at annualcreditreport.com, and look for misreported delinquencies, over-reported loan amounts, and underreported credit limits business card design. Request corrections from the bureau in writing.

2. Pay bills within the grace period. Lenders report tardiness to the bureaus once you’re 30 days past due; if your score started at 780, it can go down to 680 after just one delinquency, says Watts. So set up payment reminders or have payments automatically deducted by a certain date.

3. Focus on paying off credit cards vs. other debt. Whittling down revolving debt will do a lot more for your score than erasing installment loans. Paying off a $250,000 mortgage when your score is already high will boost it by only five or 10 points, says Watts. But wiping away a few thousand bucks on plastic can add 100 points.

4. Stay under the magic 10%. Just paying credit card balances off every cycle doesn’t mean you have a 0% utilization; issuers report the total amount you charge each month to the bureaus. That suggests you should use credit cards sparingly, says Watts. Aim to spend no more than $2,000 on a $20,000 line; and put cards on ice a few months before applying for a loan.

5. Have a favorite credit card. The FICO model penalizes you for having multiple balances, so limit the bulk of your spending to one card. That said, issuers are closing inactive lines, which can hurt your utilization ratio. So make small charges to your other cards every three months or so.

6. Ask FICO what else will work for you. FICO offers a free Score Simulator tool to those who buy scores on myfico.com, and this allows you to see how your score would respond to certain actions, such as paying down debt or even taking on new loans.  

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A survey of 500 tech and finance industry executives predicts that Mark Hurd's replacement as CEO at Hewlett-Packard Co. with either be an inside candidate or one from International Business Machines Corp.

About 43 percent of respondents said the most qualified replacement for Mark Hurd would come from those two sources, according to the survey by executive search firm Cook Associates which is expected to be published on Monday .

The survey was made available early to the New York Times.

The Times reported that among individuals named for the job Todd Bradley, who runs HP's PC business, and Steve Mills, who runs IBM's software business, tied as the most likely choices.

Hurd actually tied with Ann Livermore, HP's corporate technology chief, for the next best choice, as unlikely as it is that will happen.

The former CEO resigned on August 6 in the wake of sexual harassment charges brought by former actress and HP contractor Jodie Fisher. An internal investigation cleared him of those charges but found that he hadn't lived up to the company's code of conduct.

Hurd has reportedly agreed to pay a settlement to Fisher related to her accusations.

Chief Financial Officer Cathie Lesjak, 51, is acting as CEO on an interim basis. Lesjak is a 24-year veteran of the company who has served as HP’s CFO and as a member of the company’s Executive Council since January 2007.

To read more of the Business Journal's coverage of Mark Hurd's career and sudden resignation click here.

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Denise Rehg, president of Culture Works, has stepped down to take a new position.

Rehg, who headed the Dayton-based arts funding, services and advocacy group for nine years, has taken the position of assistant senior vice president for major gifts with the United Way of Central Ohio, according to a press release.

Until a new president is found, Kathy Hollingsworth will be the interim president and chief executive officer, effective Aug. 2. Hollingsworth co-founded Innovative InterChange Associates, a Dayton consulting company low rates payday advance.

Culture Works provides some general operating support to the largest performing arts and arts education organizations in greater Dayton including: Cityfolk, Dayton Ballet, Dayton Contemporary Dance Company, Dayton Opera, Dayton Philharmonic Orchestra, The Human Race Theatre Company and Muse Machine, among others.

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A $900 million search ad deal between Google Inc. and News Corp. expires this summer, reportedly setting up a competition involving the search giant, Yahoo Inc. and Microsoft Corp.

But declining Web traffic and other milestones on News Corp.'s MySpace have been far short of the goals laid out in the existing contract which expires in August, according to the Wall Street Journal, which is owned by News Corp.

The Journal cited unnamed sources familiar with the matter on Tuesday who said that any deal will be for significantly less money and will be much narrower.

The ad contract was a major factor in News Corp.'s ownership of MySpace, which it paid $650 million for.

