February 3, 2008

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And the Big Winner Is...Google?

YAHOO (YHOO: 28.38, +9.20, +47.96%) shareholders are heaving huge sighs of relief right now. Microsoft's (MSFT: 30.45, -2.15, -6.59%) bear hug of a bid for the leading destination on the web looks like an offer it can't refuse. So much for Yahoo being a value trap.

As for Google (GOOG: 515.90, -48.40, -8.57%) investors, this is hardly what they wanted to hear. Not after last night, when the search giant missed Street estimates and showed that its awesome growth rate is slowing. Still, the proposed union between its two biggest rivals is a testament of sorts to Google's dominance in paid search as well as a threat to that state of affairs.

It's certainly more fun owning Yahoo today. And it'll sure be nice for shareholders to get some of their money back. But what an inglorious closing chapter this would be for a company that once held out so much promise. At $31 a share, Microsoft's $45 billion offer represents a whopping 62% premium to Yahoo's Thursday closing price. We don't mean to rain on Yahoo's parade, but the fact that $31 a share seems so nice shows just how messed up Yahoo had become.

The company's disappointing fourth-quarter earnings report and lousy guidance late Tuesday knocked the stock down to levels not seen since 2003. Microsoft's offer has the shares rallying, alright — to a level they held just three months ago. And even if you bought Yahoo a year ago, $31 is just your money back.

It's possible — but not probable — that another bidder will emerge. At least the market doesn't think so: Yahoo isn't trading above $31. And it's easy to see why. Microsoft has a market cap of more than a quarter of a trillion dollars and about $21 billion in cash and short-term investments. The sheer size of the offer will make it very challenging for Yahoo co-founder and chief executive Jerry Yang to stay out of Microsoft's clutches.

"I think Microsoft is the last company Jerry would want to sell to, but I don't think he's going to have a choice," says Darren Chervitz, director of research at the Jacob Internet Fund (JAMFX), which holds a stake in Yahoo.

The proposed deal is so big that any other suitor (except, ironically, Google) would almost certainly have to borrow money and offer more of its stock instead of cash. With credit markets tight and shareholders not enamored of dilution, where else can Jerry go? "I have a tough time seeing how management can do anything other than to get Microsoft to maybe raise its bid a little bit," Chervitz says.

Microsoft has courted Yahoo before, with good reason. With nearly 60% of the U.S. market share, Google has run away with the lucrative and fast growing search advertising market, and it's doing so at Yahoo's and Microsoft's expense. Those two command less than 20% and 10% of the market, respectively.

If a Microsoft-Yahoo combination manages to avoid the integration and execution pitfalls common to big mergers it could become a viable, perhaps formidable, competitor to Google, with the scale to be a clear No. 2 option for advertisers. But as for this changing the game for Google, I doubt that the three amigos of Mountain View are squirming in their massage chairs.

For one thing, as Citigroup analyst Mark Mahaney wrote Friday, the offer's valuation seems to support Google's current share price. I'd add that since Google is a faster growing, more nimble company than Microsoft or Yahoo, it probably deserves some sort of premium. And let's not forget how entrenched Google is as the search leader. Even if the deal gets done, it's not lights out for Google, Mahaney noted.

"We don't think a Microsoft/Yahoo! combination would change user behavior at all. And we could see a scenario by which Google would actually gain more market share due to industry uncertainty over the integration of the deal," Mahaney wrote. "...Our bias is that advertisers and search marketers would only shift their marketing spend if they believed the combination was generating a more effective advertising solution — which could take a very long time to prove."

If anything, the sight of its two chief rivals teaming up could justify Google's own considerable ambitions. For example, Microsoft objected to Google's proposed acquisition of DoubleClick, arguing that the marriage of that company's display ad business with Google's search ad dominance would be anticompetitive. The European Union has yet to approve the DoubleClick deal because of antitrust concerns. If Microsoft does indeed get Yahoo, it's hard to see how the EU could deny Google DoubleClick.

"In some ways Microsoft buying Yahoo should be somewhat irrelevant for Google," Chervitz says. "Part of me wants to say that Google is going to have a harder time gaining share, but they were going to have a harder time anyway. They're already at 60%. Google should probably be more concerned with companies coming out of nowhere, just like they did."

