News Archive

S&P 500 ends near flat; retailers fly for a second day

NEW YORK (Reuters) – Stocks finished flat on Wednesday with investors hesitant to make a big move on the day before comments from Federal Reserve Chair Janet Yellen, though retailers’ shares rallied on results for a second day.

Target Corp (TGT.N) and Lowe’s Cos Inc (LOW.N) shares jumped following upbeat earnings and gave the biggest boosts to the SP 500. An SP 500 retail index .SPXRT gained more than 1 percent for a second day.

After the bell, shares of J.C. Penney Co Inc (JCP.N) climbed 12.8 percent to $6.72 as the U.S. department store chain forecast more improvement in its comparable sales and gross profit margin this fiscal year.

The SP 500 once again briefly broke above its 2013 year-end closing level of 1,848.36, which has served as resistance, but failed to hold above it, analysts said. The index remained down 0.2 percent for the year.

“From a technical perspective, we’re battling with the year-to-date break-even mark on the SP,” said Todd Salamone, vice president of research at Schaeffer’s Investment Research in Cincinnati, Ohio. “It just seems … there’s no firm commitment to drive the SP back above this particular level.”

But he said the market also seems to be biding time until Thursday, when Yellen addresses the Senate Banking Committee in semiannual testimony about monetary policy. This appearance, originally set for February 13, had to be postponed when Washington was walloped with the heaviest snowfall of the season.

Her comments will be scrutinized for insight into how much an unexpectedly cold winter has affected economic activity, and for confirmation that the Fed will maintain its stimulus-trimming schedule.

The Dow Jones industrial average .DJI rose 18.75 points or 0.12 percent, to end at 16,198.41. The SP 500 .SPX inched up a mere 0.04 of a point to finish at 1,845.16. The Nasdaq Composite .IXIC added 4.477 points or 0.10 percent, to close at 4,292.064.

The SP 500 reached a record intraday high of 1,858.71 on Monday, but was unable to hit a record close.

The small-cap Russell 2000 index ., however, climbed to a record closing high of 1,181.72 on Wednesday.

Adding to investor anxiety were developments in Ukraine. Russian President Vladimir Putin put 150,000 combat troops on high alert for war games near Ukraine.

In the retail sector, Target’s stock jumped 7 percent to close at $60.49 after the company reported results. The third-largest U.S. retailer said sales and earnings had been affected by a massive data breach and that costs relating to the event could hurt future profits.

Lowe’s stock rose 5.4 percent to end at $50.72 after the No. 2 U.S. home improvement retailer reported earnings and sales growth and unveiled an additional stock-buyback program of $5 billion.

The SP 500 retail index gained 1.4 percent. Wednesday’s strong retail performance came a day after upbeat results from Macy’s (M.N) and Home Depot (HD.N). Home Depot shares on Wednesday closed up 0.9 percent at $81.71 after rising to $82.71, a lifetime high. Macy’s stock jumped 3 percent to close at $57.96, off a 52-week high at $58.65.

On the economic front, new home sales surged to a 5-1/2-year high in January, far exceeding expectations. While much recent data has been below forecasts, analysts have attributed that to bad weather rather than worsening fundamentals. The housing data could support that interpretation.

The day’s decliners included First Solar Inc (FSLR.O), whose shares fell a day after the U.S. solar panel maker reported that its fourth-quarter net income fell 58 percent. First Solar’s stock slid 9.1 percent to end Wednesday’s session at $52.74.

Among other after-the-bell movers, shares of Autodesk (ADSK.O) rose 3.7 percent to $56.76 following the release of the computer-aided design (CAD) software maker’s results.

About 6.9 billion shares changed hands on U.S. exchanges, below the 7 billion average so far this month, according to data from BATS Global Markets.

Advancers beat decliners by a ratio of slightly more than 3 to 2 on both the New York Stock Exchange and the Nasdaq.

(Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)

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Exxon Mobil CEO welcomes fracking, but not water tower in his backyard

DALLAS (Reuters) – It’s not every day that the chief executive of the largest U.S. energy company joins a lawsuit opposing a new water tower planned in his neighborhood that could support fracking.

