Some people feel like it’s just not the holidays if they don’t watch Rudolph, the Red-Nosed Reindeer or How the Grinch Stole Christmas.

Stock market watchers feel the same way about the “Santa Claus rally.”

That’s the phenomenon where stock prices tend to rise between Christmas Day and New Year’s. Until Tuesday, Santa was a no-show.

Let’s thank the Treasury Department, in this season of giving, for reaching into its bag of money and finding $5 billion for GMAC L.L.C. and another $1 billion for General Motors Corp.

Stocks posted broad gains with the Standard & Poor’s 500 Index up 2.4 percent - its biggest rise since Dec. 16. Only 26 stocks in the S&P 500 fell, which I find remarkable on a day when the latest economic statistics were generally worse than expected.

There’s likely some “window dressing” going on as money managers add stocks to their portfolios that make them look good to their clients. Still, with stocks so beaten down, I’m not sure new curtains make broken windows look any better.

I won’t say I don’t believe in Santa Claus rallies, but the good feeling they engender tends to last only as long as the euphoria children experience as they unwrap those presents under the tree.

When in Rohm

A day after slumping 16.1 percent, shares of Rohm & Haas Co. climbed 11.9 percent, or $6.36, to close at $59.70.

That’s still well below the $78 per share that Dow Chemical Co. has promised to pay to acquire the Philadelphia specialty chemical maker.

But some were questioning that promise after the collapse of a joint venture between Kuwait and Dow Chemical over the weekend. Investors began wondering if the chemical giant could afford a $15.2 billion acquisition of Rohm & Haas.

I still wonder about that, but several analysts are confident the deal will close, perhaps at a lower price.

Dow Chemical nudged 1.5 percent higher, up 23 cents to close at $15.55.

When people describe a deal as a “slam dunk,” the implication is that it’s a can’t-miss prospect.

The trouble is, I’ve seen lots of basketball games where slam-dunk attempts clang off the back of the rim or get blocked.

Rohm & Haas Co.’s acquisition by Dow Chemical Co. appeared to be a sure thing when it was announced last July.

At $78 a share, the offer was very rich and unlikely to be topped. Investors were ecstatic with the 74 percent premium being paid. Rohm & Haas CEO Raj Gupta had actively sought a buyer, so Dow Chemical’s all-cash bid was a golden embrace.

What could go wrong?

How about the price of a barrel of crude oil plunging from its all-time high close of $145.29 on July 3 to below $40 in December?

While good news for chemical companies that use petroleum as raw material, it was very bad for Dow Chemical’s plans to boost its presence in the Middle East.

The Kuwaiti government, nervous about the effect of low oil prices on its financial health, scuttled a $7.5 billion investment in a joint venture with Dow Chemical on Sunday. That removed a barrel of cash that Dow Chemical had planned to tap for its Rohm & Haas purchase.

With closing expected by Jan. 10, what happens now? Can Dow Chemical borrow enough to complete the deal in the midst of a global credit crisis? Will the purchase price be trimmed to closer to the $20-$30 range that some analysts estimate Rohm & Haas is now worth?

Or is the deal off? Not as of yesterday.

In any case, many investors are betting the acquisition won’t get done at $78 per share. Rohm & Haas shares fell in each of the last seven trading sessions, closing yesterday at $53.34, down 16 percent or $10.22.

This game isn’t over. But Kuwait’s defense managed to block what seemed to be an uncontested dunk of Rohm & Haas. We’ll have to wait to see who retains possession.

UPDATED POST WITH CLOSING PRICES: Investor reaction to the collapse of a joint venture between Dow Chemical Co. and Kuwaiti interests was swift and certain today.

Dow Chemical shares closed at $15.32, down 19 percent, or $3.60. That's a big move on a day during a holiday week when the Standard & Poor's 500 Index was down less than 1 percent. Dow Chemical was the biggest loser among the S&P 500.

The swoon in Dow Chemical shares has also exerted a downward pull on Philadelphia's Rohm & Haas Co., which Dow agreed to buy in July in an all-cash deal worth $15.2 billion.

Shares of Rohm & Haas closed down 16 percent, or $10.22, at $53.34. Today is the seventh straight trading session that Rohm & Haas shares have fallen since hitting $70.50 on Dec. 17.

