In Brief - Monday

May 27th, 2007

NetLogic Microsystems, () a chipmaker, expects Q1 sales to increase 11%-11.5% to $23.3 mil-$23.4 mil, above views of $23 mil. It originally anticipated a revenue increase of 8%-10%. Shares rose 9% to 28.75.

SanDisk, () a flash memory and MP3 maker, said it will pair with Yahoo () to provide users free subscription music service via its new wireless music player. SanDisk and Yahoo each slipped 1%.

Apple () said it sold its 100 millionth iPod music player. The iPod was launched in ‘01. Shares dipped 1%.

California Pizza Kitchen, () a restaurant chain, expects Q1 profit of 19-20 cents ex items vs. views of 19 cents. Q1 ended on April 1. Revenue grew 15% to $149.4 mil, slightly above views. Results were hurt by unfavorable weather, the company said. Same-store sales grew 4.7%. Shares fell 0.3% to 33.05.

CIT Group, () a consumer finance company, put 3 executives on paid leave amid an inquiry into allegations that colleges and financial aid officials got kickbacks for steering student loan business to CIT. Shares slid 0.3% to 53.94.

Prestige Brands Holdings, () a marketer of personal care and household products, warned Q4 revenue will fall below views of $83 mil. Shares tumbled 6.8% to 11.34.

UPS bails out of contract with Airbus

May 27th, 2007

PARIS: The last customer for the cargo version of Airbuss A380 superjumbo jet said Friday that it was walking away from its $2.8 billion order, citing concerns that the troubled plane maker would not be able to meet even a delayed delivery schedule agreed last week.

The cancellation, by United Parcel Service, came after Airbus confirmed that it had halted work on the A380 freighter in order to divert engineering resources to the passenger version of the plane, now two years behind schedule.

The move Д four months after UPSs rival, FedEx, also abandoned an order for 10 of the planes Д leaves Airbus without a customer for the A380 freighter.

It represents a fresh blow to the company, which faces threats of mass strikes by unions in France and Germany after it announced this week that up to 10,000 jobs might be cut to save billions of euros following costly production delays of the A380.

Yet the UPS cancellation may hold a silver lining for Airbus.

The plane maker has said repeatedly in recent months that the lack of large orders for the A380 cargo jet made it possible to focus on getting 166 orders for passenger versions of the plane delivered to airlines as quickly as possible.

With UPS now abandoning its 10 production slots, Airbus should be able to offer them to other key airline customers, like Emirates or Qantas, which are eagerly awaiting the superjumbo.

UPS said its decision would be formally presented to Airbus at the first opportunity allowed under the terms of an agreement reached last week that gave either party the right to cancel the order.

The precise date has not been disclosed, but John Leahy, the Airbus chief operating officer for customers, said last week that the date fell in the second half of this year.

The announcement appeared to catch Airbus by surprise. In an e-mail exchange hours before the announcement, Leahy indicated that he had not been expecting a decision by the parcel delivery company for some time. “The order remains on our books until UPS makes a final decision,” Leahy wrote, which he said the company indicated would be “later this year.”

UPS, the worlds largest package delivery company, had originally expected its order Д valued at $2.8 billion at list prices Д to be delivered beginning in 2010. The company disclosed Friday that the latest agreement with Airbus had pushed those deliveries back by two years, to 2012.

“UPS had intended to complete an internal study of whether it could wait until 2012 for the aircraft, but now understands that Airbus is diverting employees from the A380 freighter program to work on the passenger version of the plane,” the company said.

David Abney, UPSs chief operating officer and president of UPS Airline, said: “Based on our previous discussions, we had felt that 2012 was a reasonable estimate of when Airbus could supply this plane. We no longer are confident that Airbus can adhere to that schedule.”

Barbara Kracht, an Airbus spokeswoman, declined to comment on whether the plane maker would seek to persuade UPS to change its mind. “We respect the customers decision,” Kracht said. “UPS is and remains a reliable business partner for Airbus.”

Analysts said the Airbus decision to reallocate personnel to other programs made perfect sense from an industrial point of view. “All available resources are needed for work on the A350 and the A380 passenger version,” said Richard Aboulafia of Teal Group in Fairfax, Virginia. “Demand for the cargo A380 is minimal at best.”

Airbus had forecast a market for as many as 400 cargo versions of the A380.

Meanwhile, some said UPSs abrupt decision to cancel one week after agreeing to a revised delivery schedule suggested that the company was piqued at Airbus for not communicating its plans earlier.

“This is another slap in the face for Airbus,” said Doug McVitie, a consultant at Arran Aerospace in Dinan, France. “UPS will probably turn to Boeing now for good.”

