The Swiss bank further knocked confidence by revealing that the surprise writedowns revealed days after its 2007 results last month had stemmed partly from 'intentional misconduct' by traders Source: FT.com - US homepage | 20 Mar 2008 | 10:04 am
Credit Suisse warns it is unlikely to make a profit in the first three months of 2008 after investment write downs. Source: BBC News | Business | World Edition | 20 Mar 2008 | 10:01 am
UK retail sales unexpectedly rose strongly in February, lifted by higher food sales, official figures show. Source: BBC News | Business | World Edition | 20 Mar 2008 | 9:52 am
Credit Suisse today admitted it is unlikely to make a profit in the first
quarter as it uncovered SwFr2.86 billion (£1.4 billion) in asset writedowns
which the bank partly blamed on "intentional misconduct" by a
group of traders. Source: Latest Business News from Times Online | 20 Mar 2008 | 9:45 am
Stock markets in Hong Kong and Australia fall on worries of declining demand for raw materials. Source: BBC News | Business | World Edition | 20 Mar 2008 | 9:44 am
WASHINGTON (Reuters) - Northrop Grumman Corp and Boeing Co escalated their war of words on Wednesday over a $35 billion contract for 179 U.S. Air Force refueling aircraft that Boeing argues it should have won -- not Northrop and Europe's EADS.
French luxury goods, Hermes, reports a 7.3% rise in profits last year, despite the strong euro. Source: BBC News | Business | World Edition | 20 Mar 2008 | 9:41 am
Shares in Luminar were hit in early trade after the nightclub operator pared back expansion plans and said trade continued to be "challenging" as consumers tightened their belts and went out less often... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Mar 2008 | 9:33 am
The embattled pest control to cleaning business Rentokil has hired the former management team of chemicals giant ICI to turn the company around and appease furious shareholders. Source: Telegraph Business | 20 Mar 2008 | 9:20 am
NEW YORK (Reuters) - JPMorgan Chase & Co Chief Executive James Dimon visited Bear Stearns' offices on Wednesday evening to speak to more than 400 senior executives, according to reports in the New York Times and Financial Times.
Since mid January we have had five Fed initiative rallies (two liquidity injections and three rate cuts) which have all caused major moves to the upside on their respective announcements. In between times the direction has been, as you would expect, singularly grim Source: Telegraph Business | 20 Mar 2008 | 9:05 am
CanDu Entertainment, one of the UK's biggest independent nightclub operators, is to be put into administration in the next few days as the economic downturn ravages the ailing clubs and bars sector. Source: Telegraph Business | 20 Mar 2008 | 9:00 am
John Tiner, former chief executive of the Financial Services Authority, has joined the board of New Star Asset Management as a non-executive director. The move is expected to shore up confidence in the... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Mar 2008 | 8:58 am
London equities continued to fall on Thursday, hit by losses in the mining sector as worries about the outlook for global economic growth brought metals prices off recent highs. The FTSE 100 started the... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Mar 2008 | 8:57 am
PepsiCo and Pepsi Bottling Group Inc. announce their second Russian deal this week, saying they'll buy 75.53% of the country’s largest juice maker, JSC Lebedyansky, for $1.4 billion and could buy the rest.
Commodities producers are blasted in London trading on Thursday, with gold futures down around $80 an ounce over two days, but the rumor mill is quieter after the Financial Services Authority and the Bank of England stepped in to quell concerns over banking-sector health.
Rentokil Initial appoints a new team of bosses to try to revive the pest control to hygiene business. Source: BBC News | Business | World Edition | 20 Mar 2008 | 8:42 am
Remember where electronic mail was 15 years ago? If you didn't already have an e-mail address, you probably knew someone who did. And if you were sending and receiving e-mail, you'd probably discovered that it could be a game-changing business tool.
Europe's main stock markets slid in opening deals on Thursday, with London's FTSE 100 index of top shares shedding 0.66 percent to 5,508.90 points. Elsewhere, Frankfurt's DAX Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 8:34 am
NEW YORK (Reuters) - The big three U.S. auto makers are preparing cost cuts and other belt-tightening measures in case a slumping U.S. economy hurts sales more than expected, the Wall... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 8:33 am
NEW YORK (Reuters) - The big three U.S. auto makers are preparing cost cuts and other belt-tightening measures in case a slumping U.S. economy hurts sales more than expected, the Wall Street Journal reported on Thursday.
US food and drinks giant PepsiCo said on Thursday it was paying 1.4 billion dollars (900 million dollars) for a 75.5-percent stake in Russian fruit juice maker Lebedyansky. ... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 8:29 am
At age 77, Arlen Schwinke might be getting too old for the twice-a-day milkings that come with working a dairy farm, but he's still deeply committed to Missouri's dairy industry. ... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 8:22 am
British fund manager New Star Asset Management slashed its dividend today and
said that the end of 2007 and the start of 2008 had been its most difficult
period since it began trading in 2001. Source: Latest Business News from Times Online | 20 Mar 2008 | 8:22 am
Credit Suisse warned Thursday that it may report a first-quarter loss due to deteriorating market conditions in March, and it pared 789 million Swiss francs ($799 million) from its 2007 profit after its traders intentionally mispriced assets.
FRANKFURT (Reuters) - Global financial market turmoil is casting deepening gloom on Allianz , making its financial targets for this year and next harder to hit, Europe's biggest insurer said on Thursday.
FRANKFURT (Reuters) - Global financial market turmoil is casting deepening gloom on Allianz , making its financial targets for this year and next harder to hit, Europe's biggest insurer... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 8:17 am
Borders Group Inc. said on Thursday that it would review alternatives for its business, including a sale of part or all of the company, and said its largest shareholder proposed a financing plan to ease what might have become a liquidity problem.
For New Yorkers it felt like a flashback to Sept. 11. At 3:36 P.M. on Aug. 18, 2007, came a report that a skyscraper was burning about 150 feet from where the World Trade Center's Twin Towers once stood. Thick black smoke was pouring out of the shell of what used to be the Deutsche Bank building. The structure had been badly damaged in the terrorist attack when portions of the collapsing south tower dug a 15-story gash and propelled toxic dust into it. Six years later the bank building was finally being taken down.
AP - The government on Wednesday relaxed capital requirements at Fannie Mae and Freddie Mac as part of a plan to quickly inject an additional $200 billion of financing for home loans.
Reuters - The nomination of a new Bank of Japan
governor may be delayed until April as parliament will be
preoccupied with tax measures until then, media said on
Thursday, blaming political parties for the vacuum at the
central bank.
TOKYO (Reuters) - The nomination of a new Bank of Japan governor may be delayed until April as parliament will be preoccupied with tax measures until then, media said on Thursday, blaming political parties for the vacuum at the central bank.
Reuters - Dell Inc plans to buy $23
billion worth of components from China this year, 28 percent
more than in 2007, the world's second-biggest personal computer
maker said on Thursday.
BEIJING (Reuters) - Dell Inc plans to buy $23 billion worth of components from China this year, 28 percent more than in 2007, the world's second-biggest personal computer maker said on Thursday.
Oil prices extended their sharp retreat Thursday on the previous day's release of data that showed demand for petroleum products is waning in the face of record high prices. The U.S.... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 8:00 am
Reuters - JPMorgan Chase & Co Chief
Executive James Dimon visited Bear Stearns' offices on
Wednesday evening to speak to more than 400 senior executives,
according to reports in the New York Times and Financial Times.
NEW YORK (Reuters) - JPMorgan Chase & Co Chief Executive James Dimon visited Bear Stearns' offices on Wednesday evening to speak to more than 400 senior executives, according to... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 8:00 am
LONDON (Reuters) - Pest control to parcel delivery firm Rentokil Initial is parachuting in the management team that turned around chemicals group ICI in a bid to recover from two profit... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 7:57 am
LONDON (Reuters) - Pest control to parcel delivery firm Rentokil Initial is parachuting in the management team that turned around chemicals group ICI in a bid to recover from two profit warnings that have hammered its shares.
