TODAY

– May 29, 2015

Amazon hikes Prime membership to $99 per year

(AP) — Amazon is raising the price of its popular Prime membership to $99 per year, an increase of $20.

It's the first price increase since the online retailer introduced its Prime membership program, which includes two-day free shipping on many products, in 2005. The company said it would probably raise the price by $20 to $40 in January.

The hike will apply to users when they renew their membership. Users who renew membership before April 17 will pay $79 for the year. After April 17 the price will change to $99. New customers that start a free trial between now and March 20 will lock in the $79 rate for the first year.

Amazon has spent heavily to grow its business and expand into new areas, from movie streaming to e-readers and groceries, and it has accomplished that goal.

The company said it added a million new Prime members in the week before Christmas and a surge in online ordering in the U.S. contributed to huge delays for people sending gifts just ahead of the holiday.

But that has rankled some investors, who are looking for bigger returns.

In an email Thursday to members, the Seattle company stressed that it has not raised the price on Prime in the nine years since its launch, even though shipping costs have increased and it has added new services, such as video streaming. The number of products available for two-day shipping has grown to 20 million from 1 million.

Amazon doesn't disclose how many Prime members it has, but it said in December that it has "tens of millions" of members worldwide.

Cowen & Co. analyst John Blackledge estimates there are about 23 million U.S. prime members. Blackledge said that since the bulk of new memberships occur in the fourth quarter, around the holidays, the benefit of the price hike will probably be felt next year.

He added that he doesn't expect the continued growth of Prime members to slow down despite the price increase.

The announcement was an immediate hit with investors.

Shares rose $10.05, or 2.7 percent, to $380.69 during morning trading. The stock is down 7 percent since the beginning of the year.

