Robyn Beck / AFP - Getty Images

Facebook employees walk past a wall of graffiti at the company's headquarters in Menlo Park, Calif. GM's decision to yank its ads from Facebook could be a case of the automaker not correctly seeing the potential power of the social network to build brand loyalty.

General Motors Co.’s decision to stop advertising on Facebook is like the story of The Emperor’s New Clothes. In this cyber scenario, GM, not a child, is pointing out that Facebook may be a bit underdressed when it comes to getting consumers to buy the automaker’s products.

But is Facebook really naked when it comes to providing a bang for advertising bucks, or is GM just not able to see the real potential of the social media powerhouse?

The answer may come down to what companies want out of social networking sites such as Facebook: immediate clicks on ads, or the potential for brand-loyalty building.

“GM is making a mistake, and it’s probably because they don’t have the right analytics in place and are too obsessed about short term sales effects,” said Rex Briggs, CEO of Marketing Evolution Inc., which has worked with a host of large companies including GM to measure how ad dollars are spent.

The company, he stressed, is living in the past if it expects quick returns similar to the results from television ads or rebate promotions. Social media just doesn’t work like that.

“Social media is a square peg that doesn’t fit in those round holes and doesn’t fit the traditional way marketers think about incentives,” he noted. “It’s based on people engaging with a brand and becoming an advocate of the brand.”

Consumer products companies, he continued, need a major presence on Facebook and other social networking outlets, but they also need to spend money on ads, especially things like sponsored stories, which he said bring in $3 plus for every dollar spent on Facebook.

For GM, however, the ad payoffs on Facebook weren’t enough.

“GM could not see the value and I am guessing it’s not the only one,” said Peter Cohan, a management consultant and venture capitalist. “If an advertiser on Facebook can track a user clicking on an ad to an online purchase, then – depending on the price of the ad and the value of the purchase – that advertising money would be well spent,” he maintained. “Otherwise, it’s a waste of money.”

Some social media experts think the main value in Facebook is in building a loyal fan base.

“There has been a great deal of skepticism around Facebook's advertising model, but simply relying on display ads to do the trick is the wrong approach," said Jeffrey Dachis, CEO of Dachis Group, a social business consulting firm that works with companies such as Disney and Target. “It's about engagement. Users that can interact with compelling content on Facebook will be more likely to serve as brand advocates than those who are presented with an advertisement with no opportunities for interaction."

GM, Dachis noted, doesn't plan reductions to its marketing budget for content creation and community management on Facebook. GM did not immediately return a phone call requesting information on their decision. But a story in the Wall Street Journal Wednesday quoted the company's marketing head Joel Ewanick who said on Facebook "the content is effective and important."

When it comes to building a fan base, Jan Rezab, CEO of social media analytics company Socialbakers, said the auto giant has done a crummy job engaging potential customers on Facebook, noting that Mercedes-Benz has more than 7 million likes on its Facebook page, compared to less than 400,000 for GM.

“We think that GM should not scrap their Facebook marketing strategy yet,” Rezab advised. “A lot of brands have been successful.”

Indeed, Ford Motor Company, with 1.5 million Facebook likes, tweeted Tuesday that: “It's all about the execution. Our Facebook ads are effective when strategically combined with engaging content & innovation.” The company could not be reached to elaborate on the tweet.

GM’s move to dump Facebook ads, just days before the social networking site's initial public share offering, could get other companies thinking the same way.

“A lot of marketers at places like GM continue to see Facebook as a media buy rather than a conversation tool. When you look at it from that standpoint it doesn’t look like a good media buy,” said Elliot Schreiber, marketing professor with Drexel University's LeBow College of Business. “I suspect we’re going to see others who’ve been sitting on the fence that are going to back out.”

As for more companies bailing, Marketing Evolution’s Briggs said, “you can always get another lemming to follow over the cliff, but anyone who’s studying this and thinking through the difference between planting the seed and harvesting won’t follow GM over the cliff.”

Minutes from the Fed's March meeting had said "a couple" members thought more stimulus might be needed.

The Fed remained sober about economic prospects. Members said the economy had been "expanding moderately" and generally agreed the economic outlook was broadly similar to that at the time of their March meeting.

While noting that labor market conditions had improved in recent months, almost all members said they still viewed unemployment as still elevated and to decline gradually, the minutes said.

Members also cited strains in global markets stemming from the banking and debt crisis in Europe, and the potential downside risks from contractionary U.S. fiscal policy.

About half of participants in the April meeting said that exceptionally low rates would be appropriate at least until late 2014. One thought the Fed should extend its current bond-buying program, known as Operation Twist, that is due to be completed next month.

JPMorgan Chase reportedly has let go of the infamous "London Whale," Bruno Iksil, aka Voldemort, whose massive hedging bets led to a $2 billion loss which has reignited calls for more stringent controls on risky trading by banks.

The New York Times reported Wednesday that Iksil would be leaving the bank at an unspecified time. The newspaper attributed the news to unnamed current and former colleagues of Iksil.

If confirmed, Iksil would be another victim of the trading debacle at JPMorgan after the bank announced earlier this week that his boss, former Chief Investment Officer Ina Drew, resigned. Drew is being replaced by Matt Zames, who is the co-head of the bank's global fixed income unit.

Drew, 55, had worked for the bank for 30 years, rising to become one of Chairman and CEO Jamie Dimon's top lieutenants.

Two others are expected to step down: Achilles Macris, who headed the London-based team involved in the trade, and trader Javier Martin-Artajo. 

As if JPMorgan Chase (JPM) didn't have enough to contend with -- a $2 billion-and-counting  from a series of risky trades; regulators and the FBI poking around because of the trades; and the embarrasing loss of face that has ensued -- now it has been hit with two lawsuits from shareholders accusing the bank of being imprudent.

Reuters reported that the lawsuits were filed by California shareholder James Baker on behalf of JPMorgan Chase and by shareholder Saratoga Advantage Trust financial services portfolio on behalf of owners of common stock.

The Baker lawsuit accuses CEO Jamie Dimon, Chief Financial Officer Douglas Braunstein and board members of breaching fiduciary duty, unjust enrichment and wasting corporate assets, Reuters said.

The Saratoga lawsuit claims Dimon, et al., lied to investors and kept material information from them during an earning conference call with investors on April 13 when he said the trades were "a tempest in a teapot."

"Defendants misrepresented the losses and risk of loss to the company arising from massive bets on derivative contracts related to credit indexes reflecting interest rates on corporate bonds," Reuters reported the complaint said. "These derivative bets went horribly wrong, resulting in billions of dollars in lost capital for the company and billions more in lost market capitalization for JPMorgan shareholders." 

Reuters said a spokesman for JPMorgan declined to comment on the lawsuits. 

Photo courtesy of Skechers

Kim Kardashian was part of the Skechers ad campaign called "deceptive" by the FTC.

Skechers, the company that makes those extremely popular Shape-ups toning shoes, has agreed to pay $40 million in refunds to settle charges of deceptive advertising brought by the Federal Trade Commission. 

(Click here to get the facts about this settlement and instructions on how to file for a refund if you are eligible.) 

You’ve probably seen the ads for Shape-Ups. They say you can “get in shape without setting foot in a gym.” Some of the ads feature celebrities, such as Kim Kardashian and Brooke Burke. 

Skechers USA said its shoes provided more weight loss and muscle toning and strengthening (of the buttocks, legs and abdominal muscles) than regular fitness shoes. 

The FTC complaint charges Skechers with falsely representing that it had clinical studies to back up those claims. The commission alleges the company made similar deceptive claims about its Resistance Runner, Toners and Tone-Up shoes.

“Skechers’ unfounded claims went beyond stronger and more toned muscles. The company even made claims about weight loss and cardiovascular health,” said David Vladeck, director of the Federal Trade Commission’s Bureau of Consumer Protection, in a written statement. “The FTC’s message, for Skechers and other national advertisers, is to shape up your substantiation or tone down your claims.” 

In a press release, Skechers denied the allegations and "believes its advertising was appropriate, but has decided to settle these claims in order to avoid protracted legal proceedings."

Some of the ads for Shape-Ups featured an endorsement from a chiropractor, Dr. Steven Gautreau, who said his recommendation was based on an “independent” clinical study he conducted. The FTC’s lawsuit alleges this study did not produce the positive results claimed. Dr. Gautreau is married to a Skechers marketing executive and the company paid him to conduct the study. The ads did not disclose this information. 

Under the settlement announced today, Skechers is barred from making claims about strengthening, weight loss or any other health or fitness-related benefits from its toning shoes, unless those claims are true and backed by scientific evidence. 

Last year, the FTC reached a similar settlement with Reebok International LTDk about claims for its toning shoes. Reebook agreed to make $25 million in customer refunds.

The federal settlement is part of a broader agreement that resolves an investigation conducted by 44 states and the District of Columbia.

Something else to consider
I first warned you that the claims for toning shoes appeared to be over-hyped back in November of 2010. (ConsumerMan: Do those funky shoes really promote fitness?) I explained that toning shoes are designed to be unstable, which could cause problems for people who already have trouble maintaining their balance.

At that time, Consumer Reports was concerned that seniors who wore toning shoes could increase their risk of falling, which could result in hip fractures or other serious injuries. That’s still something to consider before you buy a pair of these shoes.

More information:

• How’s that Work-out Working Out? Tips on Buying Fitness Gear 

Photo courtesy of BMW

BMW gave U.S. buyers a first taste of the X1 at April's New York Auto Show, but only last week revealed the crossover-utility vehicle's $31,545 base price.

Sometimes you have to think small to grow bigger. Hoping to lock down its position as the U.S. luxury market leader, BMW is getting ready to introduce some of the smallest products it has ever sold here, including a new version of its little 1-Series and the all-new BMW Vehicle.

