Foxconn workers strike over iPhone 5 demands, labor group says

Apple CEO Tim Cook visited Foxconn's Zhengzhou factory in March, months before Friday's report of a massive strike at the plant's iPhone 5 production lines.

NEW YORK (CNNMoney) -- Thousands of factory workers at Foxconn went on strike Friday to protest their working conditions on the iPhone 5's production lines, according to a report from an independent workers' rights organization.

Workers at Foxconn's plant in Zhengzhou, China, were furious after management enacted "overly strict demands" for production of Apple's (AAPL, Fortune 500) new iPhone 5, according to a report late Friday from China Labor Watch (CLW), a New York-based advocacy group that works closely with sources in China.

The work stoppage lasted several hours on Friday and "paralyzed the production lines," the group said.

The majority of its participants were from the quality control line for the iPhone 5. Workers and inspectors clashed in fights that sometimes turned physical, CLW said, with some hospitalized as a result.

China's state-run news agency Xinhua also reported on the disturbance. More than 100 quality inspectors refused to go to work Friday "after one of the inspectors was allegedly assaulted by the workers, who have been dissatisfied with the new inspection standards," Xinhua said, citing an unnamed regional government spokesman in Zhengzhou.

The work stoppage lasted roughly one hour, according to Xinhua's source, who said that the plant has now resumed production. Workers on the scene reported a much longer outage to CLW, saying the shutdown extended from mid-day Friday into the next day.

Foxconn released an official statement on Saturday denying both reports, but acknowledging "disputes" earlier in the week.

"Any reports that there has been an employee strike are inaccurate," Foxconn said. "There has been no workplace stoppage in that facility or any other Foxconn facility and production has continued on schedule."

The Zhengzhou plant had clashes on Oct.1 and 2 between "a small group of production line workers" and quality control personnel, according to Foxconn.

"These were isolated incidents and were immediately addressed and measures taken, including providing additional staff for the lines in question," Foxconn said. "This is consistent with our efforts to work with our employees to continuously enhance any aspects of our production that can improve the workplace and manufacturing practices."

Foxconn's Zhenghou complex employs around 190,000 people, according to CNET, which recently visited the area. Apple CEO Tim Cook made an appearance at the plant in March.

Both Xinhua and CLW cited tension over iPhone 5 quality standards as the event's catalyst.

Workers were given new, impossibly strict standards, demanding precision down to increments as small as two-hundredths of a millimeter, according to CLW.

"Employees could not even turn out iPhones that met the standard," CLW's report said, because of "design defects" in the iPhone 5.

Apple ordered stricter inspections in the wake of customer complaints over "aesthetic flaws" in the iPhone 5, the Zhengzhou government spokesman told Xinhua.

Apple did not respond to messages from CNNMoney seeking comment.

Bessie Chang, a CLW program assistant, said it was the organization's Chinese-based staff that first heard rumors of the strike. CLW director Li Qiang spoke to his sources at Foxconn to verify the report.

Tensions at the Zhenghou plant were already running high because workers were not allowed to take vacation time during China's recent Golden Week holiday, according to CLW. That holiday typically involves three days of paid time off.

Employees who worked through the holiday did so voluntarily, Foxconn said, and were paid overtime of three times their normal hourly rate, in accordance with Chinese labor laws.

Foxconn has been in the spotlight amid growing public concern about labor conditions in the overseas factories that many U.S. gadget makers rely on to produce their devices. Apple is just one of many companies that outsources its manufacturing, but as the industry's most popular and profitable company, it's under the most intense scrutiny.

A spate of suicides at Foxconn factories in 2010 garnered media coverage of allegedly harsh working conditions, including unsafe facilities and illegal amounts of overtime.

In January 2012, Apple joined the independent labor-rights organization Fair Labor Association (FLA), which promptly began inspections of the working conditions at Foxconn's many factories.

FLA released an assessment in March that documented dozens of major labor-rights violations, including excessive overtime, unpaid wages and salaries that aren't enough to cover basic living expenses. The FLA's report said Foxconn agreed to work with the group on improvements, including enacting "full legal compliance" with Chinese work-hour laws by July 2013.

Last month, a large-scale incident involving 2,000 workers forced the temporary closure of Foxconn's Taiyuan factory. One worker at the scene termed the situation a riot, and it led to the hospitalization of about 40 people.

First Published: October 5, 2012: 6:43 PM ET

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Zynga plummets 19% after cutting 2012 outlook

NEW YORK (CNNMoney) -- Zynga's $183 million acquisition earlier this year of "Draw Something" maker OMGPOP has turned into OMGNO.

The social games maker unveiled "preliminary financial results" Thursday evening a few weeks ahead of its official earnings report -- which is rarely a sign of anything good -- and scaled back its outlook for 2012. Zynga also said it will take $85 million to $95 million write-down on OMGPOP, wiping out half of the deal's value.

Zynga now expects bookings for the full year to come in at about $1.1 billion, down from its previous forecast of $1.15 billion to about $1.23 billion. Earnings before interest, taxes, depreciation and amortization are forecast to come in between $147 million to $162 million, compared the $180 million to $250 million that Zynga previously expected.

Shares were down about 19% in after-hours trading on Thursday.

It's been a challenging year for Zynga, which made its name by creating games for Facebook (FB). Zynga blamed much of its downgraded 2012 forecast on "reduced expectations for certain web games including The Ville, and delays in launching several new games."

Investors aren't thrilled. Zynga's shares are down 70% this year.

The company also previewed results from its most recent quarter, which ended September 30. CEO Mark Pincus called the quarter "challenging," and added that "as a whole we did not execute to our satisfaction."

Specifically, Zynga cited weakness in its flagship -Ville games line, which includes FarmVille.

Zynga's new estimates for the quarter are still in line with or above analysts' expectations. The company expects earnings to come in between 0 and 1 cent per share on sales of $300 million to $305 million. The full results will be released on October 24.

