Money - AOL Money & Finance

It's no secret that the financial sector is struggling. Even so, new figures from the Federal Deposit Insurance Corp.'s so-called secret list of troubled banks show an industry in increasing distress. The number of banks on the regulator's confidential watch list increased by 33% in the third quarter, to 552, the highest level in almost 16 years, the FDIC said Tuesday.

Worried about souring mortgages and other toxic assets, the more than 8,000 banks with deposits backed by the FDIC sharply raised the amount they set aside to cover loan losses, dampening their profitability. The agency keeps the names of banks on this list under wraps to protect them from debilitating runs by depositors, which could destabilize them further. However, the FDIC does publish aggregate figures derived from its examinations of their books.

Comments (27)Permalink

Facebook creates a dual stock structure, but denies that it 'signals' an IPO

By Sam Gustin | Nov 24th 2009, 5:20PM EST Filed Under: Google , Facebook

Facebook has taken a key step toward selling itself to public investors. Although the world's largest social network insists that the move doesn't mean the company is planning to go public, it's clearly designed to allow the current owners to maintain control of Facebook if it does go for an initial public offering.

Founded in 2004 in a Harvard dorm room, Facebook has been valued as high as $20 billion during the go-go years of the Web 2.0 bubble. Since the financial meltdown and recession, that valuation has dropped below $5 billion and hasn't been able to break $10 billion.

Comments (0)Permalink

GPS makers can't seem to locate a price floor: Sub-$50 devices in sight

By Alex Salkever | Nov 24th 2009, 7:00PM EST Filed Under: Google , Wal-Mart Stores, Palm, Amazon.com Inc.

First comes the nasty entry of Google's (GOOG) freebie turn-by-turn voice-activated navigation app. Then comes news that this holiday shopping season may be the first where we see GPS devices by popular makers TomTom and Garmin (GRMN) drop to the $50 price range, an area never before seen for these still hot-selling, but increasingly imperiled, devices.

Deutsche Bank analyst Jonathan Goldman released analysis on Tuesday that found TomTom is going to price its new model One 125SE at $59 at major online stores like Walmart.com (WMT). This is $20 below Garmin's lowest price point, likely forcing Garmin to come down on price, as well.

Comments (0)Permalink

A bitter pill for taxpayers: Drug ads do nothing but boost drug prices

By Melly Alazraki | Nov 24th 2009, 4:40PM EST Filed Under: Company News, Healthcare, Bristol-Myers Squibb, Sanofi Aventis

drug-ads-do-nothing-but-boost-prices-for-taxpayers

A new study published in the Archives of Internal Medicine found that direct-to-consumer drug advertising may be associated with increased drug prices -- and little else. Specifically, researchers looked at blood-thinner (anti-clotting) drug Plavix, which is commonly prescribed for heart conditions. They found that advertising aimed at consumers did not actually increase the use of the drug. However, because of the increased expenditure for advertising, the price of the drug increased, and so did the reimbursement cost of Plavix for Medicaid patients.

"The cost of drugs to public and private health insurance programs has been a long-standing source of concern among policy markers," wrote the study's authors, Michael Law of the University of British Columbia and his colleagues. Indeed, several members of Congress have asked the GAO recently to examine allegations of price gouging on drugs, especially in light of the ongoing debate over health-care reform legislation.

Comments (18)Permalink

Prempro lawsuits: Pfizer hit with $103 million more in punitive damages

By Melly Alazraki | Nov 24th 2009, 6:20PM EST Filed Under: Company News, Healthcare, Pfizer, Merck

It seems that for Pfizer (PFE), the saga of Prempro is just beginning. Barely a month after the world's largest pharmaceutical company lost a case related to Wyeth's Prempro hormone replacement therapy drug and was ordered to pay punitive damages on top of earlier compensatory damages, it lost the second pending case in the matter in Philadelphia on Monday.

Initially, Pfizer was ordered in September to pay $3.75 million in compensatory damages. The punitive damages amount awarded a month later was sealed pending another verdict in a second similar case in the same courthouse. On Monday, the court revealed that Pfizer has been ordered to pay a total of $103 million in punitive damages in the two cases. The jury found the hormone drugs the two plaintiffs used for years contributed to their breast cancer. Including three other cases, so far Pfizer has been ordered to pay $165 million in punitive damages.

Comments (0)Permalink

Fortune runs out as layoffs hit Time Inc.