But the social network has been surpassed by Palo Alto-based Facebook Inc payday loans., which has more than half a billion unique users compared to MySpace's 109 million users.

A number of high-level executives have left the company, amid a 30 percent cut in work force and a $450 million write down of the value of MySpace and other digital businesses by News Corp.

TechCrunch reported Tuesday that the search ad contract competition comes at a time that News Corp. may sell the Fox Audience Network (FAN), which it says serves most of the ads on MySpace. The blog reports that Menlo Park-based Silver Lake Partners is among the bidders and that if FAN is sold, MySpace is likely to quickly be sold as well.

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BP’s stock price has fallen far enough for the oil company to become an attractive takeover target for its biggest rivals, according to industry analysts.

BP’s (BP) stock finished at $28.88 Wednesday, a plunge of more than 50% from its close of $60.09 on April 19, the day before its leased oil rig, the Deepwater Horizon, exploded and sank in the Gulf of Mexico.

Fred Lucas of JPMorgan believes that investors have overdone it, making the stock an attractive value for buyers — including other companies.

"In theory, either Exxon Mobil or RD Shell could consider a bid for BP," wrote Lucas in a note to investors. "We focus on these two names because they have similar business models and similar global asset structures. They also bear the lowest political risk to a potential combination with BP."

Lucas said that his idea of a proposed takeover of BP was "prompted by the gap between the current market value of BP and the intrinsic value that we see in BP."

Another oil industry analyst, Douglas Youngson of Arbuthnot Securities, told CNNMoney last month that if BP’s stock dropped below $30 a share, it would become an attractive takeover target.

"If the share price continues to fall, other companies may see this for the bargain it will be," said Youngson on June 2, when BP’s stock closed at $37.66.

Of the various big players in the oil industry — including Gazprom and PetroChina (PTR) — Lucas believes that ExxonMobil (XOM, Fortune 500) is in the best position to be the acquirer.

He wrote that Exxon Mobil "has the largest rating advantage and strongest balance sheet," providing it with enough cash to handle the deal.

"Exxon Mobil has also proven its ability to integrate a very large transaction successfully — its merger with Mobil was a resounding success," added Lucas low fee cash advance. "RD Shell has no large-scale merger integration experience."

Gazprom wouldn’t be a contender because of a "low stock market rating," he said, while PetroChina "would encounter major political barriers given its controlling shareholder - the Chinese government."

BP has been purging itself of cash to try and fix the environmental and economic aftermath of the disaster.

The company said it has paid out $2.65 billion for the clean-up, and another $130 million on 41,000 claims from workers and business owners who lost their livelihoods in the wake of the spill. More than 80,000 claims have been submitted so far. Bowing to pressure from the U.S. government, BP has put $20 billion in escrow to cover damages.

Lucas figures that the leak will stop sometime in July, meaning a finite cap to the liabilities. So this might be a good time for Exxon Mobil to swoop in, especially since the oil giant has had its own experiences with catastrophic oil spills.

Before BP’s environmental disaster in the Gulf, Exxon had the dubious distinction of causing the nation’s worst oil spill, when the Exxon Valdez oil tanker ran aground off the coast of Alaska in 1989.

"In many respects, an accurate valuation of BP today depends less on a valuation of its assets, but more on an accurate value of its potential liabilities," wrote Lucas. "Who knows better how to price potential clean-up costs and associated civil claims than Exxon Mobil?"

Spokesmen for BP and RD Shell declined to comment on this story. Exxon Mobil did not respond to messages from CNNMoney.com. 

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The iPhone 4 has arrived, but for some people the wait continues as Apple sprints to keep up with fierce demand for its latest gadget.

From Tokyo to St. Louis, some stores started selling out of Apple Inc.’s newest iPhone just hours after it went on sale Thursday. Some anticipated the demand and made sure they were in line early to get one.

Malinda Hagenhoff, of Jefferson City, stayed in her car in a parking lot overnight Wednesday to be among the first in line at West County Center in Des Peres on Thursday morning.

