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How much is good advice worth? At least one St. Louis company paid a director more than $1 million, most of it in stock that has since declined in value.

Other directors collected hundreds of thousands by serving on multiple boards.

For fiscal 2007, David M. Meyer, who serves as non-executive chairman of CPI Corp., got compensation worth $1.4 million from the company, which operates Sears Portrait Studios and other photography businesses. At CPI, he outearned many directors who serve on two or more boards. Meyer also drew $143,679 in pay as a director of Ashworth Inc., a California clothing maker.

Meyer is a co-founder of Knightspoint Partners LLC, a New York-based investment company that led a shareholder ouster of CPI directors in 2004. He served as the company’s interim chief executive until 2005.

Meyer’s pay includes $16,500 in cash and $7,810 in miscellaneous pay in addition to 28,253 shares of restricted stock valued at $1.4 million in the proxy statement. Meyer got a little over half of the shares for his help with an acquisition last year and the rest for unspecified services he provided to the company in 2006.

Meyer’s case illustrates one of the problems with the way companies are reporting pay for directors. They’re required to report the accounting expense of the compensation, not what directors actually received.

Until the restrictions on the shares expire, they’re carried on the company’s ledgers. When the value of the stock declines, its value on the books must be written down.

The stock Meyer received was valued at an average of $48.56 a share in the proxy, but CPI’s stock has fallen recently in value, hitting a low of $12.39 Aug. 21 and trading recently for less than $13 a share.

If the company marks the value of the shares down, it could mean that CPI will report Meyer’s pay as a negative number next year.

That’s exactly what happened at Brown Group.

The company, which had the highest paid director a year ago, this year reported that most of its directors lost money on their service to the company. Big gains in stock values that had been reported on last year’s proxy were reversed when the value of Brown Shoe stock fell from a high of $37.39 in February 2007 to $11.91 on Jan. 8.

Directors who deferred their pay saw the biggest declines. Brown defers pay into "stock units," which correspond in value to the company’s common stock. They’re paid out in cash when a director leaves the board.

Patricia McGinnis, who deferred all of her cash pay, was the area’s highest-earning director for 2006 at $754,358. Brown reported her 2007 pay as a negative $639,858. The company valued her stock-based pay at $699,858 for 2006 but as a negative $699,858 for 2007.

Brown Shoe said McGinnis’ negative stock award reflects a paper loss on deferred compensation from earlier years through 2006. For 2006, the number was positive, reflecting a gain in value through the end of 2006. For 2007, the company marked the value down because of the lower stock price, but it could not reduce the award by more than the amount it increased in 2006 fiscal year. Brown declined to provide further details.

According to Brown’s proxy, the figure the company reported doesn’t reflect the market value of the underlying stock or what McGinnis would receive if she left the board. That would depend on the number of stock units she had accumulated and the stock prices when she leaves.

Peter Lupo, managing director of Pearl Meyer & Partners, a New York-based compensation consulting firm, agrees that the way directors’ stock-based pay is reported can be confusing. If a company provides information about the amount of stock given and its vesting schedule, you can calculate the "consulting value" of the stock. However, assigning a value could be arbitrary if the company doesn’t tell you when the director got it.

This year’s second-highest paid director was Patrick T. Stokes, the former chief executive of Anheuser-Busch Cos. Stokes serves on the boards at A-B, Ameren Corp. and U.S. Bancorp. Altogether, Stokes took in $1.3 million, including $1.07 million from the two companies based here.

Stokes’ biggest paycheck, $927,018, came from his former employer, where he has a post-retirement consulting gig that paid $750,000 last year. A-B provides Stokes with an office and administrative help as well as transportation when he is providing the consulting service. It spent $390,000 on the office and other expenses for Stokes’ consulting arrangement last year.

Stokes’ consulting was due to end next August, but it will come to an early end as a result of Belgian giant InBev’s agreement to buy A-B. The deal is expected to close later this year.

August A. Busch III, also a former A-B chief executive, took home more than $1.1 million in pay for serving as a director of A-B and Emerson here and at AT&T of San Antonio.

Busch III’s $579,649 in pay from the brewery includes $392,168 for personal security and $16,992 in consulting fees. According to company documents, the company provides security at Busch’s home "in recognition of Mr. Busch III’s continued prominence resulting from his years of service to the company."

