WBEZ | Business

Fake tweet shakes stocks

Tue, 23 Apr 2013 15:21:00 -0500

NEW YORK — The stock market climbed Tuesday following strong earnings across a range of U.S. industries.

Makers of handbags, jet planes and chemical products all turned in good results for the first quarter, reviving investors' confidence after a sharp downturn in the stock market last week.

Markets swooned briefly shortly after 1 p.m. Eastern time after The Associated Press' Twitter account was hacked and a fake tweet was posted about explosions at the White House.

Trading at Chicago’s CME Group was also affected.

Andrew Busch is publisher of the financial newsletter, the Busch Update.

“What concerns me for Chicago, an account gets hacked and people start putting out misinformation whether it’s about a company, or a police situation or flooding, that’s where things get kind of crazy and people can actually get hurt. Not only people, but companies as well,” he said.

Busch says now officials will be looking for anyone who may have benefited from the sharp turn in trading.

The CME Group declined to comment.

Coach, Lockheed Martin, DuPont and Travelers were among the winners after they reported results that were better than analysts expected. The Dow Jones industrial average and the Standard & Poor's 500 index both rose nearly 1 percent in morning trading, putting them on track for a third straight day of gains.

A resurgence in corporate profits after the Great Recession has been one of the drivers that pushed both the Dow Jones industrial average and the Standard & Poor's 500 index to record levels this year. However investors are starting to question how much further company earnings can improve without the outlook for growth in the global economy improving as well.

Tuesday's upturn in stocks put both indexes back in the black for April and closer to the record high closes they reached on April 11. It was a sharp change of tone from last week, when the market had its worst drop since November. That sell-off started after economic growth in China, the world's second-largest economy, slowed.

So far, 69 percent of the companies that reported earnings for the first quarter have beaten analysts' expectations, better than the 10-year average of 62 percent, according to data from S&P Capital IQ. Analysts expect earnings to rise by 2.3 percent in the first quarter, compared with 7.7 percent growth in the previous three-month period.

Stocks and other markets were shaken in the early afternoon when a fake tweet on the AP's Twitter account prompted a sudden sell-off.

A posting saying that there had been explosions at the White House and that President Barack Obama had been injured was sent at 1:08 p.m. The Dow immediately plunged about 143 points, from 14,697 to 14,554. The AP said its Twitter account had been hacked and the posting was fake. Within five minutes the Dow had snapped back.

AP spokesman Paul Colford said the news cooperative is working with Twitter to investigate the issue. The AP has disabled its other Twitter accounts following the attack, Colford added.

Joe Fox, chairman and co-founder of online brokerage Ditto Trade, was at work in L.A. when he got a call from the Chicago brokerage offices telling him what had happened. Fox watched the market tanking, then its quick bounce back.

"It was a tipsy-turvy rollercoaster for a few minutes there," Fox said.

Fox said the news didn't sound right to him when he first heard it, and he thinks that traders are being more cautious in the wake of the 2010 "flash crash," which sent the Dow spiraling 600 points in a matter of minutes.

After the brief sell-off investors turned their focus back to earnings.

Netflix soared 24 percent to $216 after reporting a big gain in subscribers in the first quarter late yesterday. Coach, which makes Luxury handbags and other accessories, soared 10 percent to $55.84. Lockheed rose 1.5 percent to $97.30. Travelers rose 2 percent to $86.15.

The Dow was up 139 points at 14,706 as of 3:46 p.m. The S&P 500 was 14 points higher at 1,577. Both indexes are 1 percent below their record high closes from nearly two weeks ago.

The Nasdaq composite rose 33 points to 3,267.

The price of crude oil dropped about 60 cents after the fake tweet, to $88.40 from $89, then quickly recouped that loss. It was up 11 cents at $89.30 in afternoon trading.

The yield on the 10-year Treasury note was 1.70 percent, unchanged from late Monday.

Apple reports earnings after the market closes. Apple has lost 23 percent of its value this year. Investor worry that demand for the iPhone is waning as competitors like Samsung sell more smartphones. It stock was up 1.5 percent at $405.

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Susie An contributed to this report.

