Haiti candidate warns of protests, U.S. pulls visas

Haitian presidential candidate Michel Martelly, whom the United Nations and the United States want put back into the country's election runoff, said on Friday he would bring protesters out onto the streets if local election authorities do not comply.

In a move apparently linked to heavy U.S. pressure for Haiti's electoral authorities to amend the preliminary results of chaotic November 28 elections, Washington revoked the U.S. visas of some Haitians associated with the campaign of a government candidate who is Martelly's rival for a runoff place.

The U.N. and western donors are piling pressure on Haiti's government and Provisional Electoral Council to include Martelly, a popular musician, in the deciding second-round contest with opposition matriarch Mirlande Manigat.

This would be in line with an Organization of American States experts' report, delivered to Haitian authorities, that cites "irregularities" in the initial election results. It recommends dropping the government-backed candidate, Jude Celestin, from the runoff, in favor of Martelly.

U.N., U.S. and European officials are emphatically telling Haitian President Rene Preval, who has faced accusations of rigging the first round vote results, that failure to follow the OAS recommendation risks plunging the earthquake-battered Caribbean nation into even more turmoil.

Martelly, whose supporters staged violent protests when the December 7 preliminary results placed him third and excluded him from a deciding second-round vote, said he would "not negotiate" his being one of the final two runoff contenders.

"We are saying that the electoral council has to apply the (OAS) experts' recommendations ... We are prepared to fight to the end," he told a news conference in Port-au-Prince.

"If the recommendations are not respected, the population is ready to take to the streets and we will accompany them to defend their vote."

The uncertainty created by the elections impasse in Haiti, which is trying to recover from a devastating 2010 earthquake, has been intensified by the surprise return home from exile of former dictator Jean-Claude "Baby Doc" Duvalier.

Duvalier, 59, faces charges of corruption and human rights abuses committed during his 1971-1986 rule. Another exiled former president, firebrand ex-priest Jean-Bertrand Aristide, has said he also wants to come home.

Haitian radio stations reported nine Haitians with links to Preval and Celestin's ruling Inite coalition and to Celestin's presidential campaign had their U.S. entry visas revoked.

The list of nine included Preval's Minister of Social Affairs Gerald Germain, Celestin's campaign manager Jean Francois Chamblain and another Inite campaign figure, Assad Volcy, head of communications at the presidential palace.

STATE DEPARTMENT CONFIRMATION

U.S. State Department spokesman P.J. Crowley confirmed that some visas had been revoked and that Haitian officials were among those affected.

"We want to see the government of Haiti embrace the recommendations of the OAS verification mission report. We want to see security and stability sustained in Haiti. We want to see the election results reflect the will of the Haitian people," Crowley said in Washington.

"To the extent that there are individuals who are connected with episodes of violence or corruption, we will not hesitate to take appropriate action," he added.

In Port-au-Prince, Martelly accused outgoing President Preval, who cannot stand again for a second consecutive term, of being "ready to do anything, including killing people" to keep his protege Celestin in the second-round runoff.

Martelly called Duvalier's return a "distraction," saying Preval must have known in advance about the former dictator's intention to return to his homeland. Preval's government has said it had only about an hour's warning Duvalier was coming.

Martelly said he would wait to see the definitive election results from the Provisional Electoral Council, which is expected to give final results at the end of this month.

U.N. officials say they expect a second round runoff in mid-February.

Preval, whose popularity slumped when many Haitians criticized his low-key response to the earthquake disaster, has expressed reservations about the OAS experts' report.

The report puts Martelly ahead of Celestin with as slim a margin -- mere fractions of percentage points - as the original preliminary results from Haiti's Provisional Electoral Council puts Celestin in front and in the second round.

Former first lady Manigat is undisputed as winner of the most votes in the first round, though not enough to win outright.

Facebook to unveil financials, raises $1.5 billion

Facebook is preparing to open its books this year or early in 2012 to give investors a glimpse into the financial workings of the world's No. 1 social network, after it sealed an oversubscribed $1.5 billion round of financing led by Goldman Sachs.

The financing, $1 billion of which is from Goldman Sachs' overseas clients and $500 million from Goldman itself and Russian investment firm Digital Sky Technologies, gives the company a projected value of $50 billion, setting the stage for what could be one of the largest initial public offerings next year.

Facebook, founded in a Harvard dorm room in 2004, said it would begin to file public financial reports no later than April 30, 2012, in a statement detailing the new investment.

United States securities regulations require companies with more than 499 shareholders to disclose financial information. Facebook expects to exceed that number some time this year.

The new funding was organized by investment bank Goldman Sachs, which raised $1 billion from non-U.S. investors in a fund that Facebook said was oversubscribed.

Initial projections from Goldman in documents circulated to potential investors earlier this month indicated it was looking to raise up to $1.5 billion.

Facebook said it made a "business decision" to limit the offering to $1 billion, without explaining further. It said it had no immediate plans for using the money raised.

Facebook earned $355 million in net income in the first nine months of 2010 on revenue of $1.2 billion, according to a document distributed by Goldman Sachs to potential investors earlier this month, the only source of financial data on the company.

In December, Digital Sky Technologies, Goldman Sachs and some funds managed by Goldman invested $500 million in Facebook.

Facebook has more than 500 million users and is challenging big Web businesses like Google Inc and Yahoo Inc for users' time online and for advertising dollars.

Investors are increasingly eager to buy shares of Facebook and other fast-growing Internet social networking companies on private exchanges.

GE lifts Dow, S&P 500 but S&P's 7-week streak ends

The Dow and S&P 500 rose on Friday as General Electric Co's (GE.N) earnings put a positive tone on the economic recovery, snapping a two-day losing skid for the benchmark index.

The Nasdaq was pulled lower by Google (GOOG.O), ending a week marked by investors pulling back from outperforming technology shares.

Shares of General Electric, considered a bellwether for the economy and corporate America, rose 7.1 percent to $19.74 and hit their highest intraday level since November 2008. The stock, the top positive in the Dow, also scored its biggest daily percentage jump since March 2009.

GE reported stronger-than-expected earnings, helped by the recovery of its finance arm and a rise in revenue at its industrial units, including a sharp pickup in sales of locomotives.

"Look at the two stocks, where they've been and where they are. GE has been under a tremendous amount of pressure before all this started," said Doreen Mogavero, CEO of Mogavero, Lee & Co. in New York.

"Google has acted very well throughout, so there may be a little bit more room for growth in GE, might be the thought."

The Dow Jones industrial average (.DJI) rose 49.04 points, or 0.41 percent, to end at 11,871.84. The Standard & Poor's 500 Index (.SPX) added 3.09 points, or 0.24 percent, to 1,283.35. The Nasdaq Composite Index (.IXIC) shed 14.75 points, or 0.55 percent, to 2,689.54.

For the week, the Dow rose 0.7 percent, the S&P lost 0.8 percent and the Nasdaq dropped 2.4 percent.

Even with Friday's advance, the S&P snapped a seven-week streak of gains. But the Dow managed its eighth consecutive weekly gain, its longest streak since the March through April run in 2010, in which the index hit a high that stood for six months.

The S&P 500 is up 8.7 percent since the start of December, but the index lost more than 1 percent over the past two days. Many technical and other analysts see the up trend continuing through at least the first half of the year, but some have forecast a pullback for the near term.

It could be that the pullback is limited to stocks that have far outperformed the major indexes, such as the cloud computing stocks. CSFB analysts noted that high correlation between stocks in the S&P 500 is starting to decline, in comparison to recent periods when most of the market has gone up in tandem, and higher-valued names could remain under pressure."

Google Inc shares were down 2.4 percent at $611.83 after hitting an intraday high of $641.73 as confidence that CEO Larry Page would rejuvenate the No. 1 Internet search company wavered. Late Thursday, Google reported earnings that beat Wall Street's expectations.

The action in Google shares is "not so much Google earnings, but a factor of the market itself," said Robert Francello, head of equity trading at Apex Capital in San Francisco.

"We had such a massive run in the end of December and early this month, we might be seeing selling into good earnings," he said. "The long, fast money (is) paring gains and preparing themselves for some type of consolidation short term."

Investors also contended with options expiration, with January options on individual stocks set to expire after the close. The expiry sometimes adds to market volatility.

Tempering some of the earnings optimism were results from Bank of America Corp (BAC.N), the latest bank to disappoint investors.

Bank of America shares fell 2 percent to $14.25 after the largest U.S. bank by assets reported a second straight quarterly loss, driven by a $2 billion write-down in its mortgage business.

The results follow disappointing results earlier this week from Goldman Sachs (GS.N) and Wells Fargo (WFC.N). An index of bank shares, KBW Banks (.BKX), was up 1.6 percent, however.

Volume was slightly below average with about 7.96 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, just short of last year's estimated daily average of 8.47 billion.

Advancing stocks outnumbered declining ones on the NYSE by 1,578 to 1,424, while on the Nasdaq, decliners beat advancers 1,549 to 1,073.

Boardroom brawl revs up at Vmoto

Sparks are flying in the boardroom at Vmoto, with warring directors Russell Goodman and Trevor Beazley both subject to resolutions to remove them from the scooter retailer's board.

Vmoto announced on Monday that Mr Goodman would no longer serve as executive chairman, at the same time it said it was re-thinking the proposed relocation of its head office to Queensland.

And according to documents lodged with the ASX yesterday, significant shareholder Patrick Davin put forward a resolution to remove Mr Goodman as a director.

But Mr Goodman retaliated in kind this morning, using his 7.52 per cent shareholding in the company to request Mr Beazley be removed from Vmoto's board.

Vmoto said it would keep its shareholders informed in due course.

Shares in Vmoto hit a 52-week low yesterday, after one of its significant Melbourne-based shareholders reduced their stake in the company from 7.98 per cent to 6.44 per cent.

At 09:38AM Vmoto shares were slightly up to 6 cents, from the low of 5.7 cents yesterday.

