Brand clout keeps United States shoe buyers loyal in slump

If you thought cash-strapped U.S. consumers would walk out on their favorite branded shoes for a bargain-priced pair, think again.

Brand power has driven sales at mid-tier footwear makers like Deckers Outdoor and Wolverine World Wide over the past year even as sellers of other consumer goods fail to woo U.S. shoppers pinched by rising fuel and food costs, falling home values and tighter lending conditions.

"Nothing's worse than an ill-fitting pair of shoes, and nothing is more emotionally disturbing than buying a pair of an unknown brand of shoes," Marshal Cohen, an expert on consumer behavior and an analyst with market research firm NPD Group, said.

Some branded footwear makers are also looking to capitalize on the fierce loyalty shown towards their brands by passing on a portion of rising manufacturing costs to customers.

Shoppers are willing to pay extra to get their hands on popular brands like Nike, Deckers' UGG and Skechers USA's Cali and Sport.

Deckers has posted better-than-expected results in the last five quarters as its core UGG brand, made famous by the company's sheepskin boots and slippers, fueled sales.

In the latest first quarter, UGG sales rose by a whopping 84 percent and contributed more than 56 percent of Deckers' total revenue even as skeptical Wall Street analysts debated whether to classify UGG as a fad or a must-have brand.

Industry goliath Nike's combined sales for its top three brands, Nike, Jordan and Converse, outperformed the industry in both March and April, analysts said.

Deckers' stock has jumped nearly 62 percent over the past year while Nike's shares have climbed nearly 22 percent. Both outstripped the wider S&P 1500 Footwear Sub-Industry Index , which rose about 3.7 percent in the same period.

"Consumers have always reached back to their favorite footwear brands because of the physical comfort factor as well as the psychological comfort factor," NPD's Cohen, who is also the author of "Why Customers Do What They Do," said.

In a recent visit to several stores in New York, JP Morgan analyst Robert Samuels observed consumers focusing on quality brand names such as Nike, Liz Claiborne Inc's Juicy and UGG at discount-oriented malls as well as their upscale counter parts.

"People are just buying less frequently and they are really being a little bit more nitpicky about what they really want to spend their dollars on," Susquehanna Financial Group analyst Christopher Svezia said from New York.

BETTING ON WINNERS

Amid the current turmoil rocking the retail industry, department stores such as Nordstrom and Neiman Marcus have made orders and reorders for proven winners, sustaining the momentum of several brands like UGG and Wolverine's Merrell and Hush Puppies.

Wolverine's market value has risen 17 percent this year on strong sales of its lifestyle brands that target different countries and consumer groups.

Retailers are also increasingly maintaining leaner inventories to avoid selling a large pile of goods at discounted prices at the end of a season.

But NPD's Cohen was skeptical of the move to trim inventories. "Consumers get very frustrated when shopping in these tough times, not finding what they want and being forced to go elsewhere.

"Loyalty becomes very vulnerable in lean times... Retailers are shooting themselves in the foot when cutting footwear inventories down both in assortment and stock per style."

Footwear companies are also trying to attract loyalists of non-shoe brands by teaming up with sellers of items like clothing, handbags and jewelry.

Skechers, whose stock jumped 22 percent this year through Wednesday, has said it will partner with Bebe Stores to design and sell Bebe-branded footwear for women. The Bebe Sport footwear line is set to launch in the United States in spring 2008 with a campaign featuring actress Eva Longoria.

And since brand visibility propels sales, footwear makers have been spending a good chunk of their annual budgets on brand-building initiatives.

"Footwear is a very emotional and relationship-oriented product. Experimenting with footwear is not an area where consumers are willing to 'play'. Apparel is less fit specific and accessories even less so," NPD's Cohen said.

Monkey think, monkey do: with robotic arm

Using only its brain power, a monkey can direct a robotic arm to pluck a marshmallow from a skewer and stuff it into its mouth, researchers said on Wednesday.

"They are using a motorized prosthetic arm to reach out, grab and bring the food back to their face," said Andrew Schwartz of the University of Pittsburgh School of Medicine, whose study will appear in an upcoming issue of the journal Nature.

Schwartz said the technology behind this feat may lead to brain-powered prosthetic limbs for people with spinal cord injuries or disabling diseases that make such simple tasks impossible.

Until now, such brain-machine interfaces have been used to control cursor movements on a computer screen. Schwartz and colleagues wanted to apply the technology to real-world tasks.

The monkey guides the robot arm the same way it does its natural limbs, through brain signals.