Asian markets were mixed Thursday, with Sydney and Hong Kong sharply lower on resource issues such as BHP Billiton and Zijin Mining Group Co. after commodity prices pulled back, while Shanghai-listed shares rebounded from hefty losses on the back of airlines
Borders, the American-owned bookstore chain, could be up for sale after it
suspended its dividend and hired advisers to review options for the
business. Source: Latest Business News from Times Online | 20 Mar 2008 | 7:56 am
Asian markets tumbled in early trading Thursday after overnight losses on Wall Street and amid persistent worry over the likely impact of a U.S. recession. Hong Kong's Hang Seng Index... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 7:52 am
Toyota Motor Corp. said Thursday it will start selling the hybrid Prius and two other models in South Korea next year as it expands its offerings in the country beyond the luxury Lexus... Source: Infocious RSS raw feed - channel BNewsBusiness | 20 Mar 2008 | 7:48 am
The embattled pest control to cleaning business Rentokil has hired the former management team of chemicals giant ICI to turn the company around and appease furious shareholders. Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Mar 2008 | 7:45 am
Evergrande, the Chinese property developer, became the latest casualty of the recent stock market stumble after it pulled a planned listing in Hong Kong that would have raised as much as US$2.1bn. The... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Mar 2008 | 7:43 am
Reuters - Credit Suisse warned it was
unlikely to be profitable in the first quarter due to big debt
writedowns and tough markets but said the shock trading hit
announced in February was not as bad as previously thought.
ZURICH (Reuters) - Credit Suisse warned it was unlikely to be profitable in the first quarter due to big debt writedowns and tough markets but said the shock trading hit announced in February was not as bad as previously thought.
Stocks in Europe dropped Thursday for a second day, with mining producers ravaged by the nearly $80-an-ounce drop in gold futures over the past two days and with Credit Suisse lower as the Swiss banking giant warned it will report a loss for this quarter.
Rentokil Initial will not be broken up and sold off at a bargain basement
price to "bottom feeders" from the private equity world, its
senior independent director pledged as he unveiled a crack new team of
former ICI executives who will take over leadership of the business. Source: Latest Business News from Times Online | 20 Mar 2008 | 7:40 am
Reuters - Confusion surrounds the buyout of
Clear Channel Communications due to tensions between
the private equity companies behind the deal and the banks that
have agreed to finance it, according to a report in the Wall
Street Journal on Thursday. Source: Yahoo! News: Business | 20 Mar 2008 | 7:12 am
NEW YORK (Reuters) - Confusion surrounds the buyout of Clear Channel Communications due to tensions between the private equity companies behind the deal and the banks that have agreed to finance it, according to a report in the Wall Street Journal on Thursday.
Fear is spreading with the financial system in disarray. But the global boom is ongoing, unemployment is low and the government has new tools to address the downturn. ... Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Mar 2008 | 7:00 am
Fear is spreading with the financial system in disarray. But the global boom is ongoing, unemployment is low and the government has new tools to address the downturn.
Dysfunctional capital markets, frantic central banks, stressed-out consumers, fear and uncertainty -- all are alarming echoes of the global economic cataclysm of the 1930s.
Federal regulators relax capital requirements for Fannie Mae and Freddie Mac. The move could add $200 billion to the pool of money available for home loans.
Seeking to boost the economy by making mortgages cheaper and easier to get, the government said Wednesday that it would further ease the reins on Fannie Mae and Freddie Mac. The move is intended to make as much as $200 billion in additional money available for newly issued home loans.
As Cold War workers retire, the aerospace and defense sector braces for a possible sizable brain drain.
The aerospace and defense sector is bracing for a potential brain drain over the next decade as a generation of Cold War scientists and engineers hits retirement age and not enough qualified young Americans seek to take their place.
Morgan Stanley posted better-than-expected quarterly earnings Wednesday, joining those from two of its rivals and indicating that Wall Street may be getting a better grip on the credit crisis. Source: Infocious RSS raw feed - channel BNPaperBusiness | 20 Mar 2008 | 7:00 am
Major indexes give back most of their gains from the previous day's rally.
Steep drops in oil, gold and other raw materials Wednesday triggered heavy selling of commodity-related stocks, leading a broad market rout and dashing hopes that Wall Street would build on its big advance a day earlier.
Morgan Stanley posted better-than-expected quarterly earnings Wednesday, joining those from two of its rivals and indicating that Wall Street may be getting a better grip on the credit crisis.
The seagoing cargo firm has had an exclusive contract for 44 years.
Most small businesses can't say that an entire community depends on their services. ¶ Then there's Catalina Freight Line. ¶ Each day, the Wilmington company brings tons of cargo used by Santa Catalina's 3,500 permanent residents and the 1 million or so visitors it hosts every year. ¶ "It's overnight delivery, but it's overnight delivery at 3 to 12 knots," quipped Chuck Davis, general manager of Catalina Freight, which for 44 years has enjoyed an exclusive contract for waterborne cargo to the island, bringing in about $3.5 million in annual revenue. ¶ But on the horizon, storm clouds are gathering. ¶ In 2014, Catalina Freight Line Inc.'s cargo delivery monopoly to the island is scheduled to end. The company has begun to get ready, hiring Davis to explore diversification options. ¶ Even a monopoly has its challenges. ¶ The company's fuel costs, like everyone else's, have soared, but it can't simply raise prices. For most of what Catalina Freight sells, price increases require approval from the California Public Utilities Commission. And few other companies have to worry about the size of ocean swells and surges before making a delivery.
Catapulted by the biggest IPO in U.S. history, Visa Inc. shares soared 28 percent in their stock market debut today as investors bet an accelerating shift to electronic payments will enrich the world's largest processor of credit and debit cards.
Former Japan official Sakakibara says American authorities need to rapidly infuse a significant amount of public money to stem the financial crisis.
He was known as "Mr. Yen." As Japan's deputy minister of finance for international affairs in the late 1990s, Eisuke Sakakibara had a stomach-turning insider's view of an economic meltdown.
Reuters - U.S. book retailer Borders Group Inc
posted a fourth-quarter profit on Thursday but
suspended its quarterly dividend and said it had launched a
strategic review that will investigate selling the business.
NEW YORK (Reuters) - U.S. book retailer Borders Group Inc posted a fourth-quarter profit on Thursday but suspended its quarterly dividend and said it had launched a strategic review that will investigate selling the business.
Reuters - Northrop Grumman Corp and Boeing Co
escalated their war of words on Wednesday over a $35 billion
contract for 179 U.S. Air Force refueling aircraft that Boeing
argues it should have won -- not Northrop and Europe's EADS.
Samir Arora, the brash founder of the women’s-oriented ad network Glam Media, one of the fastest-growing Web properties in the U.S., thinks his critics—specifically, longtime category leader iVillage—don’t have a leg to stand on.
“They’re sore losers,” says the 42-year-old Arora, who has founded and run several businesses, including software firm NetObjects, in the past. “They had been No. 1 in reach in women for the last decade, but they really had no anticipation that there would be a new entrant in the market that would exceed it.”
Since it was founded in 2006, Glam Media, an online advertising network of about 450 female-oriented websites from shopping site Allbabydeals.com to Zafu.com, a site about jeans, has quickly grown to become the Web’s most popular site for women, according to comScore. In February, Glam’s network attracted 29 million unique monthly users, compared to iVillage’s 16 million. And investors have taken notice—in February, Glam announced an $80 million venture capital investment led by German media conglomerate Hubert Burda Media that values the company at more than $500 million.
Glam Media versus iVillage: By the Numbers
Glam Media
iVillage
Unique Visitors per Month
29.1 million
16.2 million
12-month Growth in Monthly Visitors
246 percent
7 percent
Average Time Spent by Users per Day
5.8 minutes
10.9 minutes
Estimated Valuation
$500 million1
$650 million2
Total # of Employees
150
300
# of Sites
450+
10
Source: comScore, Portfolio.com 1 Based on latest round of investment 2 Purchase price in March, 2006
But Arora has not grown Glam’s traffic in the typical way: Rather than generating loads of original content or relying on users to create content and community, Glam is raking in ad revenue on the backs of others who do such things. The company has partnered with hundreds of special-interest sites, some of them very small and others extremely light on actual content, to display its advertising (Glam does run and produce content for about a dozen channels on Glam.com, but together these only generate about one quarter of the entire network’s traffic). And its competitors aren’t especially happy that Arora is now crowing about having the largest reach among sites catering to women.
