Three reports were unanimous that sales gained, but to different degrees: Market research firm Retail Metrics Inc. said sales rose 1.1% last month, Thomson Reuters tallied a rise of 0.6% and a tally by International Council of Shopping Centers (ICSC) and Goldman Sachs Group Inc. (NYSE: GS) showed a 0.1% increase.

“Let the retail recovery begin,” said Michael Niemira, chief economist at ICSC. “This is the start of a better performance and better fundamentals.”

Retailers such as Target Corp. (NYSE: TGT), Aeropostale (NYSE: ARO) and Kohl’s Corp. (NYSE: KSS) raised their guidance for the current quarter ending October 31. But the encouragement was reserved as it pertains to the fiscal holiday quarter that starts next month for most retailers. Fundamentals key to consumer confidence – particularly unemployment, which rose to 9.8% last month – are still serious concerns.

“While our outlook for the third quarter has improved, we remain cautious in our expectations for fourth quarter results in both of our business segments,” said Gregg Steinhafel, Target’s chairman, president and chief executive officer.

Of course, retailers didn’t have to do much to beat last year’s September, which was relatively poor.

“You want to be careful how much you’re reading into the improved numbers,” Michael McNamara, vice president for research and analysis at SpendingPulse, an information service by MasterCard Advisors that estimates sales for all forms of payment, including cash, checks and credit cards in an interview with The New York Times.

For instance, jewelry sales increased 1.2% last month, McNamara said, “but that is still about 5% lower than we were in September 2007 and about 10% lower than the sector was in September 2006.”

“In some respects the sector has turned the clock back to 2005 sales,” he said.

While the bleeding at retailers may not have stopped, it has likely slowed as leading indicators such as the financial markets and consumer sentiment show improvement. The Standard & Poor’s 500 Index has risen more than 55% since its March lows, while the Reuters/University of Michigan Index of Consumer Sentiment was up to 73.5, its highest level since the start of 2008.

Among the biggest retail gainers on the stock market today (Thursday) from the news were American Eagle Outfitters (NYSE: AEO), which gained 8.88% to close at $18.14 and Abercrombie & Fitch Co. (NYSE: ANF), up 5.51% to close at $34.46.

Source: Will Rise In September Retail Sales Carry into Holidays?

The Tokyo-based company lost $1.1 billion (98.9 billion yen) last year, and it expects to lose another $1.4 billion (120 billion yen) in its fiscal year ending March 31.  That would be Sony’s first back-to-back annual loss since the company went public in 1958.

And despite renewed optimism within its ranks, Sony still faces a plethora of challenges, including a questionable direction, cost-conscious consumers and a strengthening yen.

The onetime bellwether of the electronics industry has seen its market share crumble in almost every category: Nintendo Co. Ltd.’s (OTC ADR: NTDOY) Wii game console has supplanted Sony’s PlayStation brand, Sony has given up its lead in portable media players to Apple Inc.’s (Nasdaq: AAPL) iPod, and Samsung Electronics Co. Ltd. is now the world’s largest seller of televisions.

Hoping to turn the tide, Sony earlier this year underwent a major restructuring with the goal of unifying its hardware, software and entertainment businesses. The idea is to leverage its growing catalog of networked products with the software and services its sells, such as Internet-enabled televisions that enable consumers to watch Sony movies through an online connection.

“Consumers want products that are networked, multi-functional and service-enhanced utilizing open technologies, and user experiences that are rich, shared and, increasingly, green,” said Sony Chief Executive Officer Howard Stringer. “[The restructuring] will now make it possible for all of Sony’s parts to work together to assume a position of worldwide leadership and, together, achieve great things.”

Doubts Cast Shadow Over Efforts

While analysts agree with Sony’s loss estimate for this year, some doubt its restructuring efforts – which included thousands of layoffs and a streamlining of manufacturing in the – will truly pay off.

“They were hit fairly early by the downturn and have moved quicker than some competitors to restructure, but it remains to be seen if those moves will pay off,” Hideyuki Ookoshi, who helps oversee $365 million at Chiba-Gin Asset Management in Tokyo, told Bloomberg News. “The problem with Sony is it doesn’t know what it wants to be: Is it a game company, a consumer-electronics maker, a financial-services provider? There’s no direction.”

Operating income at Sony’s financial services division was propelled more than 57% by a boost in its life insurance revenue in the company’s fiscal first quarter ended June 30. But this non-core business won’t be the catalyst that brings Sony out of the red, according to Makoto Haga, president of Tokyo-based hedge fund Wing Asset Management Co.

“Profit at the financial unit helped Sony narrow a loss, but investors don’t appreciate that,” Haga told Bloomberg. “I can’t see any engine that drives its recovery and the company’s prospects are dim.”

As it stands now, CEO Stringer’s cost-cutting efforts have only gone so far, and investors like Yasuhiko Hirakawa want the British-born executive to prove he can boost Sony’s sales, which are expected to be 6% lower than last year.

“Cost cutting and reshuffling of management may help mend unprofitable businesses but they won’t make Sony competitive against Samsung and other rivals,” said Hirakawa, a fund manager at DIAM Co., which oversees $80 billion in assets including Sony shares. “The brand is still highly regarded but that won’t last forever.”

