Moves to Protect Children, and Bottom Lines on Home Services

Dec

Moves to Protect Children, and Bottom Lines

posted by admin in Home Depot

CHILDRENS health was on business minds amid toy recalls and changes to nutritional advertising standards, while retail sales, hedge funds and a big stock issue by a high-tech company got Wall Streets attention.

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Nickelodeon

Soon, Nickelodeon characters like SpongeBob SquarePants and others will not be allowed to appear on junk food products.

TWO OF the nations largest retailers, Wal-Mart and Home Depot, said consumers had pulled back on spending, hurting the companies earnings this summer and putting a scare into Wall Street. Wal-Mart missed its second-quarter profit estimate, while Home Depots profits fell. Both predicted tough times for the rest of the year.

But who is to blame the stores or the shoppers? Wal-Mart and Home Depot have suffered self-inflicted wounds. Wal-Mart has stocked unappealing clothing and home dcor products that sat unsold on shelves. Home Depot has upset shoppers with lackluster customer service. Both chains are working to fix the problems, but winning back customers takes time.

For their part, Wal-Mart and Home Depot are pointing to higher energy costs and a sluggish housing market, which they say have pinched consumers budgets. The bad news is that neither problem will disappear anytime soon.

Not all retailers are struggling. J. C. Penney and Kohls reported a strong second quarter and raised earnings forecasts for the year, giving the industry hope as it prepares for the crucial holiday shopping season.

MICHAEL BARBARO

MATTEL ANNOUNCED its second lead-related recall this month, notifying consumers to return or discard 436,000 die-cast cars featuring the Sarge character from the movie Cars.A subcontractor hired by one of Mattels vendors in China used lead paints on the cars from May until July.

The toy maker also recalled 18.2 million toys because of the risk that children might swallow magnets on the toys. The recall included 63 toys based on characters like Polly Pocket, Barbie and Batman.

Chinese officials, meanwhile, confirmed that the owner of the Chinese factory involved in Mattels earlier lead recall committed suicide at the end of last week, after China prohibited his factory from exporting toys.

Mattel said little about the death in China, but Mattels chief executive, Robert A. Eckert, took to the television news shows to assure consumers that the company was doing all it could to increase its toy testing. Mattel also ran full-page ads in several national newspapers.

Despite Mattels public relations effort, numerous politicians said this week that federal regulators need to increase independent testing of toys. Chinese officials responded by saying they would not welcome American regulators on their turf. China has stepped up its own inspections this summer. Toy analysts said more recalls could affect holiday sales. LOUISE STORY

WITH THE prospect of government regulation of childrens advertising looming, childrens programmers and food companies have been scrambling to embrace healthier food.

Nickelodeon Television became the latest to announce that it would limit the use of its licensed characters like SpongeBob SquarePants to better for you foods (except on special occasions like Halloween). Similar policies had already been announced by Discovery Kids and Walt Disney, and many of the nations largest food companies have announced new limits on advertising to children.

The question now is how the companies define healthy foods, and whether they can reformulate sugar- and salt-laden food to meet the healthy criteria. ANDREW MARTIN

ON MONDAY, Goldman Sachs came to its own rescue. In an embarrassing reminder that computer models are not infallible, Goldman said it would inject $2 billion into Global Equities Opportunities, an internal quantitative hedge fund, after the fund lost 30 percent of its value the previous week.

Two investors, Eli Broad and C. V. Starr %26 Company, which is run by Hank Greenberg, and others tossed in $1 billion to bring the rescue package to $3 billion, leaving the fund with more than $6 billion to invest. New investors got a cut in fees, irking old investors facing losses and full fees (at least full management fees, since there are no incentive fees on negative performance).

It may have been a gracious move, but who will be the white knight for Global Alpha, Goldmans flagship $7.4 billion fund that was down 27 percent for the same week? JENNY ANDERSON

THE STOCK market may be shaky, but that had no effect on the Silicon Valley company Vmware. On Tuesday, it was welcomed on Wall Street as the hot new thing in technology.

Its blockbuster initial public offering raised $1.1 billion, the biggest technology offering since Google in 2004. On the first day of trading, Vmwares shares rose 76 percent, closing at $51 a share.

Investors see a company that is the front-runner in the emerging market for so-called virtual software, which allows corporate data centers to juggle more computing chores on fewer computers, reducing the spending on hardware, electricity and maintenance.

Vmwares technology, analysts say, is years ahead of rivals including Microsoft, which is developing its own virtualization products, and open-source start-ups like XenSource and Virtual Iron.

The market for virtual software promises to be hot for a while. On Wednesday, Citrix bought XenSource for $500 million.