Ford Motor Co (NYSE: F) signed an agreement with the UGT Union in Spain today, according to the Associated Press. The agreement will allow Ford to build three new small- and mid-sized cars in its Almussafes plant in Spain, with an annual production target of 350,000 cars. The union has agreed to keep labor costs low in effort to keep the plant competitive with its European rivals.

The announcement comes at a time when automakers are doing everything they can to expand their global operations outside of the United States.

BusinessWeek put together a list of the most recalled new cars in 2007. What is surprising is that four out of the top five vehicles were imports, and not domestic cars. Chrysler's (NYSE: DAI) Jeep Liberty, with 149,605 recalls, was the only domestic in the top 5. Chrysler had three other significant recalls, including the new Dodge Nitro, Jeep Wrangler and Chrysler Sebring. General Motors (NYSE: GM) had two vehicles recalled, while Ford's (NYSE: F) lone recall was from its Expedition line, and only totaled 10,000 SUVs.

Toyota's (NYSE: TM) Sequoia hit No. 2 on the recall list, with 533,000 vehicles recalled. This is a surprising improvement from last year, where Toyota recalled nearly 700,000 vehicles.

The new Volkswagen (OTC: VLKAY) Beetle took No. 1 on the recall list; triggered by the potential for a brake light switch to malfunction in over 1 million vehicles if it was installed incorrectly.

Take a look at BusinessWeek's slide show here.

Due to potential safety problems, Toyota (NYSE: TM) has decided to delay the launch of new high-mileage hybrids with lithium-ion battery technology by one to two years, according to The Wall Street Journal, which cited people familiar with the strategy. The decision destroys any chance of Toyota meeting its goal of selling 600,000 hybrids a year by early next decade, up from almost 200,000 in 2006. The move allows General Motors (NYSE: GM) and others the opportunity to narrow the gap of future vehicle technology.

Toyota has also postponed its plans for the hybrid versions of the Sequoia SUV and the Tundra pickup until 2013-2014. That puts Toyota way behind General Motors and Chrysler's plans to launch hybrid SUVs in 2008.

The "potential safety problem" Toyota says, is the development of lithium cobalt oxide particles in its batteries, which have a tendency to overheat, catch fire or even explode. According to the company, similar problems have been seen in Sony Corp. (NYSE: SNE) lithium-ion batteries in laptops -- mostly because the chemistry of Sony's batteries was similar to that of batteries they were attempting to use in future hybrids.

The next-generation Prius will instead use the conventional nickel-metal-hydride batteries for its launch in early 2009. The first Toyota hybrid with lithium-ion battery technology will not arrive in the U.S. until 2011.

GM will have an opportunity to launch its first lithium-ion hybrid, the Saturn VUE Green Line model, as soon as late 2009, and before any competitors. Toyota's delays also give Honda Motors (NYSE: HMC) the opportunity to highlight its launch of a subcompact hybrid with improved nickel-metal-hydride batteries in 2009. Volkswagen (OTC: VLKAY), BMW and DaimlerChrysler (NYSE: DAI) all plan to create clean diesel engines for U.S. cars starting in 2009. The automakers say they now have obtained the technology to meet tough American clean-air standards.

Regardless of which company produces the first lithium-ion hybrid, Toyota's delays push back J.D. Power's estimates on future hybrid sales. Hybrid sales totaled 2.3% of all auto sales this year and were expected to reach 5% by 2010.

MAJOR PAPERS:

• With his company's stock near a 52-week low, Robert Willett, CEO of Best Buy Incorporated's (NYSE: BBY) international operations, bought nearly $500K in stock, reported Barron's Online's "Inside Scoop" section.
• In a rare instance of a foreign company being allowed into the Chinese onshore oil and gas industry, Chevron Corporation (NYSE: CVX) will develop a natural gas filed owned by PetroChina Company Limited (NYSE: PTR), reported the Wall Street Journal.
• The Wall Street Journal reported that Sun Microsystems Inc (NASDAQ: SUNW) is today expected to introduce a new microprocessor called UltraSparc T2, will be able to process up to 64 threads at one time -- most chips can handle up to four threads at a time.
• According to the Financial Times, citing a source familiar with his pay package, Robert Nardelli will college a salary of $1 a year in his new role as CEO of Chrysler, which is 20% owned by DaimlerChrysler (NYSE: DCX).

OTHER PAPERS:

• The New York Mercantile Exchange (NYSE: NMX) is quietly selling its lower Manhattan headquarters, asking for between $600M and $700M, ahead of a deal to sell itself, reported the New York Post.

J.D. Power and Associates said that 187,000 hybrids were sold in the first half of 2007, according to USA Today, which accounted for a minuscule 2.3% of all new vehicle sales. Despite the recent slowdown in auto sales, the auto information company expects total sales of 345,000 hybrids for the year, a 35% jump from 2006.