"I’m kind of a techy person who loves techy stuff," said Hagenhoff, who already owns an iPhone but wanted the newest model.
She was No. 30 in line when mall opened at 6 a.m., but that put her ahead of 120 others to await the Apple Store’s 7 a.m. opening.

As the line stretched farther and farther into the mall, other fanatics sought different sources.

Tyler Woods, 20, of south St. Louis, traveled with two friends to a Walmart store in Arnold.

"This has to be some kind of miracle," Woods said when he arrived in line at the Walmart store at 8:45 a.m. and was told he would get one of the 24 iPhones the store had in stock.

Similar stories were told around the globe. Thousands lined up outside stores in Tokyo, Berlin, New York and elsewhere. Some said they waited 11 hours to get through the lines.

Going into Thursday, concern was raised about limited supplies after more than 600,000 people rushed to pre-order iPhones on the first day they were available, prompting Apple and its U.S. carrier, AT&T Inc., to halt orders for shipment by Thursday’s launch. On Apple’s website, new orders weren’t promised for delivery until July 14.

Apple spokeswoman Natalie Harrison said demand was "off the charts," and that the company was working hard to get phones into customers’ hands as quickly as possible.

Some stores sold out within hours. Brian Marshall, an analyst for Gleacher & Co., said certain Apple stores likely had enough iPhones to last into today before selling out. A new shipment could be in stores as early as Saturday, he said, but more likely won’t arrive until early next week.

Apple is having a hard time getting enough of the new custom parts for the iPhone 4, such as its new higher-resolution screen, Marshall said.

Apple has said the white iPhone it plans to produce has been more challenging than expected and won’t be available until late July. Only black models went on sale Thursday.

The Associated Press and Robert Cohen, Kim Bell and Matthew Franck of the Post-Dispatch contributed to this report.

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St. Louis Brewery, maker of Schlafly craft beer, is for sale. But company founders Tom Schlafly and Dan Kopman say they are in no rush to sell their stakes, and they would strongly prefer a local ownership group that includes current brewery workers.

The main reason for the "for sale" sign outside St. Louis’ largest craft brewer is succession planning, they said. Schlafly, 61, who owns nearly 80 percent of the company, has no family interested in running the business. Kopman, 48, who holds about 20 percent, also does not see his school-age children becoming involved with the brewery.

"At some point, the brewery is going to move to additional ownership," Schlafly said Monday.

And they wanted to begin thinking about that now. So earlier this month they asked the brewery’s senior staff to look for ways they could buy the company.

"We’re exploring this on the basis that we want our employees to have a long-term stake in the company," Kopman said.

St. Louis Brewery joins a generation of craft brewers now confronting questions about what future ownership will look like. Anchor Brewing Co. in San Francisco, which is considered the brand that launched the microbrew movement, was sold earlier this year to Bay-area entrepreneurs. Rogue Ales in Portland, Ore., is being handed down from the founder-father to son.

St. Louis Brewing, founded in 1991, sells its beer under the Schlafly name and operates two brew pubs, in downtown St. Louis and Maplewood. It posted nearly $12 million in sales last year and ranked No. 41 among the nation’s largest craft brewers, according to the Brewers Association.

James Ottolini, head of brewing operations, is one of the longtime workers whom Schlafly and Kopman hope will lead the buyout effort. Ottolini, who holds a freshly minted Washington University MBA, said he was excited by the opportunity.

"Our efforts will be to put together an investment group" that includes outside investors and workers, Ottolini said.

Schlafly, an attorney not involved in the day-to-day operations, said he hoped to retain a small, unspecified stake in the company. Kopman said he might not sell any of his share. In any case, he planned to stay on as chief operating officer "for the foreseeable future."

They sounded reluctant to sell to venture capital firms seeking outsized returns or to take the company public, with heavy compliance costs and focus on making quarterly numbers.

The most likely scenario, Kopman said, is local investors and some form of employee-stock ownership plan buying a majority stake.

"We don’t want to see what we’ve helped build diminished," Kopman said.

Schlafly said he was motivated to seek a buyer, in part, because the growing company faces a looming decision on building a new brewery, "and I don’t have the appetite for the debt that it would involve."

