World Busines and Finance news

Former Japanese Economy Minister Yoshimasa Hayashi slammed the government’s fiscal policy, saying it’s not doing enough to contain the world’s largest public debt.

“It’s common sense” to set a fiscal target, Hayashi, 49, a lawmaker at the Liberal Democratic Party which was in power for almost all the period that the nation’s debt rose, said in an interview in Tokyo on Jan. 29. “It’s like smoking while driving a gasoline truck, so it’s a bit scary.”

The national debt is approaching 200 percent of gross domestic product as spending swells and tax revenue declines. The country’s credit rating outlook was lowered by Standard and Poor’s last week on concern the Democratic Party of Japan-led government lacks a plan to rein in the debt load.

“I’m wondering whether the government is appropriately managing the economic and fiscal policies,” Hayashi said. “If the DPJ carries out the spending increase it has pledged in its manifesto, what’s going to happen to Japan’s fiscal condition? I’m worried about whether it will hit 10-year bond yields.”

Yields on Japan’s benchmark 10-year bonds were at 1.325 percent at 10:41 a.m. in Tokyo, little changed from when the DPJ ousted the LDP in August last year.

Prime Minister Yukio Hatoyama’s party came to power for the first time promising to support households through initiatives such as child care allowances and free high school tuition.

Record Budget

Parliament has begun debating Hatoyama’s record 92.3 trillion yen ($1 trillion) budget for the year starting April 1. Finance Minister Naoto Kan said the government will need to find an extra 6 trillion yen to fund social welfare spending in the following fiscal year, the Nikkei newspaper reported today, citing an interview.

S&P’s move last week is “an early warning” for the government’s debt management, Hayashi said. The credit-rating company lowered the outlook on Japan’s AA sovereign credit rating to “negative.”

The LDP had set a target to balance the budget, only to abandon it last year after then Prime Minister Taro Aso released three stimulus packages totaling 25 trillion yen amid the country’s worst postwar recession. Hayashi held the economy portfolio for two months until the LDP was ousted for only the second time in half a century.

National Strategy Minister Yoshito Sengoku last week said the government needs to consider S&P’s warning as a “wake-up call.” Kan said it’s “extremely important to maintain fiscal discipline.” The two ministers are working to formulate a mid- term fiscal strategy by June.

‘Significant Blow’

Hayashi said Japan’s debt may soon exceed the value of the nation’s net household assets, and that will be a “significant blow” for the country’s fiscal sustainability. The remarks echoed comments made by former Finance Minister Kaoru Yosano last month.

Yosano, who was in Aso’s Cabinet with Hayashi, said Japan is facing an “uncontrollable rise” in bond yields as the difference between the public debt and net household savings narrows. The DPJ “doesn’t have a sense of crisis about this,” Yosano said in an interview.

Households held 1,065 trillion yen in financial assets after subtracting their liabilities, Bank of Japan figures show. The national debt will probably swell to 973 trillion yen by March 2011, according to the Finance Ministry.

Hayashi is a graduate of the University of Tokyo, and studied at Harvard University’s John F. Kennedy School of Government.

He said the Bank of Japan should go back to the type of quantitative easing it adopted for five years until 2006 should deflation deepen in the first half of this year. Under that policy, the central bank kept the banking system awash with cash by increasing the amount of funds available to lenders. Hayashi said the measure was “somewhat effective.”

Hayashi also said the government’s declaration of deflation in November was “too early” and worsened consumer sentiment, which slumped to a six-month low in December.

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Toyota has begun shipping parts to fix the faulty gas pedals that led to a still-expanding recall and an unprecedented decision to stop selling and building some of its top-selling models, but it still could not say Thursday when millions of its drivers would get their cars fixed.

The world’s largest automaker, bleeding millions of dollars a day in lost sales, also declined to say where the parts are going — to plants so production can start again or to dealers so they can start fixing cars sitting in their showrooms or already on the road.

Amid the uncertainty, the recall grew wider. Toyota expanded the recall beyond an initial 2.3 million vehicles and said it would recall an untold number in Europe and about 75,000 in China because of bad gas pedals that can become stuck.