So whoo-hoo for Yahoo. Shareholders needed a Hail Mary and they caught it. As for Google investors, today's decline is painful. Hopes that lumbering Microsoft and plodding Yahoo will combine into a nimble competitor could weigh on the stock for some time. But Google's chances of getting DoubleClick are now much improved and its value proposition is unchallenged. MicroHoo isn't going to put Google out of business. So far, all the proposed deal has achieved is to make a good stock cheaper.

V8's luxury rumble grows fainter

NEW YORK -- When Ford's new flagship Lincoln sedan, the MKS, goes on sale later this year it will be available with all-wheel-drive, a six-speed transmission and plenty of rear-seat legroom. But one feature usually found on full-size luxury cars will not be available on the MKS at any price: a V8 engine.

That might seem a risky step for a brand that's supposed to be undergoing a renaissance, getting back into fighting trim as a true luxury brand. For a certain segment of the market, a big luxury car just isn't a big luxury car without V8 power.

But V8 engines just aren't needed in many of these cars anymore, according to Ford and General Motors. New, more sophisticated V6s offer nearly the same performance with better fuel economy.

"End-game performance when you step on the gas is what it's all about" said Alan Hall, a Ford spokesman.

The top-end engine in the new MKS sedan, to be offered within a year of the car's launch, will be a twin-turbocharged V6 with direct gasoline injection. Turbochargers push air into the engine's cylinders for higher compression and greater power. Direct injection pushes fuel directly into the cylinder at high pressure.

Combining the technologies creates more compression that allows the engine, Ford says, to put out as much power as a V8 while using only slightly more fuel than a non-turbocharged V6.

Shifting tastes

GM is already seeing lesser V8 demand in its luxury cars. Last year, they were under the hood of about 26% of Cadillac STS sedans sold. This year, V8s accounted for just 17% of STS sales, according to data from Power Information Network.

That shift coincides with the introduction of GM's new V6 engine with direct fuel injection that can produce a maximum of 302 horsepower compared to 320 from the V8.

Cadillac spokesman David Caldwell cites consumer interest in the technology rather than just fuel economy difference as the main reason for the shift. The V6 gets about one mile per gallon more than the V8, according to EPA estimates.

"I think these are consumers that are more technology-savvy than they used to be and they understand that this is a really premium V6," he said.

Other car brands having been seeing similar shifts, according to Power Information Networks data. Buyers of the Chrysler 300, Mercedes-Benz E-class and the Cadillac SRX crossover SUV, which all offer V6 and V8 versions, are shifting away from V8s toward V6s.

Luxury cars present an interesting case because their engine power is entirely discretionary. They won't be used to tow trailers, and their buyers aren't deeply affected by rising gas prices. They can afford V8s - it's all about whether or not they want them.

The broad shift indicates that an interest in saving gas is partly a consideration, said Michael Omotos, an analyst with J.D. Power and Associates. Improved V6 performance clears the way for customers to make that choice without sacrifice, he said. "If you can get 300 horsepower out of a V6, what's the point of going for 340 out of the V8?"

Meanwhile, the growing environmental movement provides an added push for buyers to move to smaller engines, he said, even if they can easily afford the higher cost and fuel consumption of a V8.

V8 will stay

Like Ford, GM is also considering a smaller turbocharged V6 engine in some Cadillacs. That would improve performance further and widen the fuel economy gap compared with similarly-powered V8s.

But V8 engines aren't about to go away altogether, industry sources say. "While we have seen the demand for V8 engines softening, we haven't seen it go down to zero, either," said Winegarden.

There will still be certain vehicle types in which V8s will be a must-have. Big pickups and SUVs will need them for their low-speed towing and hauling power.

The shift in luxury cars toward smaller engines is good news for an auto industry facing stricter fuel economy standards. It shows that even customers who can have it all are willing to embrace smaller engines and somewhat less horsepower as long they don't have to sacrifice too much.

"It's about getting what you want," Cadlillac's Caldwell said. "That's why you're buying a luxury car to begin with.

Money strategies following Fed rate cuts

NEW YORK -- The Federal Reserve cut rates by half a percentage point yesterday. That's good news for consumers. We're here with top tips on the best money moves right now.