Officials at Exxon Mobil Corp (XOM.N) said on Wednesday that CEO Rex Tillerson was opposed to the plan not because of fracking but because the tower would be much taller than what the town had originally proposed.

Tillerson, former Republican heavyweight Dick Armey and other residents of a ranch-filled suburb of Bartonville north of Dallas filed suit in 2012 seeking to block construction of the 160-foot-tall (49-meter-tall) water tower, arguing it would be an eyesore.

The suit, filed in Denton County District Court, also noted that the tower could encourage the town of Bartonville to sell “water to oil and gas explorers for fracking shale formations leading to traffic with heavy trucks… creating a noise nuisance and traffic hazards.”

“Mr. Tillerson does not object to the tower for its potential use for water and gas operations for fracking,” said Alan Jeffers, a spokesman for Exxon Mobil.

Tillerson’s property is already adjacent to several oil and gas wells and fracking operations, Jeffers added.

Hydraulic fracturing, or fracking, involves the injection of water, sand and chemicals under high pressure into bedrock to allow extraction of more of oil or gas. Exxon Mobil and other energy companies say the practice is safe, but many environmental groups say it can pollute the water table and cause seismic activity.

The tower has sat unfinished for almost a year as an earlier suit between the town of Bartonville and the water supply company proceeds through the courts.

(Writing by Jon Herskovitz; Editing by Scott Malone and David Gregorio)

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U.S. senators scold prosecutors, Swiss bank in tax spat

WASHINGTON (Reuters) – U.S. senators lashed out at federal prosecutors on Wednesday for a lack of zeal in going after Swiss banks that helped Americans dodge taxes, blaming both sides for billions of dollars in missed revenues.

The Senate Permanent Subcommittee on Investigations this week alleged new misdeeds by Switzerland’s Credit Suisse, citing secret meetings in luxury hotels and hidden elevators one senator said belonged in a spy novel.

But the senators saved some their harshest criticism for two Justice Department officials who testified at the hearing after a morning session with bankers.

“You have been incredibly slow over a five-year period,” said Arizona Senator John McCain, referring to the moment that Swiss bank UBS admitted to helping U.S. clients hide money from the tax man and handed over their names.

“You’re doing a job that, frankly, has not shown any progress. … The taxpayers’ dollars are not well spent by the way you and your organization,” said McCain, the highest ranking Republican on the committee.

The Justice Department is probing 14 Swiss banks over taxes after UBS became the first major bank to settle over the charges. Two smaller Swiss banks have had to close shop as a result of the U.S. investigation.

In a lengthy report this week, the senators said Credit Suisse bankers secretly traveled to the United States, sometimes on tourist visas, describing one customer who got bank statements tucked into the pages of an issue of Sports Illustrated magazine at a hotel meeting.

The report said Credit Suisse opened accounts for more than 22,000 U.S. customers, with combined assets of $12 billion. The bank has accepted responsibility for wrongdoing by its staff.

Switzerland has amassed assets worth trillions of dollars from foreigners over the past decades, aided by its tight bank secrecy laws, but the business has come under threat from politicians and regulators abroad.


During the hearing, Credit Suisse bank laid out a detailed defense, saying that the perpetrators were a small group of Swiss-based bankers, and that while it wanted to hand over more client names, it was caught between U.S. and Swiss law.

“Credit Suisse is ready to provide the additional information requested by the U.S. authorities on U.S. account holders, but we have been unable to do so,” the bank said in a statement provided at the hearing.

Credit Suisse had provided as much information as allowed under Swiss law, it said, and while it wanted to provide more client names, the U.S. Senate had not ratified a bilateral treaty with Switzerland that would allow it to do so.

Subcommittee Chair Carl Levin, a Michigan Democrat, poured cold water on that argument, saying the treaty will only expose U.S. accounts at Swiss banks after 2009, when it was signed.

If U.S. customers closed their accounts before 2009, they could evade detection and years of U.S. tax bills, Levin said, which Credit Suisse bankers acknowledged.

“We can’t collect taxes owed by those folks, which is what the heart of the problem is. … Don’t tell us the treaty is going to get us what we want,” he said. “It won’t.”

Levin also scolded the Justice Department for only having retrieved 238 client names from Credit Suisse – and none from the other banks under investigation. But the Justice Department officials said their work did show good progress.