The recall even spread beyond Toyota. Ford Motor Co. stopped production of some full-sized commercial vehicles built by a Chinese joint venture because they have accelerators built by the same parts supplier as in the Toyota recall.

Separately, Toyota recalled 1.1 million more vehicles this week because of floor mats that can bend and hold down the gas.

Toyota said the maker of the faulty gas pedal systems, CTS Corp. of Elkhart, Ind., was cranking out replacements at three factories, and that some of them already had been shipped to Toyota.

At the same time, Toyota engineers are working with CTS to develop ways to repair, rather than replace, the pedal systems in existing cars and trucks, said spokesman Brian Lyons.

But there was no estimate for how long it would be until customers can get their cars fixed. The parts are being made at CTS plants, but Toyota has not said where they’re going within its system of plants and dealers.

House lawmakers, meanwhile, said they intend to hold a Feb. 25 hearing to review the complaints of sudden unintended acceleration in Toyota vehicles. Toyota pledged its "full cooperation" with the committee.

The episode has tarnished Toyota’s once-sterling image of reliability. Experts say the longer it goes on, the more Toyota’s competitors will benefit.

Transportation Secretary Ray LaHood said he had no details of how the problems would be fixed but said he had "no criticism of Toyota on this. They followed the law, and they’re doing what they’re supposed to do."

National Highway Traffic Safety Administration officials met with Toyota representatives to discuss the fix on Thursday, but no details were announced.

The automaker does not need regulatory approval to make repairs or replacements, but company officials do not want to proceed with a fix if the government has concerns, said people familiar with the decisions.

Asked whether Americans should continue to drive the recalled vehicles, LaHood said he would "encourage them to take their car to the Toyota dealer. That’s the safest thing to do."

Safety experts say the best thing to do if the gas pedal sticks is to hit the brake hard and hold it firmly, then shift into neutral or shut the car off and steer to the curb. They say drivers should not pump the brake.

Toyota offered its most detailed description of the problem: Condensation can form in the mechanism that connects the foot pedal to the car’s engine, causing friction that prevents the pedal from smoothly springing back when the driver eases up.

Jake Fisher, senior automotive engineer for Consumer Reports magazine, said the water probably causes corrosion.

No matter what the fix, the cost to Toyota will be staggering — probably in the tens of millions, perhaps higher. Jim Gillette, a supplier analyst with CSM Worldwide, estimated it might cost $25 to $30 per vehicle, plus labor.

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Google founders Larry Page and Sergey Brin plan to sell off 5 million Google shares each over the next five years, a move that could see them surrender majority voting control over the company they created.

Google (GOOG, Fortune 500) has an unusual dual-stock structure. "Class A" shares are publicly traded on the Nasdaq exchange, while "Class B" shares are reserved for insiders and carry 10 times the voting power of other shares.

Brin and Page plan to dip into their deep reservoir of Class B shares, selling up to 17% of the 57.7 million shares they currently hold, according to a regulatory filing submitted Friday. Those sales would reduce their voting power over Google’s stock from 59% today to around 48%, depriving them of majority control.

But CEO Eric Schmidt currently holds shares accounting for almost 10% of Google’s voting power. Together, the trio would continue to control Google, as they have for nearly a decade.

"We run Google as a triumvirate," Page and Brin announced in an "owner’s manual" included in Google’s 2004 IPO filing. "The three of us run the company collaboratively with Sergey and me as presidents no fax payday loan. The structure is unconventional, but we have worked successfully in this way."

Google created its two stock classes because of the founders’ desire to keep control vested with their management team. It’s a risk to shareholders that Google discloses routinely in its regulatory reports.

Schmidt, Page and Brin "have significant influence over management and affairs and over all matters requiring stockholder approval," the company wrote in its most recent annual report. "This concentrated control limits our stockholders’ ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial."

Page and Brin’s stock selloff will take place through gradual, pre-arranged sales over the next several years. Such trading plans are commonly used to diversify the portfolios of executives with significant holdings in their own company stock.