The best-selling hybrid model continues to be the Toyota (NYSE: TM) Prius, which accounted for just over half of all hybrids sold. J.D. Power told the newspaper that Prius sales received a boost from incentives of up to $2,000 per vehicle, which offset the drop in federal tax breaks for hybrids this year. Incentives were something Detroit and the "Big Three" were hoping to avoid this summer, and became one of the main reasons domestic market share fell below 50% for the first time in history.

In the next few years, the competition in the hybrid segment will intensify. J.D. Power estimates there will be as many as 65 hybrid models in the market by 2010, with more than half of them being trucks. It also projects sales of nearly 750,000 units, nearly double the expectations of 2007.

What's not shocking to read is that Toyota, a foreign car manufacturer, holds top billing in hybrid sales. American manufacturers again are late to the game. What is shocking is that despite soaring gas prices, hybrid sales totaled a meager 2.3% of all new vehicles. In three years projections push this out to 5%, which is still too low. If Americans want to complain about high gas prices and how they can't take the pain of paying $3.50 a gallon every week, maybe they should do something proactive and buy a hybrid.

Detroit lost control of its own market last month, as domestic market share fell below 50 percent for the first time in history, and they have no one to blame but themselves. According to USA Today, Paul Ballew, executive director of market and industry analysis at General Motors Corporation (NYSE: GM) said: "We are not going to cede market share to the competition." What Ballew failed to admit was the fact that they already have, and it's been going on for years.

Foreign automakers have seized the opportunity to take market share during the summer by offering tons of rebates, with Toyota Motor Corporation (NYSE: TM) offering a record number of incentives, according to Edmunds.com. Despite the push, overall auto sales last month were down 12.3 percent compared to July 2006. Excluding Nissan Motor Co., Ltd.(NASDAQ: NSANY), BMW and Kia, every major automaker posted a decline in U.S. sales.

Industry experts cited months of higher-than-average gas prices, as well as the problems in the housing market, for soft sales. "Experts" failed to mention that most foreign cars provide tons of incentives, better miles per gallon and have a better reputation than American cars.

With the weakness in the overall industry last month, automakers could start to develop some creative and aggressive marketing ploys, Jesse Toprak, an analyst at Edmunds.com, told USA Today. The real question is will U.S. companies ever realize they need to develop autos that have better mileage, and steer away from building gigantic gas guzzling SUVs? With House Speaker Nancy Pelosi and Massachusetts Rep. Ed Markey abandoning their push (subscription required) for an increase in fuel-economy standards, Detroit lacks any reason to even consider it.

As painful at it may be to accept, July auto sales numbers are in, and for the first time ever, U.S. automakers captured less than 50% of market share last month. This afternoon July sales figures were posted, and in a harsh reality of the hard time American automakers are going through, the figures point to America's Big Three manufacturers accounting for only 49.7 percent of sales last month.

The "Big Three" American manufacturers are DaimlerChrysler (NYSE: DCX), Ford Motor Co. (NYSE: F), and General Motors (NYSE: GM). While today's numbers really shouldn't surprise too many people, it should serve as a nice wake-up call to all the above companies which have been struggling to keep up with their foreign rivals.

General Motors posted strong earnings yesterday, but as we pointed out, the one big area of weakness remains its sales in North America, where it once again posted another loss last quarter.

The only bright side is that American manufacturers were not the only companies that suffered from poor sales last month. Even the red hot Toyota Motor Corp. (NYSE: TM) saw a year-over-year decline of 7.4%.

Toyota Motors (NYSE: TM) is launching the first U.S. tests of its plug-in hybrid technology in two converted Prius hybrids. The test cars will run on nickel-metal hydride batteries for seven miles before a gas engine kicks in.

Although seven miles is nothing to rejoice about, other automakers are also developing plug-in vehicles that are more technologically advanced:

• General Motors (NYSE: GM) is developing the Volt plug-in, with hopes of reaching 40 miles of electric-powered travel with the new lithium-ion batteries.

• Ford Motor (NYSE: F) announced earlier this month it plans to give 20 Escape Hybrid SUVs modified as plug-ins to Southern California Edison for testing.

• Chrysler Group (NYSE: DCX) modified several Sprinter delivery vans as plug-ins, with one designated for newspaper delivery.

MOST NOTEWORTHY: DaimlerChrysler (DCX), Omniture (OMTR), Convergys (CVG), Expedia (EXPE) and Baidu.com (BIDU) were today's noteworthy upgrades:

• WestLB upgraded shares of DaimlerChrysler (NYSE: DCX) to Buy from Add after the company raised the profit margin forecast for its Mercedes unit.

