Financial thoughts

Stock futures rose Tuesday as government data showed that consumers spent slightly more in April as prices remained flat.

Dow Jones industrial average futures rose 60 points to 12,715. Standard & Poor’s 500 futures added 7.6 points to 1,341.7. Nasdaq composite futures rose 19 points to 2,604.

With gasoline prices down and possibly an earlier-than-usual start to the spring shopping season, the Commerce Department reported that retail sales rose 0.1 percent in April. Retail spending had risen 0.7 percent in March and 1 percent in February.

A very warm winter may have had shoppers out early, and could explain some of the slowdown in spending, as could lower gas prices.

However, even with gasoline removed, consumer spending rose only 0.2 percent.

U.S. consumer prices were flat last month as cheaper gas offset modest increases for food, clothing and housing. The data indicate that inflation remains in check, according to the Labor Department.

A pair of retailers, Home Depot and Saks, posted first quarter earnings Tuesday.

Shares of Saks Inc. slid more than 3 percent on disappointing revenue numbers, though profit rose 13 percent for the quarter.

And shares in The Home Depot Inc. slumped as well after full-year revenue guidance from the world’s biggest home-improvement company fell short of Wall Street expectations.

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Germany and the European Commission on Tuesday called on EU nations to stick to their agreed budget cuts despite mounting voter discontent, but promised some new efforts to boost growth to alleviate economic hardship.

In elections on Sunday, voters in France and Greece gave strong support to parties who want to roll back or slow down the spending cuts and tax increases that have defined Europe’s response to its debt crisis.

That added to cries from labor unions and some governments for more measures to boost economic growth to offset the devastating impact on jobs that austerity measures are having.

Officials in Berlin and Brussels said there was some room for more reforms to help growth, but insisted that any new growth policies must not detract from Europe’s drive to lower its deficits.

European Commission President Jose Manuel Barroso said there could be no fundamental change in direction.

“What member states have to do is be consistent, implementing the policies that they have agreed,” Barroso told reporters on the eve of Europe Day, which celebrates the ever closer cooperation between the nations of the Continent. “Now, the key is implementation.”

On Sunday night, however, the calls from some European capitals were different, with French socialist president-elect Francois Hollande vowing that “austerity can no longer be inevitable.”

In Greece, parties that rejected belt-tightening made big gains and there were fears that the new leadership would renege on commitments made to secure the country’s massive rescue loans. An outright rejection of the bailout could eventually see Greece leave the euro currency bloc, a possibility that was unnerving financial markets.

As the debate over austerity intensified, EU President Herman Van Rompuy called for an informal summit of the 27 EU government leaders on May 23 to discuss economic growth and to prepare for a summit in June focused on job creation short term personal loans.

Barroso discounted the notion that Europe was going to revise its fiscal policy commitments.

“It would be completely demagogical and not serious to propose to some of our member states to relax now the efforts of fiscal consolidation,” he said.

He insisted that sustained debt reduction was essential to convince markets, build confidence and cut borrowing costs. “Every euro spent on interest payments is a euro less for jobs and investment,” he said.

Germany largely backed the Commission’s stance of staying rigid on fiscal restraint while seeking concerted measures for growth.

“The end of the debt policy has been agreed in Europe. It has to stay that way,” said German Foreign Minister Guido Westerwelle in Berlin.

Like Barroso, he suggested that economic growth could be enhanced, but through structural reforms _ not through increased government spending.

“It’s right that we are simultaneously creating new growth impulses. That’s why we have to add to the fiscal pact for less debt a growth pact for more competitiveness.

“I’m very confident that we will be able to overcome the crisis this way with less debt and more growth. Both belong together,” he said.

The debate on the policies should come up at the May 23 summit, the first for newly elected President Hollande.

Outgoing president Nicolas Sarkozy and German Chancellor Angela Merkel worked closely together to set the EU course out of the financial crisis. Now, Hollande comes in with his own agenda.

He said his first act as president will be to write a letter to other European leaders calling for a renegotiation of a budget-trimming treaty aimed at bringing the continent’s economies closer together _ a stance that puts him at odds with Merkel.

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The founder of BATS Global Markets says the U.S. exchange that withdrew its public offering on Friday after an embarrassing computer glitch should pursue a “credible” IPO plan in the second quarter.

Dave Cummings, who founded the BATS exchange and was its CEO till 2007, said in an email sent Sunday to people in the industry that it was a “freak one-time event,” because the computer program needed for an IPO was new. He said such bugs can easily be fixed, but recommended that all bonus plans at BATS should be suspended since “mistakes cost money.”

A BATS’ spokesman said Cummings’ opinions are his own and the company has “absolutely no comment” on the email.

Cummings sits on the board of BATS and is the owner of electronic trading firm Tradebot Systems and technology investment firm Tradebot Ventures. He also owns a stake in BATS.

On Thursday BATS’ initial public offering of its own stock priced at $16, the low end of what the company had originally predicted.