Caterpillar 1Q profit shrank; cuts 2013 outlook

Mon, 22 Apr 2013 15:40:00 -0500

MINNEAPOLIS — A slowdown in the mining business is digging a hole in Caterpillar's profits.

First-quarter profit shrank 45 percent and Caterpillar has lowered its expectations for full-year sales and profit because its mining business is slowing. Sales of Caterpillar-branded mining machines such as large trucks and bulldozers will drop by half this year, the company said on Monday.

Caterpillar, based in Peoria, Ill., said mining customers placed big orders for equipment last year, but then mining profits fell, so now those customers are cutting back. Dealers who would normally be stocking up on Caterpillar gear to get ready for a busy summer instead cut inventory during the first quarter.

Executives said they had hoped that a slowdown in orders from dealers in late 2012 would turn around this year. "Unfortunately, that hasn't happened," said Mike DeWalt, the company's controller, on a conference call. "Overall mining orders have remained depressed."

Profit margins are higher for mining gear than for many of Caterpillar's other products, making the slowdown more painful to the company's bottom line.

"We're definitely in a down-cycle right now, but long-term it's a great business for us," said Chairman and CEO Doug Oberhelman.

Caterpillar has already started cutting costs. On April 5 it said that it would lay off more than 460 employees at a mining truck plant in Decatur, Ill. Caterpillar also announced mining-related layoffs in Milwaukee and plans to cut 1,300 of 3,400 jobs at a plant near Brussels that makes excavators, loading vehicles and engine parts. This year's capital spending — which covers big-ticket items like factories and computer systems — will fall below $3 billion, from $3.4 billion last year.

Caterpillar employed 141,000 people at the end of the quarter, down 7 percent from a year earlier. The job cuts included about 1,000 U.S. workers and almost 7,000 in other countries. Besides the permanent layoffs, it has also been putting production and office workers on temporary furloughs.

Caterpillar's net income dropped to $882 million, or $1.31 per share, for the latest quarter. Revenue fell 17 percent to $13.21 billion from $15.98 billion a year ago. Both missed analyst expectations. Analysts surveyed by FactSet were expecting a profit of $1.36 per share on revenue of $13.79 billion.

Profits fell in each of its big divisions. Operating profit fell 59 percent to $477 million in resource industries, which includes mining. It was down 61 percent to $239 million for construction equipment, and down 26 percent to $598 million in power systems, which makes items including large electrical generators and locomotive engines.

It also cut its 2013 guidance. Caterpillar now expects to earn $7 per share, down from $7 to $9 previously. It forecast revenue of $57 billion to $61 billion, down from $60 billion to $68 billion. Analysts had been expecting 2013 profit of $7.67 per share on revenue of $62.48 billion.

The reduced outlook wasn't entirely unexpected and Oberhelman did note some bright spots. Sales in China rose compared to a year ago. And the company is "becoming more optimistic" on the U.S. housing sector.

Caterpillar also announced that it plans to buy back shares — about $1 billion worth — for the first time since 2008, following an 11 percent drop in the price this year. That helped Caterpillar shares rise on Monday. They gained $2.63, or over 3 percent, to $83.06.

Chicago's first mayor

Mon, 04 Mar 2013 05:00:00 -0600

William Butler Ogden was born in upstate New York in 1805. His family was in the real estate business. He became active in Democratic politics and was elected to the New York legislature in 1834.

A year later he made a trip west to look over some land his family had bought. The location was a new town named Chicago. Though Ogden didn’t think much of the grubby little village at first, he quickly sold off part of the property at a nice profit.

That got Will Ogden interested. He decided to stay in Chicago as a real estate trader. The economy was booming and he got rich. He became one of the town’s leading citizens.

Chicago was formally incorporated as a city on March 4, 1837. Now there would be an election for a mayor and city council. The local Democrats named Ogden as their mayoral candidate. The Whig Party picked John Harris Kinzie. Though Kinzie came from a popular pioneer family, Ogden easily won, 489-217.

Ogden served a term of ten months. He appointed a board of health, held an election for school inspectors, and ordered the city’s first census–which revealed that Chicago had a population of 4,170.