Schwartz' team picks up those signals through an array of micro electrodes half the size of a thumbtack that has been implanted in the monkey's brain. These signals are amplified and relayed to a computer that operates the robotic arm.

Schwartz said his team has learned that certain motor neurons fire rapidly when the monkey wants to move a certain way. "What is important is each neuron seems to have a preferred direction," Schwartz said in a telephone interview.

"One cell will fire a lot if you move upward. Another cell will fire a lot if you move to the right. All you really need to do is listen to these neurons at the same time to determine which direction the animal wants to move in," he said.

COMPUTER CONTROL

"We record those patterns of action potential, interpret them with a computer and extract the monkey's intention to move. That serves as a control signal to the robot."

Schwartz said it takes about three days for a monkey to learn to operate the arm, and they continuously improve.

So far, they have trained two monkeys to feed themselves with the robotic arm. The monkeys sit in a chair with their arms gently restrained in sleeves that keep them from simply grabbing the food on their own. "These animals will just relax their arms as they control these devices," Schwartz said.

The monkeys appear to enjoy the task. "They sure like eating their marshmallows." Sometimes the team will use pieces of apple, orange or zucchini. "Just about anything we can that doesn't make too big of a mess," Schwartz said.

The ultimate goal is to develop a brain-powered prosthesis that can restore near-natural function to an amputee or person with a spinal cord injury.

But first, they want to refine the system. The next step is to develop an operating wrist and jointed fingers to add dexterity to the device.

"If you look at what these patients really need, they need to be able to use their fingers to increase their quality of life. They need to button shirts and pull zippers and things like that," Schwartz said.

The researchers must overcome several engineering challenges, including developing more durable electrodes that do not lose their signal over time, but Schwartz believes such devices are feasible.

"We're learning more and more about brain function as we do this," he said.

Indiana Jones' fans tough crowd for effects crew

Indiana Jones' return to the big screen after 19 years underscores how much visual effects have evolved.

When the first three Indy films were made in the 1980s, the visual effects were done optically, i.e. photographically or in post-production.

"Indiana Jones and the Kingdom of the Crystal Skull," which topped the North American box office this past weekend, marks the first time sophisticated digital techniques were used in bringing the story of the archaeologist-adventurer to life.

"There were many challenges," said visual effects supervisor Pablo Helman, a veteran of "Indiana Jones" creator George Lucas' effects house Industrial Light + Magic (ILM).

"One was working on a movie that had so many fans and coming up with work that matched the other movies. That was something (director) Steven Spielberg wanted from the beginning."

Helman, a native of Argentina, said he and his team used a wide variety of techniques to make the scenes believable.

"The idea was to be on location as much as possible and then augment (with visual effects) to finish telling the story. ... We always started with principal photography, then we had miniatures, computer-generated elements, practical elements."

The chase in the jungle is an example of how the digital tools were used.

"They shot as much in the jungle as they could," associate visual effects supervisor Marshall Krasser said, adding that the actors were filmed against a blue screen separately.

To complete the shots, ILM created what was essentially a drag-and-drop jungle.

"We had a library of plants and stuff (computer-generated and photographed elements) to drag and drop into position ... We ... dragged vehicles into environments."

The system helped the vehicles interact with the environment, for example, by digging up debris.

"We even added bugs flying around in some of the shots to sell the sense of realism," Krasser added.

The climactic sequence inside the heart of a temple was one of the most challenging.

The movement of the chamber in the scene occurs through a combination of computer-generated imargery and miniatures. For it and other scenes in the film, ILM developed a software application called Fracture that allows the user to break surface objects in a realistic manner.

Lighting was added to enhance the realism of the shots.

"We didn't want the effects to be visible, to overshadow the events that were occurring on the screen," Krasser said. "We've trained an audience of critics."

A day in the life of America's last lighthouse keeper

The sole remaining lighthouse keeper in the United States may be the last one but she isn't about to disappear.

Sally Snowman, 56, is part historian, part tour guide and part maintenance worker who tends Boston Light, a beacon that rises 89 feet (27 meter) on its own island and had guided sailors for almost three centuries.

Her charge, and specifically the 12-sided rotating lens that casts its beam 27 nautical miles out to sea, fills her with a great sense of security.

"When you're out at night on the island, you can actually see the 12 rays," said the ex-schoolteacher. "It actually looks like the rays are going out to the curvature of the earth and it feels so protected, like nothing's going to harm me. It's awesome."

The U.S. Coast Guard has automated the other 278 federally run lighthouses, finding this a more cost-effective way to manage navigational aids that have become less critical since the advent of global positioning systems that harness satellite technology.