Credit Suisse said it was a “demonstrably inappropriate assumption” that all 20,000 U.S. clients were tax cheats, saying many U.S. clients, such as expatriates living in Switzerland, had a valid reason to hold a Swiss bank account.


Credit Suisse last week settled charges levied by the U.S. Securities and Exchange Commission, admitting to wrongdoing and paying $196 million in fines. But a settlement with the Justice Department is not imminent, a person familiar with the matter has told Reuters.

“This fine … pales in comparison with the severity of the full extent of Credit Suisse’s misconduct,” said McCain.

Levin also grilled Credit Suisse over the way it accounted for new client money it had earned, a matter the bank admitted some of its staff had mishandled, even if the issue was not directly related to helping clients avoid taxes.

The report cited emails from staff asking whether money could be booked in a different region to make end-quarter numbers look better. The bank did not condemn the practice per se but said the emails looked out of line.

The U.S. securities regulator, the Securities and Exchange Commission, has been investigating the bank over the issue since last fall, a source familiar with the matter said. The SEC and Credit Suisse declined to comment on that matter.

Credit Suisse’s larger rival, UBS, admitted to helping U.S. taxpayers hide money and paid a $780 million fine in 2009.

Evidence culled from the UBS probe, as well as thousands of Americans coming forward under a tax amnesty program, has fed a second wave of investigation, which has ensnared Credit Suisse and 13 other Swiss banks.

(Additional reporting by Aruna Viswanatha in Washington; Editing by Kevin Drawbaugh, Stephen Powell and Jonathan Oatis)

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HSBC taps ex-Homeland Security agent for anti money-laundering role

St. Louis (Reuters) – HSBC Holdings has named a former agent of the Department of Homeland Security and expert on high-risk clients to head a U.S. anti-money laundering operation being revamped after the bank paid a record fine over compliance lapses.

Daniel Wager, who helped investigate HSBC for the federal agency, joined the HSBC’s anti-money laundering team last November as a senior vice-president. He assumed his new post this week, a spokesman for the bank told Compliance Complete.

Wager has gained prominence as an authority on anti money-laundering (AML) issues. Before joining HSBC he headed TD Bank Group’s global enhanced due diligence unit, overseeing the handling of high-risk clients. In his new role at HSBC’s U.S. unit, Wager is to oversee AML compliance across all business lines.

Prior to entering the private sector in August 2011, Wager was a supervisory special agent with Homeland Security’s investigations arm and led a New York-based, multi-agency financial intelligence unit.

Among other things, Wager played a role in probing AML lapses at HSBC, sources familiar with his background said.

In December 2012, the bank paid to U.S. authorities what was then a record fine of $1.9 billion to resolve charges that it failed to stop hundreds of millions of dollars in drug money from flowing through the bank from Mexico, and promised at the time to fix AML lapses.

The U.S. government has led a crackdown on financial institutions that fail to adequately guard against improper transactions.

Despite a number of high-profile hires, HSBC has struggled to convince U.S. regulators that the AML controls surrounding correspondent banking, one of its riskiest and most profitable lines of business, are in order.

Two top legal officials at HSBC’s U.S. arm, anti-money laundering director Alan Schienberg and chief compliance officer Gary Peterson, left in November amid HSBC’s compliance overhaul.

HSBC recently hired former JPMorgan executive Jessica Gomel in a new position, global head of financial crime compliance for correspondent banking, to try to bolster its ability to police currency clearing and other activity. Wager is positioned to support that effort, the sources said.

As part of a restructuring that relies on regional heads of “financial crimes compliance” to police transactions, HSBC last month hired former Bank of America executive Patty O’Connor to be its U.S. regional head.

Wager will report to O’Connor as well as Peter Hazlewood, HSBC’s London-based global head of AML.

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus (

Compliance Complete provides regulatory news, analysis, rules and developments, with global coverage of more than 400 regulators and exchanges.)

(Editing by Randall Mikkelsen, Bernard Orr)

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Attorney subpoenaed Mt. Gox, other bitcoin businesses: source

NEW YORK (Reuters) – Manhattan Attorney Preet Bharara has sent subpoenas to Mt. Gox, other bitcoin exchanges, and businesses that deal in bitcoin to seek information on how they handled recent cyber attacks, a source familiar with the probe said on Wednesday.