A-B also provides Busch with an office, administrative help and transportation when he consults for the company. It also pays some bills related to aircraft owned by Busch or companies in which he has an interest. Busch’s consulting and other post-retirement arrangements cost the brewer $635,000 over and above his director pay.

A-B paid another $407,611 to Ginnaire Rental Inc., a company that Busch owns, to lease aircraft for business use.

William P. Stiritz was the next-highest paid director at $818,233, including $610,622 from three St. Louis area companies. Stiritz, the former chief executive of Ralston-Purina Co., once served on more than 10 boards.

Stiritz, 74, has cut his board commitments in half. He now serves at Ralcorp Holdings Inc., Energizer Holdings Inc., Reliance Bancshares Inc., Macy’s and Vail Resorts Inc. Ralcorp and Energizer both were spun off from Ralston under Stiritz’s guidance. Ralcorp owns about 19 percent of Vail Resorts.

Public companies here spent amounts ranging from $93,500 to nearly $4 million on director pay last year.

Anheuser-Busch topped the list, spending $3.96 million on 15 directors, followed by Express Scripts Inc., which spent $2.66 million for 11 directors. Twenty-one boards spent more than $1 million.

Companies pay directors in cash, stock awards, stock options and miscellaneous pay, which can include travel for spouses, consulting fees and things like insurance or home security.

About 46 percent of the $46.6 million St. Louis companies paid directors here last year was cash — a combination of retainers, fees for attending meetings and extra pay for serving as committee chairmen. The pay total is for 339 outside directors occupying 363 board positions; some directors serve on multiple boards.

Another $16 million or 33 percent of pay was stock, and $7.5 million or 16 percent was in stock options. The amounts listed in these categories represented the company’s cost for the stock-based pay, not necessarily what directors will realize if they sell the stock or exercise the options.

Because this is the first year all St. Louis-based companies were required to disclose director pay, it’s almost impossible to determine whether director pay is increasing overall. Eleven companies increased the retainers they pay to directors. RehabCare Group and First Banks Inc., which were among a handful not paying director salaries in prior years, added them this year.

Some companies require directors to take all of their pay in stock or units that rise and fall in value along with the company’s stock. Others encourage it by giving directors a bonus for selecting stock rather than cash pay. Still others divide directors’ pay between stock and cash.

Corporate governance experts say that requiring directors to hold stock aligns their interests with those of other shareholders.

Arch Coal, for example, requires directors to defer $40,000 of their $120,000 retainer into a hypothetical investment in Arch stock, which is paid in cash when a director leaves the board.

Belden Inc. pays a $60,000 cash retainer and also gives directors restricted stock worth $115,000. Similarly, Charter Communications Inc. pays directors $40,000 in cash and gives them restricted stock worth $65,000.

At Emerson, $100,000 of each director’s $150,000 retainer is paid in restricted stock.

Express Scripts gives directors $115,000 in stock at the first meeting and a $200,000 grant every year in addition to a $30,000 cash retainer.

Bill Coleman, chief compensation officer for Salary.com, says he thinks it’s good for directors to hold stock because it aligns their interests with shareholders. However, he thinks directors’ pay should be kept pretty simple, with few benefits, because they should be paid for their knowledge and what they can contribute to the company.

jerristroud@post-dispatch.com | 314-340-8384

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The applause hasn’t died down for the new Chevrolet Volt, but General Motors is already planning where the technology for this new electric car can go next.

The Volt, which made its official debut Tuesday, is based on what GM calls the "E-Flex platform." This new type of vehicle uses high-capacity lithium-ion batteries and will be able to go up to 40 miles on a full charge. If a driver wants to go farther, the car’s small gasoline engine will generate more electricity, allowing trips of over 300 miles.

But that technology doesn’t have to stop with the Volt, according to said Tony Posawatz, vehicle line director for the E-Flex program. Different body styles - wagons or small cars, for instance - and versions styled for different brands are under consideration for a future, improved E-Flex use.

"These are some of the alternatives that are being reviewed, even as we speak, relative to the future beyond Volt," Posawatz said in an interview with CNNMoney.com after the Volt’s official unveiling in Detroit Tuesday.