Since when does an ad network constitute a threat to major brands on the Internet? Deborah Fine, the president of NBC Universal’s iVillage, argues that her company has a more “authentic” user base that spends plenty of time on the site and has built up a strong community. And it is these kinds of users, Fine maintains, that advertisers are most interested in reaching.
Although Fine would not disclose the average C.P.M. (cost per thousand impressions) that iVillage charges advertisers across its sites, industry estimates put the figure at $25 to $35. Glam Media, on the other hand, says it charges $8 to $15 C.P.M. rates for its partner sites and $15 to $35 for its owned-and-operated sites (iVillage executives privately question whether Glam really gets such high C.P.M.’s for its traffic). Yet Glam, even with the lower rates, has become a contender in the race for female attention on the internet.
“We’ve had our business model which has worked for over a decade,” Fine says. “We respect that [Glam Media has] a new approach, albeit very different from ours.” Numbers from comScore bear out her claim that iVillage’s content is stickier than that of Glam’s—according to the latest data, iVillage users spent almost twice as much time per day with the site compared with Glam’s—10.9 minutes versus 5.8 minutes.
But that hasn’t stopped Glam from generating big ad dollars from its traffic. In 2007, Glam had revenues of about $25 million, while this year its revenues could top $100 million. According to Arora, revenues have increased between 50 and 150 percent sequentially every quarter since the company was launched. “[Glam] is one of the fastest growing media companies on the internet, not only in reach, but also in revenue, that has ever existed,” Arora claims in his typically hyperbolic manner.
And some Web advertisers prefer the look and feel of Glam’s sites to those of iVillage. “Glam feels edgier than iVillage,” says one online advertising executive who asked not to be identified. “iVillage feels a little old already.”
To Arora, iVillage’s approach reflects an outdated way of thinking about online content and how to make money off of it.
iVillage and its parent, NBC Universal, have not grasped “a basic change in users of the Web,” Arora says. “Users are preferring to go to multiple sites, as opposed to a few known brands like iVillage or Yahoo, which was the case in Web 1.0 ten years ago.”
To critics who point out the uneven quality of the content across Glam Media’s sites—typos are common on some sites and one popular site is Dogster, a social network for dog owners—Glam’s backers say that some of Glam’s advertisers are willing to occasionally trade off content quality in order to reach large audiences.
“A lot of these are one-person-type websites,” says Theresia Gouw Ranzetta, a general partner at Accel Partners, one of Glam’s venture capital investors. “And a lot of our advertisers are willing to forgive typos and things like that that don’t get updated as [often as] they should.”
Not having to create so much original content is also a better business model, says Ranzetta.
“We have about a dozen people on the content editorial side, and I think they [iVillage.com] have five or ten times that,” says Ranzetta. “We’re willing to try to forego some of the aesthetics and layout.”
For its part, iVillage refuses to get involved in a shouting match with Arora and Glam, even while it subtly questions their approach of relying on partners to increase traffic, as opposed to growing it internally.
A deal is a deal. That should be the message from Jamie Dimon, chief executive of J.P. Morgan Chase & Co., to Bear Stearns Cos.' Alan Schwartz and the Federal Reserve, which pushed the two sides together for the historic bailout.
As any fan of "The Sopranos" knows, the mob often takes out its enemies in a gruesome fashion as a way to warn others to fall in line. The same can be said of the campaign over the past four years instigated by the dreaded Recording Industry Association of America, more commonly known as the RIAA, which has been on a mission to stop or slow down the practice of illegal music downloading online.
JPMorgan Chase is moving swiftly to retain Bear Stearns' top performing bankers and brokers even though it has not yet received shareholder approval for its takeover of the bank Source: FT.com - US homepage | 20 Mar 2008 | 1:06 am
Fannie Mae and Freddie Mac, the government-chartered mortgage financiers, have got the go-ahead from their regulator to pump as much as $200bn of liquidity into the beleaguered US mortgage market Source: FT.com - US homepage | 20 Mar 2008 | 12:52 am
Shoppers stocking up ahead of the Good Friday closure period could be frustrated by problems with Eftpos transactions.
The company which processes Eftpos transactions - Electronic Transaction Services - is currently experiencing... Source: New Zealand Herald - Business | 20 Mar 2008 | 12:16 am
ICAP, the world's largest inter-dealer broker, said it expects to beat profit forecasts due to large volumes of trade triggered by uncertainty in the financial markets. Source: Telegraph Business | 20 Mar 2008 | 12:01 am
How good could it get? It's slowly becoming the taboo question, as confidence in the economy evaporates and bears start to outnumber bulls. Source: Telegraph Business | 20 Mar 2008 | 12:01 am
Easyjet insisted it was seeing no signs of a consumer downturn as it sent its shares into a tailspin with a warning that the rocketing oil price would hit profits. Source: Telegraph Business | 20 Mar 2008 | 12:01 am
Simon Wolfson, the chief executive of Next, the fashion retailer, has joined the chorus of retail bosses warning of a severe and prolonged downturn on the high street. Source: Telegraph Business | 20 Mar 2008 | 12:01 am
Britain's second largest energy supplier, Scottish and Southern Energy, has announced that its bills are to raise by around 15 per cent. Source: Telegraph Business | 20 Mar 2008 | 12:01 am
Mitchells & Butlers saw nearly 20pc wiped off its stock market value in early trading yesterday after an analyst sparked fears of a cash shortfall and said the pub group would have to raise funding and cut its dividend. Source: Telegraph Business | 20 Mar 2008 | 12:01 am
Police seized documents yesterday from the headquarters of TNK-BP, the
Anglo-Russian oil giant, in a raid that raises new fears over Kremlin
pressure on foreign investors. Source: Latest Business News from Times Online | 20 Mar 2008 | 12:00 am
The City regulator's retail chief yesterday became the only high-profile head
to roll over the Northern Rock debacle, but he departs with a payoff of
almost £400,000. Source: Latest Business News from Times Online | 20 Mar 2008 | 12:00 am
Simon Wolfson, the Next chief executive, admitted yesterday that the clothing
retailer would be one of the hardest hit by the turmoil on the high streets,
in a stark warning that wiped £140 million off the group's value. Source: Latest Business News from Times Online | 20 Mar 2008 | 12:00 am
The relentless march of Chinese companies into Europe continued yesterday as
Ping An, the insurer, spent €2.15 billion (£1.7 billion) buying half of an
asset management business from Fortis, the Belgian-Dutch financial group. Source: Latest Business News from Times Online | 20 Mar 2008 | 12:00 am
Scottish and Southern Energy (SSE), Britain's second-biggest energy supplier,
is increasing its tariffs by an inflation-busting 15.8 per cent. Source: Latest Business News from Times Online | 20 Mar 2008 | 12:00 am
America's biggest flotation got off to a roaring debut yesterday as shares in
Visa soared by more than a third on its first day of dealings on the New
York Stock Exchange. Source: Latest Business News from Times Online | 20 Mar 2008 | 12:00 am
Commerce Minister Lianne Dalziel has rejected calls for statutory management of a string of Blue Chip companies and backed the approach the liquidator is taking.
However, she did give investors an assurance that the Government... Source: New Zealand Herald - Business | 20 Mar 2008 | 12:00 am
Merrill Lynch shares fell by 11 per cent after it sued bond insurer XL Capital to secure up to $3.1bn that it could be owed under credit insurance contracts Source: FT.com - US homepage | 19 Mar 2008 | 11:47 pm
Starbucks is introducing a new automated espresso machine in its US stores as the coffee retailer seeks to re-energise its slumping business, the Associated Press (AP) reported today.