Shortly after starting to trade on Friday, the share price plunged to just pennies because of technical issues, according to the exchange. Trading in the stock was halted cash till payday. By late afternoon, BATS withdrew its public offering and said it had no plans to refile its IPO. All trades made were to be canceled.

The botched IPO was a blow not only to the exchange, but to its own plans for the IPO business. In February, BATS offered free listings to companies with shares that traded a certain amount each day, hoping to draw IPOs away from Nasdaq and the NYSE.

BATS, whose motto is “Making Markets Better,” strove to define itself as a tech-savvy exchange and said companies would benefit from its “world-class customer support and technology.”

Cummings said in his email that the software bug that led to the glitch would likely take less than a week to fix. He said that the company now needed a plan to move forward.

“BATS management should develop a plan to go public in the second quarter, if possible,” said Cummings. “This might seem tough, but I believe it is the only way to move past the issue.”

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Two months after filing for personal bankruptcy, former SynCare LLC chief Stephanie DeKemper on Tuesday asked that the corporation itself be granted Chapter 7 protection.

SynCare listed assets of $125,854 and debts over $5.6 million in papers filed with the Indianapolis federal bankruptcy court.

Nearly $2 million of that debt is owed to Clayton-based Centene, the corporation that provided seed money DeKemper used to purchase SynCare in early 2010.

SynCare proceeded to secure a Missouri Department of Health and Senior Services contract to oversee services for the state’s 50,000 homebound Medicaid patients.

The state terminated the pact last September, barely four months after it went into effect, following a public outcry over SynCare’s failure to deliver the services outlined in the agreement.

With one exception, this week’s corporate petition mirrors the personal bankruptcy papers filed on behalf of DeKemper the last week of December.

The personal bankruptcy names nearly 150 SynCare employees from Missouri seeking back wages and and reimbursement for business-related expenses.

The corporate Chapter 7, conversely, lists compensation owed to 13 people once employed at SynCare’s Indianapolis headquarters.

Fifth Third Bank, holding outstanding loans totaling $850,000 joins Centene as the corporation’s largest creditor.

The papers show Bank of America being owed $676,964 for a letter of credit secured by Centene.

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In his first 100 days as European Central Bank President, Mario Draghi has taken unprecedented action to tackle the sovereign debt crisis. Greece may push him even further into unknown territory.

Draghi will today face questions on the ECB

Many non-stop flights from Europe to the U.S. aren’t: Unusually high winds are forcing airlines flying west across the Atlantic to make unscheduled stops to take on more fuel.

The conditions are causing inconveniences to fliers who are often missing connections once they land, costing the airlines money to rebook or otherwise compensate their customers.

United Continental Holdings (, Fortune 500), which is operating under both the United Airlines and Continental Airlines brands as it moves to complete its merger, said it diverted 43 out of 1,100 flights in December using the Boeing (, Fortune 500) 757 jet flying from Europe to the United States. A year earlier it only had to divert 12 flights.

Company spokeswoman Megan McCarthy said the winds were typically 30 knots in December the previous decade, but they averaged 47 knots last month, with half the month averaging 60 knots.

The unusually high winds and the flight diversions have continued in the first 11 days of January, she said, although she did not have any statistics.

Other airlines have also been affected. AMR () unit American Airlines said it has happened occasionally on the trans-Atlantic routes on which it uses the 757, although it could not provide statistics.

McCarthy does not have any estimates on costs to the airlines from the high winds, but said most of the costs have been associated with payments to customers free 3-in-1 credit report.

"We have been offering compensation as a gesture of good will when circumstances merit," she said.

The eastbound flights are saving fuel due to the unusually strong tail winds. The high winds have also been associated with an unusually mild start to winter in the United States, which has saved the airlines money as well.

The planes typically land at Gander and Goose Bay in the Canadian province of Newfoundland and Labrador. But other fueling stops have been made in Iceland, Ireland, Nova Scotia, Albany, N.Y., and even Stewart International Airport, only 60 miles north of New York City.

Some larger planes have a longer range and are not having to make as many extra stops to refuel. But the 757, which holds about 169 passengers, is common on trans-Atlantic flights.

McCarthy said it has been used for years by both Continental and United, and was not something that was introduced on the routes as a result of the recent merger of the two carriers. 

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Nigerian President Goodluck Jonathan said executive-branch politicians will take a 25 percent pay cut amid labor union plans for a nationwide strike to protest scrapping of fuel subsidies that more than doubled gasoline prices.

The government will reduce overseas traveling and all ministries and departments must cut costs in 2012, Jonathan said, adding that he won

Valley Beef LLC, a franchisee of five St. Louis area Lion’s Choice restaurants, has filed for bankruptcy.

Clayton-based Valley Beef, led by Thomas Ginos, filed the Chapter 11 bankruptcy petition Thursday in St. Louis federal court and listed between $500,000 and $1 million in liabilities and assets of $50,000 or less. Its largest creditors holding unsecured claims are US Foods, which is owed $117,850, and Pulaski Bank, which has claims totaling $195,205.

