|
Loading...
|
|
|
Loading...
|
Reuters - Technology giant Microsoft Corp
said on Friday that it had offered to acquire Internet
media company Yahoo Inc for $44.6 billion in cash and
stock.
Reuters - Stock index futures jumped on Friday,
with Nasdaq futures reversing losses, after software company
Microsoft Corp proposed an acquisition of Web media
company Yahoo Inc .
Reuters - Societe Generale , the
French bank hit by a rogue trader scandal, was studying bid
defense options on Friday as a newspaper said a second domestic
rival had hired advisers to consider a takeover.
Reuters - China has muscled in on miner
BHP Billiton's attempts to buy rival Rio Tinto ,
with its biggest aluminum producer teaming up with U.S. group
Alcoa to buy a 12 percent stake in Rio.
AP - FBI Director Robert Mueller said Thursday that the agency is committed to investigating and prosecuting companies involved in mortgage fraud and other violations in connection with home loans made to risky borrowers.
Its sales and stock price in freefall, its management in flux, Motorola said Thursday that it is considering breaking itself up, shedding an anemic cell-phone handset division that accounts for more than half its revenue.
Heaving the dead weight of the cell-phone business overboard would leave Motorola with its healthier, faster growing units that make settop cable-TV decoder boxes, high-speed computer modems, and handheld radios.
The announcement came two months after the C.E.O. at the time, Ed Zander, was pushed out in favor of Greg Brown, who was then the chief operating officer. He announced the decision to look at whether to split off the cell-phone unit.
"We are exploring ways in which our mobile devices business can accelerate its recovery and retain and attract talent while enabling our shareholders to realize the value of this great franchise," he said in a prepared statement.
In the company's most recent quarterly-earnings statement, Motorola said its handset division accounted for $14.2 billion in revenue through the first three quarters of 2007. Total company revenue was about $27 billion.
Handsets, however, lost $813 million in that period, while modems and settop boxes earned $517 million and radios brought in $762 million.
Just one year earlier, the handset unit had made an operating profit of $2.4 billion in the first nine months. That was when Motorola's ultraslim Razr phone was the must-have accessory. It sold more than 100 million of the devices.
But Motorola was caught flat-footed when consumers moved on to higher-bandwidth smartphones like BlackBerry and Treo devices.
In large part, that was because Motorola didn't have an answer when investors asked the company how it would build on the success of the Razr.
"The Razr was like hitting a grand slam, and you can't hit a grand slam every time," he told the tech writer Kevin Maney in an interview published in the December issue of Condé Nast Portfolio. "You win baseball games with lots of singles and doubles, good fielding, good pitching. In the global-device business, if you want to be successful, you have to be maniacally boring."
Maney, puzzled, asked him what he meant by that.
"It's about having lots of products come out on time," Zander answered. "It's the supply chain. It's the cost structure."
In an interview last November with Bloomberg News, Zander appeared to blame the lack of a Razr successor on the people running his handset division. They "had a strategy that proved not to be correct," he said.
But he added: "That's been corrected. We'll be back."
A month later, long before Motorola had a chance to come back, Zander was gone.
And soon, the handset business may be gone too.
This Sunday, 238 people gathered in auditoriums in McLean, Virginia, and Chicago, for all of $50 apiece, will be the most influential people in all of advertising.
In theory, all that they'll be doing is gorging on salty snacks and watching the Super Bowl, just like millions of other Americans. But they will also be rating commercials for USA Today's Ad Meter poll, and their opinions will have a surprisingly profound, sometimes disastrous effect on the advertising industry.
The fates of personal careers, national brands, and international advertising agencies hang in the balance.
Just ask the principals at Chicago's Cramer-Krasselt agency, which last year created several commercials for its $60 million dollar a year client, Careerbuilder.com.
After none of Careerbuilder's three spots failed to crack USA Today's Ad Meter Top 10 -- its best was ranked 16th -- the client put its account up for review, effectively ending its five-year relationship with Cramer-Krasselt.
