June 2008 Archives

Two South Bay firms were included in the Russell 3000 stock market index, thereby increasing their profile with investors.

Carson-based aerospace subcontractor Ducommun Inc. and Torrance-based PC Mall Inc., a direct marketer of technology products, were added to the index on Friday. They will remain on the index for one year.

Inclusion in the index was based on market capitalization.

The Russell 3000 and other Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for investment strategies.

DIRECTV Group, the El Segundo-based satellite TV provider, launched a nationwide on-demand service, the company said Monday.

DIRECTV on Demand allows customers to download programming from a library to their DVRs. The service offers more than 4,000 standard-definition and high-definition titles.

The service includes customized homepages for channels -- such as The Discovery Channel -- as well as remote scheduling through the Internet, thousands of free titles and expanded pay-per-view titles.

Installation of the new service is available free to subscribers with a DIRECTV Plus(R) HD DVR or R22 DVR receiver.

It's this week's At Work profile.

AT WORK: Business here can blow hot and cold By Muhammed El-Hasan, Staff Writer

Bill Hammer is the owner of Hammer Heating & Air Conditioning, which is run out of his Redondo Beach home. (Brad Graverson / Staff Photographer)Bill Hammer's career took shape when he was still attending Mira Costa High School.

In 1987 at age 17, Hammer answered a newspaper ad for a job at a heating and air conditioning installer.

About 21 years later, he still works in this field.

Today, Hammer, 37, owns Hammer Heating & Air Conditioning, which he runs from his Redondo Beach house.

What does your job entail?

Read the full story.

High-end homes lagging By Muhammed El-Hasan Staff Writer

The South Bay's real estate market had been relatively insulated from the worst of the region's downturn.

That changed in the past two months, with the median price of a single-family home sold in May at $675,000, down 6.6 percent over May of last year, according to the South Bay Association of Realtors, which released a housing report Friday.

In April, the median price dropped 10.6 percent, year over year, to $625,000, the association said.

Read the full story.

The South Bay's real estate market had been relatively insulated from the worst of the region's downturn.

That changed in April and May, with single family home sales down 22.8 percent year over year in May, with an annual drop of 36.3 percent in April, according to the South Bay Association of Realtors, which released a housing report Friday.

The association's figures represented the South Bay, excluding the Palos Verdes Peninsual.

The median price of a single-family home sold in May was $675,000, down 6.6 percent over May of last year. In April, the median price dropped 10.6 percent, year over year, to $625,000, the association said.

It runs every Friday.

Business Casual: Gaining an edge just by chilling out

By Muhammed El-Hasan

Soak up the sun. Embrace the sandy beaches. Give thanks for the easygoing lifestyle, dude.

The South Bay's geography and culture do more than just help you totally chill out.

They give this area a competitive economic edge.

I have witnessed this advantage while covering the local business beat for nearly eight years. Through countless interviews, I learned that the South Bay's comely features - from beautiful ocean sunsets and the lushness of the Palos Verdes Peninsula to beach volleyball - serve as a magnet for talent and ambition.

Read the full column.

Folks,

My first business column, called Business Casual, debuted today.

We still have to work out some of the kinks, but I'm happy with the first edition. The column will run each Friday and will cover various parts of the South Bay's business community.

I look forward to your feedback.

Here's a link to Business Casual.

This could last a long time to shake out.

No decision yet on US air tanker purchase: Gates

WASHINGTON (AFP) -- US Secretary of Defense Robert Gates said Thursday that he has not yet taken a decision on reviewing the 35-billion-dollar refueling air tanker deal feud between Boeing and Northrop Grumman, but acknowledged problems with the contract.

On June 18, the Government Accountability Office (GAO), the investigative arm of Congress, backed a protest by US aerospace giant Boeing over the huge aerial refueling tanker contract awarded to rival Northrop Grumman and its European partner EADS, and recommended the US Air Force review the deal.

"I haven't made any decisions yet," Gates said. "But I would say that I take the GAO report very seriously. They've clearly pointed out some areas where we were deficient.

"We've clearly had problems with the tanker contract. And this time around is not the first time, obviously. And so, I think I need to get a better feel for the GAO report and for the criticisms and the nature of the criticisms that they have made."

Read the full story.

Space Exploration Technologies Corp., the Hawthorne-based developer of low-cost rockets, said Thursday that it had successfully conducted the final test before launch of the Falcon 1 rocket.

Dubbed SpaceX, the firm completed a full launch dress rehearsal and hold down firing of the Falcon 1 Flight 3 vehicle Wednesday at the Omelek Island launch site at the Kwajalein Atoll in the Pacific Ocean.

In the coming weeks, SpaceX will conduct a thorough review of all data prior to the opening of the launch window for flight, which runs from late July through early September.
The Falcon 1 will carry the Trailblazer satellite for the Department of Defense and secondary payloads that include two small NASA satellites.

DaVita Inc., the El Segundo-based provider of kidney dialysis care nationwide, said Thursday that its third annual "Kidney Awareness Time" Walk-a-thon will kick-off on Sunday in Virginia Beach, Va.

The nationwide tour will include 20 cites, including Los Angeles, concluding on Dec. 7 in Orlando, Fla.

The tour is expected to include 13,000 participants who will raise $1.5 million to improve public awareness of kidney health.

The tour is open to the public. Each walk will also offer free kidney evaluation and screening courtesy of The Kidney TRUST. More details and registration material are at http://www.davitakatwalks.com.

What will happen to the satisfaction score when gas hits $5 a gallon?

Gas prices fuel drop in car owner satisfaction

DETROIT (AP) -- Drivers of new cars were less satisfied with their vehicles this year for the first time in at least five years due mainly to rising fuel prices, according to an annual survey released Thursday.

