Stocks fall on Goldman's results

NEW YORK (Reuters) – The S & P 500 was on track to post its worst day in about two months on Wednesday as disappointing results from Goldman Sachs (GS.N) and Wells Fargo (WFC.N) deflated hopes for strong bank earnings.

The Nasdaq fell more than 1 percent, also its biggest daily percentage loss since Nov 23, as news came from Cree Inc (CREE.O), that its stock tumbled 14.1 percent to $53.87.

A semiconductor index (.SOX) also dropped 2 percent, its worst percentage decline since Aug 30.

Goldman Sachs Group Inc's stock fell 3 percent to $169.48 after the Wall Street firm posted a 53 percent drop in profit as trading revenue tumbled. Shares of Wells Fargo & Co lost 2.1 percent to $31.78 after the company posted a fourth-quarter profit that missed some analysts'estimates.

With financials, "I think expectations were for some better results after a fairly robust fourth quarter and start to 2011," said Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas.

Villalta said he was still bullish on financials for 2011, however, noting the sector's recent gains. Financials have been among market leaders in the recent rally, with the S&P 500 up 12.7 percent since the start of the fourth quarter.

Optimism about financial sector earnings strengthened after JPMorgan Chase's (JPM.N) results on Friday beat targets.

But not all analysts have been bullish on the sector: Data from Thomson Reuters StarMine on Friday suggested most banks would miss earnings expectations.

Hurting the Dow were shares of American Express Co (AXP.N), down 2.8 percent at $45.06. The company said restructuring charges, related to closing down some locations in its global servicing network, would reduce fourth-quarter earnings.

The Dow Jones industrial average (.DJI) was down 10.14 points, or 0.09 percent, at 11,827.79. The Standard & Poor's 500 Index (.SPX) was down 10.62 points, or 0.82 percent, at 1,284.40, its biggest daily percentage loss since Nov 23. The Nasdaq Composite Index (.IXIC) was down 32.00 points, or 1.16 percent, at 2,733.84.

Shares of Cree and its rival LED lighting makers fell after it reported weaker-then-expected sales, profit and a current quarter outlook late on Tuesday.

Rubicon Technology Inc (RBCN.O) slumped 6.5 percent to $21.03 and Veeco Instruments Inc (VECO.O) tumbled 5.2 percent to $46.62. Shares of circuit maker Linear Technology Corp (LLTC.O) also dove 3.3 percent to $34.93 and semiconductor provider Marvell Technology Group (MRVL.O) fell 3.1 percent to $21.22.

Among bright spots for fourth-quarter results were earnings from Apple Inc (AAPL.O) and InternationalBusiness Machines Corp (IBM.N), both released after Tuesday's closing bell.

Apple's profit blew past Wall Street's expectations on strong sales of iPhones, iPads and Mac computers. The stock was up 0.6 percent at $342.63 as a number of brokerages, including Goldman Sachs and Bank of America Merrill, raised their price targets on the stock.

Shares of IBM, whose results also surpassed expectations, rose 3.3 percent to $155.60.

"We saw two of the big names report last night with more-than solid numbers, and that, if anything, validates the move we had in the fourth quarter," said Bennett Gaeger, managing director at Stifel Nicolaus in Baltimore.

"But in the semis, people are taking some profits off some of the better performers."

Obama's education focus faces big hurdles

WASHINGTON – Signs of trouble are arising for President BarackObama's plan to put education overhaul at the forefront of his agenda as he adjusts to the new reality of a divided government.

Giving students and teachers more flexibility is an idea with bipartisan support. Yet the debate about the overdue renewal of the nation's chief education law, known as No Child Left Behind, is complicated by political pressures from the coming 2012 presidential campaign and disputes over timing, money and scope of the update.

While education might offer the best chance for the White House to work with newly empowered Republicans, any consensus could fade in the pitiless political crosscurrents, leaving the debate for another day, perhaps even another presidency.

If so, parents, teachers and students would labor under a burdensome set of testing guidelines and other rules that many say are lowering standards.

It's that scenario that the president and his administration intend to invoke as a way to rally public support and spur lawmakers and interest groups into action against long odds.

"No one I'm talking to is defending the status quo," Education Secretary Arne Duncan said in an interview. "Everyone I talk to really shares my sense of urgency that we have to do better for our children. We're fighting for our country here."

Duncan said Obama's State of the Union address on Jan. 25 will reflect his commitment to education.

Obama has spoken about the effect on the U.S. economy and competitiveness from lagging student test scores. Lawmakers and advocates will watch to see whether he keeps the issue in the spotlight in the months ahead.

"I don't think there's any substitute but for him to be out front," said Rep. George Miller of California, the top Democrat on the House Education and Workforce Committee.

Some Republicans, wary of another giant bill like health care, would prefer a series of small measures to the broad rewrite of No Child Left Behind favored by the administration.

Democrats and many outside advocates say Congress must enact an overhaul this year, before the 2012 campaign. For some in the GOP, getting it right is more important than getting it fast, and they refuse to spend any new money to do it.