"To our amazement, to our total astonishment, all that astounding business success was less important than one poll," Cramer-Krasselt President Peter Krivkovich wrote in an internal memo that found its way to Adweek (subscription required). "It's so ludicrous and they are so serious about that poll it's almost funny."
Understandably, Cramer-Krasselt's take on the Ad Meter is different from that of the folks at DDB Chicago, whose mega client Anheuser-Busch's Bud Light had seven of the Top 10 spots in the Ad Meter rankings last year.
DDB Group Creative Director Mark Gross takes obvious pride while rolling off stats about his agency's success with the meter, and he admits that it takes a certain type of spot to crack the code: "Visually driven comedy, based upon a simple story line, with a surprise that leaves you smiling."
Jim Norman, USA Today's polling editor and the man who runs the Ad Meter, said the top-rated commercial ever was a 1995 Pepsi commercial that featured a boy trying so hard to get the last drop that he sucked himself right into the bottle. It scored 9.66 out of 10.
By comparison, last year's highest-rated commercial was Bud Light's "Crabs Worshipping Ice Chest" which scored 8.56; the lowest, at 4.05, was the lone ad for Salesgenie.com.
When trying to produce a winning spot, it helps to have a budget like the one at Anheuser-Busch, which sometimes shoots several dozen spots and thoroughly test each one.
Gross says DDB's testing process is, not coincidentally, a lot like the Ad Meter methodology. The commercials that work best in test are the ones most likely to make it on the air.
(Anheuser Busch says that this year's Clydesdale entry for its Budweiser brand scored higher in pre-testing than any previous commercial for the company.)
Ad agency executives are increasingly resigned to having to take such extraordinary measures in order to please the Ad Meter.
"Whether you're shooting for it or not, the Meter is a reality," says Jill Nykoliation, president of the Toronto ad boutique Juniper Park. For projects of this magnitude, she said, "there's nothing we'll do differently as far as tapping into the essence of the brand or the psyche of the public, but because it's a Super Bowl spot, we might ultimately choose to produce the spot different."
One might think that a polling device as important as the Ad Meter would be incredibly sophisticated and the methodology intricate and complex. But according to Norman, who's got a lot on his plate these days with the Super Bowl butting right up against Super Tuesday, the only difference between this year's Ad Meter and the first one 20 years ago is that this year's gadget is wireless.
"On a device a little bigger than an iPod, the audience rates a spot on a scale of 1 to 7," Norman explains, adding that the ratings are later pro-rated on a 1-to-10 scale. "The score from each device reflects the highest point reached during a spot, usually the punch line of a joke. The final score for each spot reflects an average of the highest grades given by each individual."
The recruitment process is equally straightforward. Norman says that in an attempt to reflect the makeup of the 93 million plus watching the game, they recruit about three men for every two women, and make sure to include various ages, economic backgrounds and races.
None of the recruits, apparently, have anything better to do on the de facto national holiday that is Super Sunday.
Why test in McLean? Because USA Today has its offices there. Is the second location based upon a desire to reflect regional diversity? Not according to Norman. The choice of a second city reflects his desire to go to someplace affordable and convenient. Houston got the nod last year.
On the wall in Norman's office is a quote that appeared in Ad Age after the Super Bowl a few years ago: "The Ad Meter is ... irrelevant at best and fascist at worst."
Does the veteran pollster agree?
"It is," he says, "what the numbers say it is."
I wonder what the principals at Portland's acclaimed Wieden + Kennedy agency think of all this hoopla over a simple poll. If at the end of the day the people who brought us "Just do it" think that the opinions of 230-some people in a controlled environment really matter.
I wonder because Wieden is doing the Careerbuilder ads for this year's game.
Google said earnings rose 17 percent in the fourth quarter, to $1.2 billion, as the number of user clicks on paid ads surged 30 percent. Revenue grew 51 percent, to $4.83 billion.
But the results fell short of forecasts, suggesting that the slump in consumer spending may be spreading and dampening online advertising. Shares of Google tumbled more than 8 percent in after-hours trading.
Excluding traffic acquisition costs of $1.44 billion, revenue for the fourth quarter would have been $3.39 billion.
