Beverly Perdue’s support for a “Founder’s Credit” is generating a lot of buzz among entrepreneurs and investors who have long lobbied for tax incentives that would encourage the launching of new companies and investments in them.
Details of what Perdue has in mind are expected to be included in her budget proposal next week. In a press release, the governor’s office made this reference to the potential tax break:
“Founder’s Credit: Establish a Founder’s Credit, which will exclude initial stock investments in certain North Carolina start-up companies from capital gains. This will encourage innovation and entrepreneurship.”
Richard Holcomb, a founder of several high-tech ventures and currently chief executive officer at RTP-based StrikeIron, is a longtime critic of North Carolina tax policy. He has experienced that first hand, selling two ventures.
“North Carolina’s current treatment of founders stock gains as ordinary income encourages most successful entrepreneurs to leave the state when they have an exit from their company,” Holcomb told Local Tech Wire.
“As more than one successful entrepreneur has said to me after selling his/her company ‘I can stay in N.C. and pay over $1 million in state income taxes or I can move to Florida and use that $1 million to buy a house.’
“They all still live in Florida. It’s a pretty easy choice for most folks.”
David Jones, a partner at venture capital firm Southern Capitol Ventures, said a “founders” credit would stimulate growth.
“We feel this would be a great step towards continuing to spur entrepreneurial companies and investment in N.C.,” Jones explained.
“This Founder’s Credit would essentially encourage more entrepreneurs and seed/early stage investors into the market as neither would be taxed on any long-term value creation,” he added. “The devil is always in the details with this type of proposed bill, so we’ll see how it develops, but on the surface it would be a great step for N.C.”
Sam Taylor, president of the North Carolina Biotechnology Information Organization, likes what has heard so far from Perdue. NCBIO
has delivered a detailed proposal to the governor.
"The [Founder’s] Credit encourages both founders and the early stage investors that work with them to take the risks necessary to launch new businesses that are based on new technologies or other innovations,” Taylor said. “Capitalization of these earliest-stage companies has long been one of North Carolina's most difficult entrepreneurial challenges. The Credit is aimed squarely at this issue and will help generate deal flow for later stage venture investors and, ultimately, for new products and new jobs."
Entrepreneurs believe a credit would be “helpful,” said Joan Seifert Rose, president of the Council for Entrepreneurial Development, which is one of the largest such groups in the United States.
“This is something many members have expressed an interest in,” she said.
N.C. Technology Association CEO Brooks Raiford echoed Rose’s remarks. NCTA members toured the General Assembly earlier this week to tout the importance of technology to the state’s economy but were warned that tax cuts or incentives would be difficult to manage in a state budget that could run in the red as much as $3 billion.
“Yes, we are supportive – in fact it is a specific item on our legislative agenda,” Raiford said of the Founder’s Credit . Representative Ty Harrell introduced a bill along these lines last year that NCTA supported.
{[The] basic reason is that it serves as an incentive to invest in start-up companies in North Carolina, which fuels business and job growth. Simple as that.”
Bill Warner, an angel investor and entrepreneur in the Triangle, hailed Perdue’s support.
“Yes, it would be good news for founding entrepreneurs and for angel investors,” Warner said. “It would give founders of companies a little bit more incentive and ultimate reward upon liquidating their shares, and it would be an attractive incentive for investors who would get preferential capital gains treatment upon liquidation of their shares.”
If North Carolina chooses not to endorse such a credit, the state will continue to pay a price in exiting entrepreneurs if no changes are made, according to Holcomb.
“The current treatment of founders gains ‘encourages’ most successful entrepreneurs to move to other states with no tax on founders stock,” he explained. “N.C. not only loses the tax dollars it hopes to collect from these people, but it also loses those entrepreneurs who will start their next company in Florida or Texas and not North Carolina.”
Jones, the venture capitalist, said entrepreneurs face numerous taxing challenges that are harmful to starting new ventures.
“Right now founders are faced with the potential of significant capital gains upon sale of their company and as a result may decide to change their state of domicile to a tax free state or at minimum spend countless time and money with accountants and financial advisors to minimize this capital gains tax,” he said.