Facing thousands of shareholders eager to hear... Source: New Zealand Herald - Business | 19 Mar 2008 | 11:30 pm
Chrysler is on track to return to profitability within the next couple of years in spite of the worsening US economy Source: FT.com - US homepage | 19 Mar 2008 | 11:27 pm
Offices of the oil company BP and the TNK-BP joint venture in Moscow are raided by Russian police. Source: BBC News | Business | World Edition | 19 Mar 2008 | 11:04 pm
Gold prices tumbled Wednesday, as the dollar regained strength, to sink nearly $100 below its record high set Monday - leaving some traders wondering if this is the beginning of the end for gold's impressive run.
State-owned Kiwibank has announced a half year audited profit of $22.7 million after tax, compared to $17.2m for the same period last year.
Total lending, including home loans, business banking and credit cards, for the six months... Source: New Zealand Herald - Business | 19 Mar 2008 | 10:30 pm
Auckland Airport shareholders who sold into the Canadian partial takeover bid will know next week what they will be paid if the deal goes ahead.
The Canada Pension Plan Investment Board (CPP) today confirmed that it intends to... Source: New Zealand Herald - Business | 19 Mar 2008 | 10:15 pm
Visa shares end their first day up 28% in New York having earlier risen by as much as 38%. Source: BBC News | Business | World Edition | 19 Mar 2008 | 10:10 pm
SYDNEY - Australian artist Ken Done is suing the Commonwealth Bank's financial advice arm for A$53 million ($61.1 million), claiming he lost three-quarters of his personal fortune through bad advice.
The 67-year-old artist alleges... Source: New Zealand Herald - Business | 19 Mar 2008 | 10:00 pm
A wealthy private investor is thought to have bought 3.6 per cent of children's clothing retailer Pumpkin Patch.
The investor, believed to have been a Pumpkin Patch shareholder since it listed on the sharemarket on 2004, bought... Source: New Zealand Herald - Business | 19 Mar 2008 | 8:45 pm
Wall Street's main share indexes go into reverse, dragged down by weaker US oil stocks. Source: BBC News | Business | World Edition | 19 Mar 2008 | 8:16 pm
The New Zealand sharemarket gave up some of yesterday's gains today, following the lead of the US where all three major stock indexes dropped more than 2 per cent.
Helping pull the market down in this country was top stock Telecom,... Source: New Zealand Herald - Business | 19 Mar 2008 | 8:10 pm
The Federal Reserve's aggressive rate cut, together with its moves over the past week to shore up liquidity in financial markets, show it will do whatever it can to mitigate the risk of a long and deep recession in the United States.
Unfortunately,... Source: New Zealand Herald - Business | 19 Mar 2008 | 7:00 pm
For the first year ever, college hoops fans can catch all of the men's NCAA Division I tournament live on the Web -- great news for fans stuck at work, but employers are likely to see a major drop in productivity. Stacey Vanek-Smith reports on how one company is dealing with the mania. Source: Marketplace | 19 Mar 2008 | 6:47 pm
More than one-third of nurses born during the baby boom plan to retire or change jobs sometime in the next three years. Add in the chronic shortage of nurses already, and hospitals could be left in critical condition. Ashley Milne Tyte reports. Source: Marketplace | 19 Mar 2008 | 6:47 pm
Just like today, the early 1970s were also a time of accelerated inflation and rising commodities prices. Commentator David Frum says the Fed is now repeating the mistakes it made in the early '70s -- mistakes which ultimately led to a recession. Source: Marketplace | 19 Mar 2008 | 6:47 pm
Many states are struggling with lean budgets this year. Now Vermont's governor wants to make ends meet by selling or leasing the state's lottery to a private company. But some lawmakers worry about the long-term effect of giving up control of a state money-making asset. John Dillon reports. Source: Marketplace | 19 Mar 2008 | 6:47 pm
After five years in the war in Iraq, estimates of the monetary costs range from several hundred billion dollars to trillions of dollars. Kai Ryssdal talks to University of Chicago economics professor Steven Davis about how to truly assess the cost of the war. Source: Marketplace | 19 Mar 2008 | 6:47 pm
Though the Fed cut interest rates dramatically, the average 30-year fixed mortgage rate has gone up since the beginning of January. Jeremy Hobson reports why banks aren't interested in dropping rates for long-term loans. Source: Marketplace | 19 Mar 2008 | 6:47 pm
The federal government already raised the limit on loans mortgage lenders Fannie Mae and Freddie Mac can underwrite. Today's move to relax capital requirements on loans is designed to quickly free up $200 billion in more financing. John Dimsdale reports. Source: Marketplace | 19 Mar 2008 | 6:47 pm
The JPMorgan buyout of Bear Stearns seems to have appeased the markets, but it also angered many Stearns shareholders. Now some are suing, claiming Stearns execs hid the firm's true financial condition and failed to properly manage risk. Bob Moon reports. Source: Marketplace | 19 Mar 2008 | 6:46 pm
Thornburg Mortgage says it is trying to raise $1bn (£500m) to keep its lenders at bay and avoid filing for bankruptcy. Source: BBC News | Business | World Edition | 19 Mar 2008 | 6:39 pm
Gordon Brown, Britain's prime minsister, has agreed to meet the Dalai Lama, Tibet's spiritual leader, in a move that threatens to damage the UK's strong bilateral relationship with China Source: FT.com - US homepage | 19 Mar 2008 | 6:36 pm
Boeing admitted that it would have to redesign parts of its troubled 787 Dreamliner, raising the prospect of a third delay in recent months to delivery of the new aircraft Source: FT.com - US homepage | 19 Mar 2008 | 6:02 pm
One Infinite Loop, Apple's street address, is a programming in-joke — it refers to a routine that never ends. But it is also an apt description of the travails of parking at the Cupertino, California, campus. Like most things in Silicon Valley, Apple's lots are egalitarian; there are no reserved spots for managers or higher-ups. Even if you're a Porsche-driving senior executive, if you arrive after 10 am, you should be prepared to circle the lot endlessly, hunting for a space.
But there is one Mercedes that doesn't need to search for very long, and it belongs to Steve Jobs. If there's no easy-to-find spot and he's in a hurry, Jobs has been known to pull up to Apple's front entrance and park in a handicapped space. (Sometimes he takes up two spaces.) It's become a piece of Apple lore — and a running gag at the company. Employees have stuck notes under his windshield wiper: "Park Different." They have also converted the minimalist wheelchair symbol on the pavement into a Mercedes logo.
Jobs' fabled attitude toward parking reflects his approach to business: For him, the regular rules do not apply. Everybody is familiar with Google's famous catchphrase, "Don't be evil." It has become a shorthand mission statement for Silicon Valley, encompassing a variety of ideals that — proponents say — are good for business and good for the world: Embrace open platforms. Trust decisions to the wisdom of crowds. Treat your employees like gods.
It's ironic, then, that one of the Valley's most successful companies ignored all of these tenets. Google and Apple may have a friendly relationship — Google CEO Eric Schmidt sits on Apple's board, after all — but by Google's definition, Apple is irredeemably evil, behaving more like an old-fashioned industrial titan than a different-thinking business of the future. Apple operates with a level of secrecy that makes Thomas Pynchon look like Paris Hilton. It locks consumers into a proprietary ecosystem. And as for treating employees like gods? Yeah, Apple doesn't do that either.
But by deliberately flouting the Google mantra, Apple has thrived. When Jobs retook the helm in 1997, the company was struggling to survive. Today it has a market cap of $105 billion, placing it ahead of Dell and behind Intel. Its iPod commands 70 percent of the MP3 player market. Four billion songs have been purchased from iTunes. The iPhone is reshaping the entire wireless industry. Even the underdog Mac operating system has begun to nibble into Windows' once-unassailable dominance; last year, its share of the US market topped 6 percent, more than double its portion in 2003.