Premium Without the Value in Tough Times

While all electronics manufacturers have suffered during the worst economic crisis since World War II, premium-branded Sony has been hit especially hard. The economy has brought out the practical side of consumers, who flocked to cheaper television sets from makers like Vizio Inc., which is No. 2 in North America behind Samsung.

It’s the “intensification of price competition” that contributed to Sony’s $1.7 billion operating loss in its electronics segment last year, the company said. Comparable televisions from Samsung are often hundreds of dollars less than a Sony, without a significant sacrifice in tangible quality.

“I don’t think you can say a Samsung TV has a better picture than Sony TV,” Richard Doherty, co-founder of industry researcher Envisioneering Group told the San Diego Union-Tribune. “But (the difference) has narrowed, and that’s one of the problems.”

Indeed, while TVs from Sony may have technically superior features such as 240mhz refresh rates, it usually won’t make a difference to the mass market. The benefit of such a feature is “difficult to discern,” writes CNET, a leading Web site from CBS Interactive Inc.

Televisions are just one area where Sony is struggling with its value proposition. Until recently, Sony faced mounting pressure from video game executives and analysts to cut the price of its $400 PlayStation 3 (PS3) console.

“They have to cut the price, because if they don’t, the attach rates [the ratio of games purchased to a console] are likely to slow. If we are being realistic, we might have to stop supporting Sony,” Bobby Kotick, chief executive officer and president of Activision Blizzard Inc. (Nasdaq: ATVI) said in a June interview with Times Online.

After months of lowering manufacturing costs on PS3, Sony finally dropped the price of the console to $300 in the United States and launched an ad campaign touting “It only does everything,” a reference to PS3’s ability to play games, Blu-ray movies and browse the Internet.

The result was Sony selling more than 1 million PS3s in the first three weeks of September, almost the same amount it sold in the entire second quarter. A similar price drop in Japan led to PS3 outselling Nintendo’s Wii last month, a first since the console was released in Nov. 2006.

Sony’s Walkman, which first revolutionized portable audio 30 years ago, now comes in the form of a touchscreen digital media player, but has failed to put a dent in Apple’s ubiquitous iPod, which also has a touchscreen model. Sony’s 32-gigabyte Walkman sells for $400. But while it gives users some limited Internet options, Apple’s comparable iPod Touch sells for $100 less and has access to thousands of applications – many of them free – in its vaunted App Store.

Without any tangible features to discern it from the competition, it’s no wonder Sony expects to sell just 6.7 million Walkmans this year, while Apple sold 10 million iPods in its third quarter alone.

Currency Crisis

Sony, like its Japanese counterpart Panasonic Corp. (NYSE ADR: PC), is inherently at a disadvantage to Korean competitors like Samsung and LG Electronics Inc. due to the yen’s strengthening position against the won and U.S. dollar. The yen’s gain has enabled the Korean manufacturers to sell its products at a discount of as much as a 10% without taking a hit on margin.

“We don’t have a moment to breathe,” Sony Vice Chairman Ryoji Chubachi said of the strengthening Japanese currency in a Bloomberg interview on Tuesday. “It is a tough environment.”

The yen has gained about 15% versus the Korean won and 14% against the dollar in the 12 months ended Sept. 30, according to Bloomberg data. The dollar is at its weakest levels against the yen since February, trading at as low as 88.86 yen on Tuesday. The yen has been the third-best performer among G-10 members in the past 12 months.

For Sony and other Japanese companies, a rising yen is “like a death warrant as things stand now and if this continues, they will have a very difficult time,” said Chu Moon Sung, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which manages the equivalent of $26 billion in assets. “For Korean companies, it’s a favorable environment and the currency has been the biggest factor for their good performance.”

Source: The Three Roadblocks to Sony’s Turnaround

Investors are worried. The big question – as always – is whether the primary uptrend remains intact.

And the answer is yes.

To understand just what that target should be, let’s take a look at where we are right now.

Just before Wednesday’s sell-off, measures of the supply of stocks moved to new lows, while demand moved to new highs. This means bull-market-trading rules remain in effect. But as the cyclical bull market matures a little, we need to change the target of our buying efforts.

Although it looked like losses would be cut in the early afternoon, a lack of demand resulted in the major U.S. indices settling gently at support near the high end of the August trading range. The Dow Jones Industrial Average lost 0.4%, the Standard & Poor’s 500 Index lost 0.6%, the Nasdaq Composite Index lost 0.8%, and the Russell 2000 lost 0.5%.

All the major sector groups save healthcare finished in the red. The declines were the most severe among industrial conglomerates. The Industrials Select SPDR (NYSE: XLI) lost 1.4% thanks to a 2.5% fall in Textron Inc. (NYSE: TXT). Bank stocks were also weak as Bank of America Corp. (NYSE: BAC) dropped 2.2%. Defensive healthcare and utilities stocks were relatively buoyant with a gain of 0.1% for the Healthcare SPDR (NYSE: XLV) and just a 0.3% loss for the Utilities SPDR (NYSE: XLU).

Homebuilders were under some heavy selling pressure over the past week, likely the consequence of the U.S. Federal Reserve’s decision to slow its purchases of mortgages. By spending $1.45 trillion, the Fed kept the difference between mortgage rates and the yield on U.S. Treasury debt very low.

