The Washington Post
Washington Business
Local Digest
DEFENSE
Lockheed to Cut 600 More Jobs
Lockheed Martin will cut 600 more jobs in New York following the cancellation last month of its contract to develop and build the next U.S. presidential helicopter. The Bethesda-based company announced the plans to workers at the Owego, N.Y., plant, where it installed electronic equipment on the VH-71 helicopters.
The cuts will contribute to a 25 percent reduction in the total number of workers at the Owego facility, to about 3,000 by the end of the year. Lockheed in May said it planned to eliminate 130 jobs at the plant related to work on various contracts, including the VH-71. The company said this is the last round of job cuts related to the program.
Lockheed’s 2005 contract to build the next helicopter for the U.S. president, originally valued at $6.5 billion, was canceled by the Navy on June 1 after costs doubled to $13 billion. The fleet wouldn’t have been fully operational until 2021, more than six years behind schedule, partly because of changing specifications.
— Bloomberg News
INVESTING
CapitalSource Offering Priced at $4.10
CapitalSource, a commercial lender and money manager based in Chevy Chase, reported that its offering of 17.5 million shares has been priced at $4.10 per share. The company said it has granted the underwriters a 30-day option to buy an additional 2.6 million shares to cover over-allotments, if any. Shares finished Tuesday’s trading at $4.65. Last week the company said that it also plans to offer $300 million in senior notes due 2014.
— Associated Press
MERGERS & ACQUSITIONS
AOL Makes Third Acquisition in a Month
AOL, the Internet unit being spun off from Time Warner, bought the mixed-martial-arts Web site MMAFighting.com, its third acquisition in a month, to draw online advertisers. Terms weren’t disclosed.
— Bloomberg News
The Markets
Dow Jones Industrial Average
11,900 10,800 9700 8600 7500 6400
Nasdaq Composite Index
2500 2250 2000 1750 1500 1250
S&P 500 Index
1350
1175 1000 825 650
932.68 +3.0 +3.3 1862.90 +3.5 +18.1
Watergate Hotel to Go on Auction Block Tuesday
By Lisa Rein
Washington Post Staff Writer
The Watergate Hotel will be auc- tioned Tuesday, five years after a de- veloper bought it with hopes of re- storing it to its glory days as a Wash- ington icon.
Alex Cooper Auctioneers will take bids that morning at the company’s Wisconsin Avenue offices from po- tential buyers with the capital to in- vest in one of the city’s most famous buildings in the weakest economy in decades.
The city’s 30-day notice of foreclo- sure, sent to hotel owner Monument Realty last month after the company defaulted on its loan, expires today. The notice lists an outstanding $40 million balance on the loan. Monument officials said two weeks ago that they hoped the lender, New York-based PB Capital, could agree to new terms before the property across from the Kennedy Center was forced into foreclosure. But appar- ently new investors did not step for- ward in time.
The hotel has been shuttered since 2004, when Monument bought it. It is not the first commercial prop- erty in the region to go on the auc- tion block in recent months. But the sale of the hotel, part of the complex of six buildings made famous by the 1972 burglary that led to President Richard M. Nixon’s resignation in 1974, is a signal that even such a prominent property is not immune. Monument, in particular, was hurt by bad timing. Lehman Broth- ers, a partner and equity investor in
2005 PHOTO BY JOE RAEDLE — GETTY IMAGES
Monument Realty bought the Watergate Hotel five years ago but recently defaulted on its loan.
the property, declared bankruptcy last year. The developer had also been delayed by a legal battle with neighbors over its initial plans to turn the hotel into luxury co-ops. By the time Monument was ready to re- develop it last year as a luxury hotel, the market had soured. Monument spokeswoman Na- tasha Stancill declined to comment
last night on the auction. William Diedrich, who lives in
Watergate East, the residential tow- er whose residents challenged the conversion in court, called the auc- tion a potentially “good thing” be- cause a new owner could revive plans to restore the hotel. “We want to keep the place lit at night,” he said. “We want to keep it alive.”
The listing on Alex Cooper’s Web site does not name the Watergate but describes a “12-story, multi-unit hotel with garage space and lease- hold interest in portion of adjacent building.” The winning bidder will be required to put down $1 million.