The brewery could roughly fetch $5 million to $18 million, based on revenue and estimated margins, said Tom Lee, senior vice president with Mercer Capital in Memphis, Tenn.

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AOL said Thursday that it sold Bebo, the struggling social networking site, to Criterion Capital Partners, a private equity fund, for a fraction of what AOL paid for the site two years ago.

Terms were not disclosed, but reports pegged its value at $10 million or less. AOL paid $850 million for it.

AOL once had high hopes that Bebo would help it to regain momentum, especially with younger audiences and advertisers, and to catch other fast-growing Internet franchises. At the time, it was popular in Britain.

When it bought Bebo, the chief executive of AOL at the time, Randy Falco, called it a "game-changing acquisition" that would turn AOL into "a social media powerhouse." AOL also had hopes Bebo would help AOL’s instant messaging service bring in revenue. But Bebo was eclipsed by Facebook, which now has 500 million members around the world.

At the time of the deal, AOL was owned by Time Warner. Now, AOL is independent, and its new management team, led by Tim Armstrong, the chief executive, is struggling to engineer a turnaround.

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Stocks got pummeled Thursday, with the Dow, Nasdaq and S&P 500 losing enough to fall into "correction territory" - marked by a drop of more than 10% off the rally highs.

Worries about how the European debt crisis and slump in the euro will impact the global recovery fueled the selling, extending the month-long declines.

The Dow Jones industrial average (INDU) fell 376 points, seeing its biggest one-day point loss since February 10, 2009. Thursday’s point loss was equivalent to 3.6%, the biggest one-day percentage loss since March 5 of 2009.

The loss was bigger than that in the so-called "flash crash" earlier this month in which the Dow lost nearly 1000 points during the session, but ended up closing down just shy of 348 points or 3.2%.

The Nasdaq (COMP) fell 94 points, seeing its biggest one-day point loss since December 1, 2008. The point loss Thursday was equivalent to 4.1%, its biggest one-day percentage loss since Feb. 17, 2009.

The S&P 500 (SPX) declined 43 points, its biggest one-day point loss since January 20, 2009. It was equivalent to a percentage loss of 3.9, the S&P’s worst since April 20, 2009. Thursday’s point and percentage drops for the Nasdaq and S&P were bigger than those made on the day of the flash crash.

The CBOE Volatility index, the VIX (VIX), Wall Street’s fear gauge, spiked 30% to a 14-month high of 45.48.

Stocks slumped in the morning, trimmed losses in the afternoon as the euro turned positive and then resumed the selling, ending just above the lows of the day. The afternoon selloff intensified after the Wall Street reform bill cleared a key hurdle in the Senate. The bill is expected to pass the Senate. Investors also kept an eye on the escalating conflict between North Korea and South Korea.

After weeks of selling, all three major gauges are now officially in a "correction," technically defined as a loss of more than 10% from the rally highs. The Dow is now down 10.2% from its April 26 high, the S&P 500 is down 12% from its April 23 high and the Nasdaq is down 12.9% from its April 23 high. The Nasdaq was already in a correction prior to Thursday’s selloff.

The correction does not reflect any change in the fundamentals of the U.S. economy or corporate profit outlook, but rather a confluence of events, said Timothy Ghriskey, chief investment officer at Solaris Asset Management.

"I don’t think people are worrying about a double-dip recession in the United States," Ghriskey said. "But there is uncertainty about Europe’s economy and the sustainability of the euro."

In addition to being in a correction, the S&P 500 closed below the 200-day moving average, a key technical level market pros monitor. These events tend to have a big impact one way or the other on market direction, Ghriskey said.

Falling below these technical levels could put a floor under the selling, said Steven Goldman, market strategist at Weeden & Co. He said investors may be better able to tolerate all the uncertainty about Europe when the market has pulled back from the 2010 highs.

"If we are still in a bull market, these might be levels where someone would want to get in," he said. "But we’ve done a lot of damage technically and the pendulum hasn’t swung yet to where we’re seeing a healing."