Google’s stock closed Friday down 6%, at $550.01 per share. At those prices, Page and Brin would each fetch $2.75 billion from their stock sales. 

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The American-Arab Anti-Discrimination Committee on Wednesday attacked a commercial for Texas oil tycoon T. Boone Pickens’ energy independence plan for being prejudiced.

The advertisement for the Pickens Plan, which aims to end America’s dependence on foreign oil and instead invest in American natural gas, begins with a voiceover of the billionaire saying "Go back to sleep America. The oil crisis is over," and flashes the words first in Arabic and then in English across the screen.

Then Pickens himself takes the screen and says, "I don’t think so," and proceeds to explain that the American "economy is bleeding billions for foreign oil, importing nearly 70%, much of it from countries that don’t like us" while showing images of men with guns next to burning oil fields.

In a statement released Wednesday, the Arab-American civil rights group objected the ad’s lettering and images and said the characterizations of Arab people are "inaccurate, offensive, and outright discriminatory."

A spokesperson for the Pickens Plan said "the ads were reviewed as part of the approval process at major cable networks and there were no issues raised."

The ADC said that the images are intended to scare Americans into action at the expense of Arab Americans’ heritage or descent, engender hate and perpetuate bigotry and ignorance, and suggested that the advertisement be pulled cash advance.

"ADC supports a policy of energy independence," said the group’s president Mary Rose Oakar in a statement, "but it is unacceptable that Mr. Pickens is trying to gain support for his own program by reinforcing false stereotypes of Arab countries and their people to the detriment of all American citizens, particularly those of Arabic descent."

The group also rejected the ad’s tone which suggests that the United State’s depends primarily on oil from the Arab world.

According to data from the Energy Information Administration, the United States imports the most oil from Canada, then Mexico, Saudi Arabia and Venezuela.

Still, geopolitical tensions in the Middle East, which boasts a majority of the world’s oil reserves and is the only area where oil production is expected to grow, threatens to hike oil prices.

The advertisement is available to view on the Pickens Plan Web site.  

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Intel Corp. posted a fourth-quarter profit that trounced Wall Street expectations Thursday, as the world’s largest microchip maker became the first major technology company to report results for the period.

The Santa Clara, Calif.-based company reported a profit of $2.3 billion, or 40 cents per share, during the final quarter of 2009. The income was nearly 10 times higher than the $234 million, or 4 cents per share, that Intel reported for the fourth quarter of 2008.

Analysts polled by Thomson Reuters forecasted earnings of 30 cents per share.

"Our ability to weather this business cycle demonstrates that microprocessors are indispensable in our modern world," said Intel president and chief executive Paul Otellini, in a statement.

Intel’ (INTC, Fortune 500)s quarterly sales rose to $10.6 billion, 28% higher than the $8.2 billion in the same period of 2008. The revenue also topped analysts’ forecast of $10.2 billion.

Revenue in the PC client group rose 10% in the quarter, in line with analysts’ predictions. During a conference call, Intel chief financial officer Stacy Smith attributed the "modest recovery" to a healthy holiday season and the release of Windows 7.

But an upside analysts weren’t expecting came from a 21% boost in sales in the data center group, which includes products for servers.

For the full year, Intel posted a profit of $4.4 billion, or 77 cents per share, on revenue of $35.1 billion. That compared to earnings of $5.3 billion, or 92 cents per share, on revenue of $37.6 billion in 2008.

"In 2009, Intel had the best low-cost solutions with its Atom chip, which carried them through the year," said Kevin Cassidy, analyst at Thomas Weisel Partners.

But the encouraging news to Cassidy was in Intel’s guidance going forward.

"Intel is feeling confident about corporate IT (information technology) spending coming back, and they have the best high-end server solutions," he said. "As corporations upgrade their data centers this year, Intel will benefit. Their timing has been perfect."

Intel’s Smith also expressed optimism about future sales of the company’s server products.

For the current quarter, Intel expects revenue between $9.3 billion and $10.1 billion. Analysts have forecast it to range between $9 billion and $10 billion.

