Wednesday morning headlines

Stocks off: More not-so-hot earnings results, along with a dip in durable goods orders, can't be helping. Dow is down 35 points in early trading.

Microsoft-Yahoo deal: The two tech giants have finally come together on a 10-year search partnership that will certainly get Google's attention. Under the deal, Yahoo will use Microsoft's Bing search engine. Yahoo handles sales of search ads for both companies. From the NYT:

The Microsoft-Yahoo pact is measured step that represents a pragmatic division of duties between the two companies instead of the blockbuster deal Microsoft initiated last year, when it bid $47.5 billion to buy Yahoo. That hostile offer was ultimately withdrawn by Microsoft, and its collapse and the uncertain aftermath for the Web company led to a management change and the replacement of its co-founder Jerry Yang by Carol Bartz, an outsider who is now Yahoo's chief executive.

Budget cuts hurt L.A.: It might cost the city more than $200 million in lost revenue, though some of that could be made up by issuing bonds. The lost dollars are from property tax money that the state is borrowing and from the Community Redevelopment Agency. (Daily News)

Furloughs for tax collectors: The state treasury is expected to lose at least $550 million over the next three years because the Franchise Tax Board is not being exempted from furlough requirements (three days each month). From the LAT:

The board collects both the personal and corporate income tax, which bankrolls about 70% of the state's $85-billion general fund. The estimated tax collections lost through furloughs represent about 1% of all state income taxes paid in the state. Forcing about 5,000 people at the board to take furloughs essentially reduces an already streamlined workforce by about 15%. But the productivity losses don't stop there. An additional 289 staffers have received notices that they could be laid off in the fall.

Avery Dennison pays fine: The Pasadena label maker shells out $200,000 to settle SEC charges that its employees bribed Chinese government officials with kickbacks, sightseeing trips and gifts. The company said it disciplined a handful of employees and reported the incidents to the feds. (LAT)

Time Warner has weak quarter: The media giant reports a 34 percent drop in second-quarter earnings, largely the result of the ad slump and slow DVD sales. (AP)

Madoff speaks: He tells an attorney from behind bars that there were times during his scamming when he thought the feds had finally got him. The attorney, Joseph Cotchett, had threatened to sue members of Madoff's family. From the NY Post:

"He gave us a lot of information that we believe will help us aid the victims tremendously," Cotchett said. "He was very direct and didn't hold back anything." "The detail was extraordinary. I was very surprised at how candid and open he was." Cotchett said that Madoff told him that "it all started in the mid-'90s," and that the disgraced financier provided "the details of how it all started."

Marciano loses suit: A jury has awarded $370 million to five former employees of the Guess Jeans co-founder in a defamation suit. Marciano accused them of stealing millions of dollars in funds and artwork. (LAT)

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