Archive for July, 2010

Dynavax posts 2Q loss, weighed down by expenses (AP)

Friday, July 30th, 2010 | Finance News

BERKELEY, Calif. – Drug developer Dynavax Technologies Corp. said Friday that higher operating expenses, weak revenue and costs linked to a stock offering drove it to a second-quarter loss, reversing a year-ago profit.

Shares fell 14 cents, or 6 percent, to $2.07 in aftermarket trading, having closed the regular session flat at $2.21.

Dynavax said its loss totaled $28 million, or 34 cents per share, for the April-through-June period. In the same quarter last year, the company reported net income of $4.1 million, or 10 cents per share.

The company said it wrote down $11 million in costs related to a stock sale that helped it raise $44 million in April. Research and development expenses also jumped 52 percent to $14 million in the quarter. Meanwhile, revenue plunged 86 percent to $2.2 million from $15.9 million.

The 2009 quarter appeared stronger because it included deferred revenue recognized after the company's hepatitis B vaccine development partnership with Merck and Co. was terminated. In the 2010 quarter, Dynavax's results reflect a restarting of the vaccine clinical and manufacturing activities.

Dynavax said it spent $13.7 million in cash in the quarter to speed up enrollment and immunization of more than 2,400 people in a Phase 3 trial for its Heplisav hepatitis B vaccine candidate, and to invest in the devleopment of a universal flu vaccine.

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Jobs data, earnings latest test for stocks (Reuters)

Friday, July 30th, 2010 | Finance News

NEW YORK (Reuters) – U.S. stocks are unlikely to break above a key technical level next week unless monthly jobs data and consumer company results paint a more promising picture of the recovery.

The Standard & Poor's 500 (.SPX) index has been stuck near its 200-day moving average, a level used to determine market direction, amid recent weak economic data and disappointing outlooks from companies, including tech firms Nvidia Corp (NVDA.O) and Symantec (SYMC.O).

Options market activity points to more tech sector volatility next week, while the Nasdaq (.IXIC) had the poorest performance of the three major indexes this week.

Among companies expected to report next week are Procter & Gamble (PG.N) and Clorox (CLX.N) whose results could give another glimpse into the strength of consumer spending or its lack.

But the government's non-farm payrolls report, due Friday, looms large since sluggish job growth is considered the biggest hurdle to advances by the economy and stocks.

The Labor Department report follows data Friday that showed the pace of U.S. economic growth slowed in the second quarter. The June labor report showed a fall in payrolls, both of which raised concerns about the recovery for the rest of the year.

"We have been reducing our exposure to equities because we are concerned that a weaker economy is going to continue throughout the end of year," said Joseph Battipaglia, market strategist, Stifel Nicolaus, Yardley, Pennsylvania.


Analysts say a significant break above the S&P 500's 200-day moving average, currently around 1,114, would be a bullish signal.

"The market has the potential to push higher again if we can get through the 200-day moving average," said Michael Sheldon, chief market strategist, RDM Financial, Westport, Connecticut.

Chris Burba, short-term market technician at Standard & Poor's in New York, noted that the 200-day moving average has been nearly flat since late June, which supports the view that investors should be cautious.

The U.S. economy has shown weakness in recent months after a recovery from the worst recession since the 1930s, and corporate results for the second quarter have been mixed.

Earnings growth for S&P 500 companies in the second quarter is expected at 36 percent, while revenue growth is seen at about 9.1 percent, according to Thomson Reuters data.

Options investors appear to be expecting more volatility in the technology sector, which has heavily weighed on the market this week, to continue.

The most active options on PowerShares QQQ Trust ETF (QQQQ.P), an exchange-traded fund that tracks the benchmark

Nasdaq 100 (.NDX), was the weekly put options at the $45 strike which expire on Aug 6. Weeklys are options listed with approximately one week to expiration, different from traditional options that have a life of months or years before expiration.

"Puts are dominating in the QQQQ, both in weeklys and regulars," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.

Regular put options at the August $45 and $46 strikes were also seeing heavy volume. The ETF is currently down 0.4 percent at $45.55.

Some options market analysts see more range-bound trading ahead, with top end at 1,120 on the S&P 500 and the bottom end at 1,065.

