Business briefing, Sept. 20

By Jeff Smith, Rocky Mountain News (Contact)

Published September 29, 2008 at 9:11 a.m.
Updated September 30, 2008 at 12:53 a.m.

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Shares of Dish Network Corp. plummeted 18.7 percent Monday on the first trading day since AT&T announced it was switching its satellite-TV partnership to DirecTV.

Douglas County-based Dish closed at $19.97, down $4.58, the company's steepest one-day decline in years. Dish, which has been struggling to add subscribers, was trading at $30 a share just six weeks ago.

"The announcement (by AT&T) is a clear negative for Dish Network and a major win for DirecTV," wrote Craig Moffett, an analyst for Sanford C. Bernstein, in a research note.

Moffett, who rates Dish stock as "underperform," said he expects the company to lose about 400,000 of its 13.8 million subscribers to rival DirecTV because of the development. DirecTV now has all the major telco partnerships including one with Denver-based Qwest Communications.

"Dish Network faces going it alone," Moffett said, also discounting any merger possibility with a telco or DirecTV at this point.

But analysts also noted the switch shouldn't have been a surprise, given that AT&T announced in July a decision to end a five-year agreement to resell Dish services.

"I think the writing was on the wall," said Todd Mitchell, an analyst with Kaufman Bros.

"Obviously it's good for DirecTV and bad for Dish, but not to the degree that the market has factored in," Mitchell added. "Dish and AT&T never had that productive of a relationship."

AT&T sells satellite-TV services as part of a telephone-Internet-TV "triple play," but it also offers its own TV services in many markets.

Mitchell said Dish, which he rates as a "buy," may be positioned better than people think, even after suffering three bad quarters including a first-ever quarterly loss in net subscribers.

He noted Dish has beefed up its high-definition TV lineup and has the lowest prices, a potential boon during a recession.

"I think anybody who counts (Dish CEO) Charlie Ergen out as this particular point of the game is severely underestimating him," Mitchell said.

* The Colorado Black Chamber gave its 2008 President's Award to Leo and Susan Kiely.

* Alic Pelikant joined Colorado-based Stafford Construction Services Corp. as director of sales and business development.

* Lisa Wheatly joined HDR as vice president and marketing director for the central region.

* St. Baldrick's Foundation, a nonprofit organization for childhood cancer research, awarded $330,000 to fund Amy Keating, assistant professor of pediatrics at the University of Colorado School of Medicine, as a St. Baldrick's Scholar for three years.

* Weise Communications added Marne Brase as director of client services, Tim McCanna as art director, Beth Hardy as public relations account executive and Megan Vogel as marketing coordinator.

* The Occupational Safety and Health Administration presented Trelleborg Sealing Solutions of Broomfield with a VPP Merit Award.

* Leader's Challenge appointed Rick Patch board treasurer.

* MMG Worldwide added Tommy Martinez as account supervisor for the Colorado Tourism Office.

* Denver-based Cactus added Amy Dillon as account supervisor and Meg Wohlschlaeger as account coordinator.

* Ron Rivera joined Green Manning & Bunch as a managing director for its technology industry practice.

* The Rockefeller Foundation named the University of Colorado one of the top 15 campuses in the nation for sustainability.

* Frederick Y. Yu of Sherman & Howard was elected chairman of the board of trustees of the National Conference of Bar Examiners.

* The Colorado Film Commission will host VidExpo 2008, which will address the election outlook, ballot initiatives and latest legislative strategy for performance-based incentives, on Oct. 8. Information: vidxpo.com

* The Colorado chapter of the Public Relations Society of America recognized the Colorado Department of Human Services, Colorado Works Division and The Bawmann Group with a Gold Pick Award for the Colorado Dads Web site.

* The Rocky Mountain Chapter of the National Investor Relations Institute will hold a presentation titled "Top NIRI Executive to Address Market Trends and the Impact on Investor Relations" on Oct. 7 at the Denver Athletic Club. Information: 303-575-6501

* The Women's Bean Project hired Aimee Caldwell-George as account executive for corporate sales and gifts.

* Dr. Jason L. Heiken moved his general and cosmetic dentistry office to the new Shops at Vallagio in Englewood.