• Omniture (NASDAQ: OMTR) was upgraded by Piper Jaffray to Market Perform from Underperform to reflect the company's strong revenue momentum and expanding margins.

• Wedbush upgraded Convergys (NYSE: CVG) to Hold from Sell on valuation.

• Citigroup raised shares of Expedia (NASDAQ: EXPE) and Baidu.com (NASDAQ: BIDU) to Buy from Hold on valuation...

OTHER UPGRADES:

• Bear Stearns upgraded shares of Ryder System (NYSE: R) to Outperform from Underperform.

• Lehman raised EnCana Corp (NYSE: ECA) to Equal Weight from Underweight.

• USG Corp (NYSE: USG) was raised to Neutral from Underperform at Buckingham.

• Morgan Keegan upgraded shares of Panera Bread (NASDAQ: PNRA) to Outperform from Market Perform.

• Citigroup raised Cullen/Frost Bankers (NYSE: CFR) to Hold from Sell.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

Ford Motor Company (NYSE: F) is currently taking bids on parts of its Premier Automotive Group, which includes Jaguar, Land Rover and Volvo. (Another Premier brand, Aston Martin, was sold to investors in March for roughly $900 million.) There has been speculation that the Indian automaker Tata Motors (NYSE: TTM) may be interested in the two British luxury brands, but so far Ford has denied that it is selling Volvo. Ford's denials have been fairly weak, however, and it stands to reason that given Ford's rather desperate need for cash, it would sell the Swedish car maker -- the only profitable part of the Premier Automotive Group -- if the price were right.

It's pretty clear that Ford is in trouble, having mortgaged its plants and property -- and even its hallowed name -- to raise cash to support current operations. As Kevin Shult wrote last week, Ford is a symbol of the hard times facing American automakers, which are stuck offering large, heavy, inefficient vehicles to consumers who now want something better. There's plenty of blame to go around for the problems in Detroit. While many analysts focus on labor costs, especially retiree health care, I would argue that poor management, weak investment, and mediocre design and engineering are at least as important. And that's where Volvo can play an important role in helping Ford recover.

Main market news: Before the bell 7-25-07: Lifted by Amazon, stocks trying to rebound

Apple Inc. (NASDAQ: AAPL) lost some 6% of its value yesterday after AT&T said it activated 146,000 iPhones in the first two days the iPhone was launched (the last two days in the quarter). As you recall, estimates put that number at around half a million. Frankly, I don't see the big deal. AT&T said it activated, not sold 146,000 iPhones. I would imagine many who had bought the phone took their time activating it over the weekend, not to mention all the activation problems reported back then. I actually thought yesterday morning when I heard the number that it was an excellent one when factoring in all the rest. Analysts also cautioned against reading too much into this.

Boeing Co. (NYSE: BA) reported quarterly financial results this morning and shares are climbing 3.8% in premarket trading (8:16 a.m.). Not surprising, growth in its commercial airplane business was led by the new 787 jet airliner. Net income for the second quarter rose to $1.1 billion, or $1.35 a share, after a loss of $160 million, or 21 cents a share, last year. Revenue jumped 14% to $17.03 billion. Analysts surveyed by Thomson Financial had forecast earnings of $1.16 a share on revenue of $16.2 billion. The company also raised 2007 outlook higher than analysts' estimates.

It seems that Cerberus Capital Management is running into trouble raising the $20 billion needed to finance the buyout of DaimlerChrysler's (NYSE: DCX) Chrysler group, according to The Wall Street Journal.

Less than a month after Ford Motor Co. (NYSE: F) announced a partnership with power utility Southern California Edison to test rechargeable hybrid vehicles,Toyota Motor Corp. (NYSE: TM) now says it has developed a plug-in hybrid vehicle for public road tests in Japan and plans tests for the U.S. and Europe. General Motors Corp. (NYSE: GM) hopes to have its version in showrooms by 2010.

General Electric Co. (NYSE: GE) is planning to launch the first "green" credit card in the U.S. with rewards dedicated to reducing cardholders' carbon emissions.

MAJOR PAPERS:

• The FDA said no to Pristiq, an experimental Wyeth (NYSE: WYE) drug to treat the symptoms of menopause, reported the Wall Street Journal.
• The $3.1B sale of General Motors Corporation's (NYSE: GM) Allison Transmission to Carlyle Group and Onex has stalled in the debt financing market, thanks to difficulties raising debt from investors, reported the Wall Street Journal's "Heard on the Street" column.
• LVMH Moet Hennessy Louis Vuitton (OTC: LVMUY) is expected to acquire Les Echos from Pearson (NYSE: PSO) for $331.9M, reported the Wall Street Journal.