“Two tools currently used by companies and investors are the current N.C. Qualified Business Tax Credit and the IRS 83b Election. The N.C. Business Tax Credit does not apply to the founders or persons operating in the company, and the IRS 83-b election essentially allows founders to pay the tax on restricted stock at today’s value and it then grows tax free.
“The proposed legislation would certainly spur more high-growth startups in N.C. and perhaps be a good start to help rebuild the angel community and entice more investment at the early stages of company development,” he added. “If passed, this would continue to support it being one of the best times to start a company in N.C. The one potential downside could be that it might lead investors and entrepreneurs into more short-term thinking, i.e. buy and flip instead of staying focused on building a long-term sustainable company.”
14 Mart 2009 Cumartesi
Warren Buffett loses top credit rating
Warren Buffett's investment company has lost its top credit rating, in part because of its reliance on its 78-year-old founder.
Fitch, the credit-rating agency, stripped Berkshire Hathaway of its AAA grade last night, citing risks stemming from derivatives holdings and Buffett's role as chief investment officer. The other two major credit-rating agencies, Standard & Poor's and Moody's, still rate Berkshire triple-A.
Buffett, the legendary US investor dubbed the Sage of Omaha, was knocked off top spot in the Forbes rich list this week by a resurgent Bill Gates. He recently had to tell investors in his company that 2008 had been the worst year since he took the helm 44 years ago.
Fitch said that Buffett's role as chief investment officer puts the company at risk if he becomes unable to do the job. The agency cut the issuer default rating on Berkshire to AA+ and senior unsecured debt to AA. The insurance and reinsurance units kept their AAA status, but Fitch talked of a negative outlook for all divisions.
"Fitch views this risk as unrelated to Mr Buffett's age, but rather Fitch's belief that Berkshire's record of outstanding long-term investment results and the company's ability to identify and purchase attractive operating companies is intimately tied to Mr Buffett," the agency said.
General Electric also suffered the indignity of seeing its credit rating downgraded yesterday. It was relegated to AA+ by Standard & Poor's, after holding the top AAA rating for more than 60 years. S&P said that GE was under "increasing earnings pressure, due to the recent sharp deterioration in general economic conditions around the globe".
Fitch, the credit-rating agency, stripped Berkshire Hathaway of its AAA grade last night, citing risks stemming from derivatives holdings and Buffett's role as chief investment officer. The other two major credit-rating agencies, Standard & Poor's and Moody's, still rate Berkshire triple-A.
Buffett, the legendary US investor dubbed the Sage of Omaha, was knocked off top spot in the Forbes rich list this week by a resurgent Bill Gates. He recently had to tell investors in his company that 2008 had been the worst year since he took the helm 44 years ago.
Fitch said that Buffett's role as chief investment officer puts the company at risk if he becomes unable to do the job. The agency cut the issuer default rating on Berkshire to AA+ and senior unsecured debt to AA. The insurance and reinsurance units kept their AAA status, but Fitch talked of a negative outlook for all divisions.
"Fitch views this risk as unrelated to Mr Buffett's age, but rather Fitch's belief that Berkshire's record of outstanding long-term investment results and the company's ability to identify and purchase attractive operating companies is intimately tied to Mr Buffett," the agency said.
General Electric also suffered the indignity of seeing its credit rating downgraded yesterday. It was relegated to AA+ by Standard & Poor's, after holding the top AAA rating for more than 60 years. S&P said that GE was under "increasing earnings pressure, due to the recent sharp deterioration in general economic conditions around the globe".
Credit Cards The Next Biggest Credit Crunch?
Greensboro, NC -- The casualties of the economic crisis keep piling up. Some predict credit cards could be the next pitfall of this recession. That's why credit card companies are rethinking how they do business.
Prominent Banking Analyst, Meredith Whitney warns in a Wall Street Journal opinion piece that "credit cards are the next credit crunch." She estimates two trillion dollars of credit card lines will be cut this year another 2.7 trillion, by the end of next year.