Last month, UPS announced an order for 27 Boeing 767-300ER freighters worth about $3.8 billion. Those planes are due to be delivered from 2009 to 2012. UPS said at the time that the Boeing order was not related to its review of its A380 order.

Airbuss parent, European Aeronautic Defense Space, warned last month that A380 production problems and the continued weakness of the dollar against the euro would push the company to a significant financial loss for 2006.

EADS is scheduled to report its full- year results next Friday.

Magazine’s Car Seat Findings Withdrawn

May 27th, 2007

Magazine’s Car Seat Findings Withdrawn Consumer Reports Withdraws Negative Report on Infant Car Seats By JIM FITZGERALD The Associated Press

WHITE PLAINS, N.Y. - Consumer Reports on Thursday retracted a negative report on infant car seats that left many parents worried about their babies’ safety an embarrassing revelation for the venerable magazine.

Consumer Reports said it was withdrawing the report, issued Jan. 4, because some of its test crashes were conducted at speeds higher than it had claimed.

The original report said most of the seats tested “failed disastrously” in crashes at speeds as low as 35 mph. In one test, it said, a dummy child was hurled 30 feet.

But the National Highway Traffic Safety Administration said some of the crash tests were conducted under conditions that would represent being struck at more than 70 mph.

“Consumer Reports was right to withdraw its infant car seat test report and I appreciate that they have taken this corrective action,” said NHTSA administrator Nicole Nason. “I was troubled by the report because it frightened parents and could have discouraged them from using car seats.”

In an interview, Nason said more than 100 worried parents had called the agency’s hotline on the evening the original report was released.

Phil Haseltine, executive director of the National Safety Council’s Air Bag & Seat Belt Safety Campaign, said the report had raised doubts among many parents about their car seats despite the “very rigorous standard at NHTSA.”

“I think it’s going to take a substantial educational effort to undo that damage,” said Haseltine, whose organization was created through a partnership of automakers, insurance companies and safety groups.

Consumer Reports said it would review its study, retest the car seats and publish a new article as soon as possible.

In a statement Thursday, Consumer Reports said it had received information from the NHTSA “concerning the speed at which our side-impact tests were conducted” supposedly, 38 mph. Consumer Reports spokesman Ken Weine said new information from the federal agency showed that the speeds were higher.

The Yonkers-based magazine tested the type of infant car seat that faces the rear and snaps in and out of a base. It found only two of the 12 seats worth recommending, and it urged a federal recall of one seat, the Evenflo Discovery. Evenflo had immediately disputed the tests’ validity.

However, Weine said a recall was still being urged for the Discovery and for another seat that was judged unacceptable because it did not fit well in several cars. Evenflo Co. said Thursday that it had run 17 tests on randomly purchased Discovery seats in the last week and the seat passed federal standards each time.

The original report found that all the car seats except the Discovery performed adequately in 30 mph frontal crashes, which is the standard for seats sold in the United States. But it noted that cars are tested by federal regulators at higher speeds 35 mph for frontal crashes and 38 mph for side crashes so the magazine said it tested the seats at those speeds.

“When NHTSA tested the same child seats in conditions representing the 38.5 mph conditions claimed by Consumer Reports, the seats stayed in their bases as they should, instead of failing dramatically,” Nason said.

Consumer Reports’ Don Mays, a product safety director, said at the time, “It’s unconscionable that infant seats, which are designed to protect the most vulnerable children, aren’t routinely tested the same as new cars.”

In the 35-mph frontal test, seats separated from their bases, rotated too far or would have inflicted grave injuries, Consumer Reports said. At 38 mph, four seats flew out of their bases following side impact, it said.

Weine said Thursday there was no information casting doubt on the 35 mph crashes.

He said an internal investigation was under way and he could not yet say how the test may have gone wrong, or who, if anyone, was to blame.

“This is very early,” he said. “We found this information out very recently and as soon as we did we wanted to take the most important step which is openly communicating with consumers.”

The magazine asked its readers and others who may have learned of the tests “to remember that use of any child seat is safer than no child seat, but to suspend judgment on the merits of individual products until the new testing has been completed and the report republished.”

Consumer Reports, published by Consumers Union, has a reputation for objectivity that it backs by refusing any advertising and by refusing to permit use of its reviews in others’ advertising.

It does occasionally get challenged by manufacturers. In 2004, as part of a settlement of an 8-year-old lawsuit, Consumer Reports said that its finding about the Suzuki Samurai SUV that it “easily rolls over in turns” applied only to severe swerving turns on the test track.