If Fannie and Freddie fail the price tag is somewhere between $400 billion and a shade over a trillion of taxpayer money to bail them out. How do you like them apples? A trillion bucks? Big enough to sink the government’s AAA rating. Big enough to make LTCM look like child’s play. This is some scary stuff folks.

Some comparisons shall we?

Clinton’s proposed universal health-care coverage
10-15 years of Obama’s plan @ $50-65 billion per year
Cost of the Iraq war

From CNN’s trillion-dollar mortgage time-bomb:

Although few are predicting an imminent need for a bailout just yet, credit rating agency Standard & Poor’s recently placed an estimated price tag on this worst case scenario — $420 billion to $1.1 trillion of taxpayer’s money.

This dwarfs how much it cost to help banks during the savings and loan crisis of the late 1980’s and early 1990’s. That cost taxpayers about $250 billion in today’s dollars.

S&P added that saving Fannie (FNM) and Freddie (FRE, Fortune 500) might cost so much that the federal government’s AAA credit rating, the top possible rating, might even be at risk. If that was lost, then all federal government borrowing would become more expensive.

But other experts expect that declining home values will force more borrowers who have a Fannie- or Freddie-backed loan to stop making payments in the coming months, rather than continuing to make payments on a home now worth less than their loan balance.

Rising job losses may also make it difficult for other borrowers who formerly had good credit to stay current on their mortgage payments.

“The real fundamental problem is real estate prices have been falling and they might fall substantially more,” said Robert Shiller, a Yale University economist who argued for years that a bubble was forming in real estate prices. “OFHEO and Fannie and Freddie never considered the possibility of a massive real estate correction.”

Some economists suggest that if investors start to see problems in the performance of loans backed by Fannie and Freddie, they’ll dumping them. And that would force the federal government to step in.

“I would say there’s at least a 50-50 chance of some sort of bailout. I’m not saying it will necessarily cost $1 trillion, but they’ll need some kind of help, and it very well could happen this year,” said Dean Baker, co-director of the Center for Economic and Policy Research

Investors are signaling growing concern as well. The yield premium for securities backed by Freddie and Fannie compared to the yield on Treasury bills has grown to about 2.25 percentage points from 1.7 percentage points at the beginning of the year. That’s a sign that the investors see a greater risk of Fannie and Freddie running into bigger problems.

I’m guessing there’s a school, a child, a homeless person, a neighborhood, a teacher, a firefighter, a veteran that could all use more help - I hope we don’t end up costing them that help by recklessly throwing Fannie and Freddie in front of this train.

And Fannie and Freddie’s role in the mortgage and real estate markets is likely to grow, as Congress recently allowed them to back larger mortgages, up to $729,750, up from the previous limit of $417,000.

The Office of Federal Housing Enterprise Oversight (OFHEO), which regulates both firms, also recently lowered the capital requirements for Fannie and Freddie in an effort to pump $200 billion more into the credit markets.

The new loan limits will increase the risks and losses for Fannie and Freddie, said Wagner and other experts.

Source [blownmortgage]

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Filed under: Management, Countrywide Financial (CFC)

Countrywide Financial’s (NYSE: CFC) corporate governance satire worthy of Gilbert & Sullivan continues with the release of the company’s proxy statement.

CEO Angelo Mozilo’s pay package dropped 79% — to $10.8 million. Worse, president and COO David Sambol and managing director Andrew Gissinger III did not even come close to meeting the company’s insider stock ownership guidelines — which worked out well for them given the company’s precipitous decline in value.

Just for laughs, here’s an excerpt from the company’s executive pay philosophy pulled directly from the proxy statement:

Pay for Performance. Our compensation programs are intended to motivate our named executive officers to achieve a superior level of performance in the diversified financial services industry. The amount of compensation for each named executive officer is intended to reflect the executive’s experience, his or her individual performance and the performance of the Company. Several of our compensation programs are expressly tied to performance of the Company or the named executive officer, including our annual incentive awards program and our equity awards program. In general, our compensation is heavily weighted toward performance-based pay, and we seek to balance incentives for both short-term and long-term performance.

Here’s my question. If you’re a Countrywide director reading this, feel free to respond in the comment section: When you’re stock declines from over $40 to under $10, how can your CEO earn $10.8 million under a pay-for-performance philosophy?

Perhaps Countrywide has a sense of humor, and the description of executive pay was meant to be ironic. But the company’s shareholders probably aren’t laughing.