Many economists agree a big pull back on that credit could further slow already weak consumer spending. Individuals who are actually good borrowers who can repay their loans, their credit cards, but the banks are just being too cautious and are going to cut those as well.
If your lender cuts your credit line you can ask them to raise it back up. That way, you can improve your debt to credit ratio. Also you can ask for a lower interest rate. Consider transferring your balance to another credit card with a lower rate or higher credit limit. But be aware of any balance transfer fees and penalties.
Prominent Banking Analyst, Meredith Whitney warns in a Wall Street Journal opinion piece that "credit cards are the next credit crunch." She estimates two trillion dollars of credit card lines will be cut this year another 2.7 trillion, by the end of next year.
Many economists agree a big pull back on that credit could further slow already weak consumer spending. Individuals who are actually good borrowers who can repay their loans, their credit cards, but the banks are just being too cautious and are going to cut those as well.
If your lender cuts your credit line you can ask them to raise it back up. That way, you can improve your debt to credit ratio. Also you can ask for a lower interest rate. Consider transferring your balance to another credit card with a lower rate or higher credit limit. But be aware of any balance transfer fees and penalties.
Whitney says credit cards are the next credit crunch
Prominent banking analyst Meredith Whitney warned that "credit cards are the next credit crunch," as contracting credit lines will lower consumer spending and hurt the U.S. economy.
"Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is underappreciated is the role of credit-card availability in that spending," Whitney wrote in the Wall Street Journal.
She said though credit was extended "too freely over the past 15 years" and rationalization of lending is unavoidable, what needs to be avoided was "taking credit away from people who have the ability to pay their bills."
Whitney said available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone, and she estimates over $2 trillion of credit-card lines will be cut within 2009, and $2.7 trillion by the end of 2010.
"Inevitably, credit lines will continue to be reduced across the system, but the velocity at which it is already occurring and will continue to occur will result in unintended consequences for consumer confidence, spending and the overall economy," Whitney said.
Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon, she said.
"Lenders, regulators and politicians need to show thoughtful leadership now on this issue in order to derail what I believe will be at least a 57 percent contraction in credit-card lines," she said.
Over the past 20 years, Americans have also grown to use their credit card as a cash-flow management tool, she said adding that 90 percent of credit-card users revolve a balance at least once a year, and over 45 percent of credit-card users revolve every month.
Whitney said the five lenders which dominate two thirds of the credit-card market need to work together to protect one another and preserve credit lines to able paying borrowers by setting consortium guidelines on credit.
"Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is underappreciated is the role of credit-card availability in that spending," Whitney wrote in the Wall Street Journal.
She said though credit was extended "too freely over the past 15 years" and rationalization of lending is unavoidable, what needs to be avoided was "taking credit away from people who have the ability to pay their bills."
Whitney said available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone, and she estimates over $2 trillion of credit-card lines will be cut within 2009, and $2.7 trillion by the end of 2010.
"Inevitably, credit lines will continue to be reduced across the system, but the velocity at which it is already occurring and will continue to occur will result in unintended consequences for consumer confidence, spending and the overall economy," Whitney said.
Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon, she said.
"Lenders, regulators and politicians need to show thoughtful leadership now on this issue in order to derail what I believe will be at least a 57 percent contraction in credit-card lines," she said.
Over the past 20 years, Americans have also grown to use their credit card as a cash-flow management tool, she said adding that 90 percent of credit-card users revolve a balance at least once a year, and over 45 percent of credit-card users revolve every month.
Whitney said the five lenders which dominate two thirds of the credit-card market need to work together to protect one another and preserve credit lines to able paying borrowers by setting consortium guidelines on credit.
How to Lower Your Credit Card Interest Rate
If you have a credit card, you might be getting a letter in the mail with some bad news: your credit card company is jacking up your interest rate.
Never mind if you've been an excellent customer, whose always paid your bills on time. Some of the biggest credit card companies, including Capital One, Citibank, and HSBC, are now raising rates on millions of customers.