1: Borrow Wisely

Rate cuts are great for borrowers. And if you are thinking about refinancing, there's no better time than the present to start doing your homework. 30-year fixed mortgage rates are at their lowest level in two years.

Plus, if you live in a high cost area like California or New York, you may benefit from an increase in the conforming loan limit that's proposed in the new stimulus package says Robert Brokamp of Fool.com.

If this passes, it means the maximum jumbo mortgage loan will rise to as much as $729,750 in some areas while government-sponsored enterprises Fannie Mae and Freddie Mac will guarantee those loans.

2: Protect your savings

Rate cuts may be great for borrowers, but they're not great for savers. If you have some money tucked away in a savings or a money market account, your interest rate will probably take a hit. If you have a CD that will be maturing soon, you'll also be seeing lower interest rates.

Right now the interest on an average one-year CD is below 4%. And it's likely that average will fall even further. So it's your responsibility to find the best savings tools.

For starters, you're going to have to shop around if you want to find the best rates. Check out your local bank, but make sure to go online to Bankrate.com or search for credit unions to find other opportunities. Cast a wide net to find the best opportunities.

3: Grab the Opportunities

Your money market or savings account should be a temporary parking place for your cash says Greg McBride of Bankrate.com.

Once you have your emergency cushion stowed away, now is an opportune time to move out of savings and into longer-term investments like stocks.

If you have a long-term perspective, start looking at broad-based index funds like the ones offered by Vanguard or Fidelity. This is an inexpensive way to get access to the stock market.

Even though the market may seem like a roller coaster, if you have twenty or thirty years to retirement, you're going to come out ahead.

Remember, it's not worth your while to try and time the market. If anything, focus on minimizing the fees that eat into your returns.

4: Mix it up

These folks who have the most to lose since their goal is about saving, not borrowing. The best defense there is a diversified portfolio. Make sure you have a mix of stocks, bonds and international funds.

In the end, you never really know how the market will react to what the Fed does (or to anything else, for that matter). Rather than trying to play a guessing game that you'll be lucky to get right, it's better to keep your portfolio well diversified so it's ready for any environment.

Check out Morningstar.com's Instant X-Ray feature to help you see if you're making unintended bets on any one area of the market. You may also want to consult a fee-only financial planner to help you plan out your goals.

Your kids don’t need life insurance

Question: I received an offer in the mail to buy a life insurance policy for my 18-month old daughter for a small monthly premium. As I understand it, the policy would not only build cash value, but double the amount of insurance coverage when my daughter turns 21. Do you think this is a good plan to build for my daughter’s financial future or is there a better way? –R.K.

Answer: Let me put it this way. I think almost anything you would do with your money, outside of buying lottery tickets or playing the ponies, would be better than sinking it into a life insurance policy for your daughter.

As I’ve noted before, life insurance generally makes a lousy investment, in large part because of high fees that drag down returns. This view doesn’t make me anti-insurance; quite the contrary. I believe life insurance coverage plays a crucial role in any family’s financial plan.

But that role isn’t to provide an investment opportunity. Rather, the reason you buy life insurance is because it’s the one financial product that can replace income if a breadwinner dies, which allows surviving family members to maintain their standard of living.

But this principle rarely applies to children. After all, unless your daughter is an incredibly precocious entrepreneur or making big bucks doing commercials for disposable diapers, you’re not relying on earnings from her to support your family. So while your daughter’s death would obviously be a personal tragedy, it wouldn’t be a financial one.

In short, it makes little sense for you to devote your money to something that doesn’t make it as an investment and that provides life insurance protection for someone who doesn’t require it.

So what should you be doing to give your daughter a leg up financially?

Plan for your future

Well, the single most important thing you can do is to make sure your own finances are in shape. After all, the more precarious your financial situation is, the more difficult it will be for you to give your daughter all the things I’m sure you want her to have: a good education, a nice home, a chance to experience the wider world and, perhaps most important, a sense of security and stability.

You can begin building that solid financial foundation by stashing away enough money in a money-market fund or savings account to cover about three months’ worth of living expenses. This sort of reserve will allow you and your family to weather emergencies such as unexpected medical problems or financial setbacks like a layoff with minimal disruption to your lifestyle.