Then the national economy collapsed. The infant city ran out of money, and Mayor Ogden had to pay Chicago’s bills with scrip–an official IOU. He personally backed the scrip with his own funds. (Can you imagine any modern politician doing this?)

In Ogden’s time, political office was a public service, not a profession. Chicago’s first mayor refused to run for re-election. He went back to doing what he did best, being a businessman. And he was involved in everything.

Ogden designed the first swing bridge over the Chicago River. He dug a channel to straighten out the north branch of the river, creating Goose Island. He bought and sold land. He backed construction of the Illinois and Michigan Canal. In 1848 he built Chicago’s first railroad.

He made money on all these projects, of course. That didn’t bother the public. Ogden had a reputation for fair dealing. He also “gave back” to society–the city’s first medical school was built on land he donated.

During the 1850s Ogden broke with the Democrats and joined the anti-slavery Republicans. As a Republican he was elected to the state senate. Ogden knew Abraham Lincoln through business, and actively supported him for president.

Railroads were now Ogden’s main activity. In 1862 he became president of the new Union Pacific Railroad, which was constructing the world’s first transcontinental line. He kept a residence in Chicago, but was spending more and more time in the East.

He was in New York in 1871 when word of the Great Fire reached him. He returned to Chicago to find his mansion and its priceless contents destroyed. Ironically, his brother’s nearby home was one of the few buildings that survived.

Ogden was briefly engaged as a young man. He remained a bachelor until shortly before his 70th birthday, when he married a lady twenty years his junior. According to friends, the couple had been in a relationship for nearly three decades.

William Butler Ogden died in New York in 1877. He is buried in Woodlawn Cemetery in The Bronx.

As Yahoo CEO sparks debate over telecommuting, advocates say Chicagoans are spending too much time at the office

Tue, 26 Feb 2013 17:18:00 -0600

Leaders at internet giant Yahoo have announced plans to stop letting employees work from home.

Last week, it was reported that Marissa Mayer, Yahoo’s new CEO, will force the web company’s few hundred remote workers to come back to the office.

The move was controversial because in some ways Yahoo is bucking a growing trend. Between 2005 and 2011, the number of workers telecommuting in the U.S. grew by 73 percent.

So where does Chicago fit into this trend?

Despite significant growth, Chicago lags behind San Diego, Atlanta, Seattle and a slew of other urban areas in the percentage of total workers who work mainly from home. According to 2009 data, Chicago was at 2.3 percent - the same as the national average at the time (it’s now 2.5 percent).

“Companies continue to think about flexibility and telework as being this sort of soft fluffy thing,” said Kyra Cavanaugh. Her consulting firm, Life Meets Work, helps Chicago-area businesses transition to what she calls a “flexible workplace model.” She argues letting people work from home and allowing flexible hours increases productivity and employee satisfaction, and reduces absenteeism.

On top of the advantages to telecommuting, there are also disadvantages to commuting in Chicago: a recent study shows that it can take Chicago drivers four times as long as it should to get to and from work.

But Cavanaugh thinks the city’s not ready to go too far down the telecommuting road.

“Chicago is the place where, you know, we smelt steel and slaughter cattle, and our attitudes about workplace practices represent that still,” she said.

Chicago-area employers who encourage telecommuting include Aetna, Bank of America and the federal government. The federal Telework Enhancement Act of 2010 encourages federal agencies to save money by allowing eligible employees to work from home, and from 2005-2011 there was a 424 percent increase in the numbers of federal employees working out of the office.

Follow Lewis Wallace on Twitter.

Chicago on the hunt for taxi recruits

Thu, 07 Feb 2013 19:59:00 -0600

Chicago is short 2,000 cab drivers, according to City Hall. To get more recruits in the driver’s seat, the city co-hosted Thursday’s Taxi Driver Recruitment Day at Olive Harvey College.

There, Mayor Rahm Emanuel awarded longtime cab driver Imran Mirza with the Taxicab Driver Excellence Award. The other prize that Mirza gets? A taxi medallion.

A medallion is a city license to own and operate a cab, and having one could change Mirza’s life in a big way. “I felt great,” said Mirza. “After so many years of hard work, I’m very happy.”

