Boston Financial News | Boston Finance » Featured

Boston Financial News – Making it work in a tough Economy.

Boston Money — Tue, 20 Jul 2010 12:08:06 +0000

What companies do in a tough economy.

NEW YORK – A burrito company known for super-sized stuffed tortillas goes small. A chocolatier turns to cheaper pick-me-ups rather than expensive indulgences. A furniture retailer expands in the midst of the housing market bust.

Three businesses with three different stories, yet one unmistakable conclusion. For all the hand-wringing about the economy, plenty of companies are getting it right. They’re doing it the same way businesses have survived bad economies for decades: through innovation, cutting costs
and a little luck.

“When you see big national companies struggling, many times I wonder how we will make it,” says John Pepper, who founded the Boston-based burrito chain Boloco 13 years ago. “We are constantly blocking and tackling. We have to be.”

What follows are three good-news stories in a bad-news economy.

Trouble for Boloco’s burrito business showed up two years ago in the form of brown paper bags, the kind that workers in Boston’s financial district were using to tote their lunches in from home. As that was happening, two national burrito chains, Chipotle and Qdoba, expanded in New England, where Boloco has 16 stores.

It didn’t take long before the crowds thinned at Boloco. The worst part was that business dropped in the first and last 15 minutes of the two-hour lunchtime crush. The result: sales fell about 20 percent in its city locations and 10 percent across the company.

“The shoulders of the business fell off a lot,” Pepper says. “People were ordering the same, but there were less people.”

Pepper knew that offering cheaper and smaller items during a recession can be a bad idea in the food business. Slowing sales can get slower if too many people trade down. But he still thought there was an opportunity to grab people who didn’t want a huge burrito for lunch or might want to try some of his food without committing to a larger size.

The “mini” line includes burritos, shakes, smoothies and bowls, which has all the stuff that goes in a burrito except the tortilla. The 8-ounce mini burrito goes for $3.95, compared with the $6.25 for the 20-ounce original and $5.35 for a 14-ounce small. A mini shake sells for $2.95, while the original goes for $4.50.

Not only did people come back, now they visit more often. They don’t just buy a mini burrito, but pair minis together, or better yet, they buy an original burrito and then tag on a mini shake.

The value of the average transaction is up about 8 percent, and overall sales and profits are about 13 percent higher than a year ago.

“What we did was controversial because we are in the ‘super-size me’ business, but it worked,” Pepper says.

Lake Champlain Chocolates owner Jim Lampman was also watching his thriving business slow as the recession took hold two years ago.

The Vermont-based company’s annual sales fell by about 8 percent. Many of the 3,000 stores that carry its chocolates began ordering less and some stores couldn’t pay their bills.

Lampman, who founded the company in 1983, eliminated higher priced items and priced candy in ways that would attract buyers, like under $20, $15, $10 and $5.

A chocolate lollipop that once sold for as much as $6 was knocked down to $3.50 or so. Each one, from hearts to pumpkins, is hand-painted, so he scaled back on the design to save labor costs. He kept his seasonal packaging the same last year, saving $100,000. He depleted the inventories that he had.

Lampman also recognized the value of keeping his customers. He shipped products even when a store didn’t spend the required minimum of $250. He forgave some outstanding bills.

“A downturn like this forced us to be more focused on our operations and how we handle products,” Lampman says. “The result was we got all the business back we lost, and now are having one of our best years ever.”

At Unlimited Furniture Group Inc., owner Lenny Kharitonov thinks this is the right time to build his New York-based retail and distribution company into a national chain.

In the last two years, he expanded to seven stores from two and entered new markets in Chicago, Atlanta, Orlando, Boston and Washington. He took advantage of a glut of commercial real estate to negotiate flexible and affordable leases for new stores.

Kharitonov also uses the drop in newspaper advertising to his advantage by getting cheaper rates. Finding talented workers is easier and less expensive, too, because unemployment is so high.

It’s a risky strategy during the housing slump. The furniture business suffers when people don’t move, which means they don’t need new things for their homes. Plenty of his competitors have closed stores or gone out of business.

Kharitonov is making money, but not a lot.

“If we can be successful in a bad economy, then we will be in good shape in a stronger economy,” Kharitonov says.

He’s got a point. The economy will eventually lift from its funk. When it does, these companies should be well on their way.
___

Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

Boston Celtics Finance – Fork over Green for Playoff Security?

Boston Money — Sun, 18 Jul 2010 12:51:09 +0000

C’s loss cost Boston serious green

By Edward Mason | Friday, July 16, 2010 | http://www.bostonherald.com

Photo by Kelvin Ma

A victory celebration that never happened cost the cash-strapped city nearly $450,000 in police overtime as an army of cops hit the streets to control expected crowds of Boston Celtics [team stats] fans during the NBA Finals.

The Celts failed in their bid to win an 18th title, but a City Hall watchdog says the team should foot their fair share of the police OT bill just the same.

“The economy is down, but with the playoffs, money is coming in for the Celtics,” said Matthew Cahill, executive director of the Boston Finance Commission. “Taxpayers shouldn’t shoulder the complete burden of these things. It would only be just to share the burden of the police overtime.”

But it’s unlikely the Menino administration will go after the Green for the green, seeing it instead as a responsibility for the Police Department’s ranks of blue.

“The Boston Police Department develops safety and security plans, and Boston police will consider all revenue sources (to cover the costs),” said Dot Joyce, spokeswoman for Mayor Thomas M. Menino.

BPD spokesman Eddy Chrispin pointed out that the city, not the sports teams, traditionally pays for overtime following playoff games during title runs.

Cracking down on rowdy rooters outside the TD Garden and the Fenway bars on June 15 and 17 – Games 6 and 7 of the NBA Finals – cost $441,363, according to the Boston Police Department.

Cahill noted there is a history of partnership between the city and its teams to pay for police. The Celtics and local businesses helped pay for cops at championship parades in the past, most notably kicking in $350,000 – half of all noncop costs – when the Green Team hoisted its 17th banner in 2008.

Cahill, the city’s finance watchdog, said there’s nothing wrong with asking.

“It would be even better if the Celtics offered,” Cahill said. “They benefit financially from the playoffs.”

Calls and e-mails to the Celtics were not returned.

The nearly $450,000 paid for a dramatic show of force for the final two games of the 2010 NBA Finals, as Hub police brass sought to tamp down on shenanigans and mayhem that marred earlier sports celebrations.

In all, 3,159 officers over two days were used to keep a lid on violence in North Station and the Fenway. Police shut access to streets and barred patrons from entering taverns after the third quarter.

