Archive for July, 2009 sued over deleted digital book copies (Reuters)

Friday, July 31st, 2009 | Finance News

" ate my homework."

That's a legitimate excuse for one high-school student whose notes for a homework assignment vanished when the online retailer remotely deleted digital copies of George Orwell's "1984," off consumers' Kindle devices.

Justin Gawronski of Michigan claims his copy of the classic title about the dangers of totalitarianism, purchased in June for $0.99, disappeared along with the "copious notes" he took.

"Mr. Gawronski powered on his Kindle 2 only to watch '1984' vanish before his very eyes," according to the complaint filed Thursday in U.S. District Court in the Western District of Washington.

Gawronski and a second plaintiff claim Amazon does not have the right to delete any digital content from its customers' Kindles, the much-touted electronic readers made by the company.

In deleting the content, Amazon breached the terms of its own contract with its customers, the lawsuit claims.

"Amazon has no more right to delete e-books from consumers' Kindles and iPhones than it does to retrieve from its customers' homes paper books it sells and ships to consumers," according to the complaint.

The lawsuit cites what it calls Amazon's "unfair and deceptive business acts and practices" and seeks class-action status.

Earlier this month, Amazon acknowledged it had deleted certain purchased e-books from the Kindles of an undisclosed number of owners.

It said a third party had added the books to the catalog using the company's self-service platform. Amazon deleted the copies from consumers' devices after learning that the third party did not have the rights to the books, it said.

The complaint filed Thursday is the second consumer lawsuit filed in two weeks against the Seattle-based Internet giant.

A Kindle owner has also sued the company claiming the protective cover of the Kindle can damage the device's screen. That lawsuit also seeks class action status.

In the case over the deleted notes, the second plaintiff, California resident Antoine Bruguier, claims that Amazon never revealed why it deleted his copy of 1984 and did not provide a substitute version when asked.

The lawsuit seeks damages and injunctive relief as necessary.

Amazon's Kindle is one of several electronic readers on the market that allow consumers to read books, magazines and newspapers on a tablet-like device that downloads content digitally.

(Reporting by Alexandria Sage; Editing Bernard Orr)


Ex-Qwest chief Nacchio may get reduced jail time (Reuters)

Friday, July 31st, 2009 | Finance News

DENVER (Reuters) –
Ex-Qwest (Q.N) Chief Executive Joseph Nacchio could get his six-year prison sentence and $52 million penalty for insider trading reduced, after an appeals court said on Friday he was improperly sentenced.

Nacchio, whose 2007 conviction on 19 counts of insider trading was hailed as a victory over greedy corporate chieftains, was incorrectly sentenced because the trial court had wrongly calculated his illegal stock market gains, according to an appeals court opinion filed on Friday.

Nacchio, who turned 60 in prison in June, was accused of illegally selling his Qwest stock in 2001 after company executives warned him that Qwest could not meet its financial targets.

On Friday, the 10th U.S. Circuit Court of Appeals ruled that the trial court had erred in ordering Nacchio to forfeit $52 million in gross proceeds from illegal stock sales and in calculating his prison term based on an incorrect profit.

The appeals court did not specify a new sentence length for Nacchio, but instructed the sentencing court to subtract the underlying value of his Qwest shares in calculating the illegal profit and sentence.

"Mr. Nacchio's increased prison sentence should be linked to the gain actually resulting from the offense, not to gain attributable to legitimate price appreciation and the underlying inherent value of the Qwest shares," the court said.

U.S. Department of Justice spokeswoman Laura Sweeney said the agency was reviewing the court's decision.

Nacchio's attorney, Maureen Mahoney, did not respond to requests for comment.


Nacchio began serving his sentence in April at a federal prison camp in Pennsylvania and is awaiting a decision from the U.S. Supreme Court on whether it will accept his appeal, which claims he did not receive a fair trial.

Once a star on Wall Street, Nacchio became one of several corporate leaders convicted of financial crimes, including Tyco International's Dennis Kozlowski, WorldCom's Bernard Ebbers and ImClone Systems' Sam Waksal.