Zynga (ZNGA) also put some of the blame on its purchase of OMGPOP, which it bought in March just six weeks after the company released its smash hit, "Draw Something." The game scored millions of downloads, but the frenzy turned out to be a short-lived fad.

During Fortune's Brainstorm Tech conference in July, CNNMoney's Ben Baer asked Pincus whether he overpaid for OMGPOP.

"I'd say it's too early to call it after one quarter," Pincus replied. Apparently two quarters is long enough.

First Published: October 4, 2012: 6:31 PM ET

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Wall Street tipster gets rich off IRS whistleblower program

The anonymous Wall Street insider also provided the IRS with information on Enron.

NEW YORK (CNNMoney) -- An anonymous Wall Streeter is getting rich exposing alleged tax fraud through the IRS's whistleblower program.

Washington law firm Phillips & Cohen announced Thursday that its client, a "Wall Street insider," has netted a $2 million reward from the Internal Revenue Service for exposing an alleged tax-avoidance scheme by manufacturer Illinois Tool Works (ITW, Fortune 500).

This is the third seven-figure reward from the IRS for the anonymous whistleblower, who testified in 2004 about tax fraud schemes as a confidential witness before the Senate Finance Committee under the pseudonym "Mr. ABC."

He received $1.1 million in 2011 after providing information years previously on tax shelters set up by Wall Street banks for the infamous energy firm Enron. He also scored at least $1 million in an additional case, the details of which he does not want disclosed, Phillips & Cohen lawyer Erika Kelton said.

"Mr. ABC" does not want his identity revealed for professional reasons, Kelton said.

"Unfortunately, Wall Street and financial services tends to be one of those industries that discourages whistleblowing, and where it can be very difficult to find a job once one is identified as a whistleblower," Kelton said.

Related: Whistleblowers win $46.5 million in foreclosure settlement

Illinois Tool Works allegedly enlisted a Swiss bank to fabricate unauthorized tax deductions, costing the government an undetermined amount believed to be in the hundreds of millions of dollars, Phillips & Cohen said.

"When I looked through all the financial engineering and big words, I believed it was just a fake deduction scheme," Mr. ABC said in a statement released by the law firm. Kelton said that due to its sophistication, it's "highly unlikely" that the alleged conduct would have been discovered without a whistleblower's assistance.

Illinois Tool Works spokeswoman Alison Donnelly said Phillips & Cohen was apparently referencing "a 1995 transaction that ITW's former Leasing & Investment segment entered into with an investment bank."

"As part of the IRS' normal audits of ITW's tax returns, the tax treatment of this transaction was fully resolved without penalty with the IRS in 2009, and resulted in no significant financial impact to ITW," she said in an email.

The IRS declined to comment on the case, citing privacy laws.

Whistleblowers who provide the IRS evidence of unpaid taxes in excess of $2 million are entitled to collect up to 30% of the sum recovered. Rewards are smaller for cases involving less than $2 million.

Mr. ABC's three awards stem from submissions he made to the IRS prior to August 2004, when there was a $2 million cap on whistleblower payouts. Were the submissions made with current laws in place, he could have received many millions more, Kelton said.

Between the government's 2007 and 2011 fiscal years, the IRS issued 729 whistleblower awards, though just 38 of those cases involved unpaid taxes of $2 million or more. The awards issued during that span totaled roughly $69 million.

Last month, a former UBS (UBS) banker who provided information on the firm's vast business of helping wealthy Americans hide their assets received a $104 million whistleblower award, which his lawyers said was the largest in U.S. history.

The Securities and Exchange Commission, empowered under the 2010 Dodd-Frank financial reform law to grant whistleblower awards for the first time, announced its first such payout in August.

First Published: October 4, 2012: 4:12 PM ET

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Work from home soars 41% in 10 years

About four million more Americans work from home than did in 1999, a new report says.

NEW YORK (CNNMoney) -- The number of Americans working from home has soared 41% in the last decade.

About 13.4 million people currently work from home in the United States, according to a Census Bureau report out Thursday. That's about four million more Americans since 1999.

The availability of high-speed Internet and services like Skype, that allow for at-home virtual meetings, has made working from home easier.

A challenging economy has also forced employers to cut back on costs, such as office expenses, and let people work remotely. There's also evidence that others, who haven't been able to find jobs, are earning a living by starting businesses from home.

"As communications and information technologies advance, we are seeing that workers are increasingly able to perform work at home," said Peter Mateyka, a Census Bureau analyst and author of the report.

The number of people who work at home at least one day per week has increased to 9.5% of all workers in 2010 from 7% in 1999.

Related: Obama may be a job creator after all

The largest jump was among government workers, the report said. The number of state government employees working from home jumped by 133% between 2000 and 2010, and by 88% for federal government workers. The government's effort to cut back real estate costs was the main driver behind this shift, according to the Census Bureau.

For private companies there was a 67% increase.

Seniors were also more likely to work from home: About 1 in 10 people working exclusively from home were over the age of 65.

Not all at-home jobs are created equal. The median salary for those who worked both at home and in an office was over $20,000 higher than that of workers who worked either exclusively at home or at an off-site job.

The higher paid roles tend to be in management and business, according to the report, and often pay more than jobs held by people who work exclusively in the office or at home.

First Published: October 4, 2012: 2:42 PM ET

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Medicare fraud case: 91 professionals arrested

NEW YORK (CNNMoney) -- The Justice Department announced criminal charges Thursday against 91 people who allegedly received about $430 million through wide-ranging Medicare fraud.

Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius announced the charges, which involved doctors, nurses and other medical professionals in seven different cities. The officials allege there was $230 million in home health care fraud, more than $100 million in mental health care fraud and about $49 million in ambulance transportation fraud.

Holder said one doctor is charged with writing 30,000 prescriptions by himself for 2,000 patients, resulting in $100 million in fraud.

"Those charged today not only broke the law -- but also violated their professional obligations and sacred oaths as medical practitioners," said Holder.