An analyst from Deutsche Banc speculated today that the $78 price Dow Chemical agreed to pay Rohm & Haas shareholders may be renegotiated lower. However, another at Barclays says that the chemical giant has enough in bridge loans to close the deal.

Photographs of half-built, nearly empty subdivisions in California and other overbuilt markets may symbolize the four-year decline in the housing business.

And monthly data on new home sales and housing prices may document how far the industry has fallen. Mortgage defaults continue to rise, and some people are losing their homes.

But a review of some of the publicly held builders’ annual reports reveals another human cost - job loss in the industry.

Hovnanian Enterprises Inc., of Red Bank, N.J., filed its Form 10-K on Christmas Eve, disclosing employment of 2,816 people as of Oct. 31. That was down from 4,318 a year earlier, or a loss of more than 1,500 jobs.

Beazer Homes USA Inc., of Atlanta, had 1,444 employees as of Sept. 30, 2008. It cut 1,175 jobs since Sept. 30, 2007, or 45 percent of its workforce.

Regionally, Orleans Homebuilders Inc. reduced its headcount by more than 20 percent during its fiscal year ended June 30, to 544 people. The Bensalem company said between June 30, 2006, and Aug. 31, 2008, it slashed its workforce by more than 50 percent.

Toll Bros. Inc. , the nationwide luxury home builder, eliminated 1,169 jobs over its fiscal year ended Oct. 31. Its workforce of 3,160 is now smaller than it was during its fiscal year ended Oct. 31, 2003. Employment peaked at 6,147 as of July 31, 2006.

In filings with the Securities and Exchange Commission, most builders simply provide a total employment figure. But Toll Bros., which filed its Form 10-K on Dec. 19, actually breaks down its employment by type of job. So you can track over time the change in the number of workers involved in various aspects of home building.

For example, Toll Bros. had 417 people working in construction as of the end of its most recent fiscal year. That’s down 69 percent from the 1,331 it employed as of Oct. 31, 2005.

Not a big surprise. If you’re not building as many homes, you don’t need as many construction workers.

But Toll Bros.’ architectural and engineering team got hit even harder. At 70 people now, that group is down 76 percent from the 294 employed more than three years ago.

The Horsham-based home builder has also cut more than 1,000 administrative and clerical jobs over the last two years. Its 1,231 back-office personnel account for 39 percent of Toll Bros.’s overall employment.

However, one part of its workforce continues to grow. Manufacturing and distribution now has 280 people, up from 258 as of Oct. 31, 2007. At factories in Emporia, Va., Knox, Ind., and Morrisville, Pa., employees make open wall panels, roof and floor trusses, and other building materials used in its communities.

Toll Bros. considers these operations crucial for increased efficiencies, cost savings and productivity. Still you have to wonder how long it can avoid cuts in those facilities given the worst housing market since World War II.

Who will buy?

It wasn’t that long ago that it seemed nearly every big company was in play, and private-equity firms were tripping over each other to buy them.

Now with the credit crunch and global recession forcing retrenchment everywhere, PricewaterhouseCoopers forecasts that 2009 will bring “mergers of necessity.”

“Troubled companies will look to align with larger, stronger players in order to survive,” said Robert Filek, a partner in the consulting firm’s Transaction Services group.

Thomson Reuters says the value of announced transactions in the United States was $1.1 trillion for the first 11 months of 2008, down from $1.6 trillion for the same period of 2007.

Since Dow Chemical Co. announced its $78 per share acquisition of Rohm & Haas Co. last summer, all of us have been presuming it's a done deal.

Announced in July, Rohm & Haas' shareholders approved the transaction in late October, and the deal is expected to close early in the 2009.

But Sunday's announcement by the Kuwaiti government that it was scrapping a $9 billion joint venture with Dow Chemical is bound to affect its plans to buy Philadelphia's Rohm & Haas.

Dow Chemical and Kuwait's Petrochemicals Industries Co. were set to create a 50-50 joint venture called K-Dow Petrochemicals. The company was to have its headquarters in the Detroit area. But falling crude oil prices from $150 to below $40 a barrel have hurt the financial health of oil producing countries, including Kuwait.