Staff writer James Hohmann contributed to this report.
SMALL
CHANGE
voices.washingtonpost. com/small-change
Bulk Up Your Savings to Build Money Muscle
I asked Richard Barrington, the primary spokesman and personal finance expert for MoneyRates.com, for his views on saving money. Besides working for the Web site, which examines bank account rates, he is a freelance writer and novelist who spent over 20 years as an investment industry executive. Here’s what he had to say: “Yes, the recession is dragging on, the stock market is sputtering again, and interest rates are low. It’s an era of diminished expectations, one where we have to return to the basics like saving more money —which is about as fun as being told to eat your vegetables.
Gannett Profit Beats Expectations Even as Revenue Falls
By Frank Ahrens
Washington Post Staff Writer
McLean-based Gannett — the nation’s largest publisher of news- papers, including USA Today — said yesterday that it posted a $70.5 million profit in the second quarter, compared with a loss last year, despite a continue slide in ad- vertising revenue. The results were better than ana-
lysts had expected and sent Gan- nett stock soaring; it closed up 29 percent, to $4.50 per share. The profit came from cost-cut- ting, not growth. And the company predicted that revenue would con- tinue to dip in its broadcast unit next quarter.
“The decline in our operating ex- penses reflects our efforts to achieve efficiencies and further consolidations company-wide, fur- loughs in the current quarter and significantly lower newsprint ex-
pense,” chief financial officer Gra- cia Martore said in a statement. For the second quarter of this
year, Gannett reported net income of $70.5 million (30 cents per share) on $1.4 billion in revenue, compared with a net loss of $2.3 billion ($10.03) on $1.7 billion in revenue in the second quarter of 2008.
Gannett’s big second-quarter loss in 2008 was driven by a $2.8 billion write-down in the value of assets the company recorded be- cause of the declining value of newspapers.
The turnaround in the second quarter was driven by cost-cutting. Excluding the big write-down last year, Gannett managed to cut costs 19.7 percent between the second quarter of this year and last. Gannett said earlier this month that it would cut about 1,400 jobs across the company’s 84 daily pa- pers, less than a year after it cut 10
percent of its workforce. The com- pany also has imposed furloughs and wage freezes.
Also in the second quarter, Gan- nett shut down the print operations of its Tucson Citizen newspaper to save money.
“I suspect what the stock market is reflecting is some kind of belief that ‘Gee, Gannett’s still profit- able,’ ” newspaper analyst John Morton said of yesterday’s stock spike. “But the problems that have [recently] driven revenues down . . . show no sign they’re going to go away anytime soon.” For the year, shares of Gannett
are down 55 percent. Broken down by segment, Gan- nett’s more than 80 newspapers had the worst quarter. Publishing revenue was down 25.8 percent compared with the corresponding quarter last year, as advertising plummeted 32 percent. At USA To- day, paid ad pages dropped from
Get quotes and create customized lists to monitor your investments at washingtonpost.com/markets.
Daily Stock Market Performance
Index
8616.21
Close %Chg
+3.1
Daily
%Chg
–1.8
YTD
Industry Group
Consumer Finance
S&P 500 Industry Group Snapshot
Daily
Real Estate Mgmt & Dev Building Products
Semiconductors & Semi Eqp Paper & Forest Products Health Care Eqp & Suppl Pharmaceuticals Biotechnology
Health Care Providers Hotels Restaurants & Leis
%Chg
9.93 7.47 5.87 5.76 5.40 1.03 0.81 0.77 0.60 0.29
–10.0% 0 +10.0%
Commodities
Futures
Copper Corn
Crude Oil Gold
Natural Gas
831 in the second quarter of 2008 to 602 in the second quarter of this year. If there was any consolation for Gannett’s U.S. properties, it came from the company’s British papers, where revenue was down even more.
At Gannett’s 23 television sta- tions, second-quarter revenue was down 19.7 percent compared with last year. “Based on current trends, we would expect the percentage de- cline in television revenues to be in the mid-twenties for the third quar- ter of 2009 compared to the third quarter of 2009,” the company said, largely from the lack of Olym- pic and political advertising that aired last year.