Despite the upbeat report, the company still faces a legal battle this year. After Intel and rival chipmaker Advanced Micro Devices (AMD, Fortune 500) agreed on a $1.25 billion settlement on their legal feuds over antitrust violations and patent disputes, the Federal Trade Commission filed a lawsuit against Intel in December for alleged anticompetitive practices.

Shares of Intel rose nearly 2% in after-hours trading. 

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Downtown Macy’s

Bruce Development Co. and developer Rick Yackey plan to buy the Railway Exchange building at Seventh and Olive streets as part of a $112 million project to rehab the office floors of the largely vacant, 21-story structure.

Macy’s will shrink its store to the building’s three lower floors.

Company executives are mum on the remodeling’s details. But store employees say they’ve been told work will begin soon after merchandise inventory is completed this month.

Park Pacific

The Lawrence Group plans to pick a contractor this month to convert the former Missouri Pacific railroad headquarters into 230 apartments and office space.

Construction could be under way by spring, but gone is the $109 million project’s original plan of a condo tower next to the 1920s railroad headquarters. Instead, a parking garage will go up on what is now a vacant lot.

Also gone is the original plan to fill most of the building with condos, because of a dormant market.

Central Library

The St. Louis library system’s nearly century-old centerpiece downtown will close by midyear for a $74 million renovation that could last as long as two years.

The Grand Hall will be restored, but much of the rest of the building will get a gut rehab.

The remade library will have an auditorium, a cafe and a reading room with comfy seating, according to the St. Louis Library Foundation, which is raising money for the renovation.

Cass Gilbert was the library’s architect. He also designed the Supreme Court building in Washington and the landmark Woolworth and New York Life buildings in lower Manhattan.

St. Louis Centre area

The plan to reconfigure most of the former shopping mall as a parking garage should get under way this year.

The $220 million project to bolster the area near downtown’s America’s Center involves redoing the failed downtown mall, rehabbing the adjoining One City Centre office tower and putting apartments and an Embassy Suites hotel in the Dillard’s building. Construction of the Embassy Suites should begin this year.

Work has already begun on remodeling One City Centre’s upper floors for the Lewis Rice & Fingersh law firm. LarsonAllen, a Minneapolis-based accounting firm, will move its local office to the building this year from St. Louis County.

Centene Corp. headquarters

The health plan operator expects to open its $186 million, 17-story headquarters this summer. Centene opted for the Clayton site after a plan collapsed to locate in Ballpark Village downtown.

A major tenant in the glass-exterior Centene building will be law firm Armstrong Teasdale, which is moving from downtown. The firm will occupy the top four-and-a-half floors and a part of the concourse level. Centene is among the firm’s major clients.

Westin Hotel

Last June, R.J. York Development got permission from Clayton officials for a one-year delay to start construction of a 245-room Westin Hotel and parking garage at Maryland and Central avenues guaranteed online personal loans. The company still plans to start building the $100 million project this summer.

Construction of the 15-story hotel and a parking garage will take a year.

Schattdecor AG

Schattdecor of Thansau, Germany, a printer of decor paper used in laminate furniture and flooring, is building its first North American plant in Maryland Heights. The plant will cost $69 million and employ 107 people when it opens late this year.

Schattdecor bought the Maryland Heights site in 2008 but delayed the start of factory construction until November.

Personnel Records Center

Work has begun on the $105 million National Archives and Records Administration’s National Personnel Records Center in Spanish Lake.

The center, opening in May 2011, will replace a similar facility in Overland and preserve 800 jobs.

The government will lease the center from the developer, Molasky Group of Las Vegas. The center holds the military records of 57 million Americans.

Hillsdale housing

A neighborhood of abandoned houses has been cleared and construction is beginning on 37 single-family houses that are part of an ambitious effort to boost housing within the Normandy School District. Beyond Housing, a nonprofit housing advocacy group, will lease the houses.

E.M. Harris Construction recently took over the $9 million project from the Meyer Co., which went out of business. Beyond Housing hopes over the next decade to build or rehab 1,200 houses in the Normandy district, where nearly three-fourths of the students are eligible for free or reduced-price school lunches.