He made it clear, though, that any discussions of E-Flex’s future are preliminary. No decisions have been made, but lots of options are on the table.

It’s not too soon for GM to be thinking about this, either, said Bill Pochiluk of the auto industry consulting firm AutomotiveCompass. Transferring the technology won’t be that hard, he said.

"Some of the systems and modules will be directly transferable to other vehicles," according to Pochiluk. Add to that a much more competitive hybrid electric car market by the time the Volt comes out, he said.

By the summer of 2009, Pochiluk sees Honda and Toyota still dominating the market. But GM will move fast, he predicted, becoming the third biggest hybrid vehicle manufacturer with no one else even close.

As with any other vehicle platform, different body styles could easily be built on top of the Volt’s engineering. In the same way that the Chevy Cobalt car and HHR wagon are basically the same vehicle underneath while looking completely different, GM could easily put different "top hats," as they’re called in the industry, on the E-Flex platform.

That would be an easy first step to extending the E-Flex’s market in different directions, Posawatz said. There are already indications that there could be an appetite.

"It’s grown beyond our wildest imaginations, the degree to which people connected to the idea of the car, the spirit of the car," Posawatz said. "That’s given us a degree of confidence that this could be a family of vehicles in the future."

Creating the Volt meant engineers had to clear the big hurdles the first time out.

But when you build an electric car that doesn’t have to compromise on utility or performance, Posawatz noted, "it’s easier taking it in different directions."

The E-Flex powertrain, which is the car’s engine and electric motor, works well in a mid-size sedan carrying four passengers and cargo, so it has the flexibility to accommodate more or less demand for different vehicles, Posawatz said.

"This has a little bit of bandwidth," Posawatz said. "This can go on a little bit bigger vehicle if necessary." And it can be scaled down to create more economical versions, he said. With a smaller battery pack, a vehicle might not go as far without needing gasoline. But it would also cost a lot less, an appealing proposition to some.

"There are a number of customers out there that maybe a 20-mile [electric-only range] vehicle would work, and they would still use little to no petroleum," said Posawatz.

Forgoing the gasoline engine altogether for a shorter-range car is another possibility, Posawatz said, but it’s one that creates problems.

First of all, it just goes against the whole idea of E-Flex. GM believes there’s less of a market for a limited-use vehicle. Why wouldn’t customers want the option (even if they rarely use it) of driving a car farther than batteries alone will take them?

Pochiluk agreed that all-electric cars just aren’t as attractive from a marketing standpoint. People will always be scared of getting stranded. "I think it’s impossible to go without a range extender when you’ve only got 40 miles," he said.

Another problem is that electric only operation is harder on a vehicle’s battery, according to Posawatz. Repeatedly draining a battery down to near zero, will mean much shorter battery lives, he said.

"We’re only cycling it to a 50% state of charge," with the E-Flex platform, said Posawatz, "so we’re not beating the crap out of the battery."

For an automaker with the scope of General Motors, different branding creates many opportunities for the range-extended E-Flex. There will probably be E-Flex vehicles that aren’t Chevrolets. No doubt, Cadillac, Pontiac, Saturn and other GM dealers would love to get their own plug-in vehicles to sell.

But for now, Posawatz is concentrating on just getting the ball in play. "You always have to do the first car right and well." 

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The future of Wall Street is up for grabs — and changing by the minute.

In the course of a few hours Sunday, Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz), the fourth-largest investment bank hobbled by toxic real estate assets, was left for dead and may file for bankruptcy before Monday.

Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz), the No. 3 investment bank and weakest remaining firm after $40 billion of write downs, rushed into the arms of Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) for $29 a share — less than half its 52-week high but almost $12 higher than its closing price Friday.

These moves, coming after the U.S. government’s takeover of Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) and six months after the meltdown of Bear Stearns and its shotgun marriage to JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz), renew questions of what Wall Street will look like in an environment of lower leverage and reduce appetite for risk.

Now there are questions whether any of the independent firms will still be around. Certainly, for those that survive the current 100-year storm, Wall Street will look a lot different.