"There's room to make cuts, and I think pretty substantial cuts, that would enable us to use some of those savings on things we think work," said Rep. Duncan Hunter, a California conservative who's the new chairman of a House Education and Workforce subcommittee. "I like the piecemeal approach. ... If you do it in bite-size pieces, you can tell what needs to be tweaked as you go."

No Child Left Behind would not have passed without President George W. Bush's strong advocacy in the first year of his administration. Since then, many lawmakers have concluded that the law failed to meet its overall objectives of raising student achievement. Instead, they say, it has meant relying too much on test results and arbitrary measurements that don't help students learn.

The Obama administration produced a framework for a new law last year. It would ease many testing requirements, put a new focus on teacher performance and the lowest-performing schools, and replace proficiency requirements with loftier goals of boosting college graduation rates.

Duncan has worked with lawmakers of both parties over the past two years to lay the groundwork for a rewrite. Republican and Democratic leaders of the education committees in the House and Senate say they want to move forward. "Everyone agrees this law needs reform," said Rep. John Kline, R-Minn., chairman of the Housecommittee.

Obama focused on health care at the start of his presidency, when Democrats controlled Congress. Now Republicans control the House and are more powerful in the Senate. It's not clear that an education overhaul ranks high on their list of priorities, even if committee leaders support it.

The "Pledge to America," which the House GOP released before taking power in the November elections, never mentions education. Brendan Buck, a spokesman for House Speaker John Boehner, R-Ohio, said Boehner's focus is on "addressing the top priorities of the American people — creating jobs and cutting spending."

Administration officials will try to make the case that education is crucial for the economy and jobs — an argument Obama tried to use with health care, with limited success. "This isn't a distraction from the economy. This is important for the economy," said White House domestic policy adviser Melody Barnes.

Source: AP News

Euro slips before euro zone meeting.... stocks fall

SYDNEY - The euro eased on Monday as investors waited to see if officials will agree to beef up a euro zone safety fund, while Asian shares mostly fell, led by drop in Shanghai in the wake of China's latest attempt to contain inflation.

European Central Bank Jean-Claude Trichet gave the thumbs up for a bigger safety-net fund on Sunday, a day before a regular meeting of euro zone finance ministers, who are due to discuss an increase in the effective lending capacity of the European Financial Stability Facility (EFSF).

Some analysts played down the chances of a clear outcome this week and pointed to a February 4 European Council meeting as a more likely stage for such decisions to be made.

Still, this week's meeting could give investors a better sense of how much agreement or dissent there is among euro zone members to enlarging the facility.

Any disappointment could see the euro come under renewed pressure. For now, the euro was at $1.3330, having rallied some 4 percent last week to a one-month high around $1.3456 on Friday.

"There could be a further upside for the euro if confidence in the rescue scheme grows. But I think the euro has already risen to pretty good levels," said a trader for a Japanese trust bank in Tokyo.

Meanwhile, a breach of key support took the Shanghai Composite Index (.SSEC) down nearly 3 percent at one stage to lows not seen since early October.

The steep fall in Chinese stocks spooked other markets. Japan's Nikkei (.N225) erased most of its gains to close flat, while shares elsewhere in Asia fell 0.6 percent (.MIAPJ0000PUS).

South Korea's KOSPI (.KS11), which hit a record high early in the session, ended 0.4 percent lower, HongKong's Hang Seng index (.HSI) shed 0.3 percent and Australia's S&P/ASX 200 index (.AXJO) slid 0.8 percent.

Chinese bank shares were among the biggest losers after China on Friday raised banks' required reserves (RRR) for the fourth time in over two months.

On Monday, Chinese media said the central bank has devised calibrated reserve ratios for different banks to tighten curbs on bank lending and tame quickening inflation.

Investors also sold global miners like BHP Billiton (BHP.AX) on worries China's voracious appetite for commodities will cool. BHP fell 1.2 percent.

"With growth still strong, Beijing will likely battle inflation wholeheartedly. Get ready for more hikes in both RRR (at least another 150 bps) and interest rates (two, 25 bps) in the next six months," HSBC economists Qu Hongbin and Sun Junwei wrote in a report.

According to EPFR Global, flows into the emerging market equity funds that it tracks slowed in the week ended January 12 due to worries that high inflation rates will trigger more measures to rein in price pressures.

But underlying appetite for risk persisted, with emerging market local currency and high yield bond funds enjoying solid weeks, EPFR noted.

Asian high-yield bond issuers have wasted no time this year in taking advantage of the healthy appetite for their paper.

Last week, PRC property developer Evergrande Real Estate Group made history with a 9.25 billion yuan ($1.4 billion) synthetic renminbi bond issue, the biggest to date in the fast growing market.

Commodity prices fell, with U.S. crude oil nearing $91 a barrel, but still not far off a two-year high of around $92.58 set early this month.

Copper on the London Metal Exchange eased 0.3 percent to $9,622 a tonne, within reach of a record high of $9,754 set on January 4.

U.S. markets are shut on Monday for a public holiday, but the flow of earnings results will kick up a gear this week with Apple (APPL.O), Citi (C.N) and Goldman Sachs (GS.N) among major firms due to unveil their results.

