(Reuters) – Best Buy Co Inc (BBY.N) reported better-than-expected quarterly results and maintained its outlook for the year as a turnaround plan started to take hold, sending shares in the world’s largest consumer electronics chain up more nearly 4 percent.

The stronger results eased concerns about the future of the retailer after Chief Executive Brian Dunn resigned abruptly last month amid a probe into allegations of personal misconduct.

Critics are also worried that Best Buy is serving as a showroom for Amazon.com Inc (AMZN.O) and other online retailers.

“Best Buy is in a turnaround, and the strategic priorities we laid out at the beginning of the year are just the first phase of the changes to come,” Interim CEO Mike Mikan said. “We know we have to better adapt to the new realities of the marketplace.”

Sales rose 2.1 percent to $11.61 billion, beating the analysts’ average estimate of $11.52 billion.

Net earnings fell to $161 million, or 47 cents a share, for the quarter ended May 5, from $255 million, or 64 cents a share, a year earlier. Excluding items, it earned 72 cents a share, beating the average estimate of 59 cents.

Best Buy’s results were also helped by a lower tax rate and strength in its U.S. online segment.

The company maintained its fiscal 2013 outlook, seeing earnings of $3.50 to $3.80 a share, excluding restructuring costs.

Shares rose 3.7 percent to $18.85 in premarket trading.

(Reporting By Dhanya Skariachan; editing by Jeffrey Benkoe)

(Reuters) – Home resales rose in April to their highest annual rate in nearly two years and a falloff in foreclosures pushed prices higher, hopeful signs for the country’s economic recovery.

The National Association of Realtors said on Tuesday that existing home sales increased 3.4 percent to an annual rate of 4.62 million units last month, the highest since May 2010.

“The housing market is showing some signs of life,” said Gary Thayer, a macro strategist at Wells Fargo Advisors in St. Louis.

Nationwide, the median price for a home resale jumped to $177,400 in April, up 10.1 percent from a year earlier. That was the biggest year-over-year increase since January 2006.

Prices rose in large part because a drop in foreclosures led to fewer distressed sales, said NAR economist Lawrence Yun.

At the same time, Yun said some seasonal factors might have also played a role in the price increase, because families tend to buy in the spring, which means bigger homes comprise a larger share of total sales.

Yun still thinks overall price increases in 2012 will be muted, rising between 1 percent and 2 percent.

U.S. stocks rose as investors bet the data was another sign the housing market may be on the road to recovery. U.S. Treasuries prices fell.

The housing market has been one of the economy’s weakest links as it recovers from the 2007-09 recession, but data in recent months has raised hopes the sector has touched bottom.

The U.S. government said last week that groundbreaking for U.S. homes rebounded in April, which helped to dampen fears that the recovery in the world’s largest economy was stagnating after tepid job growth last month.

While job creation has slowed in recent months, Yun said it was enough to get more people buying homes.

“Now with the jobs creation and high affordability this is a very good combination,” he said.

March’s sales pace was revised marginally lower to 4.47 million units from the previously reported 4.48 million units. Economists polled by Reuters had expected sales at a 4.60 million-unit sales pace last month.

Inventories rose to 2.54 million, which Yun also attributed to seasonal factors. April tends to be one of biggest months of the year for new homes going on the market, he said.

(Additional reporting by Ellen Freilich in New York; Editing by Andrea Ricci)

(Reuters) – In the run-up to Facebook’s $16 billion IPO, Morgan Stanley, the lead underwriter on the deal, unexpectedly delivered some negative news to major clients: The bank’s consumer Internet analyst, Scott Devitt, was reducing his revenue forecasts for the company.

The sudden caution very close to the huge initial public offering, and while an investor roadshow was underway, was a big shock to some, said two investors who were advised of the revised forecast.

They say it may have contributed to the weak performance of Facebook shares, which sank on Monday – their second day of trading – to end 10 percent below the IPO price. The $38 per share IPO price valued Facebook at $104 billion.

The change in Morgan Stanley’s estimates came on the heels of Facebook’s filing of an amended prospectus with the U.S. Securities and Exchange Commission (SEC), in which the company expressed caution about revenue growth due to a rapid shift by users to mobile devices. Mobile advertising to date is less lucrative than advertising on a desktop.

“This was done during the roadshow – I’ve never seen that before in 10 years,” said a source at a mutual fund firm who was among those called by Morgan Stanley.