Now, as these purchases taper off, mortgage rates will creep higher and erode some of the awesome affordability levels that are driving buyers to take advantage of the government’s first-time homebuyer tax credit and stabilize the housing market. As a result, the iShares U.S. Home Construction ETF (NYSE: ITB) lost 2.7% on Friday and dropped 8.3% last week.

The declines of the past week have been in alignment with our expectation of a short-term correction before equities push on to what should be a more meaningful top near the 1,200 level on the S&P 500. A number of technical indicators, including the percentage of stocks over their 10-day moving average as well as breadth and volume measures, had begun to deteriorate after having moved well into overbought territory the prior two weeks.

We aim to run our portfolios for long-term holds during bull markets, so although we warned of weakness ahead we did not expect it to be serious enough to merit exiting positions. Still don’t.

The big question – always – is whether the primary uptrend remains intact. And the answer is yes. Just before Wednesday’s sell-off, measures of the supply of stocks moved to new lows, while demand moved to new highs. This means bull-market-trading rules remain in effect. But as the cyclical bull market matures a little, we need to change the target of our buying efforts.

However dramatic the action of the past few days has been, it is a sign that some normalcy is returning to the equity markets. Moving forward, it is unlikely we will see long strings of uninterrupted up days, super-strong performance in the lowest quality stocks, and high correlations between stocks. In the final push to the stimulus- and recovery-Fed reaction high that we will likely see over the next three months or so, the emphasis may shift to fundamental analysis and quality.

As you can see in the chart above, stock-performance correlations tend to spike during times of economic stress. When investors enter panic mode and analyst estimates become much less accurate, the focus shifts from individual assets to asset classes and broad sectors of the economy. In other words, when all hell breaks loose investors don’t differentiate between great companies and good companies – they throw them all out.

Once this unease subsides and economic volatility wanes, fundamental analysis once again becomes the most important driver of investment performance.  And that’s okay, because there will be plenty of opportunities as investors shift their focus from stocks that were priced for Armageddon to stocks that are poised to benefit from renewed economic expansion.

The foundations for the transition are already being laid: UBS AG (NYSE: UBS) analyst Jeffrey Palma notes that after nearly a year of downward revisions to earnings, analysts are starting to upgrade their forecasts for 2010. Estimate rebounds are largest in the cyclical materials and retail sectors. Breaking it down by region, the most promising opportunities are in commodity-related stocks in the United States, consumer stocks in Europe, and British banks.

We have recommended SPDR Metals & Mining (NYSE: XME) in our Strategic Advantage service as a great vehicle to play this trend, even though it stumbled last week. Another good one is iShares Australia (NYSE: EWA). Check out our newsletter for a much-expanded list of recommendations.

The Week in Review

Monday: The index of leading indicators jumped 0.6% in August after a 0.9% jump in July and a 0.8% jump in June. The indicators’ August performance represented the fifth consecutive monthly increase. Moreover, the 4.7% increase during these five months was the strongest showing since early 1983, which marked the beginning of one of history’s greatest bull markets.

Tuesday: Home prices backed by Fannie Mae or Freddie Mac jumped 0.3% in July. There were also indications that retail sales plummeted in the week following the Labor Day Back-to-School blitz.

Wednesday: The Federal Reserve announced it would leave interest rates unchanged. Stocks initially bounded higher before abruptly shifting direction and screaming lower. The bulls gunned the Dow Industrial Average close to the 10,000 level before things fell apart. At issue wasn’t the Fed’s target policy rate, which affects short-term interest rates. Instead, traders were apparently concerned that Fed chairman Ben Bernanke and his cohorts failed to expand its direct purchases of mortgages and government debt. This will likely result in higher long-term rates.

Credit markets, though, didn’t care, and carried on with their bull market run. Crude oil fell 4.8% to $68.33, its largest percentage loss since July on a surprise increase in inventories.

Thursday: Some momentum was lost in the housing market after weak existing homes sales numbers put an end for four straight months of gains. Sales last month came in at a million seasonality adjusted annual rate of 5.1 million — a 2.7% drop from July. We continue to see an emphasis on foreclosures with distressed sales making up 31% of total sales. The highlight: Supply of homes fell to just 8.5 months of sales, a level that is believed to reflect a balanced market. There are, however, the issues surrounding a “shadow” inventory of homes waiting for foreclosure proceedings to complete or the slightest whiff of a recovery before being listed.

Friday: The G20 wrapped up its meeting in Pittsburgh with a commitment to tighter regulation of the financial system and system to subject each country’s economic policy to a type of peer review to try to avoid the types of global imbalances — China’s export obsession and America’s credit binge — don’t happen in the future. While the latter can only be enforced by a public shaming by other countries and the International Monetary Fund, it lacks an actual penalty. But it’s a good first step.

Consumer sentiment, as measured by the University of Michigan, improved to its highest level since early 2008 after rising by nearly one-third since late last year. According to Haver Analytics, over the last 10 years there has been a 69% correlation between sentiment and growth in consumer spending.
Unfortunately, the good news didn’t extend to durable goods orders in August: There was an unexpected decline that reversed half of July’s 4.8% gain. A drop in orders for transportation equipment was fingered as the main culprit. However, this metric is quite volatility and the overall trend still points towards a rebound in the manufacturing sector.