Article URL: http://www.bostonherald.com/news/regional/view.bg?articleid=1268232

Danny Ainge: Celtics to sign C Jermaine O’Neal
/sports/basketball/celtics/view.bg?articleid=1266720

Green machine
/track/inside_track/view.bg?articleid=1264223

Bradley needs ankle surgery; will miss summer league
/sports/basketball/celtics/view.bg?articleid=1264037

Boston Finance – Venture Capital Makes a Comeback

Boston Money — Sun, 18 Jul 2010 12:43:53 +0000

Boston Business Journal – July 17, 2010
/boston/stories/2010/07/12/daily33.html

Saturday, July 17, 2010, 12:01am EDT

Article Courtesy of: Boston Business Journal

VC showing signs of recovery

Boston Business Journal – by Galen Moore

Industry tracker Dow Jones Venturesource hailed a return to pre-recession levels in venture capital investing in the second quarter of 2010, but when combined with a dismal Q1, the venture industry remains on track for a $20 billion to $25 billion year in 2010.

VCs invested $7.7 billion over 744 deals in Q2, a 26-percent increase over the dollars invested, and 13 percent above the deals done in the same period in 2009.

Massachusetts enjoyed its share of the upswing, with $792.2 million invested over 81 deals – a 19 percent increase in activity, and a 56-percent increase in volume, over the year-ago period, when investors put $508.2 million to work over 68 deals.

However, New York was a fast follower, with $412.2 million invested in 63 deals. California remained the leader by far, with $3.96 billion invested over 296 deals.

Nationally, average deal size broke the $10 million mark for the first time since before the fall, 2008 financial collapse, reaching $10.4 million on the strength of outsize deals in the energy sector, where the average deal sizze shot to $43.8 million, compared to $22.6 million in Q2, 2009.

The New England region’s largest energy deal on the quarter was Westborough-based lithium ion battery maker Boston-Power Inc., which took $62 million – up from $60 million initially reported – from existing investors Foundation Asset Management, Oak Investment Partners, Venrock and Gabriel Venture Partners.

However, the region’s biggest deal of the quarter closed in the IT sector. In April, Summit Partners invested $96.5 million Casa Systems Inc., an Andover-based company that makes network equipment for delivering video over cable.

Financial Penalties for Illegal Downloads: $2,250 per Tune?

Boston Money — Sun, 11 Jul 2010 13:56:06 +0000

Is $2,250 Per Song the New Standard for Online Copyright Infringement?

Article Courtesy of: PC Magazine

By David Murphy

Fancy a $675,000 penalty for illegally downloading 30 songs off the Internet? That was the kind of music Boston University graduate student Joel Tenenbaum was ready to face following a July 2009 verdict that found him liable for sharing 30 copyright-protected songs on the popular Kazaa P2P network.

The damage–$22,500 per song–has since been lowered by U.S. District Judge Nancy Gertner, who cut out roughly 90 percent of the original penalty to a more “manageable” $67,500, or $2,250 per pirated track. We say that as we do, for the move still puts Tenenbaum in an untenable financial position.

“A $67,500 pricetag for 30 songs is still a bill Joel cannot afford,” wrote Debbie Rosenbaum on the site Joel Fights Back. “Even Judge Gertner added, ‘Significantly, this amount is more than I might have awarded in my independent judgment.’”

The Recording Industry Association of America, plaintiffs in the case, remains less than thrilled by the decision. According to a statement released by the RIAA, the group plans to contest the decision on the grounds that it invalidates the carefully construed arguments–reached by a jury–as to the reparations owed.

“The judge appropriately recognized the egregious conduct of the defendant, including lying to the court about his behavior, but then erroneously dismisses the profound economic and artistic harm caused when hundreds of songs are illegally distributed for free to millions of strangers on file-sharing networks,” the organization said.

Interestingly, Gertner’s reduction in fees exactly matches a similar reduction performed by Michael Davis, chief judge for the U.S. district court for the District of Minnestora, in the not-quite-so-different case of Jammie Thomas-Rasset versus the RIAA. Thomas-Rasset, found liable for infringing 24 different copyrights for sharing music on Kazaa, was facing a $1.92 million penalty herself.

Finding the penalty to be too far into, “the realm of gross injustice,” said Davis, the judge instead reduced the total damages to $54,000. That’s $2,250 per song as well, or three times the minimum amount provided for by U.S. copyright law.

That doesn’t mean that the RIAA has accepted the ruling, however. In fact, the group elected to pursue its rights to a third trial against Thomas-Rasset and Davis, in response, ordered both parties to figure it all out via third-party arbitration. That didn’t quite work, and the third case against Thomas-Rasset will kick off on October 4 of this year.

Though it might appear that judges are looking to set a payment precedent in cases of P2P-based copyright infringement of music, the RIAA has made it clear that it’s equally willing to go to the mat to preserve what it feels are fair and adequate restitutions for its member labels.

That said, these two major court cases are, indeed, the only ones that have actually gone to trial based on the RIAA’s lawsuit threats–most accused settle out of court to an amount far less than the $2,250-per-song “standard” that’s emerging.

Finance News – Poof go the Big Brands

Boston Money — Fri, 09 Jul 2010 17:20:59 +0000

10 Brands That May Disappear in 2011

by Douglas A. McIntyre

provided by

24/7 Wall St. has created a new list of brands that may disappear, which includes Readers Digest, Kia Motors, Dollar Thrifty (NYSE: DTG – News), Zale (NYSE: ZLC – News), Blockbuster (BLOKA.PK – News), T-Mobile, BP Plc (NYSE: BP – News), RadioShack (NYSE: RSH – News), Merrill Lynch and Moody’s (NYSE: MCO – News).

24/7 Wall St. regularly compiles a report of brands that are likely to disappear in the near-term. Last April, and again in December, we published our findings. Usually, it would take a full year before such a list could be compiled again. However, the current economic climate has accelerated this process and a majority of the brands on the first two lists are either gone, have been acquired, or have filed for bankruptcy.

With a number of the brands on the December list either gone or on a short-term path to extinction, 24/7 Wall St. has put together the latest version of the Ten Brands That Will Disappear. To qualify, we expect that brand to be gone by the end of 2011, or for its parent to be sold or go into Chapter 11.

Reader’s Digest was once the most widely read magazine in the world. According to the company, it still may be when its overseas editions are taken into account.

Last August, the company took its U.S. operations into Chapter 11 to decrease debt. It emerged from bankruptcy in February with $525 million in exit financing. The company cut the number of issues it publishes a year from 12 to 10 last year. It also cut its circulation guarantee for advertisers to 5.5 million copies from 8 million. It would have been unthinkable just a few years ago that a magazine as old and famous as Reader’s Digest would be shuttered. However, Reader’s Digest as it is known in the U.S. will be gone.

Blockbuster was the national leader in the video rental business for nearly two decades. Now it is contemplating Chapter 11 to eliminate debt. The company lost $65 million last quarter. Its revenue continues to fall rapidly as firms such as Redbox and NetFlix (Nasdaq: NFLX – News) siphon off its revenue. Blockbuster has more than 6,000 stores, so it is hard to imagine that the company could disappear. But, there is some precedent, even if it is on a smaller scale. Blockbuster rival Movie Gallery said in February that it would close all of its 2,400 U.S. stores. Blockbuster’s model of renting movies through physical locations has been destroyed by cable and satellite video on demand, DVDs via mail and dispensing machines. Blockbuster may still be around as a company that has movie kiosks and a small mail and Internet-delivered content business. But its brick and-mortar business is dead.