But Boston Light, which in 1716 became the first lighthouse in the former British colonies, keeps its keeper thanks to Massachusetts Sen. Edward Kennedy who two decades ago helped push through legislation requiring a full-time attendant.

Snowman got the job in 2003 when the Coast Guard decided it could be held by a civilian. Now she resides on the three-acre

island for up to a week at a time.

She makes sure the lighthouse, keeper's cottage and other buildings are maintained, the 1,000-watt light is lit, and the grounds are in shape for the 4,000 tourists who travel the nine nautical miles from Boston Harbor each year.

RADIATING HOPE AND SECURITY

Snowman dresses the part, wearing a bonnet and long dress to reflect how women dressed in 1783 when the Commonwealth of Massachusetts rebuilt the tower that was blown up by retreating British troops in 1776, as the Revolutionary War got underway.

Twice a day she walks the island's perimeter to inspect its buildings, making sure that the light is still drawing power from an undersea cable stretching from the mainland, and that the island's water and communications systems work properly.

In between, she oversees a crew of about 100 volunteers who help to take weather readings and fill the hundreds of tiny holes that pock the island, thanks to a population of muskrats.

Automation is not the only change facing lighthouses.

As navigators rely on other technologies to find their way, the U.S. government has begun selling or donating to historic preservation groups lights no longer necessary for navigation.

More than 300 lights have passed into private hands this way, according to Coast Guard officials.

But for recreational boaters and small fishing vessels, which represent a sizable chunk of Boston Harbor traffic, the lights still play a role.

"They help with approaches because they can be seen from a great distance away," said David Bryan, general manager of the Boston Sailing Club, which teaches sailing and navigation.

"If the idea is that now everyone is using GPS and you don't need light houses, I would say that redundant information is very important when navigating."

Beyond its role in navigation, Boston Light is also a tourist draw. Snowman has a theory as to why.

"For many, it has a sense of hope and spirituality, not religion, but spirituality," she said in an interview atop the tower, looking out over Boston Harbor. "They look at it and see it as a coming home and safety."

U.S. spacecraft lands safely at Mars north pole

A small science probe blazed through the salmon-colored skies of Mars on Sunday, touching down on a frozen desert at the planet's north pole to search for water and assess conditions for sustaining life, NASA officials said.

The spacecraft, known as Phoenix, landed at 4:53 p.m. PDT after a do-or-die plunge through the planet's thin atmosphere and thruster-jet landing to the Mars surface. It marked the first time that a spacecraft had successfully landed at one of the planet's polar regions.

"It was a hell of a lot scarier than the two Mars rovers," NASA's space sciences chief Ed Weiler said, referring to the cushioned landings of the Spirit and Opportunity rovers. "I kept thinking, 'I wish I had airbags.'

" Pulled by Mars' gravity, Phoenix was tearing along at 12,700 mph before it entered the atmosphere, which slowed the craft so it could pop out a parachute and fire thruster rockets to gently float to the ground.

"It's down, baby, it's down!," yelled a NASA flight controller, looking at signals from Mars showing that Phoenix had landed.

Flight controllers and scientists battled nerves as Phoenix wrapped up its 10-month, 423 million-mile journey. In 14 minutes, the probe transformed from an interplanetary cruiser to a free-standing science station.

"People got really uncomfortable," said Doug McCuistion, director of the Mars Exploration Program at the Jet Propulsion Laboratory in Pasadena, which oversees the mission.

Scientists found in 2002 that Mars' polar regions have vast reservoirs of water frozen beneath a shallow layer of soil. Phoenix was launched August 4, 2007, to sample the water and determine if the right ingredients for life are present.

NASA attempted a landing on Mars' south pole in 1999, but a problem during the final minutes of descent ended the mission.

The U.S. space agency canceled its next Mars lander but successfully dispatched Spirit and Opportunity to the planet's equatorial region to search for signs of past surface water.

Phoenix was created out of spare parts from the failed Polar Lander mission and the mothballed probe. Unlike the rovers, Phoenix did not bounce to the planet's surface in airbags, which are not suitable for larger spacecraft.

Instead, like the 1970s-era Viking probes and the failed Polar Lander mission, it used a jet pack to lower itself to the ground and fold-out legs to land on. "We haven't landed successfully on legs and propulsive rockets in 32 years," Weiler said. "When we send humans there, women and men, they're going to be landing on rockets and legs, so it's important to show that we still know how to do this."

U.S. spacecraft lands safely at Mars north pole

A small science probe blazed through the salmon-colored skies of Mars on Sunday, touching down on a frozen desert at the planet's north pole to search for water and assess conditions for sustaining life, NASA officials said.