The survey by the J.D. Power and Associates marketing and consulting company saw the industry average drop by two points to 770 this year from 772 in 2007. The survey measures owner satisfaction with the design, layout and performance of new vehicles.

It was the first drop in at least five years, said Neal Oddes, J.D. Power's director of product research and analysis. Gas prices rose 27 percent in the period between the 2007 and 2008 surveys, he said, but the latest survey found that fuel economy stayed the same at an average of 21 miles per gallon.

"The fuel economy hasn't improved from last year to this year," Oddes said. "You just haven't seen that movement."

Foreign nameplates again dominated the survey, but U.S.-based automakers continued to show improvement.

Porsche led all brands, scoring 854 out of a possible 1,000 points, followed by Jaguar at 844. Cadillac was the highest-scoring U.S.-based brand at 827, the research company said.

It also found that models that were given mild updates scored higher on average than models that were entirely redesigned, a departure from previous years.

The Honda brand captured more model segment awards than any other automaker with three each. Its subcompact Fit, Odyssey minivan and Ridgeline midsize pickup scored highest in their segments.

Porsche, Toyota and Volkswagen each took two segment awards. The Porsche Cayman won in compact premium sporty car, and its Cayenne took the midsize multi-activity vehicle honors. Volkswagen's GTI/R32 won for compact sporty car, while its Passat won for midsize car. Toyota's FJ Cruiser won in the compact multi-activity vehicle category, while its Sequoia large multi-activity vehicle won its segment.

Also winning segment awards were the BMW 5 Series midsize luxury sedan, Buick Enclave midsize multi-activity vehicle, Chevrolet Avalanche large pickup, Dodge Magnum large car, Land Rover's Range Rover large premium multi-activity vehicle, Lexus IS entry premium vehicle, the Mercedes-Benz S-Class large sedan and the Mini Cooper compact.

Of the eight most-improved nameplates, all were U.S. brands, according to the survey. Buick brand posted the largest improvement, followed by Chrysler, Ford, Mercury and Dodge.

The survey, conducted for the past 13 years, is based on responses from more than 81,500 people who bought or leased vehicles from November to January. They were surveyed between Feb. 4 and April 30, Oddes said. It has a margin of error of one point on the scale of 1,000.

The survey is designed to complement J.D. Power's annual initial quality rankings, which were released last month. Those rankings showed the quality of new cars improved across the industry this year, with Porsche, Honda, Toyota, General Motors and Ford among the automakers leading the pack.

Of course, California's housing market is being hit harder than most.

Home slump harder to reverse than usual: Harvard

NEW YORK (Reuters) - Record foreclosures and limited access to credit will make it harder than usual for the U.S. housing market to rebound from this slump, the worst at least since World War Two, according to a Harvard University study on Monday.

A two-year home price drop is eating into housing wealth, curbing consumer spending and slicing away economic growth. This is unlikely to change until potential home buyers are convinced that prices have stopped tumbling, the study found.

The downturn has room to run.

The highest home loan rates in nine months and strict lending standards are keeping buyers on the sidelines, even after aggressive Federal Reserve intervention and a 16 percent national home price slide from the 2006 peak, by some measures.

"Historically, housing markets recover only after the economy has entered a recession and a combination of falling mortgage interest rates and house prices have improved housing affordability," Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard, said in a statement.

"It will take longer this time to rebound given the unusually high levels of foreclosures and constrained credit markets," he said. "The slump in housing markets has not yet run its full course."

Price declines and mortgage defaults are the worst on records dating back to the 1960s and 1970s, the study noted. Job losses and falling prices intensify risk of foreclosure.

The number of homes entering foreclosure nearly doubled to 1.3 million in 2007 from about 660,000 in 2005.

Payment shock after rate resets on some adjustable loans, many made to higher-risk borrowers, has propelled owners into foreclosure. For others in trouble, falling prices leave them with mortgages larger than the home's value, and they are often unable to refinance or sell.

Foreclosures are adding to an already massive supply of unsold homes, which further pressures prices.

"With credit markets in such disarray, the for-sale housing inventory at record levels ... emerging from today's housing slump could take some time," the study found.

Read the full story.

Of course, California's housing market is being hit harder than most.

Home slump harder to reverse than usual: Harvard

NEW YORK (Reuters) - Record foreclosures and limited access to credit will make it harder than usual for the U.S. housing market to rebound from this slump, the worst at least since World War Two, according to a Harvard University study on Monday.

A two-year home price drop is eating into housing wealth, curbing consumer spending and slicing away economic growth. This is unlikely to change until potential home buyers are convinced that prices have stopped tumbling, the study found.

The downturn has room to run.

The highest home loan rates in nine months and strict lending standards are keeping buyers on the sidelines, even after aggressive Federal Reserve intervention and a 16 percent national home price slide from the 2006 peak, by some measures.

"Historically, housing markets recover only after the economy has entered a recession and a combination of falling mortgage interest rates and house prices have improved housing affordability," Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard, said in a statement.

"It will take longer this time to rebound given the unusually high levels of foreclosures and constrained credit markets," he said. "The slump in housing markets has not yet run its full course."

Price declines and mortgage defaults are the worst on records dating back to the 1960s and 1970s, the study noted. Job losses and falling prices intensify risk of foreclosure.

The number of homes entering foreclosure nearly doubled to 1.3 million in 2007 from about 660,000 in 2005.

Payment shock after rate resets on some adjustable loans, many made to higher-risk borrowers, has propelled owners into foreclosure. For others in trouble, falling prices leave them with mortgages larger than the home's value, and they are often unable to refinance or sell.