“It seems perfectly clear leverage is going down, that banks will be more careful who they do business with, and that there is a desire to be more of an agent than a principal,” said Donald Marron, head of private equity firm Lightyear Capital and former CEO of PaineWebber Group.

“There will be a trend toward specialization. It’s hard to be in too many different places. Firms will concentrate on their strengths.”

After more than 13 months of a global credit crunch, the rules of the marketplace have changed. 

Read more

Bank of America says it will buy back about $4.5 billion of auction-rate securities as part of a settlement agreement with Massachusetts regulators.

The Charlotte, N.C.-based bank says it continues to cooperate fully with ongoing investigations by the Securities and Exchange Commission and the New York Attorney General’s Office.

Bank of America (BAC, Fortune 500) joins eight other big investment banks that have agreed to buy back a total of more than $50 billion of the securities.

The auction-rate securities market involved investors buying and selling instruments that resembled corporate debt, except the interest rates were reset at regular auctions, some as frequently as once a week. The market for the securities collapsed in February. 

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Despite Hurricane Gustav’s threat to infrastructure in the Gulf of Mexico, oil prices fell from an earlier rally Friday as the dollar gained traction against the euro.

U.S. crude for October delivery fell 13 cents to settle at $115.46 a barrel. Prices were higher earlier as investors braced for the storm, which is expected to make landfall in the U.S. on Tuesday morning.

Oil rose as high as $118.76 during Friday trading as Gustav bore down on the Gulf, but then pulled back as the dollar gained strength against the 15-nation euro.

Dollar rises: The dollar gained against the euro after a Chicago Purchasing Managers Index report showed an unexpected increase in manufacturing activity around the Chicago area.

A University of Michigan report also showed a better than expected rise in consumer sentiment.

The two reports lessened the impact of a reported decline in personal income, which signaled that the effects of the government’s $90 billion stimulus program were drawing to an end.

The decline in personal income also indicates that consumers may not have money to pay for a lot of expensive petroleum-based fuel, which pulled oil down as well.

Additionally, oil is traded in dollars, so a stronger dollar makes oil more expensive for foreign investors. As the dollar rises, many who purchase commodities as a hedge against inflation transfer their money into other markets.

The dollar rose against euro Friday, but fell against the Japanese yen.

Gustav bears down: Oil prices lost traction despite projections that Hurricane Gustav will to enter the Gulf on Sunday. Some models show the storm could reach Category 4 strength before it reaches Cuba, according to the National Hurricane Center.

Royal Dutch Shell (RDS), ExxonMobil (XOM, Fortune 500) and ConocoPhillips (COP, Fortune 500) were among the oil companies prepared to evacuate major offshore rigs Friday.

Facilities in the Gulf account for about 25% of U.S. oil production. Offshore platforms and pipelines buried in the sea bed are vulnerable to extreme storms such as hurricanes.

Just three years ago, hurricanes Katrina and Rita devastated oil facilities before battering the Louisiana coast. The storms, which reached Category 5 strength before making landfall, destroyed 113 offshore oil and natural gas platforms and damaged 457 pipelines in 2005.

Oil companies are shutting down production and oil traders are hedging their bets ahead of the weekend, according to Karen Matusic, spokeswoman for the American Petroleum Institute.

"Even if the storm doesn’t hit, you’re going to get companies evacuating the rigs for precautionary reasons," she said.

Storm upgrades: Oil companies have tried to improve the storm resistance of offshore rigs and pipelines since Katrina and Rita.

Drilling rigs and production platforms moored to the sea floor in the Gulf had been attached with eight lines, and are now required to be moored with 12 to 16 lines. Pipelines are now required to be buried deeper beneath the sea floor.

"That’s one reason the response to this storm has been somewhat muted so far," said Jim Ritterbusch, president of oil advisory firm Ritterbusch and Associates.

The new safety measures should make facilities much more resistant to storm damage, but Gustav would be their first real-world test.

"There’s concern for the offshore platforms," said Michael Lynch, president of Strategic Energy & Economic Research, Inc. But the biggest concern is "power loss at some facilities," he said.

If the storm disrupts electricity, the platforms may be unable to operate. However, facilities are generally better equipped to handle power outages now than they were in 2005, according to Lynch.

