Federal judge won’t delay decision in long-standing tobacco case

A federal judge on Thursday said she won’t delay an order in a 12-year-old lawsuit against the tobacco industry while other courts decide newer cases challenging tobacco marketing restrictions and graphic cigarette warning labels.

U.S. District Judge Gladys Kessler in Washington issued the decision in a case in which America’s largest cigarette makers — including Philip Morris USA, maker of top-selling Marlboro cigarettes — were found to have concealed the dangers of smoking for decades.
Kessler has said she wants the industry to pay for ads, in broadcast and print. She has not said what corrective statements should be included in those ads, where they must be placed or for how long. That’s the decision Kessler was considering delaying.

She asked the parties last November for input on whether she should delay her decision pending other lawsuits challenging marketing restrictions and new warning labels that the Food and Drug Administration proposed under authority it gained in 2009.

Kessler said that the corrective advertising that the Justice department wants the industry to pay for under a 2006 ruling is “significantly different from the verbal and pictorial advertisements” required by the FDA. She also noted that tobacco companies have brought two newer challenges to regulations the FDA proposed using its new authority.

In her decision Thursday, Kessler wrote: “It is perfectly clear” that the challenges to the FDA regulations “will not end (if ever) for an extremely long period of time.”

The tobacco companies wanted Kessler to delay her decision because the government’s proposed corrective statements would likely be subject to many of the same objections raised in newer challenges to federal tobacco regulations. Meanwhile, the Justice Department argued that postponing a decision would harm smokers, potential smokers and young people.

The government wants the companies to admit that they lied to the public about the dangers of smoking and to pay for an advertising campaign of self-criticism. Its proposed corrective ads would cover the addictiveness of nicotine, the lack of health benefits from “low tar,” ‘’ultra-light” and “mild” cigarettes and the dangers of secondhand smoke. The companies have argued the statements are inflammatory, inaccurate and “designed solely to shame and humiliate” the companies.

Health care act will put pinch on tobacco

All 3,200 employees at casinos to open this year in Columbus and Toledo will have at least one thing in common, if owner Penn National is sucessful: They won't use tobacco.

Everyone who applies to work at either casino will be screened for nicotine use, and those who test positive won't be hired, according to the company. That doesn't just preclude smokers, but those who chew tobacco, use snuff or even wear a nicotine patch.

Penn National isn't telling its employees they cannot use tobacco while working; state law already bans smoking in public places, and that is to include casinos. What the company has decided is its workers cannot use tobacco while not on the clock.

Is it legal to discriminate against tobacco users? Apparently, yes.

According to the Ohio Civil Rights Commission, it is unlawful for an employer to discriminate based on race, color, religion, sex, national origin, disability, age or ancestry.

Note tobacco use isn't mentioned.

Don't people have a right to smoke? Yes ... in increasing fewer places, as the statewide smoking ban indicates.

But what about an employer's rights? An employer should have a right to hire workers who will help it make more money. And holding down health-care costs is one way to improve the bottom line.

So why don't employers just decline to offer health plans? It's important to remember employers are not required to offer health insurance ... yet. According to Affordable Care Act of 2010, that is to change within two years.

We have a feeling casino owners won't be the only ones deciding not to gamble on tobacco users by 2014.

Apps Tax, Mortgage Deduction, Tobacco Tax Under Scrutiny

Maryland Senate President Mike Miller likes to download his music.

"I have 1,800 songs that range from 'If I Knew You Were Coming I Had Baked a Cake,' to The Drifters sinking 'Up on a Roof,' " Miller told WBAL News today.

Miller says if brick and mortar stores have to collect the sales tax, so should online merchants.

"It doesn't make sense for our small businesses and shopping centers to close their doors and put for sale signs on the window, because people are buying online and not paying the sales tax that they pay, when they shop locally," Miller added.

The Senate President believes lawmakers will pass the portion of Governor Martin O'Malley's plan that would extend the state's 6% sales tax to online purchases including smart phone apps, downloaded music and online newspaper subscriptions.

The governor says extending the sales tax will generate $21-million in its first year.

Republicans are highly critical of the plan.