Foreclosures are adding to an already massive supply of unsold homes, which further pressures prices.

"With credit markets in such disarray, the for-sale housing inventory at record levels ... emerging from today's housing slump could take some time," the study found.

Read the full story.

The tanker deal will continue to dog McCain.

McCain's Boeing Battle Boomerangs

(Newsweek) One of John McCain's most celebrated achievements in recent years was his crusade to block a Pentagon contract with Boeing for a new fleet of midair refueling tankers. Incensed over what he denounced as a taxpayer "rip-off," McCain launched a Senate probe that uncovered cozy relations between top Air Force officials and Boeing execs. A top Air Force officer and Boeing's CFO ended up in prison. Most significantly, the Air Force was forced to cancel the contract--saving taxpayers more than $6 billion, McCain asserted.

But last week, McCain's subsequent effort to redo the tanker deal was dealt a setback. Government auditors ruled that the Air Force made "significant errors" when it rebid the contract and awarded the $35 billion project to Boeing's chief rival, partners European Aeronautic Defense and Space Co. (or EADS) and Northrop Grumman. It's likely the Air Force will have to redo the bid yet again, which analysts say will delay the replacement of the fleet's 1950s-era refueling tankers. The auditors' ruling has also cast light on an overlooked aspect of McCain's crusade: five of his campaign's top advisers and fund-raisers--including Tom Loeffler, who resigned last month as his finance co-chairman, and Susan Nelson, his finance director--were registered lobbyists for EADS.

Critics, including some at the Pentagon, cite in particular two tough letters McCain wrote to Deputy Secretary of Defense Gordon England in 2006 and another to Robert Gates, just prior to his confirmation as Defense secretary. In the first letter, dated Sept. 8, 2006, McCain wrote of hearing from "third parties" that the Air Force was about to redo the tanker competition by factoring in European government subsidies to EADS--a condition that could have seriously hurt the EADS bid. McCain urged that the Pentagon drop the subsidy factor and posed a series of technical questions about the Air Force's process. "He was trying to jam us and bully us to make sure there was competition by giving EADS an advantage," said one senior Pentagon official, who asked for anonymity when discussing a politically sensitive matter. The assumption within the Pentagon, the official added, was that McCain's letters were drafted by EADS lobbyists. "There was no one else that would have had that level of detail," the official said. (A Loeffler associate noted that he and Nelson were retained by EADS after the letters were drafted.)

Read the full story.

The tabled have turned in this competition big time.

Boeing wins key round in Air Force tanker protest

WASHINGTON (AP) -- Boeing scored a major victory Wednesday in its battle to wrestle back a $35 billion Air Force contract from Northrop Grumman and its European partner.

The Government Accountability Office upheld Boeing's protest of the refueling tanker contract and recommended the service hold a new competition. The congressional watchdog said it found "a number of significant errors" in the Air Force's February decision, including its failure to fairly judge the relative merits of each proposal.

While the GAO decision is not binding, it puts tremendous pressure on the Air Force to reopen the contract and could pave the way for Boeing to capture part or all of the award from Northrop and Airbus parent European Aeronautic Defence and Space Co. And it gives ammunition to Boeing supporters in Congress who have been seeking to block funding for the deal or force a new competition.

The decision also is a setback for Sen. John McCain, the Republican presidential nominee in waiting, who was instrumental in the Pentagon's long attempt to complete a deal on the tanker.

The Air Force will determine its next steps after completing a review of the GAO ruling within 60 days. The service will select the "best value tanker for our nation's defense, while being good stewards of the taxpayer dollar," said Air Force Assistant Secretary Sue C. Payton.

Boeing said it looks forward to working with the Air Force on the next steps in this "critical procurement for our warfighters." Northrop said it continues to believe its plane was the best option for the military.

The GAO decision marks the second big blow to the Air Force this month, coming on the heels of the ouster of its two top officials over mistaken nuclear shipments.

The Air Force also is trying to rebuild a tattered reputation following a 2003 procurement scandal that sent its top acquisition official to prison for conflict of interest and led to the collapse of an earlier tanker contract with Boeing. McCain played a key role in exposing that scandal.

McCain sent two letters in 2006 urging the Defense Department to make sure the bidding proposals guaranteed competition between Boeing and Airbus. Months later, Airbus's parent company retained the firm of a McCain campaign adviser to lobby for the tanker deal.

McCain on Wednesday called the GAO decision "unfortunate for the taxpayers," saying Air Force officials "need to go back and redo the contracting process and ... hopefully they will get it right."

Democratic presidential nominee-in-waiting Sen. Barack Obama, D-Ill., lauded the GAO decision and called for a "fair and transparent" rebidding of the contract.

With a leadership vacuum, a concerned Congress and an upcoming change in the White House, the Air Force needs to act quickly, said Jim McAleese, a defense industry consultant in Virginia.

The tanker contract has sparked a fierce backlash among lawmakers from Washington, Kansas and other states that stand to gain jobs if Boeing succeeds in landing the award.

"The Air Force will have no choice but to rebid this project," said Sen. Maria Cantwell, D-Wash.

Sen. Pat Roberts, a Kansas Republican, said he would introduce legislation requiring a new competition if the service does not reopen the process.

The tanker contract also has touched off a heated debate over the military's use of foreign contractors because the Northrop tanker would be based on an Airbus plane largely built in Europe. Backed by union officials representing Boeing workers and "Buy-American" proponents, Boeing supporters on Capitol Hill have painted the competition as a fight between an American company and its European rival.

Boeing estimates the tanker contract would support 44,000 new and existing jobs with more than 300 U.S. suppliers. The company would perform much of the work in Everett, Wash., and Wichita, Kan.