The charges came as Medicare and Medicaid have become hotly contested issues in the current presidential election. Republican candidate Mitt Romney and his running mate Paul Ryan have proposed significant changes in the funding of both programs, saying the changes are needed to reduce the growing federal budget deficit.

The Obama administration says the proposed changes would fall too heavily on the poor and elderly who depend on the programs.

While the proposed changes in the program were not discussed at the news conference announcing the charges, Sebelius said "Medicare and Medicaid fraud not only costs taxpayers, it threatens the programs."

Related: Whose Medicare plans cut more?

Among those arrested by the FBI Thursday was Ernest Gibson, the president of Riverside General Hospital in Houston, along with his son, who is also an employee of the hospital, and four others associated with the hospital.

"We are going after people, whatever their positions, whatever their level," said Holder.

Related: Medicare says seniors saved $3.7 billion on medicine

The hospital issued a statement saying it was saddened by the tactics utilized against it, and that while it is awaiting counsel in the case, it does support Gibson.

First Published: October 4, 2012: 1:36 PM ET

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Romney's pledge: No tax cut for the rich

NEW YORK (CNNMoney) -- The first debate between President Obama and Mitt Romney was a fire hose of fiscal issues that nonetheless left many questions unresolved.

Romney did try to answer one unequivocally: He said he will not cut taxes for the rich.

"I will not reduce the share paid by high-income individuals," Romney said. A few breaths later: "All right? I will not reduce the taxes paid by high-income Americans."

But how he'll keep that promise is still not clear.

The issue of how much the rich pay in taxes is a touchy one for Romney. He is one of the richest people ever to seek the job of president, and his own taxes have been fodder for Obama and his proxies for months now.

Romney has said he will slash income tax rates for everyone -- including the rich -- by 20%.

But he has also promised to pay for his tax reform plan, which is estimated to reduce revenue by $5 trillion over a decade. One way he says he would do so is by reducing tax breaks that disproportionately benefit the rich.

Related: Romney signals limits on tax breaks

Earlier this week, Romney suggested one way to limit the tax breaks is to cap everyone's itemized deductions at $17,000. While that would certainly reduce the value of deductions for the rich, it's no guarantee that many still wouldn't get a net tax cut given Romney's promise to cut today's tax rates by 20%.

For example, someone with $1 million in taxable wage income subject to today's top rate of 35% would save $70,000 if that rate drops to 28%. If that same person also normally takes $100,000 in itemized deductions, he would lose about $23,240 in tax savings if those deductions are capped at $17,000.

In other words, his net tax cut would be $46,760 ($70,000 minus $23,240).

The Romney campaign, however, has also told CNNMoney that if Romney were to adopt such a cap on itemized deductions it would be paired with still-to-be-determined limits on personal exemptions and the tax-free benefit workers enjoy when their employer helps pay for their health insurance.

Depending where those limits are set, they could wipe out the tax savings above. Or they may not. It's impossible to say without further details.

Then in last night's debate, Romney suggested the deduction cap could be set at $25,000 or $50,000 instead of $17,000. That would change the math, too.

Then there's the issue of semantics.

Romney's promise to "not reduce the share" of taxes paid by the rich is not necessarily the same as saying the tax bills of some high-income filers wouldn't go down. It means that what high-income filers as a group contribute as a percentage of total revenue would be the same as it is today.

On top of that, of course, it's not clear where Romney would draw the line on high-income.

What last night's debate showed is that Romney continues to promise that his tax plan will not reduce the taxes paid by the rich -- either as a group or as individuals. What it did not clarify was how exactly he plans to ensure that.

First Published: October 4, 2012: 1:05 PM ET

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Toys R Us enters video streaming business

The retailer's new video streaming service will allow parents to search through 4,000 titles by age, genre and even popular movie character.

NEW YORK (CNNMoney) -- Toys R Us is getting into the video streaming business.

On Thursday, the toy store company is launching toysrusmovies.com, a new digital service for users to stream and download movies and television shows geared toward children.

The movies are priced at $2.99 for a 24-hour rental and TV shows are $1.99 a pop. The prices are comparable to Apple's iTunes store.

With this move, Toys R Us is wading into a crowded arena of competitors that include Netflix (NFLX), Wal-Mart (WMT, Fortune 500) Stores, Amazon (AMZN, Fortune 500) and Apple (AAPL, Fortune 500), all of which are growing their online video presence.

Toys R Us spokeswoman Katie Reczek said the site's family-friendly content will set its service apart from its competitors.

Toys R Us Movies will offer instant access to more than 4,000 titles. The site will also feature new movie releases on the same day the DVDs hit retail stores. TV shows will be available the day after they air. The site is equipped with customizable parental controls. The site will be powered by Rovi (ROVI)Corp, a digital entertainment technology company.

The store has plans to expand from online streaming into Blu-ray players, TVs and tablets in the future. It also plans to create apps for Apple and Google's (GOOG, Fortune 500) Android devices.

Toys R Us, which has over 1,500 stores globally, has made several moves recently to gear up for the holiday shopping season. It announced a free layaway plan and ramped up holiday hiring by adding 45,000 seasonal workers.

The retailer also announced its own tablet for children, the "Tabeo," set to hit stores Oct. 21. A Toys R Us movies app is being developed for the device.

Related: Holiday sales projected to increase 4%

Competitors are also upping the game. Last month, Amazon reached a deal to expand the roster of movies and shows offered on its Amazon Prime Instant Video service. Wal-Mart (WMT, Fortune 500) has also been growing its online collection and offers discounted prices on digital movies.

The heavy competition has weighed on Netflix, which has seen a 13% decline in its share price so far this year.

Toys R Us hopes to lure users by not requiring a subscription. It will let users pay per movie or download. Amazon Prime subscribers pay $79 a year and Netflix charges $7.99 a month for streamlining.

First Published: October 3, 2012: 10:02 PM ET

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Facebook wants you to pay $7 to promote your posts

Facebook's experimental new Promoted Posts feature lets users pay to bump posts up in their friends' newsfeeds.

