Actual finance blog

A financial-services franchise serving families and downtown Honolulu workers has opened a second location at Fort Street Mall.

Cash Plus — which offers check cashing, payday advances, wire transfers, money orders and serves as a bill payment center for dozens of companies — opened at 1111-A Fort Street Mall, a few doors from McDonald’s and Hawaii Pacific University.

The store doubles as a wireless and high-speed Internet service provider from Mobi PCS and Clearwire.

The Fort Street store is the second franchise for co-owners and Hawaii entrepreneurs Mark Nakatsukasa and Dylan Mabuni paydayloans. They opened their original location in January 2006 at 1130 Middle St.

"There was a need for financial services in different communities," Nakatsukasa said.

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Malaysia's government shelved at least $1.1 billion in public works projects as soaring commodity prices forced it to spend more on food security and raised construction costs, swelling its five-year development budget.

Projects including a monorail and highway in northern Penang state will be scrapped, Sulaiman Mahbob, director general of the government's Economic Planning Unit, said in a press briefing in Putrajaya yesterday. The Southeast Asian nation will spend 230 billion ringgit ($70 billion) on roads, bridges and other works during the 2006-to-2010 period, 15 percent more than it planned earlier.

The changes “take into account additional development requirements and the increase in construction-related materials cost,'' Prime Minister Abdullah Ahmad Badawi told parliament in Kuala Lumpur today in a review of the five-year plan released today. “Development projects will also be reprioritized.''

Surging commodity prices have pushed up building costs and increased government subsidies on food and fuel, leaving Asia's governments with less to spend on public-funded bridges, roads and other works. That's limiting Abdullah's ability to regain support after his coalition lost its two-thirds parliamentary majority in elections this year.

“Given the rising project costs as well as ballooning fuel subsidies, there is a need to reprioritize the projects,'' said Lee Heng Guie, an economist at CIMB Investment Bank Bhd. in Kuala Lumpur. “They will focus on all the people-centric projects'' including food security, rural roads and housing.

Penang Monorail

Scomi Engineering Bhd. had planned to bid for the 2 billion ringgit monorail project on Penang island, a popular tourist destination. Penang, Abdullah's home, was one of five states that came under opposition control after the March 8 elections.

Malaysian Resources Corp. and Melewar Industrial Group Bhd. were also potential bidders for the monorail job cash advance loans.

Other projects put on hold include a public park in the capital Kuala Lumpur, bringing the total value of projects shelved to at least 3.5 billion ringgit.

Instead, the government will spend an additional 1 billion ringgit each for Sarawak and Sabah states on Borneo island, which provided Abdullah's coalition with the parliamentary seats it needed to retain a simple majority in the lawmaking body.

An additional 10 billion ringgit will be spent on five special investment zones Abdullah has introduced across the country. Some 3 billion ringgit will go to food security programs, and 3 billion ringgit to a strategic investment fund for the trade ministry. Spending on low-cost housing, rural infrastructure and public transport will increase.

Political Pressure

Projects that will proceed include an electrified double- tracking rail development in the north of the Malaysian peninsula led by Gamuda Bhd. and MMC Corp., and a similar line being built by Ircon International Ltd. in the south.

Growth in Southeast Asia's third-largest economy may average 6 percent a year from 2006 to 2010, Abdullah said, maintaining the estimate given at the start of the five-year plan in 2006.

Achieving the targeted growth rate would be difficult, said Lee at CIMB.

“We are in trying circumstances,'' he said. Growth may ease from the average 6.1 percent pace of the past two years, as higher domestic fuel prices and “political headwinds'' add to external risks, he added.

The government's budget deficit is forecast to narrow to 3.2 percent of gross domestic product by 2010 from 3.6 percent in 2005, compared with the 3.4 percent estimated earlier. The deficit will total 21.6 billion ringgit this year, or about 3.1 percent of gross domestic product, the central bank said on March 26.

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Citigroup is preparing to fire thousands from its worldwide investment-banking division, The Wall Street Journal reported on Sunday.

The Journal, citing people familiar with the matter, said the layoffs are part of a plan to cut about 10% of the staff of the 65,000-member investment-banking group.

Messages left with Citigroup spokesmen on Sunday were not immediately returned. The Journal said the fired employees could be notified as early as Monday.

The New York-basked global bank, along with much of Wall Street, is in the throes of recovering from bad investments on mortgages and leveraged loans that cut billions of dollars from its portfolio.

It was not immediately clear if the reported job cuts would be in addition to cuts announced by Citigroup (C, Fortune 500) in April. After reporting a $5.1 billion first-quarter loss, the bank said then it was reducing its staff by 9,000, in addition to the 4,200 job cuts the bank announced late last year.

As of the end of last year, Citigroup had about 147,000 full-time employees.

In May, Citigroup unveiled a three-year plan that included getting rid of more businesses, mortgages, real-estate operations and jobs.

The bank called for shedding between $400 billion and $500 billion of its $2.2 trillion in assets and growing revenue by 9 percent over the next few years as it tries to rebound from the huge losses tied to deterioration in the credit markets.