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Written on 05/29/2015, 2:05 pm by Associated Press
(AP) — Stocks sank Friday following news that the U.S. economy shrank in the first three months of the year. The revised data showed that gross domestic...
Written on 05/29/2015, 1:49 pm by LARRY NEUMEISTER, Associated Press JAKE PEARSON, Associated Press
(AP) — A San Francisco man who created the online drug-selling site Silk Road was sentenced Friday to life in prison by a judge who cited six deaths that resulted from drugs bought on his website and five people he tried to have killed. U.S. District Judge Katherine Forrest told Ross Ulbricht he was a criminal even though he doesn't fit the typical profile — he has two collegiate degrees — and she brushed aside his attempt to characterize the business as a big mistake. "It was a carefully planned life's work. It was your opus," she said. "You are no better a person than any other drug dealer." Forrest said the sentence was necessary to show others who might follow in his path that there are "very serious consequences." She also ordered $183 million forfeiture. Ulbricht, 31, was convicted in February of operating the site for nearly three years from 2011 until his 2013 arrest. Prosecutors say he collected $18 million in bitcoins through commissions on drug sales on a website with thousands of listings under categories like "Cannabis," ''Psychedelics" and "Stimulants." They said he brokered more than 1 million drug deals worth over $183 million while he operated on the site with the alias Dread Pirate Roberts — a reference to the swashbuckling character in "The Princess Bride." The judge said Ulbricht's efforts to arrange the murders of five people he deemed as threats to his business was proof that Silk Road had not become the "world without restrictions, of ultimate freedom" that he claimed he sought. Forrest said she was "blown away in fury" at the "breathtakingly irresponsible" Internet postings of a doctor who advised customers on Silk Road about the effects of various drugs. Prosecutors cited at least five deaths traced to overdoses from drugs bought on Silk Road, and a parent of two of the victims spoke in court. Before the sentence was announced, a sniffling and apologetic Ulbricht told Forrest he's a changed man who is not greedy or vain by nature. "I've essentially ruined my life and broken the hearts of every member of my family and my closest friends," he said. "I'm not a self-centered sociopathic person that was trying to express some inner badness. I do love freedom. It's been devastating to use it." His hands folded before him, Ulbricht was stoic as the sentence was announced. As he left the courtroom, he carried with him photographs of those who died as a result of drugs purchased on Silk Road.
Written on 05/29/2015, 1:46 pm by TOM KRISHER, AP Auto Writer
(AP) — General Motors and Subaru are adding vehicles to the growing list of models being recalled by 11 automakers due to potentially exploding air bags. The U.S. government's National Highway Traffic Safety Administration released the model information on Friday. The vehicles are equipped with air bag inflators made by Takata Corp. of Japan that can inflate with too much force, spewing shrapnel into the passenger compartment. Six people have been killed and more than 100 injured due to the problem. Last week NHTSA and the government agreed to double the number of inflators it recalled to 33.8 million. But the makes and models were not available. The increase made it the largest auto recall in U.S. history, according to the agency. The best way to tell if your car or truck is being recalled is to key in the vehicle identification number at https://vinrcl.safercar.gov/vin/. The number is stamped on the driver's side of the dashboard near the windshield and also is on many state registration cards. Automakers are still posting recall information by number, and the task may take several days or even weeks. So it's wise to keep checking periodically. Here's a breakdown of the vehicles added to the recall Friday: — General Motors: About 375,000 Chevrolet Silverado, GMC Sierra HD trucks from the 2007 and 2008 model years to replace passenger air bags, mainly across North America. About 330,000 of the trucks were sold in the U.S. Dealers will replace the inflators at no cost to customers. GM says it knows of no crashes or injuries due to performance of the air bags in these vehicles. —Subaru: About 60,000 vehicles added to a previous recall along the Gulf Coast for passenger air bag inflators. Recall now expanded nationally. Brings total Subaru vehicles recalled to about 81,000. Additional models include 2004-2005 Impreza and the 2005 Saab 9-2X, which was manufactured by Subaru. On Thursday, Honda, Fiat Chrysler, BMW, Ford and Mitsubishi released their models added to the recall. Eleven automakers have vehicles included in the Takata recall expansion. Other companies include Daimler Trucks, Mazda, Nissan, and Toyota. Nissan said it would not add U.S. vehicles in the latest recall expansion. Vehicles from other automakers will be announced later.
Written on 05/29/2015, 11:24 am by LINDSEY TANNER, AP Medical Writer
