Research In Motion to Start Selling Faster Blackberry Bold

May 12 (Bloomberg) -- Research In Motion Ltd. introduced a BlackBerry phone with quicker Web browsing and more room for songs and videos, getting a jump on a faster iPhone that analysts expect next month. The device, called the BlackBerry Bold, has a brighter screen and better Web browser than previous models, co-Chief Executive Officer James Balsillie said in an interview. The phone, which also has satellite navigation and a video camera, will start selling at AT&T Inc. for $300 to $400 this summer in the U.S., he said. The product sets up a showdown between Apple Inc. CEO Steve Jobs and Balsillie in the market for so-called third-generation phones, which offer speedier Web access and video downloads. Phones with Internet, e-mail and video are the fastest-growing part of the handset market, with users quadrupling to 400 million in the next three years, RBC Capital Markets estimates.

``You need to provide faster networks, faster processors,'' said Balsillie, 47. Consumers are using ``more and more multimedia'' and ``there are lots of contenders out there.'' Research In Motion, based in Waterloo, Ontario, rose $9.07, or 6.8 percent, to $141.84 at 1:06 p.m. New York time in Nasdaq Stock Market trading. Apple advanced $4.30, or 2.3 percent, to $187.75. Research In Motion had more than doubled in the past 12 months before today, while Apple is up 72 percent over that span.

Faster Connection

The Bold, which also will go on sale in Europe and Asia, is the first BlackBerry to use high-speed downlink packet access, or HSDPA, a network technology that speeds data delivery. Apple may introduce an iPhone with faster data in June, according to analysts such as RBC's Mike Abramsky. Since the iPhone's debut last June, Apple has seized the No. 2 spot in the U.S. market for so-called smart phones, handsets with computer and Internet functions. The BlackBerry ranks first. To fend off the iPhone, Research In Motion has expanded beyond business customers, releasing devices that have music players and cameras. The new BlackBerry lets users listen to songs from Apple's iTunes music program.

``Where Research In Motion falls short against Apple is in marketing and on the entertainment side,'' Rob Enderle, president of research firm Enderle Group in San Jose, California, said today in a Bloomberg Television interview. ``Where Apple's been moving is on entertainment, particularly video.''

Venture Fund

In a bid to foster new uses for the BlackBerry, the company started a $150 million venture-capital fund with the Royal Bank of Canada and Thomson Reuters Corp., Balsillie said. The fund invests in companies developing smart-phone applications. The Bold has 1 gigabyte of memory, more than any previous BlackBerry. Users can expand it to 8 gigabytes with a memory card. Cupertino, California-based Apple sells the iPhone in 8- gigabyte and 16-gigabyte versions. While Balsillie unveiled the Bold before Jobs showed the new iPhone, the Apple device may still be the one that starts selling first, said UBS AG analyst Maynard Um. Apple, whose iPhone is sold exclusively in the U.S. through AT&T, usually waits to show new products until they are available to shoppers. Research In Motion might benefit from following Apple's introduction because AT&T's rivals are likely to battle the new iPhone with their products, Um said. That may allow the Bold to start selling in a less competitive market later on.

Touch Screen?

With rounded corners, the Bold's design resembles that of the iPhone. Unlike Apple's product, it has a regular keyboard and not a touch screen. Still, Balsillie said he isn't ``religious'' about having a keyboard in the BlackBerry. Analysts say he may release a touch-screen model later this year.

``The BlackBerry design has improved quite a bit,'' UBS's Um said in an interview. ``We are going to see more innovation coming from them.'' Separately, Research In Motion said today it would make it easier to access Microsoft Corp.'s e-mail and messenger programs with the BlackBerry. The BlackBerry dominated U.S. shipments for e-mail phones in the fourth quarter with 41 percent of the market, according to Reading, England-based research firm Canalys. The iPhone had 28 percent and Palm Inc., maker of the Treo, had 9 percent. While Research In Motion dominates the market, Apple may grow faster this year. Apple may more than triple its shipments to 14 million this year from last year's 4 million, RBC's Abramsky estimates. BlackBerry shipments will almost double this fiscal year to 25 million from 14 million last year, he projects. Research In Motion will probably start selling other new BlackBerrys this year, including one that flips open to reveal a keyboard, Toronto-based Abramsky wrote in a note this month. He recommends buying both Apple and Research In Motion shares.