They're blaming the bad economy for the rate hikes. But wait: there might be a way you can get the rate increase reversed on your account.
Listen to the case of Stacey K (who asked us not to use her full name for privacy reasons). She had a Capital One VISA for 15 years and told us she can't remember ever missing a payment. She got a notice from Capital One in late February that her rate was being raised from 7.9% to 17.9% on purchases, and to a whopping 24.9% on cash advances.
The notice said if she wouldn't agree to the rate hike, they would close her account in May. She was angry that they'd do this to a customer who says she has a spotless credit history.
So I got on the phone with Stacey, and together we called the toll-free customer service number of the back of her card, to get some answers. The Capital One rep said the company was raising the rates on most of its 37 million credit cards because of current "economic conditions." She told us it didn't matter how reliable those customers had been.
I asked the rep if there was anything Stacey could do to avoid getting her interest rate raised. "Nothing," the rep told me over and over. Being a pushy investigative reporter, I pressed her repeatedly, asking her if there was any way Stacey could appeal the rate hike. Finally, two minutes later, the representative agreed to review Stacey's account history, and suddenly, she said that the customer did in fact qualify for a special "offer," that would keep her interest rate at 7.9% for at least ten more months.
So why did Capital One offer Stacey this reprieve from getting smacked with a higher rate? Cap One's PR person, Pam Girardo, told me "decisions to modify terms are made on a case by case basis depending on the individual customer's circumstances." Translated into laymen's terms, you can fight back with your lender if you're a customer in good standing, and possibly negotiate a better rate.
Finally, you might wonder why the credit card companies are rushing to raise your rates? The Federal Reserve recently adopted a rule that will make it a lot harder for banks to raise credit card rates. But, that rule doesn't go into effect until the summer of 2010. So remember, if your rates get jacked up now, you can fight back!
Never mind if you've been an excellent customer, whose always paid your bills on time. Some of the biggest credit card companies, including Capital One, Citibank, and HSBC, are now raising rates on millions of customers.
They're blaming the bad economy for the rate hikes. But wait: there might be a way you can get the rate increase reversed on your account.
Listen to the case of Stacey K (who asked us not to use her full name for privacy reasons). She had a Capital One VISA for 15 years and told us she can't remember ever missing a payment. She got a notice from Capital One in late February that her rate was being raised from 7.9% to 17.9% on purchases, and to a whopping 24.9% on cash advances.
The notice said if she wouldn't agree to the rate hike, they would close her account in May. She was angry that they'd do this to a customer who says she has a spotless credit history.
So I got on the phone with Stacey, and together we called the toll-free customer service number of the back of her card, to get some answers. The Capital One rep said the company was raising the rates on most of its 37 million credit cards because of current "economic conditions." She told us it didn't matter how reliable those customers had been.
I asked the rep if there was anything Stacey could do to avoid getting her interest rate raised. "Nothing," the rep told me over and over. Being a pushy investigative reporter, I pressed her repeatedly, asking her if there was any way Stacey could appeal the rate hike. Finally, two minutes later, the representative agreed to review Stacey's account history, and suddenly, she said that the customer did in fact qualify for a special "offer," that would keep her interest rate at 7.9% for at least ten more months.
So why did Capital One offer Stacey this reprieve from getting smacked with a higher rate? Cap One's PR person, Pam Girardo, told me "decisions to modify terms are made on a case by case basis depending on the individual customer's circumstances." Translated into laymen's terms, you can fight back with your lender if you're a customer in good standing, and possibly negotiate a better rate.
Finally, you might wonder why the credit card companies are rushing to raise your rates? The Federal Reserve recently adopted a rule that will make it a lot harder for banks to raise credit card rates. But, that rule doesn't go into effect until the summer of 2010. So remember, if your rates get jacked up now, you can fight back!
Private Investors Weigh Fed's Plan to Spur Credit Markets
The government's signature effort to revive the consumer credit markets is expected to start slowly as private investors involved in the initiative are struggling to ensure its terms are workable, industry and federal officials said.