OTHER PAPERS:

• Time Warner Inc's (NYSE: TWX) AOL is entering the behavioral-targeting ad market by purchasing Tacoda, which uses "behavioral targeting" techniques to track Web surfers' habits, reported the New York Post.
• Cerberus Capital Management's acquisition of DaimlerChrysler AG's (NYSE: DCX) Chrysler unit could be completed on Monday or Tuesday of next week, reported the Detroit Free Press.

Private equity operators are crossing their fingers. Will the debt markets have enough capacity to fund the billions and billions of recent buyout deals?

As a result, there's quite a bit of attention on the massive deal for Chrysler, which is being spun off by DaimlerChrysler (NYSE: DCX).

Well, according to a piece on Bloomberg.com, there are some bumps in the road.

On a $10 billion loan, the private equity firm, Cerberus, wanted to get a juicy rate of 3.25% (above the London interbank rate). But there were not enough takers. So, the new offer is 3.75%. And, as for another $2 billion loan, Cerberus tried to get 6% (above Libor), but has now upped it to 7%.

This certainly seems reasonable. Despite the extreme liquidity in global markets, there are still limits.

Besides, Chrysler is not a slam dunk deal. The competition is brutal and the employee benefits are onerous.

But, it still looks like the deal is on track – although, it's not going to be cheap.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

The continuing challenge of the integrated circuit maker is to keep its products affordable while supporting a constantly evolving set of industry standards. There is a firm in Hauppauge, New York with a reputation for reliability on both sides of that equation.

Standard Microsystems Corporation (NASDAQ: SMSC) is engaged in the design and sale of integrated circuits that incorporate digital or analog signal processing technologies. The company offers flash memory card readers, physical layer transceivers, Ethernet controllers, network multimedia co-processors, as well as communications products for wireless base stations, copiers, building automation, robotics, gaming machines, and industrial applications. Customers include Alcatel-Lucent (NYSE: ALU), DaimlerChrysler (NYSE: DCX), Dell (NASDAQ: DELL), Hewlett-Packard (NYSE: HPQ) and Sony (NYSE: SNE). Standard Microsystems has long-term cross-licensing agreements with IBM (NYSE: IBM) and Intel (NASDAQ: INTC).

The company surprised the Street last week, when it reported Q1 EPS of 29 cents and revenues of $81.5 million. Analysts had been expecting 25 cents and $81.0 million. Management also guided Q2 EPS to 37-40 cents (39 cent consensus) and Q2 revenues to $88-$90 million ($89.93 million consensus).

Main market news here.

It seems that there isn't a day passing without more (good) iPhone news. This time, the Apple Inc.'s (NASDAQ: AAPL) new revolutionary phone made waves in the U.K. when the BBC reported that mobile phone operator O2 has won the deal to sell the iPhone in the UK. It is also said that the iPhone may be available in time for Christmas. Genius! A spokesman for O2, however, declined to comment on the reports. Anyone who has been expecting a dip in Apple's price was disappointed and got the exact opposite when AAPL shares climbed nearly 5% on Tuesday.

Research in Motion Ltd. (NASDAQ: RIMM) announced yesterday it has received clearance to sell the BlackBerry in China after eight years of trying. RIM expects to start selling its 8700g handset in Chinese shops at the end of next month and has already received 5,000 advance orders. RIMM shares are up 4.8% in pre-market trading (7:41 a.m.).

Jones Apparel Group Inc. (NYSE: JNY), which has already agreed to sell Barneys New York Inc. to Istithmar for $825 million in cash, received an unsolicited bid from Fast Retailing Co. Ltd. to acquire Barneys $900 million in cash. The breakup fee for Jones deal with Istithmar is $20 million. JNY shares are up 5.6% in pre-market trading (7:26 a.m.).

Champps Entertainment Inc. (NASDAQ: CMPP) has agreed to a $73.3 million buyout, or $5.60 per share, by F&H Acquisition Corp., the holding company for Fox & Hound Restaurant Group. The total value of the deal is $74.8 million. CMPP shares are up nearly 16% in pre-market trading (8:01 a.m.).

Microsoft Corp. (NASDAQ: MSFT) said it would launch the advanced version of its Xbox 360 game console, Xbox 360 Elite, on October 11 in Japan.

After deciding to start selling in retail chains and striking a deal with Wal-Mart, Dell Inc. (NASDAQ: DELL) today said it will soon start selling its laptops and desktops at Asian retail chains and stores. Dell also expects shipments to Asia to grow 20%.

Ford Motor Co. (NYSE: F) said its China retail vehicle sales rose 25% in the first half compared to last year.
After showing declines in U.S. sales in June, in Canada, Chrysler and Ford managed to post growth in sales in June. General Motors (NYSE: GM), however, already posting 21.3% decline in June sales in the U.S., showed declines north of the border as well. GM shares are down 3.7% in pre-market trading (8:03 a.m.).