The Bavarian maker isn’t alone. The compact and even subcompact luxury classes, which barely existed just a few years ago, are suddenly being flooded with new product and may be critical in an increasingly competitive market where a new generation of buyers is proving unexpectedly resistant to the siren call of luxury automobiles.

“You can no longer assume Gen-Y buyers necessarily want a luxury vehicle anymore,” cautions Rebecca Lindland, senior analyst with IHS Automotive, “and even if they do aspire to luxury, they may not have the money.”

But even older buyers are rethinking their options in the wake of both a deep recession and rising fuel prices, industry observers say.

BMW gave U.S. buyers a first taste of the X1 at April’s New York Auto Show, but only last week revealed the crossover-utility vehicle’s $31,545 base price.  The compact crossover was offered in a number of countries in its earlier form, undergoing some extensive updates before the maker felt it could launch in the U.S. 

The market has changed significantly since the X1’s global introduction in 2008. Fuel prices have repeatedly surged to record or near-record levels.  Younger buyers have shown a growing preference for downsized offerings, matching trends in other parts of the world.  Of course, that may also reflect the realities of a generation that, according to the pundits, could be the first to see their standard of living dip below that of their parents.

Whatever the reason, BMW won’t be alone.  Mercedes-Benz is also downsizing, with a totally redesigned A-Class coming to the U.S.  In fact, company officials hint they may offer as many as four different versions of their smallest-ever model in the U.S.  And the German maker will share the underlying platform developed for the A-Class with its Japanese alliance partner, Nissan using it for the planned Etherea model now under development.

The global downsizing trend has swept through the luxury side of the industry.  Even Aston Martin has responded with the Cygnet, a two-seat microcar based on a Toyota platform that recently appeared in the U.S. as the Scion iQ.  Loaded with leather and other high-end details, Aston currently has no plans to bring the Cygnet to the U.S., but that strategy could shift.

Analyst Jim Hall, of 2953 Analytics, remains skeptical about just how much demand there will be for the smallest of new luxury models, but agrees makers are likely to give it a try – if for no other reason than “as a CAFE play.”  Facing a Corporate Average Fuel Economy standard that will nearly double by 2025 BMW, for one, will have to offset low-mileage models like the big 7-Series and the X5 Sport-Activity Vehicle with models like the 1-Series and X1.

The luxury market as a whole is expected to be a bit smaller than many had once anticipated, contends Lindland. While luxury demand has been recovering along with the rest of the U.S. new car market, IHS now forecasts that high-line models will account for, at most, 13 percent of overall sales by decade’s end, compared with the 14 percent or more the consulting firm projected prior to the start of the 2008 recession.

And considering that the firm anticipates the overall auto market will fall short of earlier expectations that could mean a real dogfight in the luxury end.

In recent years, it has been a three-way battle for supremacy, pitting last year’s winner, Mercedes-Benz, against BMW and Lexus, which had been the U.S. luxury leader for more than a decade. 

Whether the new small cars, such as the BMW 1-Series, Audi A3 and Mercedes A-Class will make a significant difference remains to be seen. So far, the few entries in the segment have generated relatively modest sales. But the smaller among the brands’ more traditional offerings, such as the Audi A4 and Mercedes C-Class, have continued gaining traction.  The 3-Series has long been the dominant model in BMW’s line-up.

But just making a model small won’t necessarily be enough, cautions Jack Hollis, a vice president with Lexus parent Toyota, especially in appealing to Gen-Y.

“Young buyers don’t look at needing a car as much today to have a social life. Their world of community is so much larger and (they) don’t need a car to take them there,” he contends, arguing that it will also require exciting products that also incorporate the sort of connected technologies that have become an essential part of Millennial life.

The brand that can find the right balance between size, style, performance and connectivity should win the shoot-out.

Facebook plans to increase the size of its IPO by 85 million shares, says someone familiar with the matter, a move that could value its upcoming offering at as much as $18.5 billion.

The social network’s 25 percent upsize plan will be filed with regulators at the U.S. Securities and Exchange Commission Wednesday morning, this person said.

Facebook’s expected move takes the size of its new issue from roughly 340 million shares to roughly 420 million, a change that, combined with the greenshoe -- additional shares that could be sold by bankers in the aftermath of the IPO -- could value the total deal at nearly $20 billion.

A final decision on Facebook’s IPO price, which is expected to be somewhere between $34 and $38 per share, will be made Thursday evening.

Previously: Facebook raises price range for IPO

CNBC.com: As investors Fawn over Facebook, poll finds user distrust, apathy

CNBC.com quiz: What's your facebook IQ?

CNBC.com: Confidence lacking in Zuckerberg as corporate steward 

Full Facebook IPO coverage from CNBC.com  

Joe Raedle / Getty Images

Protesters watch as cars leave outside the building where a JPMorgan Chase shareholders meeting was taking place on May 15, 2012 in Tampa, Fla.

It took less than an hour for JPMorgan Chase's CEO Jamie Dimon to dispatch a relatively tame group of shareholders at the bank’s annual meeting in Tampa on Tuesday.

That was the easy part.

Now, the bank’s combative CEO faces two government inquiries and a substantial legal liability from angry investors who have lost more than $20 billion after a series of risky bets inflicted at least $2 billion in losses on the nation’s largest – and once most-admired - bank.

On Tuesday, the New York office of the FBI opened an investigation into JPMorgan’s ill-fated trading scheme, a source familiar with the probe told Reuters. The source, who requested anonymity because the investigation is ongoing, said the probe was in a "preliminary" stage.

The investigation follows a separate inquiry by regulators at the Securities and Exchange Commission, first reported in early April, into JPMorgan's accounting practices. When JPMorgan reported its quarterly earnings on April 13, Dimon dismissed those reports as “a tempest in a teapot.”

Investigators will likely be looking into how well Dimon was briefed on the losses, which began mounting weeks before they were disclosed on May 10. Securities laws require public companies to disclose in a timely manner material information that could affect shareholders’ investments.

With some 850 million shares traded between April 13 and May 10, the bank faces “substantial liability" from shareholders who lost money based on Dimon’s initial assurances, according to Dennis Kelleher, a securities lawyer who heads a Better Markets, nonprofit shareholder advocacy group.

“This is supposed to be a well-managed bank with a CEO who sweats the details with a gold-plated risk management team,” he said. “The lawsuits will be a mile high by the time they’re all filed.”

Several hundred of those shareholders gathered Tuesday at a suburban office park in Tampa, Fla., under tight security that had been arranged for a protest that never really materialized. After rushing through his prepared remarks, Dimon listened patiently to series of mild scoldings.

"We heard the same refrain: We have learned from our mistakes. This will never be allowed to happen again," said Rev. Seamus Finn, representing shareholders from Missionary Oblates of Mary Immaculate. "I can't help wondering if you are listening."

Among the shareholder proposals under consideration was a provision to force Dimon to abandon his dual role as chairman and CEO. The move won only 40 percent approval despite the backing of large institutional investors such as the California Public Employees' Retirement System, which argued that a separate board chairman would provide stronger management oversight.

Some shareholders also pressed Dimon on the bank’s failure to provide greater assistance to families facing foreclosure,

“If Chase can afford to gamble with $2 billion without an impact on its bottom line, why can’t it reduce principal for borrowers. We’re talking about real people. They’re not just dollar signs,” Laura Johns, a former housing counselor, told Dimon at the annual meeting.

Dimon and JPMorgan face an even tougher round of questioning from Congress, regulators, federal prosecutors and shareholders.

On Monday, Sen. Tim Johnson, D-S.D., chairman of the Senate Banking Committee, announced hearings in the next few weeks on financial regulation that will include the JPMorgan loss. The hearings are expected to address the question of whether the loss-making trades were “hedges” against wider financial risk – or outright bets with depositors' and shareholders' money.

“Nobody actually knows what was going on because JPM has decided not to disclose what was going on,” said Kelleher. "So you basically have only speculation so far."

Until last week, Dimon had been an outspoken critic of new regulations aimed at restricting so-called proprietary trading that Congress has sought to outlaw since the financial collapse of 2008. He had led his industry’s effort to water down some provisions of the Dodd-Frank regulations enacted in 2009 to curb speculative trading.

The bank’s spectacular trading blunder – the final loss is still been tallied – has bolstered the case for tougher rules to prevent a repeat of the risky strategies that brought down the financial system in 2008. On Tuesday, U.S. Treasury Secretary Timothy Geithner said JPMorgan's losses strengthened the case for reform.

"The test of reform is not whether you can prevent banks from making mistakes ... the test of reform should be: Do those mistakes put at risk the broader economy, the financial system or the taxpayer?" Geithner said in Washington.

At Tuesday’s shareholders meeting, Dimon struck a more conciliatory tone on the subject of regulating the financial system,

“Our interest is the same as yours: to make it strong and sound,” he told shareholders. “We believe in strong simple good regulations. It’s not simply a question of more or less. We supported an awful lot of what is in Dodd-Frank."

Dimon also faces calls to resign as a member of the board of the New York Federal Reserve, one of JPMorgan’s chief regulators.

Having bankers on the boards of regional Fed banks “is a problem, period,” Sheila Bair, senior adviser at Pew Charitable Trusts and a former chairman of the Federal Deposit Insurance Corp. told Bloomberg news. “Why the regional banks have members of the industry that they regulate on their boards is beyond me.”

Facebook’s long-awaited initial public offering will be a long-term bet, and selling pressure on the shares after the market excitement post-IPO will “relax,” Martin Sorrell, CEO at advertising bellwether WPP, told CNBC Tuesday.