Source: Reuters

AT&T Phone Can Convert To a Laptop

A 4G smartphone that can expand into a "dockable laptop" and the rollout of AT&T Wireless' 4G LTE network.

Those two developments at the Consumer Electronics Show, which opens this week in Las Vegas, are among the latest in a wave of announcements that will roll out over the next few days as wireless enters its next generation.

The smartphone is Motorola's Atrix 4 from AT&T. It's being billed as the most powerful such device ever, with dual-core one-gigahertz processors, 16GB of internal storage, and expandability up to 48GB with a microSD card. It runs Android 2.2 Froyo, features Motorola's MOTOBLUR user interface, and, most interestingly, can be docked so a user can attach a screen, a full-sized keyboard, and ports for a make-your-own laptop.

HSPA+, Long Term Evolution 
 
Another interesting aspect is that, even though AT&T is rolling out its Long Term Evolution (LTE) network this year, the carrier is calling the new Motorola device 4G -- although it actually is built for the current HSPA+ technology. Some industry observers do not consider HSPA+ to be "true" 4G, but others have a wait-and-see attitude about how fast the transmission will be.

Rival network T-Mobile has taken to calling its HSPA+ network 4G, to some consternation by the other major carriers, and now AT&T has adopted the same approach. The company said it can do so because its expanded infrastructure will allow higher speeds.

T-Mobile has been one of those attacking AT&T for the quality and speed of its service, including ads that show an actor representing AT&T's exclusive-in-the-U.S. iPhone 4 carrying an older actor -- representing AT&T's slower network -- on his back. Both AT&T and T-Mobile currently use the same technology.

On Wednesday, AT&T offered more details about its upcoming LTE rollout. It said 20 4G devices will be released this year with Android, BlackBerry, Windows Phone 7, and Apple iOS operating systems.

Thinnest Phone with Largest Screen 
 
A dozen of the new phones will be Android-based, increasing the carrier's commitment to that fast-growing platform. The LTE network will launch in the middle of this year and be completely deployed by 2013, according to details offered by AT&T executives during a pre-CES meeting with software developers.

In addition to the Atrix 4G, AT&T is announcing the new Inspire 4G from HTC and Samsung's Infuse 4G. At 9mm, the Infuse will be AT&T's thinnest phone, and it will have the largest screen, at 4.5 inches. The plan is to feature products for HSPA+ in the first half of 2011, and for LTE in the second.

Among AT&T's two other major U.S. competitors, Verizon Wireless has an aggressive schedule for its LTE network, which it recently launched in selected markets, and Sprint Nextel has released three 4G smartphones for its WiMAX network.



Source: newsfactor.com

LinkedIn plans to go public in 2011

NEW YORK – LinkedIn, the social networking site for professionals, plans to go public in 2011 and has selected its financial underwriters, three sources familiar with the process told Reuters.

Morgan Stanley, Bank of America and JPMorgan are among the book runners, these sources said. Bankers made their pitches to the privately-held company in November, one of the sources said.

"An IPO is just one of many tactics that we could consider," a spokesman for LinkedIn said on Wednesday.

He declined further comment.

Internet companies such as LinkedIn and Zynga, a popular maker of online social games, are considering offerings well ahead of a potential IPO of Facebook, two sources said.

"Some of these companies want to go public because they want to beat Facebook and others out," said one of the sources. "If Facebook went public before Linkedin, do you think anyone would pay that much attention to Linkedin?" You might want to surpass the beast."

Zynga couldn't be reached immediately for comment.

Facebook is not expected to file for a public offering until late 2012, Facebook board member Peter Thiel told Reuters in September.

But that could change. Regulators are scrutinizing a $500 million investment and a commitment to raise at least $1 billion more in Facebook this week by Goldman Sachs and Digital Sky Technologies, one of the sources said.

The SEC is reviewing whether the number of shareholders in Facebook has exceeded a 499 limit in order to remain private. If the SEC decided Facebook has moved past the threshold, it could accelerate Facebook's timeline for an offering, the source said.

Facebook and Goldman have declined to comment.

The people familiar with the process said LinkedIn is hoping to attract investors on its reputation as one of the Web's fastest growing social network sites.

The site claims more than 85 million members.

The filing of LinkedIn's S-1 registration statement with the U.S. Securities and Exchange Commission, which contains the basic financial information of an issuer, could take months, said one of the sources.

"There are lots of things that are worked on that they could put on hold; they miss numbers; they want to grow a little more," another of the sources said.

Linkedin, which does not disclose financial results, makes money from advertising and premium services. The valuation of a Linkedin IPO was not given by the sources.

Sales of its stock on online secondary market exchange SharesPost gives LinkedIn an implied valuation of around $2.2 billion.

In an interview with Reuters in September, Chief Executive Jeff Weiner said the company has had discussions with bankers, but wouldn't "characterize it as being specific about discussing IPOs." He said that such conversations have occurred since he joined the company as interim president in early 2009.

LinkedIn's investors include Sequoia Capital -- the venture capital firm that has backed Yahoo, Google, Apple Cisco Systems and Oracle -- Greylock Partners, Bessemer Venture Partners and Goldman Sachs.



Source: Reuters