JPMorgan Chase and Goldman Sachs, which were also major underwriters on the IPO but had lesser roles than Morgan Stanley, also revised their estimates in response to Facebook’s May 9 SEC filing, according to sources familiar with the situation.

Morgan Stanley declined to comment and Devitt did not return a phone message seeking comment. JPMorgan and Goldman both declined to comment.

Typically, the underwriter of an IPO wants to paint as positive a picture as possible for prospective investors. Investment bank analysts, on the other hand, are required to operate independently of the bankers and salesmen who are marketing stocks – that was stipulated in a settlement by major banks with regulators following a scandal over tainted stock research during the dotcom boom.

The people familiar with the revised Morgan Stanley projections said Devitt cut his revenue estimate for the current second quarter significantly, and also cut his full-year 2012 revenue forecast. Devitt’s precise estimates could not be immediately verified.

“That deceleration freaked a lot of people out,” said one of the investors.

Scott Sweet, senior managing partner at the research firm IPO Boutique, said he was also aware of the reduced estimates.

“They definitely lowered their numbers and there was some concern about that,” he said. “My biggest hedge fund client told me they lowered their numbers right around mid-roadshow.”

That client, he said, still bought the issue but “flipped his IPO allocation and went short on the first day.”

“VERY UNUSUAL”

Sweet said analysts at firms that are not underwriting IPOs often change forecasts at such times. However, he said it is unusual for analysts at lead underwriters to make such changes so close to the IPO.

“That would be very, very unusual for a book runner to do that,” he said.

The lower revenue projection came shortly before the IPO was priced at $38 a share, the high end of an already upwardly revised projected range of $34-$38, and before Facebook increased the number of shares being sold by 25 percent.

The much-anticipated IPO has performed far below expectations, with the shares barely staying above the $38 offer price on their Friday debut and then plunging on Monday.

Companies do not make their own financial forecasts prior to an IPO, and underwriters are generally barred from issuing recommendations on the stock until 40 days after it begins trading. Analysts often rely on guidance from the company in building their forecasts, but companies doing IPOs are not permitted to give out material information that is not available to all investors.

Institutions and major clients generally enjoy quick access to investment bank research, while retail clients in many cases only get it later. It is unclear whether Morgan Stanley only told its top clients about the revised view or spread the word more broadly. The firm declined to comment when asked who was told about the research.

“It’s very rare to cut forecasts in the middle of the IPO process,” said an official with a hedge fund firm who received a call from Morgan Stanley about the revision.

(Editing by Jonathan Weber, Martin Howell and Ian Geoghegan)

(Reuters) – The chief executives of Apple Inc and Samsung Electronics Co Ltd were summoned for court-directed mediation on Monday over the iPhone maker’s claims the Korean firm has “slavishly” copied some of its products.

Apple’s Tim Cook and Samsung’s Choi Gee-sung were instructed by a federal judge to appear for a two-day mediation to help resolve the bitter patent litigation between the two companies.

There was no sign of either CEO at the San Francisco federal courthouse on Monday. The mediation session had been on a magistrate judge’s calendar for Monday morning, but the meeting – which is not open to the public – could have been arranged at an undisclosed location, such as a law firm office.

Representatives from Apple and Samsung declined to provide any details on Monday about the meeting.

The U.S. case, the most closely watched in a global patent war between the two companies involving some 20 cases in 10 countries, is set for trial at the end of July in San Jose, California. Each company denies the other’s allegations of patent infringement.

Apple, the maker of the iPod, iPad and iPhone, has a complex relationship with Samsung, a conglomerate that makes computer chips, Galaxy smartphones, and televisions.

While Samsung’s smartphones and tablet computers run on Google’s Android operating system and compete with Apple’s products, Samsung is also a key components supplier to Apple.

The U.S. company, which investors value at close to $600 billion, has accused Samsung of “slavishly” copying the iPhone and iPad through products that run on Android. Samsung, which has a stock market value of about $161 billion, has counter-sued with claims accusing Apple of infringing its patents.

Both companies have a lot at stake. Their share prices hit record highs this year as they reported soaring profits, partly fueled by their dominant position in the smartphone sector.

Samsung sold 44.5 million smartphones in the first quarter of 2012, giving it a 30.6 percent share of the global high-end market. Apple’s sales of 35.1 million iPhones gave it a 24.1 percent share.

“BIG GAP”

On Sunday in Seoul, the head of Samsung’s mobile division said the South Korean company wanted to resolve differences with Apple.