In the attacks – known as distributed denial of service attacks – hackers overwhelmed bitcoin exchanges by sending thousands of phantom transactions. At least three exchanges were forced to halt withdrawals of bitcoins on February 7, including Mt. Gox, which was the largest at the time.

Mt. Gox never resumed service before going dormant on Tuesday, leaving customers unable to recover their funds. The Tokyo-based company’s chief executive, Mark Karpeles, said earlier on Wednesday that he is working with others to solve the problems.

“As there is a lot of speculation regarding Mt Gox and its future, I would like to use this opportunity to reassure everyone that I am still in Japan, and working very hard with the support of different parties to find a solution to our recent issues,” Karpeles said in a statement posted on the Mt. Gox website.

A spokesman for Bharara declined to comment.

Bitcoin, a form of electronic money independent of traditional banking, relies on a network of computers that solve complex mathematical problems as part of a process that verifies and permanently records the details of every bitcoin transaction that is made. At current prices, the bitcoin market is worth about $7 billion.

Investors deposit their bitcoins in digital wallets at specific exchanges, so the Mt. Gox shutdown is similar to a bank closing its doors – people cannot retrieve their funds.

While proponents of bitcoin hail its anonymity and lack of ties to traditional banking, regulators have become increasingly interested in the digital currency due to its usage by criminal elements and its volatile nature.

It has been a rough month for bitcoin investors, with cyber attacks on several exchanges, a sharp fall in bitcoin’s value, and rising pressure from regulators. Bitcoin’s price varies by exchange, but the losses were most dramatic on Mt. Gox, where it fell to about $135 from $828.99 before February 7.

“Mt Gox has been broken and it was obvious there was something really bad going on there for nearly a year. They were processing withdrawals very slowly and generally being very opaque about what was going on there,” said Mike Hearn, a bitcoin developer in Zurich, Switzerland.

A second source familiar with the case said U.S. federal law enforcement is investigating Mt. Gox. A third source said the U.S. Federal Bureau of Investigation was monitoring the situation.

Japan’s Finance Ministry and police are also looking into the abrupt closure of Mt. Gox, according to the Japanese government’s top spokesman.


Bitcoin has gained increasing acceptance as a method of payment and has attracted a number of prominent venture capital investors, including Andreessen Horowitz and Union Square Ventures.

The digital currency has also caught the eye of hackers. The recent cyber attacks exploited a process used by some bitcoin exchanges that introduced “malleability” into the code governing transactions, experts said.

Simply put, this allowed hackers to slightly alter the details of codes to create thousands of copies of transactions. These copies slowed the exchanges to a crawl, forcing them to independently verify each transaction to determine what was real and what was fake.

A document circulating on the Internet purporting to be a crisis plan for Mt. Gox, said more than 744,000 bitcoins were “missing due to malleability-related theft,” and noted Mt. Gox had $174 million in liabilities against $32.75 million in assets. It was not possible to verify the document.

If accurate, that would mean approximately 6 percent of the 12.4 million bitcoins minted would be considered missing.

Developers are working on fixes to bitcoin’s software to guard against cyber attacks, though many larger service providers have already implemented such changes, according to Gregory Maxwell, one of the bitcoin software’s core developers.

He said some malleability in the software protocol was necessary – for example, in transactions where multiple people can put in money, but the transaction is not valid until enough funds are contributed.

“None of these fixes are especially complicated, but because the correctness of the software is important we use a conservative release process that avoids rushing anything out,” Maxwell said, adding that the bulk of the recent work on the software is being done by four people.


Jacob Dienelt, who trades bitcoins and sells paper bitcoin wallets, said people he knows in the bitcoin community in New York stopped using Mt. Gox when the exchange halted dollar withdrawals several months ago and said all withdrawals had to be in bitcoin. Dienelt said has not been subpoenaed.

With Mt. Gox’s shutdown, Bitstamp has handled the most volume in the last two days, with more than 165,000 U.S. dollar transactions, according to Bitcoincharts.

Bitstamp had temporarily halted customer withdrawals earlier this month, citing “inconsistent results” and blaming a denial-of-service attack.