Streeter, Cooper win $60m appeal

The Western Australian Court of Appeal says Western Areas Exploration waited too long before bringing a claim against Terry Streeter and David Cooper, ruling WAE was not entitled to $60 million in damages awarded last year.

The court handed down a unanimous decision yesterday that Mr Streeter did not breach fiduciary duty to WAE by providing seed capital in support of the float of the Western Areas NL nickel play in 1999.

Mr Streeter said the ruling confirmed his belief that the provision of seed capital was opportunistic, and the trial result was wrong.

"This case initially took more than seven years to bring to trial, and has taken more than ten years to get to this point," Mr Streeter said.

"We always believed it to be a highly opportunistic and vexatious action, and I am pleased that my position has been vindicated by today's decision.

"It has consumed a considerable amount of time and resources, but I believe it has been important to defend my reputation in this industry and I now look forward to putting the matter finally to rest."

Messrs Streeter and Cooper commenced the appeal action in September 2009, following Supreme Court Justice Eric Heenan's decision to award WAE damages in July 2009.

The Court of Appeal also ruled for WAE to pay Mr Streeter and Mr Cooper's legal costs, as well as repay $500,000 paid to WAE legal representatives, Lavan Legal, by Mr Streeter in December 2009 as part of orders that suspended the trial judgment pending the outcome of the Appeal.

$1.3m Raine Sq transaction examined

Westgem Investments transferred $1.3 million to Saracen Properties a day before the Raine Square office development was placed into the hands of receivers, the first meeting of creditors has revealed.

Pitcher Partners managing director Bryan Hughes said the transaction was just one of many he would investigate in his role as administrator of Westgem, to which he was appointed January 11.

According to a Bankwest spokesperson, the funds were supposed to be provided to Raine Square's joint financiers, Bankwest and Bank of Scotland International.

In September last year Westgem and the financiers entered into new arrangements which required Bankwest and BOS International to provide additional funding, and for Westgem to make significant additional contributions to the project.

Bankwest said between September and December the financiers funded the project and met building costs, while Westgem failed to make any payment or contribution, resulting in the missed $50 million payment on December 31.

The spokesperson said there were a number of significant liabilities associated with the project, with the financiers owed over $330 million, the funds required to complete the project and lease obligations held by Westgem in respect to any residual Bankwest lease held on Bankwest Tower.

Westgem Investments is owned by prominent Perth developer Luke Saraceni and Hossean Pourzand.

Calls to Mr Saraceni's office by WA Business News were not returned by time of publication.

Bankwest appointed receivers from Ferrier Hodgson to a series of assets owned by companies associated with Mr Saraceni yesterday, including a vineyard near Margaret River, a shopping centre in Warrnambool and strata retail units in Spearwood.

Each company is a guarantor to the Raine Square development, and Newport Securities and Mayport Nominees have provided second mortgages to Westgem's joint financiers.

Ferrier Hodgson partner Martin Jones said tenants of the properties should not expect any disruption to their businesses, but claimed seizing the assets was an "appropriate course of action", given the circumstances.

Giffords Smiles on Hearing Applause During Hospital Transfer

Representative Gabrielle Giffords smiled when she heard applause from bystanders as she was being moved to a Houston hospital to continue recovering from a gunshot to the head in the Tucson, Arizona, shooting rampage, a doctor said.

While traveling in an ambulance through Tucson, she reacted when she heard applause from people standing along the street, Tucson trauma surgeon Randall Friese, who accompanied Giffords on the flight, said at a news conference today in Houston.

“She responded very well to that” and was “smiling and in fact even tearing up a little bit,” Friese said.

Giffords, 40, was moved from Tucson’s University Medical Center, flying to Houston for admission to Texas Medical Center’s intensive-care unit. She is to be moved later to the facility’s rehabilitation hospital.

Doctors examined Giffords after her arrival in Houston.

“She looks spectacular,” said Dong Kim, neurosurgery chairman at the University of Texas Health Science Center. “She was alert, awake, calm, she looked comfortable.”

“I think she may be trying to form words if I had to guess,” Kim said.

Earlier today, Vice President Joe Biden told House Democrats, “As devastating as Gabby’s injury is, it does not surprise me, believe it or not, that she’s making the progress she’s making.”

Biden, 68, who suffered two cranial aneurysms more than 20 years ago, said, “Attitude, determination is an incredible, incredible weapon in dealing with what you’re facing.”

‘Backbone Like a Ramrod’

“She has a backbone like a ramrod,” said Biden, who spoke to the lawmakers at their annual retreat in Cambridge, Maryland.

In Houston, trauma surgeon John Holcomb said Giffords would begin rehabilitation and physical therapy today. He said she will remain in the intensive-care unit for now because a drain has been inserted to remove “a little fluid collection” in her brain.

“She’s doing great,” Holcomb said. “She’s really done very well with this transfer.”

Giffords might remain a patient at the rehabilitation facility for a few weeks or up to six months, Carl E. Josehart, chief executive officer at the Houston center, told reporters yesterday. Josehart said the average length of stay for patients, including those with all types of injuries, is 28 days.

Giffords’s husband, NASA astronaut Mark Kelly, has a home in Houston, where he lives while training as a space shuttle commander.

Loughner Indicted

Her alleged assailant, Jared Lee Loughner, was indicted by a federal grand jury in the Jan. 8 shooting rampage in Tucson that killed six people and wounded 13, including Giffords.

Loughner, 22, in an initial three-count indictment, is accused of attempted assassination of a member of Congress and attempted murder of two federal employees, according to a statement by U.S. Attorney Dennis Burke in Phoenix.

The suspect was tackled by bystanders after he allegedly opened fire at a community meeting held by Giffords outside a supermarket in Tucson. The six killed included U.S. District Judge John Roll, as well as one of Giffords’s aides and a 9- year-old girl. Two members of Giffords’s staff were among the wounded.

Debt ceiling: Geithner won't let us default

Commentary: Donald Marron is the director of the Urban-Brookings Tax Policy Center and a former acting director of the Congressional Budget Office.

America reached two dubious milestones in recent weeks.

Our national debt, including Social Security obligations, has run up to nearly $14 trillion. That's a lot of money, even in Washington.

And our Treasury Secretary started using the d-word. Writing to congressional leaders, Timothy Geithner warned that failing to increase America's debt ceiling, currently $14.3 trillion, "would precipitate a default by the United States."

"Default" is not a word that Treasury secretaries use lightly. For more than two centuries, the United States has paid its debts on time. That's why U.S. Treasuries have historically been considered the safest investment in the world.

When Geithner was sworn into office, he took responsibility for defending the full faith and credit of the United States.

So why is he openly discussing the possibility of default? Because of the peculiar political theater of the debt limit.
Debt ceiling debate: FAQs

Alone among developed nations, our country separates the legislative decisions that govern spending and taxes from those that govern debt.

As a result, America must periodically watch its elected leaders try to avoid voting for higher debt, even though most of them happily voted for higher spending, lower taxes or both.

During these spells of political brinkmanship, the Treasury secretary's job is to prod Congress into action.

Given today's political divisiveness, Geithner understandably decided -- as did his predecessors in similar circumstances -- that the best way to defend America's credit worthiness is, paradoxically, to warn of potential default if Congress fails to act.

Geithner is correct that the debt limit must increase. With monthly deficits running more than $100 billion, it's simply unthinkable that Congress could cut spending or increase revenue enough to avoid borrowing more. America's daunting fiscal challenges require bold action, but it must be thoughtful and deliberate, not arbitrary and sudden.

Still, I am troubled by any suggestion that the United States might willingly default on its public debt. Doing so would have absolutely no upside. That's why I'm confident that Geithner won't let it happen.

If Congress somehow fails to increase the ceiling in time, Geithner would do everything in his power to avoid going down in history as the first Treasury secretary to miss a debt payment.

To do so, he would use the same tactics as any stressed debtor.

Squirrel it away: First, Geithner would hold on to his cash and what little credit he has left. Among other things, he would eliminate unneeded borrowing associated with certain obscure programs such as the Exchange Stabilization Fund and a state and local debt program.

Turn to family for help: He would call in money from his relatives, in this case the Federal Reserve. During the financial crisis, Treasury created a special program to borrow money on the Fed's behalf; that borrowing now totals $200 billion. Treasury temporarily wound this program down the last time we got close to the debt ceiling. Expect the same this time.

Promise to pay later: He would issue IOUs (which don't officially count as debt) to friendly creditors who have no choice but to accept them. Geithner's predecessors did this with two retirement funds for government employees, both of which were later made whole. In his recent letter to Congress, Geithner said he'd do the same.

Sell stuff: Lastly, Geithner would look for assets that are easy to sell. Thanks to the financial crisis, Treasury now owns a sizeable investment portfolio, including stakes in auto companies, banks and other financial institutions. Don't be surprised if Treasury cashes in some of these positions to raise cash in coming months.

Those tactics would give Congress time to work through its differences and raise the debt limit.
0:00 /2:11The GOP's debt-tamer

If lawmakers fail to act on time, however, Geithner would face starker choices: Our monthly bills average about $300 billion, while revenues are about $180 billion. If we hit the debt limit, the federal government would be able to pay only 60 cents of every dollar it should be paying.

But even that does not mean that we will default on the public debt. Geithner would then choose which creditors to pay promptly and which to defer.
Most 'asburd' corporate tax breaks

As the heir to Alexander Hamilton, Geithner would undoubtedly keep making payments on the public debt, rolling over the outstanding principal and paying interest. Interest payments are relatively small, averaging about $20 billion per month, and paying them on time is essential to America's enviable position in world capital markets. To miss even one is and should be unthinkable.

Other creditors would have to wait in line. Treasury would defer payments to some groups of creditors, perhaps including Social Security beneficiaries, Medicare providers, military personnel, weapons vendors or taxpayers expecting refunds.

