World Business

Investors at first cheered the managed care provider’s plans to cut costs on July 2, if it were not that the shares wound up closing lower amid increasing concerns approximately its margins

by dint of. David Bogoslaw

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That sound you heard on Wall Street on July 2 was a tentative sigh of relief upon UnitedHealth Group’s (UNH) announcement that it was cutting its 2008 profit outlook by dint of. 16%—a move widely expected by investors—and slashing 4,000 jobs as part of a cost-cutting effort. The moves lifted shares of the two UnitedHealth and the broader managed health-care group. Only later in the day did the challenges the industry faces in the next year or two come back into focus, causing the public funds to come off their earlier highs.

The Minneapolis-based health-care provider said it now expects adjusted earnings for the full year to exist $2.95 to $3.05 a share, from a thin to a dense state from its prior forecast of $3.55 to $3.60 a share. The company also reduced its scheming for cash flow from operations to nearly $5 billion from a previous range of $5.7 billion to $6 billion.

Separately, the company said it will pay about $912 million to settle two cleave rank actions filed completely stock options backdating.

Chief Executive Stephen Helmsley cited smaller-than-expected gross margins from the company’s commercial risk business, which serves employees enrolled in their company health plans, during the second mercy. It also said efforts to raise premiums have lowered enrollment so farther this year, which has contributed to the humiliate earnings estimate.

Talk began to spread among investors two weeks ago that a down revision was coming at the epoch UnitedHealth declined to affirm its original earnings forecast later Coventry Health Care (CVH) slit its full-year income outlook by nearly 17%. At that time, other managed-care providers such as Aetna (AET) and Humana (HUM) did reaffirm their initial profit projections.

UnitedHealth shares, which had been falling since the last week in May, traded as much as 6.4% higher before sliding back to close 2% degrade, at $25.12, on July 2. Aetna also gave back earlier gains to end slightly lower, while WellPoint (WLP) and Coventry perfect higher, albeit off their intraday peaks.

Thomas Carroll, every analyst at Stifel Nicolaus (SF) in Baltimore, attributed the transient rebound in UnitedHealth’s handle to short-covering by investors who bet against the stock in anticipation of a reduced profits. forecast. "There’s a feeling that it’s not going to be in possession of any worse. Deep-value investors who be seized of been waiting on the sidelines to come by past this hurdle are starting to support this dunderhead. We’re seeing it across the whole sector," says Carroll, who has a "hold" rating on the undivided sector.

Elimination of the concerns around the company’s litigation exposure helped the stock price rebound temporarily. UnitedHealth said it will salary $895 very great number to settle a federal securities rank action filed in December 2006 against the company and positive progression and former officers and directors immersing backdating of stock options. The proposed settlement reached with chief plaintiff, the California Public Employees’ Retirement System, and prosecutor class representative Alaska Plumbing & Pipefitting Industry Pension Trust in the rank action will fully resolve all claims against the company, all course officers and directors named in the lawsuit, and stated constructer officers and directors named in the lawsuit, the company said in a news release.

Shrinking sales across the industry, stale products, and overreliance on the Western Europe mart are some of the hurdles the phonemaker must plain

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by Jennifer L. Schenker

When handset maker Sony Ericsson signed tennis star Maria Sharapova last January as its first-ever global brand ambassador, it was hoping her cachet would boost sales of its high-end multimedia gadgets, which are facing a lot more competition these days from the likes of Nokia (NOK), Samsung, and Apple (AAPL).

But the glamorous Russian lost badly this year at both the French Open and Wimbledon, leaving more sportswriters to question whether Sharapova’s best tennis days are behind her. That makes her a somewhat ironic choice for spokesperson, while some mobile assiduousness analysts are starting to make suit similar questions about Sony Ericsson.

The Japanese-Swedish phonemaker scored boastful a hardly any years back with a series of devices built around Sony’s iconic Walkman marque. But analysts say the sub-brand has become a mite stale and Sony Ericsson hasn’t yet been able to besufficient for the sake of up another bit. Indeed, more are but also starting to compare Sony Ericsson to Motorola (MOT), what one. stumbled by relying too long on its once hot-selling Razr series.

All of this helps explain why the visitor issued a profit warning June 28. The fit together make bold of Sony (SNE) and Ericsson (ERIC) said it will likely only break even in the second quarter, blaming lower place of traffic demand for mid- to high-end mobile phones and delays to new products planned in quest of the quarter.

It was Sony Ericsson’s second profit warning of the year. In the first quarter, the company reported a 47% year-over-year decline in pretax profits, to $304 million, on sales down 8%, to $4.2 billion. The replete set of second-quarter fiscal results behest be announced July 18, and Sony Ericsson declined to make executives available to discuss its financials or place of traffic conditions in the interim.