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Filed under: Newspapers, Magazines, Google (GOOG), Yahoo! (YHOO), AT and T (T), JPMorgan Chase (JPM), Wells Fargo (WFC)

MAJOR PAPERS:

• While bank stocks aren’t exactly hot, they triggered yesterday’s rally because when J.P. Morgan Chase & Co (NYSE: JPM) and Wells Fargo & Company (NYSE: WFC) reported, there were no unexpected surprises, according to the Wall Street Journal’s “Heard on the Street”. The ups and downs in the sector are expected to continue.
• According to people familiar with the matter, the Wall Street Journal reported that Yahoo! Inc (NASDAQ: YHOO) may be moving closer to outsourcing its search advertising to Google Inc (NASDAQ: GOOG) after an initial test yielded what they considered to be positive results.

OTHER PAPERS:

• The New York Times reported that AT&T Inc (NYSE: T) is planning today to make an announcement that they will gift $100M to improve the skills of the nation’s work force and fight the problem of high school dropouts.

WEB SITES:

• Celgene Corporation (NASDAQ: CELG) is best known for its blockbuster drug Revlimid which is used treat multiple myeloma, a cancer which attacks blood and bones. For patients, it can prolong their lives about 2.9 years, or longer, according to Investor’s Business Daily’s “The New America”.

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The Wall Street illuminati have now come up with a new way of dragging new investors into the trenches. It is a technique practiced only by the most ardent Jedi investment bankers. A trick out of reverse psychology. What seems to be appearing now is a rather simple formula of managing expectations […]
Related Posts:
■Dr. Housing Bubble Celebrates Monumental 100th Post! Top 10 Housing Articles.
■Real Homes of Genius: Today We Salute you Huntington Park. Tweedledum and Tweedledee of housing. $500,000 Homes in Wonderland.
■Real Homes of Genius: $438,000 for 816 square feet in Pico Rivera! Another Example of Manic SoCal Housing!
■Real Homes of Genius: Today we Salute Lynwood. 597 Square Feet for $319,000.
■Home Sales: Worst Drop in 18 Years. Enjoy your Day!

The Wall Street illuminati have now come up with a new way of dragging new investors into the trenches. It is a technique practiced only by the most ardent Jedi investment bankers. A trick out of reverse psychology. What seems to be appearing now is a rather simple formula of managing expectations and sensitizing the public to come back into the water:

1. Down play that your company has any problems or issues.

2. After that is said, ensure that your earnings estimate is revised once, twice, or as many times as necessary to get to your new lower target.

3. Before the actual results are released, the stock will adjust a bit downward from wink-wink, some folks getting out while the party is still hot.

4. The news is released and if you meet your already revised earnings, the stock will soar to the stratosphere. If you miss, so what, you’ll still go the stratosphere simply because many have already jumped ship.

5. Mention that this is as bad as it will get through the PR machine. If you’re an investor, grab your ankles assume the position since you’re probably already seeing the pain in your portfolio. If you only had the inside scoop of what assets these banks were backing up.

Well today we’re going to give you a taste of that. We are going to go to 6 Southern California counties and highlight 6 homes that will show you how insane this entire housing market got and in fact, how delusional folks are to think we are anywhere near a bottom. Many of the option ARMs, which are all over the place here in Southern California, have yet to meet their true destiny. Many are still living hoping for that saving grace. A new report shows that 70 percent of subprime borrowers aren’t getting the help they need:

“NEW YORK (CNNMoney.com) — Seven out of 10 seriously delinquent subprime mortgage borrowers are still not getting the help they need to keep their homes.

That’s according to a report released Tuesday by the State Foreclosure Prevention Working Group, a coalition formed by eleven state attorneys general and the Conference of Bank Supervisors in the summer of 2007 to work with loan servicers to prevent unnecessary foreclosures.

The performance of subprime loans has continued to deteriorate, with many of the loans completed in 2006 and 2007 already in default.

For example, 28.5% of subprime adjustable rate mortgages (ARMs) that won’t reset until Spring, 2009 are already delinquent. About 21% of these same loans were delinquent in October.

The report concluded that “very weak underwriting and mortgage origination fraud, and not simply payment resets,” are what’s driving subprime loan defaults.”