Missing such payments would be another dubious milestone in America's fiscal journey -- so dubious, in fact, that the resulting constituent outrage would likely force Congress to increase the debt ceiling immediately.

Here's to hoping that Congress doesn't let things go that far and get that bad.

China approves $45 billion in U.S. export deals

The Chinese government has approved contracts worth a total of $45 billion with U.S. companies to export goods to China, the Obama administration said Wednesday.

The contracts will support an estimated 235,000 jobs for American workers, according to a statement from the White House. The deals cover a variety of exports, including agricultural products, computers, automobiles and auto parts, as well as industrial materials and technology.

China approves $45 billion in U.S. export deals

U.S. for sale - Uncle Sam's real estate play

As Washington deficit hawks scour the federal budget for ways to trim the size of government, they are arriving at one idea with increasing frequency: Put government property on the auction block.

It's an opportunity rooted in the scale of federal holdings. The government owns somewhere in the neighborhood of 650 million acres of land peppered with 429,000 buildings.

That has lawmakers on both sides of the aisle salivating as they look for ways to make a dent in the budget deficit. And not just because the federal government has a lot of property it could unload, but because more than 10% of the buildings are of only marginal use.

The roster runs the full range: Lighthouses. Empty buildings no longer used. Big plots of land that once housed government depots.

In fiscal year 2009, the most recent year for which numbers are available, 45,190 buildings were categorized by the government as underutilized. On top of those, 10,327 were counted as "excess" or unwanted.

The government's push to sell off excess property started under President George W. Bush. The first step was figuring out how many buildings it owned.

"There was no inventory of what the federal government owned," said Clay Johnson III, deputy director for management at the Office of Management and Budget during the Bush Administration. "We asked all agencies to categorize and catalog their holdings."

Once catalogued, the Bush administration encouraged agencies to scale back. The Obama administration followed suit. In June, President Obama directed government agencies to save $8 billion by selling excess property and making other cuts.

The calls for reform continue to mount. Obama's fiscal commission incorporated the idea into its budget-slashing proposal, and a bill introduced by a key Republican earlier this month suggested as much as $15 billion could be saved.

Compared to the $3.5 trillion annual federal budget, that's chump change.
National debt: The ugly facts

Despite all the talk, massive savings aren't exactly stacking up.

In 2009, government agencies sold only 2,200 buildings -- while more than 10,000 were identified as "excess." The previous year, only 835 buildings were sold, according to the General Services Administration.

So if 10,000 buildings were classified as excess, why were only 2,200 unloaded?

Law requires the GSA, which acts as the government's property manager, to offer unwanted property to states, local governments and nonprofit organizations, at discounts of up to 100%, before auctioning the property.

In addition, surplus government buildings must be offered up as housing for the homeless before being sold.

What's up for grabs: The result is a GSA auction website that currently lists a mere 23 properties, with nine open for bidding.
0:00 /3:13Summers: Growth first, deficit next

Curiously, the government list includes three lighthouses -- two in New Jersey and one in Massachusetts. The Massachusetts property attracted 29 bids and recently sold for $190,000.

Another property up for auction: Point Stratford, a sprawling 77-acre military instillation formerly used by the Army to manufacture engines.

There are also a few more conventional properties available, including a former Social Security Trust building in Hackensack, N.J., that is attracting bids in excess of $500,000.

Solutions: In a 2009 letter to Rep. Ron Kind, Congressional Budget Office Director Douglas Elmendorf laid out ways to increase revenue from the sale of federal property.

Revenue could be increased by directing the GSA to take all surplus buildings directly to auction, bypassing the cumbersome review currently required, Elmendorf said.

He also proposed changing the incentive structure for federal agencies in an effort to monetarily reward them for reducing their building count.

Meanwhile, the Obama administration says it has already identified $1.7 billion in savings, and has sold an office building in Omaha, Neb., for $1.3 million, one in Springfield, Mass., for $2.5 million, and one in Bethesda, Md., for $12.4 million.

China's economic growth picks up pace

China's economy accelerated at the end of 2010, while inflation cooled slightly.

China's gross domestic product, the broadest measure of economic output, grew at an annual rate of 9.8% during the fourth quarter of 2010, up from 9.6% growth in the prior quarter, according to figures from the National Bureau of Statistics released Thursday.

That rate is considered very rapid compared to sluggish growth in Western economies. The U.S. economy grew at a snail's pace of 2.6% in the third quarter.

While China's rapid growth has sparked fears that its economy may overheat, some economists say a rate around 10% is not unusual in the country's recent history.

"China has demonstrated that its economy can grow at a 9-3/4% clip for 30 years with no inflation risk," Carl Weinberg, chief economist for High Frequency Economics said in a research note before the official data came out.

The Chinese government also released its latest inflation data on Thursday, showing that prices rose in December at a slower pace.

Chinese consumer prices rose 4.6% in December, after rising 5.1% the month before, according to government data. Food prices rose 9.6% compared to a year earlier.

Non-food inflation was 2.1%, up from 1.9% the month before.
0:00 /2:09China's path to powerhouse

The latest data comes amid an important meeting between President Obama and Chinese President Hu Jintao at the White House.

In a press conference Wednesday, Obama said it is important to remember that while China's economy is rising rapidly, the U.S. economy is still three times its size, with a mere quarter of the population.

He also tried to calm fears that the U.S. is trying to limit China's growth.

"We welcome China's rise," he said. "We just want to make sure that rise occurs in a way that reinforces international norms and international rules, and enhances security and peace, as opposed to it being a source of conflict either in the region or around the world."

American leaders, including Obama, are pushing for a stronger trading relationship with China, as a way to boost the U.S. economy and create more jobs at home.

The iPad's success is coming from multiple sources. While Apple's Macintosh computers have always struggled for traction in the business world, Apple said the iPad is generating strong crossover interest from business customers. Around 80% of Fortune 100 companies have deployed the tablet for their employees. Apple also announced that it sold a record 16.2 million iPhones, just before the smartphone goes on sale on the Verizon Wireless network, beginning next month. "We had a phenomenal holiday quarter," CEO Steve Jobs said in a prepared statement. "We are firing on all cylinders and we've got some exciting things in the pipeline for this year including iPhone 4 on Verizon, which customers can't wait to get their hands on." The company sold 4.1 million Macintosh computers and 19.5 million iPods during the its fiscal first quarter, which ended Dec. 25. Mac sales were at an all-time high, but still a bit below analysts' expectations. On a conference call with analysts, that raised a question about whether the iPad was cannibalizing Mac sales. "Yeah, I think there is some cannibalization, but there is also a halo effect," said Apple Chief Operating Officer Tim Cook, referring to the way sales of one Apple product can lead to sales of other Apple gizmos. "If this is cannibalization, it feels pretty good." The company also noted that iPad sales will likely fall back somewhat in the current quarter, since the tablet proved to be a hot holiday purchase. The iPod follows a similar trend, with holiday-quarter sales typically doubling the average sales from the other three quarters. Apple continues to add new revenue streams. The $4.4 billion in iPad sales during the quarter come from a product that didn't exist a year ago -- the tablet computer first went on sale in April. The company also expanded its chain of retail stores, which reached $1 billion in sales for the first time. The news comes a day after Jobs temporarily stepped down from his job, taking his second medical leave of absence in two years, and his third since 2004. 0:00 /1:24Apple stock: The Jobs effect In his stead, Cook will once again handle all day-to-day operations. In the conference call following the financial results release, some analysts asked about Apple's business plan for the future -- especially if Jobs does not return to the company. In response, Cook said the Apple team has "incredible depth of talent and a culture of innovation that Steve has driven, and excellence has become a habit." He added: "We have incredible hope for the future of the company." Apple usually provides a conservative outlook for the current quarter, but this time the company blew away analysts' forecasts. The company said it expects earnings of $4.90 per share on revenue of $22 billion this quarter, compared to Wall Street's expectation of $4.47 per share on $20.8 billion of sales. Shares of Apple (AAPL, Fortune 500) rose more than 1% afterhours, after closing down 2% on Tuesday, in the first day of trading following Jobs' announcement.

tarbucks will offer a new plus-sized iced drink beginning this week.

The "Trenta" will be 31 ounces -- one ounce shy of a quart -- and available for iced coffee, Tazo shaken iced tea and iced tea lemonade.

tarbucks will offer a new plus-sized iced drink beginning this week.

The "Trenta" will be 31 ounces -- one ounce shy of a quart -- and available for iced coffee, Tazo shaken iced tea and iced tea lemonade.

Apple sets new record with sales of $27 billionApple sets new record with sales of $27 billion

Apple reported results on Tuesday for its best-ever quarter, with revenue of $26.7 billion driven by holiday iPad and iPhone sales that were much better than forecast. Apple's profit of $6 billion also set a new record.

The Cupertino, Calif., company sold 7.3 million iPads in the quarter, easily surpassing the expectations of nearly every Wall Street analyst. Those sales essentially matched iPad sales from the previous two quarters combined.

The iPad's success is coming from multiple sources. While Apple's Macintosh computers have always struggled for traction in the business world, Apple said the iPad is generating strong crossover interest from business customers. Around 80% of Fortune 100 companies have deployed the tablet for their employees.

Apple also announced that it sold a record 16.2 million iPhones, just before the smartphone goes on sale on the Verizon Wireless network, beginning next month.

"We had a phenomenal holiday quarter," CEO Steve Jobs said in a prepared statement. "We are firing on all cylinders and we've got some exciting things in the pipeline for this year including iPhone 4 on Verizon, which customers can't wait to get their hands on."

The company sold 4.1 million Macintosh computers and 19.5 million iPods during the its fiscal first quarter, which ended Dec. 25. Mac sales were at an all-time high, but still a bit below analysts' expectations. On a conference call with analysts, that raised a question about whether the iPad was cannibalizing Mac sales.