Beyond that, you also want to start putting away money for your retirement. If you’ve got a 401(k) or similar plan at work, contribute at least enough to collect any matching funds your employer may offer. If you don’t have such a plan, do an IRA. If you can, do both.

Insure your family

And let’s not forget about life insurance - not for your daughter, but for you and/or your spouse. The idea is to have enough coverage so the family can carry on as normally as possible should you or your spouse die, but not so much that paying for it would prevent you from saving for the future. Deciding on the right amount is as much art as science, but you can arrive at a reasonable estimate of what you need with a “life insurance needs” calculator like this one.

Whatever amount of coverage you decide on, you’ll want to get it through bare-bones term insurance. This type of policy pays a death benefit but has no investment component. As a result, you get more insurance protection for your premium dollar. You may already receive some of this type of coverage at no charge through your employer. If that’s not the case - or if what you get isn’t enough - you can check out the cost of coverage from different insurers by going to sites such as IntelliQuote and Insure.com.

Educate your children

If you can manage all this and you still have money left over, then you can begin looking into more direct ways of providing for your daughter’s future, such as saving for her college education via a 529 savings account or other plan. (For details on the pros and cons of various alternatives, click here.)

And, of course, at some point when your daughter is older, it wouldn’t hurt to teach her the basics about managing money, so she’ll be better prepared to handle her finances when she goes out on her own.

But as for that life insurance pitch you got in the mail, I’d say you should just ignore it. Your daughter doesn’t need the policy, and you don’t need to waste your money paying the premium.

More data on housing, spending this week

NEW YORK - The stock market has been on the upswing, but few investors are relaxing just yet. This week's data on housing, retailers and labor costs will give Wall Street an idea of whether the economy is weakening or inflation is accelerating — or both.

Wall Street had a case of the winter blues in January, and understandably. With banks reporting huge losses, uncertainty brewing about whether the economy is in recession, and Americans struggling to keep up with their debt payments, there was nowhere to go but down. The Standard & Poor's 500 index recorded its worst January since 1990.

But the stock market has bounced back — last week, the Dow Jones industrial average jumped 4.39 percent, the Standard & Poor's 500 index added 3.75 percent, and the Nasdaq composite index rose 4.87 percent.

The Dow remains 10 percent below the record close of 14,164.53 it reached on Oct. 9, but has recovered nearly 10 percent from the 15-month lows it hit in January.

There were many factors that helped buoy the market last week. The Federal Reserve met the market's hopes for another big rate cut by slashing key rates a half-point. Banks and regulators indicated they are working to help out the distressed companies that insure mortgage-backed bonds. And Microsoft Corp.'s bid for the struggling Internet provider Yahoo Inc. reassured Wall Street that although the credit markets are tight, deals are being pitched.

Recent government reports have not painted a rosy picture of the economy, but they haven't indicated the nation is in the midst of a deep recession, either.

The Labor Department's employment report last week showed a net job loss in January for the first time in four years, but a report from the Institute for Supply Management said the manufacturing sector expanded. The Commerce Department said personal spending is growing at the weakest pace in more than a year, but it also reported a solid gain in orders of big-ticket, durable goods.

The markets are angling for more rate cuts to stoke the economy, but what could tie the Fed's hands is inflation. High food, energy and healthcare costs are a reason consumers — particularly homeowners with tough-to-pay mortgages — are cutting back on discretionary spending. Those high prices may also be the only reason readings on personal spending are in positive territory.

The Commerce Department's index last week for personal consumption expenditures, a gauge of inflation, rose 0.2 percent in December from November levels. This week, the Labor Department reports on productivity and labor costs; the market is expecting labor costs to decline, and could be disappointed if they end up being higher.

"The worst of all possible worlds is stagflation," said Janna Sampson, director of portfolio management at Oakbrook Investments. Stagflation happens when the economy weakens at the same time prices are rising. It's a problem that can't be solved with rate moves; rate cuts spur inflation but boost growth, while hikes control inflation but also dampen growth.

This week, economists surveyed by Thomson/IFR are preparing for more signs that the economy is still growing, but very slowly because of a weak consumer.

They expect the Commerce Department's December factory orders index on Monday to tick up and the Institute for Supply Management's Tuesday report on January service sector growth to show a slight slowdown. They also expect the weekly ICSC-UBS chain store sales index on Tuesday to post a decline.

