Monday morning headlines

Will Microsoft up bid?: Yahoo formally rejected the $31-a-share offer this morning, but left open a willingness to consider higher bids. News reports suggest that the board will not consider anything less than $40 a share. (FT)

Home prices keep slipping: The first of the January housing reports are out and it's not great news. L.A. County's median price was $496,000, according to HomeData Corp., which is the first time in more than two and a half years that the price was below 500K. January home sales fell 38 percent from a year earlier. There have been indications of a pickup in activity as a result of lower mortgage rates, but lenders are still being stingy in approving loans. From the L.A. Business Journal:

“I think slowly but surely it is going to get worse,” said Mark Wollman, a residential broker for Hilton & Hyland, a Beverly Hills brokerage. “I think people are really going to start to understand what’s happening this summer.” Jerry Nickelsburg, an economist with the widely referenced UCLA Anderson Forecast, believes the bottom may be hit as early as midyear, when the median could decline 20 percent from its high. Prices are now off 15 percent from their high.

Countrywide expands program: The mortgage lender will help more borrowers manage their mortgage payments as a result of an agreement with the Association of Community Organizations for Reform Now, or ACORN. The initiative calls for Countrywide to try to manage payment plans for borrowers that are already behind in payments, regardless of which type of subprime loan they have. (AP)

Strike postscripts: Lots of rehashes this morning on why the early negotiations went so badly early on and how the contract came together. Variety has a good overview that gets into the media companies' controversial tactic last summer of wanting to overhaul the entire residual payment system. The idea was to put the WGA on the defensive, but what it did more than anything else, was mobilize guild members.

The blow-up at the outset set the tone for negotiations that got more poisonous as they went on, in fits and starts, through the fall, with plenty of missteps and misplaced rhetoric emanating from Verrone, WGA West exec director David Young and, to a lesser degree, WGA negotiating committee chief John Bowman. The rollback proposal was so offensive to many members that the guild's success at shutting it down was a key point that Verrone and Young used to sell the contract at Saturday's membership meeting. By the time the sides arrived at their day of infamy on Dec. 7, when the AMPTP broke off talks after demanding that the WGA drop six deal points (including the quixotic bid for jurisdiction on reality and animation), the bosses of the AMPTP congloms were firmly focused on putting the WGA talks in a deep freeze while they cut a deal with the Directors Guild of America that would serve as a basis for restarting the WGA conversation.

Latham & Watkins cleans up: The L.A.-based law firm posted 2007 revenues of just over $2 billion, up 23 percent from last year. It also claimed $2.2 million profits per partner, another big year-over-year increase. Those numbers could have Latham competing with Skadden, Arps, Slate, Meagher & Flom as the nation's top-grossing law firm. (Skadden, with its heavy M&A business, has been in the top spot for many years.) Latham was one of several Los Angeles-based firms to post strong financial numbers in 2007. From The Recorder:

"Generally speaking, 2007 was a year of very high productivity at most of the top L.A. firms," said Richard Kolodny, president of the L.A.-based recruiting firm The Portfolio Group. "Until the third quarter, the transactional side of firms was extremely busy, with their cylinders firing at a more rapid clip than they have in many years." Gibson, Dunn & Crutcher, the region's third-largest law firm, was more typical. It grew revenue 12 percent to $908 million, but revenue per lawyer was up only 3 percent while profits per partner were up a solid 8.5 percent to $1.9 million.

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Smaller leaders in the Los Angeles legal market also had pretty good years, with some scoring double-digit growth and others managing single-digit gains. Sheppard, Mullin, Richter & Hampton's RPL climbed 12 percent last year to $800,000, and its PPP soared 19 percent to $1.2 million -- as it beefed up its ranks of nonequity partners from 98 to 104.

Lerach sentencing today: Prosecutors are seeking two years, while Lerach is asking for six months in jail and six months of home confinement. Lerach pleaded guilty last September to playing a lead role in an alleged kickback scheme. Lerach’s sentencing memorandum, which will be considered by a federal judge in L.A., includes more than 150 letters of support from a diverse group that includes actor/columnist Ben Stein, Sen. Carl Levin, and consumer advocate Ralph Nader. (Law Blog)

Disney invests big: The Mouse House will be spending $1.1 billion over a five-year period to overhaul the much-maligned California Adventure. The plans call for adding elaborate new rides and rebuilding the park’s entrance. The first glimpse of the makeover comes in June, with the introduction of Toy Story Mania. The NYT had a big Sunday story on the changes (with obvious Disney cooperation).

Toy Story Mania, which Disney is also installing in Florida, reflects the larger pressures and challenges facing the company’s $10.6 billion parks and resorts business. To stay relevant to younger, digitally savvy visitors while also delivering growth to investors, Disney, the company that invented the modern theme park, knows that it has to devise a new era of spectacular attractions rooted in technology.