Dollar Thrifty Automotive Group, the car rental company, is for sale. Hertz (NYSE: HTZ – News) is a potential buyer, as is Avis Budget (NYSE: CAR – News). Each of the larger car rental firms would use the Dollar Thrifty business to expand their market share. That does not mean that they would keep the brand. The current company is not much of a business. It made only $27 million last quarter on revenue of $348 million. It has more than $1.5 billion in “debt and other obligations.” The number of vehicles that Dollar Thrifty operates at any one time is only 95,000 compared to 420,000 for Hertz. The firm’s customer base and some of its locations may be valuable, but Dollar Thrifty can’t compete with Avis and Hertz. A decade ago, the car rental industry was able to support six independent brands. A significant drop in business and leisure travel and sharp competition among the companies has already caused the creation of Avis Budget. Dollar Thrifty will be the next casualty of the industry’s consolidation.

More from Yahoo! Finance:

• Annuities Draw New Look at Time of Uncertainty

• How the Expiring Bush Tax Cuts Affect You

• Let’s Work Out the Massive Deficit the Right Way

Visit the Banking & Budgeting Center

T-Mobile, the U.S. wireless provider, is owned by telecom giant Deutsche Telekom (DTEGY.PK – News). It is the No.4 cellular company in an American market that only supports two really successful firms — AT&T Wireless and Verizon Wireless. Even the third-largest company in the market — Sprint-Nextel (NYSE: S – News) — has 50 million customers. T-Mobile had 34 million customers at the end of last year. T-Mobile only had a profit of $306 million in 2009. That was down from $483 million in 2008. T-Mobile not only faces three larger competitors, it also has to begin to offer 4G service to compete with Sprint’s new WiMax service and LTE-based products from AT&T (NYSE: T – News) and Verizon (NYSE: VZ – News). T-Mobile may seek a partner to offer a 4G network, but there are no super-fast broadband networks likely to be finished before its three rivals offer the service. As it now stands, T-Mobile has no future in the U.S. A merger with Sprint-Nextel has been mentioned several times. The combined company would have a customer base about the same size as AT&T or Verizon. And the transaction would probably make Deutsche Telekom a large owner of the combined operation. Another alternative would be a merger with Virgin Mobile. Maybe Deutsche Telekom will just change the firm’s name.

Moody’s Corp. may have the name with the largest negative brand equity in the U.S. Scandals about the company’s rating of mortgage-backed securities and allegations that the firm compromised it ratings process to get business have ruined the company’s image. Moody’s is more than 100 years old, but the reputation it built over those years is irretrievably lost. There is a chance Moody’s could be ruined by civil actions, four of which are pending, and by charges brought by the U.S. government. Overseas authorities may bring a number of actions against the company as well. Moody’s activities are almost certainly to be more regulated, which will squeeze margins and hurt sales. Moody’s may end up selling its accounts to a new rating company, which would probably hire many of its employees. Pacific Investment Management Co. and other institutional investors have talked about taking on some if not all the roles that the current rating firms play. Research houses like Alliance Bernstein (NYSE: AB – News) could also take on some of those rolls. Part of Moody’s operation may stay alive, but there is not much left to salvage in the brand.

BP: The case against the BP brand is not so much that the company will enter bankruptcy. It is that BP may end up breaking into pieces for its own sake. This may be to put the liabilities for the Deepwater Horizon spill into a company that also holds escrow capital to cover the huge costs of clean-up and suits. BP may also want to separate its successful refining operations from its exploration business, or recreate an American- based company similar to BP America, which existed for two decades. A restructuring of BP would also allow the firm to take a badly crippled brand and give the oil operation a new name — much as it did when it changed its name from British Petroleum. The second time may be the charm.

RadioShack is one of the oldest retailers in the U.S. It was founded in 1921 and in the early 1960s was purchased by Tandy Corp. The Tandy name was used for some of Radio Shack’s retail stores. RadioShack is currently a takeover target. There have been rumors that the company may be taken private via a leveraged buyout or purchased by Best Buy (NYSE: BBY – News), probably for its locations. Best Buy would certainly not keep the RadioShack brand because it is considered downscale and does not have the reputation for quality products and service that Best Buy enjoys. RadioShack has already begun to rebrand itself as “The Shack,” an indication that it knows the older brand is a burden.

Zale Corp. was founded in 1924 by the Zale brothers. It was one of the earliest retailers to offer the ability to buy items on credit. By 1980, Zale had revenue of over $1 billion. In 1992, Zale filed for bankruptcy and by the end of that decade, its revenue was $1.3 billion — about the same as it is today. Zale has been at death’s door for some time. Its market value is down to $48 million. The company is trying to turn itself around, but most experts are not convinced. The company recently made the Forbes list for firms with extreme financial risk. In the last quarter, the retailer lost $12 million on revenue of $360 million. Zale is also in a very crowded market that includes retailers as large as Wal-Mart (NYSE: WMT – News). Golden Gate Capital recently put money into Zale to buy it time. New money may defer the point at which Zale goes under, but it won’t prevent it.

Merrill Lynch may have been acquired, but that will not keep it safe. In fact, quite the opposite is true. Banks and other large financial services firms have a habit of buying large retail brokerage houses and then changing their names. Shearson is gone. So is EF Hutton and Prudential. In most cases the parent company wants to put their own names on the door. That is very likely to happen to Merrill Lynch, which was at one point the largest full-service broker in the U.S. Merrill is now owned by Bank of America Corp. (NYSE: BAC – News), and the buyout spawned a number of scandals that kept Merrill’s name in the paper for weeks and did a great deal to harm its name with customers. Bank of America will follow a time honored tradition, and Merrill Lynch will become BofA Investment Management.

Kia Motors Corp. is one of the two car brands of Hyundai of South Korea. It has always been a marginal brand. Its stable mate, Hyundai USA, has a reputation for high quality cars like the Sonata and Genesis. Kia sells “low rent” cars and SUV nameplates like the Sorento and Rio. As GM and Ford (NYSE: F – News) have already discovered, it is expensive to maintain multiple brands and storied car names, including Pontiac, Saturn and Mercury, are disappearing. Most Kia cars sell for $14,000 to $25,000. Hyundai has several cars in the same price range. Hyundai’s Sonata has quickly become one of the best-selling cars in America, and its Genesis flagship model competes with mid-sized BMWs and Mercedes. The parent company will take a page from several other global car companies and dump its weakest brand.

To read more on these brands and others, see the full article at 24/7 Wall St.

Financial Red Flag – Bloomberg Alarmed as Municipal Bond Debt Grows

Boston Money — Thu, 08 Jul 2010 15:48:14 +0000

U.S. Banks Risk ‘Untold Problem’ as Muni Debt Swells

By Dakin Campbell

(Bloomberg) — Citigroup Inc., State Street Corp. and U.S. Bancorp are among U.S. banks whose municipal bond holdings have reached a 25-year high just as state budget deficits swell to $140 billion, the most since the start of the recession.