Valley Beef’s Lion’s Choice locations in Chesterfield, St. Louis, Fenton, Wentzville and on Mid Rivers Mall Drive in St. Peters have 84 employees. Valley Beef shuttered a Lion’s Choice in downtown St. Louis in 2009.

Ginos became a franchisee of the restaurant chain that specializes in roast beef sandwiches in 2001. He plans to keep the five remaining restaurants open during the bankruptcy reorganization, according to his attorney, Robert Eggmann of Clayton-based law firm Desai Eggmann Mason. Eggmann said his client filed the bankruptcy to restructure debt and expects to emerge from bankruptcy within six months.

Lion’s Choice was founded in Ballwin in 1967 as Brittany Beef and has 15 company-owned restaurants in the St. Louis area that are not included in the bankruptcy. Jim Tobias, president of Lion’s Choice Restaurant Corp., said he did not expect the bankruptcy filing to interrupt operations at the five St. Louis area franchise restaurants. “We don’t expect any change in business,” Tobias said.

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MEMC Electronic Materials Inc. will slash 1,300 jobs — almost 20 percent of its workforce — and cut production as it copes with plunging prices for polysilicon, the key raw material in solar wafers and semiconductors.

The O’Fallon, Mo.-based company will eliminate 250 U.S. jobs by next spring, including 70 of 830 positions at the company’s corporate headquarters in O’Fallon, spokesman Bill Michalek said. MEMC will idle a polysilicon plant in Merano, Italy, and may close it permanently. It will reduce capacity at a plant in Portland that it acquired last year; and limit the ramp up of its newest silicon wafer plant in Kuching, Malaysia.

Officials said the actions were necessary to align the scope of operations with fast-changing markets that have been increasingly defined by a flood of Chinese-made polysilicon and a slowdown in solar and semiconductor demand.

“It is clear we must adjust our business model,” Ahmad Chatila, MEMC’s chief executive, said on a conference call with analysts and investors. “We believe these actions will strengthen MEMC in the near term and position us for more profitable growth in our core businesses.”

MEMC expects the restructuring to reduce annual operating expenses by more than 15 percent and boost cash flow by $200 million a year.

Theodore O’Neill, a New York-based alternative energy analyst at Wunderlich Securities, said the actions were necessary. But he’s not convinced it will insulate the company from the polysilicon prices that continue to spiral downward.

“The company is doing what I think they have to do,” he said. “My concern is they’re chasing a rabbit down a hole.” On Thursday, O’Neill cut his rating on MEMC shares to “sell” from “buy” and lowered his price target on the stock to $3 from $11.

The polysilicon boom has gone bust in only a few years as manufacturers around the globe simultaneously raced to add production capacity. The result: Prices that topped $400 a kilogram in 2008 have fallen below $40. They have plunged 45 percent just this year.

Meanwhile, the solar energy market in Europe has suffered as subsidies have begun to dry up. And demand for semiconductors has waned, too. Unlike in past years when consumers snapped up LED televisions and iPads, “we don’t have any hot consumer electronic that’s pulling massive amounts of polysilicon through the sales channel,” O’Neill said.

MEMC isn’t alone among polysilicon producers. “Other vendors in the solar supply chain will be forced to take similar action” in 2012, an analyst at Gilford Securities predicted in a research note on Thursday.

Last month, the International Trade Commission agreed to investigate a complaint by seven solar manufacturers that Chinese competitors were dumping products to injure competitors by driving down prices. MEMC was not among them, and is part of a coalition that believes the case could spark a trade dispute and raise prices for the entire industry.

Low-priced Chinese solar products were also cited by California-based Solyndra Inc. in its September bankruptcy. The case has been scrutinized by Republicans in Congress because the company received a half-billion-dollar federal loan guarantee from the Obama administration.

But just as falling prices have hurt solar wafer producers, they have benefited consumers and generated business for U.S. solar installers such as Clayton-based Microgrid Energy, which has seen its volume of solar work triple from last year.

“Probably once a month we see prices come down,” said Marc Lopata, Microgrid’s president.

Lopata said costs for installed solar energy systems have fallen by about 25 percent from a year ago to $6 a watt or less, depending on the size. And with rebates and tax incentives, consumers are getting about 60 percent back.

MEMC said it will combine its struggling solar materials unit, where 45 percent of jobs are being eliminated, with its SunEdison solar development unit under a single management team at the end of the month to squeeze out efficiencies. In some instances, SunEdison will buy solar wafers from other manufacturers rather than use those made in-house.

The company said it will take charges totaling as much as $1.38 billion in the fourth quarter. More than half of the amount is related to the restructuring plan announced Thursday, with the rest a product of likely goodwill impairments and deteriorating business conditions.

Weak solar and semiconductor markets also prompted MEMC to lower its fourth-quarter earnings forecast by 5 cents to 10 cents a share, excluding the charges. The company said revenue could be $239 million less than expected as some of its SunEdsion sales in Europe could get pushed back to 2012.

Shares of MEMC, which had lost nearly two thirds of their value over the past year, fell sharply in early trading Thursday on the New York Stock Exchange but closed down just a penny at $4.20.

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