The current slew of bad news was necessary to get European forestry companies to act, the head of the world’s top paper and board maker Stora Enso said on Wednesday.

For years the European paper industry has suffered from overcapacity, which has kept a lid on prices, while increasing costs of wood and energy have eaten into already low margins.

But Stora’s Chief Executive Jouko Karvinen, speaking at the Reuters Paper Industry Summit in Helsinki, said there has been a silver lining to the “perfect storm” of bad news.

“The good companies will come out of the storm stronger than they were ever before,” he said.

“And as bad as the past eight years have been, and as much as we complain about every possible problem right now, I have one thought: there may be a good thing with this storm. Maybe we will finally get our act together and make decisions that need to be made and start making some real money one day. It will take a little time, but that’s the goal,” he said.

For Marc Holliday, chief executive of SL Green Realty Group and Gramercy Capital Corp, the Tom Petty lyrics ring especially true.

Holliday, speaking at the Reuters Global Real Estate Summit, said on Tuesday that his company is waiting with bated breath to hear about which company has won the award to expand the gaming options at New York City’s borough of Queens-located Aqueduct Race Track.

In April, three companies where chosen as finalists for the rights to expand Aqueduct with thousands of video lottery terminals (VLTs) that the state hopes will eventually give it $300 million a year of revenue.

The companies include Holliday’s SL Green, Delaware North, and Capital Play Inc, whose partners include the Mohegan Tribal Gaming Authority and Victoria Racing Club. 

But things in the New York capital of Albany have been a little dicey recently — especially since former Gov. Eliot Spitzer has left office following a sex scandal and new Gov. David Paterson has questioned whether the things Spitzer agreed to about the expansion plan are binding or if there’s some wiggle room there.

So, anyway, that leaves Holliday and his competitors waiting. SL Green has a plan ready to roll, he said, and that could mean that the preliminary expansion could be ready six months after approval.

Holliday was one of the featured speakers at this year’s global real estate jamboree — which takes place in New York, London, Singapore, Moscowh and Dubai.

Asked to give a letter grade for the performance of U.S. Treasury Secretary Henry Paulson during the credit crisis, Goldman Sachs’ senior investment strategist Abby Joseph Cohen laughed. “I spent several years where he provided a performance review to other people,” she told the Reuters Investment Outlook Summit, about the former Goldman CEO. To find out how Paulson fared in Abby’s eyes, please click here  

Veteran Wall Street banking analyst Richard Bove sees Lehman Brothers surviving – but he doesn’t think they’ll be making a lot of money.
   There’s just not a lot of business there at the moment for brokers like Lehman, he told the Reuters Investment Outlook Summit in New York.
    To listen to a clip of what Bove had to say, please click here

The nation’s second-largest coal producer says “demand is outstripping our ability to supply” and expects “2009 and 2010 continuing to be strong years.”

Fred Katayama reports from Houston.

Contrary to popular belief, the smash hit talent show “American Idol” isn’t bringing in boatloads of money for everyone involved.

So says John Chen, the chief executive of Sybase Inc, a business software maker that builds technology for both wired and wireless devices. Chen was asked at the Reuters Technology, Media and Telecoms Summit whether he’d like to get the contract for “American Idol” texting, which is how TV viewers vote for their favorite performer.

“Our competitiors who got into ‘American Idol’ don’t make any money,” said Chen.

But he does want to get into the business side of text messaging in a big way, whether that’s working with banks or credit cards and anyone else who can send a quick message to their customer.

“If you want to do business with the next generation, you better be messaging capable,” he said.

Why? Because kids these days are all about the text. “They don’t do e-mail,” he said.

Chen also points out the texting is what he calls “viral,” meaning people automatically respond when they get a message.

“If you text and say ‘Be there in five minutes,” he said. “The number one tendency is to text back and say,  ‘Take your time’ or ‘Don’t come.’”

Don’t come? Sounds like your texting with Simon Cowell.