It's hard to see how any of this would have happened had Jobs hewed to the standard touchy-feely philosophies of Silicon Valley. Apple creates must-have products the old-fashioned way: by locking the doors and sweating and bleeding until something emerges perfectly formed. It's hard to see the Mac OS and the iPhone coming out of the same design-by-committee process that produced Microsoft Vista or Dell's Pocket DJ music player. Likewise, had Apple opened its iTunes-iPod juggernaut to outside developers, the company would have risked turning its uniquely integrated service into a hodgepodge of independent applications — kind of like the rest of the Internet, come to think of it.
And now observers, academics, and even some other companies are taking notes. Because while Apple's tactics may seem like Industrial Revolution relics, they've helped the company position itself ahead of its competitors and at the forefront of the tech industry. Sometimes, evil works.
Over the past 100 years, management theory has followed a smooth trajectory, from enslavement to empowerment. The 20th century began with Taylorism — engineer Frederick Winslow Taylor's notion that workers are interchangeable cogs — but with every decade came a new philosophy, each advocating that more power be passed down the chain of command to division managers, group leaders, and workers themselves. In 1977, Robert Greenleaf's Servant Leadership argued that CEOs should think of themselves as slaves to their workers and focus on keeping them happy.
Silicon Valley has always been at the forefront of this kind of egalitarianism. In the 1940s, Bill Hewlett and David Packard pioneered what business author Tom Peters dubbed "managing by walking around," an approach that encouraged executives to communicate informally with their employees. In the 1990s, Intel's executives expressed solidarity with the engineers by renouncing their swanky corner offices in favor of standard-issue cubicles. And today, if Google hasn't made itself a Greenleaf-esque slave to its employees, it's at least a cruise director: The Mountain View campus is famous for its perks, including in-house masseuses, roller-hockey games, and a cafeteria where employees gobble gourmet vittles for free. What's more, Google's engineers have unprecedented autonomy; they choose which projects they work on and whom they work with. And they are encouraged to allot 20 percent of their work week to pursuing their own software ideas. The result? Products like Gmail and Google News, which began as personal endeavors.
Jobs, by contrast, is a notorious micromanager. No product escapes Cupertino without meeting Jobs' exacting standards, which are said to cover such esoteric details as the number of screws on the bottom of a laptop and the curve of a monitor's corners. "He would scrutinize everything, down to the pixel level," says Cordell Ratzlaff, a former manager charged with creating the OS X interface.
At most companies, the red-faced, tyrannical boss is an outdated archetype, a caricature from the life of Dagwood. Not at Apple. Whereas the rest of the tech industry may motivate employees with carrots, Jobs is known as an inveterate stick man. Even the most favored employee could find themselves on the receiving end of a tirade. Insiders have a term for it: the "hero-shithead roller coaster." Says Edward Eigerman, a former Apple engineer, "More than anywhere else I've worked before or since, there's a lot of concern about being fired."
But Jobs' employees remain devoted. That's because his autocracy is balanced by his famous charisma — he can make the task of designing a power supply feel like a mission from God. Andy Hertzfeld, lead designer of the original Macintosh OS, says Jobs imbued him and his coworkers with "messianic zeal." And because Jobs' approval is so hard to win, Apple staffers labor tirelessly to please him. "He has the ability to pull the best out of people," says Ratzlaff, who worked closely with Jobs on OS X for 18 months. "I learned a tremendous amount from him."
Apple's successes in the years since Jobs' return — iMac, iPod, iPhone — suggest an alternate vision to the worker-is-always-right school of management. In Cupertino, innovation doesn't come from coddling employees and collecting whatever froth rises to the surface; it is the product of an intense, hard-fought process, where people's feelings are irrelevant. Some management theorists are coming around to Apple's way of thinking. "A certain type of forcefulness and perseverance is sometimes helpful when tackling large, intractable problems," says Roderick Kramer, a social psychologist at Stanford who wrote an appreciation of "great intimidators" — including Jobs — for the February 2006 Harvard Business Review.
Likewise, Robert Sutton's 2007 book, The No Asshole Rule, spoke out against workplace tyrants but made an exception for Jobs: "He inspires astounding effort and creativity from his people," Sutton wrote. A Silicon Valley insider once told Sutton that he had seen Jobs demean many people and make some of them cry. But, the insider added, "He was almost always right."
"Steve proves that it's OK to be an asshole," says Guy Kawasaki, Apple's former chief evangelist. "I can't relate to the way he does things, but it's not his problem. It's mine. He just has a different OS."
Nicholas Ciarelli created Think Secret — a Web site devoted to exposing Apple's covert product plans — when he was 13 years old, a seventh grader at Cazenovia Junior-Senior High School in central New York. He stuck with it for 10 years, publishing some legitimate scoops (he predicted the introduction of a new titanium PowerBook, the iPod shuffle, and the Mac mini) and some embarrassing misfires (he reported that the iPod mini would sell for $100; it actually went for $249) for a growing audience of Apple enthusiasts. When he left for Harvard, Ciarelli kept the site up and continued to pull in ad revenue. At heart, though, Think Secret wasn't a financial enterprise but a personal obsession. "I was a huge enthusiast," Ciarelli says. "One of my birthday cakes had an Apple logo on it."
Most companies would pay millions of dollars for that kind of attention — an army of fans so eager to buy your stuff that they can't wait for official announcements to learn about the newest products. But not Apple. Over the course of his run, Ciarelli received dozens of cease-and-desist letters from the object of his affection, charging him with everything from copyright infringement to disclosing trade secrets. In January 2005, Apple filed a lawsuit against Ciarelli, accusing him of illegally soliciting trade secrets from its employees. Two years later, in December 2007, Ciarelli settled with Apple, shutting down his site two months later. (He and Apple agreed to keep the settlement terms confidential.)
Apple's secrecy may not seem out of place in Silicon Valley, land of the nondisclosure agreement, where algorithms are protected with the same zeal as missile launch codes. But in recent years, the tech industry has come to embrace candor. Microsoft — once the epitome of the faceless megalith — has softened its public image by encouraging employees to create no-holds-barred blogs, which share details of upcoming projects and even criticize the company. Sun Microsystems CEO Jonathan Schwartz has used his widely read blog to announce layoffs, explain strategy, and defend acquisitions.
"Openness facilitates a genuine conversation, and often collaboration, toward a shared outcome," says Steve Rubel, a senior vice president at the PR firm Edeleman Digital. "When people feel like they're on your side, it increases their trust in you. And trust drives sales."
In an April 2007 cover story, we at Wired dubbed this tactic "radical transparency." But Apple takes a different approach to its public relations. Call it radical opacity. Apple's relationship with the press is dismissive at best, adversarial at worst; Jobs himself speaks only to a handpicked batch of reporters, and only when he deems it necessary. (He declined to talk to Wired for this article.) Forget corporate blogs — Apple doesn't seem to like anyone blogging about the company. And Apple appears to revel in obfuscation. For years, Jobs dismissed the idea of adding video capability to the iPod. "We want it to make toast," he quipped sarcastically at a 2004 press conference. "We're toying with refrigeration, too." A year later, he unveiled the fifth-generation iPod, complete with video. Jobs similarly disavowed the suggestion that he might move the Mac to Intel chips or release a software developers' kit for the iPhone — only months before announcing his intentions to do just that.
Even Apple employees often have no idea what their own company is up to. Workers' electronic security badges are programmed to restrict access to various areas of the campus. (Signs warning NO TAILGATING are posted on doors to discourage the curious from sneaking into off-limit areas.) Software and hardware designers are housed in separate buildings and kept from seeing each other's work, so neither gets a complete sense of the project. "We have cells, like a terrorist organization," Jon Rubinstein, former head of Apple's hardware and iPod divisions and now executive chair at Palm, told BusinessWeek in 2000.
At times, Apple's secrecy approaches paranoia. Talking to outsiders is forbidden; employees are warned against telling their families what they are working on. (Phil Schiller, Apple's marketing chief, once told Fortune magazine he couldn't share the release date of a new iPod with his own son.) Even Jobs is subject to his own strictures. He took home a prototype of Apple's boom box, the iPod Hi-Fi, but kept it concealed under a cloth.