Completion of the Hillsdale houses will be spread out from May to the end of 2010.

Old Clayton Schnucks site

Signs point toward replacement of the vacant Schnucks grocery at Clayton and Hanley roads with a $116 million office, hotel and retail complex this year. Developer Ryan Woods plans an eight-story office building, a hotel, stores and a parking garage.

Schnucks allowed its 50-year lease on the site to expire in 2003. After it left, a high-rise condo development was the most frequently mentioned possibility before Woods presented his plan last summer.

Common among the 10 projects are tax abatements, tax credits, tax increment financing and other forms of public assistance.

The Park Pacific project, for example, has a $56 million HUD-backed mortgage.

Richard Ward, vice president of Zimmer Real Estate Services, said HUD loans will remain "a big influence" in commercial lending through 2010. He added that "the bottom of the trough" in the nation’s commercial building market might be now.

"We won’t really feel better about the commercial market until later in 2010," he said. "The future will happen, but it’s not here yet. That’s a Yogi Berra saying."

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Xavier University said it began construction in February on a 240,000-square-foot residence hall and dining complex, to be completed by fall 2011.

The university will issue $48 million in tax-exempt bonds on Thursday to help finance the project, at Ledgewood Drive and Herald Avenue, according to a news release.

The residence hall will house about 525 students in four connected buildings, and the dining complex will replace the Hoff Marketplace dining hall in Cintas Center.

Several houses will be demolished next month on Ledgewood and Herald to begin the project, Xavier said.

Xavier is a Catholic, liberal arts university, with about 4,000 undergraduates and 2,600 graduate students.

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Question: I’m 57 and I think there’s a good chance I’ll be laid off this year. If that happens, I’ll have to move my 401(k) balance to an IRA. On the recommendation of a finance professional, many of my former co-workers have transferred their 401(k) savings into annuities. Do you think this is the way to go? – E.Z., Deer Park, N.Y.

Answer: When I saw your question, that old expression "to a man with a hammer everything looks like a nail" popped into my mind.

Why? Well, there are lots of "finance professionals" who see annuities as the answer to almost every retirement planning situation. So I’m not surprised that many of your former colleagues ended up owning annuities.

I can’t discern other people’s motivations. So I can’t say whether the advisers who are so quick to flog annuities genuinely believe they’re the best choice or whether annuities’ generous sales commissions are a factor or whether something else makes them so eager to recommend annuities.

But I can tell you that you shouldn’t be too quick to follow your former co-workers’ example.

For starters, although rolling your savings out of your ex-employer’s 401(k) into an IRA in the wake of a layoff or job switch is often the right move, it’s not the only way to go. There are other options you may want to consider depending on your particular circumstances.

And even if you should decide that rolling your 401(k) into an IRA is the right thing to do, it doesn’t necessarily follow that an annuity is the appropriate investment for your IRA stash.

I say this not because I have anything against annuities, per se. On the contrary, I think they can sometimes play a valuable role. In the right circumstances, I’m particularly a fan of immediate annuities, which are an excellent way of turning a portion of your savings into steady income that will last the rest of your life.

But immediate annuities aren’t the type that are usually being touted to people who have 401(k) bucks to roll over. More likely, your former co-workers have been steered into variable annuities, and more specifically into variable annuities with a type of rider known as a guaranteed lifetime withdrawal benefit.

On the surface, such annuities look very appealing. They typically guarantee that you can withdraw a certain percentage, usually 4% or more, of your initial account value as long as you live no teletrack payday loans. Some even offer a guaranteed rate of return before you start drawing income. And since your money remains invested in the annuity’s subaccounts, which operate much like mutual funds, there’s a chance your account value, and future income, might grow. Perhaps the biggest allure, though, is that your income won’t be disrupted even if the financial markets get pummeled like they did in 2008 and early 2009.

Not surprisingly, there are drawbacks. The fees can be onerous, which reduces the chances of future hikes in guaranteed income. And these annuities can get pretty complicated, making it easy for investors to misunderstand exactly what is and what isn’t being guaranteed.