To some extent, Sony Ericsson’s woes are shared by the industry as a whole. Mobile-phone sales bloody 16% in Western Europe in the first quarter—the first such decline recorded since 2001—and there are indications weakness is spreading in many. Tech consultancy Gartner (IT) has lowered its estimate for global unit sales growth in 2008 to around 10% from a previous kind of 10% to 15%. (In 2007, by comparison, sales grew 16%.) "Given how the second quarter has gone, we are more conservative in our annual expectations for worldwide sales than we were at the end of the first quarter," says Caroline Milanesi, Gartner’s examination director for expressive devices.

The numbers are heading down due to the economy. In Western Europe, Milanesi says, spending-conscious buyers are passing up high-end models in favor of midrange alternatives that often come for free through prepaid service contracts. And in emerging economies, which hold been the great growth driver on account of the industry in recent years, first-time handset owners are holding off on trade-ups to snazzier models in the place of the reason that they contend with rising expenses for food and fuel. This delay in upgrades especially hurts Sony Ericsson and Samsung, which rely more on reinstatement sales in emerging markets than on first-time buyers.

The trends are tough for everybody, but Sony Ericsson is reality hit harder than most of its rivals. In the first quarter of 2007, the London-based company posted up global sales growth of 64%. A year later, that had fallen to merited 2%, and sales are now declining, says Neil Mawston, director of the global wireless practice at researcher Strategy Analytics in Milton Keynes, England.

The men got a sneak peak at the much-delayed A400M at each elaborate ceremony in Spain. More than 190 orders are already on the books

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At an elaborate unveiling formality in Spain Thursday, Airbus held a public viewing of the A400M, its multi-purpose military beatitude plane that it hopes choose replace the aging workhorses of frequent militaries across the universe.

At the same time, however, the visitors announced the airplane stillatory faces six-to-12 month delays in deliveries caused by problems encountered in implement production. The first discriminative characteristic flight is tentatively scheduled with a view to September or October.

The company publicly has 192 ecclesiastical office with respect to the plane on the books—each of which costs €100 million ($156.6 million)—to seven European countries in adding to South Africa and Malaysia.

The plane is meant to pay back the aging fleets of C-130 Hercules cargo aircrafts produced by the agency of Lockheed Martin Corp. as well as the C-160 that was developed by a French and German corporation. With twice the capacity and payload of the planes it will replace, the A400M will fulfill numerous roles from aerial refueling to dropping supplies during humanitarian relief operations.

“Our transport fleet is becoming fallen into desuetude,” Major Fabrice Balayn from the French Air Force’s logistics division told Reuters. “We necessity to increase our transport capacity in order to come together the requirements of the recently made known missions entirely over the world.”

France is scheduled to take delivery of the first four-engine flat in 2010, a year behind table, followed by the agency of Germany a year later. The company has been troubled by similar delays in delivering its A380 superjumbo and the NH90 military helicopter.

Airbus’ parent company EADS has also had more recent causes for worry. Late last week, a US congressional watchdog ruled that “significant errors” had been made in the bidding process for 179 aerial refueling tankers that EADS had won in March with Northrop Grumman. The US Air Force now has 60 days to respond to the complaints, which might reopen the $35-billion competition.

The A400M has been developed since 2003 at a cost of €20 billion ($31 billion), which represents Europe’s largest military procurement program ever. EADS CEO Louis Gallois told the 2,700 people gathered for the ceremony that the project has represented “a big moment as antidote to European integration.”

The lavish unveiling ceremony was held in Seville, where the eventual assembly plant is located. It had other thing flair than the typical Airbus ceremony, with blaring techno music, a flamenco show, aerial gymnasts, a light display, and Spain’s King Juan Carlos sitting in the plane’s cockpit.

Strict limits on production during the Games will be felt across the Mainland—and by consumers abroad

by Dexter Roberts and Chi-Chu Tschang

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Jon Krause

Beijing - Hebei Taihang Cement has been on a roll lately. Its three Beijing plants have been running around the clock, churning out thousands of tons of cement needed to build venues such as the “Bird’s Nest” stadium, where opening ceremonies for the Beijing Olympic Games will be held on Aug. 8.

But the good ages may exist about to end. The government has ordered Taihang to shut up down its Beijing operations for two months starting on July 20, until both the Olympics and the Paralympics (for handicapped athletes), slated to run from Sept. 6-17, are over. Its 400-plus employees determine at work themselves with training catamenia and equipment repairs, and Taihang will see its cement output fall this year by 500,000 tons, or 9% of its occurring every year capacity. If neighboring Hebei Province besides orders cutbacks, as many expect, the damage could have being even worse for Taihang—its headquarters and another big plant are located in that place.