Google spent $678 million in the fourth quarter on server farms and other equipment. “We expect to continue to make significant capital expenditures,” the company said in a statement.
"We're very pleased with our performance this quarter," said Eric Schmidt, chief executive of Google. "It reflects strong momentum in our core business, growing receptivity to our new business initiatives, and improved discipline in managing our operating expenses."
Vishesh Kumar of TheStreet.com noted earlier today that investors have figured out that data about growth in search are not an accurate predictor of revenue. This quarter's results represents Google's first test in a recession environment.
Also on Portfolio.com
Spectrum Auction Draws Big Bids
"Collectively, We're All a Lot Smarter"
Is MBIA toast?
The top bond insurer says it expects to hold on to its all-important triple-A rating, even after it reported a fourth-quarter loss of $2.3 billion. The loss came after MBIA wrote down $3.5 billion on its credit derivatives.
Shares of MBIA, which fell after the report of the loss, recovered sharply after Gary Dunton, MBIA’s chief executive, sounded bullish on a conference call later in the day.
“Nothing justifies” the 80 percent drop in MBIA’s stock price over the last year, Dunton said. He blamed “fearmongering” and “distortion of the facts” by self-interested parties, a clear reference to hedge fund manager Bill Ackman.
In a letter sent to state and federal regulators on Wednesday, Ackman said he estimated that MBIA's losses on residential mortgage-backed securities and C.D.O.'s would total $11.6 billion. Ackman has been shorting MBIA's stock, betting that the company will eventually collapse.
Dunton contended that the rating agencies in their worst-case scenarios see only a possible $3 billion in losses.
The executive acknowledged that the company had problems. “All of the monolines are paying for their mistakes,” he said. But he added, “We don’t expect that bond insurers will go the way of the buggy whip.”
The sword hanging over MBIA is its holdings of collateralized debt obligations, the value of which have eroded as a result of the collapse of the subprime mortgage market. (See "What's a C.D.O.?")
Last month, the company said its C.D.O. exposure totaled $30.6 billion. Of that, $8.1 billion represented exposure to "C.D.O.'s squared," or C.D.O.'s whose underlying portfolio includes tranches of other C.D.O.'s.
Pressure on C.D.O. values will only increase. Standard & Poor's lowered or put on review ratings on some $534 billion of bonds and C.D.O.'s tied to subprime. S&P said it did not expect the ratings action to add significantly to financial institutions' losses. "However, we believe that total losses for financial institutions will eventually reach more than $265 billion," the ratings agency said.
But MBIA said today that while it had not yet calculated the full impact of the S&P review, it believed that the ratings agency had already tested the impact in its review of the bond insurers.
Amid its losses, MBIA is struggling to hold on to the lifeline of its business—its triple-A rating. That rating provides a blanket of protection for states and municipalities that issue bonds, allowing them to pay a lower interest rate. Without it, the company could collapse.
So the company is trying to shore up its capital, closing a deal with private equity firm Warburg Pincus to invest $500 million. MBIA also cut its dividend and sold $1 billion in notes.
Others believe that investors' fears about a collapse of MBIA are exaggerated. Pointing out that MBIA has already cleared the hurdles of reviews with Fitch and S&P and has raised new capital, Jonathan Laing in Barron's finds "the current price levels of its debt, credit-default swaps, and, yes, even its stock to be absurdly low."
"Moreover, both the debt and equity markets seem to be ignoring the nature of bond insurance," Laing says. Insurers only need to pay out over the life span of the underlying debt obligations, he says. That could mean over 20 years or more.
Market Movers: How Regulators Failed the Monolines
Buffett Moves Into Bond Insurance
| World : News Archives | Business | Entertainment | Sports | Technology | Science | Marketplace Audio |
| India : News | Business | Entertainment | Sports | Telugu | Free Ring Tones |
| Blogs : Humor pages | Norkay's Blog | Kids Stories | Indian Recipes | Database Tech Blog |
| Sundries : Job Listings & Search | World Video Clips | Songs Clips | Indian Video Clips | Quizzes |