Meanwhile, the National Association of Realtors will release on Thursday its index on pending sales of existing homes, and economists predict a modest increase. And that same day, retailers are releasing their sales results for January.

Investors will also be paying close attention to speeches from Fed officials for insight into their thoughts on the economy and inflation, and whether the central bank is leaning toward lowering rates again when it meets March 18. Atlanta Fed President Dennis Lockhart, Richmond Fed President Jeffrey Lacker, Fed Governor Randall Kroszner, Philadelphia Fed President Charles Plosser and San Francisco Fed President Janet Yellen are all making public appearances this week.

The bulk of the earnings season is over, but there are some big names left to release their quarterly results. Companies reporting this week include media names such as News Corp., Walt Disney and Time Warner Inc.; food sellers like Wendy's International Inc. and Yum Brands Inc.; and the homebuilder D.R. Horton.

GM Unveils Hybrid Pickups

General Motors Corp. will introduce a new hybrid full-size pickup and a concept hybrid truck this week at the Chicago Auto Show, betting that pickup drivers have been itching to jump on the hybrid bandwagon.

GM says the 2009 GMC Sierra hybrid gets a 25 percent improvement in fuel economy without compromising performance, while its GMC Denali XT concept - a low-slung, muscular utility vehicle - gets 50 percent better fuel economy than a comparable small pickup.

The Sierra is the next large GM vehicle to get the company's new two-mode hybrid system, which has also been introduced on the Chevrolet Tahoe and GMC Yukon sport utility vehicles and the Chevrolet Silverado pickup. The SUVs are expected to go on sale early this year, while the Silverado and Sierra are scheduled to hit the market at the end of 2008.

The two-mode system got a lot of buzz late last year at the Los Angeles Auto Show, where the hybrid Chevrolet Tahoe was named the 2008 Green Car of the Year by the Green Car Journal.

Like single-mode hybrid systems now used by Toyota Motor Corp., Ford Motor Co. and others, the two-mode runs without the gas engine at low speeds. But at higher speeds, the electric motor in the two-mode hybrid contributes more power. The two-mode system also is better for towing.

GM says the Sierra can drive up to 30 mph on just electricity, which is stored during braking and cruising in a 300-volt battery. When the gas engine is used, the hybrid system helps the 6-liter, V-8 engine run longer in its more economical four-cylinder mode.

GM says the hybrid Sierra can tow up to 6,100 pounds. The non-hybrid GMC Sierra 1500 can tow up to 10,500 pounds.

It remains to be seen whether pickup buyers, who have historically saved on fuel costs by choosing diesel models, will adopt hybrid systems. Hybrid systems cost more than gas engines, but pickup drivers tend to drive longer distances so they could recoup the premium more quickly. Small businesses also might want to take advantage of government tax breaks for hybrids.

Mark LaNeve, GM's vice president of North America sales, service and marketing, has said the company expects about 5 percent of pickup drivers to opt for the hybrid system. But he said GM will be able to ramp up production if there's more demand. GM sold 208,243 Sierras in 2007.

GM's radically redesigned Denali XT concept is built on a car-like unibody frame, rather than a truck frame, for a smoother ride and better fuel economy. It's the first vehicle from GM that combines an ethanol-capable engine with the two-mode hybrid system.

The Denali XT comes on the heels of another compact hybrid truck concept, the Toyota A-BAT, which was introduced at last month's North American International Auto Show in Detroit. The A-BAT is also built on a unibody frame and has a 4-foot bed, 7 inches shorter than the Denali XT's 55-inch bed.

The Chicago Auto Show opens to the public next Saturday after two days of media previews.

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Chrysler Supplier Files for Bankruptcy

Chrysler LLC scrambled to maintain its inventory of plastic parts after a supplier filed for bankruptcy protection.

Plastech Engineered Products Inc. apparently failed to negotiate a bailout package with its customers, The Wall Street Journal reported Friday.

Dearborn-based Plastech agreed to supply Chrysler through the weekend, spokeswoman Michele Tinson said.

The bankruptcy filing had not forced Chrysler to shut down any plants, Tinson said. "But it could potentially," she said. "It could impact a number of plants."