NEW YORK (CNNMoney) -- Is that cat photo you posted on Facebook not resonating? A new feature the company is testing out lets you push Fluffy to the top of your friends' newsfeeds by shelling out cash.

Facebook's experimental "Promote" feature, released on Wednesday to a small group of U.S. users, allows you to pay Facebook (FB) to promote important pictures or announcements. Those who have access to the feature say a promoted post typically costs around $7.

That price tag is part of the experiment: A company spokeswoman said that Facebook is "considering a variety of prices."

A Facebook blog post explaining the new offering features a picture of a recently engaged couple with a new option -- "Promote" -- sitting alongside Facebook's familiar Like, Comment and Share links. The feature was first tested out in New Zealand in May, then expanded to a limited number of users in 20 countries.

Facebook won't say how many U.S. users are now seeing the Promote option, saying only that it's a "limited subset" of the site's 166 million American users. The feature is also restricted right now to those with less than 5,000 friends and subscribers.

Facebook has long given businesses the option of paying to promote their posts to a broader audience, but the new Promoted Posts feature is a foray into generating revenue directly from everyday users. Facebook has run a few experiments along those lines, most recently with a new gift-giving feature that lets users send their virtual friends real-world gifts on special occasions.

Will you soon be seeing "Promote" all over your posts? That's unclear. Facebook calls the experiment a "test," and the company isn't shy about killing off money-making trials that fail. The company recently scrapped its virtual currency, Facebook Credits, and its Groupon-like Facebook Deals died after a four-month test period.

User reaction to Facebook's latest experiment seemed mixed. I asked friends and subscribers on my Facebook timeline how they feel about it.

"It would probably be useful for politicians, business owners, and narcissists, but useless for everyone else," Facebook user Matthew Cole quipped.

"I can't imagine why I would pay to promote my personal posts, most of which are about my cats or some.. pop punk band no one cares about," user Jonathan E. Seely wrote.

But some are intrigued by the idea.

"It depends on two factors: 1) how honestly they implement it and 2) its effect on my newsfeed," said Seth Bannon, the founder of tech startup Amicus. "If 'promoted post' or something similar is clearly displayed, and I'm still seeing relevant and interesting posts I care about in my newsfeed, then more power to them."

First Published: October 3, 2012: 7:52 PM ET

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Romney signals limits on tax breaks

After months of criticism for not detailing how he would pay for his tax cuts, Romney starts to lay out options for capping tax deductions and limiting breaks.

NEW YORK (CNNMoney) -- With just a month to go before Election Day, Mitt Romney has finally started to talk about more specific ways he could pay for his proposed tax cuts.

In an interview with a Denver TV station earlier this week, Romney offered what a campaign spokeswoman called an "illustrative example" for how to help pay for his plan, which would slash income tax rates by 20%.

Romney said limits could be put on how much a tax filer claims in itemized deductions. "As an option, you could say everybody's going to get up to a $17,000 deduction. ... And higher income people might have a lower number."

Capping itemized deductions alone would not be nearly enough to pay for Romney's tax plan, which the Tax Policy Center estimates could reduce revenue by roughly $500 billion a year.

For example, in 2009, the amount of tax savings realized by those who claimed itemized deductions was just $147 billion. Imposing a $17,000 cap would recapture only a portion of that money.

But a policy official with the Romney campaign told CNNMoney on Wednesday that a deduction cap would be just one part of a broader strategy to pay for Romney's tax cuts. Other elements would include limits on personal exemptions and the tax-free benefit workers get when employers pay for their health insurance.

And, the official said, the $17,000 is not a fixed number. It could change depending on where Congress and the president set the level for personal exemptions and the so-called health care exclusion. (Related: The candidates and your taxes)

The Romney campaign is also counting on economic growth to generate revenue to help pay for the tax cuts.

Without more detail, it's impossible to say how much revenue such a strategy would raise, and the Romney campaign didn't offer estimates. Nor is it possible to say which income groups would be most affected by such a pay-for strategy.

In the interview earlier this week, Romney also highlighted other ways his plan could be paid for that he has discussed in the past. But the deduction cap was a first.

And it came after months of criticism for not naming one tax break he would be willing to limit to help pay for his plan.

Related: How candidates would handle fiscal cliff

Each tax break in federal law has its fierce defenders and army of lobbyists. So it may be politically smarter to bypass the mud fights in Congress over whether to limit, say, the mortgage interest deduction or tax break on charitable contributions. Instead, tax filers could pick their deductions so long as they don't exceed a cap.

Romney isn't the first to propose such an idea. It's been kicked around in various forms by tax experts, including Harvard economist Martin Feldstein, who is an adviser to the Romney campaign.

First Published: October 3, 2012: 5:50 PM ET

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What we got for $50 billion in 'green' stimulus

The government has spent more on wind turbines and other forms of green energy as part of President Obama's stimulus program. But some critics question of the investments were worth it.

NEW YORK (CNNMoney) -- Over 770,000 homes weatherized. A doubling of energy from wind and solar. Cleaning 688 square miles of land formerly used for Cold War-era nuclear testing.

These are just some of the 'green' benefits from money spent under 2009's $787 billion stimulus package. Whether it was worth it is an open question, and one sure to come up with greater frequency as the presidential campaign enters its final weeks.

Tallying just how much cash went to green projects isn't easy. The government website that tracks stimulus spending lists 27,226 individual awards under the "Energy/ Environment" section, totaling just shy of $34 billion.

But that doesn't include things like high speed rail and smart meters, which lie among the 43,000-plus "infrastructure" awards.

In a report earlier this year, the Brookings Institution put green stimulus spending at $51 billion. From 2009 to 2014, Brookings estimates the federal government will spend over $150 billion from both stimulus and non-stimulus funds on green initiatives.

Related: 9 divisive energy issues for the election

Nearly $100 billion of that will go towards supporting renewable energy, including subsidies for current wind, solar and biofuel projects as well as R&D for promising new technologies.