“I don’t think 900 million people can be a passing fad. A lot of people have taken a position in Facebook, it’s a self-perpetuating situation,” Sorrell told CNBC’s “Worldwide Exchange.” “The $100 billion was predictable and they’re trying to build a momentum.”

Sorrell said he would buy the shares with a view to looking at them again in “15 or 20 years’ time.” He said through WPP he buys $75 billion worth of media a year, adding that he spent $200 million last year with Facebook and while he would increase his spend in the network, it would be lower than he had first envisaged.

“We’ll increase (spending) this year, but it is a social network and you interrupt a social communication with an advertisement at your peril,” Sorrel said.

Facebook has been keen to argue that its advertising revenue would form a key component of its ongoing success, saying it would make ads “more relevant, more social, and more engaging” as it looks to grow.

The social media giant hiked the widely anticipated price range of its IPO to $34 to $38 a share Tuesday with trading expected to commence Friday — valuing the company around $102 billion, Silicon Valley’s largest ever IPO to date.
Sorrell described the price range as “hard to stomach.” 

An AP-CNBC poll found that half of Americans believe that the company’s expected stock price is too high.

Crucially, the same poll found that more than half — 57 percent — of respondents do not click on the ads on the site.
Critics of the hype surrounding the highly anticipated IPO argue the company’s advertising revenue history is weak and are doubtful about the site's longevity in the competitive technology sector.

Michael Browne, fund manager at Martin Currie, agreed that Facebook was a “unique proposition” and compared it to Twitter, the rival social network which has been snapping at Facebook’s heels as it has seen its popularity and users grow.

Browne said Twitter was more about “celebrity status and the cult of following people,” whereas Facebook was about interacting with “a smaller, more closed group of people.” 

CNBC.com: As investors Fawn over Facebook, poll finds user distrust, apathy

CNBC.com quiz: What's your facebook IQ?

CNBC.com: Confidence lacking in Zuckerberg as corporate steward 

Full Facebook IPO coverage from CNBC.com  

Investors may be hot to trot over Facebook's IPO, but a new AP/CNBC poll finds the company is facing potential monetary roadblocks CNBC's Kayla Tausche finds in the video below.

A black man who says he suffered emotional distress when he heard a hijacked public address announcement at a Wal-Mart store in New Jersey telling all blacks to leave has filed a lawsuit seeking $1 million in damages from the company.

Donnell Battie says Wal-Mart was negligent, careless and reckless and showed deliberate indifference by failing to properly control access to the P.A. system.

Battie’s lawsuit was first filed in Camden County Superior Court in March. It was moved this week to U.S. District Court in Camden, the New Jersey Law Journal reported Tuesday.

The lawsuit stems from a March 14, 2010, incident at a Wal-Mart in the community of Turnersville in Washington Township, N.J. Shortly before 5 p.m., someone commandeered the store’s public address system and announced: “Attention Wal-Mart customers: All black people leave the store now.”

A store manager quickly went on the intercom system and apologized for the remark, and police were summoned, according to media reports at the time. A 16-year-old was later arrested on harassment and bias intimidation charges.

Battie says he was in the store and contends the announcement led to depression, anxiety, anger, loss of sleep and appetite, paranoia, anti-social tendencies and loss of enjoyment in activities.

Battie's attorney, John Klamo, says Battie had already been getting professional help for previous traumatic incidents.

"Mr. Battie is an individual who has been under care of a doctor for various disabilities dealing with his psychological makeup," Klamo told the Law Journal. He's in Wal-Mart and something of this nature presents its ugly head and it brings up past situations in his life that affected him."

Archive video: Police investigate alleged store P.A. slur

Greg Rossiter, a Wal-Mart spokesman, declined to comment on the specifics of the lawsuit but told msnbc.com:

“We were appalled by this incident and are amazed that anyone could be so backward and mean-spirited in this day and age. We are sorry it happened and apologized at the time to any of our customers and associates who heard it. We updated our intercom system in this store to prevent this from happening in the future.”

More content from msnbc.com and NBC News:

• Fire captain demoted for Trayvon Martin Facebook post
• Missing Ariz. girl Isabel Celis: Police release 911 calls
• Video: Brutal violence escalates in Mexico drug wars
• Shopper bitten by rattlesnake in Wal-Mart
• Mexican couple admit to 27,000-round ammo cache in Texas

Follow US News on msnbc.com on Twitter and Facebook

Stocks clung to minor gains Tuesday, in part driven by signs the U.S. economy is gathering steam.

Just after 1 p.m. Eastern, the Dow Jones Industrial Average was up 0.26 percent. The S&P 500 was 0.23 higher. And the Nasdaq rose 0.71 percent.

The markets wavered in early morning then returned to positive territory after a report saying major homebuilders were optimistic about the sector.

Consumer prices were flat in April, but the cost of gasoline dropped.

One sign of concern for the economy was a report showing retail sales barely rose in April.

Stocks are having their worst month in the past eight. For the month, the Dow is down 518 points — about 4 percent — after hitting a four-year high on May 1. The average is on track to post its first monthly loss since September, when it fell 6 percent.

If the Dow closes higher, it will be only its second up day since the peak reached on May 1.

The Associated Press contributed to this report.

Zillow

The custom home is designed to resemble a 1700s Austrian-style cottage.

885 Hill Lane, Lake Tahoe, Nevada

For sale: $3,700,000

When Paul Arnold and his wife Elizabeth decided to build their custom home, they wanted something beyond fun. They wanted something fantastic.

Hence, "The Hobbit House" was born.

"As a framing contractor, I do hundreds of homes a year," explained Arnold. "To do something different and beautiful was always our mindset if we were going to do something for ourselves."

For years, Arnold has worked alongside Jim Brashers, a local expert in designing, constructing and renovating historic and period homes.

"We have built lots of really cool Disneyland-looking mountain cottages," explained Arnold. "My wife has always wanted to have a Jim Brasher-designed house."

The resulting property is something that belongs in a fairy tale -- literally. The 1700s European-style cottage that is more the size of a castle, ringing in at 6,640 square feet. It resides on a forested lot complete with a waterfall, and views of the lake. 

It is a most fascinating mix of whimsy and formidable architectural styling.

A carved stone entry and 3-foot thick door, built with trees from the property, lead into the home where visitors are greeted by a handmade dragon chandelier holding court over an enormous entryway with hickory floors. Most of the woodwork was hewn from trees on the property, including the cabinetry and paneling -- a decision made by Arnold's wife.

"She asked me if we could build the house without taking down any of the trees," said Arnold. His compromise was to build the house the best he could around the trees, and to incorporate the few trees that fell into the home's design.

Other whimsical details in the Reno-area home include a giant wood-burning fireplace, guest suites with small windows looking over a great hall, and an indoor pool that is only accessed by a stone bridge. An outdoor wine cellar is built into the side of the hill.

And of course, detailed murals cover many of the walls.

"That's a very favorite part of the house," Arnold says. "There was an artist in that house for months, and the artwork on the walls is spectacular."

Despite the rustic appeal, the home is firmly planted in the 21st century -- a blend of a "yesterday and tomorrow," says Arnold, who amped the home with technological details, including a controlled lighting system by Creston.

The 4-bedroom, 5.5-bath home is listed by Ronda Moll of Sierra Sotheby's International Realty.

According to Zillow's mortgage calculator, a monthly payment on the home would be $13,616 a month, assuming a 20 percent down payment on a 30-year-fixed mortgage.

Zillow

A stone bridge is the only way into the indoor pool area.

Zillow

Many of the rooms are covered in murals.

See more photos of the storybook-style home on Zillow.

Attempts to form a government in Greece collapsed on Tuesday, worsening fears that leftists opposed to the terms of a European Union bailout could sweep to victory and push the eurozone crisis into a dangerous new phase. 

In Athens, a spokesman for President Karolos Papoulias said his efforts to broker a compromise -- in which a cabinet of technocrats would try to steer the country away from bankruptcy -- had failed, nine days after an inconclusive general election.

A caretaker government will now be formed pending a new vote probably in mid-June. 

"For God's sake, let's move towards something better and not something worse," Socialist leader Evangelos Venizelos told reporters after party leaders met the head of state.

The turmoil in Athens rattled markets and sent shock waves around other troubled members of the eurozone, the 17 nations that use the euro currency and the world's largest trading block. 

'Bad news' for U.S.?
And with hostility rising in Greece to austerity policies imposed by the European Union and International Monetary Fund, speculation that Greece will exit the eurozone won't go away. 

"It is quite uncharted territory -- say your prayers," politics professor and associate fellow at British think tank Chatham House Richard Whitman told msnbc.com. "If the EU is sickly, it's bad news for all its trading partners (such as China and the United States). You can't sort out the world economy without Europe on the mend."  

Greece abandons quest to form new government

The amount of political energy and effort being spent on sorting out the Greek issue means that policymakers and politicians were simply "muddling through" and not focusing enough attention on the entire trading block's ailing economy, he said.  

Then there is the question of contagion, experts warn.

"Is it Portugal, Spain or Italy next? And then the euro itself starts to unravel," Whitman said. 

At least 100,000 march in Spain over austerity

Greece's left-wing SYRIZA party, which surged to second place in last week's election on an anti-austerity platform, rejected all compromise with pro-bailout parties, emboldened by opinion polls showing it could top the poll in a second vote. 

The tremors from Greece, compounding worries about Spain's debt-laden banking system, ended any honeymoon for new French President Francois Hollande, thrusting the growing risks to the EU to the top of the agenda for his first meeting with German Chancellor Angela Merkel hours after he took office. 

Exit Sarkozy, enter Hollande: Socialist sworn in as French president

In his inaugural address, the Socialist president called for a European pact to revive growth and temper German-driven austerity measures, seeking to change the direction of eurozone economic policy.