The spacecraft, known as Phoenix, landed at 4:53 p.m. PDT after a do-or-die plunge through the planet's thin atmosphere and thruster-jet landing to the Mars surface. It marked the first time that a spacecraft had successfully landed at one of the planet's polar regions.

"It was a hell of a lot scarier than the two Mars rovers," NASA's space sciences chief Ed Weiler said, referring to the cushioned landings of the Spirit and Opportunity rovers. "I kept thinking, 'I wish I had airbags.'"

Pulled by Mars' gravity, Phoenix was tearing along at 12,700 mph before it entered the atmosphere, which slowed the craft so it could pop out a parachute and fire thruster rockets to gently float to the ground.

"It's down, baby, it's down!," yelled a NASA flight controller, looking at signals from Mars showing that Phoenix had landed.

Flight controllers and scientists battled nerves as Phoenix wrapped up its 10-month, 423 million-mile journey. In 14 minutes, the probe transformed from an interplanetary cruiser to a free-standing science station.

"People got really uncomfortable," said Doug McCuistion, director of the Mars Exploration Program at the Jet Propulsion Laboratory in Pasadena, which oversees the mission.

Scientists found in 2002 that Mars' polar regions have vast reservoirs of water frozen beneath a shallow layer of soil. Phoenix was launched August 4, 2007, to sample the water and determine if the right ingredients for life are present.

NASA attempted a landing on Mars' south pole in 1999, but a problem during the final minutes of descent ended the mission.

The U.S. space agency canceled its next Mars lander but successfully dispatched Spirit and Opportunity to the planet's equatorial region to search for signs of past surface water.

Phoenix was created out of spare parts from the failed Polar Lander mission and the mothballed probe. Unlike the rovers, Phoenix did not bounce to the planet's surface in airbags, which are not suitable for larger spacecraft.

Instead, like the 1970s-era Viking probes and the failed Polar Lander mission, it used a jet pack to lower itself to the ground and fold-out legs to land on.

"We haven't landed successfully on legs and propulsive rockets in 32 years," Weiler said. "When we send humans there, women and men, they're going to be landing on rockets and legs, so it's important to show that we still know how to do this."

"American Idol" concludes on ratings upswing

The upset "American Idol" victory by rock singer David Cook drew nearly 32 million U.S. television viewers on Wednesday night, up 3 percent from last year's finale, Nielsen Media Research reported on Thursday.

The two-hour broadcast on News Corp's Fox network marked the second-most-watched episode of the smash hit talent contest this season, behind only the 33 million-plus viewers who tuned in for the debut of the show's seventh installment in January.

The Nielsens rally came after weeks of record low ratings. And "American Idol" finished its latest run down year-to-year for the season as a whole in both overall average audience size and in ratings for viewers aged 18 to 49, the group most prized by advertisers.

It was the second straight year of season-to-season declines though the finale's ratings could be adjusted when the final Nielsen data comes in.

"Idol," which generally airs twice weekly, averaged about 28.1 million viewers per broadcast for the current season, compared with 30.8 million at the height of show's popularity in 2006. But it remains by the far the most watched show on U.S. television.

The unexpected triumph of Cook, 25, who was tending bar and playing in a band before he auditioned for the singing competition, marked one of the more surprising outcomes of the series.

His rival, 17-year-old David Archuleta, went from being the contestant widely dubbed "The Chosen One" to runner-up after a record 97.5 million votes were cast by fans of the show on Tuesday night, final performance episode.

The show is produced by 19 Entertainment, a unit of CKX Inc, and by FremantleMedia, a division of British-based RTL Group., which is controlled by media giant Bertelsmann AG.

End of NICE decade is rude shock for investors:James Saft

The demise of the NICE decade of low inflation and steady growth, mourned by Bank of England Governor Mervyn King, means tough times are ahead for most financial assets.

Calling it the "most difficult challenge yet" for Britain's 11-year-old Monetary Policy Committee, King last week declared the decade of non-inflationary consistent expansion (NICE) over and done, as tight credit and rising inflation force a rebalancing from consumption and borrowing to production and savings.

That is bad news for King and Britain, as the bank will have little freedom to ease the economy's transition by lowering interest rates.

But it will be bad news for financial markets as well, and not just in Britain. Inflation and economic growth will be choppier and less predictable, and so therefore will be company profits.

And if there is one thing investors hate, quite rightly, it is unpredictability. They will react, almost mechanically, to this new volatility by demanding an extra risk premium for holding stocks and bonds.