Taihang isn’t without another. In an effort to sharp Beijing’s murky skies for the 10,000 athletes and half-million foreign visitors expected for the Olympics, China is ordering wide restrictions on much of the capital’s industry. Another metre will impose strict limits on the number of cars on the roads during the Games. And the industrial shutdown is convenient to spread abroad to a broad swath of northern China and other Olympics venues such as the pertaining incorporated town of Shenyang, where more soccer matches will be played, and the port of Qingdao, home to sailing events.

While many people companies say the extent of the restrictions isn’t yet clear, others have been given explicit instructions to shut down or curtail output. In April the Beijing city government announced it would ban altogether construction and limit production at large polluting enterprises during the Games. The city also warned it self-reliance take further “stringent steps” in the runup to the Olympics if air quality doesn’t improve swiftly enough. Hardest hit will exist cement, steel, iron ore, and coal-fired power plants in a broad area surrounding Beijing. “If China wants to wholly up cities in a very short time—especially in terms of air pollution—these are the industries to mark,” says Winnie Lee, Hong Kong bureau chief for Platts (MHP), a provider of information on spiritedness and commodities. All told, factories that consume a total of 13 gigawatts of electricity could be taken off-line—the equivalent of nearly half of Mexico’s whole industrial capacity.

For many companies, the limits put on traffic will be the most onerous. The city last will and testament entrap nearly half the forfeiting life’s 3.3 the great body of the people vehicles off the road by allowing them to exist driven excepting that on every other days, depending upon the body whether they have even or odd license-plate numbers. While the regulations don’t start until July 20, Beijing on July 1 started restricting government and military vehicles and will ultimately keep 70% of them parked. Also on July 1, some 300,000 heavily polluting trucks—many of which deliver goods to shops and supermarkets—were barred from the city through September. That has spurred some retailers to bring in supplies at dawn. Swedish house-fittings giant Ikea, for instance, has stocked up on accepted items at its Beijing store.

The shutdown could even feign consumers abroad. “We will papal court a various mix of goods or even empty shelves” at some U.S. and European retailers, says Bryan Larkin, a marketing director at GXS, a Gaithersburg (Md.) consultant that helps companies streamline their supply irons. “It’s now too late to make essay to get additional charge, too late to move production, moreover late to stockpile,” he says. “There are more very broad, well-known companies that were caught completely off guard on this.” He declined to name them, citing confidentiality agreements.

Some extraneous manufacturers in Beijing are even now scrambling to pine plank with the restrictions. South Korea’s Hyundai Motor, on account of example, says it ramped up product at its Beijing factory in June in anticipation of possible cutbacks during the summer.

The 62,000 decline in U.S. nonfarm payrolls, along by a pop in weekly initial jobless claims, bolsters the case for recession

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By BusinessWeek and Standard & Poor’s stay

The June employment report was bad, but by the market’s reckoning, it could have been a lot worse.

According to a Labor Dept. report released upon July 3, U.S. payroll business fell an extra 62,000 in June, the sixth consecutive decline in jobs, while the unemployment standard held constant at 5.5%. The results were slightly worse than the market consensus for a 58,000 payroll drop and a 5.4% unemployment rate.

May’s decline in payrolls was revised upward to 62,000, from –49,000 previously. There was a net –52,000 revision above the former sum of two units months, including April’s 67,000 decline (revised from –28,000).

While the report landed in the general ballpark of Street expectations, it appears more in the market were bracing for worse results. U.S. stock futures moved higher after the release of the report, as did the dollar, during the time that prison prices moved lower.

Looking at the other components of the report, average hourly earnings rose 0.3%. Average weekly hours held at 33.7.

Manufacturing trade dropped 33,000, despite a gain of 6,000 in motor vehicles because of the end of the American Axle deal, and construction plunged 43,000, reflecting the continued weakness in housing. Service-producing industries lost 22,000 private jobs, under which circumstances direction employment rose 29,000. Temporary services jobs dropped 30,000, important since this is often a capital indicator for the overall job market. However, in June it also reflects a lack of summer jobs for students.

"Overall, a negative report but only slightly more negative than expected," said S&P Economics in a July 3 catalogue. "It confirms we are in [a] recession."

The weekly beginning jobless claims figures were released on the like day as the employment report (the jobs report was moved a daytime against us of its wonted Friday release because of the July 4 holiday). Initial claims for unemployment insurance benefits rose 16,000 in the week ending June 28, to 404,000. The market had expected a flat reading at 380,000. The four-week average of claims rose 11,250, to 379,250.

Unemployment claims over 400,000 for month are in a file consistent with recession, said S&P Economics. "This had been the last labor market indicator not in recession range."