Dow drops 2.3% for the day, gains 9.5% in October

A sell-off on Monday dented stocks' big advance for October, as worries about Europe's debt crisis flared again and the failure of brokerage MF Global Holdings Inc. rattled Wall Street.

The Dow Jones industrial average slumped 276.10 points, or 2.3%, to close at 11,955.01, the largest one-day drop in four weeks.

For October overall the Dow rallied 1,042 points, or 9.5%, the biggest monthly gain since October 2002.

The Standard & Poor’s 500 index fell 31.79 points, or 2.5%, to 1,253.30 on Monday. The S&P jumped 10.8% for the month, its best gain in nearly two decades, as recession worries faded.

Trading volume was relatively moderate Monday, suggesting there was no mad rush for the exits, though selling accelerated near the closing bell.

Many analysts had warned at the end of last week that the market was overdue for a pullback after soaring for most of October. In Wall Street parlance, stocks were “overbought.”

Monday’s headlines brought good excuses to sell. Italian government bond yields rose, raising fresh doubts about Europe's latest plan to solve its debt crisis.

When European leaders on Thursday announced their new strategy to end the debt nightmare, a key to the plan was to make investors feel confident about buying Italian bonds, thereby driving interest rates down. Instead, yields are rising.

Most European stock markets slid between 2.8% and 3.8% on Monday, after rocketing in the aftermath of the rescue-plan announcement.

MF Global’s failure, though not a total surprise, spooked investors by resurrecting memories of the collapse of Lehman Bros. in September 2008.

Some investors and traders rushed into the usual havens: U.S. Treasury bonds and the dollar. The yield on the 10-year T-note dived to 2.11% from 2.32% on Friday. The dollar rallied against most currencies, helped in part by Japan’s decision to try to beat back the yen from all-time highs.

On Wall Street, the bulls know they have history on their side in the near term -- if you believe that the U.S. economy will keep growing, Europe won’t implode and no other major disaster looms: Since 1950, November and December have been the stock market’s best two-month period of the year, on average, as investors often look ahead to the new year with optimism.

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-- Tom Petruno

Photo: The New York Stock Exchange floor on Monday. Credit: Brendan McDermid / Reuters

Chevys, El Torito owner files for bankruptcy

The owner of Mexican restaurant chains Chevys Fresh Mex, El Torito and Acapulco filed for bankruptcy Tuesday, pressured by years of slipping sales and the country’s economic malaise, executives said.

Cypress-based RM Restaurant Holding Corp. said its revenue has fallen to $478 million last year from $553 in 2008. The company’s 178 restaurants are seeing fewer diners, according to the filing in U.S. Bankruptcy Court in Delaware.

The restaurants are in states battered by “significant increases in unemployment” and the home mortgage crisis, said Chief Financial Officer Richard P. Dutkiewicz in the filing.  About 84% of the company’s locations are in California, where the purchasing and distribution facilities are also based.

Dutkiewicz added that “the recent national recession has left much of the general public less prone to spending their disposable income” and that the company “does not expect a meaningful improvement in the economy in 2011.”

A performance index calculated by the National Restaurant Assn. trade group last week fell to its lowest level in 13 months amid dipping customer traffic, the aftermath of Hurricane Irene and continued uncertainty among eatery operators.

RM’s subsidiary, purchasing and distribution service Real Mex Foods Inc., was hard hit by rising commodity prices and the loss of key contracts, the filing said. Real Mex provides Mexican food products to chains such as El Pollo Loco, Del Taco and Baja Fresh as well as retailers such as Trader Joe’s, Costco and Vons.

The company has about 11,000 employees.

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-- Tiffany Hsu

Sea Launch bumps back rocket launch a day

Less than a year out of bankruptcy, rocket venture Sea Launch is set to send a 10,141-pound telecommunications satellite into orbit from the middle of the Pacific Ocean on Saturday for Paris-based communications giant Eutelsat. 

The company will webcast the launch live on its website here beginning around 1 p.m. PDT. The launch is scheduled for 1:18 p.m.

Sea Launch had planned on launching Friday, but had to push it back a day because it took longer than expected to reach its launch site in the middle of the Pacific.

The company uses a floating ocean platform near the equator to lift satellites into space. It's located about 3,300 miles southwest of Long Beach and 1,400 miles south of the Hawaiian Islands. The site allows rockets to reach orbit faster while burning less fuel as they use the Earth's rotation for momentum.