(AP) — For the first time, a major study shows that a drug targeting the body's disease-fighting immune system may improve survival for the most common form of lung cancer. These newer kinds of drugs have transformed treatment of melanoma, the deadliest kind of skin cancer. Studies presented at a conference Friday suggest these "immune therapies" can play a broader role in more common cancers, including lung, liver, colon and head and neck. Doctors also may have found a way to help predict which patients would respond best to one of these newer treatments, according to research presented at the Chicago meeting. Immune therapy drugs are aimed at helping the body's immune system recognize and attack cancer. The lung cancer study tested Bristol-Myers Squibb's Opdivo (op-DEE-voh), which blocks a protein that prevents the immune system from attacking cancer cells. It worked better than chemotherapy for patients with a form of non-small cell lung cancer that is diagnosed in more than 120,000 people nationwide each year. Opdivo, also called nivolumab, was approved in March for a less common form of lung cancer, and late last year for melanoma. Two other immunotherapies are approved for melanoma — Keytruda and Yervoy. "These drugs are among the most promising drugs that have come along" in many years, said Dr. Richard Schilsky, chief medical officer for the American Society of Clinical Oncology, the meeting's organizer. "What we're seeing is ... a broader scope of activity for these drugs," Schilsky said. Any success against lung cancer is considered welcome. Patients are often diagnosed when the disease is advanced. It's the No. 1 cancer killer in the country — about 220,000 men and women are expected to be diagnosed this year and nearly 160,000 people will die of the disease, the American Cancer Society estimates. In the new study, almost 300 patients were randomly assigned to receive infusions of Opdivo or the chemotherapy drug docetaxel every two weeks. Median survival was just over 12 months for Opdivo patients versus about nine months for chemo patients. That difference might seem unremarkable, but long-term survival chances are generally slim for these patients. Tumors shrank in almost 20 percent of Opdivo patients versus about 12 percent of the others. "This is a huge step forward for treatment but we have a long way to go to be able to personalize this type of therapy for all lung cancer patients," said senior author Dr. Julie Brahmer of Johns Hopkins University. She is an unpaid consultant for the drug's maker. Study participant John Ryan of Aldie, Virginia, was diagnosed with incurable lung cancer two years ago and figured he would not live to see his son's college graduation. Standard treatments left him exhausted, prone to infections and did little to shrink the tumor. He joined the study in October 2013 and was assigned to get Opdivo. Three months later his tumor had been reduced by about two-thirds and he felt well enough to help his son cut down a large tree for firewood. Now he walks two miles most days, and best of all, just watched his 23-year-old son graduate from Virginia Tech. "I'm out there whistling with the birds and feeling pretty good about life," said Ryan, who is 70. He's still on Opdivo and is due to get it again Monday. Other research presented Friday at the meeting: — A study of about 40 patients with advanced cancer suggested a potential way to predict who may respond best to immunotherapy. It found that Merck's drug Keytruda worked better for patients whose cancers lacked an effective way to repair DNA mutations. That repair defect can be detected ahead of treatment. Larger studies are needed to confirm the results. Dr. Lynn Schuchter, a University of Pennsylvania melanoma expert who has been involved in other Keytruda research, said it works in about 40 percent of melanoma patients and that "we would rather not give it to patients who are not going to benefit." — Opdivo shrank tumors in almost 20 percent of patients with advanced liver cancer and several survived more than a year, in a small, early study. — Keytruda shrank tumors substantially in 25 percent of head and neck cancer patients whose disease had recurred or spread, in a preliminary study with about 130 patients. The results suggest the drug might be more effective than Erbitux, a drug that can improve survival for these patients.
Written on 05/29/2015, 11:00 am by Business Journal staff
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Written on 05/29/2015, 9:07 am by Business Journal staff
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Written on 05/29/2015, 9:03 am by Business Journal Staff
California’s tomato processors reported this week they have or will have contracts for 14.3 million tons of processing tomatoes for 2015, according to the U.S. Department of Agriculture (USDA). The updated expected production total represents a 2 percent increase from the final contracted production total from 2014. This year’s crop could be the largest California processed tomato crop on record. The previous record was set in 2014 when 14 million tons of processing tomatoes were harvested. In a news release issued today, the USDA’s National Agricultural Statistics Service said the May contracted acreage of 295,000 is 5 percent below the January intentions forecast and 2 percent above last year’s final contracted acreage. Fresno County remains the top California county in contracted planted acreage for 2015 with 91,000 acres of processing tomatoes.  Yolo, Kings, San Joaquin, and Merced make up the remaining top five counties for contracted planted acreage.  The top five counties make up 73 percent of the 2015 total contracted planted acreage for processing tomatoes in California. This early processing tomato estimate is funded by the California League of Food Processors in cooperation with the California Department of Food and Agriculture.
Written on 05/29/2015, 8:45 am by MARTIN CRUTSINGER, AP Economics Writer