Northrop said its tanker would support four new factories and 48,000 jobs with 230 U.S. suppliers, including more than 1,500 new positions in Mobile, Ala., where the tanker would be assembled.

Sen. Richard Shelby, R-Ala., said it is "very disturbing" that the Air Force "will likely have to go back to square one on the warfighter's No. 1 priority."

The contract for 179 aerial refueling tankers is the first of three deals worth up to $100 billion to replace the Air Force's entire tanker fleet over the next 30 years.

Although the GAO denied some parts of Boeing's protest, it offered a lengthy rationale for why the contract should be re-competed. Among its conclusions was that the Air Force awarded the Northrop team improper extra credit for offering a larger plane that could carry more fuel, cargo and troops. It also found that the Air Force improperly increased the likely costs of the Boeing bid and failed to show that Northrop's tanker could refuel all necessary planes.

"The GAO has issued a sweeping denunciation of Air Force acquisition practices that raises fundamental questions of fairness," said Loren Thompson, a defense industry consultant based in Virginia.

Boeing's backers in Congress also maintain that illegal European Union subsidies to Airbus gave Northrop/EADS an unfair advantage. Those subsidies are at the heart of U.S. Trade Representative complaint against the EU before the World Trade Organization.

Sen. Patty Murray, D-Wash., stressed that Congress needs to examine more than just the narrow technical issues raised by the GAO review, including the role of subsidies and American jobs in defense contracts.

In this global economy, what happens in other parts of the world affects us at the pump.

Oil rebounds on word Israel practiced Iran attack

NEW YORK (AP) -- Oil futures rebounded Friday as Pentagon officials said a large scale Israeli military exercise in the eastern Mediterranean early this month could have been a demonstration of Jerusalem's ability to attack Iranian nuclear facilities.
Prices also rose as investors reconsidered whether Thursday's sharp declines, which were based on an announced fuel price hike in China, were merited.

At the pump, gas prices rose slightly.

Light, sweet crude for July delivery rose $3.90 to $135.83 a barrel on the New York Mercantile Exchange, recovering much of the $4.75 that the contract lost Thursday after China's announcement.

While Thursday's news from China reduced investor concerns about surging global demand for oil and fuel, Friday's news from the Middle East injected fresh supply worries into the market.

Still, analysts suggested both price moves were overreactions.

"Whenever you get Israel and Iran within the same sentence, you have a price reaction," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

But price moves based on the possibility of conflict between the two nations are likely to be short-lived, analysts believe. An actual attack would be a different matter entirely, and could send prices sharply higher.

Meanwhile, several analysts said China's fuel price hike could actually increase the nation's crude demand. Many Chinese refiners have resisted producing fuel in recent months as the retail prices they're allowed to charge were not high enough to cover the costs of their main raw ingredient, crude oil. Now that they can charge more for fuel, Chinese refiners may actually produce more diesel and gasoline, using more crude oil in the process.

"The increase in prices can be seen ... as an attempt to reduce shortages through encouraging domestic supply," said Barclays Capital analyst Kevin Norrish in a research note. "Indeed, it could well be that case that effective demand actually rises, dependent on the current level of shortages."

Some analysts also questioned whether the modest price hikes were enough to dampen demand.

"It remains uncertain whether this fuel price hike in China will really significantly impact demand growth in China in a negative way," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "This (was) a knee-jerk overreaction by the market."

Also supporting prices Friday were reports that Nigerian oil workers have decided to strike at a Chevron Corp. facility beginning Monday, a move that could further cut oil supplies from Africa's largest producer.

The July crude oil contract expires at the end of trading Friday; trading in expiring contracts is often volatile.

On another front, investors were awaiting the outcome of a weekend summit in Saudi Arabia between oil consuming and producing nations to discuss high oil prices.

The dollar fell against the euro Friday, putting more upward pressure on oil prices. Many investors buy commodities such as oil as a hedge against inflation when the greenback weakens. A falling dollar makes oil less expensive to investors overseas.

At the pump, meanwhile, gas prices inched 0.2 cent higher to a national average of $4.075 a gallon Friday, according to AAA and the Oil Price Information Service. Gas prices have drifted lower this week since hitting a record $4.08 a gallon on Monday.

Gas prices will likely hold steady near current levels, as long as oil continues trading in its current range between roughly $132 and $138, analysts say.

Diesel fuel, used to transport the vast majority of the world's food, consumer and industrial goods, fell 0.5 cent overnight to a national average of $4.786 a gallon. Diesel reached a record $4.797 on Monday.

In other Nymex trading Friday, July gasoline futures rose 8.81 cents to $3.4407 a gallon, while July heating oil futures rose 11.72 cents to $3.8307 a gallon. July natural gas futures rose 23.3 cents to $13.094 per 1,000 cubic feet.

In London, August Brent crude rose $3.97 to $135.97 a barrel on the ICE Futures Exchange.

After Wednesday's GAO conclusion that the Air Force made errors in awarding the $35 billion aerial refueling tanker contract to Northrop Grumman over Boeing, business groups seconded the GAO's recommendation for a new bidding process.

Mark Mitchell, vice president & musiness manager Local 20 of the International Federation of Professional and Technical Engineers, said in a statement:

"We applaud today's GAO ruling that the Air Force's tanker competition and decision was flawed. We agree wholeheartedly that the contract must be overturned and a new bidding process restarted."

Bob Muscat, executive director of the IFPTE Local 20, said in a statement:

"The GAO only confirms what so many of us have been saying for some time: this was a flawed decision based on a flawed process and it's now time for Congress to step in and require a new competition."