The Week Ahead

Monday: A quiet calendar with no economic releases.

Tuesday: The latest on nationwide home prices courtesy of the excellent Case-Shiller Home Price Index. Also, we get another update on consumer confidence.

Wednesday: The government makes its final revisions to second-quarter GDP. The last revision made no change to the initial estimate of a 1% decline. In the first quarter, GDP plummeted 6.4%. Traders will be looking for indications that inventories have dropped and demand is increasing ahead of a projected inventory rebuild in the months ahead. We will also get an update on the health of the manufacturing base in the latest ISM – Chicago Business Barometer.

Wednesday will also mark the end of the third quarter.

Thursday: A busy day with an update on auto sales, personal income and spending, the latest ISM Manufacturing Index, and construction spending.

Friday: The September jobs report is expected to show a loss of 170,000 jobs compared to the 216,000 that were lost in August and a 463,000 decline in June. The unemployment rate, currently at 9.7%, will move closer to 10%. Also, we get an update on factory orders.
In summary, the start of the fourth quarter is on the horizon. We expect it to be a plus for investors, though not without growth and geopolitical scares that create S-turns and potholes. Stay positive amid the turbulence as long as corporate credit markets remain strong and the primary trend is up.

Source: Long-Term Stock-Market Uptrend to Continue

This time around, silver has failed to match the gains that gold posted in recent months, spawning a widespread believe that silver is poised for a bull run. Such factors as a decline in supply and a weakening U.S. dollar have buttressed that bullish belief. And so has the fact that China’s government is strongly encouraging that country’s residents to buy the white metal.

With Beijing’s plan to inject $587 billion (4 trillion yuan) into China’s economy, and a growing desire to diversify away from the U.S. dollar as its key reserve currency, the Asian giant could increase its reliance on such precious metals as gold and silver – especially if global inflation takes hold.

China’s central bank “could use gold, silver or even a basket of commodities” to diversify away from the dollar, said Money Morning Contributing Editor Peter Krauth, a recognized expert in metals, mining and energy stocks. “It’s impossible to know how they’d go about it.”

This wouldn’t be the first time that silver played an important economic and transactional role in Mainland China. Nearly 2,500 years ago, the Red Dragon was the first to use silver as money. While China invented paper money in the ninth century, silver made its way back several dynasties later as legal tender until the government again prohibited its ownership in 1935.

Now, 75 years later – in the wake of the worst economic downturn since World War II – China has reversed its stance on silver.

In July, state-run China Central Television (CCTV) began a campaign that pushes the purchase of silver bullion as investment opportunity. Analysts say silver has been undervalued in the last few years, and is a good investment for individual investors, according to CCTV.

“The investment threshold [for silver] is not high, and is more suitable for the general public,” said Want Chunli, GM of Beijing’s Caibai Shopping Mall, the first to offer silver as an investment opportunity. “Silver is much cheaper than gold.”

Silver’s investment potential is best measured by the silver-gold ratio, or the price of gold divided by the price of silver. Over the past five years, the ratio has held fairly steady, requiring 55 ounces of silver to buy an ounce of gold. Earlier this year, as gold increased at a faster rate than sliver, the ratio skyrocketed to 70 to 1. It has since corrected to around 60.

Money Morning’s Krauth says that when this relative price ratio does correct, it tends to overshoot.

“I see it going to 50 at least,” Krauth said. “With gold at $1,000, that means silver could trade to $20 or even higher, which is another 20% from [the current price].”

Silver closed Friday at $16.06, while gold closed at $991.10 – implying a silver-to-gold ratio of 61.71.

Krauth sees China returning to an asset-backed currency and says ownership of silver could help the average citizen, even if its central bank is unable to diversify out of the U.S. dollar fast enough.

The more Chinese citizens who own silver, “the stronger the country will be in the eventuality that the world establishes a new world reserve currency backed by (most likely) precious metal(s).”

China’s middle class is estimated at 300 million – roughly equal to the entire U.S. population. And that consumer group in China is growing. As those incomes continue to rise, so, too, will the demand for silver.

China’s use for silver goes beyond jewelry or as a safeguard against inflation. Thanks to the antibacterial properties of silver ions, the white metal is used for everything from socks to wash machines, to name a few.

Silver Supply is Falling

The world once had 2.2 billion ounces of silver above ground, but that figure has plummeted 86% to the current 300 million ounces, according to Addison Wiggin, a best-selling author and an executive publisher at Agora Financial LLC, which, like Money Morning, is part of the Agora Inc. group of companies.

However, above-ground silver accounts for only 25% of the silver produced today, says Money Morning’s Krauth. The other three-quarters is actually a byproduct of such mined base metals as iron, nickel or lead.

When the financial markets nearly collapsed last fall, base-metals producers weren’t spared. As demand forecasts were cut, they quickly throttled back on production, expansion and exploration.

“More has to come from mine production, which can only grow so fast,” Krauth said. “The fact that base-metals producers have cut back a lot hurts silver production because it’s a byproduct of base-metal mining.”

Once the recovery begins – and it’s already under way in China – supplies will be hard to come by as demand for base metals returns, resulting in higher prices for silver.