Another $15 billion will go toward conservation, including the $4.8 billion spent on the home weatherization program. Funding for electric cars and high speed rail garner about $10 billion each, while smart grid and nuclear power get about $6 billion each.

Roughly a third of this money comes from the stimulus program, and most of it is already out the door.

Many say it's money well spent.

"This is going to be seen as a major driver of innovation in the energy sector," said Mark Muro, policy director at Brookings' Metropolitan Policy Program. "We will see substantial technology gains."

Muro noted the declining price for wind and solar electricity, and said in some markets it's already competitive with fossil fuels. He said this one-time jolt of stimulus cash is needed in a sector such as energy, where the size and costs of projects make it hard for new technologies to emerge while old technologies enjoy the benefits of decades of previous government support.

Muro thinks renewables like wind and solar will soon be able to compete on their own, and the stimulus will have played a big part in that.

Plus, many countries are searching for cleaner energy technology, and the United States "should become competitive in supplying it," he said.

But others say these efforts have been a total waste.

Subsidies for renewable power are particularly problematic, they say, as electricity from wind and solar is still generally more expensive than that from coal or natural gas.

"It makes companies not want to move here and leaves consumers with less money to spend," said Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute and former chief economist at the Labor Department under George W. Bush. "It's actually de-stimulative as opposed to stimulative."

Poll: Romney supporters likelier to have 'green' homes

If conservation efforts like home weatherizations made sense, she said, people would do it themselves. She said the same is true for high speed rail and electric cars. More businesses would invest in these areas if there was greater demand.

The fact that the government has supplemented the role of private industry in clean energy funding is a concern for many stimulus critics as well.

The bankruptcy of solar panel maker Solyndra is usually Exhibit A. Solyndra received a loan that was part of a Department of Energy Program which was expanded under the stimulus package.

Critics say the Solyndra debacle, which cost taxpayers over half a billion dollars, demonstrates that the government doesn't have the expertise to pick winning companies in the fast-moving alternative energy space, especially at the commercialization level.

"The government finds itself subsidizing products people either don't want or won't spend money on," said Furchtgott-Roth. "This isn't an area where it should be involved."

First Published: October 3, 2012: 2:52 PM ET

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HP's 2013 outlook sorely disappoints

NEW YORK (CNNMoney) -- Hewlett-Packard CEO Meg Whitman has spent her first year on the job attempting a turnaround, but it's clearly not happening anytime soon. The company on Wednesday released a grim outlook for its 2013 fiscal year.

HP (HPQ, Fortune 500) is trying to overcome severe weakness in the hardware business, as PC demand continues to slump and buyers shift to newer devices. HP called the current climate "a challenging environment" -- and it's one that will dent financial results.

HP expects to earn $3.40 to $3.60 per share for the fiscal year that ends in October 2013. That's much lower than the analyst consensus estimate from Thomson Reuters, which had forecast earnings of $4.18 a share.

Shares of HP fell more than 7% Wednesday on the news. The stock is now down more than 40% in 2012, making HP by far the year's worst performer in the Dow Jones Industrial Average (INDU).

Whitman inherited a long list of problems when she took the CEO role at HP in September 2011. Predecessor Léo Apotheker lasted only 11 months in a tenure marked by disaster, including the ill-fated TouchPad tablet -- pulled after only 49 days on the market -- and public waffling over whether to spin off HP's PC business.

But HP's problems began before Apotheker, who was the company's third CEO in less than seven years. Like its top rival Dell (DELL, Fortune 500), HP has struggled to stay relevant in a mobile world that's being led by Apple (AAPL, Fortune 500) and other phone/tablet makers. HP bought Palm in 2010, but essentially shut it down two years later.

It's a mistake HP doesn't plan to repeat. Asked in an interview earlier this week whether HP would consider buying Research in Motion (RIMM), Whitman gave a one-word answer: "No."

While it deals with its weakness in hardware, HP is trying to beef up its software and services business to compete more effectively against rivals like IBM (IBM, Fortune 500) and Oracle (ORCL, Fortune 500).

HP executives discussed those and other "strategic priorities" on Wednesday at its annual meeting with Wall Street analysts. The company has a lot to prove to investors and customers -- and Whitman has to hope they'll give her enough time, after HP gets through its dismal 2013, to turn it all around.

First Published: October 3, 2012: 1:51 PM ET

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Economists: Housing recovery finally here

Economists surveyed by CNNMoney believe that the housing market recovery is finally here.

NEW YORK (CNNMoney) -- It's been a long time coming, but economists surveyed by CNNMoney believe the nation's housing market has finally turned the corner.

Of the 14 economists who answered questions about home prices in the survey, nine believe that prices have already turned higher or will make that turn later this year. Only three months ago, half of the economists surveyed by CNNMoney believed a turnaround in prices would not take place until 2013 or later.

Economists have been encouraged by a variety of readings, including three straight months of increases in the S&P/Case-Shiller home price index, a pick-up in sales of existing homes and home construction and a big jump in the price of new home sales.

Mortgage rates are also likely to remain near record lows thanks to the Federal Reserve's purchase of $40 billion in mortgages a month for the foreseeable future.

"We're seeing the signs of a pulse in a sector that has been flat-lined for a number of years," said Sean Snaith, economics professor at the University of Central Florida.

Determining when the housing market has turned the corner is important for more than home builders and real estate agents. Even before soaring foreclosures sparked a meltdown in financial markets in 2008, the housing market had become a significant drag on the economy. Housing t continued to subtract from the nation's gross domestic product right up through early 2011.

But starting in the fourth quarter of last year, housing has been adding to growth. Lynn Reaser, chief economist for Point Loma Nazarene University, said housing is now bucking the trend in what is otherwise a sluggish U.S. economy.

Still, economists don't believe housing is ready to be a major driver of economic growth, as it was during the housing boom and some earlier economic recoveries. But housing could keep the economy moving in the right direction.

Related: Is buying rental property now a sure bet?