"The biggest risk is that you get the major loss of a natural gas processing facility," said Lynch. Fluctuations in natural gas prices can also affect crude oil, since both are used in similar applications such as home heating.

On Thursday, Gustav sent crude prices as high as $120.50, although prices later fell in part because of a report that there was a large increase in natural gas supplies.

If the storm does make a direct hit on Gulf facilities, the Energy Department said Thursday it was prepared to release supplies from the government’s 700 million barrel Strategic Petroleum Reserve to cushion the blow. 

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You can’t walk within shouting distance of the Pepsi Center here without sighting Ben Affleck, Eva Longoria, Stephen Spielberg or Melissa Etheridge.

After Hillary Clinton’s speech Tuesday, reporters lurched after passed canap

The Supreme Court on Wednesday reduced a $2.5 billion punitive damages award against energy giant Exxon for its role in an infamous 1989 maritime oil spill off the coast of Alaska.

The high court concluded that punitive damages should roughly match actual damages from the environmental disaster, which were about $507 million. Lower courts were asked to reassess the jury verdict, extending the years-long litigation in the case.

"The award here should be limited to an amount equal to compensatory damages," wrote Justice David Souter.

Justices Ruth Bader Ginsburg, John Paul Stevens and Stephen Breyer agreed in part and disagreed in part with the majority ruling. In such cases, it is left open to interpretation whether their dissent is strong enough to be considered a vote against the majority.

In the incident, commonly known as the Exxon Valdez spill, 11 million gallons of crude oil spilled in pristine waters off the southern end of the state when a supertanker - the Exxon Valdez - ran aground on an offshore reef. Petroleum soaked some 1,200 miles of coastline, killing countless birds and marine life.

Much of the initial blame for the accident was placed on Capt. Joseph Hazelwood, who was cited by various courts for relapsed alcoholism that contributed to mistakes, leaving his vessel helplessly stuck on Bligh Reef.

Witnesses said he had been drinking heavily before the Exxon Valdez left port that night, and had left the ship’s bridge when it left the normal shipping channels to avoid ice. Both actions violated Coast Guard and company policies.

A class-action lawsuit was brought against Exxon by nearly 33,000 plaintiffs - including fishermen, landowners, local governments and Native Americans - who claimed private economic harm from the spill.

The company, now known as Exxon Mobil (XOM, Fortune 500), has already paid $3.4 billion in cleanup costs and millions in government fines and it argues it should not be forced to continue to pay for the spill.

A jury in 1994 awarded $5 billion in the class-action suit. A federal court later cut that amount in half, but it was still believed to be the largest punitive-damages judgment of its kind in U.S. courts. Punitive damages are designed to punish a wrongdoer, while compensatory damages compensate a wronged party for the loss they suffered.

The issue before the justices was whether the judgment was too high, based on past high court precedents limiting punitive awards.

Lawyers for the plaintiffs claimed the company has deep financial pockets, and noted in their appeal that even a multibillion-dollar judgment amounts only to "barely more than three weeks of Exxon’s net profits."

Alaska residents who attended oral arguments in April held signs noting the Texas-based company reported an annual profit last year of $40.6 billion, a record for a U.S. firm.

Exxon Mobil claimed the federal Clean Water Act does not allow for punitive damages for oil spills and other open-water environmental incidents similar to the Exxon Valdez. And they said federal maritime law prevents company owners from being held liable for personally negligent conduct by the captain or crew.

Souter wrote, "The common sense of justice would surely bar penalties that reasonable people would think excessive for the harm caused in the circumstances."

The ruling was applauded by organizations such as the U.S. Chamber of Commerce, the world’s largest business federation.

"This is good news for companies concerned about reining in excessive punitive damages," said Tom Donohue, the chamber’s president and CEO, in a written statement. "For years, the chamber has argued that punitive damages are too unpredictable and unfair, and today the court agreed."

The high court has generally tried to limit punitive damages that are deemed "excessive." Last term, it threw out a $79 million award to an Oregon smoker’s family who claimed tobacco giant Philip Morris contributed to his death by cancer. The justices, in their divided ruling in that case, said punitive damages almost always should match "actual," or compensatory, damages.