"I will propose to our partners a pact that will tie the necessary reduction of our public debt to the indispensable stimulation of our economies," Hollande declared, saying Europe needed "projects, solidarity and growth." 

Msnbc.com's F. Brinley Bruton and Reuters contributed to this report.

Mark Duncan / AP

A new government study warns that as many as one in 20 crashes could be linked to tire-related problems, with underinflated tires posing an especially high risk of causing a problem.

Today’s tires are engineering marvels, improving both performance and fuel economy, even if they tend to largely be ignored by motorists. But that’s a problem that also could turn a tire into a killer.

A new government study warns that as many as one in 20 crashes could be linked to tire-related problems, with underinflated tires posing an especially high risk of causing a problem.

“Tire problems are inherently hazardous to vehicle safety,” said the report by the National Highway Traffic Safety Administration, which based its study on crash data covering a three-year period from 2005 to 2007.

The report found that underinflation was the biggest problem, with a tire 25 percent below its rated pressure three times more likely to be involved in a crash.

Nissan Altima Takes Guesswork out of Tire Inflation

Part of the problem is that a low tire reduces the vehicle’s stability even under ideal conditions, but it also makes it significantly more difficult for a driver to maintain control in bad weather or during emergency maneuvers, such as swerving to avoid an obstacle in the road.

Problems also can result from worn tires, especially those that have gone bald or have damage to the tire that could lead to a catastrophic blow-out.

Subaru Shifting Focus Away From China

The study noted that tire problems, in general, were more likely to lead to accidents in bad weather.

Industry officials say the study underscores the need to properly maintain tires, repairing or replacing those that are damaged while always keeping tires at the proper inflation.

That message should now weigh doubly on the minds of consumers.  Properly inflated tires also deliver significantly better fuel economy.  A low tire can reduce mileage by as much as 5 to 10 percent, by various estimates.

Carroll Shelby Dead at 89

Regulators and industry officials alike have been paying more attention to tire safety since the recall of 13 million tires used on the Ford Explorer a decade ago.  Problems with the tires – compounded by improper inflation – were linked to 280 deaths.

Congress subsequently passed a law mandating all vehicles be equipped with tire-pressure monitoring systems, or TPMS.  But the more basic version of the technology is prone to false alerts and doesn’t necessarily show which tire is low, with some studies suggesting consumers often ignore the warnings.

That has led many manufacturers to adopt more advanced TPMS technology – such as will become available in the 2013 Nissan Altima – that provides specific inflation information on each individual tire.

T.J. Hooker / AP

Glens Falls, N.Y., ranks No. 2 in a ranking of the nation's fastest-growing housing markets.

Nationally, home prices are projected to decline 4 percent by the end of this year, according to Fiserv Case-Shiller’s latest projections. The country’s largest population centers will not escape this fate. In fact, in all but 50 of the 384 largest metropolitan areas examined, home prices are projected to decline at least through the end of the year before they start improving.

Among the 50 fortunate regions where housing prices are expected to increase, the gains will likely be modest. Only in nine cities are home values projected to grow by more than 3 percent, and the largest increase is estimated at just 4.3 percent. 24/7 Wall St. reviewed these nine fastest-growing housing markets in the country to try to identify the reasons behind their success.

Our analysis reveals several factors driving the growth in these few markets that are bucking the national trend. In most cases, housing prices are projected to increase because the areas are considered to be ripe for investment. This could be either because home values are perceived to be at their low point, because their economies are relatively healthy, or a combination of the two.

Many of the housing markets where home prices are projected to increase the most in the next year are ones in which home prices have already dropped significantly. In five of the metropolitan areas housing prices decreased more than 20 percent since they peaked. Home prices in the Madera-Chowchilla, Calif., metro area have plummeted more than 53 percent since the third quarter of 2006.

These nine metropolitan areas, with only a few exceptions, are also projected to have the largest increases in home prices in 2013. David Stiff, chief economist at Fiserv Case-Shiller, told 24/7 Wall St. that the nation’s housing recovery is not expected to reach full swing until the end of next year -- even in the areas that are currently leading the country in recovery. home prices are expected to increase much more in 2013 than they are projected to in 2012. Many of the cities on this list also have among the greatest projected increases in home prices through 2016.

While many of the nine cities on our list experienced large declines in home prices during the recession, most have an average unemployment -- generally floating around 8 percent. In other metropolitan areas -- not on our list -- that also experienced dramatic drops in housing prices the unemployment rates are much higher. In fact, most of these metropolitan areas have unemployment rates above 10 percent.

24/7 Wall St.: Cities where home prices are collapsing

Finally, foreclosure processing is another factor that appears to be affecting the recovery in these nine metros. “Markets that have been able to liquidate more of this inventory are farther along in their correction than markets that have not been able to do so,” Stiff explained. “In California, foreclosures are non-judicial. They don’t go through the courts, so California is further along in liquidating their foreclosure inventory, whereas foreclosures in Florida are judicial.” Florida is therefore farther behind in liquidating its foreclosure inventory.

The effect of non-judicial  foreclosure processing was clear in our analysis. California is home to the housing market that is expected to grow the most in the next year, Madera. Florida, on the hand, doesn’t have a single city among the 50 housing markets that are expected to increase in value. All but one of the regions expected to grow more than 3 percent in value have non-judicial processing.

24/7 Wall St.’s "Fastest-Growing Housing Markets" is based on Fiserv Case-Shiller’s forecast of changes in home prices from the fourth quarter of 2011 to the fourth quarter of 2012. 24/7 Wall St. also included each metropolitan area’s February 2012 unemployment rate and change in home prices from the fourth quarter of 2010 to the fourth quarter of 2011 -- both of which were provided by Fiserv Case-Shiller.

9. Danville, Va.
Expected price increase: 3.3 percent
Unemployment rate: 8.5 percent
Change in home prices (2010Q4-2011Q4): 0.0 percent

Home prices in Danville fell 6.1 percent from their peak in the first quarter of 2009. Compare to most cities, this decline is relatively small. The Danville metropolitan area is home to just over 100,000 people, making it among the least populated regions in the country. After a year in which home prices did not increase or decrease -- between the fourth quarter of 2010 and the fourth quarter of 2011 -- home prices in the city are now expected to rise by 3.3 percent by the end of this year -- one of the largest increases in the country.

24/7 Wall St.: 13 ways to sell your home in 2012

8. Kennewick-Pasco-Richland, Wash.
Expected price increase: 3.6 percent
Unemployment rate: 8.7 percent
Change in home prices (2010Q4-2011Q4): -0.3 percent

Home prices in the Kennewick-Pasco-Richland, Washington metro area were barely touched by the recession. Real estate values didn’t peak until the third quarter of 2010 and are only down 1.8 percent since that period. Fiserv projects home prices will increase 3.6 percent in the region through the end of this year. By the end of 2013, values are expected to increase an additional 3.8 percent.

7. Lewiston, Idaho-Wash.
Expected price increase: 3.6 percent
Unemployment rate: 6.6 percent
Change in home prices (2010Q4-2011Q4): -1.8 percent

The Lewiston metropolitan area, which has the second-smallest population in the country, is projected to undergo its first improvement in housing prices since 2009 in the coming year -- an increase of 3.6 percent. In the following year, home prices are expected to increase 6.2 percent. This is within the top eighth of largest increases for next year. Between the fourth quarter of 2011 and the fourth quarter of 2016, home prices in the Lewiston housing market are expected to increase an average of 3.7 percent each year.

6. Eugene-Springfield, Ore.
Expected price increase: 3.8 percent
Unemployment rate: 8.3 percent 
Change in home prices (2010Q4-2011Q4): -6.1 percent

From their peak in the second quarter of 2007, home prices in the Eugene-Springfield region fell 21.2 percent during the recession, putting it in the top third for the biggest declines in the country. In the last year alone, prices fell nearly 6 percent, the 40th worst decline in the country. However, Fiserv projects the region has hit its trough. Through the fourth quarter of this year, home prices are expected to increase 3.8 percent. Between the end of this year and the end of 2013, they will go up an additional 8.3 percent.

24/7 Wall St.: 10 most (and least) affordable cities to buy a home

5. Hagerstown-Martinsburg, Md.-W.V.
Expected price increase: 3.8 percent
Unemployment rate: 7.8 percent
Change in home prices (2010Q4-2011Q4): -6.7 percent

Between the fourth quarters of 2010 and 2011, home prices in the Hagerstown-Martinsburg metropolitan area dropped 6.7 percent -- among the largest decreases in the nation for that period. From their peak in the first quarter of 2007, prices have dropped a total 32.1 percent -- more than most markets. However, in the coming year, home prices are expected to increase 3.8 percent. In the year after that, they are projected to grow an additional 3.9 percent.

4. Coeur d’Alene, Idaho
Expected price increase: 3.8 percent
Unemployment rate: 8.9 percent
Change in home prices (2010Q4-2011Q4): -4.5 percent

Coeur d’Alene, located in northern Idaho, is one of the smallest and most remote metropolitan areas in the country, with a population of just over 140,000 residents. It is, however, located next to the much larger Spokane, Washington, across the state border. Home prices in the region fell 27.1 percent during the recession from their peak in the third quarter of 2007. In the past three years alone, prices fell more than 8 percent each year. The area is projected to experience a substantial housing recovery over the next half-decade. Between the end of 2011 and the end of 2016, Fiserv estimates home prices will increase 4.5 percent each year.