At his trial, Nacchio's lawyers argued that his sentence should fall within federal sentencing guidelines of 41 to 51 months, based on insider trading profits of $1.8 million.

But prosecutors argued that Nacchio's illegal proceeds from the Qwest stock were at least $44.6 million, resulting in a sentencing range of 70 to 87 months.

The trial court rejected both arguments and calculated the sentence based on a $28 million gain and imposed a sentence of 72 months to run concurrently for each count.

But on Friday, the appeals court found that the trial judge had incorrectly calculated Nacchio's true gain.

(Reporting by Robert Boczkiewicz in Denver; Gina Keating in Los Angeles)


S&P 500 sees best 5-month streak since 1938 (Reuters)

Friday, July 31st, 2009 | Finance News

NEW YORK (Reuters) –
The S&P 500 ended its best five-month streak since 1938 with a slight gain on Friday as government data showed softness in consumer spending but reinforced expectations that the economic slump is abating.

But the mood was cautious as the report on second-quarter gross domestic product showed the U.S. consumer was more frugal, which cut hurt economic demand. Even so, Dow industrials had their best July since 1989 while the S&P 500 and Nasdaq recorded their best gains for July since 1997.

Commodity prices, a barometer for economic sentiment, moved higher after the GDP data, but the price of safe-haven U.S. Treasury debt also rose in a sign of underlying caution.

Trading was volatile as investors digested mixed news from the GDP report. Consumer spending, which fell in the quarter, is a crucial driver of corporate profits and the economy..

GDP fell at a 1.0 percent annual rate in April-June after tumbling 6.4 percent in the first quarter. Economists had expected a 1.5 percent contraction in the second quarter.

"The GDP number came in better than expected but was masked by a lot of government spending and the consumer pulled back," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "When you're fueling economic growth on government spending, clearly that is not a sustainable situation.

"But overall my take is that we still are going to enjoy a cyclical recovery and the third quarter will likely come in positive territory," he said.

The Dow Jones industrial average (.DJI) ended up 17.15 points, or 0.19 percent, at 9,171.61. The Standard & Poor's 500 Index (.SPX) was up 0.73 point, or 0.07 percent, at 987.48. The Nasdaq Composite Index (.IXIC) was down 5.80 points, or 0.29 percent, at 1,978.50.

For the week the Dow rose 0.9 percent, the S&P 500 gained 0.8 percent and the Nasdaq added 0.6 percent. For July the Dow gained 8.6 percent, the S&P added 7.4 percent and Nasdaq rose 7.8 percent.

Another report showing that business activity in the U.S. Midwest was the strongest in July in 10 months also lifted stocks.

"What you're seeing is numbers that are an improvement, but a lackluster improvement. They're less bad, but not great," said Chad Morganlander a portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.

Travelers Cos Inc (TRV.N), one of the largest U.S. home, auto and commercial insurers, was a standout following positive broker comments, a day after it raised its forecast for the year. The stock jumped 2.7 percent to $43.07.

On the downside, Walt Disney Co (DIS.N) shed 4.2 percent to $25.12. The media and entertainment powerhouse reported a 26 percent slide in quarterly earnings late Thursday as the recession continued to hurt advertising and consumer spending.

Even though Disney beat expectations by a hair, its shares were the Dow's top drag. JPMorgan downgraded the stock to "underweight" from "neutral" on Friday.

In other earnings news, Chevron Corp (CVX.N) posted a 71 percent drop in profit on weaker energy prices and fuel demand due to the economic slump, but it raised estimated 2009 output and said cost cuts were on track. The shares rose 2.6 percent to $69.47.

Volume was moderate on the New York Stock Exchange, with 1.51 billion shares changing hands, compared to last year's estimated daily average of 1.49 billion, while on the Nasdaq, about 2.27 billion shares traded, below last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by a 1879 to 1137, while declining stocks beat advancers on the Nasdaq by 1356 to 1282.

(Reporting by Edward Krudy; Editing by Kenneth Barry)