To give hedge funds and other investment firms more time, the Federal Reserve Bank of New York yesterday pushed back the deadline for participating in the program by two days, to Thursday.
Officials are counting on these wealthy private investors to borrow money from the government and use it to buy recently issued, highly rated securities that finance much of the nation's debt, such as auto loans, student loans and credit cards. The government hopes this activity will thaw the market for such "asset-backed securities" and free lenders to make more loans.
A number of prominent investors, from large hedge funds to major banks, have expressed interest in buying the securities, largely because the terms of the government financing would give them a windfall profit if the credit markets recover and limit their losses if the markets do not. Two banking giants, J.P. Morgan Chase and Barclay's, are setting up a special investment fund to draw pension funds into the program.
But other investors are more skeptical, saying they will wait on the sidelines to see how the program will work in practice. Meanwhile, several major hedge funds said it has proven complicated to draft contracts that would set the terms of participation and protect the firms against fraud and other hazards.
"Our members are very anxious to participate; we know this is an important and critical step toward economic recovery," said Richard Baker, president of the Managed Funds Association, the leading lobbying organization for hedge funds. "My fund managers are trying to understand the underlying risks involved. They will be investing their own money, but also have a fiduciary duty to their investors, and they have to look at these opportunities very carefully."
Officials overseeing the program said they do not expect investors to borrow the full $200 billion in loans being made available by the Fed this month. The Treasury and the Federal Reserve have said that the initiative could eventually grow to $1 trillion.
Much is riding on the success of the program, known as the Term Asset-Backed Securities Loan Facility, or TALF. It exceeds the size of every other federal effort to address the crisis so far and offers a model for future federal efforts to aid the credit markets.
The government is adopting a similar approach for a separate initiative, which also relies on an alliance between the government and affluent investors, to buy toxic assets that have soured during the two-year financial crisis. Treasury officials may detail this program, called the public-private investment fund, as soon as next week, sources said.
Investors interested in buying asset-backed securities through the TALF must submit their applications by Thursday. Over the following six days, investors would be able to bid in electronic auctions to buy securities backing loans from student lenders, auto finance companies, and specialty lenders for small businesses and credit card companies. The auctions will managed by the New York Fed. On March 25, the Fed will offer loans to the winners of the auction.
A wide range of lenders, especially those that provide financing for car buyers, are interested in selling off these securities, including Ford Motor Credit, CarMax and auto lender World Omni, among others, sources familiar with the matter said.
Administration officials said they hope the initiative could eventually expand to commercial real estate loans as well as complicated derivatives. Fed and Treasury Department officials are discussing whether to broaden the program to include asset-backed securities that do not have the highest credit ratings.
In a typical TALF deal, a hedge fund would use $1 million of its own money and get a $9 million loan from the Fed, payable after three years, to buy a $10 million asset-backed security. Hoping that the market for these assets recovers, the hedge fund would hold the asset for three years.
If the security rises in value to $11 million, the investor would keep the profit, essentially doubling the initial investment. The government, meanwhile, would consider the deal a success because consumer lending was spurred.
If the value fell below $9 million, the hedge fund would lose its down payment but nothing more. The Treasury, using bailout funds approved by Congress, would cover the next set of losses, with the Fed ultimately on the hook for anything more.
To give hedge funds and other investment firms more time, the Federal Reserve Bank of New York yesterday pushed back the deadline for participating in the program by two days, to Thursday.
Officials are counting on these wealthy private investors to borrow money from the government and use it to buy recently issued, highly rated securities that finance much of the nation's debt, such as auto loans, student loans and credit cards. The government hopes this activity will thaw the market for such "asset-backed securities" and free lenders to make more loans.
A number of prominent investors, from large hedge funds to major banks, have expressed interest in buying the securities, largely because the terms of the government financing would give them a windfall profit if the credit markets recover and limit their losses if the markets do not. Two banking giants, J.P. Morgan Chase and Barclay's, are setting up a special investment fund to draw pension funds into the program.