3. Medford, Ore.
Expected price increase: 4.2 percent
Unemployment rate: 10.8 percent 
Change in home prices (2010Q4-2011Q4): -6.6 percent

Medford is a relatively poor metropolitan area, with a median family income of $49,700 -- compared to the national median income of $63,000. The drop in home prices -- a decrease of 37.1 percent since 2006 -- has therefore been all the more painful on residents. Fortunately, home prices are projected to increase 4.2 percent in the next year. In the year after that prices are expected to increase another 15.3 percent -- the third-largest increase in the country.

24/7 Wall St.: Best American cities for business

2. Glens Falls, N.Y.
Expected price increase: 4.2 percent
Unemployment rate: 7.5 percent 
Change in home prices (2010Q4-2011Q4): -2.4 percent

Home prices in Glens Falls declined only moderately during the housing crisis. Homes lost 7 percent of their value from their peak, much lower compared to a 34.2 percent average decline nationwide. Still, the 2.4 percent drop per year between the end of 2008 and 2011 was apparently enough for investors to identify the region as a potential investment. The regional economy remains stable, with an unemployment rate of 7.5 percent, well below the national average. Fiserv projects home prices in the area to increase 4.2 percent by the end of this year and increase an average of 7.2 percent per year by the end of 2016.

1. Madera-Chowchilla, Calif.
Expected price increase: 4.3 percent
Unemployment rate: 14.4 percent
Change in home prices (2010Q4-2011Q4): -10.0 percent

Home prices in the Madera-Chowchilla metropolitan area are projected to increase 4.3 percent from the fourth quarter of 2011 to the fourth quarter of 2012. The following year, prices are expected to increase another 16.5 percent -- the highest rate in the U.S. However, these improvements come after the region experienced among the worst effects of the housing crash. From the time Madera’s home prices peaked in the third quarter of 2006 to the fourth quarter of 2011, they dropped 53.1 percent. This is one of the largest drops in the country.

Some collection agencies bugging you about late or defaulted student loan payments are cashing in big time on your financial pain.

The staff at Educational Credit Management Corp., a non profit collection agency in Minnesota, has been getting fat pay checks -- nearly half a million dollars in annual pay for one student-loan collector, according to a story on Bloomberg Tuesday.

In addition, the article reported, the ECMC CEO Richard Boyle brought in $1.1 million in 2010, and more than $400,000 for five other managers at the company.

Such organizations have a lot of business right now thanks to the escalating cost of college tuition and a tight labor market that’s left many recent graduates unemployed or underemployed. As a result, many grads are having a tough time paying back their student loans.

The average student-loan debt for graduates jumped 25 percent from 2000 to 2010 to nearly $17,000 in inflation-adjusted dollars, while average wages for workers 25 to 34 with bachelor's degrees dropped by 15 percent over the same time period, according to the Progressive Policy Institute.

 This all means, many grads are dropping the ball when it comes to keeping up on loan payments.

Student loan defaults are on the rise, increasing to 8.8 percent in fiscal year 2009, up from 7 percent the previous year, according to a Department of Education report released late last year. And 27 percent of student-loan borrowers are more than 30 days past due on payment, found recent report by the Federal Reserve Bank of New York.

So it’s disheartening to hear organizations such as ECMC are profiting on fees they charge borrowers and commissions coming from taxpayers, stated the Bloomberg piece.

Robert Shireman, a former deputy undersecretary of education under President Barack Obama, told Bloomberg that the loan program “is enriching collection agencies and undermining a goal we all want for society -- to encourage people to go to college.”

These student loan collection agencies, 33 in all, oversee student loans for the U.S. Education Department and they guarantee loans made by lenders. It’s a failsafe proposition for these agencies because if they can’t recover the funds the burden is shifted to taxpayers, the article reported.

Such agencies have come under fire recently in a report released this month by the National Consumer Law Center looking at what it deemed a faulty complaint system for borrowers and the poor job being done tracking complaints.

This from the report:

By contracting out its defaulted loan portfolio and failing to provide effective oversight, the Department has abdicated its responsibility to uphold the borrower protections in the HigherEducation Act. These protections include affordable payment plans and loan cancellations in circumstances such as disability or death. The Department has created financial incentives for its contractors that encourage high collections at the expense of borrower rights.  

ECMC’s chief operating officer, Dave Hawn, defended his organization, telling Bloomberg that the company has returned $4.3 billion to the U.S. Treasury, helps direct borrowers to payment plans and repair their credit. And, he added, “I’m really proud of what we do as an organization.”

President Obama's pronouncement last week in favor of same-sex marriage has no legal effect on employers’ decisions on whether to offer benefits to workers’ domestic partners, but some advocates believe it could reinforce a decade-long trend toward coverage.

Last year, 52 percent of all employers offered domestic partner health benefits, with the percentage varying widely by region and industry, according to a nationally representative sample of about 3,000 employers surveyed by benefit consultant Mercer.  That’s up from 31 percent in 2010.

 The biggest factors driving that change are employers’ views on whether such benefits help them attract and retain desirable workers.

 "Employers started doing this because they felt they needed to be competitive in the labor market, just like with other benefits," said Paul Fronstin of Employee Benefit Research Institute, a think tank in Washington D.C.  "I don’t see that changing."

 The Village Voice newspaper in New York is credited with being the first private employer to offer workers domestic partner benefits in 1982.  In 1995, Vermont became the first to offer coverage to state workers.

 "There’s been a steady growth for a long time," says Joan Smyth, a partner at Mercer.  In the early days, some employers worried that adding coverage for domestic partners could make their costs skyrocket by attracting people with higher-than-average health risks, she said, but "that did not happen."

The District of Columbia and almost half of states currently offer benefits to domestic partners or same-sex spouses of state workers, according to the advocacy group Human Rights Campaign.  

Same-sex partners of federal workers are not eligible for coverage under the Federal Employees Health Benefits Program (FEHB) because the Defense of Marriage Act, passed in 1996 and signed into law by President Bill Clinton, defines marriage as a legal union between a man and woman, the FEHB website says. That law is being challenged and may well end up before the Supreme Court.  The Obama administration has said it will not defend the statute.

In the Mercer survey, coverage of same-sex partners was most common in the West, with 79 percent of large employers offering such benefits. It was least common in the South, at 28 percent.  Big differences were also noted within industries.  Among manufacturing firms, for example, the coverage rate ranged from a high of 96 percent for pharmaceutical companies to 18 percent for machinery and heavy equipment makers.

Public sector jobs had a lower rate of coverage, averaging 26 percent across state, county and municipal workers, the Mercer survey found.

While Smyth at Mercer doesn’t think the president’s pronouncement will sway employers, the Human Rights Campaign’s state legislative director Sarah Warbelow has a different take.

"Hearing the president supports this as well makes this even easier for corporations to get on board," says Warbelow, adding that 58 percent of Fortune 500 companies currently offer domestic partner benefits. Some of those companies limit those benefits to same-sex couples, while others include domestic partners of opposite sexes.

The climate remains volatile, particularly for state and municipal employees. What, for example, will happen in states like North Carolina that passed a ban on same-sex marriage and have municipalities that offer domestic partner benefits to government workers?

With last week’s vote in North Carolina, there are at least 31 states that bar gay marriage.

In North Carolina, attorneys for cities such as Carrboro and Chapel Hill are still evaluating whether they can continue to offer domestic partner benefits, according to reports from the area’s local NBC television affiliate.

"We have employees asking us, 'What's going to happen?' These are people who otherwise wouldn't have health care, children who wouldn't have health care," Chapel Hill Mayor Mark Kleinschmidt told NBC-17 in Raleigh, N.C.

Court decisions in other states with similar laws have split on whether domestic partnership benefits can be retained for state or municipal workers, says Warbelow.

Meanwhile, private-sector employers must contend with a confusing array of state laws governing the types of unions residents may enter.

Eight states and the District of Columbia have passed laws to allow same-sex couples to marry, for example, while an additional nine allow civil unions or domestic partnerships, which offer many, if not all of the same legal protections as marriage. 

While many employer health programs are exempt from state law because they are self-insured, some employers buy coverage from insurers that are subject to state rules.

Employers who buy coverage from insurers in those states must follow that state’s law, even if the employees live another state, Smyth says.  

A separate Mercer report out last week gave an example set in Virginia: "Ellen and Sue live in Virginia, which doesn’t permit same-sex marriage. Ellen works in Washington, D.C., and is covered by a group health insurance policy issued in D.C., which must cover same- and opposite-sex spouses equally. Ellen and Sue marry in D.C., even though they live in Virginia. Ellen may add Sue to her health coverage because they are lawfully married and covered by a D.C. policy."

Employers are "focused on this right now and are watching" the changing political landscape to make sure they are in compliance with the rules, says Smyth. "They need to be really careful that they know the laws."

Kaiser Health News, an editorially independent news service, is a program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente. Our stories appear in media outlets nationwide and on our website, www.kaiserhealthnews.org.

Avon may be "the company for women," but, for now at least, it's not the company for Coty.

Coty announced that it was withdrawing its $10.7 billion bid to buy Avon because the direct seller of women's cosmetics had missed a deadline to begin talks about the offer.

"Your total lack of engagement with us leads us to believe that you remain reluctant to explore a friendly, negotiated combination on a reasonable timetable," Coty Chairman Bart Becht said in a letter to Avon dated Monday and made public.

"It is time for Coty Inc to move on and pursue other opportunities."

The move leaves Avon shareholders relying on new Chief Executive Sheri McCoy to come up with a plan to turn around a company that has been suffering from plummeting profits on falling sales at home and in some international markets, as well as a stock price that had been hammered prior to Coty's bid.

Coty last week raised its unsolicited bid, which had the financial backing of Warren Buffett's Berkshire Hathaway and others, to $24.75 per share from an earlier $23.25 per share offer, and gave Avon a Monday deadline to respond.