(Reuters photo: American Idol judges Randy Jackson, Paula Abdul and Simon Cowell)

OVERVIEW: TECHNOLOGY SECTOR - Q2 2008

MAY 2008

John Butters

Director, U.S. Earnings Research

Thomson Reuters

In the S&P 500 Index, the Technology sector is expected to have the highest earnings growth of any sector at 15%. Over the past four quarters, the sector has recorded an average earnings growth rate of 16%.

On April 1st, the estimated growth rate for the sector was 18%. Since the start of the quarter, the mean estimate for 45% of the companies in the sector has decreased while the mean estimate for 24% of the companies in the sector has increased. The mean estimate for the other 31% of the companies has remained unchanged.

At the industry level, twelve of the fourteen industries that comprise the sector are anticipating earnings growth. The largest contributors to earnings growth at the industry level include the Systems Software, Computer Hardware, Semiconductors and Internet Software industries. The only two industries expecting earnings to decline compared to the Q2 2007 are the Semiconductor Equipment and Office Electronics industries.

No companies have reported earnings to date for Q2 2008 for this sector. Over the past four quarters, 73% of Technology sector companies reported earnings above analyst expectations, 12% reported earnings in-line with analyst expectations and 15% reported earnings below analyst expectations. In aggregate, companies in the Technology sector have surpassed estimates by 6% over the previous four quarters.

Looking ahead to the remainder of 2008, analysts are currently calling for growth of 12% for both Q3 2008 and Q4 2008. For all of 2008, the estimated growth rate is 13%. For 2009, the estimated growth rate is 18%.

©

Terry Duffy, the chairman of CME Group, which owns the world’s largest derivatives exchange, says he realizes the Merc can be an easy scapegoat at a time when food prices are soaring. When politicians start to talk about the evils of “speculators”, criticism of the main venue where they make their bets on wheat and other crops can’t be far behind.

But Duffy, a long-time livestock futures trader, told the Reuters Exchanges and Trading Summit that he’s used to the exchange being a “political football” and that this is far from the worst case of that happening.

“I remember seeing tractors on LaSalle Street,” which runs through the heart of Chicago’s financial district, when farmers were protesting against excessively low prices in other years, he says. ”I mean, that’s a bad day. That’s when you know people are upset because that gets everybody’s attention.”

The mistake, Duffy says, is to say that the speculator, or the hedge fund, are the root of the problem of the run-up in food prices.  Investors want exposure to agricultural commodities and they are intent on getting it, whether through the CME or elsewhere, he says.

Massachussets State Pension Fund Executive Director Michael Travaglini says the Bay State’s pension fund, one of the nation’s largest, won’t be following the lead of New Jersey’s anytime soon — at least not in terms of direct investments in banks. He thinks that New Jersey — like some prominent sovereign wealth funds — viewed its recent investments in Citigroup and Merrill Lynch “almost as a necessity” to help prop up the financial system.
But even if he understands their motives, Travaglini isn’t sure rescuing troubled investment banks from Merrill Lynch to Bear Stearns is the right thing to do.
“If there’s always a net, whether it’s the Fed, whether it’s New Jersey, whether it’s Abu Dhabi, to me there’s a risk that there’s nothing learned,” he said. “I don’t want people to repeat the same mistakes. I think reasonably people could argue this whole subprime mess is a mistake that has been repeated two or three times throughout history.”
To Travaglini, the danger of lessons not getting learned reminds him of his own kids and why they must learn the consequences of mistakes.
“Why would they avoid getting in the same predicament if they had known they were going to get taken off the hook,” he said, speaking at the New York segment of the Reuters Hedge Funds and Private Equity Summit.

2008 is shaping up to be a challenging year for hedge funds and private equity but there are opportunities if you know where to look.

From London to Tokyo to New York the turbulence in the stock market is driving hedge funds and private equity firms to look beyond equities.

Despite opportunities in other investments, hedge funds are still folding at a fairly rapid clip.

Funds which oversaw nearly $4 billion dollars in assets have already closed their doors in the first quarter of 2008.

Ruben Ramirez reports.