Downgraded Starbucks stock hits 3-year low

Starbucks stock fell to the lowest level in more than three years Monday after RBC Capital Markets downgraded the stock to "sector perform" on concerns about a sales slowdown from fewer customer visits and more competition.

The world's largest chain of coffee shops dropped $1.10, or 5.2 percent, to $20.15, the lowest since May 2004. The Seattle company's stock has plunged 43 percent this year, heading for its steepest annual decline since going public in 1992.

Starbucks in November cut profit and sales forecasts as U.S. customer visits fell for the first time after it raised prices 9 cents a cup.

"Our concern is pricing power has eroded along with a weak U.S. consumer and increased competition," Larry Miller, an analyst at RBC Capital Markets in Atlanta, said Monday in a note to investors.

Mortgage industry

Kirkland firm may face penalty

The state Department of Financial Institutions (DFI) announced it may fine the owners of Kirkland-based Linden Loans at least $150,000 and temporarily suspend their mortgage licenses, alleging they used "bait-and-switch tactics" in their mortgage loan advertising.

Linden advertised home loans at "1 percent interest, with no points and no fees." A DFI investigation revealed that none of Linden's 2006 customers received those terms. It's looking into whether any did this year.

The DFI investigation also found some Linden customers "paid fees that in some cases grossly exceeded traditional broker fees," said Deb Bortner, DFI's director of consumer services.

Linden Loans is owned by Christopher Opdyke and Mark Sullivan. DFI may order them to pay a fee of at least $2,500 for its investigation. Linden Loans is also known as Linden Home Loans.

AdReady

Financing round closes with $10M

Seattle-based AdReady, which helps small and medium businesses run online display advertising campaigns, said Monday that it closed a $10 million venture-financing round.

Bain Capital Ventures led the round, joined by Khosla Ventures and previous investor Madrona Venture Group.

The company had received $2 million in previous funding rounds.

AdReady CEO Aaron Finn said the company will use the funding to expand and market its recently launched service for advertisers, and to add staff. The company has 33 employees and aims to nearly double that by the end of 2008.

Puget Sound Energy

Approval of deal from panel sought

Puget Sound Energy and the consortium of foreign investors that plans to buy it asked the Washington Utilities and Transportation Commission on Monday to approve the deal.

The consortium — led by Macquarie Infrastructure Partners, the Canada Pension Plan Investment Board and British Columbia Management Corp. — has offered $30 per share in cash for Washington's largest utility, pending shareholder approval.

The company had to go through a "go-shop" period first, soliciting other acquisition proposals. That period expired Dec. 10 without attracting better offers, the company said.

Puget Energy and the consortium expect to complete the transaction by the second half of 2008, after securing shareholder and regulatory approval.

Earlier this month the consortium bought 12.5 million shares for about $296 million, which the company said it will use to fund construction and as working capital.

Safeco

$500 million buyback is eyed

Seattle insurer Safeco may repurchase as much as $500 million worth of shares, it announced Monday

The buyback equals 9.7 percent of outstanding stock as of Oct. 23, based on the Dec. 14 closing price, the company said.

Safeco has repurchased 41 percent of its shares, at a cost of $3.1 billion, since 2003, the company said. The insurer's stock rose 74 cents, or 1.4 percent, to $55.50 Monday after the buyback news. The shares have fallen 11.3 percent this year.

Nation and World

Ingersoll-Rand

Shareholders cool to Trane deal

In a deal worth a cool $10 billion, Ingersoll-Rand will acquire Trane and create one of the world's largest makers of commercial and residential home air conditioners, refrigerators for trucks and stores, and other climate-control products.

But some Ingersoll-Rand shareholders, who had expected the cash-rich company to pour some money into share repurchases, seemed disappointed with the acquisition announced Monday and sold Ingersoll-Rand stock, driving shares down sharply.

The $10.1 billion cash and stock deal — one of the largest industrial buyouts in recent years — gives Ingersoll-Rand, which makes Thermo King refrigerated trucks and Hussmann refrigerated display cases, access to Trane's building and transportation cooling systems.

Trane shares jumped $8.04, or 21.6 percent, to $45.24 on Monday, while Ingersoll-Rand shares dropped $5.58, or 11.4 percent, to $43.60. Each lost about 15 cents in after-hours trading.

Qwest

Building TV service deemed too costly

Qwest, the local-phone provider in 14 U.S. states including Washington, will limit capital spending to network upgrades next year after deciding that building a television service would be too costly.

Qwest will spend as much as $1.8 billion in 2008, Chief Executive Officer Edward Mueller said on a conference call Monday. That compares with $1.6 billion planned for this year. The capital budget includes $300 million for faster home Internet connections.

Sales growth has stagnated for six straight quarters as Qwest lost customers to cable companies offering packages of phone, TV and Internet service. Improving Internet speeds may encourage customers to spend more, Mueller said.

"There's a lot of skepticism, with the competitive issues being what they are, that [faster Internet speeds] might not be sufficient," said Thomas McIntyre, president of McIntyre Freedman & Flynn, who sold Qwest shares in October. "That's why the stock isn't really reacting."

Qwest fell 29 cents, or 4.1 percent, to $6.72 Monday. The shares have dropped 20 percent this year.

Compiled from Seattle Times staff, Bloomberg News and The Associated Press