Some of the economists surveyed said they believe there's been some fundamental change of thinking in the market place. Buyers who had postponed housing purchases while prices slid are finally more comfortable making the plunge.

"You had a lot of people with what they needed to buy homes -- jobs, decent credit scores -- who were on the sidelines. All they needed to do is wait for their confidence to rebuild," said David Crowe, chief economist for the National Association of Home Builders.

Reaser said that that change in attitude is a key to the market turnaround.

"The firming in home prices might be feeding on itself," she said. "You've got buyers not wanting to miss the bottom of home prices and mortgage rates."

First Published: October 2, 2012: 9:54 PM ET

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The Pirate Bay down in extended outage

When The Pirate Bay goes down, a significant chunk of the Internet's piracy infrastructure goes down with it.

NEW YORK (CNNMoney) -- Popular torrent hub The Pirate Bay suffered an extended outage on Monday and Tuesday, coinciding with a government raid on its former Web hosting service. The site says it's down mainly because of a power outage, however, and that it will be back later this week.

Users of the infamous digital piracy site began flooding The Pirate Bay's Facebook page early on Monday, complaining that the Sweden-based site wasn't working. Prolonged outages often spook Pirate Bay fans, since the site is firmly in government crosshairs around the world.

It's the most famous nexus of illegal downloads and the embodiment of what anti-infringement legislation like SOPA aims to kill. On a typical day, several million users swap files through the site's links. When Pirate Bay goes down, a significant chunk of the Internet's piracy infrastructure goes down with it.

Swedish law enforcement agents on Monday raided PRQ, a web host started by two Pirate Bay co-founders, according to reports in TorrentFreak and other news outlets. The raid knocked PRQ and many of the sites it hosts offline, fueling speculation that Pirate Bay was a target of the crackdown.

PRQ's clients include WikiLeaks and a number of controversial blogs. Pirate Bay's operators claim that they are minimally affected by the PRQ outage, though.

"We have a relay there but not that much more," the Pirate Bay's operators wrote on their Facebook page. "This combined with a power failure at another place is the reason why we're down at the moment."

The Pirate Bay page said Monday that the site would soon "be back with full force, hopefully later today," but on Tuesday, that target was pushed back.

"Looks like we won't be up until tomorrow," The Pirate Bay posted on Facebook around 2:30 p.m. ET on Tuesday.

The Pirate Bay has survived forces much stronger than power outages during its nine-year existence.

Swedish anti-copyright organization Piratbyrån started The Pirate Bay in late 2003, taking advantage of the country's lax copyright laws. By October 2004, a handful of individuals were running the site independently.

Operated by an organization registered in the Seychelles, The Pirate Bay bills itself as the "world's largest tracker of BitTorrent files."

BitTorrent is a free, peer-to-peer software program that lets users swap and download large media files. The tool has many legitimate uses, but it's also heavily used to illegally trade movies and other copyrighted content. The Pirate Bay simply operates a torrent tracking network, linking together users who connect directly to make their trades.

No copyright-protected files ever sit on the site's own servers. That makes it very hard to kill.

The site has been targeted by governments around the world, and U.S. Senator Orrin Hatch, who co-chairs the Congressional International Anti-Piracy Caucus, once denounced it on the Senate floor. Last December, the Office of the U.S. Trade Representative highlighted The Pirate Bay on its list of "markets notorious for privacy."

The site has weathered police raids before, including one in 2006 that closed the site down for three days after its servers were confiscated. To evade shutdown, it has occasionally changed Web hosts and domain names.

In 2007, Swedish officials charged three Pirate Bay operators and one of its financiers with "promoting other people's infringements of copyright laws." The trial took two years and ended with the conviction of operators Fredrik Neij, Peter Sunde and Gottfrid Svartholm as well as businessman Carl Lundström.

The four were sentenced to one year in jail and a fine of $905,000 each. All except Svartholm, who was ill and skipped his scheduled court appearances, appealed the sentence, and in 2010 it was amended to include less jail time but a higher fine.

Svartholm disappeared for several years, but last month, he was arrested in Cambodia in connection with the alleged 2010 hacking of a Swedish IT company. He was deported back to Sweden, where he is now in detention awaiting formal charges.

First Published: October 2, 2012: 3:24 PM ET

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Government: We plan to sue more banks

Task force warns of more lawsuits against Wall Street banks.

WASHINGTON (CNNMoney) -- Wall Street banks should be prepared for more lawsuits, a taskforce of federal and state investigators said Tuesday.

The warning came one day after New York Attorney General Eric Schneiderman sued JPMorgan Chase-owned Bear Stearns, alleging that bankers committed systemic fraud against investors. The suit was the government's latest attempt to hold the big banks accountable for the financial crisis.

"There are more cases to come," Schneiderman said in a news conference. "We're investigating the misconduct of folks ... that brought about the crash of 2008."

The case against JPMorgan Chase (JPM, Fortune 500) is the first by President Obama's Residential Mortgage Backed Securities working group, which was formed in January. It includes the Justice Department, the Securities and Exchange Commission, the New York Attorney General's Office, as well as the Federal Housing Administration Inspector General.

Mortgage-backed securities are financial products of home loans pooled together and sold to investors. Many of those securities became worthless when the value of homes fell precipitously after the housing bubble burst in 2007 and 2008. Many people lost homes to foreclosure in the aftermath.

Investigations since then have revealed that many banks were aware of the risks associated with the housing bubble but continued to package poor quality home loans and sell them, collecting hefty fees along the way.

During the financial crisis, large Wall Street banks loaded with the bad securities received big government bailouts. Investors who lost their money from those securities have sued the banks and some have received payouts.

Meanwhile, homeowners hurt by the financial crisis have struggled to get help. It's unclear if homeowners will receive anything from the latest government lawsuits.

The suit seeks unspecified damages and claims that risky mortgage-backed securities issued by Bear Stearns in 2006 and 2007 caused investors some $22.5 billion in losses.