Mirza played it cool, but the truth is, most of the city’s 6,600 cab drivers don’t have medallions because they’re too expensive, costing around $360,000 each.

Most drivers lease their cabs from medallion owners, and only take home what they earn after paying the lease and for gas. Mirza did that for 14 years, starting work at 5:30 a.m. and working 12-hour days.

Mirza said becoming a cab owner will bring big changes to his family of five. “Being an owner, it gives you more flexibility, and you’re making your own decisions and you can depend on something,” he explained, “And it’s good in another way that I can have another driver.”

Mirza hopes his fortune inspires others to get into the business, and so does the city. Rosemary Krimbel, Commissioner of Business Affairs and Consumer Protection, says there’s been a steady decline of drivers in recent years.

Krimbel thinks part of that may be due to perceptions about the job. “Cab drivers, sometimes they take the job part-time while they’re going through college, and then maybe they just kind of end up [driving taxis],” she said. “I want it to be a choice. I don’t want this to be a job that you end up doing because you can’t find anything else. I want you to choose to be a cab driver.”

Krimbel says the mandatory public chauffeur training for taxi drivers has been revamped to focus more on customer service. She says she wants people to think of cab driving not as a job — but as a “profession.”

“Not me, I’m just doing it to pay for my school,” said 22-year old Northeastern Illinois University student Hocine Drouche. “Whenever I’m done, I’ll just go and work whatever I want to work.”

Several attendees at the recruitment fair said they were students, too, hoping to earn some income while they study. So it may take time to change the perception of cab driving to more than a backup option.

As for Imran Mirza?

“To tell you the truth,” he said, “nobody will come here and say ‘I’m going to be a cab driver for the next 40 years.’ I don’t think so. But it’s a good middle step, I would say. And it keeps your family going.”

United Airlines to cut 600 jobs

Thu, 24 Jan 2013 14:48:00 -0600

United Airlines is cutting about 600 jobs as it aims to keep costs in line with reductions in flying.

The airline says the job cuts will include buyouts and layoffs. Some open positions won't be filled.

The cuts are spread around the company's locations, although many are expected to happen in Chicago. That's where United is based and where it has one of its biggest hubs at O'Hare International Airport. The positions being cut are in management and administration.

In a memo to workers, CEO Jeff Smisek acknowledged last year was “difficult”, but said he was “optimistic” 2013 would be better.

United officials declined to provide details to WBEZ as to what impact the layoffs will have on headquarters. They did say the cuts will first be offered on a voluntary basis before involuntary layoffs are made. The 4,000 people who work at Willis Tower downtown are in the group targeted for cuts.

Last year, United Airlines gave $5.6 million dollars back to the city - mostly tax incremental financing, commonly called TIF funding - for its old offices on Wacker Drive.

It said then it had extended its lease at Willis Tower until 2028.

The layoffs come as United reports a loss of $723 million for last year. It's reducing flying this year, which is one reason for the layoffs.

Spokeswoman Megan McCarthy says United cut 4 senior officers last month, out of about 50 at the company. The company employs about 84,000 people worldwide.

Google puts up Libertyville Motorola campus for sale

Fri, 04 Jan 2013 14:57:00 -0600

Now that the former headquarters of Motorola Mobility in Libertyville is up for sale, who’s likely to buy it?

Before we think about it - consider first that the most recent vacancy rate for similar office space in Libertyville is 28.7 percent - almost twice as high as in the city.

That’s before you take into the account the Motorola Mobility campus in Libertyville. It sits on 84 acres and is more than a million square feet of office space. To give you an idea of the size, the Merchandise Mart - where the workers are moving - is four times that size.

"If in fact this building were to be added to the competitive market it would add approximately 10 percent to the total inventory in that area," said Robert Kramp, who directs regional research for the Great Lakes for Jones Lang LaSalle, the commercial real estate services firm.

Bult in 1992, the property is really designed as a corporate headquarters. It has 3400 parking spaces. But Kramp thinks convincing a company to move or expand to Illinois right will be a tough sell.