Calls to Plastech headquarters were not answered late Friday.

Chrysler was Plastech's fourth-largest customer, The Journal said. The company has 8,000 employees at more than 30 plants in North America.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

In Play: TV, Furniture Among Bowl Buys / Survey: Consumers Plan to Spend on Televisions, Furniture for Super Bowl XLII

NEW YORK (AP) -- Consumers might be worried about a possible recession, but that's not stopping them from spending on televisions and furniture for Super Bowl XLII, according to a recent survey.

Consumers plan to buy 3.9 million televisions to watch this year's battle between the New England Patriots and New York Giants, up more than 50 percent from a year ago. Individuals in the 18-24 age range look to be the biggest purchasers, with one in 10 planning to buy a TV for the sports telecast, the Retail Advertising and Marketing Association said.

The Super Bowl is expected to be the most-watched program of the year. Last year's game drew in 93.2 million viewers, slightly down from the Super Bowl's all-time record of 94.1 million viewers set in 1996.

While TV purchases are always a hot topic prior to the big game, furniture sales often see a boost as well. Furniture purchases are expected to climb to 1.8 million pieces sold from 1.3 million last year. Total Super Bowl spending is targeted to reach $9.5 billion, according to the RAMA poll.

In years past consumers traditionally made TV and furniture purchases before the Super Bowl in preparation for viewing parties. While many have tightened spending recently on recession fears, eroding credit and the continued housing downturn, retailers are looking to pull in shoppers with discounts and promotions to offset weak holiday sales.

"Retailers will be courting consumers with their very best deals on electronics, furniture and even food in anticipation of the Super Bowl," RAMA Executive Director Mike Gatti said in a statement.

RAMA's consumer intentions and actions survey was performed by BIGresearch between Jan. 2 through Jan. 8 and included results from 8,447 consumers. The Retail Advertising and Marketing Association is a unit of the National Retail Federation.

The Britney Economy

To the casual tabloid reader, Britney Spears' life looks like a train wreck. To the Britney Industrial Complex, comprising everyone from paparazzi to perfume vendors, she is a gold mine. Whether she's shaving her head or battling for custody of her children, Britney seems to grow more fascinating (and to some people, more lucrative) every time she stumbles. Recent court documents suggest she's amassed a $125 million fortune and continues to rake in about $737,000 a month, or nearly $9 million a year. But that's chicken feed compared with the overall Britney economy.

The Packagers
Britney has sold 83 million records since the release of her debut album in 1999, bringing in more than $400 million to Jive Records, her recording company. Even her 2007 album sold well, despite her troubles. Her tours have grossed nearly $150 million; the average take for her 265 solo shows is $583,138, according to Pollstar, which tracks touring data. But there's a lot more of Britney for sale than her music: Pure Nightclub in Las Vegas reportedly sold seats at a table next to hers for $50,000 at a recent bash, and she still commands between $250,000 and $400,000 just for showing up at events. Elizabeth Arden has sold nearly $100 million worth of its Britney perfumes—Believe, Curious, and Fantasy. PepsiCo determined that it was worth paying her a reported $4 million to $10 million for a short-lived ad gig.

Estimated annual take for record company, promoters, licensers, and others: $30 million to $40 million

The Paparazzi
A Britney photo garners anywhere from $250 (for a run-of-the-mill shot of her at Starbucks to $100,000 or more. The photo agency X17, which has a team trailing her 24-7, estimates that Britney accounts for 30 percent of its revenue: It sold $2.5 million worth of Britney photos in 2007 alone, including $500,000 for its exclusive Bald Britney pics. Competitor Splash News says that Britney accounts for 10 to 15 percent of its business, boosted this year by $200,000 for photos of Britney in a hot tub. All told, Britney probably makes up a full 20 percent of the paparazzi business.

Estimated average annual take: $4 million

The Media
If it seems like every time you see a newsstand, Britney is on the cover of another magazine, that's only because…she is. A celebrity tabloid with Britney Spears on the cover sells 1.28 million newsstand copies, some 33 percent more than the average. Between January 2006 and July 2007, Britney was a cover subject of People, Us Weekly, In Touch, Life & Style, OK!, or Star a total of 175 times in just 78 weeks. During that period, newsstand sales of issues with her on the cover amounted to a staggering $360 million. She's also topped the annual Yahoo Search rankings in six of the past seven years, slipping to No. 2 only in 2004, when Paris Hilton briefly stole her crown. Searches for Britney were up 60 percent in 2007, the year of her divorce, shaved head, and car wreck. "If there was no Britney, would all Web traffic stop?" asks Vera Chan, senior editor at Yahoo. "I would hesitate to give her that much power, but it's hard to argue with the facts."