Gannett’s digital unit, which in- cludes its CareerBuilder job-search site, was the lone growth story in the earnings. The unit reported $142 million in revenue in the sec- ond quarter, up from $20 million in the comparable period last year.
“Let’s talk about those low interest rates on your savings accounts. A 2 percent interest rate with 1 percent deflation these days is worth as much as a 6 or 7 percent interest rate was under normal inflation conditions. You wouldn’t say no to 6 or 7 percent, would you? Because most of us have never seen deflation before, we have to readjust our thinking. Do the math and you’ll see it’s true: 2 percent is the new 6 percent. “Also, because the limit on FDIC deposit insurance has been raised to $250,000 through the end of 2013, it gives you more opportunity for pooling your deposits with one bank. Why is this important? Because banks often offer fee waivers and/or higher interest rates to large depositors. So, as you accumulate money, make sure you use that additional financial muscle to get better deposit terms.
“Naturally, building muscle depends on a steady diet, so here’s how to feed your savings account: Create a regular spending plan, and pay into it just like paying a monthly bill. Direct-deposit programs can help.
“Use an Internet resource to shop for the most competitive rates and terms on savings accounts — and look for those special offers on larger accounts, if you have that kind of money available.”
—Nancy Trejos
Data and graphics by
S
Thursday, July 16, 2009 A19
$2.3825 $3.2950 $61.54
$939.40 $3.28
Close %Chg
+4.0 –2.7 +3.4 +1.8 –4.3
Daily
Orange Juice Silver
Soybeans Sugar Wheat
Value of $1000 invested for the past:
Daily
International Stock Markets
Daily
Americas
Brazil (Bovespa) Canada (S&P/TSX Comp.) Mexico (Bolsa)
Europe
Eurozone (DJ Stoxx 600) France (CAC 40) Germany (DAX) U.K. (FTSE 100)
Asia Pacific
J A S O N D J
Company
3M
Alcoa
AmExp AT&T BoA
Boeing
Caterpillar Chevron Cisco
Coca-Cola Du Pont
Exxon Mobil GE
Dow Jones 30 Industrials
Daily
Close
62.00
10.14 27.22 23.97 13.42 41.36 33.84 64.57 19.81 50.53 26.98 68.44 12.24
Home Depot 24.08 HP
38.82
%Chg %Chg
2.3
YTD
7.8
5.7 11.3
–9.9 46.7
2.2 –15.9 4.0 2.4
–4.7 –3.1
6.0 –24.2 2.5 5.8 2.5 5.6
–12.7 21.5 11.6 6.6
3.4 –14.3 5.2 –24.4 1.7 4.5
4.6 7.0
Other Measures
DJ Total Stock Market Index 9551.79
Index
Russell 2000
F M A M J
Company
IBM
Intel J&J
JPMorgCh Kraft Foods McDonald's Merck
Microsoft P&G
Pfizer Travelers
United Tech Verizon
Wal-Mart Walt Disney
Close
107.22
18.05 58.96 36.26 27.53 57.08 27.71 24.12 54.65 15.02 40.35 53.75 29.34 48.55 24.08
Daily
7.2 1.3 4.5 2.0
–0.7 2.0 4.4 2.1
J
%Chg %Chg
3.8
YTD
27.4
23.1 –1.5 15.0 2.5
–8.2 –8.8 24.1
–11.6
0.8 –15.2 2.0 –10.7 4.2 1.3
0.9 –13.4 4.2
–13.5 6.1
Interest Rates
Consumer Rates
Close
515.64
Post-Bloomberg DC Area Index 155.94 CBOE Volatility(VIX)
25.89
Daily%Chg YTD%Chg
3.0 3.9 3.2 3.5
5.1 3.2 5.2
–35.3
