Obama to propose pay hike for federal workers

NEW YORK (CNNMoney)

The White House's Office of Management and Budget officials briefed federal labor leaders late Friday on the proposed pay hike.

Federal pay has been frozen for more than two years. A 0.5% pay hike is scheduled to go to civilian federal workers in late March. That pay hike was delayed when President Obama extended the existing pay freeze a few months to give lawmakers time to come up with a budget deal.

Union leaders were elated to hear the news.

Related: White House details pending budget cuts

"After all that federal workers have sacrificed the past three years, they have earned a raise. I repeat, they have earned a raise," said William R. Dougan, president of the National Federation of Federal Employees.

Congress would still have to approve the pay hike. In the meantime, House Republicans have plans to consider legislation that would extend the current freeze on federal pay through the end of this year.

First Published: February 8, 2013: 6:18 PM ET

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Who called it Nemo anyway?

Snow plows sit in the parking lot of a Home Depot in Vauxhall, N.J., preparing for what has been dubbed Winter Storm Nemo by The Weather Channel.

NEW YORK (CNNMoney)

Last year, The Weather Channel decided it would start naming winter storms.

Thus, Nemo.

The idea was to draw more attention to storms and get people to prepare, according to Bryan Norcross, senior executive director of weather content for the company.

Since this storm is hitting heavily populated areas, the Nemo name is getting much greater attention than the 13 smaller winter storms that came before it this year. Anyone remember winter storm Brutus?

A spokeswoman for the National Weather Service, which names tropical storms like hurricanes, said the agency has no position on the Weather Channel's decision to name winter storms.

Related: Winter storm brings back gas lines

In case you're curious, the name Nemo, like most of the other names in the 26 picked for this year, is meant to harken back to Greek or Roman mythology, not the Pixar-Disney (DIS, Fortune 500) movie "Finding Nemo." And no, the network does not intend to sell the storm naming rights to the highest bidders.

The Weather Channel is owned by a consortium that includes Comcast (CMCSA)-unit NBC Universal, Blackstone Group (BX) and Bain Capital.

First Published: February 8, 2013: 3:39 PM ET

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Google's Schmidt selling $2.5 billion in stock

NEW YORK (CNNMoney)

Schmidt, who was Google's CEO from 2001-2011, will sell up to 3.2 million shares of Google stock, worth about $2.5 billion, according to a filing with the SEC late Friday.

That would leave him with 4.4 million shares, or a 1.3% stake, and 5% voting power. That's a little more than half of what he owned at the end of last year.

Schmidt owned 7.6 million shares, which gave him 8.2% of the voting power, as of Dec. 31. This sale is part of a pre-arranged stock trading plan the company approved in November that allowed Schmidt to begin selling his stock this month.

"Using this trading plan, Eric can diversify his investment portfolio and can spread stock trades out over a period of one year to reduce market impact," said Google in the filing.

Just last week, Google's stock soared to an all-time high on hope that the company was nearing a settlement with European regulators over an antitrust probe. Turns out the European Commission says it's still reviewing proposals submitted by Google. But the hint of a settlement was enough for investors to jump in.

Related: 5 reasons why Google has its mojo back

Google's stock has been on a tear over the past six months as the company continues to activate a million Android devices a day, has successfully expanded into the broadband, cable and wireless arenas, and remains the dominant search engine.

Despite more competition from Microsoft (MSFT, Fortune 500) and Facebook (FB), neither has yet threatened Google's top spot.

Shares of Google edged lower in after-hours trading.

-- CNNMoney's David Goldman contributed

First Published: February 8, 2013: 7:37 PM ET

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Justin Timberlake to be "creative director" for Bud Light Platinum

NEW YORK (CNNMoney)

Anheuser-Busch announced Thursday that it had hired the actor and musician to be the "creative director" for its Bud Light Platinum brand.

What exactly does that mean? It's not entirely clear, but the company said in a statement that Timberlake would "provide creative, musical and cultural curation for the brand," and will appear in a Bud Light Platinum commercial set to air on Sunday during the Grammy Awards.

Related: Small craft breweries hit it big

"Justin Timberlake is one of the greatest creative minds in the entertainment industry, and his insights will help us further define Bud Light Platinum's identity in the lifestyle space," Anheuser-Busch (BUD) vice president of U.S. marketing Paul Chibe said in a statement. Timberlake said Bud Light Platinum "brings a refined, discerning aesthetic to beer that plays well with what I'm doing."