Estimated average annual take: $75 million

The most famous ex in America, Kevin Federline is living large off his Britney-fueled image. Nightclubs reportedly pay him about $30,000 just for appearing. And he gets $35,000 a month from Britney in spousal and child-support payments.

Estimated average annual take: $1 million

The Bottom Line
Britney's peak touring and recording years are surely behind her, but the public's fascination with her chaotic life continues to mint money for those selling her image.

Estimated annual value of the Britney Spears economy: $110 million to $120 million

Wall St. gains fresh vigor on Fed's pick-me-up

NEW YORK (AFP) - US stock markets got a lift from the Federal Reserve's latest interest rate cut as the week's economic news confirmed the US economy is no longer accelerating and has struck a few worrisome potholes.

Despite the rebound, Wall Street is hoping that Congress will approve a giant stimulus package aimed at mitigating an economic slump.

In the week to Friday, the benchmark blue-chip Dow Jones Industrial Average rose 4.39 percent to close at 12,743.19. The Dow is down four percent for the year to date, however.

The tech-laden Nasdaq composite gained 3.74 percent to 2,413.36 while the Standard & Poor's 500 index increased 4.87 percent to 1,395.42.

All three indexes have lost considerable ground in recent months amid a worsening housing slump and a related credit squeeze which have triggered losses at major banks.

"While short-term prospects seem to be unraveling, and there continues to be hand-wringing about the ultimate fate of the bond insurers, markets are detecting a glimmer of light at the end of the tunnel," economists at Global Insight said in a briefing note.

Some investors are fearful that credit woes could sap the financial health of bond insurers, but one of the world's largest bond insurers, MBIA, eased market nerves this week by announcing it had raised fresh capital.

Wall Street also cheered a decision by the Fed to cut its key federal funds interest rate by half a percentage point to 3.00 percent on Wednesday.

The central bank cut rates just a week after it had slashed borrowing costs by an historic three quarters of a percentage point amid mounting economic uncertainty.

Government surveys this past week confirmed the giant US economy is sailing in turbulent waters: Fourth quarter economic growth slowed to a 0.6 percent annualized crawl compared with 4.9 percent in the prior quarter, and the economy lost an unexpected 17,000 jobs in January.

The Fed has unleashed more aggressive rate cuts in recent weeks as recession worries have mounted, although some analysts believe the economy is already in recession.

The economic news flow will be much lighter in the coming week with reports on jobless claims and consumer credit among others, but investors said they were waiting to see if Congress passes a stimulus plan sought by President George W. Bush.

Bush urged Congress to pass a stimulus "quickly" on Friday amid a congressional squabble over the right size of the package and the extent of tax rebates and business incentives.

The plan could be worth as much as 150 billion dollars, but could be pared back to a lesser amount.

Corporate executives and economists warn that the economy is likely to remain in a rough spot in the near term.

"What lies ahead for our economy may be some rough sledding, as mounting evidence suggests that growth has come to a stand still," said Carl Tannenbaum, a private economic consultant.

A host of companies have warned in recent days of belt-tightening times ahead and more job layoffs are likely to be made.

A monthly employment snapshot Friday showed the economy lost an unexpected 17,000 jobs in January, marking the first monthly loss in nonfarm payrolls since August 2003.

Major banks, reeling from multibillion dollar losses on ailing mortgage investments, continue to lay off staff as are other industries including manufacturing and telecommunications.

Although Wall Street's spirits were lifted in recent days, market sentiment is likely to remain cautious in the coming week.

Bond prices dropped over the week as investors regained confidence in stocks.

The yield on the 10-year Treasury bond rose to 3.600 percent from 3.584 percent a week earlier, while that on the 30-year bond climbed to 4.318 percent from 4.282 percent. Bond yields and prices move in opposite directions.