That extra premium implies, all other things being equal, lower prices for the same earnings power in a stock or a bond.

"We are at the start of the decade of great instability for both real economies and asset markets," said Lena Komileva, an economist and strategist at brokerage Tullett Prebon in London.

"At a time when the cost of finance is decided in asset markets, outside the control of central banks, increased macroeconomic instability and rising asset price volatility as a result will compound the effects of the credit crunch.

"With cheap leverage no longer available, an adverse macroeconomic environment will make the correction of asset valuations in line with real fundamentals that much more painful."

The NICE decade is a manifestation of the broader phenomenon that economists have dubbed the Great Moderation.

Since the 1980s the economies of the West, led by the United States, have enjoyed fewer and less severe downturns, a period characterized above all by less volatility in the economy both in terms of growth and inflation.

There has been a lot of debate about what caused such an extended period of predictability, but what is clear is that the benefits have been huge. It has made it easier for governments, companies and individuals to plan their investment and consumption.

It has also probably contributed to a fall in savings in the English speaking economies, as rainy days have been few and far between.

All that seems to be changing.

THE HIGH VALUE OF PREDICTABILITY

If the Great Moderation is on the way out, investors will simply have to get used to more volatility.

To get a sense of how important this is, look at the premium investors paid for General Electric shares during its period of steady earnings expansion. Or conversely, look at the very low multiple of earnings shareholders are willing to pay to hold investment banking shares, which historically experience huge volatility in earnings.

And though Britain has gone longer without a recession, there is no doubt that the United States has also benefited from low and stable inflation and is now seeing rising inflationary pressure.

More than 20 percent of Britons polled in a survey by the Bank of England and GFK expect inflation to rise by five percent or more in the next year.

In the United States, the Reuters/University of Michigan survey of consumer sentiment, released on Friday, showed that median year-ahead inflation expectations jumped to 5.2 percent in May from 4.8 percent in April, the highest since the dark days of February 1982, when inflation was raging and the Great Moderation just a gleam in Paul Volcker's eye.

The latest bout of inflation is being caused by skyrocketing prices for agricultural commodities and energy. And whereas emerging markets like China were only one or two years ago supplying disinflation to the west through competition and cheap manufactured goods, these countries are now themselves in the grip of rising wages as well as commodity prices, making them a source of inflation.

Russell Jones, a fixed income strategist at Royal Bank of Canada in London, thinks that rising volatility won't just hit asset prices across the board.

"Volatility also heightens risk aversion as well," he said. "People are frightened off by volatility and they will keep their money in less risky asset."

Jones thinks Britain faces a period he characterizes as "evil," for Exacting period of Volatile Inflation and Low growth.

Quite possibly it won't be that bad, but two things are reasonably sure: central banks will not have the same freedom to lower rates they have used in the past to dampen economic volatility, and investors will have to grapple with the costs.

At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund.

Senate panel passes housing rescue plan

The U.S. Senate Banking Committee approved legislation on Tuesday that could save a half million homeowners from fore closure and help stabilize the nation's rattled housing market.

Under the plan, lenders who agree to erase a large share of the original loan amount could win a government guarantee on future mortgage payments. The bill would also create a stronger regulator for mortgage-finance companies Fannie Mae and Freddie Mac.

Both the Senate bill and a similar plan passed by the House of Representatives earlier this month would create a fund under the Federal Housing Administration to allow distressed homeowners to refinance into government-guaranteed loans.

Congress is trying to stem a wave of foreclosures estimated at about 1.4 million this year with home prices falling and many borrowers unable to make payments on costly mortgages taken out before the real estate bubble burst.

Senate Republicans and the White House had worried a new FHA program would put taxpayers on the hook for failing loans. But under the compromise bill passed by the Senate panel, Fannie Mae and Freddie Mac will absorb loan losses.

The bill that cleared the Senate committee on Tuesday now must go before the full Senate for a vote. If approved, lawmakers will need to hammer out a compromise between the competing House and Senate versions.

Rep. Barney Frank, chairman of the House Financial Services Committee and the author of the House legislation, said he had questions about how the Senate plan would fund mortgage rescues. But he said he expects lawmakers from both chambers to agree on a bill that can go to President George W. Bush.

Democratic Sen. Christopher Dodd of Connecticut, chairman of the Senate panel, has said he hopes to see the mortgage rescue package reach Bush by July 4.

While the White House had threatened to veto the House bill, it said it will take a close look at the Senate version.

"I don't believe the president will veto this," Sen. Richard Shelby of Alabama, the top Republican on the banking panel, told reporters after the vote.