Joel Ayala, President and CEO of the California Hispanic Chamber of Commerce, said in a statement:

"California's economy, our U.S. troops, and national security will be better served if the Air Force takes the GAO's concerns to heart and moves to redo the bidding process for the air tanker."

Tom Brandon, secretary treasurer of the California Conference of Machinists, said in a statement:

"Today's GAO decision is an important first step to right a terrible wrong. The Air Force under the watchful eye of the US Congress must take immediate steps to re-bid the tanker contract. We thank the American people for the outpouring of support in our effort to keep tens of thousands of experienced and loyal machinists working to protect our national security. Americans will be safer and our economy will be stronger if Machinists Union members continue a tradition of more than 50 years of top quality and skilled work on this next generation of transport tankers."

Here's today's article.

Review of Northrop bid urged

In a surprise turnaround, congressional investigators Wednesday upheld Boeing Co.'s protest of a $35 billion Air Force contract awarded to competitor Northrop Grumman Corp.

The Government Accountability Office also recommended that the Air Force hold a new competition to build 179 aerial refueling tankers to replace an aging fleet.

The ruling could further delay the start of the program, which eventually could reach $100 billion.

Northrop's El Segundo-based Integrated Systems sector had won the contract in February with partner and Airbus parent European Aeronautic Defence and Space Co., which is based in France and Germany.

Much of the production and final assembly for Northrop's KC-45 tanker would occur in Mobile, Ala., with thousands of subcontracting jobs created in Southern California.

Read the full story.

Fresh & Easy Neighborhood Market, which will open a new location in Harbor City within months, will donate $1,000 to a local organization or charity nominated by the community.

The winning organization will be chosen by employees at the new store, at the northeast corner of Palos Verdes Drive and Western Avenue.

To nominate a local organization, visit www.freshandeasy.com/goodneighbor, and explain in 150 words or less why you think your choice is worthy of $1,000.

Fresh & Easy will begin accepting submissions on June 25, with a cutoff on July 23.

Southern California as a whole saw an increase in foreclosures of about 13 percent from April 2008 to May 2008, and an increase of 219 percent from May 2007 to May 2008, according to Default Research, which compiles foreclosure data.

Los Angeles County had 11,770 foreclosure documents (6,396 Notices of Default recordings and 5,374 were Notice of Trustee Sales recordings) filed in May 2008.

Home prices in L.A. County have come down about 18 percent in the last year, and they continue to decline.

Just to recap, Northrop's El segundo-based Integrated Systems sector would be in charge of the tanker program if the Air Force stays with the Northrop-EADS team. However, most of the production would occur in the Mobile, Ala.

But local subcontractors would do work on the tanker.

Boeing wins GAO tanker ruling

WASHINGTON (AP) -- Congressional investigators have upheld Boeing's protest of a $35 billion Air Force tanker contract awarded to Northrop Grumman Corp. and Airbus parent European Aeronautic Defence and Space Co., and recommended that the service hold a new competition.

The Government Accountability Office said Wednesday that it found "a number of significant errors that could have affected the outcome of what was a close competition between Boeing and Northrop Grumman."

The Air Force had no immediate reaction to the GAO findings, saying only that it is aware of the report and will review it.

While the GAO decision is not binding, it puts tremendous pressure on the Air Force to reopen the contract and could help Boeing capture part or all of the award. It also gives ammunition to Boeing supporters in Congress who have been seeking to block funding for the deal or force a new competition.

"Boeing and the American people are the big winners in this decision," said Sen. Maria Cantwell, D-Wash. "The GAO criticisms were a scathing indictment of the Air Force's process. The Air Force will have no choice but to rebid this project."

The contract for 179 aerial refueling tankers is the first of three deals worth up to $100 billion to replace the Air Force's entire tanker fleet over the next 30 years.

The award has become a flashpoint in a heated debate over the military's use of foreign contractors. It has triggered a fierce backlash on Capitol Hill among lawmakers from Washington, Kansas and other states that stand to gain jobs if Chicago-based Boeing succeeds in capturing the deal. Backed by union officials representing Boeing workers and "Buy-American" proponents in Congress, they have painted the competition as a fight between an American company and its European rival.

Sen. Patty Murray, D-Wash., stressed that Congress needs to examine more than just the narrow technical issues raised by the GAO review, including the impact of defense contracts on American jobs.

It seems more and more people agree with this view.

EADS chief: high oil prices here to stay

PARIS (AP) -- The head of Airbus' parent EADS said Wednesday that high oil prices are here to stay and the entire industry -- from airlines to air traffic controllers -- will have to adapt.

"We don't see how the price of oil can fall substantially, even if there is a speculative part in the price," CEO Louis Gallois said during a lunch with journalists in Paris.

Airline profits have been pummeled by surging fuel costs combined with a slowing economy, and Gallois didn't rule out the cancellation or delay of deliveries for new aircraft.

"We are very attentive," he said.

Airbus is cushioned by an order backlog that will take around six years to fill, but Gallois' comments highlight the plight of the industry.

"The increase in oil prices is forcing us to reflect on what the air transport of tomorrow will look like," he said.

Finding more efficient methods of fuel consumption is a question for planemakers, airlines, air traffic controllers, airports and government, he said.

Airbus is being asked by airline bosses including Air France-KLM CEO Jean-Cyril Spinetta to consider making more fuel-efficient planes, he said.

Spinetta has asked for an elongated version of the A380 superjumbo, which Gallois said is "possible," and a replacement for the single-aisle A320.

Airbus has no plans to replace what Gallois called its "cash cow" just yet, and is waiting for engine makers such as Rolls Royce and General Electric who in 3 to 4 years could unveil engines that are 25 percent more efficient, he said.