Justice Samuel Alito withdrew from deciding the case. Although no reason was given, financial disclosure reports indicated the newest justice had owned substantial amounts of Exxon stock.

Meanwhile, the long-running case has made it hard for residents of the community to move on, Travis Vlasoff, a native Chugach fisherman from Tatitlek, told CNN after oral arguments in the case. Vlasoff said the long legal fight has taken a financial and emotional toll among his family and friends.

"It’s very difficult to advance the healing process without any sort of finality," he said. "Each turn has reopened long, deep wounds within the community and with individuals."

The case is Exxon Shipping Co. v. Baker (07-219). 

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Toyota may scale back its ambitious target of selling more vehicles in the United States this year than it did in 2007, as damage from an economic slowdown and soaring oil prices becomes more fully known.

Surpassing the 2.62 million vehicles the company sold last year in the U.S. - its biggest market - would be difficult, Executive Vice President Tokuichi Uranishi told a shareholders meeting Tuesday, according to Toyota spokesman Paul Nolasco.

The world’s No. 2 automaker announced in December that it was hoping to sell 2.64 million vehicles in the U.S. in 2008 and predicted a 5% jump in global sales to 9.85 million vehicles because of strong sales in emerging markets such as China and Russia.

Toyota Motor Corp. will review its sales targets in July, as it does every year.

Through the first half of June, total auto sales in the U.S. were running at an annualized rate of about 12.5 million vehicles, according to J.D. Power & Associates. It was the lowest level for June in decades and a huge drop from the year-earlier rate of 16.3 million vehicles.

Uranishi projected that total U.S. auto sales could slip under 15 million vehicles this year, Nolasco said.

Last week, Ford Motor Co. (F, Fortune 500) said industrywide sales could drop as low as 14.4 million for the year, which would be the lowest level in 13 years, according to Ward’s AutoInfoBank.

With buyers fleeing to smaller, more fuel-efficient cars, demand has soared for Toyota’s gas-electric hybrid models. Still, their popularity has been unable to fully insulate the Japanese carmaker from a drop-off in sales of larger vehicles.

Toyota announced recently a slowdown in large pickup truck and SUV production at plants in Texas and Indiana.

But the shift in consumer preference has hit Toyota’s U.S. rivals especially hard.

General Motors Corp. (GM, Fortune 500) said Monday that it would further cut SUV and pickup truck production, on top of its announcement earlier this month that it will close four North American plants by 2010. It also plans to offer zero-interest financing to clear out inventories of some 2008 pickup truck and SUV models.

Ford announced cuts Friday at seven pickup truck and SUV factories for the remainder of the year, including the idling of a pickup truck factory in Dearborn for most of the third quarter and the temporary closure of a Wayne pickup truck factory for nine weeks during the summer.

It now plans to produce 475,000 vehicles in the third quarter, 25% fewer than in the same period last year.

Toyota (TM) shares fell 1.51% to $48.63 Tuesday, compared with a 0.6% drop in the Nikkei 225 Stock Average. 

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Hewlett-Packard announced Tuesday it is buying Electronic Data Systems for about $13.9 billion in cash, as it aims to step up competition for the computer services business with rival IBM.

HP (HPQ, Fortune 500) is paying $25 a share for EDS (EDS, Fortune 500), a narrow 4% premium to Monday’s close but a nearly one-third premium over Friday’s closing price of $18.86 a share before reports of a possible deal lifted EDS shares 27% in Monday trading.

The $13.9 billion price is the enterprise value of the transaction; the cost of the deal for HP is $12.8 billion when comparing the price to EDS shares outstanding.

Shares of HP fell 1.5% in premarket trading, while EDS shares gained another 0.9%.

It is the largest purchase for HP since its controversial purchase of Compaq Computer in 2002. It should also allow HP to close much of the gap in lucrative computer consulting business with IBM (IBM, Fortune 500).

EDS is the largest independent systems management and services provider in the nation, and is second in the business only to IBM. It was founded by Ross Perot in 1962, and remained independent until General Motors (GM, Fortune 500) bought it in 1984, a combination that lasted until a 1996 spin-off.

HP said it plans to establish a new business group, to be branded EDS — an HP company, which will be headquartered at EDS’s existing executive offices in Plano, Texas. EDS CEO Ronald A. Rittenmeyer is to stay with the company to run the new unit.