DIFFERENT PLANS

The foreclosure prevention plan that cleared the House could assist about 500,000 borrowers at a cost to taxpayers of about $1.7 billion, according to the nonpartisan Congressional Budget Office.

The White House objected specifically to the cost of the House plan and Shelby demanded that its sponsors find a way to fund it without tapping governmen coffers.

After weeks of haggling, Shelby and Dodd agreed to scale back the FHA refinancing fund so it would cost only about $500 million. Dodd said the bill would still help a similar number of homeowners as the House version.

The Senate bill would cover the cost of the program by diverting money from an affordable housing trust fund to be set up under Fannie Mae and Freddie Mac.

Under the trust fund proposal, the two companies would contribute a share of their profits to create a pot of money for housing advocacy groups to expand affordable housing.

The affordable housing trust fund was a key element in the housing rescue package authored by Frank, who said he was concerned about the Senate plan to divert those funds.

"A fight is brewing on the affordable housing trust fund," the Massachusetts Democrat said. "That would be one of the most contentious issues between us ... So we will deal with that."

Freddie Mac's chief financial officer said the company is "generally supportive" of the legislation.

Speaking at a Lehman Brothers conference in London via Webcast, Buddy Piszel said, however, that the new regulator for Freddie Mac and Fannie Mae should maintain the companies' funding flexibility as they are the main sources of stability in "the worst housing downturn anyone has ever seen."

A spokesman for Fannie Mae said the company was concerned that the legislation might put a crimp in its ability to invest in the nation's housing market.

Chinese man pulled to safety eight days after quake

A man was pulled alive from the rubble of a power plant on Tuesday, eight days after China's deadly earthquake and just hours after predictions of another tremor sent thousands running on to streets in terror.

Ma Yuanjiang was rescued in Wenchuan county, epicenter of the May 12 quake in mountainous Sichuan province, after 179 hours buried in the rubble, state media said.

His rescue came as authorities tried to restore calm in the provincial capital, Chengdu, after tens of thousands rushed into the streets alarmed by a television prediction of another powerful earthquake.

That, along with fresh aftershocks and forecast heavy rain, compounded the difficulties for military, government and private workers trying to ensure millions of homeless are fed and housed.

Anger was building among bereaved parents in Sichuan over the way many school buildings had collapsed, burying whole classrooms full of children. In one town, in a rare public protest, hundreds demanded punishment for anyone guilty of shoddy construction.

Chengdu residents rushed from their homes before midnight on Monday, alarmed by the prediction of another earthquake after the 7.9 magnitude tremor on May 12.

Hundreds of aftershocks have been felt over the past week, bringing down more buildings and causing landslides. A few hours after the television report, a 5-magnitude tremor was felt.

But on Tuesday, provincial television screened interviews with a series of seismological bureau officials to explain the prediction and calm a jangled populace.

"Just because you can feel aftershocks, it doesn't mean they will hurt you. Of course, that doesn't mean you should stand in harm's way," said Han Weiding, researcher with the local seismological bureau.

ANGER OVER SCHOOLS

The pandemonium showed how nerves have been stretched to breaking point by the main quake and its aftershocks, now known to have killed more than 34,000 and injured 245,000.

"I think the television coverage is overdoing it. They're scaring people," said a hotel worker surnamed Li, who spent the night in a public park.

The most lamented victims of the quake have been the thousands of children who died when school buildings collapsed.

In Juyuan town, hundreds of grieving parents demanded an annual memorial day for their children, punishment of officials or builders responsible for shoddy schools, and compensation.

"How come all the houses didn't fall down, but the school did? And how come that happened in so many places?" demanded Zhao, whose two daughters were crushed to death.

"We want a memorial day for the children, but we also want criminal prosecution of those responsible, no matter who they are."

As China's ruling Communist Party seeks to maintain a staunch front of unity and stability after the quake, the incipient protests by parents could be troublesome, for many of them blame official graft and laxity, more than nature, for the deaths.

HOPE REMAINS

The number of dead from the May 12 quake, the worst to hit China since 1976, is expected to rise dramatically. The Communist Party chief in Sichuan said on Monday nearly 30,000 were still missing and a further 5,000 were believed buried under rubble.

Ma's release raised hopes of further rescues. In 1990, a quake survivor was pulled out alive two weeks after being buried under a collapsed hotel in the northern Philippines.

Rescuers found Ma on Saturday when they were digging a hole trying to reach a colleague, Yu Jinhua, Xinhua news agency said.