Beyond the reaction to the immediate headlines, the stock market may have already been vulnerable to selling, said Brett Hammond, chief investment strategist at TIAA-CREF no credit check payday loans.

"The European debt issues and the euro are very important," he said. "But the market was already poised for a pullback after the enormous run up in the stock market since March of 2009."

He said that the historic rally was partly fueled by anticipation that an economic and corporate profit recovery would take hold and that the consumer would take over from the government as an engine of growth. While some of that has happened, market participants may have been betting on a bigger comeback.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 19 to one on volume of 2.13 billion shares. On the Nasdaq, decliners beat advancers 11 to 1 on volume of 3.37 billion shares.

Euro: The euro was little changed versus the dollar after falling in the morning and gaining through the late afternoon. The euro has seesawed over the last few days after plunging to a four-year low of $1.2234 on Monday. The dollar fell 0.2% versus the yen, erasing bigger morning losses.

Economy: Reports on jobless claims and leading economic indicators (LEI) disappointed, while the Philadelphia Fed index, a regional reading on manufacturing, topped forecasts.

The number of Americans filing new claims for unemployment rose last week to 471,000 from 446,000 the prior week. Economists surveyed by Briefing.com expected claims to fall to 439,000.

Continuing claims, the number of Americans who have been receiving benefits for a week or more, fell to 4,625,000 from 4,665,000 in the previous week. Economists thought claims would fall to 4,600,000.

After the start of trading, the Conference Board released its index of leading economic indicators. LEI fell 0.1% in April after rising 1.3% in March. The index was expected to have risen 0.2%.

The Philadelphia Fed index rose to 21.4 in May from 20.2 in April, topping predictions for a rise to 20.7.

After the mini-crash: New rules continue to be proposed in the wake of the May 6 stock market selloff, in which erroneous trading in hundreds of issues created a panic that dragged down the broad market. Since then, most of the trades have been cancelled, but regulators remain unclear as to what exactly caused the selloff.

Out-of-control computer trading may have caused the slump, Securities and Exchange Commission chairwoman Mary Schapiro told a Senate panel Thursday.

On Tuesday, the SEC proposed new rules that would impose circuit breakers, or a temporary pause, on individual stocks that experience extreme swings. There are already circuit breakers in place for the broad markets, but this would impact individual stocks.

World markets: Markets in Europe slumped, as the euro continued its slide versus the dollar. The British FTSE 100 fell 1.7%, the German DAX lost 2% and the French CAC 40 fell 2.3%.

Asian markets tumbled. The Japanese Nikkei fell 1.5%, while the Hong Kong Hang Seng fell 0.2%.

Commodities: U.S. light crude oil for June delivery fell $1.86 to settle at $68.01 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $4.50 to settle at $1,188.60 an ounce.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.24% from 3.36% late Wednesday. Treasury prices and yields move in opposite directions. 

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In the next couple of weeks, lawmakers are expected to unveil an unprecedented climate change proposal that may open up more areas for offshore drilling and cut emissions through a cap on greenhouse gases and a tax on gasoline.

Details on the proposal, put forth by Sens. John Kerry, D-Mass., Joe Lieberman, I-Conn., and Lindsey Graham, R-S.C., are scant - the actual bill isn’t expected until at least the end of the month.

But since this may be the last time this year climate change law is discussed, timing is critical. And with health care, financial reform and looming elections on Washington’s collective plate, it faces an uphill battle.

Still, there’s an outside chance the novel idea could gain traction.

"If they put out something people really like, they’ve got a real shot," said Christine Tezak, an energy and environmental policy analyst at asset management firm Robert W. Baird & Co.

Cutting emissions

The oil, utility and manufacturing industries will all be affected by the new law — the challenge is to craft something they’ll all feel comfortable with.

Tax gasoline: Many oil companies have opposed a cap-and-trade system — where the government issues annual permits to pollute and then ratchets down that number each year.

Like many economists, oil companies maintain that it is an inefficient system, with too many middle men to handle the complex trading of permits.