NATIONAL

Consumer spending flat in August, falling short of expectations

Consumer spending in August turned in the weakest performance in six months, underscoring the threat the economy faces as the government's stimulus program fades into the past.

The Commerce Department reported Monday that consumer spending was unchanged in August, even worse than the small 0.2 percent gain economists had expected. It was the weakest showing since spending was also flat in February.

Personal incomes were up a better-than-expected 0.5 percent, a rebound after a 0.6 percent drop in July. But after-tax incomes, which felt the impact of the stimulus program to a greater extent, dropped by 0.9 percent.

WIRELESS NETWORK Sprint Nextel Corp. opened its new wireless network to customers in Baltimore on Monday, offering Internet service for laptops for $45 per month. It's the first commercial network in the U.S. to use so-called WiMax technology for mobile customers.

MOBILE BROADBAND GOAL Vodafone Group PLC, Microsoft Corp. and Ericsson AB are among 17 companies working together to promote laptop computers with built-in tools for making broadband connections to mobile-phone networks.

The initiative is led by the GSM Association, which will spend $1 billion next year to promote such devices.

"It's freedom from your desk, freedom from WiFi hotspots, the ability to get online anywhere where you have cellular coverage," marketing head Michael O'Hara said. There should be "several hundreds of thousands" of such products in stores around Christmas, he said.

RAISE FOR BALLMER Microsoft Corp. Chief Executive Officer Steve Ballmer received $1.35 million in compensation for fiscal 2008, a 5.5 percent increase.

Ballmer's compensation included a salary of $640,833 and a bonus of $700,000, according to a regulatory filing Monday. Ball- mer ranks 15th on the Forbes list of wealthiest Americans with a fortune of $15 billion.

WALGREEN FALLS SHORT Walgreen Co., the largest U.S. drugstore chain, reported a fourth- quarter profit that rose less than analysts estimated after it posted the smallest sales increase in at least a decade.

Net income increased 12 percent to $443 million, or 45 cents a share. Excluding a benefit that lowered costs, the earnings missed the average estimate of analysts. Sales rose 8.8 percent to $14.6 billion.

CIRCUIT CITY SLUMPS Circuit City Stores Inc. reported a wider loss as sales at the electronics retailer fell for the sixth straight quarter and cash dwindled.

The second-quarter net loss more than tripled to $239.2 million, or $1.45 a share, from $62.8 million, or 38 cents, a year earlier, the Richmond, Va.-based company said Monday. A "significant decline" in customers lowered sales 9.6 percent to $2.39 billion, and for stores open at least a year, the decline was even steeper - 13 percent.

The chain, which has more than 1,480 stores, said it may close unprofitable locations.

IMCLONE DEADLINE SET ImClone Systems Inc., the biotechnology company controlled by billionaire Carl Icahn, said a drugmaker that proposed a $6.1 billion takeover will make a formal bid or withdraw by the end of Wednesday.

Icahn, ImClone's chairman and second-biggest shareholder, disclosed on Sept. 10 the offer of $70 a share from a "large pharmaceutical company" that he declined to identify.

MARVEL DEAL GROWS Viacom Inc.'s Paramount Pictures expanded its agreement to distribute films from Marvel Entertainment Inc., the publisher of Hulk and Iron Man comic books.

The agreement covers Marvel's next five self-produced films worldwide and includes theatrical distribution outside the U.S. in areas previously serviced by Marvel through local distributors, Los Angeles-based Paramount said.

AUTOMAKERS STALLED General Motors Corp., Ford Motor Co. and Chrysler LLC continued their sales slide in the U.S. this month as tight credit and the financial crisis sap demand.

Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. also tumbled, making September just the third time in 2008 for all three Japanese automakers to fall. They may be down at least 20 percent, Wachovia Capital Markets analyst Richard Kwas said in a Sept. 24 note.

GM, the largest U.S. automaker, will be down 26 percent, while No. 3 Chrysler's slide will be 34 percent, based on the average estimates of five analysts. Ford, the second-biggest in the U.S., may report a 22 percent dip.

PETTERS STEPS DOWN Tom Petters resigned as chairman and CEO of Petters Group Worldwide on Monday amid a federal investigation that alleges he and others defrauded investors of $100 million or more since the mid-1990s. Petters announced his resignation at an employee meeting.

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