When the company isn’t blasting off 20-story rockets, it docks its specially designed ship and a launch platform, made from a modified oil rig, in the Port of Long Beach.

It is the company’s first launch since it emerged from Chapter 11 bankruptcy protection late last year. For a more in-depth look at Sea Launch and its history, take a look here at a story that ran in Thursday’s Times.

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-- W.J. Hennigan

twitter.com/wjhenn

Photo: Sea Launch transfers rocket to launch platform. Credit: Sea Launch

FBI, Energy Department raid offices of solar-panel maker Solyndra

The FBI and the Energy Department's inspector general's office are executing a search warrant at the Fremont, Calif., headquarters of solar panel maker Solyndra. The raid came just two days after the company declared Chapter 11 bankruptcy, a move that raised serious concerns about the Obama administration's granting of a $500-million-plus federal loan guarantee to Solyndra in the fall of 2009.

FBI Public Affairs Specialist Peter D. Lee confirmed that the company's headquarters had been targeted, adding that the raid was still underway late Thursday morning. Lee said he was unable to disclose further details about what the FBI and the Energy Department was hoping to find.

Lee said that the raid documents were under seal.

Solyndra is a manufacturer of solar power systems for rooftop applications on commercial buildings. Earlier this week, the company said in a press release that "global economic and solar industry market conditions" had forced it to suspend its manufacturing operations. The company has laid off its 1,100 full-time and temporary employees.

"Despite strong growth in the first half of 2011 and traction in North America with a number of orders for very large commercial rooftops, Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers," the company said.

Solyndra was one of about 40 alternative energy projects funded over the last two years through an Energy Department loan program that helped companies involved with major wind, solar, nuclear and ethanol projects. At the time, the Energy Department said that it expected the combined projects to create about 60,000 jobs.

President Obama had visited Solyndra for a tour of the factor in May 2010, even as outside observers, such as PricewaterhouseCoopers, were already raising doubts about the company's ability to survive.

Solyndra had another Obama connection in that it was backed by Tulsa billionaire George Kaiser, a key supporter of the president.

Also: Solyndra and the stimulus

Also: House GOP seeks probe of loan

-- Ronald D. White

Photo: FBI agent guards the Fremont, Calif., offices of Solyndra. Credit: Associated Press

California solar panel manufacturer ceases operations

The California solar panel manufacturer that received a high profile $535 million Energy Department loan guarantee announced today that it was ceasing operations, laying off 1,100 workers and will file for bankruptcy in the coming days.

Fremont-based Solyndra said that it had been rocked by stifling global economic conditions and a slow recovery from the great recession. It had also faced heavy competition from Chinese firms that were undercutting it on costs.

The company's website had not been updated to reflect the development. A terse voice mail announcement on one of Solyndra's contact information telephones said only the following: "Solyndra announced today in a press release that it has ceased operations and intends to file for chapter 11 bankruptcy protection," advising customers on how to contact the company for further information.

It was quite a fall from late May 2010, when the company hosted the president on a factory tour. Company officials announced then that they expected to be adding new employees. But in July of this year, the company was being grilled on Capitol Hill by House Republicans who said that there were indications that the company was in a weak financial condition and wasn't a good choice for the loan program.

Solyndra would become the third such company to file for bankruptcy in recent days. Spectrawatt Inc. of Hopewell Junction, N.Y., filed for Chapter 11 bankruptcy on Aug. 19. Evergreen Solar Inc. of Marlboro, Mass., filed for Chapter 11 bankruptcy on Aug. 15.

Consumer Confidential: Small-car prices, Borders in trouble, the Google Effect

Here's your make-it-or-break-it Monday roundup of consumer news from around the Web:

--With the economy stuck in neutral, many people are thinking about downsizing their wheels. Is now the best time? Maybe not. Small-car prices, which have set record highs this year, are expected to come down this fall. Lower gas prices will make people comfortable driving something bigger. Honda and Toyota, which were hurt by the Japan earthquake, will crank up production of small cars. And Japan and Detroit will offer big discounts on smaller models as their lots fill up. The average new compact car, which cost a record $20,500 in June, should fall to about $19,300 by the end of the year. The average used compact car should fall from a record $11,300 to about $9,600 over the same time, according to figures compiled by the Kelley Blue Book auto pricing service. Small-car prices should start falling in September and accelerate through the end of the year.