“There is still a big gap in the patent war with Apple,” JK Shin said, before departing for the U.S. mediation talks. “But we still have several negotiation options.”

Apple spokeswoman Kristin Huguet reiterated a prior statement, saying Apple needs to protect its IP against “blatant copying.”

An eventual Apple and Samsung settlement could have wider implications because the U.S. company is locked in disputes with major Android phone makers HTC Corp of Taiwan and Motorola Mobility Holdings Inc of the United States.

Court documents show Apple and Samsung have had at least one mediation session, although it is not clear if Cook and Choi were involved. The latest mediation session will be overseen by U.S. Magistrate Judge Joseph Spero. He declined to comment.

Cook became Apple’s CEO last year, taking over from the company’s co-founder and inspiration, Steve Jobs, who had told his biographer he intended to go “thermonuclear” on Android. Jobs died in October after a long illness.

Cook has echoed Jobs’ mantra that Apple’s top priority is to make “great products” but he has also made his mark by revealing the U.S. company’s production partners and initiating investigations into allegations of labor abuses in its supply chain.

Choi, 61, became Samsung’s leader in 2010, after more than three decades with the company. He is seen as a mentor to Jay Lee, the only son and heir apparent of Samsung Chairman Lee Kun-hee. Choi, asked by reporters on Sunday about the court mediation, declined to comment.

U.S. courts are increasingly demanding parties in civil disputes try mediation, although success if far from certain.

Last year, Oracle’s Larry Ellison and Google’s Larry Page undertook mediation in an intellectual property fight over Android, but no settlement was reached and a trial in the case has entered its sixth week.

“I can’t imagine that the heads of a major enterprise of that kind would take any more seriously a decision of that magnitude, simply because they are in the room together,” said Vaughn Walker, a former northern California federal judge who now works as a mediator.

(Additional reporting by Kim Miyoung in Seoul; Editing by Tim Dobbyn)

(Reuters) – Facebook shares sank on Monday in the first day of trading without the full support of the company’s underwriters, leaving some investors down 25 percent from where they were Friday afternoon.

Facebook’s debut was beset by problems, so much so that Nasdaq said on Monday it was changing its IPO procedures. That may comfort companies considering a listing but does little for Facebook, whose lead underwriter Morgan Stanley had to step in and defend the $38 offering price on the open market.

Without that same level of defense, its shares fell $4.50 to $33.73 in the first 1-1/2 hours of trading. That represented a decline of 11.8 percent from Friday’s close and 25 percent from the intra-day high of $45 a share.

“At the moment it’s not living up to the hype,” Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago said, adding that some people may have decided to hang back and buy the stock on the declines.

“Look at the valuation on it. It might have said ‘buy’ to a few people, but boy it was awfully rich,” he said.

The losses wiped some $19 billion off of the company’s market capitalization — not far from what Chief Executive Mark Zuckerberg was worth personally when the stock debuted.

Volume was again massive, with more than 96 million shares trading hands by 11 a.m. EDT (15OO GMT), making it by far the most active stock on the U.S. market. Nearly 581 million shares were traded on Friday.

“One of the things that we are seeing in Facebook is a lot of emotional trading, in that over the weekend much of the media coverage was negative, and that could be weighing on investors’ decisions to get out of the stock,” said JJ Kinahan, TD Ameritrade’s chief derivatives strategist.

The drop was so steep that circuit breakers kicked in a few minutes after the open to restrict short sales in the stock, according to a notice from Nasdaq.

Shares in other one-time Internet darlings fell in lockstep with Facebook on Monday, with Yelp, LinkedIn and Zynga all lower at mid-morning.

The news was not all bad, though, as the Nasdaq rose 1.2 percent. High-profile tech stocks rose sharply, with Apple up 3.3 percent and Amazon 1.6 percent higher.

As the stock fell, there was a long list of questions — ranging from whether the underwriters priced the shares too high to how well prepared the Nasdaq was to handle the biggest Internet IPO ever — and few immediate answers.

“It was just a poorly done deal and it just so happens to be the biggest deal ever for Nasdaq and they pooched it, that’s the bottom line here,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

NASDAQ CHANGES

Nasdaq said Monday morning the changes it was making would prevent a repeat of what happened Friday, when glitches prevented some traders from knowing for hours whether their trades had been completed.

The exchange also said it would implement procedures to accommodate orders that were not properly executed last week, which could ultimately lead to compensation for some investors.