Light, sweet crude for July delivery rose 24 cents to $134.24 a barrel Wednesday on the New York Mercantile Exchange. Prices surged to a record $139.89 per barrel Monday.

While there have been reports that high oil prices are hurting demand in the U.S., by far the world's biggest oil consumer, demand in booming Asian markets and other parts of the world is accelerating rapidly. That growth ensures worldwide supplies remain tight even as U.S. drivers ease up.

Over the weekend, Saudi Arabia told U.N. Secretary-General Ban Ki-moon that it would increase oil output by 200,000 barrels a day, or 2 percent, from June to July. In May, the country raised production by 300,000 barrels a day.

It may not be much, but I'll cling to any good news out there.

What Inflation? Some Items That Actually Cost Less

(CNBC) Inflation may be climbing faster than the humidity level, but there are still some things that actually cost less than they did a year ago.
Amid all the headlines about soaring energy and food prices, many consumers may not notice that they're getting a break on some items they buy every day.

"People don't often remember [the positives]," said Jim Glassman, senior U.S. economist at JPMorgan Chase. "The economy is not falling apart. It's just stuck."

Friday's report on the consumer price index confirmed the predicted rise in gasoline and food costs, but core prices remained relatively flat. While financial markets cheered the results, they didn't give much comfort to consumers. The latest snapshot of consumer sentiment on Friday showed that it plunged to a 28-year low in June.

With that in mind, here's a look at a few of those things that aren't pinching your wallet.

Electronics

The average price of a point-and-shoot digital camera has fallen $28 from a year ago, to| $178, according to the NPD Group, a consumer tracking service.

The cost of LCD flat-panel TVs is also expected to drop $18 this year, to an average $848, while notebook computers are forecast to fall 9 percent, to $775, according to the Consumer Electronics Association.

Read the full story.

How much of what he's saying resembles what other observers have said?

Market full of oil, price trend "fake": Ahmadinejad By Hashem Kalentari

The market is full of oil and the rising price trend is "fake and imposed," Iran's president said on Tuesday, partly blaming a weak U.S. dollar which he said was being pushed lower on purpose.

"At a time when the growth of consumption is lower than the growth of production and the market is full of oil, prices are rising and this trend is completely fake and imposed," President Mahmoud Ahmadinejad said in a televised speech.

"It is very clear that visible and invisible hands are controlling prices in a fake way with political and economic aims," he said when opening a meeting of the OPEC Fund for International Development in the central Iranian city of Isfahan.

Iran, the world's fourth-largest oil exporter, has repeatedly said the market is well-supplied with crude and blames rising prices on speculation, a weak U.S. currency and geopolitical factors.

"As you know the decrease in the dollar's value and the increase in energy prices are two sides of the same coin which are being introduced as factors behind the recent instability," Ahmadinejad said.

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In today's Breeze ...

Here comes hydrogen to Torrance

Scott Robinson Honda in Torrance and two other Southern California car dealerships will be among the world's first to offer leases on a zero-emission fuel cell vehicle that runs on hydrogen, the Japanese automaker said Monday.

The first commercial production model of the car, the FCX Clarity, rolled off a Honda assembly line in Japan on Monday. About 200 of the vehicles will be part of the milestone leasing program over the next three years in the United States and Japan.

Power Honda Costa Mesa and Honda of Santa Monica also will participate in the leasing program for the FCX Clarity.

"This is an important day in the history of fuel cell vehicle technology and a monumental step closer to the day when fuel cell cars will be part of the mainstream," John Mendel, executive vice president of American Honda Motor Co., the carmaker's North American headquarters, said in a statement.

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OSI Systems, the Hawthorne-based security and technology company, won two contracts totaling about $16 million from two undisclosed international customers, the company said Monday.

The first contract was for multiple Rapiscan Eagle Mobile high-energy X-ray cargo and
vehicle inspection systems. The systems are expected to be deployed by local customs
officials at various land borders for the inspection of inbound trucks for duty evasion and contraband.

The second contract consists of security inspection systems including the Rapiscan Eagle Mobile, the Rapiscan MVXR 5000 automated hold baggage inspection
system and a variety of baggage and parcel inspection X-ray systems. These systems are to be deployed at a major Middle Eastern international airport.

In today's Breeze.

Carson gets a West Coast first
By Muhammed El-Hasan, Staff Writer

Amid the crackle of french fries cooking and the clanking of kitchen utensils, an employee shouts, "Two in the door," as a woman and her young son step inside for lunch.

Soon two becomes dozens as the small eatery fills with hungry customers.

The only Five Guys Burgers and Fries restaurant west of Missouri opened three weeks ago at Carson's Southbay Pavilion mall.

"Probably 15 to 20 percent of our customers in the first two weeks know about us and sought us out because of their experience on the East Coast," said Phil Ratner, who co-owns the casual Carson restaurant.

Burger fans also will be able to eat at Five Guys sites in other parts of Southern California as Ratner and partner Bob Zanolli - two longtime restaurateurs - pursue their goal to open 30franchise locations in the next five years in southern Los Angeles County and northern Orange County.

The pair are planning their second location for Cerritos and are looking at other possible sites including in the South Bay, Zanolli said.

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I wish I were a CEO

CEO pay chugs up in '07 despite economy

NEW YORK (AP) -- As the American economy slowed to a crawl and stockholders watched their money evaporate, CEO pay still chugged to yet more dizzying heights last year, an Associated Press analysis shows.

The AP review of compensation for the heads of companies in the Standard & Poor's 500 index finds the median pay package added up to nearly $8.4 million. That's a comfortable gain of about $280,000 from 2006.