Unfortunately the “help” they need is very straight forward:

1. Increase their incomes (unlikely in a recession).
2. Cut the mortgage balance down to a manageable amount (which of course lenders are resisting and would require in some cases 50 percent reductions).

3. Rates hardly matter. As you can see from the above delinquent rates many are now defaulting even before rates reset.

What government loan can you give to increase income? What government loan can offset rising costs of everything? The underwriting was so horrific that these people unfortunately could not afford their homes. That is the brutal fact. At what point do we stop these absurd haphazard plans and realize that no low rate government mortgage is going to increase income or cure pathetic underwriting?  If anything, it is throwing a life jacket to a few select banks and Wall Street firms.  Let us now look at some specific examples of why no life jackets should be thrown to some of these mortgage lenders.

Real Homes of Genius - Southern California

#1 - Los Angeles County

Current Median Price: $440,000

Drop from last year: -18.5%

Los Angeles is the largest county in Southern California. With nearly 10,000,000 people, this county has it all. From the glamour of Hollywood, the fun at the Santa Monica Pier, and the renegade Real Homes of Genius. It is also important to note that in Los Angeles County we have a renting majority so we are way below the national homeownership rate. Let us take a look at 1 of the 88 cities in the county that is being hit very hard and had a disproportionate amount of subprime loans.

The city of Lynwood has a median home price of $320,000, down an incredible 36% in one year. It is becoming rather apparent that there will be many cities in Southern California that will face 40 to 50 percent declines. Out of 264 homes in Lynwood 40 are currently distressed sales. You want to see why problems are occurring in California? The above home is a 3/2 home sitting on 1,468 square feet. Let us look at some details:

Current asking price: $259,900

Sale History

12/06/2007: $434,673 *

10/18/2006: $550,000

12/02/1977: $31,000

This is an REO. At the current sales price we are seeing a 52% reduction in less than 2 years. That my friends is a crash. This isn’t necessarily cheery picking either considering the city itself is down 36%. Who in the world made a $550,000 loan on a home that would rent for $1,000 a month?  We don’t have enough data on the recorded data in 2007 so we don’t want to speculate. Oh wait, that’s right!  This is California and speculation is the name of the game!  Let us go forward.

#2 - Orange County

Current Median Price: $506,000

Drop from last year: -19.6%

Orange County for those out of the area, usually brings to mind images of the “OC” or shows such as Real Housewives of Orange County. Of course this is a tiny enclave that is completely unrepresentative of the area including the larger cities of Santa Ana, Anaheim, and Fullerton. The majority of people do not live in Newport Coast or Laguna Beach. Just to give you an idea, Laguna Beach has 23,727 people and Newport Beach has 70,032 people. Orange County has over 2,800,000 million folks so they have to live somewhere as well.

The city we’ll profile is Westminster which is one of the harder hit cities in the county. Currently the median price for a home in Westminster is $450,000, down 25 percent from a year ago. This is a working class city so we are now seeing drops across the board. The above home is a short sale and has 3 bedrooms and 2 baths. Let us look at some data:

Current asking price: $425,000

Sale History

01/30/2006: $575,000

08/20/2001: $180,000

In slightly over two years, we have seen a $150,000 reduction. I know many nice cities in the United States where that discount would get you a fantastic starter home! Yet the current price is still high given the fact that local area rents for a place like this would go for $1,750 to $2,000. Now do you understand why looking at rental/leases prices matter even in areas like California? If anything, having an understanding of the interaction between income and rents allows people to have a bigger buffer during downturns. Say you really wanted to keep your house but couldn’t. Simply rent the place and carry the costs until your situation improves. This option is off the table for nearly every home we are looking at. You can do this but your negative cash flow is so bad, you’d start looking like a Wall Street investment bank. Except in your case, no one is there to bail you out if it all goes bad.

#3 - Riverside County

Current Median Price: $306,250

Drop from last year: -27.1%

Our next two stops take us to the Inland Empire of California which is composed of Riverside and San Bernardino Counties. For all of those that claim there is no land in Southern California they simply have not treaded east far enough. There is plenty of land once you get out of the 50 mile coastal radius. The Inland Empire has taken the worst from this housing crash. Over building, speculation, and simply lack of an infrastructure nearly cement any growth in this region for sometime. In fact, if high gas prices remain many will simply not have the money to commute into the other counties for work. That is why many move out to this area in the first place! They can’t afford a home in the more pricier LA or OC areas and decided they’ll buy their home while sacrificing with a dreaded commute. Yet with gas prices as they are, I’m curious to see how many folks make this journey in the near future.