Commercial lenders added more than $84 billion to their holdings since 2003, according to the Federal Reserve, pushing total investments to $216.2 billion at the end of the first quarter. Bank regulators and ratings companies are ramping up scrutiny of banks most at risk of being forced to raise more capital should debt prices slide.

“There is a huge untold problem here,” said Walter J. Mix III, a former commissioner of the California Department of Financial Institutions who closed 30 banks during the last banking crisis in the 1990s. “The economics lead to the conclusion that there will be downward pressure on these bonds.”

At Cullen/Frost Bankers Inc., the biggest Texas lender, holdings of municipal debt exceeded Tier 1 capital, a key measure of a bank’s ability to absorb losses, by $491 million at the end of the first quarter, data compiled by Bloomberg show. For State Street, based in Boston, the holdings make up 50 percent of Tier 1 capital. U.S. Bancorp, the Minneapolis lender, has a ratio of 28 percent. It’s 11 percent at Citigroup, the data show.

Municipal Bond Yields

Default speculation and a move by investors to the safest securities drove municipal bond yields to a 13-month high relative to U.S. Treasuries in the first half of the year. Now, the Federal Deposit Insurance Corp. has asked analysts to look into the issue, according to spokeswoman Michele Heller.

The 9.5 percent U.S. unemployment rate and slump in property prices have slashed local governments’ ability to pay bills. Billionaire investor Warren Buffett, speaking at a June 2 hearing of the Financial Crisis Inquiry Commission in New York, predicted a “terrible problem” for municipal bonds. Buffett has said a U.S. state facing default may need a federal rescue.

Analysts and investors remain divided about the level of risk. Lenders hold just 8 percent of the $2.8 trillion state and local government debt market, and municipal bonds are only about 2 percent of total bank assets, according to the Fed.

‘Train Wreck’

“The open issue is whether it’s a slowly emerging train wreck,” said Jeff Davis, an analyst at Guggenheim Securities LLC, a unit of Guggenheim Partners LLC, whose executive chairman is former Bear Stearns Cos. Chief Executive Officer Alan D. Schwartz. “It’s hard to paint all general obligation and all revenue bonds with the same brush. The portfolios won’t go to zero.”

Municipal defaults are a slender risk, according to Moody’s Investors Service, which said in a February report that the investment-grade rate during the past four decades was 0.03 percent, compared with 0.97 percent for similar corporate issues. Investors eventually recoup an average of 67 cents on the dollar for defaulted municipal bonds.

While the historical default-rate risk for municipal debt is below corporate obligations, sudden declines in prices have already created losses at some banks.

Citigroup had an unrealized loss of $1.8 billion in the third quarter of 2008, when the municipal market sank 3.8 percent, the biggest quarterly decline since 1994, company filings and Bank of America Merrill Indexes show. The loss was deducted from the firm’s equity.

Citigroup

“Citi’s exposure to the municipal market is of the highest quality,” Danielle Romero-Apsilos, a spokeswoman for the New York-based firm, said in a statement. “We conduct rigorous stress tests under a variety of scenarios and are comfortable with our position.”

Citigroup had the largest municipal holdings among the biggest banks as of March 31, with $13.4 billion of state and local government bonds, according to FDIC call reports. That’s down from $13.8 billion at the end of last year. Bank of America Corp. held $8.5 billion, Wells Fargo & Co. owned $7.6 billion and JPMorgan Chase & Co. held $4.5 billion. Each accounted for less than 8 percent of Tier 1 capital, according to the FDIC.

Bank of America, based in Charlotte, North Carolina, has made “significant progress” boosting capital and reducing risk-weighted assets, spokesman Jerry Dubrowski said. The lender trimmed its municipal investments by more than $800 million in the first quarter. JPMorgan spokeswoman Jennifer Zuccarelli didn’t return a call for comment.

Wells Fargo

Wells Fargo, based in San Francisco, boosted its municipal holdings by more than $2 billion in the first quarter, data compiled by Bloomberg show. The investments are in municipalities “we know very well,” Chief Financial Officer Howard Atkins said on May 13.

State Street, the second-largest independent custody bank, owned $6.2 billion of state and local government debt at the end of March, the data show. State Street is “very comfortable” with its portfolio and has had no material credit issues, spokeswoman Carolyn Cichon said. At Minneapolis-based U.S. Bancorp, which owned $6.6 billion of municipal bonds, spokeswoman Jennifer Wendt also declined comment.

Cullen/Frost, which says it’s the only one of the 10 biggest Texas banks to survive the 1980s savings-and-loan crisis, is “extremely comfortable” with the municipal investments, CFO Phillip Green said in a July 1 interview.

$1 Billion in Bonds

The 142-year-old lender, based in San Antonio, bought $1 billion of municipal bonds in the 12 months through February, Green said that month. Most were issued by Texas school districts and insured by the state’s Permanent School Fund guarantee program, he said in last week’s interview.

Municipal debt gained 2 percent in the second quarter underperforming Treasuries by 2.7 percentage points, according to Bank of America Merrill indexes. In 2009, state and local government debt rose 14.5 percent.

U.S. states are likely to face $140 billion in cumulative budget gaps in the coming year, according to the Center on Budget and Policy Priorities. Last year, 187 tax-exempt issuers defaulted on $6.4 billion of securities, the most since 1992, according to data from Distressed Debt Securities in Miami Lakes, Florida.

“It’s a market where it’s clear that the underlying fundamentals are lousy,” said Michael Aronstein, chief investment strategist at Oscar Gruss & Son Inc., a New York- based brokerage. “People can say fundamentals don’t matter but I’ve been doing this for 32 years. They do.”

–With assistance from Dunstan McNichol in Trenton, New Jersey and William Selway in Washington, D.C. Editors: Alec McCabe, David Scheer.

To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

To contact the editor responsible for this story: Alec McCabe at amccabe@bloomberg.net.

Boston’s Red Scare: Russian Spies Donald Howard Heathfield & Tracey Lee Ann Foley Nabbed in the Peoples Republic of Cambridge

Boston Money — Wed, 30 Jun 2010 00:30:54 +0000

The Russians next door: A ‘sexy’ spy to ‘great tenants’?

‘Such a nice couple’

AFP – Getty Images used spies next door

This drawing dated June 28, 2010 shows five of the 10 arrested Russian spy suspects in a New York courtroom.

It’s a tabloid editor’s dream come true: Ten people are accused of being undercover Russian spies, and one of them is even photogenic enough to deserve her own slide-show (see The New York Post’s tribute to what they are calling“Sexy Russian Spy Anna Chapman”here).But for the neighbors of the ten people arrested throughout the Northeast, it was more of a nightmare. Who were these people who they had come to trust as a professor, a newspaper columnist, and an architect, among other well-respected professions?Video: FBI arrests 10 in alleged Russian spy ring“They’re such a nice couple,” Susan Coke, a real estate agent who sold a home in Montclair, N.J. to two of the suspects — who called themselves Richard and Cynthia Murphy — told The New Jersey Star-Ledger. “I just hope the FBI got it wrong.”
Scroll down to learn more about the suspects. You can read the the court filing about the alleged spy program here, and the Department of Justice’s court complaint against two of the suspects, Mikhael Semenko and Anna Chapman, here.