"Given the challenges that currently face the state of Illinois in addition the fact that the economy has barely begun to recover - not withstanding the uncertainty that is still associated with the federal budget impasse - it will be a very challenging market for this particular property," Kramp said.

Libertyville Mayor Terry Weppler says the state has already committed to helping find potential tenants.

"I would prefer that there were multiple tenants," Weppler said, adding that it would lessen the chance of another big company coming in and then leaving.

Clayco moving headquarters to Chicago

Fri, 04 Jan 2013 09:42:00 -0600

A design, engineering, architecture and construction firm is moving its corporate headquarters from St. Louis to Chicago.

Chicago Mayor Rahm Emanuel's office says Clayco's decision to relocate its headquarters will create about 300 new jobs in Chicago in the next few years.

Clayco already has 280 employees in the Chicago area. The company plans to keep its office in St. Louis and no layoffs are planned.

Clayco CEO Robert Clark says his company also is hoping to acquire a municipal engineering company to develop its infrastructure business during the next few years.

Clayco also will be joining the City Colleges of Chicago's College to Careers program.

Crime-fighting strategy goes after problem businesses

Mon, 26 Nov 2012 22:16:00 -0600

The City of Chicago said its new crime-fighting strategy has helped close 34 problem businesses due to healthy and safety concerns.

The businesses were cited with criminal activities like selling alcohol or tobacco to minors or allowing gang activity.

In April, the city created a task force of city departments including the Chicago Police Department and the Department of Buildings.

According to city officials, the task force has identified problem buildings. Among the closed businesses were seven liquor stores that remain closed under a Department of Buildings order today.

Sam Ali owns a cell phone shop on the city’s South Side. He said when the city closed down Phoenix Food & Liquors, a nearby liquor store, his business improved.

“So it frees up the area more and allows customers to shop around, feel free to do their shopping without having to worry about seeing people standing out in front of a place and scaring them into going to an establishment,” Ali said.

Lieutenant Cynthia Lance said the police department has flagged over 300 businesses in the last seven months.

“We haven’t inspected all 300 hundred, we just started in the spring,” Lance said. “We are making our way through this list of 300 or so properties.”

She said so far, the police department has inspected about 90. The task force also schedules weekly inspections in certain parts of the city in collaboration with police.

Residents can report a problem business by calling 311 or contacting their district police office. They can also contact the Troubled Business Unit by calling 312-745-6231 or by sending an e-mail to troubledbuildings@chicagopolice.org.

Cash Register company closes doors after 120 years in Chicago

Thu, 01 Nov 2012 07:12:00 -0500

After 120 years in business, the A.J. Thomas Midwest Cash Register Company in Chicago’s West Loop is closing.

The small business has been at the heart of Chicago retail for more than a century.

A.J. Thomas sold and serviced cash registers for restaurants, bars and stores around the city.

By now, most businesses have swapped gleaming brass registers for computers.

Owner Dorothea Alfini's family is only the third to run the business since 1892. They've moved storefronts a couple of times over the last century, but never strayed from the West Loop.

The company kept up with technology - they sold electronic Point-of-Sale systems too. Those customers will merge with a company in Indiana, and Alfini said she'll still be part of the business.

But it's the end of the line for the mechanical and antique cash registers the company sold.

Alfini decided it was time to ease toward retirement after her husband passed away last year. He started in the cash register business when he was 12. She worked alongside him for more than four decades.

Her one remaining employee, age 75, is retiring too. She said he's about the only one left who knows how to fix the old registers if they break.

“It’s a dying art because within a few years they’re going to be gone," she said about the antique registers.

The storefront and warehouse on Randolph Street is having an everything must go sale. Thousands of antique cash registers, tools and parts for sale. And just about anything they can pry off the walls, if someone wants it.

Alfini said the neighborhood has changed as much as the business.

“You just look out the window," Alfini said. "What used to be a run down bar is now a condo building. What they used to call the Madison Street bums - they’re all gone.”

Just next door, a new restaurant and winery has opened up. Down the street, fancy coffee shops flank both corners.

And she said their name - Alfini - is fitting for the moment.

“It means the end," she said. "That’s what the last name means. So yeah, I’m the end of this whole thing.”