Money News

GM uncovers the pre-production Camaro

2008-01-05T21:31:00.000+02:00

From now on Camaros will be tested without camouflage, GM says, so bring out your cameras.

The production version of the highly anticipated Chevrolet Camaro won't be officially revealed for some time yet but, in a highly unusual move, GM won't hide the car from prying spy photographers during test drives anymore.

Magazines and car enthusiasts pay top dollar for "spy shots" of early pre-production cars, which are usually covered in black cloth and stripes of tape to try to hide their appearance, as the cars undergo testing on public roads.

In fact, several companies now specialize in selling these pictures, while car companies do their best - or at least claim to do their best - to keep their future products under wraps.

"It's really a cat-and-mouse game between spy photographers and car companies that benefits everybody," said John Neff, editor of Autoblog.com, a Website that posted several Camaro spy photos. (Autoblog.com, like CNNMoney.com, is a Time Warner property.)

Starting now, however, the Chevrolet Camaro isn't playing coy. Want to take a shot? Go for it, GM (GM, Fortune 500) says. When Camaro prototypes go out on public roads for testing they'll be totally naked.

"During this upcoming year, pre-production Camaros will appear both on U.S. and Australian roads as we continue with testing and development," Chevrolet general manager Ed Peper wrote in a post on GM's FastLane blog. "So keep those camera phones ready - if you happen to see one, we'd like to hear about it, so please post a comment and include your 'spy photo!'"

Engineering and development for GM's new rear-wheel-drive cars is taking place in Australia. That's because rear-wheel-drive cars are more common there, making GM's Australian engineers the company's rear-wheel-drive experts.

The FastLane post was accompanied by a "spy photo" GM says was taken by one of the company's engineers.

The main reason for removing the camouflage, according to Peper's post, was to facilitate tests for aerodynamics and cooling efficiency.

But even high-performance cars like the Corvette ZR1, for which aerodynamics and cooling would be especially important, are covered up during public testing. That's made some people skeptical that this is the real reason for the decision. Certainly the move would help juice publicity for the car.

In the case of the Camaro, there wasn't really much of a secret to protect, though. The company has said the production car would closely resemble concept versions that have been seen at car shows and in the movie "The Transformers."

Some executive wondered: "Why are we camouflaging something that's so close to the coupe and convertible that are already on the auto show circuit?" said Chevrolet spokesman Terry Rhadigan.

Even so, there has been a lot of interest in spy photos of the car. On the morning that GM's decision was announced, Autoblog.com posted images of a test Camaro on a parked transport truck. The images included detailed shots of the car's interior and the inside of an open door.

Seeing the potential for damage or injuries as photographers try to get close to the cars, GM may have decided that "at this point everybody is safer just taking off the camouflage," said Brenda Priddy, a professional automotive spy photographer.

Priddy, who has spent 15 years taking spy photos of cars, did not take the pictures posted on Autoblog.com. For her part, she said, she would never actually touch or reach into a car, which is a car company's private property, to get a shot.

A representative for the company that distributed the photos of the test Camaro's interior did not immediately respond to questions about how the photos were obtained.

The decision announced Thursday was made weeks ago, said GM's Rhadigan. It was not made in response to those specific photos, he said.

"This was not by any means a knee-jerk reaction to something we saw on the Internet," Rhadigan said.

Besides, said spy shooter Priddy, why should GM let people like her profit from all the interest in GM's car?
(source money.cnn.com)

Barack Obama in the leader seat

2008-01-04T09:19:00.000+02:00

Barack Obama and Mike Huckabee have claimed victories in Iowa's first-in-the-nation caucuses

With all Democratic precincts reporting, Obama had the support of 38 percent of voters, compared to 30 percent for John Edwards and 29 percent for Hillary Clinton.

"The numbers tell us this was a debate between change and experience, and change won," said CNN political analyst Bill Schneider.

Iowa delivered fatal blows to the campaigns of Sen. Chris Dodd of Connecticut and Sen. Joe Biden of Delaware. Both have decided to abandon their White House runs.

New Mexico Gov. Bill Richardson, who finished fourth, said his campaign plans to "take the fight to New Hampshire."

New Hampshire holds the nation's first primary Tuesday.

Clinton and Obama are in a statistical dead heat in New Hampshire, according to the latest CNN/WMUR poll.

On the GOP side, Sen. John McCain of Arizona, whose campaign was languishing six months ago, and former Massachusetts Gov. Mitt Romney are now tied for first place in New Hampshire, according to the poll, which was released Wednesday.