Avon, which had rejected outright all of Coty's earlier bids without entering into discussions, said on Sunday in a two-sentence statement that it would look at Coty's latest offer but respond within a week.

Coty, known for fragrances for celebrities like Madonna and Beyoncé, said that no one on Avon's board or senior management, including McCoy, returned its request for an explanation of why Avon needed more time to consider the bid.

Avon did not respond to a requests from Reuters or The Associated Press for comment.

Coty's reaction - take our offer by the deadline or we walk away - is consistent with how Buffett has approached dealmaking in the past. He has always been clear that Berkshire does not get into bidding wars; it makes what it considers a fair offer and that bid is either taken or not.
That was most recently seen last year with an offer by Berkshire's National Indemnity insurance unit for reinsurer Transatlantic. Amid a bidding war by other parties, Berkshire came in with a firm cash offer. It set a deadline, and when that deadline passed Berkshire simply withdrew its bid and went on its way.

A number of Avon shareholders had told Reuters in recent weeks that Coty's offers were too low but that they wanted Avon to at least meet with Coty.

Coty, which made its desire to buy Avon known to the public for the first time in April, had said from the start it had no intention of making a hostile bid for Avon, which has close to three times as much revenue as Coty.

Avon had rejected Coty's offers, arguing that they were too low and that the company's value could rise more from a turnaround led by a new CEO.

Avon shares had fallen 38.8 percent between the time they hit a 52-week high on May 16, 2011 and March 30, the last session before Coty went public with its overtures. 

Avon, is facing declining sales and a loss of sales representatives. Earlier this month, Avon reported weak first-quarter results, including a sharp drop in profits.

Avon has been bedeviled by heavy competition from drugstores in the United States, aggressive pricing by rivals in Eastern Europe and inadequate ordering systems that have frustrated representatives in Brazil, its biggest market.

The company has poured tens of millions into an internal probe into whether it broke the Foreign Corrupt Practices Act to build its business overseas. The U.S. government announced its own investigation last year.

Coty had said that before it could raise the offer any higher, it needed access to Avon's books to understand the financial implications of the U.S. probe as well as to get a sense of potential savings from combining the businesses.

When McCoy spoke to shareholders at Avon's annual meeting on May 3, she said her first priority was to stabilize the business.

McCoy, a former Johnson & Johnson executive, took the reins as CEO last month. She will conduct a thorough business review this year.

Fragrances accounted for 57 percent of Coty's $4.1 billion in sales in its year ended June 2011. The bulk of its sales come from Europe and North America. A tie-up would have given it access to developing markets such as Brazil, Russia and Mexico, and deepened its roster of products.

The companies first met to informally discuss a deal in February, initially exploring having Avon buy Coty. Becht last month said that when no offer came from Avon, Coty made a verbal offer, followed by three letters in March. Its original offer was for $22.25 per share.

Coty had lined up equity financing from several parties, including Coty's main shareholder, Joh. A. Benckiser, BDT Capital Partners and some of its limited partners, and Berkshire Hathaway. Coty had said J.P. Morgan Securities would provide debt financing.

Berkshire Hathaway would provide $2.5 billion of the financing, a person familiar with the matter told Reuters last week.

Reuters and The Associated Press contributed to this report.

The United States, the European Union and the U.N. have imposed tough economic sanctions against Iran –- blocking access to the international banking system and hurting sales of Iranian crude oil -– as a way to persuade Tehran to abandon its nuclear program. 

In the short term, the harsh sanctions have had an impact on Iran’s economy -– inflation has gone through the roof, and the unemployment rate is staggering, especially among young Iranians. Prices of consumer goods have doubled, tripled, even quadrupled in some cases, according to consumers. 

The business community is in disarray, and as things keep getting worse, it’s all people are talking about.

Reuters

CLICK ON THE GRAPHIC ABOVE TO ENLARGE THE IMAGE. Iran Sanctions: Key areas affected by sanctions imposed by the international community against Iran.

Barely getting by 
At the Tajrish Bazaar in North Tehran on a recent afternoon, Ahmed, a 31-year-old unemployed man, poured his heart out to me. Speaking on the condition of anonymity, as all those interviewed for this story did because of the political sensitivity of speaking out in Iran, he told me his story. 

He said he has been unemployed for the past year, doing odd jobs, and that he barely makes enough to feed himself, let alone his wife and children. The lack of jobs and the extraordinary rise in food prices have hamstrung him. But he was most worried about what the crippled economy is doing to the youth of Iran, who he said are turning to crime and drugs if they can’t find work. 

In Iran, appearance is everything. How you dress and wear your beard says a lot about your politics. 

As I talked to Ahmed, who was dressed in Western-style clothes, another man looked on disapprovingly. He had a full dark black beard and was dressed in conservative black clothes. He was listening to everything Ahmed said and wanted to talk to us, although he declined to give us his name.

He said that people like Ahmed were making excuses and were lazy. He argued that the economy had become tougher, but no more so than the Iranian people were used to over the years. He blamed the U.S. for the bad economy, accusing President Barack Obama of unfairly trying to squeeze Iran. But he said that in the end, the rough economic times had taught Iran to be more self-reliant. 

“We need to tighten our belts for now and weather this storm with the West as we have always done. And we will be victorious again,” he said.

New sanctions' real impact
The most recent international sanctions have targeted Iran’s crude oil and banking sectors. In addition to harsh U.S. measures, 27 countries in the European Union agreed in January to ban Iranian oil imports –- giving countries until July 1 to terminate their deals. They also put a freeze on assets belonging to the Central Bank of Iran and a ban on trade in gold and other precious metals.  

Anthony Cordesman, who holds the Burke chair in strategy at the Center for Strategic and International Studies and is a long-time Iran watcher, said that despite years of sanctions against Iran, the most recent ones have had the greatest impact –- partly because they target banking.

The banking sanctions “have had the most popular, or broad, impact. Right now Iran can’t even operate on the international clearinghouse.”   

“I think that this is the first time that sanctions have really had a major bite. Up to now, they have all been fairly limited,” said Cordesman.  “But beginning in November, and it’s just beginning to bite, you can’t bank internationally effectively, you can’t move money. You don’t have a stable conversion rate –- but the rial [Iran’s currency] is way down, so your savings are of very uncertain value unless you’ve invested in property.  You don’t know what’s going to happen to your business. You have to be very cautious about how much money you can spend on a marriage for your children or their education.” 

He added that we really won’t begin to see the full impact of the sanctions until summer, when they have all gone into effect.  “So everyone knows it’s getting worse, but no one knows yet how serious.” 

Vali Nasr, the incoming dean at the Johns Hopkins School of Advanced International Studies, explained how these sanctions differ from 30 years of sanctions that mostly targeted imports into Iran. 

Slideshow: Everyday life in Iran

At schools, in shops, and on the streets of big cities and small towns, daily life plays out in Iran.

Launch slideshow

“The new set of sanctions targeting Iran’s oil industry, central bank, ability to conduct international financial transactions, are of a different nature largely because they are going after the government’s source of income –- the ability to sell oil or receive money for oil,” said Nasr. “So these have had an impact because they have caused extensive inflation inside Iran. They’ve caused the government to scrap a variety of projects, which has caused unemployment.  

“There is no doubt that economic hardship has become much more pronounced. And there is on top of that a layer of uncertainty. So there is significant economic hardship that is hitting the lower rung of society and the Iranian middle class,” said Nasr.
 
Back in Tajrish Bazaar, Roya, a well-dressed woman in her 60s wearing a Hermes scarf for a hijab and carrying a Louis Vuitton bag, explained how even she is being hit by the economic uncertainty. While she is a wealthy Iranian living in the leafy suburbs of affluent North Tehran, she said her purchasing power has been halved by the struggling economy. 

“Everything has doubled in price,” Roya said. “My son lives in Los Angeles, and it’s cheaper to go shopping there -- amazing. Things have become difficult for me even though I am among the better off Iranians. I can’t imagine how difficult it is for folks downtown.” 
When I asked her what the solution was, she replied sarcastically, “That’s for the country’s economists to figure out.”

Close to the bone
For international relations analysts, like Cordesman and Nasr, getting reliable information on what’s going on in Iran is very difficult. Both analysts said that basically all of their information on the impact of the current sanctions is anecdotal. 

“You have to rely on anecdotal information especially because the Iranian government does not have an interest in revealing how painful the sanctions are. They may admit that they are hurting, but they don’t want to put numbers out there,” said Nasr. 

But it’s not all doom and gloom for the regime. President Mahmoud Ahmadinejad often touts during public events that Iran has a record $90 billion in foreign exchange reserves, as well as untold reserves of gold, silver and precious stones. 

Even though experts estimate that Iran has seen a decline in sales of about 300, 000 barrels of oil per day as a result of the sanctions, this has been offset by a 15 percent rise in crude prices. 

And the effect and pain of sanctions have not been distributed evenly. While blue-collar workers in downtown Tehran can expect to eat meat once a month only as a treat, North Tehran is awash with Mercedes and Porsche SUVs costing as much as $500,000 after the import tax has been paid.    

Will the sanctions achieve goal?
So the question remains as to whether the sanctions will achieve their goal: curtailing Iran’s nuclear program.

“The sanctions have had an impact of getting Iran to the negotiating table. Iran came to Istanbul [the site of the latest diplomatic talks] with much more seriousness than in the past,” said Nasr. 

But he added that the sanctions alone won’t be enough for Iran’s leaders to give up a program they have invested heavily in –- both financially and in terms of building the nuclear program as a point of national pride.  “Just because the Iranian public dislikes this regime –- that does not mean that they dislike the nuclear program. They don’t see this as the regime’s nuclear program, they see it as Iran’s nuclear program,” said Nasr.  