The price of bitcoin was lately at $588 on Bitstamp, up about 7 percent on the day.

“Right now is a sweet buying opportunity. I don’t think you’re going to see bitcoin go this low for awhile – if ever again,” said Jordan Kelley, chief executive of Robocoin, which launched the world’s first Bitcoin ATM in Vancouver, Canada, in the fall. “The more that bitcoin is on the front pages, the more that people are discussing it and educating one another, the better for the currency.”

Kelley said Robocoin has not been subpoenaed in the U.S. regulatory probe; nor has New York-based exchange Coinsetter, according to a spokesperson.

Bitstamp did not respond to requests for comment.

(Reporting by Emily Flitter in New York and Jim Finkle in Boston; Additional reporting by Chris Francescani in New York and Julie Gordon in Toronto; Writing by David Gaffen; Editing by Tiffany Wu)

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Argentina hopes Repsol deal will dispel investor doubts

BUENOS AIRES (Reuters) – Two years after seizing the country’s biggest energy company from Spain’s Repsol, Argentina hopes a new compensation deal will lure more foreign investment to what many believe to be some of the world’s most promising shale oil and gas prospects.

But the deal ending a bitter dispute between Argentina and the Spanish oil company may prove only a first step in dispelling investor concerns about economic conditions and energy policy in the South American country.

Repsol on Tuesday announced that its board of directors had approved a $5 billion settlement with Argentina after President Cristina Fernandez expropriated 51 percent of Repsol’s stake in energy company YPF (YPFD.BA).

“The world can accept that a government takes an oil company into state hands, but only if you pay for it,” said Victor Bronstein, a Buenos Aires-based oil analyst.

Fernandez is betting the settlement will clear the way for Argentina to pursue investments from international oil companies to develop Vaca Muerta, Spanish for “Dead Cow,” a formation in the country’s Patagonia region that potentially holds one of the world’s biggest shale reserves.

“The agreement was absolutely necessary but it’s not enough to unleash a boom in investments,” said Jorge Lapena, president of the Institute of Energy General Mosconi and a former Argentine energy secretary. “What’s needed is a long-term energy plan, and the country doesn’t have that right now.”

Argentina is seeking financing and technological expertise to develop Vaca Muerta, but international investors, some worried about possible legal threats from Repsol before the announced agreement, have been reluctant to participate in large-scale development.

The success that Argentina achieves in attracting more companies to the mega field will depend on what steps the government takes to improve the country’s economic conditions.

For companies drawn to Argentina’s energy sector, significant challenges remain, analysts say.

They include the elevated costs of operating in a country with one of the world’s highest inflation rates and tough foreign exchange controls.

There are few signs those issues will be resolved in the near term. Fernandez, whose presidency ends next year, is struggling to contain inflation now running around 30 percent and to preserve Argentina’s dwindling currency reserves.

Analysts said the cost to develop a well at Vaca Muerta could run between $8 million and $10 million compared with between $2 million and $3 million in the United States, where shale drilling is already key to energy supplies.

That means Argentina will need to lure mammoth amounts of capital in order for the Vaca Muerta project to proceed more quickly. YPF has said it will need $250 billion to develop Vaca Muerta.

A U.S. Department of Energy report shows that Argentina has more natural gas trapped in shale rock than all of Europe, a 774-trillion-cubic-feet bounty that could transform the outlook for Western Hemisphere supply.

The country’s shale gas reserves trail only China and the United States.

Fernandez has billed the YPF takeover as a fresh start for Argentina’s energy industry, which has seen a decline in recent years in oil and gas production and the country’s hydrocarbon reserves.

The drops in production and reserves have triggered a chronic energy deficit in Argentina, meaning energy imports exceed exports, putting pressure on government coffers.

In 2012, Argentina raised natural gas prices at the well in an attempt to encourage increased production.

Since Fernandez’s decision to seize YPF, the government has signed one major Vaca Muerta deal, a $1.24 billion joint venture with U.S.-based Chevron Corp. (CVX.N)

Several other companies have signed on to smaller projects, including ExxonMobil (XOM.N), Total (TOTF.PA), and Royal Dutch Shell (RDSa.L).

Earlier this month, YPF said it signed an agreement with Malaysian state-owned oil company Petronas for a possible investment in Vaca Muerta.