Timberlake is the latest in a series of musicians to snag "creative director" gigs with big companies. Last week, struggling smartphone maker BlackBerry (BBRY) tapped singer Alicia Keys to be its creative director, a title given to Lady Gaga by Polaroid and to will.i.am by Intel (INTC, Fortune 500).

First Published: February 7, 2013: 5:15 PM ET

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LinkedIn proves it's no Facebook (in a good way)

NEW YORK (CNNMoney)

Wall Street analysts had high expectations for LinkedIn's (LNKD) fourth quarter, and the company still beat on both counts. LInkedIn netted $40.2 million, or 35 cents per share -- more than three times as much as the $13 million it made a year earlier.

Sales came in at $303.6 million during the past quarter, up 81% over the year.

Shares rose 10% in after-hours trading.

As a business networking site, LinkedIn might not be as sexy as Facebook (FB) and other buzzy startups. But from the start, LinkedIn stood out from the newly public pack. The likes of Yelp (YELP), Pandora (P) and Groupon (GRPN) weren't profitable when they decided to go public, but LinkedIn was earning money and had a solid business model to boot.

The company has touted its multiple-revenue-stream approach, and all three money-making sectors were strong last quarter.

Sales from job-recruitment tools rose 90% over the year, accounting for more than half of the company's overall revenue.

Ads and other marketing revenue increased by more than two-thirds over the year. Advertising represents just a quarter of LinkedIn's revenue -- at Facebook, by contrast, ad sales account for 84% of revenue, and they were up only 41% last quarter.

The final fifth of LinkedIn's sales comes from subscribers who pay for premium accounts.

The company didn't shed much light on mobile, however, a continued pressure point for social networks like Facebook. Facebook shares are finally turning around now that the company is beginning to serve ads to mobile users, and Zynga posted a surprise profit on Tuesday as its mobile userbase expanded.

On a conference call with analysts, CEO Jeff Weiner said about 27% of the site's visitors last quarter came from mobile apps, a 15% jump from a year ago, and about one-third of people looking at job postings came from mobile devices.

One analyst on the call asked about LinkedIn's ongoing testing of mobile ads, and Weiner stressed it's "still early." Because of the limited space on smartphones in particular, the company wants to "be thoughtful" about its mobile ad rollout, Weiner said.

Meanwhile, LinkedIn's overall userbase is growing. The company passed the 200 million member mark during the fourth quarter, representing a nearly 40% increase from the same quarter last year. It's adding about two members per second, and the international market is especially hot: More than 64% of LinkedIn members live outside the United States.

The company also touted its fourth-quarter redesign of LinkedIn profiles, saying that nearly twice as many members updated their pages versus the fourth quarter of 2011. LinkedIn did not provide specific numbers on that point.

LinkedIn expects sales of about $307 million for the first quarter, and about $1.43 billion for the full year. Both figures were in line with the outlook analysts expected.

The social network continues to outperform more traditional job search competitors as well. Monster Worldwide (MWW) Thursday morning reported a $73 million loss last quarter, and the company decided to exit some foreign markets to focus on its U.S. business.

First Published: February 7, 2013: 5:11 PM ET

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Inflation slows in China to start new year

Inflation moderated in China last month.

HONG KONG (CNNMoney)

Chinese consumers paid 2.0% more for goods and services in January than they did a year ago, the government's National Bureau of Statistics reported Friday.

That's a slower rate than December's 2.5% annual increase, and represents tame inflation for the world's second largest economy. A year ago, the country was experiencing an annual inflation rate of 4% or higher.

Food prices also registered a slower rate of growth than in December, when unseasonably cold weather pushed prices on meat and vegetables up dramatically.

Food is an important gauge of cost of living expenses in China. It accounts for more than a third of the country's inflation calculation, and for rural families, it makes up the bulk of expenses.

The Chinese government prefers to keep its annual inflation rate below 4% -- a level it sees as consistent with healthy economic growth and consumer demand.

China's inflation data in January and February can be distorted by the timing of the Lunar New Year holiday, scheduled this year for Feb. 10.

Related: Photos from China's great migration

China has averaged economic growth of around 10% a year in the past three decades, propelling it up the list of biggest economies, generating wealth for its growing middle class and boosting global trade.