Gold’s “Lap Dog”

The price of gold doesn’t necessarily affect the price of silver, but when other economic factors such as the U.S. dollar falter, prices traditionally rise at the same pace. But when the global financial crisis took hold last year, the silver-to-gold ratio shot up to 84.

Much like a “nervous little lapdog,” the price of silver follows gold closely, Krauth says.

Since its mid-July low of $12.46 an ounce, silver has rebounded roughly 30% to current levels. But if gold supplies run short, silver may have even more room to run.

When gold hit its all-time high of $1,033.90 per ounce in March 2008, silver prices soared as high as $20.92. But when gold hit its 18-month high earlier this month, silver stayed in check.

“Silver has lagged the rise in gold prices since 2000,” said Money Morning Contributing Editor Martin Hutchinson, a former investment banker with more than 25 years’ experience in the global financial markets. “If gold really takes off and the big money finds there isn’t enough of it, there should be spillover into silver.”

Famed commodities investor Jim Rogers also noted the lag in silver and gold’s prices.

“I’m looking at all commodities, but some commodity prices are very depressed,” Rogers told China International Business. “Silver is 70% or so below its historical highs, coffee is 70% or so, as is sugar, while gold is only 10% off its all time high.”

Making the Investment

While buying physical silver is an option for investors, the simplest way to get in, Krauth says, is via the iShares Silver Trust (NYSE: SLV) exchange-traded fund (ETF). In the three years since its inception, SLV has accumulated $3.91 billion in assets, and the share price – which is the equivalent to one ounce of silver – is up more than 50% this year.

During last fall’s market crash, SLV’s holdings remained nearly flat, around 220 million silver ounces. Since then, it has grown a further 22% to about 280 million ounces.

“That’s a testament to investor commitment,” Krauth said.

Hutchinson calls SLV “quite a good vehicle” over the big silver miners – such as Coeur d’Alene Mines Corp. (NYSE: CDE).

Coeur d’Alene has a large silver deposit in Bolivia. But Hutchinson characterizes Bolivia as a country that he “wouldn’t touch,” thanks chiefly to the Venezuela-like nationalization of the country’s other commodities, including oil and natural gas.

Source: The No. 1 Way to Profit When Silver Upstages Gold

For its second quarter ended August 29, RIM reported net income of $475.6 million, or 83 cents per share on revenue of $3.53 billion. That compares to a net income of $643.0 million, or $1.12 per share on revenue of $3.42 billion in the same quarter a year ago.

Analysts expected RIMM to earn $1 per share on revenue of $3.62 billion, according to Briefing.com.

In June, RIM held a commanding market share lead over Apple Inc.’s (Nasdaq: AAPL) iPhone – it’s closest competitor in the United States – with a 55% share of the smartphone market versus Apple’s 20%.

Approximately 3.8 million net new BlackBerry subscriber accounts were added in the quarter, bringing the total account base to 32 million, RIM said. AT&T Inc. (NYSE: T), said it activated more than 2.4 million iPhone accounts, but that number is limited to the United States, where AT&T is the exclusive carrier of the smartphone.

Roughly 8.3 million BlackBerry smartphones where shipped in the quarter, versus 5.2 million iPhones in Apple’s last reported quarter, which ended June 27.

RIM shares were trading at $73.55 in after hours trading this evening, down 11.45%.

Source: Research in Motion Shares Nosedive After Missed Sales, Earnings

Ad revenues in the newspaper industry plunged 16.7% last year to $37.8 million r, according to the Newspaper Association of America (NAA). The 2009 take is estimated to fall another 17.3% to $31.6 billion according to Alan Mutter, a Silicon Valley executive who once lead the newsrooms of the Chicago Sun-Times and San Francisco Chronicle and now writes a blog titled “Reflections of a Newsosaur.”

Mutter’s estimate would put ad revenues at their lowest levels since 1965, when the industry took in $4.42 billion, or $30.22 billion when adjusted for inflation, the Columbia Journalism Review (CJR) reported.

While the worst economic downturn since World War II has eviscerated the fortunes of print media companies like The New York Times Co. (NYSE: NYT), The Washington Post Co. (NYSE: WPO) and Gannett Co. Inc. (NYSE: GCI), publishers will see secular decline in revenue even after the financial crisis subsides.

“Think, for instance, the classified ads business of newspapers, which has been walloped by eBay and craigslist (with a final indignity provided by the cyclical collapse of the housing bubble),” the CJR said. “Most of those revenues aren’t coming back. That’s a secular decline.”

The result of this decline means a “new reality” for publishers as they transition from the printed page to digital content. All the major publishers are online and have been for some time.

The New York Times’ Web site began in 1995, when the Internet was just starting to enter consumers’ homes. Ten years later in 2005, The Timestried its hand at a subscription-based model for its Web site, known as TimesSelect, a service that charged readers without subscriptions $50 a year for online access to editorial content.

According to The Times Co., TimesSelect had about 227,000 paying subscribers by August 2007. However, accessing the content for free were an additional 471,200 home delivery readers, as well as another 89,200 college students.

But the estimated 13 million readers who accessed the site that month, according to Nielsen/NetRatings reports, dwarfed those subscriber-users. The following month, the Times Co. gave up on TimesSelect and made the Web site free for all users in September 2007.