Money market funds 6-Month CDs 1-Year CDs 5-Year CDs New car loan Home-equity loan
1.24 1.31 1.68 2.62 7.11
8.64
0.51% 0.25% 3.25%
Bank Prime Federal Funds LIBOR 3-Month
4.00% 4.85% 5.36%
30-Year fixed mortgage 15-Year fixed mortgage 1-Year ARM
0.3
Australia (ASX 200) China (CSI 300) Hong Kong (Hang Seng) Japan (Nikkei)
3924.50 3493.31
18,258.66 9269.25
Cross Currency Rates
EU €
US $
US $ per EU € per
Japan ¥ per Britain £ per Brazil R$ per
Canada $ per Mexico $ per
0.7089 94.2475 132.9675
0.6090 0.8591 0.0065 1.9326 1.1151
2.7263 0.0205 1.5731 0.0118
13.5475 19.1086 0.1437 Japan ¥
1.4107 0.0106 0.0075
1.5 1.1 2.1 0.1
Britain £ 1.6421
Brazil R$ Canada $ Mexico $ 0.5174
1.1640 0.3668
0.8968 0.0738 0.6357 0.0523
154.7700 48.7672 84.5300 6.9568 0.3151
3.1739 1.8310 0.5770
0.5461 0.0450 1.7332 0.1427 0.0823
22.2464 7.0100 12.1491
Treasury Performance Over Past Three Months
10-year note
Yield:
3.61
5-year note
Yield:
2.51
2-year note
Yield:
1.02
6-month bill
Yield:
0.27
Note: Bank prime is from 10 major banks. Federal Funds rate is the market rate, which can vary from the federal target rate. LIBOR is the London Interbank Offered Rate. Money market rate is the yield paid by Merill Lynch Ready Assets. The 6-month CD average is fromBankrate.
Close
51,296.66 10,215.46 25,336.33
209.08 3171.27 4928.44 4346.46
%Chg
5.0 2.3 4.1
2.7 2.9 3.1 2.6
YTD%Chg
–100%
0% +100%
Exchange-Traded (Ticker) %Chg
Coffee (COFF.L) Copper (COPA.L) Corn (CORN.L) Cotton (COTN.L) Crude Oil (CRUD.L) Gasoline (UGAS.L) Gold (BULL.L)
1.2 4.8 1.2 1.9 1.5 1.9 1.4
Natural Gas (NGAS.L) Silver (SLVR.L)
–1.7 2.0
Gainers and Losers from the S&P 1500 Index
Gainers
Gannett Co Inc Rudolph Techn
Methode Electronics AM Castle & Co Enzo Biochem Inc Agilysys Inc AAR Corp
Alliance Data Sys Insight Enterprises Neenah Paper Inc Spherion Corp
SuperiorWell Svcs NCI Building Sys LCA-Vision Inc
Brush Engineered Smith Micro Sftwr Life Time Fitness RC2 Corp
Boston Privte
Close %Chg
$4.50 28.9 $7.27 21.8 $7.85 20.8 $11.98 16.7 $4.44 16.5 $4.68 16.4 $17.95 15.7 $43.29 14.5 $9.60 13.7 $8.51 13.6 $3.99 13.4 $6.31 13.3 $2.69 12.6 $3.99 12.4 $17.15 12.4 $10.47 12.2 $21.22 12.2 $14.96 12.0 $5.35 11.9
Daily
Cedar Shopping Cntr $5.07 11.9
Losers
UCBH Holdings Inc JB Hunt Trans Svcs Central Pacific Fin Hanmi Financial Yum! Brands Inc HUB Group Inc
Drew Industries Inc
Close %Chg
$1.09 –12.1 $26.72 –9.8 $2.45 –6.5 $1.30 –6.5 $34.05 –5.5 $18.75 –4.0 $12.42 –3.6
Daily
Arkansas Best Corp $26.29 –3.5 Pharm Product Dev Lufkin Industries
Abbott Laboratories $45.28 –2.6 Knight Trans
Tollgrade Comm Con-way Inc Covance Inc
Heartland Express Werner Enterprises Total SystemSvcs CSG Systems Intl
$21.10 –3.3 $39.52 –3.0
$16.16 –2.3 $5.13 –2.3 $33.48 –2.1 $47.63 –2.1 $14.55 –2.1 $18.63 –1.8 $12.80 –1.8 $13.68 –1.7
Landstar SystemInc $34.38 –1.6
$700
$1.0285 $13.20
$10.2050 $0.1777 $5.3475
day
$1000
Close %Chg
+5.2 +2.7 –1.4 +0.5 +0.9
Daily
month
$1300
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