"Yeah, I think there is some cannibalization, but there is also a halo effect," said Apple Chief Operating Officer Tim Cook, referring to the way sales of one Apple product can lead to sales of other Apple gizmos. "If this is cannibalization, it feels pretty good."

The company also noted that iPad sales will likely fall back somewhat in the current quarter, since the tablet proved to be a hot holiday purchase. The iPod follows a similar trend, with holiday-quarter sales typically doubling the average sales from the other three quarters.

Apple continues to add new revenue streams. The $4.4 billion in iPad sales during the quarter come from a product that didn't exist a year ago -- the tablet computer first went on sale in April. The company also expanded its chain of retail stores, which reached $1 billion in sales for the first time.

The news comes a day after Jobs temporarily stepped down from his job, taking his second medical leave of absence in two years, and his third since 2004.
0:00 /1:24Apple stock: The Jobs effect

In his stead, Cook will once again handle all day-to-day operations.

In the conference call following the financial results release, some analysts asked about Apple's business plan for the future -- especially if Jobs does not return to the company.

In response, Cook said the Apple team has "incredible depth of talent and a culture of innovation that Steve has driven, and excellence has become a habit."

He added: "We have incredible hope for the future of the company."

Apple usually provides a conservative outlook for the current quarter, but this time the company blew away analysts' forecasts. The company said it expects earnings of $4.90 per share on revenue of $22 billion this quarter, compared to Wall Street's expectation of $4.47 per share on $20.8 billion of sales.

Shares of Apple (AAPL, Fortune 500) rose more than 1% afterhours, after closing down 2% on Tuesday, in the first day of trading following Jobs' announcement.

No Big Blues for IBM as earnings top forecasts

Shares of International Business Machines rose 2.5% in after-hours trading Tuesday following a strong earnings report.

The tech giant said its profits for the fourth quarter rose 16% from last year to $4.18 per share. Net income for the quarter reached a record $5.3 billion, up 9% from the same period a year ago.

Analysts polled by Thomson Reuters expected earnings of $4.08 per share.

IBM (IBM, Fortune 500) also hit record revenue of $29.02 billion, up 7% over the year after adjusting for foreign exchange rates. In addition, IBM said that it expects to deliver full-year 2011 GAAP earnings per share of at least $12.56, and operating (non-GAAP) earnings per share of at least $13.

IBM, which is a component of the blue-chip Dow Jones industrial average, is the world's largest IT company in terms of sales. Wall Street looks to Big Blue's earnings as an indicator of how much businesses are spending on technology.
How the IT department can go from zeroes to heroes

The traditionally insulated tech sector has not been immune to the global recession, but experts have been looking for tech firms' earnings to start improving on rebounding demand from business customers.

IBM chief executive Samuel Palmisano recapped the company's decade in a prepared statement. He pointed out that Big Blue spent almost $60 billion in research and development, acquired 116 companies and paid out $100 billion in dividends to shareholders.

On a conference call, CFO Mark Loughridge said the company had its best quarter in a decade in terms of revenue.

"We continue to improve our mix of business," Loughridge said. "No one can deliver the complement of hardware, software and services that we can."
0:00 /1:52Supercomputer 1, Jeopardy champs 0

Growth markets boost results: IBM has benefited as corporate spending on information technology has remained healthy despite the sluggish economic recovery. It has also been helped by the weak dollar, which boosts profits for companies that do a large amount of business overseas.

Along those lines, IBM said its results were driven by robust performance in emerging markets such as Brazil, Russia, India and China. Revenues from the so-called BRIC countries jumped 19% in the fourth quarter.

Sales in the United States rose 9% from a year ago, and Asia-Pacific revenues jumped by 14%. By contrast, revenues from Europe, Africa and the Middle East fell 2%.

IBM reported gains across all of its business units.

Sales in its global services division were up 2% in the quarter, IBM said. Revenue from its software unit jumped 7%, while hardware sales soared 21%.

New contract signings in the company's services division rose 18% to $22.1 billion, IBM said. Contract signings are considered a barometer of future revenue growth.

JPMorgan admits military mortgage mistakes

JPMorgan Chase & Co. admits that it overcharged 4,000 members of the U.S. military on their mortgages and accidently foreclosed on 14 homes, mistakes that it is working to resolve.

JPMorgan (JPM, Fortune 500) said it is mailing $2 million in refunds to the overcharged military personnel. The bank also said it has resolved 13 of the accidental foreclosures and is working to resolve the last.

"We made mistakes here and we are fixing them," said the bank, in a prepared statement.

"We are deeply appreciative of those who fight to protect our country and Chase funds a number of programs that provide benefits to military personnel and veterans -- and while any customer mistake is regrettable, we fell particularly bad about the mistakes we made here," said the bank.

The New York-based bank reported on Jan. 14 that it made a profit of $4.8 billion, or $1.12 per share, in the latest quarter, beating Wall Street estimates.

Colonel Sanders: China's favorite importColonel Sanders: China's favorite import

Colonel Sanders is an iconic American brand image. The K in KFC is for Kentucky after all. So it may come as a surprise that KFC's parent company actually generates more sales from China than the United States.

Yum! Brands (YUM, Fortune 500), which owns KFC, Pizza Hut and Taco Bell, has been a phenomenal success in China.

With China's president Hu Jintao in America this week to meet with President Obama, as well as a bevy of U.S. business leaders, there is more attention on the world's most populous nation than there has been in quite some time.

And Yum may be a model for other large multinational U.S. firms that are attracted to the vast growth potential in China.

Yum's China sales hit $1.2 billion in the third quarter of 2010, up 20% from the same period a year ago. Meanwhile, Yum's sales in the U.S. totaled $970 million, down 8% from the third quarter of 2009. There is no denying that China is now the biggest reason to consider investing in Yum's stock.

"China and other international markets are going to continue to drive Yum's sales and profits, not the U.S.," said John Fox, manager of the FAM Value Fund in Cobleskill, N.Y.

Clearly, China is a market that the U.S. can't ignore even though there are a myriad of political, cultural and geographical challenges.

How has the company been able to do it? In an e-mailed response to my questions, Yum cited its "first mover advantage" as a key reason for its success. The company entered China in 1987 with KFC and introduced Pizza Hut in 1990.

Fox added that Yum wisely didn't try to transplant the exact look and feel of its U.S. restaurants to China.

"Their restaurants are different in China. They are more like casual dining and upscale than fast food. They've made the menu acceptable to locals," he said.

Yum pointed out, for example, that KFC restaurants in China also feature seafood and beef while Pizza Hut serves rice dishes. The company also has a 27% stake in Mongolian-style hot pot chain Little Sheep.

But what's most remarkable about the company's growth in China is that it is almost entirely due to KFC.

Yum had 3,664 restaurants in China as of the end of the third quarter. More than 3,000 of them (83%) were KFC stores while the remainder were Pizza Huts. Yum did open some Taco Bells in China in 2003 but they were closed by 2008.
Why China matters

The company didn't indicate if it planned to reintroduce Taco Bell in China, only saying that it intended to make Taco Bell its third global brand and noting that there were new restaurants opened in India and South Korea.

Even if Yum doesn't try to bring chalupas back to China, it would appear that it has a long way to go before it saturates the Chinese landscape with Pizza Huts. In Yum's other international markets, Pizza Hut makes up more than a third of the company's total stores.

Yum has signaled that more growth in China is on the menu. The company announced Tuesday that it planned to sell two smaller underperforming chains it owns -- seafood restaurant Long John Silver's and A&W Restaurants, a burger joint featuring Dr Pepper Snapple Group (DPS, Fortune 500)-owned A&W root beer.

In a statement about the sale, Yum said that it is "sharpening its long-term growth focus on building leading brands in every significant category in China."
0:00 /2:09China's path to powerhouse

The company added that it expects profits from China and other international markets to reach 75% of total earnings by 2015, up from about 65% in the first nine months of 2010.

That would be an astonishing feat. Yum rival McDonald's (MCD, Fortune 500) currently generates 56% of its profits from overseas markets.

And China is still such a negligible part of Mickey D's total sales that it gets lumped into the Asia/Pacific, Middle East and Africa category for reporting purposes.

But McDonald's is also recognizing China's allure. The company made waves last year by becoming the first U.S. firm to sell yuan bonds in Hong Kong. That move was later followed by construction equipment giant Caterpillar (CAT, Fortune 500).

Yum would not say if the company planned any debt sales of its own in China.

Still, is it possible that Yum, by focusing on China so heavily, could wind up being overexposed to that market -- especially if trade and currency tensions boil over between the U.S. and China?

That seems like a stretch. Peter Wood, a co-manager for the Chase Growth Fund (CHASX) in Charlottesville, Va., which owns the stock, said that it's highly unlikely there would be a consumer or government backlash to Yum.

"I really don't think there would be an impact from whatever happens between China and the U.S. regarding the yuan," Wood said. "Yum has done such a great job of becoming part of Chinese consumers' daily lives."

-- The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks

Meet the newest GoDaddy Girl

GoDaddy.com has added work-out taskmaster Jillian Michaels to its roster of "GoDaddy Girls."

Michaels will appear in two GoDaddy commercials during this year's Super Bowl broadcast on Feb. 6. She will be co-starring with race car driver Danica Patrick, who's been the face of the Web domain registrar for years. They'll be wearing superhero costumes in at least one of the 30-second spots.

A personal trainer and martial artist, Michaels is best known as the hard-driving fitness overseer on NBC's "The Biggest Loser" -- a television show where obese people, weighing as much as 510 pounds, compete to lose the most weight.

But she's also a one-woman corporation. Michaels has produced popular workout videos, like "30-Day Shred" and "Yoga Meltdown;" and authored best-selling books, like "Master Your Metabolism." She also has her own Wii game, called "Fitness Ultimatum."
Check out last year's Super Bowl ads

Michaels is one of the highest profile individuals to appear in GoDaddy.com's ads, which have acquired a reputation for their risqué nature. The company's commercials often feature scantily clad women and off-color jokes.