The K-Dow deal had come under political pressure in recent weeks from Kuwaiti lawmakers who viewed it as a waste of public funds. On Sunday, the Kuwait government dropped the deal calling it "very risky." Here's Reuters' version of the story.

In a statement, Dow said it was "extremely disappointed" and is evaluating its options under its joint venture agreement.

What does any of this have to do with Dow's pending $15.3 billion acquisition of Rohm & Haas? Apparently, completion of the K-Dow joint venture would have supplied some of the funding Dow needs to repay a lot of the $13 billion in debt it is using to close its all-cash bid for Rohm & Haas. Without those billions, where does Dow come up with that kind of funding in the short run?

Some investors have been betting on a collapse in the Dow/Rohm & Haas deal, as the Web site Seeking Alpha reported on Christmas Eve based on action in the options market. That speculation shows up in Rohm & Haas' stock price which has been falling in recent weeks. On Friday, Rohm & Haas shares closed at $63.56, down 32 cents.

I must stress that Dow Chemical's statement on Sunday does not mention the status of the Rohm & Haas deal at all. And it's on until Rohm & Haas and Dow Chemical say otherwise.

But the collapse of K-Dow doesn't make it easier for Dow to swallow Rohm & Haas.

Recipe for debate over executive compensation:

Take an intractable credit crisis. Add mounting bank failures and the extinction of the independent Wall Street investment bank. Slowly mix in a recession. Pour in massive amounts of corporate bailouts. And deep fry in a $50 billion fraud perpetrated by a once-respected money manager.

There are those in the corporate world who simply can't imagine why someone would ask CEOs to take less money home. And while I'm clearly in the camp that people should be free to earn whatever they can, this is the year that CEOs need to show true leadership by sharing the pain many of their employees are feeling.

On Christmas Eve, the Conference Board said that changes in CEO compensation have already begun. The New York-based economic forecasting group said that nearly all industries are reallocating compensation towards stock and away from total cash compensation and stock options. That makes sense when you consider that the stock prices of nearly every company has cratered over the last year.

But here's an image problem: the Conference Board's Top Executive Compensation report says that median cash compensation increased in more than two thirds of the industries it studied. The biggest gainer? Insurance, up 34.39 percent. Not a great message in a year when the world's biggest property & casualty insurer, American International Group, had to be rescued by the federal government to the tune of $150 billion.

(The only industry to see a decline in median cash comp was construction, with a 22.36 percent decrease.)

CEOs in the food and tobacco industry topped the 22 industries studied with median total compensation of $6.34 million. Of that, cash compensation accounted for $2.7 million.

When the stock market is rising and the economy is expanding, complaints about how much the boss makes never seem to stick. In recession, CEO compensation should fall if that pay is tied to revenue performance. Kevin Hallock, a Cornell University professor who's a co-author of the Conference Board's report, says we won't know how the downturn affected pay until companies start issuing proxy statements in 2009.

And Linda Barrington, research director for the Conference Board, says that companies have to expect that there will be more focus than ever on compensation in the coming year:

"The financial market crisis and U.S. recession have contributed to eroding public trust in business leadership."

Earlier this week, I wrote about lackluster projections for the growth in corporate sponsorships in 2009.

That’s bad news for a lot of organizations that depend on them, especially college and professional sports. One local company is standing by its sport, however.

Credit-card marketer Advanta Corp. just updated its sponsorship agreement with World TeamTennis professional and recreational leagues, which runs until the end of 2014.

The Spring House company will pay $6.75 million for the rights to continue as sole title sponsor for the leagues and the All-Star Smash Hits annual charity event for the next three years.

According to a document filed with the Securities and Exchange Commission, Advanta said its Advantennis Corp. subsidiary also will pay $2.25 million to be the sole presenting sponsor of the Philadelphia Freedoms tennis team and its home matches for the next three years. In 2008, the Freedoms played at a temporary stadium near the King of Prussia Mall.

Also, I wrote that Forman Mills would donate a percentage of sales from its Aramingo Avenue store on Tuesday to organizers of the annual Mummers Parade. Now we know that the amount is $22,000, including matching funds by CEO Rick Forman.

It’s a blockbuster

Cephalon Inc. has a blockbuster on its hands.