Our first city takes us to Canyon Lake. The current median price in this area is $275,000, a stunning 53.2 percent drop in one year. There are many spots were land was simply undeveloped and I’m not sure how things will pan out in the areas. Certainly the employment base isn’t there.

The above home is a short sale and has 2 bedrooms and 2 baths. It is a manufactured home which is fascinating since apparently in California any home is worth ridiculous prices. The dog is starring straight at the camera wondering, “is this the housing bottom?” Let us look at some details:

Current asking price: $139,000

Sale History

01/24/2006: $178,000

11/30/2004: $145,000 *

The drop in terms of amount is tiny but in percent terms it is off by 21.9 percent. Given the fact that this is a manufactured home and the employment base of the area, I’m curious to see some reports on bubble prices for non-traditional housing for California. We get plenty of data for condos, new homes, resale homes, but not much on these kind of homes.

#4 - San Bernardino County

Current Median Price: $265,000

Drop from last year: -28.2%

San Bernardino out in the Inland Empire also is being hit hard by the housing crash. Why not call the current situation by the true market reaction? This isn’t a housing correction or soft landing like many last minute pundits were preaching while luring new home buyers into a game of musical chairs with only one seat left. I doubt they have any sympathy for those now facing problems. Ironically, they put themselves out of work as well. Sustainability would have been better for everyone in the long run but they decided to pig out after a money starvation and their intestines exploded with adjusting mortgages, option ARMs, and every other craptastic mortgage  that gave them nice commission checks but now that feast is done. Now, they are facing the same fate as those that bought. San Bernardino County has many of the characteristics that Riverside County faced; over building, massive subprime, and tons of land (so that argument is out the window).

The city we’ll look at is Ontario. The zipcode we’ll look at is down 35 percent in one year and the median priced home is $258,000. You really have to wonder what in the world people were thinking. Wages are stagnant and employment in this area isn’t that strong and much of the employment was riding on the housing boom coattails.

We can summarize the home above while you lift your head to the sky and explode with, bwahahahaha! Please, bookmark this home so whenever you get a feeling for bailing out lenders or Wall Street firms you can pull up this page and look at this home to knock some sense back into your soul. This 580 square foot home with 2 bedrooms and 1 bath is “corporate owned” which makes it sound a whole lot better than a picked up foreclosure.

Current asking price: $160,000

Sale History

09/29/2006: $350,000

10/19/2005: $260,000

08/14/1984: $119,750

Bwahahaha! We’re rolling back prices to 1984! George Orwell is spinning like a top in his grave. Who in their sane mind would pay $350,000 for the above place? More importantly, who in the world would fund that mortgage? Forget about bailing these lenders out, they need to be put in jail! I’m equally shocked with the $260,000 price but $350,000? Come on now. Don’t these examples make you feel happy about helping your fellow prudent lender and banker on Wall Street? Totally inexcusable. How many of your Congressmen have actually been to any of the cities above? This home is now off by 54 percent from the peak price and it still seems overpriced given area rents are $750 to $900 for a similar place.

#5 - San Diego County

Current Median Price: $395,000

Drop from last year: -19.4%

San Diego County was the first to show significant signs of correction in this whole housing mess. Just because it is down south, it doesn’t mean that prices should be higher. The home we’ll look at in this county is in Poway. The actual city of Poway has a median home price of $490,000 which is down 31.2 percent on a year on year basis.

Are we buying a garage here? Seriously folks. As a future requirement for listing a home you’ll need to have people take photography 101 at their local community college. This home in Poway is a 4 bedroom 3 baths home on 1,894 square feet. This is a bank owned foreclosure. Let us take a look at some of the details here:

Current listing price: $389,900

Sale History

01/16/2008: $500,000

12/01/2006: $565,000

Price Reduced: 04/16/08 — $424,900 to $389,900

They tried to go for a higher price but no cigar. The $500,000 is most likely the bank taking this place back which is happening all over the state. But look at that absurd $565,000 price tag in 2006. This home is off by $175,100 in 1 year and 5 months. Again, to those not in the California area, welcome to height of irresponsible lending.