"The governor is floating a tax a day. The governor needs to get some sensitivity training about how tax increases impact people's lives every day on a negative basis," Senate Minority Leader E.J. Pipkin told WBAL News.

Pipkin believes that this proposed tax extension is far worse than the so-called "tech tax" that lawmakers approved in a special session in late 2007, only to repeal it a few months later in 2008.

Pipkin says that plan which extended the sales tax to Internet services is far narrower than the one the governor proposed last week.

In defending the tax, Lt. Gov. Anthony Brown told WBAL News that extending the sales tax to online purchases reflects a shift in the economy from one based on manufactured, tangible goods sold in stores, to services and digital goods sold electronically.

"The proposal the governor and I are making says hey let's recognize the evolution and the change in our economy, to make sure everyone is paying their fair share of taxes," Brown told WBAL News.

Cancer Society, Advocates Rally To Support Tobacco Tax Hike

Lt. Governor Brown today joined officials of the American Cancer Society and other health advocates at a rally to support the governor's plan to increase the state tax on cigars and other tobacco products so that it is at the same level as cigarettes.

Under the governor's tax proposal, the price of a single cigar could go up around 80-cents.

Advocates say it would discourage people, particularly teenagers from smoking.

The advocates cite statistics that flavored cigars are the tobacco product of choice for teenagers because they are less expensive and easier to obtain than cigarettes.

The O'Malley Administration says raising the tobacco tax would generate an additional $19-million in its first year.

Home Builders Criticize Mortgage Tax Deduction Changes

Home builders are giving lawmakers an earful about the governor’s proposal to limit the home mortgage interest deduction for individuals making more than $100,000 a year and families making more than $150,000.

Tom Farasy, the immediate past president of the Maryland State Home Builders Association, says the timing of the governor’s proposal comes as home prices are still depressed, and limiting the deduction won’t make the situation any better.

"Look at the reality of who buys a home, even a $300,000 home, and what do you have to make in order to qualify for that house? You have to make $100,000, so it's knocking everybody out," Farasy told WBAL News.

Under the governor's proposal, the deduction would be capped 90% for those earning more than $100,000, and 80% for those earning more than $200,000.

The mortgage interest payment deduction is part of a package of deduction changes that the governor says would generate about $181-million for the state every year.

Markell's planned smoking ban elicits some grumblings

Charles Young, a 37-year smoker who quit seven months ago, doubts Gov. Jack Markell's planned ban on smoking outside state office buildings will have the desired effect of getting employees to kick the habit.

As with any form of prohibition, Young said, "they're going to do it anyway."

Still, the Division of Revenue employee recognizes the potential savings to taxpayers.

"I know since I quit, I'm more productive because I'm not out here smoking," said Young, who works in the Carvel State Building in downtown Wilmington, where dozens of workers huddle outside the entrances throughout the day to light up on their 15-minute breaks.

Markell is targeting their habit in his quest to slow the growing $1 billion annual health care bill for state workers, retirees and Medicaid recipients. Combined, they make up 40 percent of the state's population.

But the planned smoking ban, which can be implemented without a change in law, is already generating grumblings among state employees who smoke.

"If there's a designated area [to smoke], that would be fine,", Department of Justice employee Janea Righter said while smoking outside the Carvel building next to a sign instructing smokers to stay 25 feet away from the building. "I look forward to coming out for fresh air."

Several smokers interviewed this week outside the Carvel building declined to be publicly identified for fear of retribution. The smokers asked why they can't use the back of Freedom Plaza, a park area between the Carvel building and the Louis Redding City/County Building on French Street.

Markell doesn't plan to make life easier for tobacco-addicted state employees who routinely violate the 25-foot rule, especially when it's snowing or raining.

"The goal is actually to discourage smoking because smoking carries not just a physical cost to smokers but a fiscal cost to taxpayers," Markell spokesman Brian Selander said. "The goal of the governor's policy was not to simply move smoking out of doorways."

But employees like Righter say they'll just walk across French Street to Spencer Plaza to smoke. Most state workers get two 15-minute breaks plus a half-hour for lunch throughout their 7.5-hour work day.