Brazilian oil company Petrobras (PETR4.SA) said on Tuesday it is looking to boost oil exploration and production in Argentina.

To get the Chevron deal done, the government loosened its foreign exchange regulations for the company and also reduced import taxes on drilling equipment.

The energy institute’s Lapena said the government needs to lay out broader policies to help more companies have a clear understanding of the investment terms in Vaca Muerta.

“We can’t have a case-by-case policy, we need a general policy,” he said.

(Writing by Kevin Gray; Editing by Jonathan Oatis)

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Exclusive: Biomet picks BAML, Goldman, JPMorgan to lead IPO

NEW YORK (Reuters) – Biomet Inc, the U.S. medical device maker that was taken private by a private equity consortium for $11.4 billion in 2007, has hired underwriters for an initial public offering later this year, people familiar with the matter said on Wednesday.

The offering could come in the first half of 2014 and raise more than $1 billion, the people said, asking not to be identified because the matter is not public.

Biomet’s owners — Blackstone Group LP (BX.N), Goldman Sachs Group Inc’s (GS.N) private equity arm, KKR Co LP (KKR.N) and TPG Capital LP — have selected Bank of America Merrill Lynch (BAC.N), Goldman Sachs Group (GS.N) and JPMorgan Chase Co (JPM.N) to lead the IPO, the people said.

Blackstone and Biomet did not immediately respond to requests for comment. Representatives for TPG, KKR and the banks declined to comment.

Founded in 1977, and based in Warsaw, Indiana, Biomet designs, manufacturers and markets products that include dental implants and artificial hips joints. Biomet competes with Smith Nephew PLC and Stryker Corp (SYK.N).

Biomet’s buyout was done at the top of the market. But since then the medical device industry was hit during the financial crisis as patients delayed surgery and joint replacements. Pricing pressure for hip and knee replacements has also impacted the sector.

Biomet is one of the few remaining large companies taken over by private equity firms during the buyout boom that has not yet gone public.

Other large private equity-owned companies that have gone public in the past 12 months include hotel chain Hilton Worldwide Holdings Inc (HLT.N), oil and gas company Antero Resources Corp (AR.N) and industrials supply company HD Supply Holdings Inc (HDS.O).

Biomet’s sales topped $3 billion in the fiscal year ended May 31, 2013, up 8 percent from the previous year. Adjusted net income was $368 million, up 46 percent over the same period.

(Reporting by Olivia Oran and Soyoung Kim in New York; Additional reporting by Greg Roumeliotis in Berlin; Editing by Leslie Adler)

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Facebook says makes progress targeting users

(Reuters) – Facebook highlighted on Wednesday two ad campaigns in an attempt to persuade advertisers that its massive membership base and ability to home in on specific audiences makes it a more effective advertising platform than broadcast TV.

The No. 1 social network revealed in a blog post some details about marketing campaigns from AARP and the American Legacy Foundation to show how Facebook can target specific age groups among its audience of more than 1 billion global users, which rivals the number of people watching TV.

Facebook is hoping to tap some of the billions of dollars that advertisers dedicate to television commercials to reach large groups of people.

“For an advertiser, in Facebook’s view their users are more engaged than when they are watching TV,” said Debra Aho Williamson, principal analyst at research firm eMarketer. “It’s not just sitting on the couch and watching something go by.”

Still TV gets the lion’s share of ad dollars with more than $66 billion in 2013 in the U.S. alone, according to eMarketer. Facebook generated roughly $7 billion in global ad revenue during the same year.

The AARP, an association for older Americans, sought to target ads to Facebook members over 45 in order to build awareness that the organization is for more than just retired people, Facebook said in its blog post, while the American Legacy Foundation wanted to reach teenagers for its Truth campaign to curb smoking.

Both campaigns ran in Facebook’s News Feed interspersed among a user’s stream of news and other updates.

“One of the things we wanted to test is if there a better result when you air a TV ad spot and support it on social media,” said Tammy Gordon, AARP vice president of social strategy.

A survey conducted by Nielsen Online suggested that 14 percent of 45-to-64-year-old Americans said they saw the AARP campaign.