Playboy posts quarterly loss, shares drop

By Robert MacMillan

NEW YORK (Reuters) - Adult entertainment publisher Playboy Enterprises Inc posted a quarterly loss on Tuesday because of weaker publishing and domestic television revenue and forecast more trouble during the year, pushing its shares down 8 percent. The worse-than-expected results illustrate the trouble that Playboy and other publishers and television companies face as more people get their entertainment online, and often for free. Its results also show that, at least for Playboy, licensing its bunny ears brand and bachelor lifestyle cachet is proving a more resilient business than the magazine that created them.

"Our publishing and domestic entertainment businesses continue to face unprecedented change in the way consumers access and use media content," Chief Executive Christie Hefner said in a statement accompanying the quarterly results. Hefner forecast the licensing business would grow throughout the year but said Playboy did not expect it to offset the weaker results it anticipates in its media business. The publisher of the iconic men's magazine reported a loss of $3.1 million, or 9 cents a share, compared with a profit of $1.5 million, or 4 cents a share, in the first quarter a year ago. Excluding restructuring and severance charges, the company's loss was 6 cents a share. Analysts' average forecast was a profit of 6 cents a share, according to Reuters Estimates. Revenue fell 8 percent to $78.5 million, missing the average analyst estimate of $85.4 million.

"I think the company has a fantastic brand and I think there's a tremendous opportunity to exploit that brand across multiple platforms, particularly on the location-based entertainment side," said RBC Capital Markets analyst David Bank. "The challenge is to rightsize the other businesses, which aren't really growth businesses." Licensing revenue, not counting an art sale last year, rose 5 percent, helped by a 10 percent rise in revenue from international consumer products. Other businesses did not fare as well. Domestic television revenue fell 16 percent despite growth in monthly subscription revenue at Playboy TV. Publishing revenue fell 14 percent as circulation and ad sales at Playboy magazine fell. Advertising pages in the second quarter will be down 5 percent compared with last year. Online revenue fell 3 percent to $15.2 million because of lower pay site revenue. Hefner said the company is redesigning the Playboy.com website to attract more visitors and create a better portal to its other properties.

"This will be a transitional year as we are still in the investment stage of the retooling process, and results won't be apparent until year-end at the earliest," Hefner said. Playboy shares fell 66 cents to $7.60 in morning trade on the New York Stock Exchange.

Cablevision to Buy Newsday After Outbidding Murdoch

By Gillian Wee and Tim Mullaney

May 12 (Bloomberg) -- Cablevision Systems Corp., the New York-area cable provider, topped offers from Rupert Murdoch and Mortimer Zuckerman to buy Tribune Co.'s Newsday in a transaction valuing the Long Island newspaper at $632 million. Tribune will get $612 million for a 97 percent stake in Newsday, plus an additional $18 million in prepaid rent for some facilities, the companies said in a statement today. Tribune will keep a remaining 3 percent stake worth $20 million. Cablevision plans to use Newsday, located about 7 miles from its Bethpage headquarters, to expand local advertising and subscription businesses. Murdoch's News Corp. dropped a $580 million bid on May 10, saying a purchase was no longer economical. For Tribune Chairman Sam Zell, the higher offer from Cablevision helps him pay down the $13 billion in debt he acquired through his takeover of Chicago-based Tribune last year.

``If Rupert Murdoch, with an adjacent market newspaper and local TV broadcaster, can't see a way to make money at $580 million, it's a stretch to think that Cablevision can make this work at $650 million,'' said Craig Moffett, an analyst at Sanford C. Bernstein & Co., before the announcement. He has an ``outperform'' rating on Cablevision and doesn't own the shares. Cablevision said last week that it wouldn't rule out more acquisitions beyond cable after announcing plans to build a high-speed wireless network and purchase the Sundance Channel for independent films. The Bethpage, New York-based company also owns Madison Square Garden and the New York Knicks basketball team.

Expansion Concern

Cablevision, led by Chairman Charles Dolan and his son, Chief Executive James Dolan, said in today's statement that they will use Newsday to generate ``substantial operating cash flow'' as they expand in local ads and subscriptions. The company's stock dropped 63 cents, or 2.5 percent, to $24.34 at 10:48 a.m. in New York Stock Exchange composite trading and had risen 1.9 percent this year before today. Gains have been held back on concern over the Dolans' investments outside of their main business, according to Richard Greenfield, an analyst at Pali Capital LLC in New York.

``All they seem intent on doing now is making acquisitions in non-core businesses,'' Greenfield said in an interview today with Bloomberg Television. He raised his recommendation on Cablevision to ``neutral'' last week. ``This is not like buying a brand like Dow Jones or the New York Times. This is a very challenged long-term business.'' Zell, who took control of Tribune last year, is cutting jobs and selling assets to repay debt as print advertising and circulation decline. Tribune is the second-largest U.S. newspaper publisher after Gannett Co. The owner of the Los Angeles Times and Chicago Tribune has $1.85 billion in debt maturing by the end of 2009. The company also plans to sell its Chicago Cubs baseball team and the Cubs' home stadium, Wrigley Field.