“It doesn’t instill confidence for clients. Talk about trying to convince them it isn’t a casino,” one Midwestern financial adviser told Reuters on Monday.

Separately, a source said Morgan Stanley’s brokerage arm still had a “large number” of share orders from Friday that were not confirmed, which it was working to resolve.

A Facebook spokeswoman declined to comment on the share price issue.

But analysts said that after the initial frenzy, investors were quickly becoming cautious about the stock.

“Investors are increasingly aware of the risk embedded in the stock price. There are real concerns about growth and advertisers’ frequent lack of certainty how best to use Facebook, along with rising costs and ongoing acquisition risk,” said Brian Wieser at Pivotal Research Group, who has a $30 target on the stock.

“At $38, the stock is priced for perfection in a manner that implied that risks were negligible.”

(Reporting By Chuck Mikolajczak, Jennifer Saba, David Gaffen, Edward Krudy and John McCrank in New York, Doris Frankel in Chicago and Jennifer Merritt in Orlando, Fla.; Writing by Ben Berkowitz in Boston; Editing by Edward Tobin and Maureen Bavdek)

(Reuters) – Shooting from the hip may have got Jamie Dimon into deep trouble — shooting straight may help to get him out of it.

The JPMorgan Chase & Co (JPM.N) CEO made the crisis over the bank’s trading loss of at least $2 billion far worse because he had assured financial markets back in April that news reports about massive bets the bank’s Chief Investment Office had taken were “a tempest in a teapot”.

It meant that when the bank disclosed the big and probably growing loss on May 10, it not only had to admit a sizable problem, but also that it had been misleading investors.

The context of the “tempest” comment changed the whole dynamic of the bank’s response, according to a source familiar with the bank’s thinking. It was one of the main reasons that Dimon was so blunt in admitting just about everything was wrong with the situation — he said the hedging strategy was “flawed,” there was “sloppiness” and that “egregious mistakes” had been made.

The approach gets high marks from crisis communications experts, who said Dimon did the best he could with a bad hand, albeit a hand that he was involved in dealing himself.

His problems may not yet be over. He has agreed to testify before Congress and the bank faces probes by regulators and shareholder lawsuits. But at least getting out in front of the news has made it more difficult for his critics to paint him as a banker-villain.

“One of the tried and true rules of this kind of communication is, if it’s not going to end well, try and end it on your own terms,” said Michael Robinson, of Levick Strategic Communications and a former U.S. Securities and Exchange Commission public affairs and policy chief.

“In 2012, there is, in the court of public opinion, a pretty healthy percentage of people who want to see bankers get their comeuppance. And I think he recognized that and went on there to say ‘OK, the buck stops with me, we made a mistake and we’re responsible, and we’re going to fix it,'” Robinson said.

In response to questions concerning its public relations strategy, the bank said it wanted to be open and honest and admit its mistakes.

Dimon has long been unusual among Wall Street executives for his plain-spoken manner. In the hours after announcing the bank’s loss, Dimon called many journalists to discuss the matter. It was unusual for an executive under fire, but characteristic of Dimon.

“Jamie Dimon came out quick, and that’s a big plus,” said Kenneth Makovsky, the CEO of the public relations firm Makovsky and Company. “Ultimately you’re talking about the reputation of a business and nothing disappears as rapidly as reputation.”

The approach won praise from Lucas van Praag, the former head of Goldman Sachs’s public relations department. Van Praag for years had to defend Goldman’s behavior and comments by the firm’s CEO Lloyd Blankfein from its many critics.

“My observation is that they are trying hard to be open, to minimize any further surprises, take decisive action to correct mistakes, make their most senior executive available, stay calm, and not burn any bridges,” van Praag said in an email.

“From a communication perspective, the approach is smart, although I’m sure their legal team would probably rather pursue a bunker mentality.”

POTENTIAL PITFALLS

Indeed, there may be a downside to the straight talking.

Given the threat of shareholder lawsuits — and several have already been filed — securities lawyers and crisis managers both said executives would be well-served to avoid phrases like “egregious errors.”

The Merriam-Webster dictionary defines egregious as conspicuously bad or flagrant.

Gerry Silk, a plaintiff’s attorney with Bernstein Litowitz Berger & Grossmann LLP in New York, called Dimon’s comments a potential liability.

“‘Egregious’ really represents a departure from anything that would be acceptable conduct, and I think the lawyers are going to carefully focus on that because under the securities laws, such egregious and reckless conduct could lead to a finding of violations – could,” said Silk.

