elwinc writes “There’s a great New Yorker story about Nathan Myhrvold’s Intellectual Ventures company, whose business model is to nurture ideas, write patents, and sell them. Apparently they’re filing about 500 patents a year including a passive thorium reactor which consumes waste from conventional reactors. On the lighter side, you can read how Nathan has achieved ‘dominant T. rex market share.’” Though we’ve discussed Myhrvold and his company in the past, the New Yorker focuses more on how astonishing it is to have a group of very intelligent people sitting around a table developing ideas.

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a boy named woo writes “Tired of justifying your gaming addiction? Now you can really help accomplish something while you play… thanks to Howard Hughes Medical Institute researcher David Baker at the University of Washington.” In collaboration with others, Baker has designed a game, called “Foldit,” with a practical outcome: players manipulate on-screen images of protein chains and attempt to predict their folding patterns. From the article: “‘Our main goal was to make sure that anyone could do it, even if they didn’t know what biochemistry or protein folding was,’ states [co-creator Zoran] Popovic. At the moment, the game only uses proteins whose three-dimensional structures have been solved by researchers. But, states Popovic, ’soon we’ll be introducing puzzles for which we don’t know the solution.’”

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Filed under: Bad news, Products and services, Management, Consumer experience, Competitive strategy, Marketing and advertising, AMR Corp (AMR), UAL Corp (UAUA), Oil, Delta Air Lines (DAL)

In reaction to surging fuel costs, several major airlines announced this day that they were raising their fares in order to recoup some of their rapidly increasing flying costs.

The increase this time around is $20 and effects passengers traveling on UAL Corporation (NASDAQ: UAUA), Delta Air Lines, Inc. (NYSE: DAL), and AMR Corporation (NYSE: AMR)’s American Airlines. The $20 jump in prices will be added to the airline’s fuel surcharges, and consequently, these charges are now running at $130 round trip on most flights that you will book through the airlines.

The current rate hike was first initiated by Delta, and marks the second time in just over a week that the airline has been forced to raise fares in order to combat record high fuel costs. Times are definitely tough for airlines, and they are doing everything they have the ability to to combat fuel prices, but regardless of the rate increases most analysts are still expecting to see huge losses this year from most, if not all, airline carriers.

The airlines are definitely in a tough situation right now. They’re being forced to raise their rates to cover their costs, but at some point you have to assume that passengers are going to cut back on flying in reaction to the rising costs, and this would really put a crunch on the carriers that are already struggling to keep their heads above water.

With oil prices continuing to trade at record high levels, do not be surprised if you see more rate hikes coming in the months to come. Definitely a tough year for travelers: whether you’re driving to your vacation spots or flying, the costs just keep on rising.

How do you think current fuel prices will impact your travel plans for the summer? Will you continue to take your vacations as normal, or scale things back a bit in reaction to the rising costs?

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.

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Filed under: Products and services, Wal-Mart (WMT), Target Corp. (TGT)

Wal-Mart Stores, Inc. (NYSE: WMT) implemented another phase of its low-price prescription drug program this week, and as usual competitor Target Corp. (NYSE: TGT) followed suit with price reductions of its own. In addition to offering a 30-day supply of many popular generic prescription drugs for $4, Wal-Mart is now offering a 90-day supply for $10. And so is Target.

Is Target just trying to keep up, or does it see a benefit in matching drug price cuts by its more massive competitor? In response to the price cuts, Target said that it “understands the challenges guests are facing in the current economic environment.” It probably planned to make these price cuts as soon as Wal-Mart did and gain the same kind of free PR that comes with such a drastic price reduction in something that millions of Americans now depend on.

But Target does not position itself as the “low price” leader like Wal-Mart does. Its marketing is more upscale, and so is the appearance of its stores — even while carrying much of the same merchandise. So why is Target matching these prescription drug price cuts? Is it trying to take customers from Wal-Mart? Of course — the two are fierce competitors even though marketing and merchandise presentation strategies are what I’d consider to be worlds apart. Sometimes, price is everything.

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Filed under: Management, Economic data, Housing

Someone had to pay for the fact that Moody’s (NYSE: MCO) is being blamed for not doing a superior job predicting the mortgage securities crisis. The reasoning is that the credit ratings agency was too close with some of the companies that issued the paper and did not look hard enough at how the system might come apart in a subprime lending meltdown.

As usual, it isn’t the CEO who is leaving. Moody’s is dumping its president, a sign that the company is contrite, sees the error of its ways, and wants to do superior. According to The Wall Street Journal Brian Clarkson’s departure “effective by July, marks the highest-profile casualty to date in the controversy over the complicity of credit-rating firms in the subprime meltdown.”

Of course, Mr. Clarkson didn’t act alone. Moody’s has scores of analysts who looked at the data on the subprime market. Clarkson was at the top of the pyramid. Of course, the company’s CEO was even more so.

The great tradition in American management is that blame should always fall to one person, or a small group of people, when something significant goes off-track at a company. The thinking is usually muddled. Responsibility nearly always extends over a wider number of persons.