But other investors are more skeptical, saying they will wait on the sidelines to see how the program will work in practice. Meanwhile, several major hedge funds said it has proven complicated to draft contracts that would set the terms of participation and protect the firms against fraud and other hazards.
"Our members are very anxious to participate; we know this is an important and critical step toward economic recovery," said Richard Baker, president of the Managed Funds Association, the leading lobbying organization for hedge funds. "My fund managers are trying to understand the underlying risks involved. They will be investing their own money, but also have a fiduciary duty to their investors, and they have to look at these opportunities very carefully."
Officials overseeing the program said they do not expect investors to borrow the full $200 billion in loans being made available by the Fed this month. The Treasury and the Federal Reserve have said that the initiative could eventually grow to $1 trillion.
Much is riding on the success of the program, known as the Term Asset-Backed Securities Loan Facility, or TALF. It exceeds the size of every other federal effort to address the crisis so far and offers a model for future federal efforts to aid the credit markets.
The government is adopting a similar approach for a separate initiative, which also relies on an alliance between the government and affluent investors, to buy toxic assets that have soured during the two-year financial crisis. Treasury officials may detail this program, called the public-private investment fund, as soon as next week, sources said.
Investors interested in buying asset-backed securities through the TALF must submit their applications by Thursday. Over the following six days, investors would be able to bid in electronic auctions to buy securities backing loans from student lenders, auto finance companies, and specialty lenders for small businesses and credit card companies. The auctions will managed by the New York Fed. On March 25, the Fed will offer loans to the winners of the auction.
A wide range of lenders, especially those that provide financing for car buyers, are interested in selling off these securities, including Ford Motor Credit, CarMax and auto lender World Omni, among others, sources familiar with the matter said.
Administration officials said they hope the initiative could eventually expand to commercial real estate loans as well as complicated derivatives. Fed and Treasury Department officials are discussing whether to broaden the program to include asset-backed securities that do not have the highest credit ratings.
In a typical TALF deal, a hedge fund would use $1 million of its own money and get a $9 million loan from the Fed, payable after three years, to buy a $10 million asset-backed security. Hoping that the market for these assets recovers, the hedge fund would hold the asset for three years.
If the security rises in value to $11 million, the investor would keep the profit, essentially doubling the initial investment. The government, meanwhile, would consider the deal a success because consumer lending was spurred.
If the value fell below $9 million, the hedge fund would lose its down payment but nothing more. The Treasury, using bailout funds approved by Congress, would cover the next set of losses, with the Fed ultimately on the hook for anything more.
Biz break: S&P drops National Semiconductor's credit rating to junk status
Plus: SanDisk rumored takeover target again; Internet sellers skittish about eBay change; SunPower may borrow $75 million to complete Philippines solar plant
Compiled by the Mercury News
Warning to investors: Standard & Poor's Ratings Services has lowered its credit ratings on National Semiconductor to junk status, citing S&P's expectations for continued pressure on profitability for the near-to-intermediate term.
The downgrade comes just a day after National Semi said it plans to eliminate 26 percent of its work force, or more than 1,700 jobs, in response to a 71 percent plunge in fiscal third-quarter profit, on sales that dropped nearly 36 percent.
S&P said National has historically generated high profit margins and good cash flow. But those factors are offset by concentration in the mobile-phone industry and the concern over National's maturing debt over the next three years, among other things.
Rumored chip deal: SanDisk, the San Jose maker of flash-memory cards for digital cameras, rose as much as 13 percent on speculation that Samsung Electronics may have renewed overtures to buy the company.
Samsung, which withdrew a hostile bid last year, may be planning to make a new offer with Toshiba, EE Times reported today. SanDisk and Toshiba already have joint manufacturing operations.
The company doesn't comment on rumors or speculation, said SanDisk spokesman Mike Wong.
Fretful merchants: EBay's announcement Wednesday that it wants to focus on liquidated,
"A huge role in the downfall of eBay as an Internet shopping destination (lies) with its broken relationship with its sellers," said Andy Bergman, operations manager of Michigan-based eBay seller Alpha & Omega Antiques. He said eBay should be lowering fees for its sellers.