"Following an amputation operation, Yu was rescued at about 6 p.m. on May 18," Xinhua said. "Rescuers then turned to Ma and sent sweetened water to him through a straw."

Rescuers had reached the most remote areas of the province by Monday, but roads to some 50 affected towns and villages were still blocked by rocks and mudslides.

Whole towns have been flattened in mountainous areas north and west of Chengdu, and about 4.8 million people are homeless. Housing and feeding during the long-term rebuilding effort will prove a major challenge.

The quake warning also prompted panic in neighboring Chongqing municipality and Guizhou province.

"The panic was much worse in Guizhou, where reports of a frog and toad migration also spread public fear," Xinhua said.

In Tongzi county in Zunyi, a city in the north of Guizhou that borders Sichuan and Chongqing, "some villagers said they saw a massive migration of frogs and toads on Monday night, which they took as quake forecast", Xinhua said, quoting Zunyi's Vice Mayor, Zeng Yongtao.

He said the city government was investigating.

Microsoft proposes alternative deal to Yahoo

Microsoft Corp said on Sunday it proposed an alternative deal to Yahoo Inc rather than a full acquisition, but the move was unlikely to win favor with financier Carl Icahn, a person familiar with his thinking said.

Icahn launched a proxy campaign on Thursday to replace Yahoo's board with directors who would reopen talks with Microsoft, saying Yahoo had acted irrationally in refusing the giant software company's $47.5 billion bid.

Microsoft walked away from its pursuit of Yahoo two weeks ago after three months of negotiations when Yahoo's board rejected Microsoft's sweetened offer of $33 a share, saying the company was worth at least $37 a share.

The software giant's move on Sunday was likely to prompt the billionaire investor to press Yahoo to further pursue a possible alliance with Google, the source said.

"Microsoft is trying to get the milk without buying the cow, and if you look at Icahn's history, he has never been used that way," said this person. "He does not want to see Yahoo pushed into some joint venture with Microsoft and is not going to be used to push Yahoo into it."

Microsoft's statement on Sunday said it was "considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo." It did not clarify what that alternative might be.

The New York Times reported that Microsoft and Yahoo may form a partnership or joint venture for search-related advertising to take on Google Inc, which dominates the search market with a share significantly larger than a combined Yahoo and Microsoft.

For its part, Yahoo continues to talk with Google Inc about a search advertising partnership and a deal could come as early as this week, a source familiar with the talks said on Thursday.

Microsoft emphasized it was not proposing to make a new bid to buy all of Yahoo, after recently being rebuffed, but could reconsider.

Yahoo replied later on Sunday that it continued to consider a number of strategic alternatives and was "open to pursuing any transaction which is in the best interest of our stockholders."

The company's board will "evaluate each of our alternatives, including any Microsoft proposal, consistent with its fiduciary duties, with a focus on maximizing stockholder value," Yahoo said in a statement.

It added it had confirmed with Microsoft that it was not interested in "pursuing an acquisition of all of Yahoo at this time."

ANALYSTS SPLIT

Analysts were split on the benefits of an alternative scenario to a full-fledged takeover.

"I definitely think an alternative deal is better than a full acquisition," said Toan Tran, analyst at Morningstar. "It is positive for both companies, because you are getting the benefits of a Yahoo acquisition without the negatives, namely the integration risks."

But Kim Caughey, a senior analyst at Fort Pitt Capital Group, said the market will probably send Yahoo shares higher while pushing down Microsoft shares when the market opens on Monday.

Caughey said a joint venture or minority investment with Yahoo could cause confusion about who was in charge.

"Microsoft walking away from Yahoo was a total head fake," said Caughey. "Microsoft is a terrible poker player if it thought people were going to believe that the deal was dead."

Meanwhile, Microsoft and Icahn have not held discussions about Yahoo, said another source close to the company.

In a letter to Icahn last week, Yahoo board Chairman Roy Bostock said a new board would not be in the best interests of Yahoo investors, adding Yahoo would consider any deal from any party, including Microsoft, if it offered the company full value.

Icahn, who has said he had accumulated 59 million shares and options in Yahoo, also has the support of Paulson & Co, a $30 billion hedge fund that has amassed a 3.4 percent stake in Yahoo, and other investors upset by the board's handling of negotiations with Microsoft.

New bin Laden message to focus on Israel: monitors

Al Qaeda leader Osama bin Laden will address the 60th anniversary of Israel's founding in a Web message expected to underscore a growing focus on the Jewish state, U.S.-based Internet monitors said on Thursday.

Militant Islamist message boards on the Internet carried a banner announcing the statement with Israel's anniversary as the topic, said the monitoring service of the U.S. author and analyst who goes by the name Laura Mansfield.