In order for the sanctions to work, Nasr explained, the U.S. and other parties at the table need to give something back -– otherwise it would just seem like Iran is surrendering to the West’s demands, not an easy sell at home. 

“Until now, the whole approach has been stick-heavy and carrot-poor. And the sticks are very explicit and the carrots are vague. And maybe that was necessary to get their attention and to show that we meant business. But now going forward -– [the U.S.] can’t ask [Iran] for concrete concessions –- like stop this, stop that -– but not put concrete things on the table, like this sanction will be lifted.  If all the concessions are on the Iranian side and what they get is just a promissory note, I don’t think it will fly.”   

“End of the day, these two countries have not had a single thing they’ve agreed on or done together in the last 30 years. So you couldn’t expect them to actually be able to conclude a deal without some sort of reciprocal, trust-building, concrete steps going forward.”

Msnbc.com’s Petra Cahill contributed to this report. 

More world news from msnbc.com and NBC News:

• Germany's Pirate Party rides wave of popularity
• 'Scapegoated'? Westerners held over massacre
• Anxious Greeks withdraw $894 million in a day
• In China, English teaching is a whites-only club
• Beer-swilling bride sparks controversy in New Zealand
• Oh la la! A look at France's fascinating first ladies
• 'Puppet': Al-Qaida chief issues message on Yemen
• 'Everything has doubled in price': Iran sanctions bite

Follow us on Twitter: @msnbc_world

AP

Facebook CEO Mark Zuckerberg broke out a suit and tie for a meeting with Japan's Prime Minister Yoshihiko Noda this year.

As Facebook nears its debut as a public company, would-be investors are pondering the $96 billion question: Can an eight-year-old company run by a hoodie-wearing 28-year-old possibly be worth that much?

Analysts are divided, with some suggesting that the valuation is simply too high, and others coming up with scenarios in which Facebook could be worth even more, given the right conditions and a leap of faith.

Andrew Sheehy, chief analyst at British-based Generator Research, says the number is too high, reflecting outsized expectations for the social networking company. A market cap of $100 billion would give Facebook a price-to-earnings ratio five times that of Apple, the nation's most valuable company. Apple clocks in at about 20 times earnings, based on its most recent fiscal year, while Facebook would be valued at 100 times its $1 billion in annual earnings.

Such P-E ratios are a typical way investors measure the value of a company, although they also have to factor in the rate of a comapny's growth. But even if Facebook profits grow rapidly it will be years before its P-E ratio comes down to the level of other tech companies.

Morningstar analyst Rick Summers offers a preliminary valuation of $71 billion for the company and forecast a growth trajectory that would bring Facebook up to $40 billion in revenue by 2021, from $3.7 billion last year.

Related: A non-investors guide to Facebook's IPO

"Facebook’s ownership and control of its user data affords it substantial competitive advantages," he wrote in a recent research note. "Within Facebook, the company continues to build a rich database of friends, actions, demographics and applications."

Most of Wall Street's top tech industry analysts are barred from commenting on the offering because they work for one of the 33 investment banks underwriting the massive offering, which is expected to be priced Thursday and begin trading Friday on the Nasdaq stock market.

That leaves investors largely on their own, especially since most individual investors will be unable to buy shares until they begin trading publicly, when they easily could be far more expensive than the initial public offering price, which will value the company at an estimated $77 billion to $96 billion, according to the latest documents filed with federal regulators.

Facebook's 900 million-plus user base is far and away its biggest asset. It represents a huge number of eyeballs for exposure-hungry advertisers, along with a vast warehouse of data about users' online behaviors, preferences and habits. The company has done a good job of turning that data into dollars so far but will have to invent new ways to make that data generate revenue to justify such a rich valuation, analysts said.

Facebook recently raised eyebrows by reporting quarterly profits that were below year-ago levels, although revenues rose 45 percent.

"Growth is decelerating, but it's decelerating from enormous down to large," said Barry Randall, chief investment officer at Crabtree Asset Management LLC. "Its major problem now is managing people's expectations."

Summers, of Morningstar, acknowledged that the IPO hype glosses over some shorter-term issues with which Zuckerberg and his team will have to deal. "The market may be underestimating several near-term challenges for the company," he wrote.

Some analysts voiced concern that the rapid increase in Facebook's mobile traffic will continue to erode ad revenues. In March, the company had 488 million mobile users, which presents a challenge because the small screen size of smartphones means much less real estate for ads.

In an amended filing with federal regulators last week, Facebook said, "Growth in use of Facebook through our mobile products, where our ability to monetize is unproven, as a substitute for use on personal computers may negatively affect our revenue and financial results."

"The rapid shift from online usage to mobile devices that are harder to monetize is harming Facebook's growth prospects in the near and medium terms," Sam Hamadeh, founder and CEO of PrivCo, which does research on privately held companies, said in a report. Even analysts who are more positive agree that growth is slowing.

Related: Facebook sees growing shift to less lucrative mobile use

In a research note in response to Facebook's recent disclosure of weaker revenue numbers, analyst Ken Sena at Evercore Partners lowered estimates for revenue and earnings margins, although he still said the company was worth $130 billion to $150 billion.

Even if Facebook figures out a way to tuck ads into smartphone news feeds without alienating users, Sheehy said relying on online ads isn't going to be enough. "They have done a very, very good job at executing target advertising," he said, which is why Facebook was able to generate what Sheehy, of Generator Research, called its "tremendously impressive" $3.7 billion in revenue last year. 

"But it's just not going to scale," he said. Even if Facebook triples ad revenue to $12 billion by 2016, that's nowhere near enough to justify a $96 billion valuation, he said. To do that, "They'd have to develop a completely new incremental business."

Analysts have plenty of ideas about how Facebook could do this. Morningstar's Summer pointed out that the site has already morphed from a social destination to an identity for users to log into other websites. It's also a platform for a growing slate of apps and layered networks like BranchOut, which Randall suggested could become a revenue stream in the future.

Related: On Wall Street, it's shaping up as hoodies vs. the suits

Eventually, he predicted, "They'll monetize it by allowing smaller companies to build businesses on top of their database and eventually charge them for doing so." The site also does a robust business in the sale of virtual goods, which could be the first step into selling physical goods and expanding into the burgeoning e-commerce and payments arena, following in the footsteps of eBay.

It's not impossible. Apple grew faster than Facebook would need to in order to justify a $96 billion valuation, but Sheehy pointed out Apple also revolutionized both the music industry and the mobile phone market. That sets the bar high for Facebook.

Evercore's Sena has faith.

"We believe that Facebook's ad model is only now just beginning to reflect the power of its audience platform," he wrote. "Moreover, while we continue to believe that Facebook will redefine advertising and that the company is on course to be the most valuable media company in existence."

Scott Thompson won't get severance compensation after leaving as Yahoo's CEO in a scandal about his resume, according to a filing.

The filing also said Yahoo agreed to appoint activist investor Daniel S. Loeb, Michael J. Wolf and Harry J. Wilson to the board, effective Wednesday.

CNBC.com: World's richest CEOs

Loeb and his hedge fund, Third Point, pressed for Thompson's ouster after a discrepancy about Thompson's education background had been revealed. 

The filing, released Monday, was part of a settlement between Yahoo and Third Point, its largest shareholder.

Earlier Monday, The Wall Street Journal reported that Thompson had told directors and colleagues that he had been diagnosed with thyroid cancer days before quitting the post.

CNBC.com: 10 short-lived CEO terms

It said Thompson disclosed his illness late last week before handing in his resignation, as evidence appeared to emerge that contradicted his claim that he wasn’t responsible for an error in his resume regarding his academic record, sources told the newspaper.

The Journal reported Thompson’s decision to step down as CEO at Yahoo was in part influenced by the diagnosis, which occurred in recent days as the board was investigating why his resume included a computer science degree which he had never attained.

The error in Thompson's resume appeared in a Yahoo regulatory filing and on Yahoo's and other corporate websites.

CNBC.com: Outgoing Yahoo boss reportedly told board he has cancer

The struggling Internet company said Sunday that Thompson, its third CEO in three years, would leave immediately and be succeeded by Ross Levinsohn, a senior Yahoo executive who becomes interim CEO.

The Journal reported that Thompson told one colleague that he didn't want to publicly discuss the cancer diagnosis because he wanted to keep personal details private.

CNBC.com: Big changes ahead for Yahoo after CEO resigns

Wall Street, not known for gender diversity in its upper echelons, just lost one of its top-ranking women executives Monday.

Ina Drew, who headed trading strategy at JPMorgan Chase as its chief investment officer, is retiring in the wake of a trading error that cost the nation's largest banking company $2 billion so far and re-energized the debate over too-big-to-fail and government regulation of banking. Drew, 55, had worked for the bank for 30 years, rising to become one of Chairman and CEO Jamie Dimon's top lieutenants.

She is being replaced by Matt Zames, who is the co-head of the bank's global fixed income unit, JPMorgan said in a statement.

Drew was in charge of the London trading unit responsible for the trading error. Drew's resignation was expected after news reports over the weekend said she and two traders from the London unit would be stepping down.

"Ina Drew has been a great partner over her many years with our firm. Despite our recent losses in the CIO, Ina's vast contributions to our company should not be overshadowed by these events," said Dimon.

"We maintain our fortress balance sheet and capital strength to withstand setbacks like this, and we will learn from our mistakes and remain diligently focused on our clients, who count on us every day," he said.

Drew had offered to resign several times since Dimon disclosed the trading loss on Thursday, a person familiar with the matter told The Associated Press on Sunday.

At least two other executives at the bank will be held accountable for the mistake, the person said.

Drew was paid $15.5 million last year and almost $16 million in 2010, making her one of the highest-paid officials at JPMorgan, according to a regulatory filing.