Some of the ads have been rejected prior to their Super Bowl screenings -- including a commercial that used a crude reference for female genitalia, and another depicting a gay man named Lola.

The newest GoDaddy addition didn't immediately respond to questions from CNNMoney as to whether the company's image would clash with her own image of self-empowerment. But her prepared statement showed no sign of a conflict.
0:00 /0:30'An offer they can't refuse'

"It doesn't get much bigger than being in a Super Bowl commercial," Michaels said. "I think shooting a spot with Danica Patrick is going to be a blast."

Bob Parsons, the chief executive and founder of GoDaddy.com, announced on Twitter in September that Michaels would be joining the girls of GoDaddy.

"I am stoked about Jillian being a GoDaddy Girl," Parsons said. "She's smoking hot -- she's also edgy and smart."

Fox Television is broadcasting the game this year for the sixth time.

Noble's cause: Can an independent manage Israel's Leviathan?

Crude is still the Holy Grail for energy companies exploring new places to drill. But while oil may be the most profitable form of energy, there's a growing market for natural gas, which is turning up in unexpected places.

The latest big find happened in Middle East when an independent gas exploration and production company called Noble Corporation (NE) struck gold, in the form of gas, off the Israeli coast in the Mediterranean Sea. The play, called Leviathan, is in the Levant Basin Province, which is an area that the majors passed over because no one thought anything valuable was there.

But Noble found a reservoir that could produce 16 trillion cubic feet of gas--the world's largest deepwater gas discovery in the past decade. Now, the company must figure out the best way to develop it.

A supermajor might feel more comfortable in a play this size, says Robert Attai, a partner who specializes in energy deals at the law firm Husch Blackwell. "When you're an independent you say 'great, what the hell do I do with this thing?' It's like the dog that caught the car it was chasing."

A smaller company such as Noble will have to face numerous obstacles without the kind of financial clout or experience of bigger companies. "[Leviathan] is the biggest find in their history," says Phillip Weiss, a senior energy analyst with Argus Research Group, who says that the gas coming out of the Leviathan could mean a 15-20% increase in Noble's entire production level. "That's huge. Relative to what would happened if an Exxon (XOM, Fortune 500) or a Chevron (CVX, Fortune 500) or a Shell (RDS) found it, it's much more meaningful."

The play is so big, in fact, that someone is going to profit from it, and Noble will most likely do well from the find. It has a strong balance sheet, and other good energy assets. But the Leviathan situation will be challenging for Noble for several reasons.

For example, Noble would have to liquefy the natural gas it drills at Leviathan in order to transport it to other countries. The biggest liquefied natural gas operations in the Middle East are in Qatar, which ExxonMobil developed over a ten-year period. In that time, Qatar went from having no hydrocarbon exports to being the leading liquefied natural gas exporter in the globe.

But there's a difference between these two finds. One of which is simply the size of the developer. Noble is a big independent--its market cap is about $15 billion. But it's nothing close to Exxon, with a market cap of almost $400 billion, experience with big projects that finish on time and the cash to fund parts of the project like, for example, the pipeline infrastructure to export natural gas from the country where its being drilled.

Noble's find won't work that way for several reasons. First, the company is on a tighter schedule than a major. Noble doesn't have the same cushion in the form of a diverse range of energy assets. It's going to have to time its project pipeline so that other plays produce right when it would need to spend a chunk of capital in Israel.

For example, Noble will probably have to fund some portion of a liquefied natural gas facility. If it didn't, it would have to use the gas from Leviathan for local energy in Israel. But Israel can already access enough gas to fulfill its natural gas needs in the short term due to the company's 2009 find in the Tamar gas field. Tamar, which is in the same basin as Leviathan, holds over 8 trillion cubic feet of gas and is set to come on line in 2012.

Instead, the gas would need to be exported, most likely to European and Asian markets, where there's demand, according to Platts, which reported that global demand for liquefied natural gas will actually outstrip supply as early as 2011, thanks to increased need in markets in Asia, South America and Europe.

Once the facility is built, getting the gas out of the country will be challenging. "The area is technically in a war zone," says Attai. That makes it difficult to lay down pipeline to transport the gas. "Every country around Israel would like to see it no longer exist, so there's not a whole logistical support from neighboring countries."

The Leviathan play actually straddles the maritime border between Israel and Lebanon-the two companies have a long history of political tension. Any company that would develop a resource such as Leviathan would have to risk foregoing other energy plays in the area, which Noble must have known before accessing the play.

Finally, this particular situation is different because Noble only has a 40% stake in Leviathan. Part of the rest is owned by Delek Drilling, which has ties to the Israeli government. The Israeli government is going to try to maximize profit from the play any way that it can. Already, the government is planning on jacking up the tax on exported oil and gas.

None of these issues will likely come to a head in the next year. For now, Noble is still surveying the project. It also has promising assets in West Africa that are set to produce in 5-7 years, which is about the time that anything out of Leviathan would start to require an influx of cash.

So Noble is good for now, sitting on the latest, major find that the company will probably cash in on in some capacity. But soon, Noble will likely have to navigate a series of partnerships to pull the most profit that Leviathan can offer. Worst case scenario, a change in risk or an unexpected hole in Noble's pipeline could mean it would sell its stake before there's a massive profit margin on anything coming out of Leviathan.

The company's main strength is its innovative approach to exploring somewhat riskier plays. But when the exploration phase is over, it's unclear who will ultimately reap the benefit of the find.

EBay stock pops 5% on strong sales

ohn Donahoe took the helm at eBay at the start of 2008, just as the company unveiled a slew of changes to the decade-old online marketplace. A major revamp of eBay's fee structure and feedback policy was meant to shore up market share, but veteran sellers were furious and threatened revolt.

The company has clawed its way back up since those torrid times. On Wednesday, the San Jose, Calif., e-commerce giant reported quarterly results that beat Wall Street expectations and raised its outlook for the year.

PayPal and mobile especially helped the company during last quarter's holiday season.

EBay said its fourth-quarter revenue rose 5% over the prior year, to $2.5 billion. Net income rose to 42 cents a share, or $559.2 million. EBay (EBAY, Fortune 500) shares rose 5% in after-hours trading.

PayPal and mobile payments shine: Online payment service PayPal ended the fourth quarter with 94.4 million active registered accounts and is adding about 1 million active accounts per month.

PayPal's "net total payment volume" was $26.9 billion last quarter. The biggest growth came in mobile: For the full year, the volume of PayPal mobile payments increased to a whopping five times 2009's total.

Those figures weren't broken out, but eBay said its "portfolio of mobile applications" were popular with holiday shoppers. The company's overall mobile gross merchandise volume -- the total of stuff it sold to those shopping on their smartphones and other gadgets -- was almost $2 billion for the full year.

Europe was another bright spot, Donahoe noted in a conference call with analysts. But he's not as pleased with domestic figures.

"We're on a good trajectory, but I'm not totally satisfied with where we are in the U.S.," Donahoe said on the call.

Who's selling and for how much: The number of active eBay users rose 5% over the year to 94.5 million.

Another widely watched metric is eBay's gross merchandise volume (GMV), which is the total value of items auctioned. Excluding vehicles, GMV for the fourth quarter was $15 billion.

EBay has come a long way from 2008. The company's stock took a dive in the first months of Donahoe's tenure, as the site's core sellers spearheaded protests, including a week-long boycott -- and many jumped ship, moving their online storefronts to other sites like Amazon (AMZN, Fortune 500).

The fee changes reduced some upfront costs but raised the commission eBay takes on completed sales. That hike was painful for small businesses that depend on meager profit margins.

Even more incendiary, though, was the site's decision to block sellers from leaving negative feedback about buyers. EBay's feedback system had been a two-way street, which helped the site differentiate itself from early competitors. Sellers were not happy to be silenced.

That lingering bitterness turned eBay from a site with a strong user community into a more generic sales platform.

But the changes did eventually pay off on the bottom line. For 2010, eBay's full-year revenue hit a record $9.2 billion -- up 21% from the $7.7 billion it had in 2007.

Soccer officials openly discussed changing the dates of the 2022 World Cup to avoid the summer heat in Qatar in the weeks before voting, a FIFA executive committee member said.

Qatar beat the US, Australia, Japan and South Korea to win rights to the event, which is usually held in June and July, summer in Europe and North America.

While none of the bidders proposed changing the dates, FIFA President Sepp Blatter said he expects a switch to winter. The temperature in Qatar rarely falls below 37 degrees Celsius (98.6 degrees Fahrenheit) in June and July, raising questions about players’ health.

“There were comments like that some weeks before the decision,” said Chuck Blazer, a US official on the executive body, referring to talks about bringing the event forward. “Otherwise I really couldn’t understand how they voted for football in that level of temperatures, because I knew them well enough, and their support for their own teams, so it seemed illogical.”

FIFA says ‘no concrete plans’ to shift 2022 World Cup to winter

FIFA has “no concrete plans” to move the 2022 World Cup in Qatar from the summer to winter, soccer’s governing body said in an emailed statement on Thursday.

Any potential move “would have to be initiated by the football association of Qatar and would have to be presented to the FIFA Executive Committee,” the governing body said.

There’s been speculation about a switch to winter because of concern over possible risks to players’ health. Temperatures in Qatar rarely fall below 37C in June and July.

In December and January, the temperature drops to an average of 23C.

Qatar last month beat the US, Australia, Japan and South Korea to win rights to the event, which is usually held in June and July, summer in Europe and North America.

While FIFA President Sepp Blatter has said he expects a switch to winter, Qatar has said it won’t deviate from its plans to air-cool stadiums and stage the tournament in the summer.

Soccer officials openly discussed changing the dates of the World Cup in the weeks before the December 2 vote, FIFA executive committee member Chuck Blazer said last week.