The Frazer biopharmaceutical company told employees earlier this week that gross sales of its Provigil drug, used to promote wakefulness, hit $1 billion for 2008. The billion-dollar mark is the measure by which drugs are dubbed blockbusters.

The company will provide full-year 2008 financial results in February. Its 2007 sales of Provigil, also known by its chemical name modafinil, were $852 million, or 49 percent of its total sales of $1.7 billion.

But Provigil may not be a blockbuster for long. Cephalon could face generic competition for it starting in 2012. Generic substitutes, which cost a lot less than brand-name drugs, usually capture most of the sales once a brand-name drug loses patent protection.

Anyone who was stuck on the road yesterday morning thanks to the freezing rain saw firsthand how a little ice can disrupt normalcy.

Now imagine an ice storm cutting all electric power in your town for days. The Dec. 11 storm that walloped New England snapped off electric service to 1.4 million households.

As utilities often do when hurricanes or other weather-related disasters occur, Peco Energy Co. sent crews from Philadelphia north Dec. 13 at the request of Unitil Corp., which was struggling to restore power.

One Unitil customer, Maureen Davi, was without power at her Ashby, Mass., home for 10 days. Since most of the 2,944 people there depend on wells for water, no power means no water. She called yesterday with a message for Peco from many in the town: “Thank you.”

To Davi, who grew up in Northeast Philadelphia and has lived in Ashby for the last 20 years, the Peco trucks were a welcome sight.

Ben Armstrong, a Peco spokesman, said the last of the 33 employees who went to Massachusetts returned Tuesday afternoon. They’d worked double shifts, making the most of the daylight hours. They put up 100 poles, rebuilding the entire electric-delivery system of the town.

Engineering firm Henkels & McCoy Inc., of Blue Bell, also had some Philadelphia-based crews on the job.

This was far from the run-up to the holidays that Davi expected. She never got the cookies baked. But at least one neighbor who did gave them to the Peco employees to show her appreciation.

Thanks to summer thunderstorms, we know a little about power outages in the Philadelphia area. Usually, they last hours, not days, and zap neighborhoods, not entire towns. When we’re in the dark, we tend to question the competence of our local utilities, as Davi certainly did about Unitil.

But when I see a guy on a pole or in a ditch, I know I’m glad that’s not me sweltering, freezing or getting soaked.
And when the lights blink back on just a few days before Christmas, it’s hard not to see electricity as something short of miraculous.

The 1,300 job cuts announced by Unisys Corp. Monday night might be called by some a “Christmas surprise.”

Except, when it comes to Unisys, the days before Christmas generally bring some type of news.

Last year, it was the welcome announcement that the Blue Bell information technology company intended to move its headquarters and 225 jobs into Center City.

That would prove to be a high point for Unisys as nothing went as planned in 2008. The Philadelphia Zoning Board of Adjustment shot down its effort to affix its corporate logo to Two Liberty Place. Unisys was pressured by an activist hedge fund to improve performance. It changed CEOs. And its market value fell so low, its stock got dropped from the Standard & Poor’s 500 index.

Along the way, Unisys lost money each quarter. (The $72 million loss for the first nine months is an improvement on the $93 million loss for the same period of 2007.)

Did I mention that J. Edward Coleman, who was named CEO Oct. 7, is a turnaround expert?

Now, the ongoing credit crisis and the 13-month-long recession have wrecked many a solid business plan.

But Unisys is a serial restructurer in the way that some people are constantly dieting. Previous CEO Joseph W. McGrath spent much of his three-year tenure trimming expenses and cutting 7,400 jobs. He did try to orchestrate the relocation to burnish its image.

However, since the summer, speculation has grown that Unisys will drop those plans. Has it? Spokesman Jim Kerr would say only that the company is “looking at its options.” One of them involves subleasing the 90,000 square feet in Two Liberty it now controls.

But when a company says it want to reduce its annual cost structure by more than $225 million, opening a new headquarters in one of Philadelphia’s trophy buildings would seem to be the last thing it wants to do.

Plus, such a move might hurt morale among Unisys employees, many of whom will have to make do with no salary increase in 2009 as well as the suspension of matching contributions to their 401(k) plan.