The government task force has been under pressure to deliver. President Obama touted the group for holding "accountable those who broke the law," during his State of the Union address in January.

The clock is ticking for the task force. Lawsuits have to be filed within five years of the fraud. When Jan. 1 rolls around, sales of mortgage-backed securities from 2007 can't be pursued.

"As the go-go years for many alleged violations were 2006 and 2007, the ability to bring more of these suits is rapidly disappearing," said Jaret Seiberg, a financial services analyst with Guggenheim Washington Research Group, in a note for investors.

Related: Home prices may not return to peak until 2023

In the JPMorgan Chase lawsuit, Schneiderman accuses Bear Stearns of misleading investors into believing that its staff had carefully evaluated the quality of the home loans in the securities it was selling.

The suit says that Bear "systematically failed to fully evaluate the loans, largely ignored the defects ... and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans."

JPMorgan bought Bear Stearns in 2008 at a steep discount in an emergency deal backed by the government. The investment bank was running out of cash and regulators struck the deal to prevent its failure from touching off a panic on Wall Street.

-- CNNMoney's James O'Toole and CNN's Carol Cratty contributed to this report.

Find homes for sale

First Published: October 2, 2012: 1:03 PM ET

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White House to contractors: Hold off on layoff warnings

White House budget office made an effort to stave off layoff notices from companies worried about 2013 automatic spending cuts.

NEW YORK (CNNMoney) -- The White House on Friday told government contractors worried about fiscal cliff spending cuts to hold off on warning employees about possible layoffs.

The government said it would cover legal costs if contractors are forced to slash their payrolls because of the looming $109 billion in automatic cuts next year and are alleged to have violated the WARN Act.

The federal WARN Act requires businesses with more than 100 employees to notify workers at least 60 days in advance of a mass layoff or plant closing. Some states require more notice.

"Any resulting employee compensation costs for WARN Act liability as determined by a court, as well as attorneys' fees and other litigation costs (irrespective of litigation outcome) would qualify as allowable costs and be covered by the contracting agency, if otherwise reasonable and allocable," the Office of Management and Budget said in its guidance.

Top CEOs: Fiscal cliff is hurting jobs

Defense contractors in particular have warned for months that the upcoming sequester would cost jobs in their industry. And Lockheed Martin's CEO has said publicly he may be forced to issue notice this fall of possible layoffs in 2013.

If other contractors follow suit, there could be a rash of layoff notices spooking employees right before Election Day.

Both parties in Congress created the sequester -- a series of thoughtless, automatic, across-the-board cuts -- as a way to force their hand to agree on a more gradual bipartisan debt-reduction plan.

Well, that hasn't happened yet. And if lawmakers can't agree on how to replace the sequester soon, the cuts become effective on Jan. 2.

First Published: September 28, 2012: 6:51 PM ET

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New York sues JPMorgan over mortgages

JPMorgan is facing a lawsuit over actions by Bear Stearns, which it purchased in 2008.

NEW YORK (CNNMoney) -- New York attorney general Eric Schneiderman has filed suit against JPMorgan over the creation and sale of mortgage-backed securities during the housing bubble, alleging that bankers from the now-JPMorgan-owned Bear Stearns perpetrated "a systemic fraud on thousands of investors."

JPMorgan acquired Bear Stearns in 2008 at a steep discount in a deal backed by the government. At the time, regulators were attempting to prevent ailing Bear from touching off a panic on Wall Street.

Having acquired Bear Stearns, JPMorgan is now legally responsible for it. Schneiderman's lawsuit is a civil action and does not name individual bankers as defendants.

The suit, filed Monday, alleges that Bear misled investors into believing that its staff had carefully evaluated the quality of the loans making up the mortgage-backed securities it was selling. In fact, the suit claims, Bear "systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans."

"Furthermore, even when Defendants were made aware of these problems, they failed to reform their practices or to disclose material information to investors," the complaint says.

The suit seeks the return of ill-gotten gains, as well as an unspecified total in damages and restitution. It claims that risky mortgage-backed securities issued by Bear Stearns in the years 2006 and 2007 alone suffered some $22.5 billion in losses.

Related: Going after Wall Street - and watching the clock

Mortgage-backed securities are financial products comprising groups of mortgages pooled together and sold to investors. They played a central role in the financial crisis, as subprime mortgages began to fail in large numbers with the bursting of the housing bubble. This left banks and investors saddled with these so-called "toxic assets" and helped prompt the Wall Street bailouts.

JPMorgan (JPM, Fortune 500) spokesman Joe Evangelisti emphasized the lawsuit's focus on Bear Stearns, "which we acquired over the course of a weekend at the behest of the U.S. Government."

"We're disappointed that the NYAG decided to pursue its civil action without ever offering us an opportunity to rebut the claims and without developing a full record -- instead relying on recycled claims already made by private plaintiffs," Evangelisti said in an email. "We intend to contest these allegations."

Schneiderman was tapped earlier this year to lead President Obama's mortgage-backed securities task force, convened to investigate banks accused of packaging and selling bad mortgages in the years leading up to the financial crisis. A spokeswoman for Schneiderman declined to comment on whether similar actions were planned against other large banks.

The task forced was announced amid criticism of the government's failure to hold individuals from the financial sector criminally accountable in connection with the crisis. In the only major criminal trial to date stemming from Wall Street's role in the meltdown, a pair of former Bear Stearns hedge-fund managers were found not guilty in 2009 of falsely inflating the value of mortgage-backed assets in their portfolios.

JPMorgan shares fell 0.7% in after-hours trading Monday. Elsewhere in the sector, Bank of America (BAC, Fortune 500) fell 0.2%, Wells Fargo (WFC, Fortune 500) fell 0.3% and Morgan Stanley (MS, Fortune 500)fell 0.2%.

First Published: October 1, 2012: 7:17 PM ET

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Ultrabook sales forecast slashed in half for 2012

Touted heavily at this year's Consumer Electronics Show, ultrabook sales haven't lived up to expectations.