Another worry is eBay's plan to set up a new resolution process for disagreements between buyers and sellers. Some sellers fear that means they may get stuck with the bill for returns.
"It's a question mark out there," said Scot Wingo, chief executive of ChannelAdvisor, a company that helps merchants sell on eBay and other sites.
Investing in the sun: While some companies are hunkered down in these dismal economic times, hoarding their cash and hiding under their desks from creditors, others are willing to gamble a few bucks on the future. Take SunPower.
The San Jose company is considering borrowing $75 million from International Finance Corp. to complete a second solar-cell factory, in Batangas, Philippines.
SunPower, which makes solar electric generation equipment, said in a filing that the $475 million plant will have 12 lines producing solar cells.
Silicon Valley tech stocks:
Up: Applied Materials, Cypress Semiconductor, Gilead Sciences, Lam Research and Sun Microsystems
Down: eBay, Exponent, Intuit, Juniper Networks and Oracle
The tech heavy Nasdaq composite index: Up 5.40 points, or .38 percent, closing at 1,431.50.
The blue-chip Dow Jones industrial average: Up 53.92 points, or .75 percent, closing at 7,223.98.
And the Standard & Poor's 500 index: Up 5.81 points, or .77 percent, closing at 756.55.
Compiled by the Mercury News
Warning to investors: Standard & Poor's Ratings Services has lowered its credit ratings on National Semiconductor to junk status, citing S&P's expectations for continued pressure on profitability for the near-to-intermediate term.
The downgrade comes just a day after National Semi said it plans to eliminate 26 percent of its work force, or more than 1,700 jobs, in response to a 71 percent plunge in fiscal third-quarter profit, on sales that dropped nearly 36 percent.
S&P said National has historically generated high profit margins and good cash flow. But those factors are offset by concentration in the mobile-phone industry and the concern over National's maturing debt over the next three years, among other things.
Rumored chip deal: SanDisk, the San Jose maker of flash-memory cards for digital cameras, rose as much as 13 percent on speculation that Samsung Electronics may have renewed overtures to buy the company.
Samsung, which withdrew a hostile bid last year, may be planning to make a new offer with Toshiba, EE Times reported today. SanDisk and Toshiba already have joint manufacturing operations.
The company doesn't comment on rumors or speculation, said SanDisk spokesman Mike Wong.
Fretful merchants: EBay's announcement Wednesday that it wants to focus on liquidated,
"A huge role in the downfall of eBay as an Internet shopping destination (lies) with its broken relationship with its sellers," said Andy Bergman, operations manager of Michigan-based eBay seller Alpha & Omega Antiques. He said eBay should be lowering fees for its sellers.
Another worry is eBay's plan to set up a new resolution process for disagreements between buyers and sellers. Some sellers fear that means they may get stuck with the bill for returns.
"It's a question mark out there," said Scot Wingo, chief executive of ChannelAdvisor, a company that helps merchants sell on eBay and other sites.
Investing in the sun: While some companies are hunkered down in these dismal economic times, hoarding their cash and hiding under their desks from creditors, others are willing to gamble a few bucks on the future. Take SunPower.
The San Jose company is considering borrowing $75 million from International Finance Corp. to complete a second solar-cell factory, in Batangas, Philippines.
SunPower, which makes solar electric generation equipment, said in a filing that the $475 million plant will have 12 lines producing solar cells.
Silicon Valley tech stocks:
Up: Applied Materials, Cypress Semiconductor, Gilead Sciences, Lam Research and Sun Microsystems
Down: eBay, Exponent, Intuit, Juniper Networks and Oracle
The tech heavy Nasdaq composite index: Up 5.40 points, or .38 percent, closing at 1,431.50.
The blue-chip Dow Jones industrial average: Up 53.92 points, or .75 percent, closing at 7,223.98.
And the Standard & Poor's 500 index: Up 5.81 points, or .77 percent, closing at 756.55.
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