But Apple's radical opacity hasn't hurt the company — rather, the approach has been critical to its success, allowing the company to attack new product categories and grab market share before competitors wake up. It took Apple nearly three years to develop the iPhone in secret; that was a three-year head start on rivals. Likewise, while there are dozens of iPod knockoffs, they have hit the market just as Apple has rendered them obsolete. For example, Microsoft introduced the Zune 2, with its iPod-like touch-sensitive scroll wheel, in October 2007, a month after Apple announced it was moving toward a new interface for the iPod touch. Apple has been known to poke fun at its rivals' catch-up strategies. The company announced Tiger, the latest version of its operating system, with posters taunting, REDMOND, START YOUR PHOTOCOPIERS.)
Secrecy has also served Apple's marketing efforts well, building up feverish anticipation for every announcement. In the weeks before Macworld Expo, Apple's annual trade show, the tech media is filled with predictions about what product Jobs will unveil in his keynote address. Consumer-tech Web sites liveblog the speech as it happens, generating their biggest traffic of the year. And the next day, practically every media outlet covers the announcements. Harvard business professor David Yoffie has said that the introduction of the iPhone resulted in headlines worth $400 million in advertising.
But Jobs' tactics also carry risks — especially when his announcements don't live up to the lofty expectations that come with such secrecy. The MacBook Air received a mixed response after some fans — who were hoping for a touchscreen-enabled tablet PC — deemed the slim-but-pricey subnotebook insufficiently revolutionary. Fans have a nickname for the aftermath of a disappointing event: post-Macworld depression.
Still, Apple's radical opacity has, on the whole, been a rousing success — and it's a tactic that most competitors can't mimic. Intel and Microsoft, for instance, sell their chips and software through partnerships with PC companies; they publish product road maps months in advance so their partners can create the machines to use them. Console makers like Sony and Microsoft work hand in hand with developers so they can announce a full roster of games when their PlayStations and Xboxes launch. But because Apple creates all of the hardware and software in-house, it can keep those products under wraps. Fundamentally the company bears more resemblance to an old-school industrial manufacturer like General Motors than to the typical tech firm.
In fact, part of the joy of being an Apple customer is anticipating the surprises that Santa Steve brings at Macworld Expo every January. Ciarelli is still eager to find out what's coming next — even if he can't write about it. "I wish they hadn't sued me," he says, "but I'm still a fan of their products."
Back in the mid-1990s, as Apple struggled to increase its share of the PC market, every analyst with a Bloomberg terminal was quick to diagnose the cause of the computermaker's failure: Apple waited too long to license its operating system to outside hardware makers. In other words, it tried for too long to control the entire computing experience. Microsoft, Apple's rival to the north, dominated by encouraging computer manufacturers to build their offerings around its software. Sure, that strategy could result in an inferior user experience and lots of cut-rate Wintel machines, but it also gave Microsoft a stranglehold on the software market. Even Wired joined the fray; in June 1997, we told Apple, "You shoulda licensed your OS in 1987" and advised, "Admit it. You're out of the hardware game."
Oops.
When Jobs returned to Apple in 1997, he ignored everyone's advice and tied his company's proprietary software to its proprietary hardware. He has held to that strategy over the years, even as his Silicon Valley cohorts have embraced the values of openness and interoperability. Android, Google's operating system for mobile phones, is designed to work on any participating handset. Last year, Amazon.com began selling DRM-free songs that can be played on any MP3 player. Even Microsoft has begun to embrace the movement toward Web-based applications, software that runs on any platform.
Not Apple. Want to hear your iTunes songs on the go? You're locked into playing them on your iPod. Want to run OS X? Buy a Mac. Want to play movies from your iPod on your TV? You've got to buy a special Apple-branded connector ($49). Only one wireless carrier would give Jobs free rein to design software and features for his handset, which is why anyone who wants an iPhone must sign up for service with AT&T.
During the early days of the PC, the entire computer industry was like Apple — companies such as Osborne and Amiga built software that worked only on their own machines. Now Apple is the one vertically integrated company left, a fact that makes Jobs proud. "Apple is the last company in our industry that creates the whole widget," he once told a Macworld crowd.
But not everyone sees Apple's all-or-nothing approach in such benign terms. The music and film industries, in particular, worry that Jobs has become a gatekeeper for all digital content. Doug Morris, CEO of Universal Music, has accused iTunes of leaving labels powerless to negotiate with it. (Ironically, it was the labels themselves that insisted on the DRM that confines iTunes purchases to the iPod, and that they now protest.) "Apple has destroyed the music business," NBC Universal chief Jeff Zucker told an audience at Syracuse University. "If we don't take control on the video side, [they'll] do the same." At a media business conference held during the early days of the Hollywood writers' strike, Michael Eisner argued that Apple was the union's real enemy: "[The studios] make deals with Steve Jobs, who takes them to the cleaners. They make all these kinds of things, and who's making money? Apple!"
Meanwhile, Jobs' insistence on the sanctity of his machines has affronted some of his biggest fans. In September, Apple released its first upgrade to the iPhone operating system. But the new software had a pernicious side effect: It would brick, or disable, any phone containing unapproved applications. The blogosphere erupted in protest; gadget blog Gizmodo even wrote a new review of the iPhone, reranking it a "don't buy." Last year, Jobs announced he would open up the iPhone so that independent developers could create applications for it, but only through an official process that gives Apple final approval of every application.
For all the protests, consumers don't seem to mind Apple's walled garden. In fact, they're clamoring to get in. Yes, the iPod hardware and the iTunes software are inextricably linked — that's why they work so well together. And now, PC-based iPod users, impressed with the experience, have started converting to Macs, further investing themselves in the Apple ecosystem.
Some Apple competitors have tried to emulate its tactics. Microsoft's MP3 strategy used to be like its mobile strategy — license its software to (almost) all comers. Not any more: The operating system for Microsoft's Zune player is designed uniquely for the device, mimicking the iPod's vertical integration. Amazon's Kindle e-reader provides seamless access to a proprietary selection of downloadable books, much as the iTunes Music Store provides direct access to an Apple-curated storefront. And the Nintendo Wii, the Sony PlayStation 3, and the Xbox360 each offer users access to self-contained online marketplaces for downloading games and special features.
Tim O'Reilly, publisher of the O'Reilly Radar blog and an organizer of the Web 2.0 Summit, says that these "three-tiered systems" — that blend hardware, installed software, and proprietary Web applications — represent the future of the Net. As consumers increasingly access the Web using scaled-down appliances like mobile phones and Kindle readers, they will demand applications that are tailored to work with those devices. True, such systems could theoretically be open, with any developer allowed to throw its own applications and services into the mix. But for now, the best three-tier systems are closed. And Apple, O'Reilly says, is the only company that "really understands how to build apps for a three-tiered system."
If Apple represents the shiny, happy future of the tech industry, it also looks a lot like our cat-o'-nine-tails past. In part, that's because the tech business itself more and more resembles an old-line consumer industry. When hardware and software makers were focused on winning business clients, price and interoperability were more important than the user experience. But now that consumers make up the most profitable market segment, usability and design have become priorities. Customers expect a reliable and intuitive experience — just like they do with any other consumer product.
All this plays to Steve Jobs' strengths. No other company has proven as adept at giving customers what they want before they know they want it. Undoubtedly, this is due to Jobs' unique creative vision. But it's also a function of his management practices. By exerting unrelenting control over his employees, his image, and even his customers, Jobs exerts unrelenting control over his products and how they're used. And in a consumer-focused tech industry, the products are what matter. "Everything that's happening is playing to his values," says Geoffrey Moore, author of the marketing tome Crossing the Chasm. "He's at the absolute epicenter of the digitization of life. He's totally in the zone."
The estimated cost of drought to farmers this season is more than $1 billion but a bigger financial impact could hit next year, says Federated Farmers president Charlie Pedersen.