Earlier this month, the bank said it was closing the Old Lane Partners hedge fund that was co-founded by Chief Executive Vikram Pandit paydayloans. The bank is shuttering the fund just 11 months after it was acquired for more than $800 million. 

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Inflation, the curse of the 1970s, is staging a comeback, led by sky-high oil prices. This time, the menace is more genuinely global than three decades ago, and this time much of it is “Made in China”.

Wary of past errors, Western central banks may well opt for shock therapy — interest rate rises — in an effort to prevent prolonged stagflation, the toxic mix of inflation and economic stagnation that followed the oil crises of the 1970s.

Their prospects of success depend at least in part, though, on how willing the rising powers of the developing world are to play the game, above all China, an economy that was shut to the outside world 30 years ago but has now taken it by storm.

While inflation is far higher in faster-growing regions than in the United States and Western Europe, everyone feels the pain because of the globalization of trade, says Stephen Roach, Asia region chairman of Morgan Stanley.

“The risks of a new stagflation are mounting,” he said in an article earlier this month. “Like nearly everything else in the world these days this one is likely to be made in Asia.”

Average annual inflation rates in the developing world were about three times those of industrialized economies last year, and that overrun will widen in 2008, according to figures from the International Monetary Fund.

IMF forecasts, published last April and perhaps in need of upward revision, foresee world inflation rising from an average of 3.9 percent for 2007 to 4.7 percent in 2008 credit scores. Revealingly, the IMF sees the inflation rate nearly doubling to just short of 12 percent in the emerging and developing world, as opposed to rising from 2.2 to 2.6 in advanced economies.

In rich and poor countries, fuel and food prices surges have sparked wave after wave of protests by truckers, taxi drivers, fishermen and farmers demanding government action, increasing fears of political instability and economic downturn. 

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Andrew D. Busch, a nonemployee member of Anheuser-Busch Cos Inc’s (BUD.N: Quote, Profile, Research, Stock Buzz) founding Busch family, said on Saturday that he supports the U.S. brewer’s efforts to remain “a strong company headquartered in St. Louis.”

Busch, an uncle of Chief Executive August A. Busch IV, said he supports his nephew, the board of directors and the management team of Anheuser-Busch as they evaluate and respond to the $46.3 billion takeover bid by Belgian-Brazilian brewer InBev NV (INTB.BR: Quote, Profile, Research, Stock Buzz).

“I believe that Anheuser-Busch has created substantial shareholder value over the long term and that it will continue to maintain the best interests of the shareholders and employees,” Busch said.

However Busch, who is not a company employee and has no role in decisions about the company’s future other than as a shareholder, stopped short of recommending that Anheuser should reject InBev’s $65-per-share bid.

Andrew Busch has “substantial” shareholdings in the maker of Budweiser and Michelob, according to a spokesman who declined to provide more details, including whether Busch supported rejecting the bid.

Busch added that he does not speak for other family members.

The statement comes a day after Anheuser’s board met face-to-face for the first time since receiving InBev’s unsolicited takeover bid free credit report instantly. The company issued a statement late on Friday saying that no response had been made by the board and that it would continue to review and consider the proposal.

Anheuser-Busch has been family run for most of its history, which dates back to 1861, when Adolphus Busch married Lilly Anheuser and went to work at her father’s brewery. 

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Best Buy reported a 7% drop in first-quarter profits Tuesday, but it still beat Wall Street’s expectations because of a lower share count and increased sales.

The electronics retailer said net income dipped to $179 million, or 43 cents per share, from $192 million, or 39 cents per share. The per-share figure is based on fewer shares outstanding.

Thomson Financial said analysts expected profit of 37 cents per share.

Best Buy Co. Inc (BBY, Fortune 500). said revenue jumped 13% to $8.99 billion from $7.93 billion. Analysts expected $8.57 billion.

Sales rose 3.7% at stores open at least 14 months. So-called comparable store sales are a key measure of a retailer’s health. The company said the gain "accelerated in the second half of the quarter and remains solid thus far in early fiscal June." The gain was driven by customers who bought higher-priced items such as flat-panel TVs, video gaming consoles, notebook computers and GPS devices.

"We believe company-specific drivers, including rolling out Best Buy Mobile’s store-within-a-store and Apple store-within-a-store are enabling (Best Buy) to take share from competitors," Deutsche Bank-North America analyst Mike Baker wrote in a note to investors.

The company expects adjusted profit of $3.25 to $3.40 per share and revenue of $43 billion to $44 billion in fiscal 2009 payday loan. Analysts had been predicting profits of $3.26 per share and revenue of $43.90 billion. The company expects comparable store sales for the year to grow 1% to 3%.

Richfield-based Best Buy lowered its new store plans for China for the year. It now plans to open eight to 16 Five Star stores and one to three Best Buy stores. Previously it had planned 20 to 25 Five Star openings and five to eight Best Buy openings.

"While we are working through the timing of our store openings, our commitment to China as a growth market is unwavering," said Bob Willett, CEO for Best Buy International and chief information officer.

Best Buy shares rose 37 cents to $46.25 at the open of trade Tuesday. 