#6 - Ventura County

Current Median Price: $430,000

Drop from last year: -24.1

Our final county takes us to Ventura. I think you are catching on that Southern California is a big freaking place with very niche markets. So to paint with a broad brush like during the boom days was simply a mass mania not seen since the Macarena took a hold for a few months until people finally took a long hard look at themselves in the mirror. We’ll take a look at Oxnard here. Oxnard has 3 zipcodes which have varying degrees of correcting; from 22 percent down all the way to 44 percent.

The above piece of housing is actually a church if you haven’t figured that out on your own from the picture. There is a 600 square foot home in the back according to the ad. Now I know what many of you are thinking and no, this isn’t some kind of joke. When we say that we had a real estate bubble we meant we had a bubble in literally everything that was built on California land. I love how the ad tells us that the church has newer windows. I think it is safe to say that this place is a “niche property.” Let us look at some history here:

Current listing price: $199,000

Current listed property tax for 2007: $46

Guess someone owned this place for a very long time and was looking to make some dough during the housing bubble:

Price Reduced: 01/31/08 — $325,000 to $315,000
Price Reduced: 02/27/08 — $315,000 to $199,000

Welcome to California folks.

Today we Salute you Southern California with our Real Homes of Genius Special Award.

Did You Enjoy The Post? Subscribe to Dr. Housing Bubble’s Blog to get updated housing commentary, analysis, and information

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Related Posts:
■Dr. Housing Bubble Celebrates Monumental 100th Post! Top 10 Housing Articles.
■Real Homes of Genius: Today We Salute you Huntington Park. Tweedledum and Tweedledee of housing. $500,000 Homes in Wonderland.
■Real Homes of Genius: $438,000 for 816 square feet in Pico Rivera! Another Example of Manic SoCal Housing!
■Real Homes of Genius: Today we Salute Lynwood. 597 Square Feet for $319,000.
■Home Sales: Worst Drop in 18 Years. Enjoy your Day!

Via [DrHousingBubble]

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Filed under: Earnings reports

For companies, PR is one of the best ways to get customers and build a brand. But, it can be expensive - as well as unpredictable.

Well, Vocus (NASDAQ: VOCS) has been making things easier. That is, the company has a suite of web-based products that help manage the PR process, such as with media relations, monitoring, and news distribution. What’s more, the services are fairly affordable.

Investors are also getting interested in Vocus. On news of its Q1 results, the shares shot up 8% to $27. Then again, revenues spiked 42% to $17.87 million, which was the 35th consecutive quarter of revenue growth. Cash flow from operation came to $5.94 million, which was a 58% increase.

In the quarter, Vocus added 219 net new subscribers (the total is 2,646). Some of the customers include British Antarctic Survey, China Foreign Trade Centre, Clemson University, Department of Justice, Merck & Company (NYSE: MRK) and so on.

Going into Q2, Vocus sees revenues of $18.6 million to $18.8 million. Full-year guidance is for $75.9 million to $76.7 million.

All in all, Vocus is yet another company that is leveraging the on-demand model, which allows for a nice recurring revenue model. What’s more, it helps that the company doesn’t have major competitive forces - yet has a fairly large market opportunity.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Want to know why stated income loans are called liar loans? Because people lie on stated income loans. Not just some people, some of the time and by some little exaggeration. It’s most of the people, most of the time by mostly large exaggerations. Take a look at this Slate article on the liar loan and you’ll see why subprime is a drop in the bucket. Pay close attention to Mish Shedlock’s analysis of a pool of stated income loans with a median FICO of 705 and tell me we’re through the worst of it.

Remember, most of the good credit loans are ticking down to adjustment as we speak. Wave number two, gaining on the horizon is going to be grim.

From the article on the liar loans:

In 2006, a man named Steven Krystofiak gave a statement in a Federal Reserve hearing on mortgage regulation, representing an organization called the Mortgage Brokers Association for Responsible Lending. The organization had compared a sample of 100 stated income mortgage applications to IRS records.

More than 90 of the applications overstated the borrower’s income at least a little. More strikingly, more than three out of five overstated it by at least 50 percent. (emph mine) This isn’t a few people fibbing a little. This was the whole system breaking down.

The consequences are predictably depressing. A blogger named Michael Shedlock has done some terrific work tracking the performance of these kinds of loans. Shedlock analyzed one particular bundle of loans from Washington Mutual consisting of 1,765 mortgages from around May 2007, a total of $519 million in loans.