Since then, nytimes.com has soared to become the most visited newspaper site in the United States, with roughly 20 million unique visitors per month as of March. But The Times and other publishers are still trying to figure out how to generate revenue and turn a profit, especially now that the recession is cutting into advertisers’ budgets.

“As we continue our transition from a company focused primarily on print to one that is increasingly digital in focus and multiplatform delivery, online advertising revenues are a more important part of our mix,” said The Times Co. President and Chief Executive Officer Janet Robinson. “They made up 21% of our ad revenues in the quarter, up from 18% in the same period a year ago.”

Print and online ad revenue for U.S. newspaper publishers fell 29% in the second quarter from $9.6 billion to $6.82 billion, according to the NAA. Part of this stems from a cyclical decline in spending, while the rest comes from the “new reality” that people aren’t reading as many printed newspapers as they used to.

“This data represents a rearview mirror perspective on what we all know was a terrible stretch of bad road,” said NAA Chief Executive Officer John Sturm.

And the data comes even as online news audiences are growing: The latest data from the NAA shows online newspaper readership was 73.3 million users in the first quarter, a 10.5% increase from the 66.4 million the year before.

A Financial Fork in the Road

Publishers are hoping the decline in online ad spending is cyclical, but some aren’t waiting for the recovery to take advantage of the growing information-hungry audience and what they hope is an inevitable upswing in ad revenue.

News Corp. (Nasdaq: NWS) Chairman and CEO Rupert Murdoch has vowed to charge for all of the online content of his newspapers and television news channels, including The Wall Street Journal, the New York Post and Fox News.

Much of the content on The Journal’s Web site is available only through a paid subscription of $1.99 per week, and is one of the few newspapers to successfully charge for its content, in spite of a backdoor to view articles for free via Google Inc.’s (Nasdaq: GOOG) popular search engine.

“If successful, we’ll be followed by all media,” Murdoch told the Financial Times.

Murdock predicts “significant revenues” from charging for differentiated news online.

But differentiated news isn’t enough for people to pay for it, according to Google CEO Eric Schmidt.

“In general these models have not worked for general public consumption because there are enough free sources that the marginal value of paying is not justified based on the incremental value of quantity,” he said to a group of British broadcasting executives.

Murdoch is hoping The Journal’s online success will carry over to its mobile applications for devices like Research in Motion Ltd.’s (Nasdaq: RIMM) BlackBerry and Apple Inc.’s (Nasdaq: AAPL) iPhone. His company will start charging consumers to read stories via those apps “in one to two months,” he told Reuters last week.

Several news outlets already have either ad-supported mobile news sites or device-specific applications. The Times and The Journal have the No. 2 and No. 5-most downloaded apps in Apple’s App Store for iPhone, respectively. NPR News is the most popular app.

A “Digital Vampire” Becomes a Partner to Some Publishers

Google News, which aggregates stories from the all over the Internet, currently generates ad revenue from news searches and doesn’t share any of it with the news sites – a business model that clearly doesn’t sit well with publishers.

Earlier this summer, Les Hinton, chief executive officer of Dow Jones and publisher of The Journal described Google as a “digital vampire.”

Speaking at the annual PricewaterhouseCoopers LLP Entertainment and Media Outlook event, Hinton accused Google of “sucking the blood” out of the newspaper business, and vowed new developments would level the playing field.

“There is a charitable view of the history of Google,” Hinton said. “[It] didn’t actually begin life in a cave as a digital vampire per se.”

Instead, by offering content free on the Web, the newspaper industry “gave Google’s fangs a great place to bite,” he said. “We will never know what might have happened had newspapers taken a different approach.”

Now, Google is trying a new way to share its take and possibly change the way people read news on the Web with its “Fast Flip” experiment, unveiled last week.

The idea behind Fast Flip is to present newspaper and magazine Web sites like a print publication, and users can quickly “flip” top stories in a selected category or specific topic found via Google’s search.

Google will share revenue with publishers such as The Times. Co. and The Post Co., but specific percentages were not given.

“The publishing industry faces many challenges today, and there is no magic bullet,” said Google News researcher Krishna Bharat in a blog posting. “However, we believe that encouraging readers to read more news is a necessary part of the solution. We think Fast Flip could be one way to help, and we’re looking to find other ways to help as well in the near future.”

Source: ‘New Reality’ for Newspaper Publishers Forces Search for New Revenue Streams to Tap Into

Commercial property values in the U.S. have plummeted 36% since peaking in 2007, and the commercial real estate market is unlikely to recover before 2012, according to the quarterly PricewaterhouseCoopers Korpacz Real Estate Investor Survey, released yesterday (Tuesday).

Office rents in New York and San Francisco may drop 20% through next year, the survey found.

“The biggest problem is that commercial real estate lags what happens in the economy,” Susan Smith, who is the director of PricewaterhouseCoopers’ real estate advisory practice and editor-in-chief of the survey, told Bloomberg News. “Companies are looking for ways to cut costs, many are continuing to reduce workers and are continuing to reduce their space needs.”

That means many of the banks that made commercial real estate have only realized a fraction of their losses. And as those losses continue to mount, we’re likely to see more and more bank failures.