But that pace of expansion is hard to maintain, and China may be reaching a new normal of growth. China's economy grew 7.9% in the fourth quarter, compared to a year earlier.

Recently, China has felt the impact of sluggish growth in the United States and recession in much of Europe, which has depressed export demand. Government efforts to take the heat out of a real estate boom and control inflation have also had a dampening effect.

First Published: February 8, 2013: 1:14 AM ET

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Hackers access Federal Reserve website, data

The Federal Reserve has acknowledged a data breach.

HONG KONG (CNNMoney)

"The Federal Reserve System is aware that information was obtained by exploiting a temporary vulnerability in a website vendor product," a Federal Reserve spokesman said in a statement.

"The exposure was fixed shortly after discovery and is no longer an issue," the spokesman said. "This incident did not affect critical operations of the Federal Reserve System."

The Fed did not say which of its websites had been compromised, or detail the information obtained by intruders.

According to Reuters, the Fed notified bankers earlier this week that a contact database designed to facilitate communication between banks during a natural disaster had been compromised.

The notice, sent via the Fed's Emergency Communication System, warned that email addresses, phone numbers and other contact information had been stolen and published.

"Hacktivist" collective Anonymous, which has targeted the U.S. government in the past, claimed responsibility for the attack.

Related: Anonymous in disarray after major crackdown snares leaders

On Twitter, OpLastResort, an account that claims to be affiliated with Anonymous, said Sunday that it had carried out the attack, and posted a link a third-party website where the data could be downloaded.

In the past, Anonymous has taken down several high-profile sites, including those of the Motion Picture Association of America and the Recording Industry Association of America. It has also targeted Amazon.com and the U.S. Department of Justice.

Anonymous often makes its attacks not through hacking, but merely by directing a giant traffic surge to the targeted website. The strategy is called a DDoS attack, short for distributed denial-of-service -- and it's hard for most websites to defend against.

The loose collective, including OpLastResort, has in recent weeks expressed anger over the death of Aaron Swartz.

Related: Activist Aaron Swartz's suicide sparks talk about depression

Swartz, a 26-year-old Internet savant who shaped the online era by co-developing RSS and Reddit and later became a digital activist, committed suicide last month.

In 2011, Swartz was arrested in Boston for alleged computer fraud and illegally obtaining documents from protected computers. He was facing the possibility of a trial and incarceration.

Swartz's family and partner called his death "the product of a criminal justice system rife with intimidation and prosecutorial overreach." And they criticized prosecutors for seeking "an exceptionally harsh array of charges (for) an alleged crime that had no victims."

The U.S. attorney for Massachusetts, Carmen Ortiz, has said that her office acted appropriately in bringing the case.

-- CNN's Scott Spoerry contributed to this report.

First Published: February 6, 2013: 9:36 PM ET

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George Lucas registers Disney shares for possible sale

Lucas owns roughly 2% of Disney currently.

NEW YORK (CNNMoney)

The Star Wars creator received the shares, worth $2.02 billion at Wednesday's closing price, as part of Disney's $4 billion acquisition last year of his production company, Lucasfilm.

The move doesn't obligate Lucas to sell his shares immediately, and Lynne Hale, a Lucasfilm spokeswoman, said no sale is planned.

"George does not have any current intent to sell his stock," she said.

Lucas said following the Disney acquisition last year that he planned to donate "the majority" of his wealth to education-focused charities.

"For 41 years, the majority of my time and money has been put into the company," Lucas said. "As I start a new chapter in my life, it is gratifying that I have the opportunity to devote more time and resources to philanthropy."

Disney plans to release a new trilogy of Star Wars films starting in 2015, and CEO Bob Iger said this week that the company is also planning several separate spinoff films based on individual characters.

First Published: February 6, 2013: 7:12 PM ET

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The real Medicare spending problem

NEW YORK (CNNMoney)

But the news isn't enough to trump Medicare's unsustainable path.

Growth in Medicare spending for hospital stays and physician care has dropped precipitously. It was growing at an average rate of 8.4% between 2002 and 2009. But since then the average dropped to just 2.9% a year, the Congressional Budget Office noted in its latest budget and economic outlook.

As a result, the CBO has lowered its cost estimates for Medicare in 2020 by about $126 billion, or 15%.

That's a nice chunk of change, but it won't do much to alter the fiscal imbalances that Medicare faces. The program is projected to eat up ever larger pieces of the federal budget in the next decade and well beyond.