--Borders may soon say bye-bye. The once-mighty bookstore chain is inching closer to liquidation after a bidding deadline passed on Sunday without offers that would keep the company in business. Bids for Borders were due at 5 p.m. Sunday ahead of a bankruptcy-court auction scheduled for Tuesday. Still, Borders is likely to entertain offers right up until the scheduled auction in the hopes a white knight will emerge to save the chain. By late Sunday, Borders reportedly was in discussions with Books-A-Million, a bookstore chain based in Alabama, on some kind of potential deal. But it remained unclear whether Books-A-Million would be in a position to save all of what remains of Borders, and fluid discussions were underway with other parties. The dearth of bids to keep the company running increases the odds that Borders, which employs nearly 11,000 people, will be sold to a group of liquidators this week, putting the chain out of business for good.

--Is Google eating away at our ability to remember things? A new set of studies in the journal Science suggests that people are increasingly relying on access to information -- say, a Google search -- rather than memorizing things. This so-called Google Effect could result in people becoming more forgetful because they don't exercise their memory muscles as often as in pre-Google days. And this, of course, can only mean ... um ... sorry, I forgot what I was going to say.

-- David Lazarus

Photo: If you're in the market for a smaller car, you should wait a bit. Credit: Reed Saxon/AP

 

Little Saigon condo complex in receivership

An upscale condominium complex that opened in 2009 in the heart of Little Saigon in Westminster has been placed in receivership and converted to apartments.

The 136-unit development has been renamed Jasmine Place. The four-story complex has a French-inspired design with Asian overtones and was originally valued at more than $57 million, receiver Taylor B. Grant said.

The property was developed by Moran Property Limited Partnership and Asian Gardens II.

Eight condo owners remain in the complex at 15100-15200 Moran St. Western National Property Management has been hired to manage and lease the other units, said Grant, who heads Newport Beach-based Real Estate Receiverships.

The complex will officially reopen Tuesday.

-- Roger Vincent

Photo: Jasmine Place in Westminster. Credit: Real Estate Receiverships

Retail Roundup: Borders finds a buyer, Costco pulls pork products after animal rights video, Gap to open stores in Africa

-- Bankrupt bookstore chain Borders has found itself a buyer. Phoenix-based Najafi Cos. has agreed to pay $215 million for the company, which filed for bankruptcy in February, and would assume $220 million in debt. The "stalking horse" bid still needs to be approved in bankruptcy court and a higher bidder could emerge. If the deal goes through, it would rescue Borders, which has struggled as more consumers turn to discounters and online retailers to buy books, from liquidation.

-- Warehouse club Costco will no longer carry products from Iowa Select Farms after an undercover video was released showing pigs there being mistreated. The animals were shown being thrown, slammed to the ground and castrated without anesthesia. The action by Costco follows similar moves by Safeway and Kroger to pull the company's pork products from their shelves.

-- Gap and Banana Republic plan to open stores in Morocco this year as part of an ongoing international push. Gap will also open a store in Egypt.

-- Andrea Chang 

Consumer Confidential: Pie chain goes bankrupt, Timberland bought, Arby's sold

Here's your make-my-day Monday roundup of consumer news from around the Web:

--Some bitter-tasting pie: Restaurant owner Perkins & Marie Callender's has filed for bankruptcy protection, brought down by tough competition, the weak economy and rising food costs. The owner of the Perkins Restaurant & Bakery and Marie Callender's chains says it plans to close 65 stores and cut 2,500 jobs, or about 20% of its work force of 12,350. The company cites the weak economic climate, particularly in California and Florida, where many of its restaurants are located, for the bankruptcy filing. Documents filed with the U.S. Bankruptcy Court in Delaware indicate the company can't afford to build new restaurants and upgrade existing ones, so it loses traffic to better-funded rivals. The two chains were "adversely affected by the languishing economy, including declines in consumer confidence and sluggish consumer spending and increased commodity costs," CEO J. Trungale said in a statement in November.

--Timberland has a new daddy. The purveyor of outdoorsy shoes and duds is being acquired by VF Corp., whose brands include Wrangler denim and Nautica apparel, for about $2 billion. Eric Wiseman, chairman and CEO of Greensboro, N.C.-based VF, calls the acquisition "transformative." VF's outdoor and action-sports businesses will now comprise 50% of total revenue and are expected to hit 60% by fiscal 2015, Wiseman says. The company's other brands include 7 For All Mankind premium denim, John Varvatos men's clothing and Reef surf gear. Its outdoor and active brands include Vans, Lee and North Face, and the company says Timberland will be complementary to, rather than competitive with, those names. I've always liked Timberland's gear. If only it weren't so darned expensive.