The speech is addressed to "Western peoples" and entitled "The Causes of Conflict on the 60th Anniversary of the State of Israeli Occupation," the SITE Institute monitoring group said. The monitor IntelCenter said an audio-video statement was expected to be released within 72 hours.

"Bin Laden seems to be shifting gears," over the last decade, Mansfield said. "In his initial messages, bin Laden's focus was on the removal of U.S. forces from (Saudi Arabia) but in recent years he has more closely wedded himself to the Palestinian issue."

In a message on March 20, his second in 2008, bin Laden urged Muslims to maintain the struggle against U.S. forces in Iraq as a path toward "liberating Palestine."

Al Qaeda has vowed attacks on Jews both within and outside Israel, and regularly expressed support for the Palestinians. Al Qaeda was blamed for a suicide attack on an Israeli-owned hotel in Kenya and a simultaneous failed attempt to shoot down an Israeli charter jet near the Mombasa, Kenya, airport in 2002.

But despite calls by al Qaeda supporters for the militant network to establish a presence in Palestinian areas, U.S. intelligence officials see no evidence it has done so. Analysts say al Qaeda faces competition for turf from the well established Hamas.

Al Qaeda's second-in-command, Ayman al-Zawahri, criticized Hamas in March 2007 as a servant of U.S. interests by agreeing to respect past Palestinian accords with Israel.

He denounced Saudi Arabia and Egypt in December for serving U.S. interests, as he accused Arab leaders of betraying Palestinians by attending a Middle East peace conference in the United States.

A new message from Zawahri was likely in the coming week and was expected to pertain to Egypt, Mansfield said.

Delta/Northwest merger seen likely to be approved

A proposal by Delta Air Lines to buy Northwest Airlines is likely to be approved by the U.S. government, an influential lawmaker on aviation affairs said on Wednesday.

Rep. John Mica, a Florida Republican and former chairman of the House of Representatives aviation subcommittee, told a hearing on the merger proposal the deal to create the world's biggest airline did not appear anti-competitive.

Democratic colleagues on the panel predicted the merger would probably lead to service reductions and job cuts and usher in other mergers to further narrow choices for consumers.

"In short, the pending merger places at risk the consumer benefits of airline deregulation," said James Oberstar, a Minnesota Democrat and chairman of the House Transportation Committee.

But Mica said the industry faces enormous challenges and it was more likely than not that "this merger will be granted" by officials at the Justice and Transportation departments who are reviewing the potential impact on competition and service.

Antitrust and industry experts have said previously the Delta/Northwest proposal stood a good chance of winning regulatory approval.

A senior official from the Justice Department's antitrust division, James O'Connell, told the hearing that he could not comment on the case.

But O'Connell said competition in the airline industry "is critical" and said the agency has a "strong record" of "enforcing antitrust laws" in the industry.

Delta proposed in April to acquire rival Northwest in an all-stock deal. Executives of the merged company say they plan to expand service, especially overseas.

So far, the proposal has met little or no resistance in Congress, which cannot block a deal. Lawmakers, however, can disrupt the timing of the regulatory review, influence policymakers and rally consumers and workers.

Aviation subcommittee Democrats gave the chief executives of both airlines -- Richard Anderson of Delta and Douglas Steenland of Northwest their toughest public review yet.

"Previous airline mergers have rarely produced the projected benefits and efficiencies promised," said Rep. Jerry Costello of Illinois, the current aviation subcommittee chairman. "This has frequently led to reduced competition and higher fares."

Delta estimates annual cost savings and revenue gains of at least $1 billion for the merged company. Of roughly $700 million in projected cost savings outlined by Anderson, at least $150 million would come from combining operations at airports. Another $150 million would come from paring corporate overhead.

Delta estimates roughly 1,000 job losses in management and administrative ranks from the deal.

While the deal is supported by the Delta pilots' union, pilots and flight attendants at Northwest agree with labor-friendly Democrats that the combination appears overly optimistic and could be bad for consumers and lead to labor friction.

"With the price of oil, the weak economy, the closed credit markets, and the huge costs of combining the two companies, there will be no margin for error," said Dave Stevens, chairman of the Northwest pilots union. "The net result may be a weak combined carrier in a terrible economic environment."

Stevens said Northwest should remain independent. But he noted there was a "small window" of time to negotiate a new contract with management and joint seniority agreement with Delta pilots, which has been elusive for months.

Delta management has agreed to wage and benefit terms with its pilots -- including an equity stake in the new company.