A switch to winter would disrupt the European soccer season, which traditionally runs from August to May, and has been opposed by coaches including Arsenal’s Arsene Wenger. A winter World Cup, the first in the competition’s history to be played outside June and July, would require a mid-season break of about 60 days and necessitate changes to the 2020-21 and 2022-23 club schedules.

Also in December, the FIFA committee awarded the 2018 World Cup to Russia.

Your mobile phone is becoming your wallet

Welcome to the dawn of mobile currency.

For years, tech companies have demoed flashy prototypes of systems that let customers use their mobile phones in place of cash or credit cards. This year, those systems are heading out of the labs and into the real world.

The result: A gold rush on the next e-commerce frontier.

"There's a lot of money at stake if it's done right," says Omar Green, director of strategic mobile initiatives at Intuit (INTU).

Starting Wednesday at Starbucks (SBUX, Fortune 500) stores throughout the U.S., the cashier can now scan your phone to deduct payment for your latté from the balance on your pre-loaded Starbucks card. Splitting the dinner bill with a friend? Download Bump, and you can beam over the cash from your PayPal account.

Those transactions are small slivers of a global mobile payments market analysts estimate at $69 billion in 2009, the latest year for which data is available, according to research firm Generator Research.

But by 2014, it expects mobile payments to reach $633 billion annually, with 490 million customers using their phones to move cash around.

The battlefield: The mobile payments space right now is a primordial soup. Both new and entrenched players are battling about fundamental aspects of how the market will work.

Issue number one: How many middlemen will there be?

PayPal created an empire for itself by making it easy for consumers to send money online to friends and merchants. Rivals like Google Checkout and Revolution Money never gained much traction.

The company is determined to extend its dominion. "We are already the leader in mobile payments," says Laura Chambers, senior director of PayPal Mobile. "We're going to continue to innovate, and we're getting very aggressive about mobile payments in the next two years."

PayPal, a unit of eBay (EBAY, Fortune 500), processed $700 million in mobile payments in 2010, according to Chambers. While that's a small fraction of the more than $70 billion a year PayPal handles, it's an increase of almost 500% increase over the prior year's $141 million mobile total. PayPal's platform is an easy one for developers to build on top of, and the company has been actively striking integration deals.

But PayPal sits in the commerce market's shaky middle ground. It doesn't control the financial network payments run through -- that's in the hands of companies like Visa (V, Fortune 500) and MasterCard (MA, Fortune 500) -- and it doesn't control the devices consumers use, or the data networks their transactions happen on.

The companies that do control those things are determined to get their piece of the action.

Three of the nation's biggest wireless carriers -- Verizon Wireless, AT&T (T, Fortune 500) and T-Mobile -- teamed up in November to create Isis, a new mobile commerce network the carriers hope to have up and running within 18 months. Working around the Visa/MasterCard duopoly, they picked Discover Financial Services (DFS, Fortune 500) as their financial services partner.

Banking giants Visa, Bank of America, JPMorgan Chase, and Wells Fargo have also been testing technologies that would transform a smartphone into a wallet.

What happens next: The looming game-changer in mobile payments is a technology called "Near Field Communication" (NFC), which swaps data over very short distances.

Put a NFC chip -- for example, one built into in your smartphone -- near an NFC reader and you don't need to awkwardly scan a bar code on your phone or send a text message to transfer money.

Key mobile players are on board. Just months ago, Google CEO Eric Schmidt said that the next version of Google's Android would include tap-and-pay functionality and "could replace credit cards." Apple recently hired an NFC product-development veteran to lead its mobile commerce efforts.

"The lifecycle of a phone is fast: 18 months. If some of the big players -- like Apple, RIM, Google and Motorola -- all get going with NFC, it could be a standard within two years," says VeriFone CEO Doug Bergeron.
5 ways to pay with your phone right now

Developers are currently kludging together workarounds. Startups like Blaze Mobile and Bling Nation are pushing stickers with embedded NFC chips. Slap one on your phone, and you can use it to pay at participating merchants that have installed compatible NFC readers.

That's where VeriFone (PAY) comes in. The 30-year-old company makes point-of-sale systems that are used by millions of U.S. merchants. VeriFone is experimenting with the pay-by-phone market, striking partnerships with many of the field's pioneers, including PayPal and Bling Nation.

"We're going to play the role of Switzerland," Bergeron says. "The more the merrier in our view."

The scramble: In a year or two, NFC technology will be more widespread. Isis will be closer to launching. The battle lines will harden.

But for the moment, it's anyone's game.

"There's no cut and dry 'this is how to do it' approach," says Nick Holland, a Yankee Group senior analyst. "In the U.S., it's going to be the Wild West, since anyone can play in this space."

Quick-moving startups are charging in. Last week, investors poured $27.5 million into Square, a venture launched in 2009 by Twitter cofounder Jack Dorsey. Square lets mobile merchants accept credit-card payments on their phones.
0:00 /2:33Twitter founder plugs in payments

Venmo is another startup the tech world is buzzing about. It allows users to text each other money -- and just like PayPal did a decade ago, it's actively cultivating a developer ecosystem of apps built on top of its platform.

Venmo raised about $1 million in seed funding last year and is currently in beta testing, with plans to officially launch by mid-2011. (CNNMoney readers can sign up and try it out by following this link.)

"There's a lot of time for these smaller players to make some noise," Intuit's Green says of the scrum.

Holland predicts there will be much noise before clear winners emerge: "There's going to be quite a lot of fragmentation."

We're still in the early days, and it'll be years before smartphones are ready to completely wipe out cash and credit cards.

But don't be surprised if sometime this year, you find yourself handing over your iPhone to pay for a Frappuccino.

Google's hottest holiday searches

http://1.1.1.5/bmi/i2.cdn.turner.com/money/galleries/2010/news/companies/1012/gallery.top_holiday_searches_on_google/images/lalaloopsy_dolls.jpg

$1 billion: Blizzard's cost to retailers

Retailers may have lost $1 billion of crucial post-Christmas sales because of the blizzard that struck over the holiday weekend, according to a report Wednesday.

ShopperTrak, which records sales and customer traffic at more than 70,000 stores and malls, estimates that shopper traffic on Dec. 26 was 11.2% below what it would have been if the blizzard hadn't hit.

The 2010 blizzard throughout the Northeast halted nearly all retail visits and spending during a period that is fairly crucial for retailers," ShopperTrak founder Bill Martin, said in the report.

Specifically, shopping traffic in the Northeast fell 6.1% on Sunday.

Monday was particularly brutal. Many potential shoppers were snowbound or digging out from the storm.

ShopperTrak estimates that stores nationwide saw 13.9% lower traffic than the average level expected had the blizzard not hit.

In the Northeast, which was crushed by 20-plus inches of snow, traffic fell 42.9% on Dec. 27 compared to a year ago.
0:00 /2:20The blizzard blame game

Given that retail sales estimates for Dec. 26 and 27 combined are about $10 billion, the firm assumed a 10% sales impact nationally from the blizzard.

That means about $1 billion of retail spending was postponed during that two-day period.

"And at this point the prospect of momentarily pausing a potential $1 billion in sales has the collective industry holding its breath," Martin said.

"While we do think there will be some retail strength later this week as folks begin to dig out, it will be interesting to see if levels recover in time to boost December sales and the overall holiday shopping season," Martin said.

Christmas week sales drop: Although the Nov. - Dec. season was surprisingly strong, the firm said the blizzard capped off what was already looking like a somewhat disappointing week-before-Christmas for sellers.

ShopperTrak's National Retail Sales Estimate for Christmas week sales at general merchandise, apparel, furniture and other stores showed a 4.1% drop versus the same period last year.

Martin attributed the dip to a "calendar shift" which placed Dec. 26 on a Sunday this year as opposed to a Saturday last year. As a result, sales on Dec. 26 could not be counted in the Christmas week tally, Martin said.

The day after Christmas typically counts among the top six busiest sales days of the year for merchants, said Marshal Cohen, chief retail analyst with NPD Group.

Cohen estimates that retailers will lose about 0.5% of total holiday sales from the loss of the post-Christmas shopping day.

"The loss of post-Christmas weekend is brutal. This weekend was shortened already. Saturday was Christmas and then Sunday was lost in the East and much of the Midwest to a snowstorm," he said.

"The weather has interfered with business and traffic at some of our shopping centers on the East Coast," Karen MacDonald, spokeswoman for Taubman Centers, said late Sunday.

Taubman (TCO) owns 26 shopping centers across the United States, including the Stamford Town Center in Stamford, Conn., and the Woodfield Mall in Schaumburg, Ill.

MacDonald said shopping traffic at the Stamford Town Center on Sunday was lighter than the same time last year, largely due to the snowstorm. She said those who braved the storm picked up clothing and deeply-discounted holiday merchandise, with about 5% to 10% of purchases made with gift cards.

Cohen isn't sure that retailers will be able to regain all of the sales momentum that they've enjoyed during this year's holiday shopping season.

The gift-buying months of November and December together are critical to merchants because combined sales during the two months can account for as much as 50% of their revenue and profit for the entire year.

After a two-year slump, holiday sales revved up this year, marked by robust sales on Black Friday. Consequently, the National Retail Federation (NRF), which initially had forecast a 2.3% gain in 2010 holiday sales, bumped up its holiday sales forecast to a 3.3% increase earlier this month after retailers reported much stronger store sales for November.

So can retailers recover from this one setback this season? "Sure," said Cohen, "But it will take two to three weeks longer because retailers have lost the momentum they gained."

And while the storm froze traffic at stores, e-tailers may have seen a boost even beyond the record-setting days seen earlier in the season. Online sales numbers for the Christmas week through Sunday are expected later on Wednesday.