Dropped Bid

New York Daily News owner Zuckerman declined to comment on his bid today. News Corp.'s decision to drop its offer came three days after Chairman Murdoch said talks with Chicago-based Tribune were at a ``pretty advanced stage.'' Murdoch, who completed News Corp.'s $5.2 billion purchase of Dow Jones & Co. in December, had planned to combine Newsday's printing and distribution operations with his New York Post. The move would have helped News Corp. increase cash flow by $100 million a year, Murdoch said on a May 7 conference call. Newsday had a circulation of 379,613 in the six months through March, according to the Audit Bureau of Circulations. That's a 4.7 percent drop from a year earlier. The newspaper had $80 million in earnings before interest, taxes, depreciation and amortization last year, a person familiar with the sale talks said last month. Cablevision was advised by Banc of America Securities LLC and Merrill Lynch & Co., as well as Hughes Hubbard & Reed LLP and Sullivan & Cromwell LLP. Tribune was advised by Citigroup Inc., McDermott Will & Emery, Sidley Austin and Paul Hastings.

Wall Street set to stumble on AIG loss

By Jennifer Coogan

NEW YORK (Reuters) - Stock index futures fell on Friday, with financial stocks poised to decline after American International Group (AIG.N), the world's largest insurer, reported a larger-than-expected record loss. Equity markets overseas were pushed lower as the price of oil topped $125 a barrel. Tokyo's main index lost more than 2 percent and Europe's broad benchmark was down by nearly the same amount. Shares of AIG fell 8.3 percent to $40.50 before the opening bell. The company had to write down assets linked to subprime mortgages and said it would raise $12.5 billion to strengthen its balance sheet.

Another big financial company, Citigroup Inc (C.N) said it intends to shed roughly $400 billion of non-core assets in a bid to become more competitive. AIG "rekindles fears about the credit markets and that we're not through with the write-downs," said Jim Awad, chairman of W.P. Stewart Asset Management in New York. "On top of that, you've got Citi selling assets, which in the long run is a good thing, but it implies several more years of turmoil and restructuring."

S&P 500 futures were down 6.8 points, below fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 81 points, and Nasdaq 100 futures slipped 8 points. Transportation and other energy-dependent stocks were likely to sag as U.S. crude for June delivery was up $1.55 to $125.24 a barrel after hitting a record of $125.98. Airlines particularly be under pressure after UBS cut its price target on shares of six major carriers. Semiconductor shares may lag after graphics chip maker Nvidia Corp (NVDA.O) posted quarterly earnings and gross margins that missed estimates. Nvidia shares were down 3 percent at $21.29 before the open. Stock futures showed a muted reaction to government data showing the U.S. trade deficit narrowed more than expected in March on a record plunge in the value of imports, underscoring the U.S. economic slowdown.

Oil nears $123 on $200 oil prediction, supply concerns

By John Wilen, AP Business Writer

NEW YORK (AP) -- Oil futures blasted to a new record over $122 a barrel Tuesday, gaining momentum as investors bought on a forecast of much higher prices and on any news hinting at supply shortages. Retail gas prices edged lower, but appear poised to rise to new records of their own in coming weeks. A new Goldman Sachs prediction that oil prices could rise to $150 to $200 within two years seemed to motivate much of Tuesday's buying, although a falling dollar and increasing concerns about declining crude production in Mexico and Russia contributed, analysts say.

The Energy Department raised its oil and gasoline price forecasts, but also predicted that high prices will cut demand more than previously thought. Light, sweet crude for June delivery jumped to a new record of $122.73 a barrel before retreating slightly to trade up $2.10 at $122.07 on the New York Mercantile Exchange. Oil prices have nearly doubled from about $62 a barrel a year ago, which Goldman sees as a sign that the world is in the midst of a "super spike" in oil prices. Analyst Arjun Murti said in a research note released Monday that prices would ultimately force demand to fall sharply.

Not everyone shares Goldman's view. Tim Evans, an analyst at Citigroup Inc., countered Goldman's analysis with a note predicting that crude prices could as easily fall to $40 a barrel as rise to $200 over the next two years because supplies are, as Evans put it, comfortable. James Cordier, president of Tampa, Fla., trading firms Liberty Trading Group and OptionSellers.com, said Goldman's prediction isn't necessarily new: "We've heard numbers like these out of Goldman Sachs, especially over the last 12 months." Indeed, it's not the first time Murti has espoused a super spike theory; in an April 2005 note, he predicted the oil market was in the early stages of an unprecedented rally that would send prices from a then-record of about $57 a barrel to $105. But some investors respond to such predictions by buying, Cordier said.