My advice: Before you stick your 401(k) dough into an annuity, consider speaking with an adviser whose livelihood doesn’t depend mostly on annuity commissions. That might be a fee-only financial planner or an adviser willing to work with you on an hourly or project basis.

The conversation shouldn’t just be about the pros and cons of annuities. Rather, you and the planner should focus on the best way to handle your 401(k) money given when you want to start drawing retirement income from it and how much you’ll need. In short, you and the adviser should be thinking strategies more than just specific products.

Any number of strategies can work, including ones that involve an annuity or maybe even more than one type of annuity. But you may not hear about these alternatives if you’re dealing with someone dead set on putting you into an annuity.

One final note: There is absolutely no reason to hurry this process. You’re not going to miss out on some great opportunity by methodically sorting through your options. So if and when the time arrives that you must figure out what to do with the money in your 401(k), bide your time. It’s taken you an entire career to build your nest egg. The last thing you want to do is undermine all your effort with a hasty decision.

Are you stuck in a lousy 401(k) plan at work but want help maximizing your retirement savings? Send us an email at makeover@moneymail.com. For the CNNMoney.com Comment Policy, click here.  

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Factory orders in the U.S. rose in November more than twice as much as anticipated, led by gains in demand for business equipment that indicate companies are boosting spending and production.

Bookings rose 1.1 percent, the seventh increase in eight months, figures from the Commerce Department showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 0.5 percent gain.

Demand has increased against a backdrop of record inventory reduction during the first nine months of 2009, spurring production at the nation’s factories. The acceleration that led the economy out of the worst recession since the 1930s may soon be accompanied by hiring and more corporate investment.

“Production is catching up to sales as firms don’t feel the need to cut inventories further,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York who forecast a 1 percent gain in factory orders. “That’s one of the significant reasons for the acceleration in manufacturing activity.”

The number of contracts to buy previously owned U.S. homes plunged 16 percent in November, more than forecast, as Americans waited for a first-time buyer tax credit to be extended, according to figures from the National Association of Realtors issued today in Washington. It was the first decrease in 10 months.

Stocks trimmed earlier losses following the reports. The Standard & Poor’s 500 Index was up 0.2 percent to 1,135.61 at 10:43 a.m. in New York. Treasury securities rose.

The median estimate of economists surveyed was based on 58 projections. The Commerce Department revised the October advance in bookings up to 0.8 percent from a previously reported 0.6 percent. Estimates range from a drop of 1 percent to an increase of 1.5 percent.

Measures of business investment from the durable goods report issued last month were also marked higher.

Excluding transportation demand, which tends to be volatile, orders climbed 1.9 percent, the biggest gain since June.

Durable Goods

Demand for durable goods, those made to last several years, rose 0.2 percent in November.

Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, increased 3.6 percent, up from the previously reported 2.9 percent increase. Shipments of those goods, used to calculate gross domestic product, climbed 1.1 percent, compared with 0.8 percent reported earlier.

Orders for non-durable goods, which include food, petroleum and chemicals, increased 1 business card templates.8 percent in November after a 2.2 percent increase a month earlier.

The gain in non-durable orders may reflect higher prices for petroleum. The average cost of a barrel of crude oil traded on the New York Mercantile Exchange rose to $78.15 in November, compared with $75.82 in October.

Demand fro computers and electronic products increased 4.9 percent, the most since February, signaling companies may be gaining confidence in the recovery.

Business Investment

Corporate investment in equipment rose at a 1.5 percent annual rate from July through September, the first increase since the final three months of 2007, the Commerce Department’s final report on third-quarter gross domestic product showed Dec. 22. The economy grew at a 2.2 percent annual pace in the third quarter.

Today’s report showed factory inventories rose 0.2 percent. Manufacturers had enough goods on hand to last 1.32 months at the current sales pace, the fewest since September 2008.

Other reports showed manufacturing continued to expand at the end of 2009. The Institute for Supply Management’s national factory gauge climbed to 55.9 in December, the highest reading since April 2006, the group said yesterday.