The payouts to 311 shoppers who bought jewelry at his Perry's Emporium store in Wilmington, N.C., between Thanksgiving week and Dec. 11 could total more than $400,000. That's quite a sum, but Perry's not hanging his head. He had purchased a $10,000 insurance policy that will cover all the costs. Plus, it was a marketing win. "My sales jumped 34% [in that period] versus last year after I ran the snow promotion," said Perry, who owns and operates the 7,500 square-foot jewelry store in Wilmington. Why did he choose Asheville? "It rarely ever snows in December there," he said. "This promotion absolutely paid off," Perry said. "I've been everywhere talking about it. I've been on 'Good Morning America', Fox News, you guys." Perry is so happy with the result that he's already working on next year's snow promotion. "But I'm going to feature a different city, maybe Wilmington, Delaware," he said. Small pain, large gain: Perry bought a weather-based insurance policy from his longstanding insurer Global Weather Insurance. The "snow policy" that he bought is a type of sales promotion that's recently become popular with merchants, explained Patricia Sleicher, Perry's insurance agent. Since it snowed 6 inches, the insurer -- not Perry -- will pay out the the $400,000 to customers. Perry said checks to the winning customers will go out beginning in February. Sleicher said the $10,000 snow policy was a winning proposition not only for Perry and his customers but for her company, too. "It was great publicity for him and for us," she said. Catching on: Sleicher said other merchants are jumping on the weather policy contest bandwagon as sellers look for inventive ways to rev up sales in a slow economy. "We sell several of these policies nationwide," she said. Some are pegged to snow, others to rain, temperatures and even to wind. The snow policy cost Perry 2.2% of total sales, and they typically range between 1.5% and 5.5%. They policies are especially popular with jewelry and electronics sellers and with car dealers, said Sleicher, who named RadioShack (RSH, Fortune 500) as one of her clients. "We have a jeweler in California who runs a weather-based promotion four times a year, before Christmas, Memorial Day, Fourth of July and Labor day," she said. "He pegs it to rain and temperature levels." Perry has also run a rain-day promotion for the past six years in Wilmington, N.C., promising to refund the cost of an engagement ring if it rains above a certain amount on a customer's wedding day. "I am known as the rain-day diamond jeweler around here," he said. So what was the most expensive -- and now free -- jewelry item bought at his store during the snow promotion? "It was a $12,000 engagement ring," Perry said. "The lady was in the store yesterday to have it resized. She said they'll use the money toward paying for the wedding.

A few brave souls from New York City's tech crowd ventured into blizzard-covered streets Monday for venture capitalist Charlie O'Donnell's second annual tech snowball fight.

O'Donnell, a principal with First Round Capital, organized the fight on Twitter, recruiting participants with the hash tag #techsnowball. He also advertised the battle through his weekly tech newsletter. Typically jam-packed with events, this week the newsletter featured just one: "INNOVATION COMMUNITY SNOWBALL FIGHT!"

As shop owners salted their sidewalks and residents tried to free their cars from beneath mountains of snow, techies gathered at Madison Square Park to network in freezing temperatures.

Although the extreme weather conditions -- and city-wide subway shutdowns --kept turnout down, fears of frostbite didn't deter a few dozen revelers from showing up for snowball-assisted networking.

Nick Ganju, CTO and founder of ZocDoc, a three-year-old startup that helps patients book doctor appointments online, came with a business agenda.

"I came here specifically to hire people," Ganju said in between snowball tosses.

Ganju's startup, which recently closed a $15 million funding round led by Founders Fund, handed out cards reading "ZocDoc is hiring Rockstar devs!"

"You got to hustle," said Alex Taub, a business developer at Aviary, which offers free photo-editing and other Web creations tools.

Other attendees included a team from startup Hashable, an online tool that helps users track their relationships; and Gregory Galant, founder of Muckrack, a startup that collects tweets from journalists.

Most snowball fighters who attended didn't travel far -- a good thing, given the chilly weather and tough travel conditions.

The downtown Manhattan area is jam-packed with startups and investors.

"I would say half the startups in New York are in a six-block radius of this park," said organizer O'Donnell, who picked the spot for its tech proximity. "I like feeling attached to the neighborhood."

And for startups trying to make a name for themselves in an increasingly crowded space, any visibility helps. Paramendra Bhagat, CEO of a fledgling venture called Koya, said that any chance to schmooze is worth grabbing.

"When you're part of a small startup, it's important to feel something big," he said. "This is where a lot of bonding happens."

And as is often the case in the tech world -- where work and play constantly overlap -- a social outing could lead to a new job.

"I found a couple people here that seem like solid candidates," ZocDoc's Ganju said of his hunt for software engineers among the snowball fighters.

Six inches of snow = Free diamond rings

Alan Perry promised customers that if it snowed more than three inches in Asheville, N.C., in December, their holiday jewelry purchases would be free. Guess what? It snowed six inches!

What does this mean for Perry?

The payouts to 311 shoppers who bought jewelry at his Perry's Emporium store in Wilmington, N.C., between Thanksgiving week and Dec. 11 could total more than $400,000.

That's quite a sum, but Perry's not hanging his head.

He had purchased a $10,000 insurance policy that will cover all the costs.

Plus, it was a marketing win. "My sales jumped 34% [in that period] versus last year after I ran the snow promotion," said Perry, who owns and operates the 7,500 square-foot jewelry store in Wilmington.

Why did he choose Asheville? "It rarely ever snows in December there," he said.

"This promotion absolutely paid off," Perry said. "I've been everywhere talking about it. I've been on 'Good Morning America', Fox News, you guys."

Perry is so happy with the result that he's already working on next year's snow promotion. "But I'm going to feature a different city, maybe Wilmington, Delaware," he said.

Small pain, large gain: Perry bought a weather-based insurance policy from his longstanding insurer Global Weather Insurance.

The "snow policy" that he bought is a type of sales promotion that's recently become popular with merchants, explained Patricia Sleicher, Perry's insurance agent.

Since it snowed 6 inches, the insurer -- not Perry -- will pay out the the $400,000 to customers.

Perry said checks to the winning customers will go out beginning in February.

Sleicher said the $10,000 snow policy was a winning proposition not only for Perry and his customers but for her company, too. "It was great publicity for him and for us," she said.

Catching on: Sleicher said other merchants are jumping on the weather policy contest bandwagon as sellers look for inventive ways to rev up sales in a slow economy.

"We sell several of these policies nationwide," she said. Some are pegged to snow, others to rain, temperatures and even to wind.

The snow policy cost Perry 2.2% of total sales, and they typically range between 1.5% and 5.5%.

They policies are especially popular with jewelry and electronics sellers and with car dealers, said Sleicher, who named RadioShack (RSH, Fortune 500) as one of her clients.

"We have a jeweler in California who runs a weather-based promotion four times a year, before Christmas, Memorial Day, Fourth of July and Labor day," she said. "He pegs it to rain and temperature levels."

Perry has also run a rain-day promotion for the past six years in Wilmington, N.C., promising to refund the cost of an engagement ring if it rains above a certain amount on a customer's wedding day.

"I am known as the rain-day diamond jeweler around here," he said.

So what was the most expensive -- and now free -- jewelry item bought at his store during the snow promotion?

"It was a $12,000 engagement ring," Perry said. "The lady was in the store yesterday to have it resized. She said they'll use the money toward paying for the wedding.

What I learned in selling my company for $100 million

Charlie Crystle is a serial entrepreneur currently working on a search startup. A version of this essay first appeared in A VC.

My software company ChiliSoft sold for $100 million in 2000. Or $70 million. Or $28 million.

It depends on the date you choose, the built-in triggers, and ego. Notably, from December 1999 to May 2000, my stake dropped from 40% to 15% when the deal closed. Most employee stakes dropped as well -- but not all employees.

My point at the end of this story will be something like this: sweat the details.

Some context: I started ChiliSoft in 1996 in Lancaster, Pa. I had no money, and Dad had passed away just days before. It was a tough time, but I saw this huge opportunity for adding functionality to Web servers, so I took the deep plunge.

I tried raising money nearby, but in those days there wasn't a firm in Pennsylvania that really got the space, so I headed to the West Coast with a credit card, deeply believing in our mission to take over the world. Tip: Try to take over the world.

To save money, I slept on my attorney Ben's floor as I bounced around Silicon Valley trying to get meetings and raise money. Ben finally got me a meeting with Draper Fisher Jurvetson, one of the leading venture-capital firms in the field, and a few months later they produced a term sheet. Tip: Floors are cheaper than hotel rooms.

I signed the term sheet for $1.4 million at 11 p.m. on a Sunday night at a bar in a casino in Las Vegas -- completely emblematic, it seemed. But I was out of debt. DFJ saved my life, in a way. Tip: Try not to run up debt -- it's unlikely you'll be saved by Series A.

The second financing round, Series B, was nuts -- $3.7 million on $19 million pre-money valuation, and a cap on the liquidation preference. That meant if we sold for more than $42 million, those who invested in the Series B round simply got their share back -- and everyone would be thrilled. Tip: Don't create the wrong incentives.

Over the next year and a half, we fired the CEO, and I ended up taking the CEO job back. I wasn't a popular guy with investors for that, but my gut (informed intuition) said that we needed to cut the bullshit and sell software. I figured they'll like us when we win. Tip: They'll like you when you win.

The chill set in, so I focused the company on sales, and kept sending reports to the board. We increased revenue in that next quarter by three times the prior one, and things thawed. Tip: Communication matters with investor relationships.

I started a CEO search; I really didn't want to run the company, but also didn't want to see someone run it into the ground. A few months later, we had our guy. Tip: Run the company, get help with ops.

At the same time, we were lower on cash than was comfortable, and I had the choice of cutting from 55 people to 9, or bringing on the CEO and making sure he had cash in the bank. DFJ and another firm offered an onerous bridge: monthly escalating warrants, and a controlling board seat. I didn't really grok the meaning of the warrants. Tip: Sweat the details.