HP also reported preliminary results for its fiscal second quarter, saying that it earned 87 cents a share excluding special items, up from 70 cents on that basis a year earlier. That’s better than the 84-cent-a-share forecast of analysts surveyed by earnings tracker Thomson First Call.

Including special items, primarily the accounting for the purchase of some intangible assets, the company earned 80 cents a share in the quarter, up from 65 cents a share. Revenue rose to $28.3 billion compared with $25.5 billion, which also edged past the First Call forecast of about $28 billion.

The company said its purchase of EDS is expected to close in the second half of this year and that it should add to earnings per share, excluding special items, in the fiscal year that ends in October 2009.

HP also raised its revenue target for the fiscal year that ends this October to between $114.2 billion to $114.4 billion, up from $113.5 billion to $114 billion. It projected that earnings per share excluding special items this year should be between $3.54 to $3.58, up from its earlier guidance of $3.50 to $3.54, and better than First Call’s forecast of $3.52 a share.

It also upped its net income per share guidance to between $3.30 to $3.34, up from its previous estimate of $3.26 to $3.30. 

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NEW YORK – Gas prices jumped nearly three cents overnight to a new U.S. record of nearly $3.65 a gallon today, while oil prices paused from their own climb to record highs and succumbed to mild profit-taking.

At the pump, the average price of a gallon of regular gas nationwide rose 2.7 cents to a record $3.645, according to a survey of stations by AAA and the Oil Price Information Service. Diesel prices also rose, adding 0.9 cent to match a record national average of $4.251 a gallon.

Gas prices tend to lag oil futures, and with crude rising to a new record near US$124 a barrel Wednesday and likely headed higher, it’s widely expected the average U.S. price of gas will soon rise as high as $4. Motorists in many areas, including parts of California and Hawaii, are already paying that much, or more.

"If oil prices go the way that pundits are expecting, there’s no way we’ll stay under $4 a gallon," said Fadel Gheit, an analyst at Oppenheimer & Co. in New York.

Meanwhile, light, sweet crude for June delivery fell $1.16 to $122.37 a barrel on the New York Mercantile Exchange today. Prices rose as high as a record $123.93 on Wednesday.

Analysts said there was little in the way of news driving today’s oil moves. Investors occasionally sell a little during rallies to lock in profits, Gheit said. But bullish momentum – and expectations that the dollar will continue to weaken against foreign currencies including the euro – are likely to keep pushing oil to new records, he said.

Goldman Sachs analysts recently predicted prices will rise as high as $150 to $200 a barrel within two years. That forecast has driven much of oil’s gains in recent days.

Analysts at Goldman and firms such as Barclays Capital believe tight global supplies and growing demand from fast-growing economies in countries such as China and India are driving oil higher. But Gheit and analysts including Tim Evans at Citi Futures Perspective argue that supply and demand fundamentals don’t support such high prices.

"There is no reason why oil prices should be above $60," Gheit said, noting that domestic crude supplies are at average levels, and that refineries are cutting gasoline production as high prices cut consumers demand for fuel. "The physical supplies do not justify the price, it just doesn’t make sense."

Many analysts feel speculative investment driven by the dollar’s protracted decline is the real reason behind higher prices. The dollar fell against the euro today, attracting investors who view commodities such as oil as a hedge against inflation. Also, a weaker dollar makes oil cheaper to investors overseas.

Still, the market sometimes ignores the dollar, as it did Wednesday when oil surged to new records although the dollar advanced. Some analysts say that’s a sign that many investors are buying on pure momentum – believing prices will head higher regardless of negative data, news or dollar movements.

"There’s a lot of momentum driving the oil price up," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

In other Nymex trading, June gasoline futures fell 0.41 cent to $3.1141 a gallon and June heating oil futures rose 2.99 cents to $3.4772 a gallon. June natural gas futures fell 10.6 cents to $11.221 per 1,000 cubic feet. The Energy Department said natural gas inventories rose by 65 billion cubic feet last week, but remain slightly below the 5-year average.

In London, June Brent crude futures fell 63 cents to $121.69 a barrel on the ICE Futures exchange.

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