"In order to take out the upside of the trading range, we need to see the majority of economic data next week to be better than expected," said Stifel Nicolaus options market strategist Elliot Spar in Shrewsbury, New Jersey.

In other key economic data next week, the Institute for Supply Management's manufacturing report, due Monday, is expected to show growth for a 12th straight month.

(Additional reporting by Doris Frankel and Angela Moon; Editing by Kenneth Barry)

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Obama: Detroit auto bailout was unpopular, but it worked (The Christian Science Monitor)

Friday, July 30th, 2010 | Finance News

President Obama used a visit to Michigan Friday to argue the case that despite its unpopularity, his 2009 bailout of the Detroit auto industry has worked.

Employment in the industry has risen over the past year. The carmakers are now running at or near a profit. And, more important for the economy, a feared collapse of the industry was avoided.

"This plant just hired a new shift of 1,100 workers last week," Mr. Obama told an audience of Chrysler employees after touring a factory near Detroit. "You are proving the naysayers wrong."

It was a pep talk for workers in one of the states hardest hit by the recession, but also a response to critics who say the government shouldn't have spent taxpayer money to rescue Detroit carmakers – or for broader programs designed to stimulate the economy.

The auto rescue in particular could use some public-relations help, judging by recent polls.

Some 48 percent of Americans say they are now less supportive of the auto bailouts than they were a few months ago, versus 17 percent who say they are more supportive, according to a Bloomberg poll taken early in July. And in a May CBS News poll, 6 in 10 adults said the government should not have aided the automakers.

Obama argued Friday, in appearances at a General Motors plant as well as at Chrysler, that failing to help the firms would have deepened an already severe recession.

"It's estimated that we would have lost another million jobs if we had not stepped in," he said. The shutdown of these two firms, he said, would have rippled out to bankrupt suppliers and dealerships – including adverse affects on the supply chain for Ford, the other large US-based automaker.

The Obama administration says it has committed $60 billion to help GM and Chrysler avoid liquidation, adding that much of that money could be recouped for taxpayers as the government's ownership stake is eventually sold to private investors in a stock offering.

Many economists agree with the president's basic assertion – that some form of carmaker aid was needed. Amid a financial panic late in 2008, car sales took a 40 percent plunge as consumers held back on large purchases.

Ford avoided a bailout in part because it had borrowed to create a cash cushion before the recession.

The government "had to do something," says Donald Grimes, a University of Michigan economist who follows the industry. "His bailout was good ... for the US economy."

In addition to assisting GM and Chrysler, the government subsidized a "cash for clunkers" program, designed to revive car sales by encouraging people to trade in old vehicles with poor fuel efficiency.

Mr. Grimes worries, however, that the long-run challenges for the industry aren't over and that the specific form the rescue took could make life more difficult for GM and Chrysler in the future.

The bailouts have provided the firms with bridge funding, so that they could restructure in bankruptcy rather than liquidate their operations. The companies downsized, and their stock and bond holders took losses that allowed the companies to emerge with smaller debt.

But the administration policies gave more favorable treatment to one set of creditors – trust funds representing retired union workers – than to traditional bondholders. When that framework survived in the bankruptcy proceeding, it set a precedent that could make it harder for these firms to raise funds in credit markets.

"It clearly makes it less likely that unionized companies, in particular the auto industry, going forward are going to be able to go to the bond market and say, 'Give me a loan,' " Grimes says.

The industry, Obama said, has gained 55,000 jobs in the past year. But that comes after a much sharper decline during the recession.

Michigan still has one of the nation's highest unemployment rates. The state now has 3.9 million nonfarm workers employed, down from 4.7 million in 2000.

The carmakers are not only surviving, Obama said, but are also transitioning toward new fuel-efficient technologies. While in Detroit, Obama got behind the wheel of a Chevrolet Volt, the electric car for which GM has just announced a $41,000 price tag and a 50 percent boost in production.

Michigan is also hoping to gain thousands of jobs from battery production for electric cars.

But a recovery in the car industry alone won't solve the jobs problem, Grimes says. Longer term, he says, the solutions include reforming the state's tax system, boosting education and retraining, and growing new industries in the service sector.

Similar changes may be needed nationwide as well, economists say. Obama's visit coincided with news of tepid 2.4 percent growth for the economy during the year's second quarter.

"We've got more work to do," Obama said.


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