“You don’t just do a TV commercial, you have to be looking at multi-media campaign,” Gordon said.

In the case of the Truth campaign, almost half of all Americans between the age of 13 and 19 saw at least one ad in their News Feed stream, the Nielsen survey found.

Investors have been concerned that teenage users may be drifting away from Facebook in favor of alternative online services such as Snapchat and WhatsApp, which Facebook recently acquired for $19 billion. But the survey results suggest marketers still view Facebook’s social network as an important channel for reaching teenagers.

Christine Dela Rosa, senior brand manager of marketing at the American Legacy Foundation, said that Facebook was still a good way to expose teens to brands. She noted, however, that the foundation also adjusted its marketing campaign to run on other platforms like deviantART, a social network for artists that is attracting teens.

“Facebook is really huge and people tend to want to converse with us in that space,” Dela Rosa said. “We are in other places too because teens aren’t using Facebook for expression. Every single platform has a different purpose. We want to be there in all those different places.”

(Reporting by Jennifer Saba in New York; Editing by Meredith Mazzilli)

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Rolls-Royce seeks long-term uplift with new aero engines

DERBY, England (Reuters) – British engineering company Rolls-Royce (RR.L) has outlined plans designed to maintain long-term dominance in large aircraft engines, showcasing two new models that could improve efficiency by up to 10 percent.

Rolls-Royce warned this month that U.S. and European defense cuts mean that a decade of profit growth will come to an end this year, sending its shares sharply down and providing added incentive to refocus investor attention on the company’s longer-term prospects.

Soaring demand for more fuel-efficient engines for aircraft made by Europe’s largest aerospace group Airbus (AIR.PA) and its U.S. rival Boeing (BA.N) has helped Rolls-Royce’s civil aerospace division, which generates about half of its sales, to drive the company’s strong run over the past decade.

That appetite shows no signs of slowing. Over the next 20 years the world will need to double its fleet of aircraft as cities expand and Asia’s increasingly affluent middle class takes to the skies, Airbus forecast in September, adding that airlines, leasing companies and cargo operators would need a total of 29,226 new passenger and freighter jets worth $4.4 trillion.

Rolls-Royce, a major British exporter founded in 1884, has responded with Wednesday’s unveiling of the new Advance and Ultrafan engines.

The Advance could be ready to enter service by 2020, it said, bringing efficiency improvements of up to 6 percent on its Trent WXB engine, which will be powering planes later this year.

At its headquarters in Derby, central England, Rolls-Royce unveiled the lightweight Advance’s carbon-titanium fan blades, suspended from the roof of one of the huge kerosene-smelling hangars scattered around the vast site. The blades will be attached to a core smaller than the Trent model’s before the engine is put through its paces over the coming years.


Among the tests to be conducted is the simulated bird strike, in which dozens of frozen birds are fired at the blades at high speeds to assess the durability of this crucial engine component.

The Ultrafan engine, which differs from the Advance in that it will incorporate a gear system, could be ready to be attached to aircraft by 2025 and is expected to be about 10 percent more efficient than the Trent XWB.

Rolls-Royce, which describes the Trent XWB as the world’s most efficient engine to date, said it is confident of demand for its new products from Airbus and Boeing.

“To some degree we’ve already started these conversations with the air-framers as part of our normal discussions around future requirements,” Simon Carlisle, executive vice-president of strategy and future technology, told reporters.

The world’s second-largest manufacturer of aircraft engines of all sizes, behind U.S. group General Electric (GE.N), said that its civil aerospace business could also seek further growth by utilizing its large-engine know-how to move into supplying medium-sized aircraft.

In the meantime, Rolls is aiming to exploit additional opportunities with its biggest civil aerospace customer, Airbus. “We are having very live discussions with them.” said Eric Schulz, head of civil large engine operations.

“If Airbus decides to go for a re-engine of the A330 or A380 (passenger jets), we will be here to support,” he added, referring to the possibility that the French company could seek different engines for existing aircraft.

Schulz also said that an ongoing investigation by Britain’s anti-fraud watchdog into Rolls-Royce’s dealings in Asia has not affected business.

“Our customers are confident that the management of this company has the right level of ethics, has the right level of processes and governance in place,” he said.

(Editing by Brenda Goh and David Goodman)

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