McCain left Iowa before caucus night even began. He was already in New Hampshire by Thursday afternoon, trying to get a jump on his rivals.

For the winners of both party's caucuses in Iowa, it's an age revolt for Democrats versus a religious revolt for Republicans, Schneider said.

Among Democrats, Obama took 57 percent of the under-30 vote, according to CNN's analysis of entrance polls. Watch Obama celebrate his victory

Speaking to supporters, Obama called the night a "defining moment in history."

"You came together as Democrats, Republicans and independents to stand up and say that we are one nation, we are one people and our time for change has come." Watch an audio slideshow of the candidates' speeches »

Huckabee's victory can be attributed to his overwhelming support among evangelical voters and women, the polls indicate.

With 92 percent of Republican precincts reporting, Huckabee, former governor of Arkansas, had the support of 34 percent of voters, compared to 25 percent for Romney. Fred Thompson had 13 percent, McCain had 13 percent and Ron Paul had 10 percent. What do the results mean? »

Former New York Mayor Rudy Giuliani, who has turned the focus of his campaign to the February 5 "Super Tuesday" primaries, trailed with 4 percent.

"We've paid a lot of attention to states that some other candidates haven't paid a lot of attention to," Giuliani said, adding, "Time will tell what the best strategy is."

Huckabee was vastly outspent by Romney, who poured millions of dollars into a sophisticated get-out-the-vote operation.

"People really are more important than the purse, and what a great lesson for America to learn," Huckabee said in thanking his supporters.

For most of 2007, Huckabee languished in the single digits in the polls and had very little success raising money. But his momentum picked up in the final six weeks of the year when social conservatives -- an important voting bloc in Iowa -- began to move his way.

"We won the silver ... You win the silver in one event. It doesn't mean you're not going to come back and win the gold in the final event, and that we are going to do," Romney said.

Clinton, speaking with 96 percent of the vote in, portrayed herself as the candidate who could bring about the change the voters want.

"I am so ready for the rest of this campaign, and I am so ready to lead," she said.

Clinton had worked to convince Iowa caucus-goers she has the experience to enact change, while Edwards and Obama preached that she is too much of a Washington insider to bring change to the nation's capital.

Edwards, in a tight race for second, said Iowa's results show that "the status quo lost and change won."

"Now we move on ... to determine who is best suited to bring about the changes this country so desperately needs," he said.

McCain, who had largely abandoned Iowa to focus on the New Hampshire primary, said, "The lessons of tonight's election in Iowa are that one, you can't buy an election in Iowa; and two, that negative campaigns don't work."

With such a close race on both sides, voter turnout was key. The Iowa Democratic Party reported seeing record turnout. The party said there were at least 227,000 caucus attendees. The Iowa GOP projected that 120,000 people took part in the Republican caucuses.

The Iowa Democratic Party said 124,000 people participated in the 2004 caucuses, while the Republican Party of Iowa estimated that 87,000 people took part in the 2000 caucuses. (President Bush ran unchallenged for a second term in 2004.)

Caucus-goer Kathy Barger, inside a Democratic caucus site in Walnut, Iowa, said the room she was in was packed to the brim with a line out the door.

"I don't know how they are going to be able to fit everybody in the room, much less count the votes," she said. "There are bodies in every available space in the room."

The White House hopefuls campaigned down to the wire in Iowa, determined to reach as many people as possible before the 1,781 caucuses that started at 7 p.m.

Iowa Democrats, unlike Republicans, use a more complicated system to determine a candidate's viability. Republican caucus-goers are asked for their support for a candidate only one time during the event. Democrats are asked twice: an initial question of support, and a second if their first-choice candidate does not reach a 15 percent threshold to achieve viability.

Among Republican candidates, Thompson, a former senator from Tennessee, and Rep. Duncan Hunter of California needed strong showings in Iowa to keep their campaigns going, while Paul, a representative from Texas, is likely to ride his surge of popularity through February 5 -- "Super Tuesday," when 24 states hold their primaries -- no matter where he places in the early contests.
(Source cnn.com)

The Most Valuable College Basketball Teams

2008-01-04T09:08:00.000+02:00

Highway I-40, known as Tobacco Road, connects the universities of North Carolina, Duke and North Carolina State. These schools sit within a 25 mile radius of each other in a region where college basketball is religion. The passion that their students, alumni and sponsors have for college basketball translates into an abundance of riches for these universities, making their men's basketball programs extremely valuable, according to Forbes' first ranking of college hoops teams. Just how much are these "amateur" basketball teams worth?