The once teflon CEO is also likely to become a much less formidable lobbyist for the banks in Washington, undermining the industry’s attempts to blunt the effectiveness of expansive regulatory reforms.

Dimon’s effusive apology has also fed suspicion among critics that Dimon is trying to avoid too much focus on the reasons for the loss, which many see as being the result of an aggressive trading mentality in an area the bank was supposed to have been conservatively hedging.

“What they’re really trying to do, I think, is divert attention from the fact that this was not an outlier event, this is normal,” said Chris Whalen, a senior managing director of Tangent Capital Partners in New York and a long-time banking industry analyst. “There’s no way that these guys were hedging. They were trying to make money.”

Some experts also warned that it is too early to say whether JPMorgan’s communications strategy is working.

The bank still faces probes by regulators and the FBI, it still has to explain why it misled investors about the risk that was being taken on by the CIO operation, and it still has to tally up a final loss figure — which will take some time and could easily be north of $3 billion.

“If you’re a high-wire act like that, and you get hit with something like this, you fall completely on your face,” said Fraser Seitel, a public relations consultant who was the public affairs director for Chase Manhattan Bank in the 1980s. “And he recognizes that, I suspect, so it’s going to take a long while for him to be respected and to get his credibility back.”

(Reporting by Edith Honan; Editing by Richard Pullin)

(Reuters) – The United States imposed punitive tariffs on solar panel imports from China, the latest in a series of trade disputes between the world’s two biggest economies and sparking accusations by Beijing of protectionism.

The new tariffs of around 30 percent, much bigger than had been expected, were set on Thursday by the U.S. Commerce Department after it ruled in favor of local firms which said Chinese exporters were dumping cut-price panels on their market.

The size of the tariffs is larger than Chinese companies had expected and some analysts said it might prompt them to manufacture elsewhere or look for alternative markets.

“The U.S. decision lacks fairness and China expresses its strong displeasure”, a spokesman for China’s Ministry of Commerce, Shen Danyang, said in a statement posted on the ministry’s website (www.mofcom.gov.cn).

“By deliberately provoking trade friction in the clean energy sector, the U.S. is sending the world a negative signal about trade protectionism,” Shen said.

However, Beijing stopped short of threatening immediate retaliation.

“We believe these measures by the United States damage China-U.S. cooperation in the renewable and clean energy sectors … We hope the United States can appropriately resolve the relevant issues and take practical steps to respond to China’s demands,” Foreign Ministry spokesman Hong Lei said.

The tariffs apply to most top Chinese exporters, including Suntech Power Holdings Co Ltd and Trina Solar Ltd, at about 31 percent.

President Barack Obama, running for re-election in November, has promised to crack down on what he said are unfair Chinese trade practices.

The United States already has punitive duties on steel pipe, pencils, electric blankets and bedspring imports from China and was also reported in March to be investigating if imports of stainless steel sinks are sold at unfairly low prices.

TRADE DUTIES

Chinese officials have threatened to impose trade duties on U.S. shipments of polysilicon, the key material used in solar panels, if the U.S. moves to penalize Chinese solar companies.

“The anti-dumping ruling increases the risk of retaliatory action by Chinese government on U.S. polysilicon imports into China,” Deutsche Bank said in a report.

The solar panel ruling follows a complaint filed last October by the U.S. subsidiary of Germany’s SolarWorld AG, and six other U.S. companies that alleged unfair competition and had sought duties well above 100 percent.

“The decision sends a clear signal: free trade does not mean there are no rules,” Frank Asbeck, chief executive of SolarWorld told Reuters.

“We expect the U.S. decision will serve as an impulse to the EU,” Asbeck said, adding the company – whose shares rallied as much as 18 percent on the move – was still trying to file a similar complaint in Europe by mid-2012.

DZ Bank analyst Sven Kuerten cautioned: “While the tariff may help SolarWorld in the U.S., the Chinese modules will be sold into other markets, increasing the price pressure there, so we see no huge fundamental improvement for SolarWorld.”

China’s solar companies hold more than 60 percent of the global market. The U.S. market alone accounts for about 20 percent of sales of China’s largest solar panel manufacturers.

Their heavy reliance on subsidized U.S. and European markets has prompted criticism that loans from Chinese state-run banks and low prices gave the companies an unfair advantage.