Information compiled by msnbc.com’s Elizabeth Chuck and Ryan McCartney.
Anna Chapman, New York, N.Y.:Chapman, 28, said she was the founder of an online real estate company worth $2 million. She said she had a master in economics, was divorced, and lived in Manhattan’s Financial District, The New York Post reported. According to the New York Daily News, Chapman is the one who figured out her alleged spy network was being monitored on Saturday, prompting the FBI to make the arrests Monday.Sources: New York Daily News, New York Post
Richard and Cynthia Murphy, Montclair, N.J.:Richard was an architect, a neighbor told The New Jersey Star-Ledger, and Cynthia had just gotten an MBA. Richard said he was from Philadelphia; Cynthia said she was from New York. She worked as a vice president at a Manhattan firm, Morea Financial Services, Politico reported. The couple lived with two young daughters, Katie and Emily, in a home on Marquette Road in Montclair that they purchased for $481,000 in the fall of 2008. The two had come to the U.S. in the mid-1990s, first living in an apartment in Hoboken, N.J.Sources: Star-Ledger, New York Daily News, Politico
Juan Lazario and Vicky Palaez, Yonkers, N.Y.Neighbors said they knew Juan to be an economics professor at a college in New Jersey, and Vicky to be a columnist for New York’s Spanish-language newspaper, El Diario La Presna. They lived with two sons, according to the New York Daily News.Source: New York Daily News
Michael Zottoli and Patricia Mills, Arlington, Va.The husband-and-wife pair lived in Seattle before they moved to Arlington, Va. in October 2009. Zottoli, 40, said he was a U.S. citizen who was born in Yonkers, N.Y., and Mills, 31, said she was a Canadian citizen. Records reveal that the two moved around several times between 2002 and 2009.“They were the nicest people,” one former resident manager said of the two, who another neighbor said had a young son and a new baby. “In fact, I wish they had stayed on as tenants. They were really good tenants.”When their Seattle apartment was searched in February 2006, FBI agents reportedly found password-protected computer disks that contained “stenography program employed by the SVR.”Sources: KOMO-TV, Washington Post
Donald Howard Heathfield and Tracey Lee Ann Foley, Cambridge, Mass.The “Boston Conspirators,” as the FBI dubbed them, lived with their two teenage boys in Cambridge’s Harvard Square, according to the Boston Herald. He had received a master’s in public administration from Harvard in 2000 and worked as a consultant for a Cambridge-based consulting firm – a job that allegedly enabled him to contact a former high-ranking U.S. government national security official. The two were arrested at their Trowbridge Street apartment.“I’m absolutely floored,” Paul Hesselschwerd, president of Global Partners Inc. where Heathfield worked since 2000, told The Boston Globe. “He’s a good person. He’s lived in the United States for a long time. We’re just completely shocked.’’Craig Sandler, a former classmate of Heathfield, told The Boston Globe the alleged Russian spy was friendly and intelligent.“It never crossed my mind that he might be a spy,” Sandler said Tuesday. “But it’s not completely flabbergasting. He seems like a guy who would make a pretty good spy.”Sources: Boston Globe, Boston Herald, Harvard Crimson
Mikhael Semenko, Arlington, Va.Semenko, 28, was a travel specialist at Travel All Russia LLC, according to a spokesman from the company based in Arlington, Va.The alleged spy began working for Travel All Russia in 2009 and was described as a friendly and diligent worker who had a strong command of several languages, including Russian (native), English, Spanish, and Mandarin Chinese, according to a statement released by the company after the arrest. A LinkedIn profile that says Semenko worked at Travel All Russia indicates he was particularly interested in non-profits, think tanks, public policy and educational institutions. Semenko was based in the Washington, D.C., area at the time of his arrest and attended or was attending Seton Hall University, the LinkedIn profile says.According to Britain’s Daily Telegraph, FBI officials apparently met Semenko on Saturday just blocks from the White House, at the intersection of 10^th and H Street. “Could we have met in Beijing in 2004?” the undercover agent asked. “Yes, we might have but I believe it was in Harbin,” Semenko reportedly replied. See below for other code words and phrases the suspects used.Sources: Daily Telegraph, LinkedIn
Code words, phrases suspects used Following are among the phrases used by the alleged agents, their handlers and, deceptively, by U.S. counter-espionage officials in exchanges designed to verify a contact’s identity.”Excuse me, but haven’t we met in California last summer?”"No, I think it was the Hamptons.”"Could we have met in Beijing in 2004?”"Yes, we might have, but I believe it was in Harbin”"Excuse me, did we meet in Bangkok in April last year?.”"I don’t know about April, but I was in Thailand in May of that year.”Source: Reuters

###################################################

Russian spies: High-tech gear, plus old Cold War methods

The accused Russian spies arrested this week used a combination of very advanced methods and equipment as well as old-style spycraft like the ‘dead drop.’

FBI agents outside 35B Trowbridge Road in Cambridge, Mass., a residence owned by Donald Heathfield and Tracey Foley. Heathfield and Foley were arrested Sunday by the FBI on allegations of being Russian spies.
(Richard Stanley/AP)

By Peter Grier, Staff writer
posted June 29, 2010 at 7:44 pm EDT

Washington —The accused Russian spies arrested by the US on Monday used a wide range of espionage techniques. Some were high tech, such as steganography – communication via encrypted text embedded in web site photos. But many were Cold War-era golden oldies, such as brush-passes, in which agents hand off identical bags in crowded places; radiograms, which involve burst transmissions over shortwave transmitters; and that old favorite, the dead drop.

Why is it called a “dead” drop? Because it involves one person dropping off something at a pre-arranged location, and a second person picking it up after the first has left. If the two meet face-to-face it’s called a live drop.

Anyway, traditional methods were a hallmark of the KGB during the years of the Soviet Union. That appears to have persisted with the SVR, Russia’s intelligence service. Here are some highlights of that long history of tradecraft, as recounted by FBI historians.

IN PICTURES: Top 10 notorious spies

THE HOLLOW NICKEL. In 1953 the FBI obtained a curious artifact – a hollow nickel that contained a microphotograph of ten columns of typewritten numbers. A newsboy had received the nickel in change while collecting from a customer.

The hollow nickel had been made from two coins with a tiny hole drilled through the “R” in the word “Trust.” For four years, US intelligence tried to decipher the numbers, and solve the mystery of the nickel, to no avail.

Finally, in 1957, a key appeared in the person of Reino Hayhanen, a Soviet spy who defected to the US rather than return to the USSR. The KGB had supplied Hayhanen with a hollow Finnish coin for dead drops that was marked by the same tiny hole as the nickel. With this hint the FBI finally decrypted the message, which turned out to be a welcome-to-the-US letter for Hayhanen from his Moscow superiors.

Hayhanen eventually led agents to one of his spy masters in the US, Col. Rudolf Abel. Convicted of espionage, Col. Abel was swapped in 1962 for captured US U-2 pilot Gary Powers.