By Jeff Bercovici | Nov 24th 2009, 4:20PM EST Filed Under: Media, Time Warner

Long-awaited layoffs arrived at Time Inc. Tuesday, and those near the top were not spared.

At Fortune, three of the four remaining assistant managing editors have been pink-slipped. John Brodie, Brian Dumaine and Eric Gelman are all departing, leaving only Stephanie Mehta, who, according to one insider, is seen as the likely eventual successor to Managing Editor Andy Serwer. A fourth assistant managing editor, Lee Clifford, volunteered for a severance package last week, as did executive editor Steve Koepp.

Comments (2)Permalink

No sale: GM's Saab deal falls apart after Swedish buyer pulls out

By David Schepp | Nov 24th 2009, 3:00PM EST Filed Under: Company News, Economy, General Motors

gm-saab-sale-falls-apart-after-swedish-buyer-pulls-out

It seems General Motors (GRM) isn't have any better luck at selling pieces of itself than it is at selling its cars and trucks. A deal struck by the Detroit-based company in June to sell its Saab unit fell apart Tuesday, according to news reports, threatening an end to the Swedish manufacturer of niche automobiles.

GM had hoped to seal the deal on the sale of Saab to a consortium led by Swedish luxury car builder Koenigsegg Group at the end of next month. But on Tuesday, Koenigsegg suddenly pulled out after it was unable to secure financing in time to close the deal.

Comments (43)Permalink

Why Ballmer and Murdoch's attack on Google is doomed

By Peter Cohan | Nov 24th 2009, 2:50PM EST Filed Under: Company News, Technology, Google , Microsoft, Yahoo

Competitor-focused strategies fail, while customer-focused ones win. This comes to mind in thinking about a possible deal to take search advertising market share from Google (GOOG). It's now well known that Microsoft (MSFT) and News Corp. (NWS) are discussing teaming up in an effort to take out a rival (the competitor-focused strategy), whereas Google is on the side of creating competitively superior value for consumers and the advertisers seeking to reach them (the customer-focused strategy).

Google's approach is better because customers are the ones who are paying, and while Microsoft and News Corp. are busy trying to take a piece out of Google's hide -- with Microsoft paying News Corp. to remove its links from Google and put them on Bing -- their struggles to partner will distract them from serving customers. And that could give Google a chance to take search traffic away from Bing.

Comments (2)Permalink

Fed officials: Labor market recovery could take up to six years

By AP | Nov 24th 2009, 2:29PM EST Filed Under: Economy

The Federal Reserve doesn't expect the recovery will be strong enough to quickly drive down the jobless rate, and acknowledged its efforts to keep the rebound going could feed a new speculative bubble.

Record-low interest rates "could lead to excessive risk-taking in financial markets," according to documents released Tuesday of the Fed's closed-door meeting earlier this month. It also could cause consumers, investors and businesses to worry about inflation taking off.

Although Fed officials saw the current likelihood of that as "relatively low," they pledged to "remain alert to these risks."

Comments (80)Permalink

Galleon's Rajaratnam strikes back, calls SEC tactics unconstitutional

By Vishesh Kumar | Nov 24th 2009, 2:00PM EST Filed Under: People, Investing

Billionaire hedge fund manager Raj Rajaratnam had vowed to fight the insider trading charges against him with the same vigor he used to amass his fortune. And now his army of seasoned lawyers is swinging back hard against allegations that the founder of the Galleon Group engaged in insider trading in stocks ranging from Google (GOOG) to Hilton (HLNQ).

On Tuesday, Rajaratnam's legal team responded to the SEC's allegations by attempting to systematically dismantle the case made against their client. Not only were the methods used to snare Rajaratnam unconstitutional, the response contends, but the information allegedly given to Rajaratnam was already widely known, and it may be difficult to prove he traded on it rather than on his broader analysis of the stocks.

Comments (1)Permalink

Consumers scramble to pay credit card bills, let everything else slide

By Jonathan Berr | Nov 24th 2009, 1:00PM EST Filed Under: Economy, Real Estate

In these tough economic times, people are leaning on their credit cards more than ever. So when it comes time to decide which bills to pay, those are the ones that make it to the top of the pile.

Credit reporting agency TransUnion reported Monday that credit card delinquency rates fell in the third quarter, continuing a drop-off that began a quarter earlier. Average credit card borrower debt fell by 1.87% to $5,612 from the previous quarter's $5,719, and down 1.71% compared to the third quarter of 2008. But this is not a sign that the economy is improving.

Comments (30)Permalink