Meanwhile, in a monthly report, the Energy Department's Energy Information Administration predicted oil prices will average $110 a barrel this year, up $9 from last month's forecast. The EIA also said high prices will cut U.S. demand for petroleum products by 330,000 barrels a day this year; last month, the EIA predicted U.S. petroleum consumption would fall by 210,000 barrels a day. But strong demand for oil from countries such as China, India, Russia, Brazil and in the Middle East will support high prices and keep global oil demand growing by about 1.2 million barrels a day this year, unchanged from last month's forecast, the EIA said.

A falling dollar on Tuesday also gave traders reason to buy. Investors often buy commodities such as oil as a hedge against inflation when the dollar falls, and a weaker greenback makes oil cheaper to investors overseas. Many analysts feel the dollar's protracted decline is the real reason oil prices have nearly doubled since last year.Cordier said investors are also increasingly concerned about falling oil production in Russia and Mexico, which are both major oil producers. And prices are still supported by concerns about supply disruptions in Nigeria, where production at a Royal Dutch Shell PLC facility was cut after a weekend attack, and in Iraq, where Kurdish rebels warned they could launch suicide attacks against American interests to punish the U.S. for sharing intelligence with Turkey after Turkey bombed rebel bases in Iraq on Friday.

At the pump, meanwhile, the national average price of a gallon of regular gas slipped 0.1 cent overnight to $3.61, according to AAA and the Oil Price Information Service. Analysts are split over how high gas will go; while prices have slipped lower since May 1, leading some analysts to say gas is close to peaking, others predict the fuel will follow oil's upward surge. "You're going to see new highs for gas prices, probably for the weekend," said Cordier, who predicts an average price of $4 a gallon in the coming weeks. In its report, the EIA said gas prices will peak at a montly average of about $3.73 a gallon in June, about 13 cents higher than its previous forecast.

In other Nymex trading Tuesday, June gasoline futures rose 5.87 cents to $3.1116 a gallon after earlier setting a new trading record of $3.126. June heating oil futures rose 5.48 cents to $3.3613 a gallon after rising to their own trading record of $3.3634, and June natural gas futures rose 5.4 cents to $11.232 per 1,000 cubic feet. In London, June Brent crude futures rose $2.35 to $120.48 on the ICE Futures exchange.

Stocks trade lower after Microsoft pulls Yahoo bid

By TIM PARADIS, AP Business Writer

NEW YORK - Wall Street pulled back Monday as investors digested Microsoft Corp.'s decision to withdraw its bid for Yahoo Inc. and a better-than-expected reading on the service sector. Microsoft had offered $43.7 billion to buy Yahoo Inc., but scrapped the bid late Saturday after the software maker and the Internet provider could not agree on a sale price. The failed deal came as a disappointment to Wall Street, as merger-and-acquisition activity tends to boost shareholder value, and also signals to the broader market that corporate America is optimistic about the future. But investors did appear to take some encouragement from a key reading on the U.S. service sector. The Institute for Supply Management said its April index of nonmanufacturing activity rose to 52 from 49.6 in March. A reading above 50 signals economic expansion; analysts had expected the figure would come in at 49.3, according to economists surveyed by Thomson Financial/IFR.

In midmorning trading, the Dow Jones industrial average fell 64.97, or 0.50 percent, to 12,993.23. Broader stock indicators were mixed. The Standard & Poor's 500 index fell 3.73, or 0.26 percent, to 1,410.17, and the Nasdaq composite index fell 4.52, or 0.18 percent, to 2,472.47. Helping to offset some of investors' disappointment over the abandoned Yahoo deal was a report from The Wall Street Journal, which said Deutsche Telekom AG is considering a bid to buy Sprint Nextel Corp., according to people familiar with the discussions. Bond prices slipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.87 percent from 3.86 percent late Friday.

Overall, first-quarter earnings reports and economic data have been coming in weak, but not as poor as many on Wall Street had braced for. Optimism for an economic rebound later in the year has lifted the Dow back above the 13,000 mark. Investors have lingering concerns, however — not only is the housing market still extremely weak, but commodities prices remain near record levels, threatening consumers' discretionary spending and their ability to pay off debt.