WALKIE-TALKIES AND FAKE BRICKS. In 1970 a Grumman aircraft engineer who lived in the New York area struck up a friendship with a Russian who introduced himself as Sergey Petrov. Petrov claimed to be a translator of scientific documents at the UN.

Petrov was quite interested in the engineer’s work on the design of the new F-14 Navy fighter. He asked for any documents related to the plane – and said he’d pay the engineer a stipend if things went well.

The engineer went to the FBI. Over the next few months, he and Petrov met at Long Island restaurants for document exchanges. The Soviet spy gave his new friend a special camera, so he could bring pictures instead of actual paper. Eventually he outlined a plan in which the engineer would place microphotos in fake bricks made of plaster of Paris. Then the engineer would contact Petrov on a walkie talkie and tell him when he had dropped the brick at a location near the Tappan Zee Bridge, north of the city. This would eliminate the need for dangerous face-to-face meetings.

The FBI arrested Petrov shortly thereafter. He was indicted on espionage charges in July, 1972. In August of that year, the White House told the courts to drop the charges. Petrov was freed, and he returned to the USSR.

“It was decided by top US officials that this dismissal would best serve the national and foreign policy interests of the United States,” concludes an FBI summary of this case.

RAMON’S HOMEMADE TRADECRAFT. Robert Hanssen was a veteran FBI counterintelligence agent who spied for the Soviet Union, and later Russia, from 1979 to 2001. His acts did dreadful damage to US security, and caused the death of a number of US intelligence assets inside the USSR.

One of the reasons he was able to carry out 22 years of such high-level espionage was that he was careful to conceal his identity and place of work from his Soviet handlers. That way he could not be turned in by any US mole within the KGB.

The Soviets knew him by the code name “Ramon Garcia”.

Hanssen began his career as a turncoat by writing the KGB a letter. He subsequently refused all Soviet offers to meet in a third country, and all Soviet tradecraft. He was an FBI counterintelligence agent, after all, and figured he would survive best by designing his own routines.

Hanssen never showed any outward signs that he was receiving large sums of money, as he knew that might raise FBI suspicions. He set his own dead drop locations, which included a footbridge near Vienna, Virginia, a wooden utility pole near a Vienna bus stop, and the top of a “Foxstone Park” sign in the same area.

An FBI hunt for a suspected internal leaker finally discovered Hanssen after years of pursuing false leads. As then-FBI director Louis Freeh pointed out when the arrest was announced on February 20, 2001, Hanssen’s homemade tradecraft had been so effective that American counterintelligence learned his real name before his Russian spymasters did.

“They are learning of it only now,” said Director Freeh that day.

Hanssen, aka “Ramon,” is now serving a life sentence at the Supermax federal penitentiary in Florence, Colorado.

IN PICTURES: Top 10 notorious spies

Russian spy case ‘right out of a John le Carré novel’

Russian spies: US case could derail Medvedev, boost Putin

########################################

In spy swap, agents were pawns in a practiced game

By CALVIN WOODWARD, Associated Press Writer Calvin Woodward, Associated Press Writer

WASHINGTON – In the rapid-fire spy swap, the United States and Russia worked together as only old enemies could.

Less than two weeks after the FBI broke the spy ring in a counterintelligence operation cultivated for a decade, 10 Russian secret agents caught in the U.S. are back in Russia, four convicted of spying for the West have been pardoned and released by Moscow, and bilateral relations appear on track again.

In describing how the swap unfolded, U.S. officials made clear that even before the arrests, Washington wanted not only to take down a spy network but to move beyond the provocative moment.

So the U.S. made an offer. Russia was ready to deal.

Channels of communication that once coursed with world-shaking superpower crises were reflexively put into play. Moscow and Washington not only have a history of nuclear-tipped tension but also long experience keeping those tensions in check.

Just imagine if the U.S. had been caught up in a spy flare-up with Iran instead.

“This case has been done with electrifying speed,” said John L. Martin, who oversaw Cold War espionage prosecutions and trades during a 27-year career at the Justice Department. “I’ve never seen so much pressure to do it quickly.”

The detailed case against the network of secret Russian agents was brought to the attention of the White House in February, officials said. On June 11, President Barack Obama was briefed on the matter.

Well before FBI agents moved against the operatives late that month, Washington had in mind that they might become bargaining chips to free Russians imprisoned for betraying Moscow and helping the West.

The U.S. arrests were not made to facilitate a swap, said a U.S. official, speaking on condition of anonymity to discuss matters of intelligence. Rather, they were precipitated, at least partly, by the plans of several of the Russians to leave this country this summer. He said that as the time approached to take down the ring, the question officials asked each other was, “Once the arrests take place, what do we do?”

CIA and FBI officials decided that because the sleepers had been observed and tracked by U.S. agents for so long, there was nothing to be gained or learned from them, the official said. Once in custody, the operatives “provided an opportunity for us to get something from the Russians.”

The idea of a swap advanced.

The CIA was assigned to make the initial approach, “testing the waters, and following through,” the official said. About a day after the arrests were made, the CIA contacted the Russian service to say, “We had a proposal to resolve the situation.”

The Russians, despite crying foul in public over the arrests, were ready to privately listen.

That set the stage for three phone calls between CIA Director Leon Panetta and Russia’s spy chief, Mikhail Fradkov. Panetta identified the four prisoners being held in Russia that the U.S. wanted to free, several U.S. officials said.

“I think the U.S. government had its end game lined up when it started this process,” said attorney Peter Krupp, who represented Donald Heathfield, one of the U.S. defendants.

“The Justice Department and perhaps the State Department moved mountains that couldn’t be moved by local officials to orchestrate a meeting between my client in Boston on Saturday of the Fourth of July weekend,” said Krupp.

Daniel Lopez, who represented defendant Mikhail Semenko in the case, says he has handled over 1,000 criminal cases “and I’ve never seen one move this quickly.”

On Monday, four days after becoming Semenko’s court-appointed lawyer in Alexandria, Va., Lopez got a phone call from a federal prosecutor telling him that “it would be in your client’s best interests to agree to come to New York as fast as you can because either he is ‘on the bus’ when it’s leaving or he is not.”

“I said ‘Do we have a plea agreement in this case?’ And he said ‘yes,’” Lopez recalled. But Lopez had no idea yet that his client was to become part of a spy swap.

All 10 defendants were assembled in New York from various jails to enter guilty pleas, complete the swap arrangements and be deported.

Once Russian diplomats talked to defendants or their lawyers to lay out what was going on, it became clear from their side as well that the operatives were merely pawns in a chess game controlled by Washington and Moscow.

Lopez said two Russian diplomats approached him Thursday as his client waited to plead.

“I said, ‘What is going to happen to my client’s belongings?’” and one diplomat replied, “It’s not important.”

“I said, ‘Well, what is important is for my client to know when he is going to leave.’ One of them said, ‘He’s leaving today … as soon as this is over, we’re going to the airport, straight to Europe and from there to Russia.’”

“I was amazed,” said Lopez.

