Market Minute: Yum Brands' China Sales Catch a Case of Bird Flu

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A customer places an order at a Yum! Brands Inc. KFC restaurant in Beijing, China, on Monday, Dec. 6, 2010. In China, KFC has achieved such dominance over McDonald's and local rivals that Colonel Harland Sanders's image is a far more common sight in many Chinese cities than that of Mao. Photographer: Nelson Ching/Bloomberg via Getty Images
Nelson Ching/Bloomberg via Getty Images
KFC falls prey to the bird flu, and the PC may become a dinosaur.

Record highs continue to pile up on Wall Street. The Dow Industrials rallied 128 points yesterday and the S&P 500 jumped 19, both closing at record levels. The Nasdaq soared 39 points.

The bird flu outbreak in China is taking a big bite out of KFC's sales there. They fell 16 percent last week, and the downtrend for the unit of Yum Brands (YUM) is continuing this month. More than half of Yum's total sales come from China, where it has above 5,000 KFC outlets.

Worldwide shipments of personal computers tumbled by nearly 14 percent in the first quarter. Market researcher IDC says that's the biggest drop since it began tracking the numbers in 1994. Hewlett-Packard (HPQ) remains the number one PC maker, despite a 24 percent slide in the quarter. Dell's (DELL) shipment's fell by 11 percent, and Apple's (AAPL) dropped more than seven percent. The decline signals consumer's growing preference for smartphones and tablets. IDC also notes that Microsoft's (MSFT) rollout of Windows 8 has done nothing to slow the decline in PC sales, and may have even made it worse.

Separately, the Wall Street Journal reports Microsoft is developing a new line of tablets, including a 7-inch version of the Surface. Goldman Sachs (GS) lowered its rating on Microsoft to neutral.

General Motors (GM) says it plans to invest more than $5 billion dollars in its ailing European brands, Opel and Vauxhall. The company's European operations lost $1.8 billion last year, so it was either invest more to rebuild the brand, or retreat.

Costco (COST) reports a key measure of sales rose 4 percent last month. That's a bit below expectations... a rare miss for the warehouse club retailer.

And shares of Integra LifeSciences (IART) are set to tumble after the company recalled some of its surgical products. It also issued a disappointing earnings forecast.

–Produced by Drew Trachtenberg

28 PHOTOS
Go Inside The Secret Test Kitchen Where McDonald's Invents New Menu Items
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Market Minute: Yum Brands' China Sales Catch a Case of Bird Flu

Tucked away at the McDonald's C.O.B. — or Campus Office Building — is the test kitchen, where the fast food chain comes up with all sorts of products.



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The kitchens are up on the top floor on Big Mac Blvd. Yes, McDonald's names all the "streets" in its global headquarters office building.



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Here's what Big Mac Blvd. looks like. Kitchens on the left, cubicles on the right.



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Here we are — the test kitchen is called the Culinary Center.



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It's a bit strange, actually — a McDonald's kitchen encased in glass that's more fitting for a conference room.



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The kitchen has some appropriate reading.


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We met up with Chef Jessica Foust, a nutrition and culinary manager at the test kitchen.



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Judging by the setup, the kitchen was prepped to handle the McWraps and Fish McBites. The box o' fish is the McDonald's latest limited-time offering, hitting locations just in time for Lent.



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It has all the gadgets that a regular McDonald's kitchen would have.



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Like these handheld pumps.



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And the usual cups and shakers.



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There's even a little guide on how to get buns toasted perfectly.



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So we ran through the whole process of making a McWrap — a product that McDonald's is counting on going forward.



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The whole assembly line was set up — simple enough.



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The finished product (well, after we'd taken a bite) — just like you'd see in restaurants.



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We also got to try those Fish McBites, which weren't in stores yet.



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The breading's different from a Filet-O-Fish and it's a totally different experience.



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A lot of people shy away from fast food fish, but it wasn't too bad. We wouldn't go out of our way to order it, though McDonald's Filet-O-Fish lovers might.



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What's Foust's favorite item that never made it into restaurants? A blueberry yogurt ice cream shake, she told us.



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That's not the only kitchen at the McDonald's HQ. There are plenty more running down the side of Big Mac Blvd.



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On the way to another one, we ran into Chef Dan Coudreaut, the executive chef at McDonald's.



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Other chefs were at work too. This one was getting some bacon ready for some unknown project.



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It was a bit of a mess in there, like a scientist's lab, with chefs busy at work with their food.



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There's also the Sensory Evaluation Center, which McDonald's uses to test the new stuff they're experimenting with in order to get the feedback to improve the products.



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It's a key part of product development. In the Difference Test, you evaluate everything from appearance and color to viscosity and flavor.



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The items come through a magic door. We tasted a set of mango pineapple smoothies and each of them were slightly different.



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