But, having Clarkson leave is good window dressing.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Forecasts, Consumer experience, Economic data, Housing, Recession

George Soros, the billionaire money manager, claims to be old and wise, and able to guess the market’s turns superior than most. Given the compensation he has collected on Wall Street over his lifetime, it is hard to quarrel with that.

Soros, who still manages several hedge funds, says that the U.S. is in a “bear market rally,” according to The Wall Street Journal. Like many pundits, he stakes his claim primarily on the American housing market. If home prices keep up their sharp decline, how, he reasons, can the rest of the economy do well?

He might have a point. Much of what economists have said recently is based on a recession being avoided because consumer spending has slowed but not halted. People are still going to Wal-Mart (NYSE: WMT). Thank goodness for that.

But Soros and his intellectual allies look at a housing market that’ll continue to decline into 2009 and say that this must force a deeper and deeper downturn.

No one wants to believe Soros. The thought is too grim. But the logic is hard to dispute.

Douglas A. McIntyre is an editor at 247wallst.com and the author of the Ten Stocks Under $10 letter.

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Filed under: Forecasts, Bad news, Consumer experience, Economic data, Housing, Recession

Bloomberg News reports that consumer borrowing — as measured by credit card receivables — grew much faster than expected in March. Specifically, the 9% growth to $2.56 trillion was twice the rate of increase that economists had expected (the actual increase was $15.3 billion vs. 34 economists who expected $6 billion). The March figures brought U.S. consumer borrowing in the first quarter to $34 billion, the most since the first three months of 2001, when the economy entered its last official recession.

And as consumers are increasing their indebtedness, they are also having more trouble paying it back. Overdue payments at the six largest U.S. credit-card lenders reached the highest level since November 2004, according to data compiled by Bloomberg. It found an average of 4.11% of loans were at least 30 days late in February and March.

Bloomberg quotes Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York who states it all: “incomes are not keeping up with inflation and this is leading them to rely increasingly on credit to see them through the worst housing downturn since the Great Depression. The days of extracting cash from one’s home to spend on goods and services are long gone.”

With consumer spending accounting for 70% of GDP growth, that’s why I recommended selling into the sucker’s rally that peaked last week.

Peter Cohan is President of Peter S. Cohan & Associates. He also instructs management at Babson College and edits The Cohan Letter.

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Filed under: Before the bell, Earnings reports, Deals, Toyota Motor Corp. (TM), Market matters, Ideal Buy (BBY), News Corp’B’ (NWS), Economic data, Politics, Housing

U.S. stock futures were higher early Thursday morning as investors digested Toyota’s earnings and awaited sales reports from several huge retailers.

This is after on Wednesday, U.S. stocks dropped as oil futures surged past $123 a barrel and financials showed more weakness. The Dow industrials fell 206 points, or 1.59%, the Nasdaq Composite fell 44 points, or 1.80%, and the S&P 500 dropped 25 points, or 1.81%.

But this day stocks looked set to recover from the previous session huge pull back. While Toyota’s results show the automaker also struggling in the U.S. market, a stronger dollar may have helped boost sentiment. Investors also anticipate April retail sales to be strong rising about 1.5% to 2% due to an extra selling day and warmer weather at the beginning of the month.

Not much economic data is due today, only weekly initial jobless claims and March wholesale inventories.

Also on the docket today is a vote the housing aid bill, the Democrats’ plan to help strapped homeowners refinance into government-backed mortgages. Already blamed by many for not doing enough to address the crisis, President Bush will likely veto the measures.

Companies in focus today include Toyota Motor Co. (NYSE: TM), which reported quarterly results this day. Profit for the quarter sank 28% from the previous year due to the dollar’s weakness and the yen’s strength. Sales in N.America were slower as a result, hurting the Japanese automaker’s earnings. Toyota also said that for the current fiscal year through March 2009, it anticipates sales to drop for the first time in nine years - and net profit to plunge 27%.

Best Purchase Co. Inc. (NYSE: BBY) is buying a 50% stake in Europe’s largest cell phone retailer, The Carphone Warehouse, for $2.1 billion. The Carphone Warehouse will add its 2,400 U.S. and European stores into the new joint venture.

Rupert Murdoch’s New Corp. (NYSE: NWS) said Wednesday its quarterly net profit rose to $2.7 billion, or 91 cents per share as the company saw higher advertising sales at the Fox TV network and Fox News Channel. The results included a one-time gain from its stock swap with Liberty Media. Excluding special items earnings were 30 cents a share, a penny short of estimates. Revenue rose 16% to $8.75 billion, topping estimates.

Also news from across the pond have the Bank of England holding rates steady at 5%. The European Central Bank is also expected to hold its rates as inflation worries, at least for now, outweigh slowdown concerns.

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tracer818 writes “In order to study a person as if they were in space without gravity, NASA scientists are paying subjects $17,000 to stay in bed for 90 straight days. The study will follow the Bed Rest Project standard model and be conducted at the University of Texas Medical Branch in Galveston, Texas. Participants will live in a special research unit for the entire study and be fed a carefully controlled diet.”

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hackingbear writes “Unsatisfied by the reliance on American GPS navigation systems and not feeling much security joining the European Galileo system, China will expand its 4-satellite Beidou navigation system to a full-fledged, competitive, and encrypted system by 2010.”

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