Crude oil futures for June delivery rose $2.84 to $119.16 a barrel on the New York Mercantile Exchange, boosted by news of an attack on a Nigerian oil facility. Crude oil had spiked more than $3 a barrel on Friday, and some analysts are concerned the commodity will surge back above its record near the $120-a-barrel level. Gold prices also climbed Monday, while the dollar traded mixed against other major currencies. Overseas, Japan's and Great Britain's markets were closed. In afternoon trading, Germany's DAX index rose 0.13 percent, and France's CAC-40 rose 0.08 percent.

Microsoft Earnings Decline 11%; Forecast Is Tempered

By Amy Thomson

(Bloomberg) -- Microsoft Corp. said profit declined 11 percent and gave a measured forecast for this quarter as sales of Windows software fell short, sparking concern about a slowdown in technology purchases and sending the shares down 4.4 percent. Third-quarter net income fell to $4.39 billion, or 47 cents a share, from $4.93 billion, or 50 cents, a year ago. Revenue was little changed at $14.5 billion, matching analysts' estimates and disappointing investors looking for more after industry reports showed better-than-expected demand for personal computers. The world's biggest software maker said sales of Windows for PCs sank 24 percent and revenue from its online advertising unit came in at the low end of its projections. Microsoft's report contrasted with positive comments from chipmaker Intel Corp. and computer company International Business Machines Corp. ``People were expecting more of a blowout,'' said Brendan Barnicle, an analyst at Pacific Crest Securities in Portland, Oregon. ``It's a decent quarter. It's not a great quarter by any means, and people were expecting a great quarter.'' Earnings in the quarter, which included costs of 15 cents a share for a European Commission fine, beat the 44.5-cent average of analysts' estimates. Profit and sales a year ago were helped by $1.67 billion in Windows and Office software orders held over from the previous quarter for accounting reasons. For this quarter, Microsoft said profit will be 45 cents to 48 cents on sales of $15.5 billion to $15.8 billion. That compares with analyst estimates of 48 cents and $15.5 billion. Microsoft declined $1.41 to $30.39 in extended trading after closing at $31.80 at 4 p.m. New York time on the Nasdaq Stock Market. The stock has fallen 11 percent this year.

Windows Concerns

The results stoked concern that corporations are tightening their belts as the U.S. economy cools, even after a report from researcher IDC showed PC sales exceeded forecasts in the quarter. PC shipments rose 15 percent, Framingham, Massachusetts-based IDC said this month. Microsoft had forecast as much as 11 percent. Windows sales fell to $4.03 billion in the quarter. UBS AG's Heather Bellini, the top-ranked software analyst by Institutional Investor, predicted $4.3 billion. Sales of Office word-processing and spreadsheet applications trailed forecasts slightly as well. Chief Executive Officer Steve Ballmer has sought to bolster sales by selling more higher-priced versions of Windows, the operating system that runs more than 90 percent of the world's PCs. Those gains were limited last quarter. More Windows sales came from emerging markets, where prices are typically cheaper, Chief Financial Officer Chris Liddell said in an interview. ``That means that we are seeing revenue growth relative to unit growth isn't as strong,'' he said. The company expects PC growth of as much as 13 percent for fiscal 2008.

Online Business

Microsoft said total sales in the year that starts in July will rise to between $66.9 billion and $68 billion, beating the $66.6 billion average of estimates in a Bloomberg survey. Profit will increase to between $2.13 and $2.19 a share, topping an estimate of $2.11. In the online business, where Ballmer is seeking to build sales by bidding for No. 2 search engine Yahoo! Inc., the loss widened to $228 million. Sales rose 40 percent to $843 million. Microsoft had forecast 40 percent to 45 percent growth. Google Inc.'s revenue climbed 46 percent in the period, to $3.7 billion. Yahoo CEO Jerry Yang dodged Microsoft's advances, rejecting the $31-a-share bid and approaching rivals such as Time Warner Inc.'s AOL. Ballmer may begin a proxy contest to oust Sunnyvale, California-based Yahoo's board as soon as this weekend. The acquisition, which would be the largest in Microsoft's history, may help the software maker take a bigger chunk of the $41 billion market for Internet ads away from Google.

Xbox Growth

One bright spot in the quarter came from the Xbox video-game unit, where sales growth was almost double some forecasts. The business posted its third straight quarterly profit and revenue rose 68 percent to $1.58 billion. Microsoft predicted growth of 25 percent to 35 percent. Ballmer has lined up exclusive titles such as ``Halo 3'' and ``Mass Effect'' to win users from Nintendo Co.'s Wii system and achieve the first annual profit in the Xbox unit. It was ``an outstanding Xbox quarter,'' said Canaccord Adams Inc. analyst Peter Misek in Toronto. ``It's just amazing that a company this size is being driven by video games.''