Goldman Sachs (GS) Analysts Upgrade British American Tobacco (BTI) Shares to “Buy”

British American Tobacco (NYSE: BTI) was upgraded by research analysts at Goldman Sachs (NYSE: GS) to a “buy” rating in a report issued on Friday. They currently have a $46.00 price target on the stock.
British American Tobacco plc is a holding company that owns, directly or indirectly, investments in the numerous companies constituting the British American Tobacco Group of companies. Its brand portfolio includes Dunhill, Kent, Lucky Strike and Pall Mall. Dunhill sells in approximately 120 countries. 41 billion Dunhill cigarettes were sold during the year ended December 31, 2009. Kent is sold in more than 70 countries. Lucky Strike’s markets incude Germany, Spain, Japan, France, Italy, Argentina and Chile. Pall Mall offers a range of cigarette and make-your-own products. On June 17, 2009, it acquired 85% stake in Indonesia’s cigarette maker PT Bentoel Internasional Investama Tbk.
Shares of British American Tobacco traded down 0.74% during mid-day trading on Friday, hitting $91.20. British American Tobacco has a 52 week low of $72.59 and a 52 week high of $96.64. The stock’s 50-day moving average is $93.02 and its 200-day moving average is $90.42. The company has a market cap of $90.354 billion and a price-to-earnings ratio of 18.52.

Philip Morris Vs. Other Tobacco Companies

Since my first article "Southern Copper vs. Freeport-McMoRan: Higher Yield Tips The Scales" was well received by a lot of people for its short and precise format, I would like to proceed with these "Stock A vs. Stock B" articles as a series, if I continue to receive good feedback about the format and the series in general. For those of you who did not read the first article of this series, I do not intend to slam any stock. I just present my analysis and would appreciate any constructive feedback and discussion in the comments section.

Part 2 of this series involves Philip Morris International (PM) vs. Altria (MO) vs. Lorillard (LO) vs. British American Tobacco (BTI). I've purposefully left out Reynolds American (RAI) from the article to keep the balance: two US only companies (MO and LO) and two International companies (PM and BTI). Also, I've ignored small(er) cap companies like Vector Group (VGR) and Universal Corporation (UVV). I mentioned in my first article that I would not cover the same points in the pros and cons of the companies I am dealing with, but its particularly difficult in this case as it involves 4 stocks. So, one or two points might get repeated but I believe those are really needed to drive the point home. So here we go.

Pros of PM:

High Growth Potential: Operating in more than 150 countries throughout the world, PM has fantastic growth potential. Currently, PM has the largest global market share at about 15%. For investors with patience, I see this stock being the "Altria of the next 25 years" - that is, the best performing stock
Decent dividend yield and growth: At the current price, PM yields about 4%, and I expect a dividend increase (say to 85 cents per quarter) in September 2012 based on its dividend increase history
Cons of PM:

Most Volatile: This stock is the most volatile with a Beta of 0.93. For those of you not familiar with the term "Beta", it indicates the volatility of the stock. Example: If the market moves up by 10%, a stock with a Beta of 1 moves up by 10% as well. If the market goes down 10%, a stock with Beta 2 goes down 20%. With its exposure to Europe and the ongoing Europe mess, PM might be considered more risky than usual at the moment
Competition: While the highly regulated US market impedes new companies, Philip Morris has to face tough competition in the international markets from companies like British American Tobacco, Imperial Tobacco Group (ITYBY.PK), and Japan Tobacco
Pros of MO:

Reliable Dividend: Highest current yield of the companies in question at 5.7%, with continuous dividend payments from the year 1970
Lesser Competition: High regulations, ban on public smoking, and tons of lawsuits make sure the barriers to entry are quite high. Peter Lynch, the legendary investor of 1970s and 1980s, favors companies with niches and less competition (and his book "One up on Wall Street" was the first investment book I read/heard and is one of my favorites)
Pricing Power: Talk with a regular smoker and you will know they will not hesitate a few pennies more for "their Marlboro cigarettes". I would like to add Charlie Munger's (Warren Buffet's investing partner) famous quote on pricing power "If you know you like Wrigley's Gum and you see it there for two bits, are you really going to reach for Glotz's Gum because it's 20 cents and put something you don't know in your mouth? It's not worth it for you to think about buying an alternative gum. So it's easy to understand why Wrigley's Gum has such a huge advantage."