Roughly $530 billion in mortgage-backed securities are due for refinancing between now and 2011, according to property researcher Foresight Analytics LLC. Foresight estimates that the U.S. banking sector could incur as much as $250 billion in commercial real estate losses, enough to cause a as many as 700 banks to fail, in that time.

The FDIC’s “problem list,” or banks that run a higher risk of failure, grew to 416 in the second quarter, up from 305 in the first quarter. That’s the highest number since the second quarter of 1994, when there were 434 banks on the list.

San Francisco-based Wells Fargo & Co. (NYSE: WFC) has the largest share of the $3.1 trillion commercial debt market with 16.5% of its $821 billion loan portfolio invested. JPMorgan Chase & Co. (NYSE: JPM) is a distant second with 5.4% of its portfolio invested in commercial loans, followed by Citigroup Inc. (NYSE: C) with 3.4%.

However, smaller banks – 92 of which have already folded this year compared to 25 last year – are even more at risk because they will likely have a harder time accessing the crucial capital to offset rising defaults, according to the TARP-inspired Congressional Oversight Panel’s August Oversight Report.

“Unlike large banks that can sustain a certain number of defaults, even of large commercial loans, smaller banks may have far more difficulty in absorbing more than a few large loan losses,” the panel said. “The FDIC’s statement that ‘banks have been able to raise capital without having to sell bad assets through the LLP’ may not reflect the reality for these banks.”

Indeed, the number of smaller banks expected to seized by the FDIC (Federal Deposit Insurance Corporation) is forecast to accelerate by economists. More than 150 publicly traded U.S. banks have nonperforming loans that account for 5% of their assets, according to the report.

The panel said rising commercial real estate loan defaults may prompt the need for $12 billion to $14 billion more in TARP funds as well as well as stress tests for smaller banks.

The early 1990s saw a devastating crash of the real estate market, but this coming time around the result could be far worse. The $3.1 trillion that makes up the commercial real estate debt market is three times the size it was during the early 1990s – meaning the potential for losses is steeper than ever before.

In 1993, less than 2% of U.S. banks and thrifts had an exposure to commercial real estate that was more than five times their Tier I capital. By the end of last year, that ratio had spiked to 12%, involving about 800 banks and thrifts.

And this time around – compared to the early 1990s – banks left themselves no margin of safety in the form of “Tier I Capital” – a measure of how well a lender can navigate serious levels of losses. The higher the ratio, the less likely a lender will be able to work its way through a stretch when loans start going bad.

Source: Bank Failures Could Surge as Commercial Real Estate Losses Continue to Mount

Motorola’s stock is up nearly 12% since the announcement, as investors are hoping the new phone will be enough to win back some of the company’s lost market share.

However, saving Motorola’s mobile division – which the company plans to spin off – is a daunting task. The company – which invented the cell phone, as well as a plethora of other communication devices used by police and military – has seen its global market share of wireless phones fall to 2% in its second quarter this year from 31% in 1995. Mobile phone sales accounted for 33% of Motorola’s second-quarter revenue, down from 41% a year ago.

Motorola had enjoyed some success in 2004 when it released its popular Razr clamshell-style phone, which was viewed as a fashionable and useful high-tech gadget. During its four-year run, more than 110 million Razrs were sold.

However, Motorola failed to respond to innovation in the mobile phone market that was pioneered by its fiercest competitors. Apple and RIMM have whittled away at Motorola’s market share over the past five years.

With the Cliq, Motorola is trying to separate from the competition by angling its device toward a younger, less professional base. The Cliq’s biggest draw will be its quick access to social networking content from Facebook Inc., Twitter Inc. and News Corp.’s (NYSE: NWS) MySpace.

“Our initial take is favorable, and it seems that Motorola is carving out a niche in the crowded smartphone market by focusing on socially minded demographics as opposed to enterprise users or pro-sumers,” RBC Capital Markets Corp. analyst Mark Sue told Reuters. Sue upped his share target for Motorola from $8 to $10 a share.

Aside from that distinction, the Cliq includes features typically found in most any smartphone: A touch screen, slide-out keyboard, and access to an application store. It runs on Google Inc.’s (Nasdaq: GOOG) Android mobile operating system, already found on two other T-Mobile Phones.

However, if Motorola’s Android-based phones are going to take off, they’ll need bigger wireless carriers. The phones currently function on Deutsche Telecom AG’s (NYSE ADR: DT) T-Mobile USA Inc. network. But with just 34 million users, T-Mobile is the fourth-largest carrier in the United States.

For that reason, a second Android phone will be offered for Verizon Communications Inc.’s (NYSE: VZ) mobile network, which is nearly three times as large. Verizon Wireless has about 88 million subscribers and is the largest carrier in the United States.

Wall Street may be underestimating the boost in profit Motorola will get from its smartphone line in 2010, UBS AG (NYSE: UBS) analyst Maynard Um said in a note to investors. Um has upgraded the communications firm’s stock to “buy” from “neutral.” Um attributed the upgrade to the expected holiday release of the Cliq, as well as additional deals with mobile carriers in the fourth quarter.

Pricing for the Cliq was not announced, but Um anticipates recession-friendly pricing.