These were not “subprime” loans. The borrowers’ average credit score was 705, well within prime territory. This is a fairly typical package of loans for a mortgage-backed security, but one thing that does make it stand out is the proportion of these loans that didn’t ask for income documents: 88 percent.

Historically, a year into the life of a loan, well less than 1 percent of typical prime loans would be 30 days late or more. By the end of January, when Shedlock first looked at it, just eight months after the loans were made, almost one in five were at least 60 days overdue.

Shedlock looked at it again two months later, at the end of March. The results:

• Eighteen percent of the loans are already in foreclosure—or have already been seized by Washington Mutual.
• One in four of this bundle of liar loans is already 60 days past due.

Source [blownmortgage]

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Filed under: Forecasts, Bad news, Economic data, Housing, Recession

The United States is an enormous, diverse nation, and there’s perhaps no better evidence of that than the U.S.’s current economic cycle.

The finances of many states have deteriorated to such a degree that they appear to be in recession, even though the nation as a whole may not be, a survey of 50 state fiscal directors concluded.

The states: budget deficits abound

The National Conference of State Legislatures’ survey says that “arguing whether the national economy is in recession is almost beside the point” because the fiscal condition of some states has declined so much that they appear to be in a recession.

In all, 23 states, including hard-hit housing slump states Florida, California, and Nevada, expect to report budget deficits in the next fiscal year, fiscal 2009, with the aggregate revenue shortfall reaching $26 billion. Further, more than two-thirds of the states said they are concerned or pessimistic regarding their F2009 revenue outlook.

Historically, most states experience a decline in revenue as the U.S. economy contracts, as the economic slowdown results in lower retail sales, which lowers sales tax revenue — a major source of revenue for many states. Job layoffs also decrease state income tax revenue. Further, state social service costs typically increase, as unemployment claims increase and applications for income/food/energy assistance rise.

Florida, California hard hit

Economist Peter Dawson told BloggingStocks Friday the NCSL data is in-line with the profile of this cycle’s economic slowdown. “From the research we can see that the states under most stress are those that rank very high regarding mortgage default and housing foreclosure lists, with Florida and California being the most obvious examples,” Dawson said. “These states are going to be under fiscal stress for a considerable period of time due to the size of their housing correction.”

Moreover, Dawson said because of California’s and Florida’s size, “it will be very hard for the nation to grow at capacity until these states have started to grow.” Hence, a return to robust economic conditions nationally, “could be a year to 18 months off, assuming growth resumes nationally by late 2008,” he said.

Continue reading Many states appear to be in recession, fiscal survey shows

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Filed under: Wachovia Corp (WB), Mexico

The Feds are looking into whether drug money was laundered by Wachovia (NYSE: WB). The investigation is “part of a broad probe of alleged laundering of drug proceeds by Mexican and Colombian money-transfer companies,” according to The Wall Street Journal (subscription required).

Several companies with accounts that have been seized claim to be legitimate businesses and that if they cannot get at their funds, they may go out of business.

The open question is whether Wachovia employees knew about the transactions.

It is hard to imagine a well-run bank like Wachovia would be involved in such blatant aid to drug operations from outside the U.S. Perhaps that is why its shares are down almost 50% this year.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Newspapers, Magazines, Google (GOOG), Yahoo! (YHOO), AT and T (T), JPMorgan Chase (JPM), Wells Fargo (WFC)

MAJOR PAPERS:

• While bank stocks aren’t exactly hot, they triggered yesterday’s rally because when J.P. Morgan Chase & Co (NYSE: JPM) and Wells Fargo & Company (NYSE: WFC) reported, there were no unexpected surprises, according to the Wall Street Journal’s “Heard on the Street”. The ups and downs in the sector are expected to continue.
• According to people familiar with the matter, the Wall Street Journal reported that Yahoo! Inc (NASDAQ: YHOO) may be moving closer to outsourcing its search advertising to Google Inc (NASDAQ: GOOG) after an initial test yielded what they considered to be positive results.

OTHER PAPERS:

• The New York Times reported that AT&T Inc (NYSE: T) is planning today to make an announcement that they will gift $100M to improve the skills of the nation’s work force and fight the problem of high school dropouts.

WEB SITES:

• Celgene Corporation (NASDAQ: CELG) is best known for its blockbuster drug Revlimid which is used treat multiple myeloma, a cancer which attacks blood and bones. For patients, it can prolong their lives about 2.9 years, or longer, according to Investor’s Business Daily’s “The New America”.

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