The 3 1/2 percent pay increase for CEOs came even as the landscape for both workers and shareholders darkened considerably and the economy was choked by a housing market in free fall, layoffs and soaring prices for fuel and food.

At the top of the AP list: John Thain, who took the reins of Merrill Lynch on Dec. 1, 2007. His $83 million pay package was supercharged by a signing bonus and other enticements that lured him from the New York Stock Exchange to lead the investment bank as it was suffering its worst-ever losses.

Collectively, the 10 best-paid CEOs made more than half a billion dollars last year. Yet half the members of this stratospheric club were leading companies whose profits shrank dramatically.

The AP examination of CEO pay in 2007 mined data from the 410 companies in the S&P 500 that filed compensation disclosures with federal regulators in the first six months of this year.

The AP's formula, based on data from the past two years, adds up salary, perks, bonuses, above-market interest on pay set aside for later, and company estimates for the value of stock options and stock awards on the day they were granted last year.

That provides a clearer picture than pay totals required by the Securities and Exchange Commission, compensation experts say, because the SEC totals include expenses companies book during the year for previously granted stock compensation and retirement benefits.

The value of stock and options given to CEOs may turn out to be significantly higher or lower if they are ultimately cashed out, but the numbers in the AP formula do reflect the board of directors' estimate of the likely eventual payout.

The median salary figure of about $8.4 million means half the CEOs in the AP analysis made more than that and half made less.

There were some signs companies were pulling back on pay at the top: Out of the 316 companies in the AP survey that had the same CEO two years running, about two-fifths lowered the total pay package for their CEOs. However, the primary culprit for some was falling stock prices that cut into the value of the shares included in pay packages.

In many more cases, overall pay ballooned.

Rick Wagoner, chief executive of General Motors Corp., announced earlier this month the company had to close four plants that make trucks and SUVs because of lagging demand as fuel prices soar. That followed the posting of a $39 billion loss in 2007, a year when its stock price fell by about 19 percent, without adjusting for dividends.

And Wagoner? His pay rose 64 percent, to $15.7 million.

Last year was rocky for the economy and the stock market, making it a useful test of a concept called pay for performance -- a term companies use to sell shareholders on the idea CEOs are being paid based on how well the company does.

According to this concept, trotted out frequently by the compensation committees of corporate boards in their proxy statements, a big chunk of CEO pay is considered "at risk," meaning it could disappear if CEOs don't meet established metrics.

But the AP analysis found that CEO pay rose and fell regardless of the direction of a company's stock price or profits.

Take KB Home, battered by the subprime lending crisis and the weak housing market. According to the Los Angeles-based homebuilder's proxy statement, CEO Jeffrey Mezger is entitled to a cash bonus based on a percentage of KB's profit.

The problem was there was no profit. KB Home lost almost $930 million in 2007 and its stock lost 60 percent of its value. But Mezger still made $24.4 million, as valued by the AP, including a $6 million cash bonus.

He pocketed that bonus because he exceeded certain objectives the board had set out for him. Among them were improving performance on a customer satisfaction survey and developing senior leadership in his first year as CEO.

"Compensation has become a shell game," said Richard Ferlauto, director of pension and benefits policy for the American Federation of State, County and Municipal Employees, a Washington labor group representing government workers.

How long will this dip last?

Oil Falls for a Second Day as Saudi Arabia May Increase Output

June 16 (Bloomberg) -- Crude oil fell for a second day in New York on speculation Saudi Arabia will increase production, reducing risks to global growth from near-record energy prices.

Saudi Arabia, the world's biggest oil exporter, may announce an output increase at a meeting it is hosting in Jeddah on June 22, an OPEC official said yesterday. The Middle East kingdom will pump an extra 200,000 barrels a day next month, Agence France- Presse reported yesterday, citing United Nations Secretary- General Ban Ki-Moon. This would boost world supply by 0.2 percent.

``I wouldn't be surprised if they do'' increase output, Peter McGuire, managing director of Commodity Warrants Australia Pty in Sydney, said in a Bloomberg Television interview. ``It's just a little bit in their hands. When you control the spigot, you control the refineries, you control the whole game.''

Crude oil for July delivery fell as much as $1, or 0.7 percent, to $133.86 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $134.05 a barrel at 12:01 p.m. in Singapore.

The contract dropped 1.4 percent to settle at $134.86 a barrel on June 13, taking last week's decline to 2.7 percent.

``Everybody is going to take a wait and see approach on this,'' said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. ``It's prudent for people to back off and see what happens.''

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But how much will this impact the price?

UN chief sees Saudis move on oil

(BBC) UN Secretary-General Ban Ki-moon says major oil producer Saudi Arabia views current prices as "abnormally high".

He also said that the country, the leading producer in the Opec cartel of oil output nations, is willing to take action to bring prices down.

Mr Ban was speaking after a meeting with the Saudi monarch, King Abdullah.

Oil prices fell on Friday after reports that Saudi Arabia might boost oil production. US light, sweet crude was trading at $134.86 in New York.

'Adequate levels'

Speaking after the weekend talks in Jeddah, Mr Ban said: "He [King Abdullah] acknowledged that the current oil prices are abnormally high due to speculative factors and some other national government policies.

"He is willing to what he can to [bring] the price of oil to adequate levels."

And he added that the Saudis, who appear poised to take "concrete measures", also seemed "to be considering very seriously how they can address this issue by increasing production".

Read the full story.

Question: When will it end?
Answer: Don't hold your breath.