“We do not expect new competitor handset announcements to have a materially negative sentiment impact on Motorola, as the company is not defending share, likely only has share upside, and is likely to be an aggressor on price,” he wrote.

A sizeable boost in profit could come from the Android phones’ access to the Android Market, Google’s application store. Apple’s App Store for its iPhone and iPod Touch devices have proven to be a boon for the company, with more than 1.8 billion paid and free apps downloaded since its debut in July 2008. While many of the apps, such as those from The New York Times are free, they present consumers a strong value proposition when buying a smartphone.

However, Apple’s App Store has more than 75,000 applications available, while Google’s Android Market offers just 10,000 apps.

Motorola will add more Android-based phones next year, Chief Executive Officer Sanjay Jha said at a conference last week in San Francisco, and Avian Securities LLC analyst Matt Thornton expects Android phones to represent 30% of the total handsets it sells in 2010, Bloomberg News reported.

“It’s the first step in a long journey,” said Jha, who insists the Cliq will not make or break his company.

In March 2008, Motorola to split its core business from its mobile division after pressure from billionaire investor Carl Ichan mounted. At the time, analysts said the split would put the company in a better position to sell assets or negotiate a joint venture.

A week later, Videocon Industries Ltd., the largest electronics maker in India, said it was interested in buying Motorola’s mobile business. However, neither a sale nor split of Motorola has happened.

Motorola shares closed at $8.79 in trading yesterday (Monday), up 11 cents or 1.27%.

Source: Hot Stocks: Motorola Throws Hat Into Smartphone Ring

However, a report from the International Energy Agency (IEA) indicated that demand is recovering more quickly than previously thought, and that OPEC may be playing catch-up as the global recovery gathers steam.

The IEA increased its outlook for global oil demand by nearly 500,000 barrels per day (bpd) for 2009 and 2010, to 84.4 million and 85.7 million bpd respectively.

Perhaps the biggest reason for the increase was surging demand in China, where the Red Dragon’s $587 billion (4 trillion yuan) stimulus plan has resuscitated manufacturing and helped China grow into the world’s largest auto market.

China’s imports of oil hit a record high in July, soaring 18% from the month prior to 19.63 million metric tons, or about 4.64 million barrels a day, according to the nation’s General Administration of Customs.

China’s economy grew by 7.9% in the second quarter, and Beijing estimates 8% growth for the year, compared to an expected 3% dip for the United States.

Chinese demand for oil this year will grow by 2.8%, according to the IEA.

“I am more confident today than what I was back in May,” about China’s economic recovery, Saudi Oil Minister Ali Naimi told Bloomberg.

The rise of China has been a tremendous boon to OPEC – which controls 40% of the world’s oil supply – particularly since the financial crisis has crimped oil demand in developed nations around the world.

“We’re looking East more these days,” said Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah.

The IEA expects demand for oil in North America to plunge 4.4% this year. However, that figure is an improvement from last month’s forecast of 5.1%, and could accelerate further as the recovery gains momentum.

Data for gasoline and heating oil consumption in June showed a “hefty” increase in demand the IEA said. That data was further substantiated yesterday when the Energy Department reported a larger-than-expected drop in inventories.

Inventories dropped by 5.9 million barrels for the week ended Sept. 4 – more than three times estimates of analysts surveyed by Platt’s, the energy information arm of McGraw-Hill Cos, according to The Associated Press.

Indeed, even Saudi oil minister Naimi has acknowledged the bullish shift in the market.

“You guys must realize that there is a fundamental change in the market,” he told reporters ahead of the night-time meeting that agreed to keep supplies officially unchanged.”Economic growth is the name of the game, that’s what’s going to drive the price. As long as economic growth is there, the price is going to go up.”

Still, OPEC remained cautious, opting to keep production level until demand in the West returns to its pre-crash levels. Of course, that means the cartel will likely be playing catch-up, boosting production behind price increases as the economic recovery gains momentum.

Oil prices have more than doubled from their February lows, closing yesterday at $72.17 a barrel on the New York Mercantile Exchange (NYMEX).

Goldman Sachs Group Inc. (NYSE: GS) has raised its 2009 oil price forecast to $85 a barrel from $65 and said prices would reach $95 a barrel in 2010.

Source: Oil Prices Gaining Momentum as OPEC Keeps a Lid on Production

The 64-year-old Mack will remain as Morgan’s Chairman when Gorman, 51, takes over the CEO post on January 1, the company said.

Mack came under criticism as he scaled back Morgan’s risk profile even as rivals like Goldman Sachs Group Inc. (NYSE: GS) regained momentum as the worst economic downturn since World War II began to wane, according to the Associated Press.

“Gorman has really earned his stripes,” Anton Schutz, president of Mendon Capital Advisors Corp., which owns Morgan Stanley shares, told Reuters. “He did a great job at Merrill, he’s doing a good job at Morgan Stanley, and the timing for a change seems to be good, because we’ve made it through the worst of the crisis.”

Before joining Morgan in 2006, Gorman had held a series of positions at Merrill Lynch & Co. Inc., including leading its global private client business from 2001 to 2005.

Morgan received $25 billion in federal funds under the Troubled Asset Relief Program (TARP) last year, and has since repaid the entire amount to the U.S. government.

Source: Morgan Stanley CEO Steps Down, Will Remain as Chairman