Robert Krakow, attorney for Mikhail Anatonoljevich Vasenkov, said he was surprised to learn Russian officials had met his client without his knowledge. “I was not happy about it,” he said. “But the last thing I want to do is have my needs as a lawyer intrude upon events that are unfolding.”

Prosecutors sent Krakow a plea deal letter close to what was eventually agreed upon. When he first told his client, Vasenkov rejected the idea of going to Russia.

“He said, `No, I’m not going. What am I going to do in Russia?’” the lawyer recalled. Vasenkov, 66, went by the name Juan Lazaro, falsely claimed he was South American and lived in a Yonkers, N.Y., home paid for by Russian intelligence.

“It became clear that the choices were limited,” Krakow went on, and his client agreed to go — promised support for himself and his family in their new life. John Rodriguez, lawyer for Vasenkov’s wife Vicky Pelaez, said the couple had 24 hours to accept the “all-or-nothing” deal to go to Moscow or face years behind bars in the U.S.

Krakow said when he met the Russian representatives, one of them told him his “mission was to get this done.”

“We didn’t like him,” Krakow said. “He was very heavy-handed. It was sort of like the imperative: `This is what we will do.’ His manner was: `This is what’s going to happen.’”

And that is what happened with all 10, leaving only one pawn eluding the chess masters, at least for now. He is Christopher Metsos, on the run after posting bail in Cyprus.

Boston Ugly Financial News – NBA Finals Scores Big $$$’s for Sports Biz

Boston Money — Sat, 19 Jun 2010 15:28:38 +0000

Lakers’ NBA title caps a lucrative month for sports business

It didn’t hurt that the Lakers were up against their rivals, the Celtics, for the NBA title. But it isn’t just ABC and the NBA that are scoring financially. There’s hockey, golf, tennis, and the World Cup, too.

Los Angeles Lakers guard Kobe Bryant reacts as time runs out in Game 7 of the NBA basketball finals, Thursday, June 17, in Los Angeles. The Lakers won 83-79.
(Mark J. Terrill/AP)

By Mark Trumbull, Staff writer
posted June 18, 2010 at 3:59 pm EDT

June is turning into a high-scoring month for the sports business – punctuated by the nail-biter series that made the Los Angeles Lakers NBA champions on Thursday night.

By lasting for seven games, and with a finish that hung in the balance until the final seconds, the basketball series became an ad-revenue winner for host network ABC. It didn’t hurt that the Lakers were up against the Boston Celtics, making it a rematch of one of the most storied rivalries in pro sports.

“It was a terrific back and forth series,” says Andrew Zimbalist, a Smith College economist who follows the sports business. “It’s good for the buzz … of the NBA.” Although a single event like this doesn’t catapult basketball to a new place in American hearts and wallets, the excitement came at a helpful time, when sports are struggling with some of the same economic challenges as other industries, he says.

IN PICTURES: NBA Finals riots in L.A.

A parade through L.A. in coming days will cap the Lakers’ success. But it isn’t just ABC and the National Basketball Association that are scoring financially and with fans.

Consider what else has been going on this month in the world of sport:

• Hockey’s Stanley Cup drew a big audience for NBC as the Chicago Blackhawks bested the Philadelphia Flyers in six games.

• In tennis, Spaniard Rafael Nadal won his fifth French Open in six years, defeating the opponent who had knocked him out of the event a year earlier.

• In golf, the signature test of skill on American soil – the US Open – is now under way at one of the sport’s most famous and scenic venues, a reshaped Pebble Beach course on the California coast. OK, like it or not the plot line also includes the comeback bid by a tarnished Tiger Woods, but there’s some good golf happening (with final rounds on NBC this weekend).

Oh yeah, and a little thing called the World Cup is alive and kicking in South Africa. Early in the tournament, there’s already been plenty of excitement along with too much noise from those weird vuvuzelas. The US team managed a 2-2 tie in a game against Slovenia Friday.

It’s not clear if the soccer matches (or really “football” to most citizens of the planet) will be a financial win for the host nation, but plenty of advertisers are trying to cash in. One example: Sony, which gets exposure when people click for video clips on the FIFA (Fédération Internationale de Football Association) website. The US broadcasting is largely on ESPN, which is in the same corporate family as ABC.

The Lakers-Celtics championship was a showcase for some great basketball, pitting L.A.stars like Kobe Bryant and Pau Gasol against the likes of Paul Pierce and Kevin Garnett. By going a full seven games, the series raked in extra ad revenue for ABC. And although Cleveland has plenty of fans sorry that the Cavaliers and LeBron James didn’t make it to the final, arguably the classic rivalry between teams from the East and West Coasts helps to boost the sport’s profile.

According to preliminary numbers, the final game of the NBA series had the biggest TV viewership of any NBA game since 1998, when Michael Jordan led the Chicago Bulls against the Utah Jazz.

Similarly, the National Hockey League basked in its Stanley Cup final. The NHL said the season was its best ever for business and that the championship drew “the largest audience across all platforms in the history of the sport.”

Of course, sports can involve its share of heartbreak, too. The baseball season is having its usual share of excitement, but the sport’s highest-profile moment in June was not a crowd-pleaser. A self-confessed bad call by umpire Jim Joyce stirred a frenzy of debate over whether Major League Baseball should initiate wider use of instant replays to reduce the potential for game-changing mistakes by the umps.

In this case, Detroit Tigers pitcher Armando Galarraga saw what would have been the 21st “perfect game” in the sport’s history (no batter gets on base for the opposing team) in the sport’s history.

And even basketball – and the Los Angeles area – was sorry at the passing of legendary coach John Wooden, who led UCLA to 10 national championships.

As an economic force, sports are a huge business – generating $213 billion in value in the US alone, by one estimate. Basketball continues to rank lower than football or baseball in popularity among Americans. But behind soccer, it’s one of the most popular sports globally.

IN PICTURES: NBA Finals riots in LA

Lakers parade 2010 after NBA Finals Game 7 with the biggest global audience ever

World Cup stadiums: What’s with all the empty seats?

Boston Finance News – Automotive – Cars to Watch in 2010

Boston Money — Sat, 29 May 2010 14:22:40 +0000

The 15 hot cars to watch in 2010

By Mark Phelan / Detroit Free Press | http://www.bostonherald.com

If the economy recovers, 2010 could be a very good year for Ford Motor Co. and General Motors Co., both of which are poised to launch new high-volume, high-mpg vehicles next year.

Cars like the Chevrolet Cruze and Ford Focus compacts, with the promise of low prices and stingy fuel consumption, seem perfectly suited to the mood of the times. Chrysler hopes to rekindle buyers’ passions with new versions of the Chrysler 300C and Dodge Charger.

Japanese and German automakers have few potential big sellers in the wings. Hyundai looks set to continue its momentum with a couple of stylish new vehicles, however.

Here’s an advance look at some of the most intriguing or significant new models coming over the next year:

CHEVROLET CRUZE: The roomy compact could be a top seller for General Motors. The Cruze looks to be competitive with stalwarts like the Toyota Corolla and Honda Civic, but Chevrolet will need head-turning fuel economy to persuade skeptical buyers to try its new small car. Look for EPA ratings above 40 mpg from Cruzes featuring a turbocharged 1.4-liter engine and six-speed automatic transmission.