Drew declined comment through a bank spokeswoman on Sunday. The Wall Street Journal and the New York Times reported Sunday that she and two other executives were expected to resign soon.

The Journal also reported that Bruno Iksil, the JPMorgan trader identified as the "London whale" because of the giant bets he placed, was also likely to leave, but the paper reported that it was not clear when that would happen.

The surprise loss has been a black eye for the bank and for Dimon, who is known in the industry both as a master of risk management and as an outspoken opponent of some proposed regulation since the crisis.

Dimon said in a TV interview aired Sunday that he was "dead wrong" when he dismissed concerns about the bank's trading last month. "We made a terrible, egregious mistake," Dimon said in an interview that was taped Friday and aired on NBC's "Meet the Press."

"There's almost no excuse for it." Dimon said he did not know the extent of the problem when he said in April that the concerns were a "tempest in a teapot." The loss came in the past six weeks.

Dimon has said it came from trading in so-called credit derivatives and was designed to hedge against financial risk, not to make a profit for the bank.

A piece of financial regulation known as the Volcker rule would prevent banks from certain kinds of trading for their own profit. Dimon has said the trading involved in the $2 billion loss would not have fallen under the rule.

Rep. Barney Frank, D-Mass., told ABC's "This Week" that he hopes the final version of the Volcker rule will prevent the type of trading that led to the massive loss at JPMorgan.

Dimon conceded to NBC that the bank "hurt ourselves and our credibility" and expects to "pay the price for that."

Asked what the price should be, Sen. Carl Levin, D-Mich., said that banks will lose their fight to weaken the rule. "This was not a risk-reducing activity that they engaged in. This increased their risk," Levin told NBC. "So we've got to be very, very careful that the regulators here are not undermined by this huge effort to weaken the rule by putting in a huge loophole" that includes the trading involved in the JPMorgan loss, he said.

Dimon said the bank is open to inquiries from regulators. He has also promised, in an email to the bank's employees and in a conference call with stock analysts, to get to the bottom of what happened and learn from the mistake.

Dimon told NBC that he supported giving the government the authority to dismantle a failing big bank and wipe out shareholder equity. But he stressed that JPMorgan, the largest bank in the United States, is "very strong."

Addressing public anger toward Wall Street, Dimon said he wants a more equitable society and does not mind paying higher taxes. But he said attacking all of business is "very counterproductive.

The Associated Press contributed to this report.

Updated at 4:55 p.m. ET: California Gov. Jerry Brown on Monday asked state employees to work a four-day, 38-hour week as part of a package of massive spending cuts needed to help the state close an unexpected $15.7 billion budget deficit.

In addition to the unusual four-day workweek — part of a mandated reduction in salaries and benefits to state workers of 5 percent — Brown's proposed budget, which would take effect July 1, also would slash $1.2 billion from the state's Medi-Cal program and more than $2 billion from education.

Brown also urged voters to pass an initiative to raise taxes that he is supporting on the November ballot.

"I am a buoyant optimist," Brown said at a news conference, "but this is the best I can do" about the deficit, which is about $7 billion greater than Brown predicted when he proposed his initial budget in January.

He blamed tax collections that hadn't come in as high as had been expected and billions of dollars in state cuts that have been blocked by lawsuits and federal requirements.

"The budget has lots of funds ... and restraints and rules," Brown said. "It's a pretzel palace of incredible complexity, and that's why it isn't straightforward how you balance the budget."

The tax plan Brown is pushing in November would raise the state sales tax to 7.5 percent from 7.25 percent, which is projected to increase sales tax receipts by about 3.5 percent.

The plan would also raise the income tax on residents earning between $250,000 and $300,000 a year to 10.3 percent from 9.71 percent and to 11.3 percent on people with annual incomes between $350,000 and $500,000 — a 17.7 percent increase over the current rate.

Read the full revised budget (.pdf)

Brown said that if voters don't approve the new taxes in November, cuts to social services, state workers' pay and other spending would be larger. Under that scenario, he said, cuts to education would total $6 billion, and services for people with developmental disabilities would be reduced by $50 million.

"I can't convey how difficult it is to make the cuts we are facing," Assemblyman Roger Dickinson, D-Sacramento, said in an interview with NBC station KCRA of Sacramento, adding that it was inevitable that California would have to raise taxes.

"This is a very, very serious situation that can't be solved simply by cuts," Dickinson said. "We've cut the state general fund budget by about 20 percent over the last three years, so it's not a matter of continuing to cut. We're beyond being into the bone at this point."

Jon Streeter, president of the State Bar of California, said the proposals would gut the state's court system.

"The situation is dire and getting worse," Streeter said. "The entire civil justice system as we know it is in peril."

It isn't clear how the proposed cuts would affect municipalities and social services. A spokesman for Los Angeles Mayor Antonio Villaraigosa said city officials were still reviewing the proposals Monday afternoon.

On Saturday, Brown released a YouTube video criticizing previous legislative fixes as "gimmicky."

"We're still recovering from the worst recession since the 1930s," Brown said in the video. "Tax receipts are coming in lower than expected, and the federal government and the courts have blocked us from making billions in necessary budget reductions. This means that we will have to go much further and make cuts far greater than I asked for at the beginning of the year."

More content from msnbc.com and NBC News:

• Gov. Christie's pension issue: Double-dipping in New Jersey
• Edwards case: Dismissal denial anything but routine
• Video: Obama, Romney play up gay marriage split
• Four heading to Christian youth rally killed in plane crash
• BU mourns deaths of 3 students in New Zealand crash
• Father: 'Miracle' as woman fights flesh-eating bacteria

Follow US News on msnbc.com on Twitter and Facebook

Paul Sakuma / AP

Scott Thompson had been chief exective at Yahoo since January.

UPDATED 4:31 P.M. E.D.T.

Yahoo said Sunday that Scott Thompson, its embattled CEO who was mired in a resume scandal, is leaving the company.

In a press release, the Internet pioneer said effective immediately recently added board member Fred Amoroso becomes chairman and global media chief Ross Levinsohn will serve as interim chief executive officer.

The release didn’t note a reason for Thompson’s departure, simply that he “has left the company.”

“The Company also announced that its Board has reached an agreement with Third Point LLC ("Third Point") to settle its pending proxy contest related to the Company's 2012 annual meeting of shareholders,” the company said in the statement.

Third Point LLC is a hedge fund that holds 5.8 percent of Yahoo’s common stock. It is led by Daniel Loeb, who last two weeks ago charged that Thompson, formerly president at PayPal, doesn't hold the computer science degree that's been listed in numerous biographies and securities filings.

Loeb will now be joining the board at Yahoo. Third Point threatened a proxy fight for three board seats earlier. Third Point will withdraw their candidates for the board, according to the release.

A call for comment by The Associated Press to the company about the matter ahead of the release wasn’t returned.

Yahoo is fighting Google for both customers and  revenue and is losing badly, though the company's first-quarter results showed signs of progress this year. Thompson became CEO in January.

In its first-quarter 10-Q filing with the SEC last Wednesday, Yahoo acknowledged that "uncertainties'' about Thompson and questions about the company's "future direction''could hurt business opportunities and make it difficult to attract employees and business partners.

Thompson was Yahoo's third CEO in three years.

Before joining Yahoo, Levinsohn was president of News Corp's Fox digital division.  According to Yahoo's official website, Levinsohn holds a Bachelor of Arts in Communications from The American University.   

"He is well-respected in the Valley, Hollywood and on Madison Avenue,'' said Jason Hirschhorn, a former MTV digital executive. "Yahoo has to lean into media and he has the plan.''

Previously: Yahoo CEO's resume 'error' could get him booted 

Reuters and the Associated Press contributed to this report.

More from msnbc.com business:

• Honda wins appeal of small-claims hybrid MPG ruling
• Proposed law would crack down on nasty overdraft fees
• Should Zuckerberg finally ditch his ubiquitous hoodie?
• Head West? Actually New Jersey economy is booming
• Video: She's 92 and has no plans to retire

Follow msnbc.com business on Twitter and Facebook

UPDATED 3:26 P.M. E.D.T.

UPDATE: The company confirms it in a press release here. Updated story is now here. Earlier story follows.

Yahoo CEO Scott Thompson, charged by a shareholder group of lying on his resume, will quit the company, The Wall Street Journal reported Sunday, citing its All Things D technology blog.

The All Things D reports said the company will say he is leaving for "personal reasons."

Thompson has been on the job for about two months. The shareholder group, hedge fund Third Point LLC, discovered that the PayPal veteran doesn't hold the computer science degree that's been listed in numerous biographies and in securities filings.

Earlier this week the company said "This in no way alters the fact that Mr. Thompson is a highly qualified executive with a successful track record leading large consumer technology companies." 

The board also will appoint three new members and select a new chairman on Sunday, the Journal reported.

The Journal said Yahoo's board will appoint the company's global media head, Ross Levinsohn, as interim CEO.

The incoming board members reportedly to be selected Sunday are three of those nominated by Daniel Loeb, an activist shareholder and manager Third Point. 

A Yahoo Inc. spokeswoman did not immediately return a call for comment. 

Patti Hart, the director who oversaw Thompson's hiring, has said she will step down at Yahoo's annual meeting later this year.

Yahoo is fighting Google for search supremacy and is losing badly, though the company's first-quarter results showed signs of progress this year.

Below, Jeffrey Sonnenfeld of the Yale School of Management, discusses the controversy over Yahoo CEO's credentials on CNBC, saying "It's bordering on-cover-ups-are-worse-than-the-crimes types of situations," he says. 

We will update this story as soon as new information becomes available.

Previously: Yahoo CEO's resume 'error' could get him booted 

The Associated Press contributed to this story.