--Adios, Arby's. Wendy's/Arby's Group says it will sell a controlling stake in its Arby’s restaurant chain to Roark Capital Group for $130 million. Atlanta-based Roark will also assume $190 million in debt with the acquisition. Arby’s, which has has 3,600 outlets across the United States, will now focus on new menu items, new breakfast fare and new-look restaurants. Roark specializes in brand management of restaurant companies. The group also has stakes in Atkins Nutritionals, Auntie Anne’s, Cinnabon and Moe’s Southwest Grill. Last month, California Pizza Kitchen agreed to a $470-million buyout by Golden Gate Capital, and groups are reportedly circling Sbarro, the recently bankrupt pizza chain.

-- David Lazarus

Photo: Pie maker Marie Callender's has filed for bankruptcy protection. Credit: Allen J. Schaben / Los Angeles Times

 

Consumer Confidential: Tax preparer goes bankrupt, a new Nook, pricier coffee

Here's your tell-me-another-one Tuesday roundup of consumer news from around the Web:

--Irony alert: Jackson Hewitt Tax Service, the second-largest tax preparer in the United States, helping millions of people avoid financial trouble, has filed for Chapter 11 bankruptcy protection. The company got in over its head with loans and now must restructure its debt. The loans in question are so-called tax-refund loans, also known as refund anticipation loans. They're offered by tax preparers and funded by various banks, but banking regulators are tightening the screws, saying the loans are unsafe. While under bankruptcy protection, Jackson Hewitt says it will have the liquidity to operate normally and handle the 2012 tax season. Um, am I the only taxpayer who'd feel a little awkward having his return prepared by a bankrupt company?

--An update from the e-reader front: Barnes & Noble is set to unveil a lighter, slimmer, cheaper version of its Nook for $139, stepping up the pressure on rival Amazon and its Kindle. Available on June 10, the new-and-improved Nook features a 6-inch touchscreen and can hold up to 1,000 digital books. Barnes & Noble Inc. says the latest Nook lets readers look up words, highlight passages, search, and adjust font size by typing on an onscreen keyboard. It says the device weighs 7.5 ounces and is 35% lighter than the first Nook, which launched a year and a half ago. The iPad 2 is nearly three times heavier at more than 1.3 pounds. The newest Kindle, meanwhile, is 8.5 ounces, though it holds more than three times as many books as the new Nook.

--That cup of joe may soon get even pricier. The company that sells Folgers and Dunkin' Donuts and several store-brand coffees has announced its second double-digit price increase this year. J.M. Smucker says the list price for most of its U.S. coffee products will go up 11% on average. Smucker blames a continuing rise in what it pays for unroasted beans, known as green coffee. Coffee companies and analysts say speculators may be causing most of the increase, though demand is rising in emerging markets and harsh weather in some major coffee-growing regions shrank supply. Green-coffee prices jumped 77% last year. Smucker says its latest price increase also affects Smucker's Millstone and Folgers Gourmet Selections packaged coffees. The Ohio company said in early February that it was raising coffee prices by an average 10%. Last August, it announced a 9% price hike, which followed a 4% increase in May 2010.

-- David Lazarus

Photo: Tax preparer Jackson Hewitt needs some financial help. Credit: Gary Friedman / Los Angeles Times

 

Metropark to close all 69 of its stores, including 18 in California

Los Angeles apparel chain Metropark USA Inc. has filed for bankruptcy and is shutting all 69 stores, including 18 in California.

On Thursday, the company began offering 20% to 40% off all merchandise, including items from True Religion, Diesel, Rock & Republic and BCBG. The stores are also selling high-end DJ equipment, flat-screen televisions, apparel racks, shelving and lighting, according to two firms that were hired to run the going-out-of-business sales.

Metropark, a specialty retailer that caters to the 25- to 35-year-old market, is known for offering a shopping experience that is part store, part club. Despite a rapid expansion, the company has struggled to become popular among young adult shoppers and sales fell sharply during the economic downturn. 

This week, the company filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Southern District of New York.

Metropark operates stores in 21 states. Its California locations include stores in Los Cerritos Center, Glendale Galleria, Westfield Santa Anita and Irvine Spectrum Center.

In a statement, Metropark Chief Executive Cynthia Harriss said the chain’s customers had “shown us great loyalty over the years.”

-- Andrea Chang