The North Carolina Tar Heels basketball team is the most valuable in the country, worth $26 million. We base our valuations on what the basketball programs contribute to four important beneficiaries: their university (money generated by basketball that goes to the institution for academic purposes, including scholarship payments for basketball players); athletic department (the net profit generated by the basketball program retained by the department); conference (the distribution of tournament revenue); and local communities (incremental spending by visitors to the county during the regular season that's attributable to the program).

Last season the Tar Heels posted a $16.9 million profit and, thanks in part to a lucrative merchandising agreement with Nike (nyse: NKE - news - people ), contributed $800,000 to the university for academics. With Michael Jordan's jersey hanging from the Dean Smith Center's rafters and the basketball team a perennial contender for the national championship, basketball is the cornerstone of the university's athletic department.
In Pictures: The Most Valuable College Basketball Teams

Duke is the fifth most valuable team, worth $22.6 million. The Durham Convention & Visitors Bureau estimates total spending by visitors to Duke Blue Devils men's home games last season topped $11.2 million--more than any other basketball program in the country. Duke's success (three national titles during the past 17 years) has enabled head coach Mike Krzyzewski to become a brand unto himself, appearing in commercials for American Express (nyse: AXP - news - people ) and Chevrolet, a division of General Motors (nyse: GM - news - people ). Rivals complain Coach K's commercial success is an unfair recruiting advantage.

NC State's basketball program, ranked 13th, is worth $13.6 million. With expenses of only $3.1 million, the lowest of any team on our list, the NC State Wolfpack earned a profit of $7.9 million last season. In his first year with the Wolfpack, former NBA head coach Sidney Lowe led his alma mater to victories over Duke, North Carolina and Wake Forest University, marking the first time in four years that NC State beat all three in-state opponents during the same season.

Captured in our valuations are mandatory donations required by some athletic departments in order to be eligible to purchase season tickets (often hidden within athletic department accounting). These "gifts" add up: the University of Louisville's basketball team, the most profitable in the country, raked in $10.5 million last season from contributions directly tied to premium seating. Valued at $24.4 million, Louisville's basketball team is ranked third on our list. State rival University of Kentucky generated $7 million through 7,000 premium seats at Rupp Arena before a single ticket was even sold. Placing second, the Kentucky program is worth $24.9 million.

There is less wealth disparity among the top college basketball teams than the top football teams mainly because television money is more evenly distributed in basketball. The 20 most valuable teams span seven conferences, and include one team from the mid-major Atlantic 10. Xavier University, a private institution in Cincinnati with only 3,360 undergraduate students, can boast having a basketball team worth $10.7 million--largely as a result of personal seat licenses reaping almost $4 million in annual revenue. Compare that with football (see "The Most Valuable College Football Teams"), where teams from the SEC, Big Ten and Big 12 dominate our list.
(Source forbes.com)

DaimlerChrysler gets record fuel economy fine

2008-01-02T23:09:00.000+02:00

Mercedes-Benz cars draw $30.3 million penalty for violating fuel economy standards.

DaimlerChrysler has been hit with the largest fine ever assessed against any company for violating fuel economy standards set by the federal government.

The automaker was split into two companies last year when its Chrysler division was purchased by a private equity firm.

The fine of $30.3 million was assessed for 2006 model year imported passenger cars. That means the fine was assessed almost entirely against the company's Mercedes-Benz luxury cars. The only imported car sold as a Chrysler was the German-built Crossfire sports car.

For the 2006 model year, the average fuel economy of passenger cars imported by DaimlerChrysler - as measured for "corporate average fuel economy," or CAFE, purposes - was 24.8 miles per gallon. The government requires an average of 27.5 mpg.

The fine for violating CAFE standards is $5.50 for ever tenth of a mile under the 27.5 mpg goal, multiplied by the number of vehicles imported. The record fine is nearly double the $16,895,472 the company had to pay for the 2005 model year.

The fuel economy figures used by the National Highway Traffic Safety Administration (NHTSA), which administers the CAFE program, are calculated differently from Environmental Protection Agency fuel economy figures shown on vehicle window stickers. In general, NHTSA's CAFE figures are about 25 percent higher, according to the EPA.

The target of 27.5 mpg is the same for domestic and imported cars, but averages for domestic and imported cars are tabulated separately.

The fine assessed against DaimlerChrysler surpassed the previous record $28 million fine against BMW for the 2001 model year. For the 2006 model year, BMW was hit with the second-biggest fine, but at about $5 million it was much lower than DaimlerChrysler's.