CHEVROLET VOLT:

The 500-pound gorilla of next year’s vehicle introductions. Advance publicity for the extended-range electric car has been unprecedented, from the promise of a 230- mpg. EPA rating for city fuel economy to GM’s peekaboo unveiling of the Volt’s styling. If the car delivers on its promise, it could revolutionize the auto industry and change the way people think of GM. Any foul-ups will generate headlines around the world, however. “GM has to get the Volt right,” Merkle said.

CHRYSLER 300 and DODGE CHARGER:

The second generation of the last great cars Chrysler developed. They’ll be under a microscope, because the originals were so good, and because they’re the first new Chryslers since Fiat took control of the company. The cars’ styling recaptures the originality and excitement of the first Chrysler 300, and their rear-drive platforms should delight fans. Fuel economy will almost certainly be a challenge, however.

FORD EXPLORER:

America’s best-selling SUV will be replaced by a more fuel-efficient car-based vehicle, but the name could confuse some buyers. The new crossover wagon may not be rugged enough for owners of traditional SUVs, while crossover shoppers may dismiss it because they assume an Explorer must be a big, heavy SUV. “Ford has to market the new Explorer really well so people know what it is,” Hall said.

ACURA ZDX:

Honda’s luxury brand needs a hit, but its pricey new crossover faces challenges. “It’s a bold move to make an untested vehicle like that a brand’s flagship model,” said Stephanie Brinley of consultant AutoPacific. Prices for the 300-horsepower V6 crossover with the sloping roof and hatchback will start at $50,000, according to Edmunds.com. “It’s going to be a niche vehicle,” said consultant Erich Merkle of Autoconomy.com. “You lose function and form with the low roofline.”

CADILLAC CTS COUPE:

“It enhances the sex appeal of the whole Cadillac lineup,” Brinley said. The CTS sedan elevated Cadillac to the front rank of luxury brands, but the coupe still has to “earn its stripes,” said Jim Hall, managing director of 2953 Analytics. “The BMW 3-series owns the luxury coupe segment,” he said. “It’s tough to establish a new vehicle’s credibility,” he said.

FORD FOCUS:

Ford’s sophisticated global compact car is to finally go on sale in the United States. The new Focus promises to be a quantum leap better than the current model, but it will have to remain affordable to succeed. “Ford has a lot riding on the Focus,” Brinley said. “They need to prove they can be profitable with a small car.”

FORD FIESTA:

The attractive subcompact will test American buyers’ appetite for small cars. “The design is a knockout,” Merkle said. “It’s got a cute factor like the Mini Cooper, but is more affordable. It could appeal to empty-nesters as well as young buyers.”

HONDA ACCORD CROSSTOUR:

Honda’s alternative to Toyota’s sleek Venza crossover wagon attempts to meld an Accord-style nose to a Civic-like tail. The styling could be polarizing, but the car’s position as a roomy flagship to the popular Accord line should generate interest. Edmunds.com predicts prices will start at $31,500.

HYUNDAI SONATA:

Sketches of the new midsize sedan’s slinky profile show a stunning departure from today’s staid Sonata. Combined with Hyundai’s steadily rising quality scores, the Sonata could be a game-changer for the Korean brand. “It trumps the Accord and Camry’s design and could take a piece out of both of them,” Merkle said. Hyundai’s popular Tucson small crossover SUV gets an equally striking redo as the brand repositions itself upward.

JEEP GRAND CHEROKEE:

An all-new version of the vehicle that spawned the luxury-SUV craze and became an icon for its brand. The new Grand Cherokee’s sleek, modern looks and significantly improved interior are major selling points, but it faces a market that’s grown cool to SUVs. Boosting fuel economy significantly while maintaining the off-road capability of a true Jeep will be a challenge.

LEXUS LF-A:

Lexus’ first sports car, the LF-A is intended to prove Toyota’s luxury brand can go toe-to-toe with Porsche and BMW. The LF-A is expected to come in coupe and convertible models and feature a 5.0-liter V10 and sequential manual transmission. The LF-A concept debuted at auto shows in 2007, and the car’s long gestation raises some questions. “It’s been a stop-and-start program,” Brinley said. “Will it still fire the imagination when it finally arrives?”

SCION TC:

Scion has had trouble with the second generation of its cars — the xB grew bigger and less funky, while the xA failed and was replaced by the equally disappointing xD. The replacement for the sporty tC coupe could be an important indicator of whether Toyota has a coherent plan for its youth brand. “The jury’s kind of out on Scion,” Merkle said. “The tC could be a make-or-break vehicle.”

TOYOTA SIENNA:

The well-equipped minivan has become a mainstay of Toyota sales and a family favorite. “It’s a big player in the market and in American life,” Brinley said. “Minivans are still a huge segment of the market. There’s no better vehicle for hauling people.” The Sienna has a loyal following and could boost its sales further if the new model has exceptional fuel economy or unique kid-friendly features.

___

Mark Phelan: phelan@freepress.com

___

Visit the Freep, the World Wide Web site of the Detroit Free Press, at http://www.freep.com.

Article URL: http://www.bostonherald.com/business/automotive/view.bg?articleid=1198391

Boston Financial News – Cape Wind Approval

Boston Money — Sat, 15 May 2010 12:54:11 +0000

Mass. wind farm wins U.S. approval

Massachusetts Gov. Deval Patrick, left, speaks with U.S. Interior Secretary Ken Salazar, right, after Mr. Salazar announced that the Obama administration has approved what would be the nation’s first offshore wind farm, off Cape Cod, during a press conference at the Statehouse, in Boston, Wednesday, April 28, 2010. The decision clears the way for a 130-turbine wind farm in Nantucket Sound off the coast of Massachusetts. (AP Photo/Steven Senne)

By Joseph Weber

The Obama administration on Wednesday approved the country’s first offshore wind farm, in Nantucket Sound off the Cape Cod coast, overriding protests from some environmentalist groups and local residents.

Interior Secretary Ken Salazar said he approved the project on the condition it was scaled back from 170 to 130 wind turbines and that additional environmental and historical studies be completed.

“Cape Wind will be the first U.S. offshore wind farms,” Mr. Salazar said at a press conference in Boston where he was joined by Massachusetts Gov. Deval Patrick, Democrat and a supporter of the project. “It will be the first of many projects up and down the East Coast.”

The Interior Department had vowed to make a decision by the end of April on the hotly contested nine-year-old proposal.

President Obama had not said publicly whether he supports the project, despite his green-energy agenda that includes reducing U.S. dependence of foreign oil.

The project has been divisive in Massachusetts. The late Sen. Edward M. Kennedy, a friend of Mr. Obama whose family compound is in the area, did not support the plan. Critics are concerned about the project harming the natural habitat and historical sites.

Mr. Patrick said construction will begin within a year.

States along the East Coast closely watched Mr. Salazar’s decision with more offshore wind energy projects in the pipeline.