(AP) — The U.S. economy shrank at a 0.7 percent annual rate in the first three months of the year, depressed by a severe winter and a widening trade deficit. The government's revision for last quarter was weaker than its initial estimate of a 0.2 percent growth rate. The U.S. trade gap — the difference between the value of exports and the larger value of imports — was found to be wider than first estimated. And consumer spending was slower than previously thought. But steady job gains are expected to fuel modestly healthy growth for the rest of 2015. The harsh winter, which kept many consumers home and businesses closed, and a labor dispute that slowed trade at West Coast ports are both over. Home sales and construction are rebounding, along with business investment. Analysts generally foresee the economy, as measured by the gross domestic product, growing at an annual rate of 2 percent to 2.5 percent in the April-June quarter, with further strengthening later in the year. But risks remain: A stronger dollar, which makes U.S. exports more expensive, will likely continue to keep the trade deficit wide. And cutbacks in oil drilling, a result of low energy prices, could depress spending in the energy industry. "While the evidence of a second-quarter rebound hasn't been overwhelming, we still think that the outlook for the economy is very encouraging," Paul Ashworth, chief U.S. economist at Capital Economics, wrote in a research note. Last quarter's contraction marked the first since a 2.1 percent annual drop in the first three months of 2014, a slump that was also due in part to severe winter weather. Last quarter, the trade gap subtracted 1.9 percentage points from growth, the biggest drag in 30 years. Consumer spending, which drives about 70 percent of economic activity, slowed to annual growth of just 1.8 percent for the quarter, slightly below the government's first estimate. Consumers spent less on mobile phone services, among other expenses, than initially thought. One of the biggest hits to the economy last quarter came from cuts in drilling activity by energy companies — fallout from the sharp drop in oil prices over the past year. The government said investment in the category that covers energy exploration plunged at an annual rate of 48.6 percent, the steepest drop since 2009, during the Great Recession. The government also downgraded its estimate of the boost the economy got from business restocking. That change should be a positive for second quarter growth, because it means businesses won't have as large a backlog of unsold goods. Not all the revisions to the initial estimate for the first quarter were lower. Housing construction and business investment in equipment were both revised higher. Though falling GDP can be a sign of a recession, economists see little cause for such concern this year. Many economists also suspect that the government's calculations have tended to underestimate growth in the first quarter of each year. GDP has contracted in three quarters since the recession ended six years ago, and all three declines came in the first quarter of the year. The outlook has brightened considerably since winter. Most economists expect lower gas prices will eventually accelerate consumer spending, the main fuel for the economy. So far, most consumers haven't used their gasoline savings to spend much more on other goods and services. The average U.S. pump price reached $2.03 a gallon in January, the lowest level in eight years. Though the average has risen back to $2.74, according to AAA, that's still nearly a dollar below its point a year ago. Analysts also say that steadily solid hiring, which has helped cut the unemployment rate to a seven-year low of 5.4 percent, will continue to put money in more people's hands and fuel spending gains. "We are more than halfway through quarter two and we are seeing signs that the economy is recovering from the weak first quarter," said Jennifer Lee, senior economist at BMO Capital Markets. She said several economic reports next week including consumer spending, the trade deficit and auto sales for May should provide important clues on the economy's momentum. Also, some of the first quarter weakness may be revised away by government statisticians, who are studying whether their methods for making seasonal adjustments tend to overstate slowdowns during winter. The Bureau of Economic Analysis has said some adjustments will be reflected in the annual updates to economic growth it will issue in July. The government will release its third and final estimate for first-quarter GDP on June 24.
Written on 05/29/2015, 8:42 am by NICHOLAS K. GERANIOS, Associated Press
(AP) — A record crop of apples, coupled with the West Coast port slowdown earlier this year, is taking a toll on Washington apple growers. Nearly $100 million worth of apples that cannot be sold have been dumped into fields across central Washington, the nation's most productive apple region. The apples are being left to rot and compost in the hot sun, an unusual occurrence for an industry that has found ways to market ever-growing crops. "If we wouldn't have had the port slowdown, we wouldn't have needed this," Todd Fryhover, president of the Washington Apple Commission in Wenatchee, said of the dumping. He estimated that apple exporters lost at least three weeks of their season because of labor problems at West Coast ports. Along with a record supply of apples, that created surpluses that could not be shipped profitably to markets or processors, Fryhover said. "It is unusual," Fryhover said. The Washington State Tree Fruit Association estimated $95 million in lost sales because of apples that could not ship, a figure Fryhover considers low. Washington is by far the nation's largest producer of apples, a crop worth about $2 billion a year to the state's farmers. The 2014 crop totaled a record 150 million boxes, which weigh about 40 pounds each. About a third of the apples each year are exported to more than 60 countries. The labor dispute that hobbled international trade through West Coast seaports earlier this year didn't officially end until last week, when the union representing dockworkers announced its members had ratified a five-year contract. Union leaders had reached a tentative deal in February with the companies that own massive oceangoing ships that bring cargo to and from ports and operate the terminals where that cargo is loaded and unloaded. Ports from San Diego to Seattle were all but shut down several months ago as the two sides haggled. Companies that accused workers of coordinated slowdowns decided to cut their shifts, shuttering ports on nights and weekends. The tit-for-tat led to long lines