NEW YORK (CNNMoney) -- One year ago, skinny, sleek ultrabooks were being hailed as the great savior of the struggling PC business. The white knight hasn't arrived yet. Ultrabook sales so far have sorely disappointed, and one research firm is slashing its 2012 forecast by more than half.

IHS iSuppli laid out a stark view of the field in a report it cheekily titled "Dude, You're Not Getting an Ultrabook." The research firm now expects about 10.3 million ultrabooks to ship worldwide in 2012. Earlier this year, its prediction was 22 million.

There are two key reasons for lackluster sales of the super-thin and super-fast notebooks, according to IHS iSuppli: "nebulous marketing and unappealing price."

The company also took a shot at Intel (INTC, Fortune 500), the creator of the "ultrabook" category, for its too-strict standards. The company's "increasingly stringent set of definitions" mean that some computers that were once called ultrabooks are now called "ultrathins" -- a new, unfamiliar bit of jargon in a field that already isn't doing well marketing to consumers.

"So far, the PC industry has failed to create the kind of buzz and excitement among consumers that is required to propel ultrabooks into the mainstream," Craig Stice, IHS's senior principal analyst for computer platforms, wrote in the report.

That's even more of a problem considering the marketing blitz around tablets and smartphones. A long list of companies have released shiny new tablets or phones recently: Apple (AAPL, Fortune 500), Amazon (AMZN, Fortune 500), Nokia (NOK), Microsoft (MSFT, Fortune 500) and more.

The report also criticized the $1,000 price point for most ultrabooks, saying that a cut to $600-$700 could spur sales in 2013.

Intel has a lot to lose if ultrabooks don't take off. Consumer demand for PCs continues to slump, particularly in the United States, Canada and Europe. Intel heavily hyped ultrabooks, a word it trademarked, at the Consumer Electronics Show earlier this year, and predicted that ultrabooks would account for 40% of all consumer notebook sales by the end of 2012.

Despite the slashed sales forecast, the ultrabook field still has a few bright spots. Intel is releasing a new microprocessor called Haswell in mid-2013. Microsoft's (MSFT, Fortune 500) new Windows 8 operating system, due out later this month, could be another sales catalyst. It runs on both traditional PCs and tablets and will appear on ultrabooks from companies including Hewlett-Packard (HPQ, Fortune 500) and Dell (DELL, Fortune 500).

Those moves could help ultrabooks pull out of their slump next year, IHS iSuppli said in its report, especially if pricing and marketing improve. The company predicted that ultrabook shipments will rise by more than 300% next year and continue growing to 95 million units by 2016.

First Published: October 1, 2012: 2:23 PM ET

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Bernanke: Stimulus helps savers, too

Federal Reserve Chairman Bernanke defended impact of low interest rates on those living off of savings in a speech Monday.

NEW YORK (CNNMoney) -- The Federal Reserve's efforts to keep interest rates exceptionally low are in the best interest of those living off their savings, Fed Chairman Ben Bernanke argued Monday.

In a speech to the Economic Club of Indiana in Indianapolis, Bernanke said the Fed's recently announced plans to buy $40 billion in mortgages every month for the foreseeable future, a plan widely known as QE3, would help spur greater economic activity and higher home prices. He said that would help many more savers than would be hurt.

"Many savers are also homeowners; indeed, a family's home may be its most important financial asset," he said. "Only a strong economy can create higher asset values and sustainably good returns for savers."

Bernanke acknowledged that the problems low interest rates cause those people, such as retirees, who are living off savings.

"My colleagues and I know that people who rely on investments that pay a fixed interest rate, such as certificates of deposit, are receiving very low returns, a situation that has involved significant hardship for some," he said.

The fed funds rate, used as a benchmark for a variety of interest rates charged and paid by banks, has been near 0% since December 2008. The Fed has taken additional steps, known as quantitative easing, to drive market rates even lower.

Related: Fed policies favor the rich

Bankrate.com estimates that the average annual rate on a 6-month certificate of deposit is only 0.49% today.

But Bernanke said the low rates on CD's and U.S. Treasuries are only partly due to the Fed action, and partly due to investor expectation about sluggish economic growth overall.

Related: Protecting your savings from inflation

"Interest rates are low throughout the developed world, except in countries experiencing fiscal crises, as central banks and other policymakers try to cope with continuing financial strains and weak economic conditions," he said.

Bernanke, in his remarks, reiterated that the Fed will keep rates low until the nation's unemployment rate falls significantly. The rate has lingered above 8% for most of 2012.

First Published: October 1, 2012: 1:35 PM ET

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Honda recalls more than 500,000 Accords

Honda Accord V6's from model years 2003-2007 are affected by the recall.

NEW YORK (CNNMoney) -- Honda is recalling more than 500,000 of its popular Accord vehicles because of a potential fire risk in their engines.

Honda said roughly 572,000 Accord V6's from model years 2003-2007 are covered under the recall. The power steering hoses in these cars are at risk of leaking, creating smoke and potentially sparking engine fires, according to the National Highway Traffic Safety Administration.

So far, no crashes or injuries have been reported as a result of the problem, though one engine fire has been documented, Honda said in a statement Friday.

Honda (HMC) is expanding on an earlier recall announced in May of roughly 53,000 Acura TL's from model years 2007 and 2008 affected by the same problem. The company will replace the power steering hoses at dealerships free of charge, though replacement parts will not be available for the 572,000 defective Accords until early next year.

Related: Cool cars from the Paris Motor Show

Honda pledged to notify car-owners when the parts become available. In the meantime, "interim repairs" can be done at Honda dealerships for drivers who fear their vehicles are afflicted, the company said.

In July, Honda was forced to recall more than 170,000 CR-Vs and Acura ILXs because of a problem with their front-door latches. The automaker also recalled some 46,000 Odyssey minivans earlier this year because their tailgates were at risk of dropping unexpectedly.

First Published: October 1, 2012: 1:24 PM ET

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