He said cash flow could be quite good in drought... Source: New Zealand Herald - Business | 19 Mar 2008 | 6:00 pm
India tops the table for the amount of money sent home by its migrant workers, the World Bank says. Source: BBC News | Business | World Edition | 19 Mar 2008 | 5:54 pm
The UK's financial watchdog launched an inquiry into the feverish speculation and scaremongering that has destabilised London's stock market Source: FT.com - US homepage | 19 Mar 2008 | 4:47 pm
Despite earlier equivocations, the Federal Communications Commission has said it will hold a second public hearing on network neutrality following last month's botched public session at Harvard, at which cable giant Comcastpaid people to take up space.
The F.C.C. said this morning that a new "en banc" hearing will take place at Stanford University in Palo Alto, California, on Thursday, April 17.
Last month's hearing on the subject sparked controversy after Portfolio.com reported that Comcast paid people off the street to show up at the hearing at Harvard. The event's organizer—the Berkman Center for Internet and Society at Harvard—was not amused by the company's tactics.
Consumer groups praised the F.C.C.'s decision to hold another hearing in the wake of the Comcast debacle.
"Just as the internet benefited from widespread public participation, so will the debate over its future," said Josh Silver, executive director of Free Press. "The hearing at Stanford—the birthplace of our internet economy—gives Web innovators a chance to weigh in on the policies that will shape the industry for a generation.
"We look forward to working with the F.C.C. to ensure that all interested parties are accommodated. With the future of the internet at stake, no one should be shut out of the conversation," Silver added.
The F.C.C. is reviewing Comcast's practice of slowing down or blocking the delivery of some internet content over its cable network. The company says it is engaging only in prudent network management, but critics have accused it of trying to hobble potential rivals in the video-on-demand business. Related Links The Comcast Mystery Deepens F.C.C. 'Do-Over' on Net Neutrality Hearing? Piling On
The Federal Communications Commission is delaying announcing the winners of its closely watched 700-MHz wireless spectrum auction in order to address the controversy over the failed sale of one of the largest slices of the spectrum, Portfolio.com has learned.
"Chairman [Kevin] Martin has circulated a brief order to his fellow F.C.C. commissioners that proposes de-linking the D-block, or public-safety spectrum, from the other blocks of spectrum," an F.C.C. spokeswoman said. "This would enable the commission to announce the winners in the other blocks of spectrum, the specific spectrum they won, and the amount they paid for it."
"We cannot put a time frame on when this may occur," she added, "as it is contingent on receiving a majority vote on the proposed order being circulated."
The federal government received bids totaling almost $20 billion for big chunks of wireless spectrum, including a highly coveted national C-block cluster of licenses. The frequencies have been made available as the television industry transitions to digital broadcasting.
But F.C.C. officials are delaying a formal announcement of the winners of the auction—which ended at 3 p.m. yesterday and handily beat Congress's $10 billion estimate—pending a meeting to discuss the controversy surrounding its failed sale of the D-block.
"Because the reserve price [$1.3 billion] for the D-block was not met in the 700-MHz auction, the F.C.C. is now evaluating its options for this spectrum," Martin said in a statement yesterday.
The botched D-block sale—which was for frequencies that the buyer would share with public-safety agencies—marred the otherwise successful auction.
"The $19.59 billion generated by the auction nearly doubled congressional estimates of $10.2 billion," Martin said. "All other 68 auctions conducted by the F.C.C. in the past 15 years collectively generated a total of only $19.1 billion in receipts."
Google said last fall it would bid for the C-block, which had a reserve price of $4.6 billion. In a win for wireless "open access" advocates, the winning bid exceeded that reserve price, triggering two F.C.C. "open access" rules that require the winner—as yet unnamed—to let its customers use any wireless device on its network.
But some have suggested that Google was "bidding to lose" the auction because it had already won the two open-access provisions and because the cost of building an actual network—as much as $25 billion—could prove prohibitive. Other likely bidders include Verizon Wireless and AT&T.
Before it announces the winner of the C-block spectrum, the F.C.C. wants to address to the D-block controversy.
Just weeks before the auction began, former F.C.C. Chairman Reed Hundt's Frontline Wireless's bid for the D- block—which the F.C.C. designated for public-safety agencies as well as commercial wireless service—collapsed for lack of funding. The F.C.C. is currently mulling conducting a new auction of the D-block.
No bidder came close to meeting the $1.3 billion reserve price set for the D-block, although there was one anonymous bid on the spectrum, $472 million.
"We clearly misjudged the interest [in the D-block] and set rules that apparently inhibited the financing [for bidders]," F.C.C. Commissioner Jonathan Adelstein said, according to GigaOm. "It's a concern, and it's something we will revisit with our friends in public safety."
The controversy concerns Cyren Call, the group that represents the Public Safety Spectrum Trust, which holds the national 12-MHz public-safety license that makes up the "public" half of the D-block.
Cyren Call C.E.O. Morgan O'Brien, the former chairman of Nextel, reportedly demanded a $500 million fee over 10 years from Frontline, in exchange for a lease for the public-safety half of the spectrum. He added that Cyren Call wanted to become the "monopoly buyer" of broadband service on the network once it had been built.
Frontline abruptly disintegrated in January before the auction began, citing an inability to raise enough money to bid on the auction.
Gigi Sohn, who runs the Washington, D.C.-based consumer-rights group Public Knowledge, said the F.C.C. needs to explain "the lack of activity in the D-block that would have supported public-safety activity."
"Following reports that Frontline dropped out of the auction as a result of alleged conditions put on the block by the public-safety community, we urge the commission to look into the auction results," Sohn said.
Whenever there is a financial setback, whether a one-day plunge in the stock price of an odd internet company or the global market sell-off after September 11, there is always the cry: The shorts are somehow to blame.
The collapse of Bear Stearns is the latest round in this knee-jerk game.
Bloomberg News reports that the Securities and Exchange Commission is investigating whether hedge funds or other investors spread false rumors about Bear while selling its sales short or betting that its stock price would fall. The New York Stock Exchange is also involved in the inquiry, Bloomberg says.
Is this really necessary? For nearly a year it has been no secret that Bear was vulnerable to the collapse of the subprime market because of its relatively small size, its huge leverage, and its exposure to mortgages. In the October issue of Condè Nast Portfolio, Jesse Eisinger said that Bear might not survive.
Sure, the rumors about Bear grew significantly louder last week. But it is hardly underhanded when some were simply trying to profit on what was becoming increasingly obvious in the market: Bear was doing next to nothing to protect itself in the credit crunch even as others.
Last year, other Wall Street banks scrambled to raise huge amounts of new capital and to reduce leverage. They ousted top executives. They retrenched.
And Bear? An alliance with Citic Securities of China that came to nothing.
As the whisper campaign grew louder last week, Bear executives were denying there were any liquidity concerns. Alan Schwartz, its chief executive, said in a statement on March 10 that "Bear Stearns' balance sheet, liquidity, and capital remain strong."
For banks, however, denials are never enough, Edward Hadas contended on Breakingviews.com last week. "Banks, especially weak ones, need to make themselves rumor-proof," he said.
That's what Lehman Brothers has successfully done—in 1998 and again today. Bear did not, and has no one to blame but itself.
Barry Ritholtz on the Big Picture blog says: Bear's "thinly traded mortgage-based paper got marked lower and lower because no one else wanted them. That is what caused the run on the bank, and not any whisper campaign."
The run came with breathtaking speed. On Tuesday, March 11, Bear's liquidity pool fell to $11.5 billion from $18.2 billion, according to the S.E.C.
By Thursday evening, that level had shrunk to just $2 billion, and the firm was contemplating filing for bankruptcy on Friday, the Wall Street Journalreported.
That was the bleak forecast faced by Bear before the rescue by J.P. Morgan Chase and the Federal Reserve.
It is something to keep in mind during this silly season of searching for villains, not to mention the wishful thinking that there is an alternative to the J.P. Morgan takeover.
Bear is headed for liquidation, whether through J.P. Morgan or through a bankruptcy court. The only question, as Felix Salmon has put it, is whether shareholders want $2 or $0 per share. (With shares of J.P. Morgan continuing to rise, its all-stock offer will soon be worth $3 per share.)