Sales gains are helping to bring an end to the almost two- year drop in payrolls. The U.S. lost 11,000 jobs in November, the fewest since the recession began in December 2007, according to Labor Department data released last month. Economists surveyed by Bloomberg News project the government will say on Jan. 8 that payrolls were unchanged in December.

Recalling Workers

Caterpillar Inc., the world’s largest maker of bulldozers and excavators, will bring back some laid-off workers in this year as sales improve, Chief Executive Officer Jim Owens said in a Dec. 11 Bloomberg Television interview.

“We’ll gradually begin to call people back and to rebuild our overall sales and ability to ship product,” Owens said in a Dec. 11 interview with Bloomberg Television. “I think it will gradually begin to pick up as 2010 unfolds.”

Caterpillar cut about 18,700 full-time jobs and about the same number of temporary workers since December 2008 as the global recession reduced demand. The Peoria, Illinois-based company predicts 2010 sales will increase as much as 25 percent from the midpoint of the 2009 forecast range.

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Editor’s note: This is part of a package running with the Dec. 25 and Jan. 1 print edition of the Phoenix Business Journal looking at the year ahead for industries from health care to employment and technology. For more on the print edition: jbertolino@bizjournals.com.

Traditional print media outlets in Phoenix faced a brutal climate in 2009, as advertising revenue and circulation plummeted, forcing layoffs, furloughs and deep budget cuts as they search for a sustainable business model.

Optimists believe the worst may be over, but with so many questions unanswered and relief nowhere in sight, what happens in 2010 is anyone’s guess.

The future of the East Valley Tribune hangs in the balance, but worried staffers there did get some good news in November after Tucson publisher Randy Miller sent a letter of intent to buy the struggling newspaper. A statement released by the East Valley Tribune said Miller would model the paper after the Tucson Explorer with a focus on local, suburban news.

The Tribune’s parent Freedom Communications Inc. filed for Chapter 11 bankruptcy protection in September and was planning on closing the paper at the end of the year if a buyer was not found.

Sources at the Tribune, who asked not to be identified, tell the Phoenix Business Journal the prospective buyer is expected to be approved by the courts, but likely not until after the New Year, so the paper will continue to operate until the bid is approved or rejected.

The media landscape will see even more changes in 2010, and for the first time in months, some good news is projected.

“It seems like the worst might be over,” said Tim McGuire, the Frank Russell chair for the business of journalism at Arizona State University’s Walter Cronkite School of Journalism and Mass Communication.

Independent Newspapers Inc. is planning to resurrect its Chandler and Gilbert publications in early January and launch a monthly newspaper in north Glendale in the first quarter.

The Dover, Del.-based chain, with regional headquarters in Scottsdale, has nine free-distribution papers Valleywide, from Apache Junction to Surprise.

McGuire believes some advertisers who abandoned traditional media will come back after not seeing the return on investment they expected through social media sites and campaigns. He said the environment here is ripe for startups and he expects numerous online ventures to spring up next year, citing opportunities in Scottsdale and professional sports.

Arizonaguardian.com, which debuted in January and caters to the State Capitol crowd and political insiders, has found some success in online niche journalism. To date, the site, which publishes about a dozen stories a day, has garnered 2,500 paying subscribers.

“We’re still here and have grown dramatically,” said political consultant Bob Grossfeld, president of Scottsdale-based The Media Guys Inc., who launched the site with former East Valley Tribune employees.

“We haven’t had to go get any kind of outside financing, which I have considered from the beginning to be significant and important,” Grossfeld said. “The force is still with us and we’re all pretty upbeat about it.”

While many lifestyle publications in this market are struggling to survive, 944 continues to expand, launching regional editions in October of its fashion, lifestyle and entertainment magazine in Atlanta and Detroit. With a circulation of 20,000 in each market, the new editions boost the company’s portfolio to nine regional publications with a national distribution of 3.4 million copies annually.

The expansion comes on the heels of 944 Media LLC’s acquisition of Six Degrees magazine in March. Six Degrees, which ceased distribution with the transition, is a monthly fashion, culture and entertainment publication with distribution in Atlanta, Detroit, Miami and Las Vegas.

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