British American Tobacco chief tops up stake

Nicando Durante, Chief Executive of British American Tobacco, has topped up his share in the FTSE 100-listed firm.

The announcement comes just one day after Credit Suisse identified the firm as being one of several which met a “new gold standard”, saying they offered “better value and greater safety than sovereign debt”.

“We continue to believe that a new asset allocation class develops,” said analysts.

The broker added that these stocks are relatively lower risk than governments as they have credit default swap spreads below the average of the Group of Seven (G7) countries.

Credit Suisse raised its target on BAT by 18.5p to 3,028.5p.

Durante, 54, purchased 1,421 shares at Ł11.52 each, giving him a total of 219,911 shares in the firm.

The share price has gained 22% on its share price over the past year.

MPs Warn Continental Tobacco Over Failure To Pay Farmers

Members of parliament on Agriculture , fishers and animal industry warned the managers of continental tobacco Uganda limited that if the company doesn’t pay farmers money worth 23.6 billion shillings soon the company will be forced to close operations in the country.

Addressing the press at the premises of the company during a tour today the woman member of parliament for Ibanda district Mary Kiboijana said that many tobacco farmers from Kibale have not been paid their money for last year.

MPs also noted some tobacco farmers have been blocked from accessing the weighing scales by the agents so that these tobacco farmers do not know how much they own on their receipts.

The committee however expressed concern over the way the continental tobacco Uganda limited hidden their office location from the tobacco farmer whom they owe money

Kiboijana said these farmers took loans to invest in this business, but they have not been paid and yet they have financial needs like school feesto settle.

She expressed concern that the company is treating them as destitute taking advantage of their low education.

The manager finance and administration continental tobacco Uganda limited Mariku Mwanji assured the MPs during the tour that farmers will receive their pay before the end of this January which Kiboijana says that the committee is going to take it up with the minister of agriculture and the manager.

Tobacco Farmers petitioned parliament last month complaining that they had not received pay since 2009 to totalling 23.6 billion shillings from the company.

Tobacco Expert Reveals No. 1 Tip to Prevent Teen Cigarette Smoking

Visual cues play an important part toward initiating teen cigarette smoking. So much so, that anti-smoking activists have fought for legislation to remove smoking related visual cues from cigarette packaging, TV programming and movies. Ironically, the anti-smoking movement uses visual cues as well, but recent research shows that such ads may do more harm than good. The following article shows what one study on teen smoking has revealed; and, a tobacco expert’s advice to parents with a No. 1 tip to prevent your teen from smoking cigarettes.

A past focus of teen cigarette smoking prevention was to provide teens with explicit messages about the health risks associated with smoking. However, explicit messages are not working effectively. A recent study shows that teens tend to light up a cigarette more often when in the presence of another teen or just by seeing visual images of other teens smoking.

In the online scientific journals Nicotine and Tobacco Research, and Drug and Alcohol Dependence, researcher Zeena Harakeh released her findings regarding what she believes encourages young smokers to light up a cigarette. She found that within the age group of 16 to 24, young smokers tend to light up a cigarette when in the presence of another smoking youth. Furthermore, that the motivation to smoke a cigarette is stronger in the presence of a smoking peer than if the young person were just simply offered a cigarette.

According to a press release from the Netherlands Organization for Scientific Research, Ms. Harakeh—a social scientist from Utrecht University, states that, “I call this implicit, passive influencing, as it happens without the other person actively offering a cigarette,” she explains, while adding that young people who communicate with a peer online and see this person smoking, will smoke more themselves. “So the effect is there, even when they do not smell the cigarette scent of the other,” she says.

One of her recommendations is that anti-smoking campaigns no longer show images of young people as part of the visual cues against smoking. “Merely the image of a young smoker might well cause another young person to light up a cigarette,” says Ms. Harakeh.