Archive for March, 2010

AutoNation’s Jackson made almost $5.2M in 2009 (AP)

Friday, March 26th, 2010 | Finance News

RICHMOND, Va. – The Associated Press says AutoNation CEO Mike Jackson made $5.2 million last year, about twice as much as the previous year as the auto retailer posted a profit amid the worst U.S. auto sales market in decades.

Jackson's salary remained the same at $1.15 million, but he received a $1.7 million performance-based bonus after getting none the previous year. The value of his stock options and stock awards rose about 70 percent to almost $2.1 million.

Last year, AutoNation posted a profit of $198 million, compared with a loss of $1.24 billion a year earlier. Annual revenue fell about 19 percent.

The AP calculation is based on a regulatory filing. It aims to isolate the value company board place on CEOs' total compensation package. It includes salary, bonus, incentives, perks and the estimated value of stock options and awards.

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AP Exclusive: `Smart’ meters have security holes (AP)

Friday, March 26th, 2010 | Finance News

SAN FRANCISCO – Computer-security researchers say new "smart" meters that are designed to help deliver electricity more efficiently also have flaws that could let hackers tamper with the power grid in previously impossible ways.

At the very least, the vulnerabilities open the door for attackers to jack up strangers' power bills. These flaws also could get hackers a key step closer to exploiting one of the most dangerous capabilities of the new technology, which is the ability to remotely turn someone else's power on and off.

The attacks could be pulled off by stealing meters — which can be situated outside of a home — and reprogramming them. Or an attacker could sit near a home or business and wirelessly hack the meter from a laptop, according to Joshua Wright, a senior security analyst with InGuardians Inc. The firm was hired by three utilities to study their smart meters' resistance to attack.

These utilities, which he would not name, have already done small deployments of smart meters and plan to roll the technology out to hundreds of thousands of power customers, Wright told The Associated Press.

There is no evidence the security flaws have been exploited, although Wright said a utility could have been hacked without knowing it. InGuardians said it is working with the utilities to fix the problems.

Power companies are aggressively rolling out the new meters. In the U.S. alone, more than 8 million smart meters have been deployed by electric utilities and nearly 60 million should be in place by 2020, according to a list of publicly announced projects kept by The Edison Foundation, an organization focused on the electric industry.

Unlike traditional electric meters that merely record power use — and then must be read in person once a month by a meter reader — smart meters measure consumption in real time. By being networked to computers in electric utilities, the new meters can signal people or their appliances to take certain actions, such as reducing power usage when electricity prices spike.

But the very interactivity that makes smart meters so attractive also makes them vulnerable to hackers, because each meter essentially is a computer connected to a vast network.

There are few public studies on the meters' resistance to attack, in part because the technology is new. However, last summer, Mike Davis, a researcher from IOActive Inc., showed how a computer worm could hop between meters in a power grid with smart meters, giving criminals control over those meters.

Alan Paller, director of research for the SANS Institute, a security research and training organization that was not involved in Wright's work with InGuardians, said it proved that hacking smart meters is a serious concern.

"We weren't sure it was possible," Paller said. "He actually verified it's possible. ... If the Department of Energy is going to make sure the meters are safe, then Josh's work is really important."

SANS has invited Wright to present his research Tuesday at a conference it is sponsoring on the security of utilities and other "critical infrastructure."

Industry representatives say utilities are doing rigorous security testing that will make new power grids more secure than the patchwork system we have now, which is already under hacking attacks from adversaries believed to be working overseas.

"We know that automation will bring new vulnerabilities, and our task — which we tackle on a daily basis — is making sure the system is secure," said Ed Legge, spokesman for Edison Electric Institute, a trade organization for shareholder-owned electric companies.

But many security researchers say the technology is being deployed without enough security probing.

Wright said his firm found "egregious" errors, such as flaws in the meters and the technologies that utilities use to manage data from meters. "Even though these protocols were designed recently, they exhibit security failures we've known about for the past 10 years," Wright said.

He said InGuardians found vulnerabilities in products from all five of the meter makers the firm studied. He would not disclose those manufacturers.

One of the most alarming findings involved a weakness in a communications standard used by the new meters to talk to utilities' computers.

Wright found that hackers could exploit the weakness to break into meters remotely, which would be a key step for shutting down someone's power. Or someone could impersonate meters to the power company, to inflate victims' bills or lower his own. A criminal could even sneak into the utilities' computer networks to steal data or stage bigger attacks on the grid.

Wright said similar vulnerabilities used to be common in wireless Internet networking equipment, but have vanished with an emphasis on better security.