Medicare funding runs short by 2024, trustees say

The primary reason for that imbalance over the next few decades: the aging of the population. The number of Medicare beneficiaries who will be enrolled in the program will grow by 36%, or an estimated 18 million people, between 2012 and 2023. That rising trend is likely to continue, given that the number of Baby Boomers turning 65 is projected to grow from an average of about 7,600 per day in 2011 to more than 11,000 per day in 2029.

"The numbers of people who will be receiving the Medicare subsidies for their health care are growing so rapidly that costs will grow rapidly even if cost per person doesn't grow at all," CBO director Douglas Elmendorf said this week.

Over the next decade, annual net spending on Medicare will jump 80%, from $508 billion this year to $914 billion in 2023, according to CBO estimates. And it will also rise as a share of the economy from about 3% of GDP today to 5% by 2037.

At the same time, the number of workers whose payroll taxes help support Medicare beneficiaries is also declining. In 2011, there were 3.3 workers per beneficiary; by 2030 that number is likely to drop to 2.3; and by 2086, it will be 2.1, according to estimates from Medicare's trustees.

First Published: February 7, 2013: 2:18 AM ET

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Why 4G may lead to bigger smartphone bills

Cisco is predicting that smartphone networks will get faster and faster. But you pay more as a result.

NEW YORK (CNNMoney)

The average American will use 6.2 GB of data on their mobile devices each month in 2017, according to the latest annual Visual Networking Index released by Cisco (CSCO, Fortune 500). To put that into context, Americans used just 752 MB Americans on average last year.

If data plans stay the same five years down the road, the average user's smartphone bill could grow by $40 a month.

The wide-spread roll-out of 4G, the lightning-fast wireless networks that all four of the major carriers are in the process of deploying across the country, is expected to be the main culprit. 4G is capable of speeds comparable to your home broadband service, and it's roughly 10 times faster than 3G. By 2017, Cisco predicts that the average smartphone connection speed will grow more than three-fold.

The faster the connection, the more stuff people consume on their mobile devices -- particularly large video files, which will be the primary driver behind the download explosion, Cisco says. Streaming video services such as Netflix (NFLX), Hulu and Google (GOOG, Fortune 500)-owned YouTube are expected make up two-thirds of downloads in five years.

Related story: Video and mobile are breaking the Internet

The number of 4G devices is relatively small now. Just 1% of devices were connected to 4G networks last year -- but those smartphones and tablets accounted for 14% of global mobile traffic. By 2017, Cisco estimates that 10% of the world's devices will have 4G connections, and they will make up almost half of all traffic.

Clearly, people who have (or plan to buy) 4G-capable phones will download like crazy. That has vast implications for wireless carriers -- and your wallet.

Today's mobile-data-per-user average sits just below the entry-level 1 GB data tier that Verizon (VZ, Fortune 500) has put in place and well under the 3 GB tier that AT&T (T, Fortune 500) offers. But if Cisco is right that we'll all be consuming 6.2 GB-per-month on average in five years, those same Verizon or AT&T customers would have to pay $40 a month more in their cell phone bills to cover all that data.

Related story: Why your cell phone bill is going up

The companies haven't exactly been shy about stating the rationale behind switching to tiered and shared data plans. As customers rack up more and more gigabytes on their 4G devices, they pay more.

But if those plans don't change, carriers with data caps or tiers are going to have a revolt on their hands. For the time being, Sprint (S, Fortune 500) and T-Mobile continue to offer unlimited data service for mobile customers

"As you have more people using bandwidth-intensive applications on the networks, carriers are putting data caps in place," said Thomas Barnett, manager of Cisco's Visual Networking Index team. "But carriers will need to evolve their tiers for cell service to remain affordable -- while still getting those top users reined in."

AT&T and Verizon declined to comment on whether they'd consider raising their tiers as average use ticks higher in the future.

But those tiers have clearly been very effective. American mobile customers offloaded half of their traffic to Wi-Fi networks last year. In other words, the prospect of paying more has forced customers to think twice about when they need to use a 3G or 4G network.

By 2017, Cisco forecasts that 66% of smartphone and tablet traffic will be over Wi-Fi. So that may be a way for consumers to keep watching Netflix on their phone or tablet without paying an arm and a leg to their carrier.

First Published: February 5, 2013: 9:12 PM ET

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