UNFAIR SUPPORT

Under the decision, 59 Chinese solar companies that petitioned Washington in the case will also face an import duty of about 31 percent, including Yingli Green Energy, LDK Solar, Canadian Solar, Hanwha solar One, JA Solar Holding and Jinko Solar.

Other Chinese companies could now face a 250 percent tariff, although those levels could be altered before the final ruling is issued by the Commerce Department in coming months.

The U.S. ruling, retroactive to cover imports dating back 90 days, comes two months after Washington set more modest tariffs of less than 5 percent on imports from China because of what it deemed Beijing’s unfair support for its solar industry.

Suntech, the world’s largest manufacturer of solar panels, which also operates a panel plant in Arizona, denied it sold below its cost of production.

“All leading companies in the global solar industry want to see a trade war averted. We need more competition and innovation, not litigation,” Andrew Beebe, Suntech’s chief commercial officer, said in a statement.

Yingli Energy and Trina Solar said they would actively defend their position in administrative proceedings.

There was speculation that Chinese companies could circumvent the restrictions by buying Taiwan cells and wafers for panels and assembling them outside the mainland.

“This is positive for Taiwanese players, which can come in and supply solar cells to U.S. panel makers that won’t be buying from the Chinese,” said Keith Li, analyst at CIMB Research.

Chinese companies had been bracing for a punitive duty of 15 percent, analysts said. Some have already started to look for markets beyond Europe and the United States.

“By late last year, we started shifting our focus away from the United States and into other growth markets like Japan,” said Solargiga Energy Chief Financial Officer Jason Chow. “Japan has started offering attractive incentives for solar.”

(Additional reporting by Christoph Steitz in Frankfurt, with Braden Reddall in Houston, Ran Li in Beijing and Twinnie Siu in Hong Kong; Editing by Phil Berlowitz and David Holmes)

(Reuters) – Stocks rose in early trading on Friday but were gearing up to close their worst week of the year, while Facebook’s market debut could help lift battered investor sentiment.

The S&P has fallen 6.7 percent so far in May, and while volatility is expected to continue, some analysts were forecasting a near-term rebound as valuations become more attractive.

Investors are awaiting Facebook’s debut after the world’s No. 1 online social network raised about $16 billion in one of the biggest initial public offerings in U.S. history. Facebook priced its offering at $38 a share on Thursday, and shares are expected to begin trading under the FB symbol on Nasdaq (FB.O) at around 11 a.m. New York time.(1500 GMT).

The large weekly decline in equities has come amid uncertainty over a political crisis in Greece and whether that could trigger a default and possible exit from the euro zone.

Market participants were skittish even as a poll showed Greek voters are returning to the establishment parties that negotiated its bailout.

“I think this is a technical bounce and probably some values are beginning to emerge,” said Jim Russell, chief equity strategist for U.S. Bank Wealth Management in Cincinnati.

“There’s a little bit of enthusiasm around the Facebook IPO that makes people feel good, but things haven’t changed from yesterday.”

Shares of companies in the online social media sphere were trading lower. LinkedIn (LNKD.N) fell 0.8 percent to $104.07, Zynga (ZNGA.O) dropped 2.2 percent at $8.08 and Groupon (GRPN.O) fell 1.7 percent to $12.20.

The Dow Jones industrial average .DJI gained 19.68 points, or 0.16 percent, to 12,462.17. The S&P 500 Index .SPX rose 4.47 points, or 0.34 percent, to 1,309.33. The Nasdaq Composite .IXIC edged up 0.66 point, or 0.02 percent, to 2,814.35.

The three indexes were on track to post their largest weekly losses since the last week of November.

The cost to insure Spanish government debt against default hit record highs Friday, a day after Moody’s cut its ratings on 16 Spanish banks, heightening fears of contagion from the Greek political crisis.

Spanish government-run Bankia (BKIA.MC) shares, up more than 25 percent on the day but still down 31 percent this month, led a rebound in Spanish banking stocks as traders closed short positions. U.S.-traded shares of Banco Santander (STD.N) and BBVA (BBVA.N) rose more than 4 percent each.

Shares of Foot Locker (FL.N) jumped 10 percent to $30.82 after the athletic footwear retailer posted higher-than-expected quarterly results.

(Reporting by Rodrigo Campos. Editing by Bernadette Baum, Dave Zimmerman)

(Reuters) – Warren Buffett’s Berkshire Hathaway Inc is boosting its bet on the newspaper industry, with a deal to buy the majority of Media General Inc’s papers for $142 million in cash, making him one of the largest publishers in the United States.