No American or Asian car company has ever had to pay a fine for violating government CAFE standards. Only European car companies, which mostly sell luxury and performance-oriented cars here, have had to pay such fines - and many do so routinely

Representatives of Mercedes-Benz USA and Chrysler LLC did not immediately respond to requests for comments on the fine. Since the fine was assessed against the combined DaimlerChrysler, it is not clear what portion of the fine, if any, Chrysler LLC will have to pay.

Cars produced in Canada and Mexico are counted as domestic products under fuel economy regulations.
(Source money.cnn.com)

Oil pushes to $100

2008-01-02T21:12:00.000+02:00

Violence in Nigeria, supply disruption in Mexico and the prospect of another drop in U.S. inventories and more rate cuts drive crude to triple digits.

Oil prices topped $100 a barrel Wedesday as violence in Nigeria pushed an already nervous market over the triple digit mark.

NEW YORK (CNNMoney.com) -- Oil prices kicked off the first trading day of 2008 by hitting a new high of $100 a barrel Wednesday on violence in oil-rich Nigeria, the prospect of more interest rate cuts, a halt in Mexican imports and the expectation of yet another drop in U.S. crude supplies.

U.S. crude for February delivery jumped $4.02 to $100 a barrel on the New York Mercantile Exchange before slipping to $99.42. The previous trading record was $99.29 set Nov. 20. Oil prices ended 2007 by gaining nearly 60 percent for the year, the largest jump this decade.

"This market is really gonna fly," Ira Eckstein, president of Area International Trading Corp, said from the NYMEX floor.

In Nigeria, bands of armed men invaded Port Harcourt, the center the oil industry Tuesday, attacking two police stations and raiding the lobby of a major hotel, The Associated Press reported. Four policemen, three civilians and six attackers were killed. The Niger Delta Vigilante Movement claimed responsibility for the attack.

At 2.1 million barrels per day, Nigeria was the world's eighth-largest oil exporter in 2006, according to the U.S. Energy Information Agency.
What $100 oil would cost you

A surprise fall in manufacturing activity sparked fears of yet another interest rate cut from the Federal Reserve. Interest rate cuts generally cause the dollar to fall - and oil prices rise - as investors bail out of U.S. stocks and bonds and into commodities.

One trader said word among traders on Wednesday was that Mexico plans to temporarily halt oil exports, although the reason was unclear. The Associated Press reported that several Mexican ports were closed due to rough weather. PEMEX, the Mexican state oil company, could not be immediately reached for comment.

At 1.7 million barrels per day, Mexico is the world's 10th largest exporter of crude and the second largest exporter to the U.S. behind Canada.

Analysts are expecting the latest government inventory report - set for release Thursday, to show a 1.8 million barrel decline in crude supplies, according to a Dow Jones poll. It would mark the seventh straight week U.S. crude stocks have dropped.

Oil has been on a tear over the last few months - rising from under $70 in August - as OPEC cuts from earlier this year began to eat into inventories in developed counties.
$100 oil and the 'S' word

A falling dollar and several reports pointing to tightening supplies as strong demand from developing countries swallows up new production gains have also pushed prices higher, as well as attracted a slew of investment money.

Crude has risen over five-fold since the start 2002, largely for the same reasons.

Adjusted for inflation, oil is at or near the prices of the early 1980s. At that time, following the Iranian revolution and the outbreak of the Iran-Iraq war, oil traded in the high $30-a-barrel range, the equivalent of between $92 and around $103 a barrel in current prices, depending on the contract cited and the inflation calculation used.

Retail gasoline prices have not risen as fast as oil prices over the last few months, largely due to weak demand.

But with oil prices so high, gasoline is beginning to catch up. The national average price for a gallon of regular Wednesday was about $3.05 a gallon, a penny less than last month but about 30 percent higher than the same time last year, according to the motorist organization AAA.
(source money.cnn.com)

Apple working to bring iPhone to Japan

2007-12-20T08:25:00.000+02:00

Consumer tech giant is negotiating with Japan's top mobile phone carrier, but they're said to be at odds over how much subscriber revenue Apple should get.

Apple Inc. is negotiating with Japan's top mobile phone carrier to launch the iPhone in Japan, though the cut of subscriber revenue that Apple wants has been a sticking point, according to a report published Tuesday.

NTT DoCoMo spokesman Shuichiro Ichikoshi said company President Masao Nakamura met recently with Apple Chief Executive Steve Jobs. Shuichiro declined to comment further.