It's amazing what a halfway-decent browsing experience can do for mobile internet usage. A new study from measurement firm M:Metrics confirms what was pretty much common knowledge: Give users a good phone browser, and they'll flock to the mobile web.
After charting the habits of more than 10,000 adults for six months after the iPhone's U.S. launch, M:Metrics concludes that nearly 85 percent of iPhone purchasers regularly use their handheld device to access news and other content on the web.
Compare that to the 58 percent of total smartphone owners who browse web content and just 13 percent of overall mobile phone users who do, and you get an idea of how much a simple interface can do to inspire usage. You can just picture the design meetings happening at phone manufacturers around the world: "Wait, if we make a web browser that doesn't make users feel like jabbing forks into their eyes, they'll actually want to browse the web?"
The study also found that 59 percent of iPhone users visited a search engine on their phone, compared to 37 percent of smartphone users and a miniscule 6 percent of mobile phone users. This corroborates information Google released last month, which said the search company saw on average 50 times more search requests coming from Apple iPhones than any other mobile handset.
Mark Donovan, an analyst at M:Metrics, says the other major factor in the iPhone's mobile success is AT&T's unlimited data plan for iPhone users. I'm not really convinced here. Sure, the labyrinthine data plans most carriers offered a few years ago were a cold shower for those with mobile internet lust. But almost all U.S. carriers now offer similar all-you-can-eat data packages, and there are plenty of phones out there capable of taking advantage of those plans.
In the current business climate, a quarter for a Wall Street firm that is not "embarrassing" is very, very good.
John Mack, chief executive of Morgan Stanley, had called his firm's fourth-quarter performance, when it lost $3.6 billion, "embarrassing." Today, Morgan Stanley reported first-quarter earnings that, while down 43 percent from a year ago, were much better than forecasts.
Morgan earned $1.5 billion, or $1.45 per share, compared with $2.7 billion, or $2.51 per share, in the quarter a year earlier. Net revenue, or revenue after interest expenses, slumped 17 percent, to $8.3 billion. Analysts had been expecting earnings of $1.03 per share.
In a sign that the credit crunch continues to crush, the firm also said it took an additional $2.3 billion in write-downs on mortgage-related trading, loans, and pipeline commitments.
Still, the unexpected strength in Morgan Stanley's results, following similar surprises from Lehman Brothers and Goldman Sachs on Tuesday, should go a long way toward restoring investors' confidence in Wall Street as it tries to weather the credit storm.
"While many of our businesses are facing challenging market conditions that we expect to continue in the months ahead, we are satisfied with how Morgan Stanley navigated the ongoing market turbulence," Mack said today in a statement.
Mack has no shortage of critics, as Portfolio.com's Dan Colarusso noted last week. Morgan, he said, "kept ramping up its risk profile, but the party ended early, leaving Morgan exposed to a walloping by the credit crunch."
And a big shareholder, CTW Investment Group, which represents union pension funds, has been pushing to force Mack to give up the position of chairman while staying on as C.E.O.
But with all of Wall Street in largely the same boat (even Goldman reported a decline in quarterly earnings), these latest results certainly buy time for Mack.
This housing crisis is always being compared to the slump during the Depression. So why not use the tools created in the last crisis for this one?
That appears to be the thinking behind a decision to allow Fannie Mae and Freddie Mac, companies created by Congress to buy mortgages, to have looser capital requirements so that they can spend as much as $200 billion more for mortgages and mortgage-related securities.
The regulator for the now privatized, publicly traded companies, the Office of Federal Housing Enterprise Oversight, announced the move today, saying that it "estimates that Fannie Mae’s and Freddie Mac’s existing capabilities, combined with this new initiative and the release of the portfolio caps announced in February, should allow the G.S.E.'s [government-sponsored enterprises] to purchase or guarantee about $2 trillion in mortgages this year."
The idea is that an expansion of Fannie's and Freddie's buying will bolster the mortgage market and free up more money for troubled homeowners to refinance. In exchange for the relief on the capital requirement, which is being reduced by a third, the companies have agreed to raise additional equity capital sometime this year.
Some Democratic lawmakers, including Senator Charles Schumer of New York, have pushed for a cut in the capital requirements to help the depressed housing markets.
Critics fear that looser regulations will just invite trouble.
The two companies reported a combined $6 billion of losses in the fourth quarter last year on credit derivatives. The quality of their mortgages and mortgage-backed securities has been questioned. Fannie Mae has been taken to task by regulators over its accounting.
The Calculated Risk blog noted that "It wasn't that long ago when Fannie and Freddie were the problem; now they are the solution."
An editorial in the Wall Street Journal last month argued against lifting the capital requirements, saying, "What Fannie and Freddie really need is a regulator with the clout to cut up their credit cards before they get into even deeper trouble—and take the rest of us along with them."
Shares of Visa started trading this morning at $60 per share, up 36 percent from their $44 initial offering price. They ended the day slightly lower, at $56.50.
Still, the enthusiastic reception is evidence that investor appetite for some equities is still strong despite the recent credit turmoil.
By selling 406 million shares, Visa raised $17.9 billion, more than any other American I.P.O. in history. It also happens to be raising more money in this single offering than all other I.P.O.'s worldwide combined have raised so far this year, according to Bloomberg data.
The Visa I.P.O. is also contributing to what is turning out to be a historical week for J.P. Morgan. The bank came out looking like a winner by bailing out Bear Stearns at a deep discount, and now it's taking in a windfall as one of the two lead underwriters for the deal and also the biggest banking shareholder behind the credit-card processor.
It was a gamble for Visa to enter the public markets during one of the most volatile periods in recent stock market history. The S&P 500 index fell nearly 10 percent during the first two months of the year. Since the beginning of March, it fell another 4 percent and then regained the same amount, mostly from Tuesday's rally.
But there's good reason for investors to welcome Visa to the public fray. MasterCard, the No. 2 credit-card company behind Visa, issued shares for $39 in May of 2006, and they now trade at $210.
Both Visa and MasterCard are benefiting from a consumer spending culture driven increasingly by plastic—an estimated 55 percent of all transactions are expected to use plastic by 2011, up from 40 percent in 2005. Visa has about 60 percent of the market for debit transactions. The credit-card companies are in the enviable position of collecting fees with each transaction, while letting their banking partners shoulder the actual debt.
The offering is also providing a capital windfall for some in the beleaguered banking sector. Visa plans to use $10 billion of the proceeds from the offering to buy class-B shares from its member banks.
J.P. Morgan, the largest shareholder, plans to sell 29 million shares for $1.3 billion and Bank of America will make over $600 million by unloading 14 million shares. Other banks expecting smaller windfalls include National City Corporation, Citigroup, U.S. Bancorp, and Wells Fargo.
AP - The government on Wednesday relaxed capital requirements at Fannie Mae and Freddie Mac as part of a plan to quickly inject an additional $200 billion of financing for home loans.
Reuters - The nomination of a new Bank of Japan
governor may be delayed until April as parliament will be
preoccupied with tax measures until then, media said on
Thursday, blaming political parties for the vacuum at the
central bank.
Reuters - Dell Inc plans to buy $23
billion worth of components from China this year, 28 percent
more than in 2007, the world's second-biggest personal computer
maker said on Thursday.
Reuters - JPMorgan Chase & Co Chief
Executive James Dimon visited Bear Stearns' offices on
Wednesday evening to speak to more than 400 senior executives,
according to reports in the New York Times and Financial Times.
Reuters - Credit Suisse warned it was
unlikely to be profitable in the first quarter due to big debt
writedowns and tough markets but said the shock trading hit
announced in February was not as bad as previously thought.
Reuters - U.S. book retailer Borders Group Inc
posted a fourth-quarter profit on Thursday but
suspended its quarterly dividend and said it had launched a
strategic review that will investigate selling the business.
Reuters - Northrop Grumman Corp and Boeing Co
escalated their war of words on Wednesday over a $35 billion
contract for 179 U.S. Air Force refueling aircraft that Boeing
argues it should have won -- not Northrop and Europe's EADS.