Their opposition to cap-and-trade intensified when they weren’t granted liberal exemptions under the greenhouse gas bill that passed the House last summer — the bill that this Senate version is meant to complement.

So to win their support the Senate proposal is thought to include a straight-up carbon tax on products derived from oil, such as gasoline, which would likely be passed along to consumers at the pump.

The tax isn’t expected to be huge — starting at something under 10 cents a gallon for gasoline and moving up to maybe 20 cents a gallon after 10 years, said Kevin Book, Managing Director of research at ClearView Energy Partners, a Washington D.C.-based research firm.

And the tax isn’t expected to discourage people from driving, said Book, as it’s too gradual and small to have much of an impact. But revenue from it would likely be spent on other, cleaner transportation projects like mass transit or subsidies for hybrid cars.

So although the oil industry may be more receptive to this gas tax idea, their ultimate support for the law is uncertain.

"We’d like to see more of the proposal," said Lou Hayden, senior director of federal relations at the American Petroleum Institute, echoing the sentiment of most interest groups involved.

In the end, at least one analyst doesn’t think the oil industry will play ball.

"It is unlikely that the oil industry will eventually support whatever shape it takes in the bill," Divya Reddy, an energy policy analyst at the political consultancy Eurasia Group, wrote in a recent research note. "Moreover, carbon fees will translate into higher prices at the pump, an outcome with which few politicians will want to be associated."

Cap emissions for utilities: Power producers may give the proposal a warmer reception, although here again their eventual support lies in the details guaranteed high risk personal loans.

The utility industry as a whole was generally supportive of a cap-and-trade plan that applied to the whole economy, even if they dickered with lawmakers over how fast emission cuts should happen.

For utilities, a cap-and-trade law allows them to upgrade their equipment and pass the cost along to consumers. And under the House cap-and-trade bill, the pass-through to consumers is offset by plans that allow reductions to come from things like planting trees and rebates for low income ratepayers. The Congressional Budget Office said the House bill would cost the average household an additional $175 a year.

As for participating in a cap-and-trade plan without other manufacturers, the industry didn’t rule it out.

"We’re keeping an open mind on everything," said Jim Owen, spokesman for the utility association’s Edison Electric Institute.

A temporary reprieve for manufacturers - Several Midwest Senators opposed a greenhouse gas bill on the grounds that it would make U.S. firms less competitive with foreign factories that don’t have to comply with tighter pollution rules, and hence cost American jobs.

To get around this, the Senate plan calls for some delay in holding factories accountable to the new rules — maybe five to 10 years.

It’s unclear whether this will be enough to get industry and their key Midwest lawmakers on board.

More energy

In return for approving all the reductions, lawmakers that focus on energy production want some bones.

Drilling - Key among them is greater access to U.S. oil and gas reserves — and the great prize in that is Alaska’s Arctic National Wildlife Refuge (ANWR).

"You want to have me sit down at the table and talk about what a strong domestic production piece is, [then] you have to be willing to talk to me about ANWR," Sen. Lisa Murkowski, R-Alaska, was quoted as saying in remarks about what it would take to get her to support a climate bill.

Lieberman said that is not an option, and most analysts say opening ANWR isn’t in the cards.

But expanding production in the eastern Gulf of Mexico is, as well as encouraging some states to open up their waters to oil and gas drilling, said Baird’s Tezak. It’s thought that Virginia, among other states, might jump at federal laws that permanently opened more offshore areas.

Nukes - More support for nuclear power may also be in order, although it’s unclear how much more the Senate plan might allocate beyond President Obama’s recent pledge of over $50 billion in loan guarantees for the industry.

Most analysts think this is probably the last chance the Senate has this year to pass a climate bill, one of Obama’s key policy goals.

With everything going on in Washington, Obama isn’t expected to give this his undivided attention.

"He is most likely to pay lip service to the bill but not put himself on the line for it the way he has done for health care," wrote Eurasia Group’s Reddy.

But few expect this issue to go away. If a bill doesn’t materialize this year, many expect this last ditch effort will form the starting point for negotiations in 2011. 

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