I didn't want to send people home and our pipeline was strong, so I chose to keep the ride rolling and go with it. Everyone was surprised when I wasn't fired right away, but there I was, still employed.
The Prospect

That fall a great sales/biz dev guy, Brian Pavicic, asked me to attend a conference with him. He was incredibly excited about a potentially big licensing deal with Cobalt Networks, which made Linux servers for ISPs. ChiliSoft had a number of large ISP partners, like PSI and ATT, and that kind of distribution at the time was a big win.

Somewhere in the conversations the talk turned to a merger -- Cobalt saw our application server as a strategic edge, and admired our traction with major customers like Excite.

And that's where it gets murky for me; I had been focused on launching a suite of small business apps on top of ChiliSoft, and the talks went on without me.

A month later I got a voicemail from Ben: "Just make it easy, accept the severance, you'll make a lot of money in the sale ..."

I sat down in the CEO's office, acted like I didn't know anything, and talked about how excited I was about the company, and how he was doing so well, and... he could have at least had the balls to tell me himself. Tip: You won't always be indispensable.

I imagine they wanted me out because I was dogmatic about the direction of the company. I wanted to make the engine free and sell apps into it, like the CRM system I was building. They wanted to get the company sold and get liquid. Besides, CRM wasn't going to be big or anything.

But I was difficult, admittedly.

So I left, a bit bitter and burned out, and spent a few weeks more in Seattle to take in the WTO riots and plan my trip home. Tip: Stay away from riots after getting fired from your startup.

Fast forward to the deal.
The Deal

The deal was struck at $100 million in January 2000.

But the VCs insisted on fixing the number of shares, not the value of the deal. A month later, they looked like geniuses: the deal was worth $135 million. The next month, it fell to $70 million. It closed in May at $28 million, 72% down from the deal price. Tip: Fix the price, not the stock.

The management team threatened to quit if they didn't get an additional 10% of the deal.

From my perspective, they already had better than average stock option allocations, and I didn't believe they would walk. But at that point I basically decided to stop paying attention to the details and just get it done, after a threatening call from the Cobalt CFO. Fun stuff.
The Drop

So how did my stock drop by 62% in 6 months? Three things: escalating warrants, management shakedown, and the timing of one of the dips in Cobalt's wild ride in 2000.

The deal closed at $28 million -- below the $42 million threshold, which triggered more magic. The management shakedown took another 10%. Tip, again: sweat the details.

And the escalating warrants? Let's just say it made DFJ very happy. They made (I think) more than 15 times their original investment, with a big boost coming from the bridge deal. Overall I owe a lot to those guys -- learned a lot, made a lot, and don't regret much of it. Tip: You don't have to accept a bad deal -- at least try to negotiate.

Some final tips: Run your company--you'll figure it out. Get good advisors, but follow your gut. Don't touch anything with escalating warrants. Be generous with employee options and make them meaningful.

And once you close your acquisition and get your stake? Don't let it ride, especially in a bubble.

I did. Then Sun bought Cobalt and the stock dropped 97% in value. I sold enough stock to invest in a few startups and support some great nonprofits, but it was a huge, huge hit. Founders love to take risks, but we're notorious for taking stupid risks with our own money.

My Next Big Thing? Something new around search. I'm raising capital and building a team, and would love to hear your thoughts on it.

Goldman Sachs's gift to 10,000 small businesses

FORTUNE -- In late 2009, just as Goldman Sachs was being widely slammed for showering billions in bonuses on its employees after receiving a massive federal bailout during the financial crisis, the investment bank announced -- coincidentally or not -- that it was committing $500 million over five years to help small businesses in distressed urban and rural communities across America. Called "10,000 Small Businesses," the program would combine practical business training with loans delivered through community lending institutions. Goldman assembled a distinguished advisory board led by Berkshire Hathaway (BRKA, Fortune 500) chairman Warren Buffett, the bank's biggest investor, and Harvard Business School professor Michael Porter, who is well-known for his research on inner city entrepreneurship. The program then dropped out of the news.

One year later, Goldman's gift is yielding modest but tangible results. So far, more than 100 business owners in New York City and Los Angeles have completed a 20-week course that covers accounting, marketing, negotiation, and similar topics (participants take a full day of classes every other Saturday, applying each week's lessons to their businesses). Nearly 50 small businesses nationwide have been approved for loans financed by Goldman and administered by mainly nonprofit community lenders (because it isn't a small-business lender, Goldman relies on local institutions to administer the loans). So far, Goldman has spent about $60 million on the program.

The program is competitive -- nearly 400 people applied for spots last year -- and not for dreamers. To be eligible, applicants must run companies with at least four full-time employees, have been in business for at least two years, and have revenues from $150,000 to $4 million. (Email here for more information.)

So what's in it for Goldman Sachs (GS, Fortune 500), apart from the obvious PR dividend? It's tempting to be cynical about the motives of a bank that made out during the meltdown. For their part, Goldman officials acknowledge only the most diffuse self-interest in launching 10,000 Small Businesses.

"The program and our business are well aligned," says Dina Habib Powell, 37, a former assistant secretary of state in the Bush administration who now runs the Goldman Sachs Foundation. "In both, we are obviously focused on economic growth. And small businesses are one of the smartest investments to drive growth in communities in the U.S."

The logic behind the program is simple: It makes sense to invest in small-business education because small businesses employ half of all private sector workers in this country and have generated 65% of all net new jobs over the past 17 years, according to the Small Business Administration. "We're looking for businesses that can scale," says Porter, whose nonprofit Initiative for a Competitive Inner City is responsible for selecting entrepreneurs to join the program. "All the data show that's where the real job creation happens."
4 Goldman graduates

One such job creator is Daniel Levy of Manhattan Home Design, who completed the first 10,000 Small Businesses course at LaGuardia Community College in Queens, N.Y. A classic serial entrepreneur, Levy started out raising tropical fish in his bedroom and selling them to schoolmates in Buenos Aires when he was 7 years old. Now 36, Levy launched Manhattan Home Design, an online retailer that specializes in contemporary furniture, four years ago with $500 in startup capital. Today he represents about 40 furniture brands and also manufactures his own furniture in China. Levy's products are sold on some 30 partner sites, including eBay (EBAY, Fortune 500) and Amazon (AMZN, Fortune 500). Manhattan Home Design has six employees and grossed nearly $500,000 last year.

"It was a small-business owner's dream," Levy says of the program. Especially useful: teaching him how to navigate New York City's procurement bureaucracy, which helped him land a $200,000 contract to provide bistro tables and chairs for a new city public-space project.

Entrepreneurs need solid negotiating chops, and graduates of the program praise this aspect in particular. Buffett himself calls it a key element. "I learned to negotiate by watching my dad when I was 7 or 8 years old, but not everyone gets that exposure," he says. "Members of this program have gotten better deals as a result of their training."

William Sanchez can vouch for that. Sanchez, 37, runs Technical Digital Services, a family-owned printing business based in the Woodside neighborhood of Queens. He says the sales and negotiating skills he learned in the Goldman Sachs program helped him score a major printing contract with a university in the New York area. It also taught him to zero in on a crucial point in the negotiation process: He convinced the university to insert a contract clause stipulating that he could renegotiate prices annually based on fluctuations in the price of paper and other materials. "My attitude used to be that I had to give big clients everything they wanted," he says. "The class taught me that both sides can walk away from a negotiation with a positive outcome."

Sanchez now needs expansion capital to fulfill that contract, and the program came through with that too, providing a $350,000 loan from Seedco Financial, Goldman's lending partner in New York City. Sanchez says he will use part of the money to revamp his main facility and set up a satellite location near the university. All told, he says, the lessons he learned in class helped him boost his company's revenues by 30% over 20 weeks.
0:00 /2:32Start a small biz with $500

For Rosalie Safier, the takeaway was in marketing. Safier, 56, runs National Van Equipment, a manufacturer of blankets and pads for the moving industry, in Long Island City, N.Y. Like many low-tech U.S. manufacturers, Safier had been steadily losing ground to Chinese competitors. Safier says the course taught her to think strategically about product marketing and the importance of diversifying her business; it also helped her create an appealing narrative about her company. National Van Equipment now sells a full range of packing equipment, including boxes, tape, and stretch wrap -- and the company's new marketing materials stress its made-in-the-U.S.A. credentials and green supply chain. "We buy textile remnants and seconds from U.S. mills, things that would otherwise end up in a landfill," Safier says. Annual sales through November were up by 40% over 2009.

Perhaps the most unusual feature of 10,000 Small Businesses is that it's a national economic development initiative based almost entirely in the private sector. Goldman is putting up the money and partnering with local community colleges and lenders to deliver training and capital. Government is conspicuously absent from the mix. "That's a different model of economic development than is the norm here and around the world," says Porter. "What we're uniquely good at in this country is bottom-up development, where individual companies take responsibility for doing things."

Nevertheless, the Obama administration has taken note of Goldman's small-business-development efforts. "It fits our economic development goals perfectly," says White House senior adviser Valerie Jarrett, who spoke at the graduation ceremony for the first 10,000 Small Businesses class. "The President's No. 1 goal is to create jobs and grow the U.S. economy. Giving small-business owners the tools they need to grow leverages our efforts to create an environment where all businesses can grow."

Empowering small businesses is an idea that's thrown around a lot on the talk-show circuit as the job market continues to stagnate. Will Goldman and its partners be able to make a difference? Goldman says it will measure results of the program in terms of revenue growth and job creation. It is still about 9,800 shy of the 10,000 entrepreneurs it hopes to educate, but the program has four years remaining; new programs will soon launch in Long Beach and New Orleans.

For his part, Porter hopes Goldman's money and networking mojo will catalyze a new entrepreneurial ecosystem built around community institutions, banks, and businesses. And Buffett focuses on the program's potential to change lives for the better. "Who knows how far it goes?" he asks. "But I know it will help a great many individuals achieve goals that they wouldn't have otherwise."