The deal announced Thursday means Buffett will have a stable of about 25 daily newspapers across the country.

Buffett is staking his claim in an industry dogged by plummeting advertising revenue and readers who are choosing digital formats over paper and ink. Newspapers, once the toast of investors looking for stable cash-generating companies to park their money, have lost favor over the last several years.

The move is a classic turn for the chairman of the ice-cream-to-insurance conglomerate who is always on the hunt for a good value. He told his Berkshire shareholders in May that he was going to spend more money on newspapers because he still views them as the primary source for local information.

Berkshire will also lend Media General $400 million and provide a $45 million credit line. Media General will issue warrants for approximately 4.6 million Class A shares, representing 19.9 percent of its existing shares outstanding.

Media General’s stock soared 38.2 percent to $4.34 a share in midday trade, touching its highest level in six weeks. The company said in February it was exploring the sale of its papers.

Its 63 daily and weekly newspapers are scattered throughout the U.S. Southeast and include the Richmond Times-Dispatch. They will be operated under BH Media Group, a new subsidiary of Berkshire Hathaway. The sale does not include newspapers in Media General’s Tampa division, which will be sold separately.

The Poynter Institute’s Rick Edmonds said that without the Tampa paper, the group Berkshire bought is probably “modestly profitable.”

When the Media General deal is complete, Buffett’s stable of daily papers will have a total weekday circulation of around 800,000.

Berkshire already owns the Buffalo News, the Omaha World-Herald Co and a stake in the Washington Post Co. The conglomerate also reportedly holds a small stake in the recently reorganized newspaper chain Lee Enterprises.

With the Media General deal, Buffett will own, outright or in large part, three of the top 10 newspapers in the country by market penetration, according to the Pew Research Center.

But none of the papers that Berkshire owns directly are in the top 25 nationwide by circulation, according to the Audit Bureau of Circulations, which one analyst said fits with Buffett’s strategy.

“Berkshire Hathaway is clearly (taking) a vote of confidence in small-town local newspapers. They didn’t buy the big city newspaper Tampa Tribune, which is struggling,” said Benchmark Capital analyst Edward Atorino.

“They’re basically giving Media General a lease on life here. This is chump change, but Berkshire Hathaway doesn’t fool around. I don’t think Berkshire Hathaway does anything where they’re going to lose money.”

Media General is the latest newspaper company with a heavy debt load to turn to a mogul for help. The New York Times Co took a $250 million loan with about 14 percent interest from Mexican billionaire Carlos Slim, which the company has since paid back. Slim also received warrants in the deal.

‘REASONABLE’ INVESTMENT

Buffett is paying slightly less for the Media General papers than he paid late last year for his hometown paper, the World-Herald. That deal included six other dailies and several weeklies in Nebraska and Iowa.

That deal raised eyebrows, as it looked to some to be more like a rescue of a local business with a clouded financial picture than a long-term investment. Many also pointed to his highly skeptical comments in his 2007 letter to shareholders.

“When an industry’s underlying economics are crumbling, talented management may slow the rate of decline. Eventually, though, eroding fundamentals will overwhelm managerial brilliance,” he said in discussing the shrinking profits at his first newspaper holding, the Buffalo News.

But Buffett was adamant that the World-Herald deal was “reasonable,” and told shareholders earlier this month they were likely to see him do more.

“We may buy more newspapers. I think the economics work out OK,” Buffett said at Berkshire’s annual meeting on May 5.

One Berkshire investor said the deal fits Buffett’s value model, which has drawn him into a wide range of acquisitions — from railroads and chemical companies to jewelers and alcohol distributors.

“Buffett sees the transition away from free content as an ultimate boost to profit margins. The companies are very undervalued if they attain even low single-digit earnings growth. I would compare this to his purchase of gas pipelines in the Enron fire sale in 2002,” said Bill Smead, chief investment officer of Smead Capital Management in Seattle.

The new holding entity, BH Media Group, also includes the World-Herald papers. Terry Kroeger, formerly CEO of the World-Herald Co, is president of the group.

It was not clear where or even whether the Buffalo News fits into the new entity. Buffett’s assistant was not immediately available to comment.

With the nearly 20 percent stake in Media General, Buffett also gets a foot back into the broadcast television business, an industry he knows well. After the newspaper sale, the remaining Media General will be mostly a TV company, with a number of NBC affiliates.

In the 1980s, Buffett helped Capital Cities finance its purchase of the ABC television network and for years remained one of its key shareholders.