For instance, the meters encrypt their data — scrambling the information to hide it from outsiders. But the digital "keys" needed to unlock the encryption were stored on data-routing equipment known as access points that many meters relay data to. Stealing the keys lets an attacker eavesdrop on all communication between meters and that access point, so the keys instead should be kept on computers deep inside the utilities' networks, where they would be safer.

"That lesson seems to be lost on these meter vendors," he said. That speaks to the "relative immaturity" of the meter technology, Wright added.

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Year-end growth spurt not likely to be repeated (AP)

Friday, March 26th, 2010 | Finance News

WASHINGTON – The burst of energy the economy showed at the end of last year isn't likely to be repeated anytime soon.

The Commerce Department reported Friday that the economy grew at a 5.6 percent pace in the October-to-December quarter in its third and final estimate of economic activity during the period.

Even though growth turned out to be a tad less than the government's prior two estimates for the quarter, the new reading still marked the strongest showing in six years.

Many economists, however, think the economy has slowed in the current quarter to about half the pace seen at the end of last year.

Why won't the big growth spurt be repeated? Because the main force behind it is already ebbing.

Most of last quarter's growth came from a large bump up in manufacturing — but not because consumer demand was especially strong. In fact, consumer spending weakened at the end of the year, even more than the government previously estimated, contributing to the slightly lower reading on overall economic growth.

Instead, factories were churning out goods for businesses that had let their stockpiles dwindle to save cash. If consumer spending remains lackluster as expected, that burst of manufacturing — and its contribution to economic activity — will fade.

Analysts predict the economy will expand at only between a 2.5 percent and 3 percent pace in the first quarter of this year. The next two quarters should log similar growth, they say.

In normal times, growth in the 3 percent range would be considered respectable. But the nation is emerging from the worst recession since the 1930s. Sizzling growth in the 5 percent range would be needed for an entire year to drive down the unemployment rate, now 9.7 percent, by just 1 percentage point.

Unlike past rebounds driven by the spending of shoppers, this one is hinging more on spending by businesses and foreigners.

Businesses in the fourth quarter boosted spending on equipment and software at a pace of 19 percent, the most in 11 years. Foreigners snapped up U.S.-made goods and services at a pace of 22.8 percent, which propelled exports to grow at the fastest pace since 1996. Both export growth and spending on equipment and software turned out to be stronger than the government's previous estimate last month.

The slower drawdown in businesses' stockpiles accounted for nearly 4 percentage points of the fourth-quarter's overall growth.

But consumers didn't spend as much.

They increased their spending at a pace of just 1.6 percent. That was weaker than the government's prior estimate and was down from a 2.8 percent growth rate in the third quarter.

Although consumer spending is shaping up to be somewhat better in the current quarter, Americans aren't in the mood to go on a spending spree, one of the reasons why the pace of the recovery will be more subdued than in the past. High unemployment, sluggish wage gains, hard to get credit and record-high home foreclosures are all expected to keep consumers relatively cautious.

"Consumers are exhaling after the enormous loss of wealth from the recession. The intensive retrenchment that they were doing during the recession has ended," said Robert DiClemente, chief U.S. economist at Citigroup. "But we're only going to get moderate growth in consumer spending so I don't expect this to be a powerful recovery," he added.

The government first estimated that the economy grew at a 5.7 percent pace in the fourth quarter. Then last month it boosted that estimate to a 5.9 percent pace. On Friday it shaved it a bit, mostly reflecting slower consumer spending as well as more weakness in the commercial real-estate market.

Economists had expected that the fourth-quarter reading would stay at 5.9 percent.

Wall Street didn't seem to mind. The Dow Jones industrial average was up around 52 points in morning trading.

The new reading of 5.6 percent growth still marked a big improvement from the 2.2 percent growth rate logged in the third quarter. That's when the economy started growing again after a record fourth straight quarters of declines racked up from the recession.

As government stimulus wanes and Federal Reserve economic-support programs end, the economy — especially the fragile housing market — could suffer.

Improvements in the housing market tailed off at the end of the year — despite massive government support. There are fears the housing recovery could stall out once a homebuyer tax credit ends in the spring and the Fed stops a mortgage-securities buying program at the end of this month that has lowered mortgage rates and boosted sales.

Friday's report also showed a slowing in corporations' after-tax profits. Under one measure, after-tax profits rose at a rate of 6.5 percent in the fourth quarter, down from a 12.7 percent growth rate in the third quarter. Although some companies are flush with cash, they are aren't inclined to ramp up hiring until the recovery is on firm footing.

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