- - Thursday, September 8, 2011

FEDERAL RESERVE

Bernanke offers no hints of further aid to economy

Federal Reserve Chairman Ben S. Bernanke said Thursday that he is surprised by how cautious consumers remain more than two years after the recession officially ended. But he offered no hints of further steps the Fed might take to try to boost the weak economy.

Mr. Bernanke noted that several factors have kept consumers from spending more: from high unemployment and falling home values to still-heavy debt loads and higher gasoline prices.

“Even taking into account the many financial pressures they face, households seem exceptionally cautious,” he said in a speech in Minneapolis to the Economic Club of Minnesota.

Mr. Bernanke said that higher prices for gas, cars and other consumer goods were due, in part, to temporary factors, such as supply disruptions stemming from Japan’s earthquake and nuclear crisis. As those factors continue to ease, the Fed chief said he expects inflation to ease in the coming months.

CALIFORNIA

Activist buys stake in Yahoo, slams board

LOS ANGELES — An activist investment fund disclosed Thursday that it has bought a 5.2 percent stake in troubled Web portal Yahoo Inc. and called for sweeping changes to the board.

A public letter from Daniel Loeb, chief executive of investment adviser Third Point, comes after Yahoo’s board fired CEO Carol Bartz on Tuesday after 2 1/2 years on the job, a move she bitterly criticized in an interview published Thursday.

Mr. Loeb said the board made a “serious misjudgment” in hiring Ms. Bartz, and he criticized it for taking so long to fire her, given her “abysmal performance.” He disparaged Ms. Bartz personally for alienating the company’s Asian partners Alibaba Group, Softbank and Yahoo Japan as well as Yahoo’s shareholders, analysts, bloggers, customers and employees.

“While the decision to hire her alone is grounds for questioning the board’s competence, its willingness to turn a blind eye to these serious problems … is even more troubling,” Mr. Loeb said.

Mr. Loeb also said it is now apparent that the board made a “gross error” in turning down Microsoft Corp.’s takeover bid in 2008 for $31 a share. He estimated the company’s intrinsic value now at $20 per share.

“This mistake is all the more frustrating given Yahoo’s current depressed stock price,” he said.

Yahoo’s stock jumped 34 cents, or 2.5 percent, to $13.95 midday Thursday after the letter was released. Since Ms. Bartz’s firing, shares are up 8 percent.

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