(Additional reporting by Supantha Mukherjee in Bangalore; editing by Viraj Nair, Jeffrey Benkoe and Gunna Dickson)

(Reuters) – Facebook Inc is expected to price its initial public offering to raise more than $16 billion on Thursday, as strong demand, particularly from retail investors, fuels anticipation for a big pop in the stock when it begins trading on the Nasdaq.

Predictions on how much the stock will rise on Friday vary greatly, with some experts saying anything short of a 50 percent jump will be disappointing given the hype over what would be the third-largest initial share sale in U.S. history, after Visa Inc and General Motors Co. Other IPO watchers say the large size of the float, coupled with a raised price range, could curb first-day gains to as little as 10 percent.

“I think anything over 50 percent will be considered a successful offering — anything under that would be underwhelming,” said Jim Krapfel, analyst at Morningstar. “A lot of retail investors are not concerned about valuation. That’s what is going to drive the first day pop.”

Lee Simmons, industry specialist at Dun & Bradstreet, had a more modest forecast.

“You’ve got a large offering at an increased price — so a huge pop may be difficult to achieve. I’d think a 10 to 20 percent pop over the offer price is expected,” Simmons said. “When you’re talking about doubling or a pop the size of LinkedIn, it’s more difficult to achieve because Facebook is just offering more shares … The others were smaller floats – under 10 percent – so you had this artificial feeding frenzy.”

Professional networking company LinkedIn Corp’s shares doubled on their first day of trading on the New York Stock Exchange.

Another social media company, online games developer Zynga Inc which makes lots of games for Facebook users, fizzled on debut and ended down 5 percent on its first day of trading on Nasdaq. No one Reuters spoke with said they were expecting a fall in Facebook’s stock on Friday.

The No. 1 social network, with some 900 million users, on Tuesday raised the target IPO price range to between $34 and $38 per share, from between $28 and $35.

That would value Facebook at $93 billion to $104 billion, rivaling the market value of Internet powerhouse Amazon.com Inc, and exceeding that of Hewlett-Packard Co and Dell Inc combined.

On Wednesday, Facebook increased the size of the IPO by almost 25 percent to 421 million shares, a 15 percent float. If it prices at the top of the range, as expected, Facebook would raise at least $16 billion – including a greenshoe option for underwriters, it would raise north of $18.4 billion.

Despite the high expectations, the social network started eight years ago in Chief Executive Mark Zuckerberg’s Harvard dorm room does face challenges maintaining its growth momentum.

Some investors worry the company has not yet figured out a way to make money from the growing number of users who access Facebook on mobile devices such as tablets and smartphones. Meanwhile, revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.

Sports betting firms had varying estimates of where Facebook would end up at the close of its first day of trading. Spreadex Limited in Hertfordshire, UK, said clients are speculating shares could end up trading above $56 a share in the first day, having come down a bit in price since the amount of shares slated for sale were increased.

Betting on Intrade, a popular online betting site for political events, was limited, with only about 750 shares changing hands in contracts that bet on a closing price anywhere from $25 to $60. By contrast, more than 200,000 trades have been made on President Barack Obama’s chances for re-election.

Some financial advisers have warned their clients against jumping into Facebook right away, but the well-known brand could still attract enough interest to exceed the 458 million shares traded the day General Motors went public after emerging from bankruptcy in 2010.

One UBS adviser initially received calls from 12 clients clamoring to buy shares of Facebook, but over the past couple of weeks, two have changed their minds.

“A lot of people are thrown off by the recent negative stories in the press,” the adviser said, speaking on condition of anonymity. “One guy was worried about General Motors stopping its advertising on Facebook.”

GM said on Tuesday it would stop placing ads on Facebook, raising questions about whether the display ads on the site are as effective in reaching consumers as traditional media.

Overall financial advisers are struggling to manage clients’ expectations about what the stock will do and in some cases, if they will be able to get any stock for them.

“People want to just own it because they think it’s the next Google and they missed out on that,” said a financial adviser from Wells Fargo Advisors, the brokerage division of Wells Fargo & Co, which is part of the syndicate underwriting the deal.

Facebook has 33 underwriters for the IPO, led by Morgan Stanley, JPMorgan and Goldman Sachs.

(Reporting by Olivia Oran, Jessica Toonkel and David Gaffen in New York, and Edwin Chan in San Francisco; Editing by Tiffany Wu and Phil Berlowitz)