of ships queueing outside of harbors, waiting for space at the docks. Meanwhile, U.S. exporters complained that their goods — including apples — were stuck on the docks as foreign competitors filled orders that should be theirs. The ports dispute created numerous problems for farmers. A big issue is that apples loaded into unrefrigerated containers sat on docks for weeks waiting to be loaded on a ship, Fryhover said. "It is a perishable crop," he said. The record crop also created a shortage of refrigerated storage space for the apples, which normally can be stored for months and sold year round. The result is lots of apples became too ripe even to be diverted to juice and applesauce makers and other processors, Fryhover said. And prices for processor apples are so low — $10 to $30 a ton — that they do not cover shipping costs, he said. The easiest way to get rid of culled apples is to dump them in fields, he said. That hasn't happened often in the past, but it doesn't create any special problems for the industry, he said. "These are apples," Fryhover said. "We're not throwing our TVs out. They don't harm the environment."
Written on 05/29/2015, 8:40 am by STEVE ROTHWELL, AP Business Writer
(AP) — Female CEOs are outpacing their male colleagues in pay, although they remain vastly outnumbered in the top echelons of American companies. Last year, the median pay for women CEOs rose to $15.9 million, a 21 percent gain from a year earlier, according to a study by executive compensation data firm Equilar and The Associated Press. That compared with median pay for male CEOs of $10.4 million, which was down 0.8 percent from 2013. Marissa Mayer, the head of Yahoo, was the highest-paid female chief executive in the Equilar/AP pay study. Her compensation was almost double that of the next-highest earner on the list — Carol Meyrowitz of discount retailer TJX Companies. Still, there is a big caveat: There are far fewer female CEOs than males among large U.S companies. The study of 340 CEOs included 17 women. No. 1: Marissa Mayer, Yahoo, $42.1 million, up 69 percent Yahoo's stock price has climbed 177 percent since the technology company hired Mayer from Google in July 2012. That compares with a gain of 76 percent for the tech-focused Nasdaq over the same time. Earnings jumped at Yahoo last year after it raised $9.5 billion by selling part of its stake in Alibaba, the Chinese e-commerce site owner. No. 2: Carol Meyrowitz, TJX Companies, $23.3 million, up 13 percent Meyrowitz has led the parent company of T.J. Maxx, Marshalls and other stores, since January 2007. For the year that ended in January, the company reported profit of $2.22 billion on revenue of $29.08 billion. The company said in February that it would lift hourly wages for its employees. Workers that have been employed for six months or more will earn at least $10 an hour. No. 3: Margaret Whitman, Hewlett-Packard, $19.6 million, up 11 percent When Whitman rejoined HP in 2011, the company's board established an initial salary of $1 a year. For 2014, the board decided it was time to raise the salary portion of her pay package to make it consistent with her peers at similar technology companies. Her base salary increased to $1.5 million. No. 4: Indra Nooyi, PepsiCo, $19.1 million, up 45 percent PepsiCo., which makes Frito-Lay snacks, Gatorade sports drinks and Quaker oatmeal, has improved its performance by raising prices and slashing costs. The company's earnings were hit this year by currency volatility in countries like Russia and Bolivia, but this was offset by growth at Frito-Lay North America, which makes snacks such as Doritos, Cheetos and Tostitos. No. 5: Phebe Novakovic, General Dynamics, $19 million, up 1 percent Novakovic was a senior executive at General Dynamics for more than a decade before she was promoted to the top job in January 2013. Since she took the position, the defense contractor's stock has doubled as it has increased dividend payouts and boosted stock buybacks. No. 6: Virginia Rometty, IBM, $17.9 million, up 28 percent The IBM boss was awarded a $3.6 million bonus for her performance last year, even though the company's sales and profits declined. Her overall pay jumped from 2013, when Rometty and other top executives did not take bonuses after IBM turned in disappointing results. No. 7: Marillyn Hewson, Lockheed Martin, $17.9 million, up 13 percent Hewson is a 32-year veteran at Lockheed Martin and the second chief executive at a defense company to top the list of best-paid female CEOs. Her pay award increased as the company's earnings rose. Lockheed's stock also gained nearly 30 percent. No. 8: Patricia Woertz, Archer Daniels Midland, $16.3 million, up 138 percent Woertz's near nine-year tenure as CEO of Archer Daniels Midland ended in December, though she still holds the position of chairman at the company, which makes vegetable oil, ethanol and ingredients used in packaged foods and drinks. Her compensation included $501,560 for relocation expenses after ADM moved its global headquarters to Chicago from Decatur, Illinois. No. 9: Irene Rosenfeld, Mondelez International, $15.9 million, up 14 percent The maker of Oreo cookies, Cadbury chocolate and Trident gum raised Rosenfeld's overall pay by 14 percent last year. Shareholders didn't fare as well. The company's stock rose 3 percent, compared with a gain of 11.4 percent for the broader stock market. No. 10: Ellen Kullman, DuPont, $13.1 million, down 1 percent Kullman spent much of last year fending off an attempt by activist investor Nelson Peltz to gain more influence over the 212-year old chemical company. She prevailed in May this year after shareholders voted against his campaign. But the fight showed that DuPont needed to do a better job of explaining its transformation from a traditional chemical maker to a faster-growing company focused on agricultural products and advanced materials, she said.

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