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Belgian brewer InBev NV (INTB.BR: Quote, Profile, Research, Stock Buzz) on Sunday cautioned U.S. rival Anheuser-Busch (BUD.N: Quote, Profile, Research, Stock Buzz) that it should fully explore its $46 billion takeover offer before striking out to do any potential deal with Mexico’s Modelo (GMODELOC.MX: Quote, Profile, Research, Stock Buzz).

InBev, whose beers include Stella Artois and Beck’s, on Wednesday made a $65-a-share unsolicited bid to buy Anheuser-Busch, which brews the popular Budweiser brand. A deal would create the world’s largest brewer. St Louis, Missouri-based Anheuser-Busch responded that its board would evaluate the proposal carefully.

On Friday, The Wall Street Journal, citing people familiar with the matter, reported that Anheuser-Busch had begun talks with Mexico’s No. 1 brewer, Grupo Modelo, about a possible combination of the two companies that could help it thwart the Inbev bid.

Anheuser-Busch owns a 50 percent stake in Modelo, maker of Corona beer, which is emerging as a critical power broker in the battle for control of Anheuser-Busch payday loan cash advance loan.

In a letter dated Sunday, Inbev’s Chief Executive Carlos Brito told Anheuser-Busch’s CEO August Busch IV that he was committed to a “friendly combination.”

But he said: “We have read the recent press reports suggesting that you may have approached Grupo Modelo regarding a possible transaction between Anheuser-Busch and Grupo Modelo or affiliated entities.”

He said it was important that Anheuser-Busch understood that Inbev’s offer was “made on the basis of Anheuser-Busch’s current assets, business and capital structure.”

“Accordingly, we would expect that prior to proceeding with any alternative transaction, especially if your shareholders will not be given the opportunity to vote on it, you would first fully explore our offer and the potential adverse consequences any such transaction could have on the ability of your shareholders to receive our premium offer,” he said. 

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ATA Airlines is suing FedEx Corp. over its decision to drop the airline from its military charter team, a move ATA says forced it into bankruptcy protection and left it financially destroyed.

ATA says in a lawsuit filed Wednesday in federal court that FedEx (FDX, Fortune 500) broke contractual promises with the Indianapolis-based airline when it ousted ATA in January bad credit payday loans.

The airline says charter flights of military personnel and their families generated more than $400 million in annual revenue and were ATA’s most important profit base.

ATA abruptly ceased operations April 3. 

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Google Inc Chief Executive Eric Schmidt on Wednesday detailed his theory of competition in the Web industry while saying Google’s famous mantra of “Don’t be evil” is often misunderstood.

In an on-stage interview with writer Ken Auletta of the New Yorker magazine, Schmidt said “Don’t be evil” is meant to provoke internal debate over what constitutes ethical corporate behavior, rather than representing an absolute moral position.

“We don’t have an ‘Evilmeter’ we can sort of apply — you know — what is good and what is evil,” Schmidt said before an audience of media industry professionals at an event sponsored by Syracuse University’s Newhouse School in San Francisco.

On other fronts, Schmidt said Google was taking a patient view to making money from online video advertising, while it sees mobile phones attracting the most lucrative ad rates.

Google is moving to transform YouTube, its popular online video-sharing site, into a money-maker via new forms of advertising it will unveil over the next year, Schmidt said.

He was cautious about how profitable this might prove to be faxless payday loan. For now, YouTube’s video traffic consumes the majority of Google’s outgoing network bandwidth. But he said it could possibly lead to the “creation of a whole new industry.”

“We don’t yet know how we are going to make significant amounts of money on YouTube,” Schmidt said. “But it seems obvious that we should be able to make some money from this.”

His optimism is based on two key facts: “We know people are watching it” and “We have the luxury of time to invest.” 

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The Federal Reserve will not allow inflation to get out of control and is aware of the danger that a weaker dollar could feed into higher prices, one of its top policy-makers said on Tuesday.

“We want to make sure the message is clear … that we will not countenance building inflationary expectations,” said Federal Reserve Bank of Dallas President Richard Fisher.

“We are witnessing a negative feedback loop … which is that a weaker dollar can lead to further inflationary pressures which in turn leads to a weaker dollar, et cetera, and to dampened economic activity,” he said in response to questions after a speech at the Council on Foreign Relations.

Fisher, a voting member of the Fed’s interest rate-setting committee this year, has dissented at the last three policy gatherings in favor of either smaller rate cuts than were agreed, or because he wanted no cut at all.

He said he had drawn the line at 3.5 percent, whereas the Fed has gone on to lower its benchmark overnight funds rate to 2 percent to shield the U.S americashadvance. economy from a housing crisis, and made plain he was uncomfortable with inflation expectations.

“The anecdotal evidence, the headlines that we’re reading in the newspapers, and the survey data, is not encouraging,” he told the audience.

“That worries me a great deal. It’s beginning to work its way into expectations, and when you begin to work your way into expectations, business and consumers behave accordingly and then you have a problem.

“So you want to make sure that is not encouraged and we will do the level best we can to do so,” he said. 

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