US foreclosure filings surge 48 percent in May

WASHINGTON (AP) -- Soaring foreclosures are continuing to raise questions about the mortgage industry's claims that lenders are making a dent in the housing crisis.
Foreclosure filings last month were up nearly 50 percent compared with a year earlier. Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, foreclosure listing service RealtyTrac Inc. said Friday.

The latest grim foreclosure news comes as criticism mounts that efforts by government and the mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners. Critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.

"It's clear that these voluntary efforts in and of themselves cannot really make a dent," said Allen Fishbein, director of credit and housing policy at the Consumer Federation of America. "Government intervention is going to be necessary."

Mark Zandi, chief economist of Moody's Economy.com and an adviser to Republican John McCain's presidential campaign, wrote earlier this week that "the Bush administration's efforts to encourage loan modifications and delay foreclosures are being completely overwhelmed."

A Credit Suisse report from this spring predicted that 6.5 million loans will fall into foreclosure over the next five years, reaching more than 8 percent of all U.S. homes.

Sobering statistics like these are leading to more calls for government intervention, especially from lawmakers pushing a plan for the government to guarantee as much as $300 billion in new loans to help borrowers refinance into cheaper, fixed-rate mortgages.

A new government report released Wednesday found that among mortgages held by nine large banks, including Bank of America and Citigroup Inc., foreclosures climbed to 1.23 percent of all loans in March from 0.9 percent in October.

In a speech, Comptroller of the Currency John Dugan said the federal agency conducted its own examination of foreclosures and loan modifications after finding "significant limitations" with data collected by trade groups like Hope Now.

"Virtually none of the data had been subjected to a rigorous process to check for consistency and completeness," Dugan said. "They were typically responses to surveys that produced aggregate, unverified results from individual firms."

The comptroller's report found that 2.7 percent of seriously delinquent mortgages had been modified as of March, up from 1.8 percent in November 2007.

The industry has continued to favor repayment plans, which help borrowers get back on track after missing a few payments, rather than permanent loan modifications, such as lower interest rates.

Faith Schwartz, executive director of Hope Now, said in an e-mailed statement that the group's statistics "encompass more member data and provide a broader view of the range of solutions delivered by a larger number of mortgage servicers."

Rep. Barney Frank, D-Mass., said this week that Dugan' analysis shows that "much more aggressive action is needed."

The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't get refinanced into an affordable loan.

Making matters worse, mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent this week, the highest level in nearly eight months and up sharply from 6.09 percent last week.

According to the RealtyTrac report, one in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.

Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.

Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, Calif. and the Cape Coral-Fort Myers area in Florida.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices, the company said.

In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.

Rick Sharga, RealtyTrac's vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. "I don't think we've seen the high point," he said.

About 50 to 60 percent of borrowers who receive foreclosure filings are likely to lose their homes, Sharga said. The rest are likely to be able to sell or refinance.

As foreclosed properties pile up, they add to the inventory of homes on the market and drag down home prices. The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.

Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 percent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody's Economy.com.

In some neighborhoods, lenders are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers. While that's a positive for the real estate market, buyers in other parts of the country are still holding back.

"I think a lot of people are waiting to see if we really have hit the bottom," Sharga said.

Lehman Brothers economist Michelle Meyer said in a report Thursday that U.S. home sales are likely to hit bottom at the end of this summer, but said a recovery in sales is likely to be "feeble."

ESPN said Thursday that it had agreed to purchase Student Sports Inc., a Torrance-based high school-focused digital media and event production company.

The price was not divulged.

Student Sports was founded by Andy Bark, the company's president and CEO. Bark will continue with the company after the deal is completed.

Student Sports has been involved in producing high school sports content for 22 years. Its assets include StudentSports.com and DyeStat.com, and more than 160 events such as Elite 11, Area Code Baseball and Nike Combines/Nike SPARQ Mini Camps, all of which will be integrated into ESPN's recently announced high school initiative ESPN RISE.

The fight over Yahoo isn't over yet.

Yahoo seeks Google's aid after Microsoft talks die

SAN FRANCISCO (AP) -- Yahoo Inc. became Microsoft Corp.'s takeover prey largely because Google Inc. established such a commanding lead in the Internet's lucrative search advertising market.

But after eluding Microsoft's grasp, Yahoo is now turning to Google to help squelch a rebellion among its shareholders who believe it should have accepted Microsoft's $47.5 billion buyout offer while it was still available last month.

Yahoo announced its decision to let Google handle some of its advertising sales late Thursday, just a few hours after revealing it unsuccessfully tried to persuade Microsoft to renew its previous offer of $33 per share. The snub caused Yahoo to conclude that there is no hope for any kind of deal with Microsoft.

Although Yahoo believes Google could help boost its annual revenue by $800 million, the advertising partnership wasn't enough to ease the disappointment of investors who had been holding out hope for a Microsoft deal.

Yahoo shares plunged $2.63, or 10.1 percent, to finish Thursday at $23.52 and shed another seven cents after the market closed.

Part of the problem for Yahoo is that antitrust concerns might prevent an alliance with Google.

Google already holds about 75 percent of the $11 billion search advertising market in the United States with Yahoo a distant second at 9 percent, according to the research firm eMarketer Inc.

Microsoft and a variety of consumer-interest groups already have signaled they will turn up the political heat in an attempt to prevent Google from working with Yahoo.

The outcry already has drawn the attention of U.S. Sen. Herb Kohl, chairman of the Senate subcommittee on antitrust, competition policy and consumer rights.

"The consequences for advertisers and consumers could be far-reaching and warrant careful review, and we plan to investigate the competitive and privacy implications of this deal further," said Kohl, a Wisconsin Democrat.

Yahoo and Google have voluntarily agreed to wait until late September to begin working together to give the government adequate time to review the