The Wall Street Journal, citing unnamed people familiar with the matter, reported Tuesday that Jobs and Nakamura discussed launching the iPhone in Japan.

Apple (AAPL, Fortune 500) has said it plans to launch the device in Asia in 2008 but has not provided details.

NTT DoCoMo (DCM) had nearly 53 million subscribers and commanded more than half of Japan's mobile phone market at the end of September, but has struggled to add new users in recent months amid fierce competition from KDDI Corp. and Softbank Corp., (SFTBF) which have slashed rates and launched aggressive sales promotions.

Apple and NTT DoCoMo are still negotiating the terms of a deal, with one stumbling block being Apple's demands to receive the same percentage of subscriber revenue from NTT DoCoMo that it receives from other carriers, according to the Journal.

If a deal with NTT DoCoMo falls through, Apple is also talking with Softbank, according to the report.

Apple spokeswoman Jennifer Bowcock declined to comment.

The introduction of the combination iPod-cell phone-Internet surfing device to the world's second-largest economy would be a tremendous boon for Cupertino-based Apple, which hopes to sell about 10 million iPhones by the end of 2008.

Apple has sold more than 1.4 million iPhones since they went on sale June 29 in the United States. Subsequent launches in Europe have boosted sales and sparked a legal fight over Apple's exclusive use of T-Mobile, part of Deutsche Telekom AG (DT), as its wireless provider in Germany.

Apple's strategy thus far has been to pick an exclusive mobile operator for each region: AT&T Inc (T, Fortune 500). in the United States, O2 in Britain, T-Mobile in Germany and France Telecom's Orange wireless arm in France.

Last month, the chairman of China Mobile, China's biggest mobile services operator with nearly 350 million subscribers at the end of September, revealed the company was in talks with Apple to bring the iPhone to China.
(Source money.cnn.com)

Cuban: Quieter and moving closer to Cubs

2007-12-17T11:17:00.000+02:00

Dallas Mavericks owner Mark Cuban has toned down his act as he tries to convince baseball's powers to let him buy a storied

How do you get famous NBA bad-boy owner Mark Cuban to shut up and play nice? Simple: Dangle in front of him the chance to buy one of the most attractive franchises in sports.

Two sources familiar with the sales process of the Chicago Cubs confirmed to CNNMoney.com that Cuban is one of a handful of bidders who have been cleared by Major League Baseball to look at the Cubs' books.

Cuban has been identified as one of the bidders for the Chicago Cubs for many months. Now, as he moves closer to the endgame, the Dallas Mavericks owner has become the model of decorum that NBA Commissioner David Stern probably never thought he'd live to see.

Cuban and the other bidders who have been approved to see the financials - including J. Joe Ricketts, the founder of TD Ameritrade (AMTD), and John Canning, chairman of private equity firm Madison Dearborn Partners - are still waiting to see the books from the Cubs' current owners, the media conglomerate Tribune Co. (TRB, Fortune 500)

Estimates are that the Cubs could bring between $750 million to $1 billion, and the price would go even higher if the deal includes the company's interest in cable networks that carry the teams' games. Wrigley Field could bring in hundreds of millions of dollars more. It thus is poised to be the richest sale in U.S. sports franchise history, dwarfing the bargain-basement price of the $280 million Cuban paid for the Mavericks in 2000.

The Tribune Co., which is selling assets as part of its own sale to Chicago real estate developer Sam Zell, announced Wednesday that it expected to complete the sale of the team in the first half of 2008. A successful bidder might not be identified even by the start of spring training.

The outspoken Cuban once said the head of officiating in the NBA was not qualified to run a Dairy Queen. He also has been hit with a series of fines by the league for his comments.

But he hasn't been fined since June 2006, when his comments about officiating in the NBA finals that his Dallas Mavericks lost cost him $250,000. And his other public comments are far milder than you would expect from him.

When he stopped by CNN the other day, he wouldn't say word one about his interest in the Cubs or baseball, or even comment on the general economics of the sport compared to the salary-capped NBA. And he had almost nothing but good things to say about the NBA leadership.

He said if he had to give a letter grade to the way the business side of the league is being run, he'd give it a B-plus. When I suggested that was a better grade than you'd give someone unable to manage a Dairy Queen, he grimaced and said he wasn't grading the quality of officiating. But he also clearly wasn't about to go down that road again.

"That was six years ago," he said about the Dairy Queen comment.

And while he'd like to see the NBA step up domestic marketing, particularly in the offseason, he raved about the league's overseas growth and online offerings.

"I think internationally, we're perfect," he said.

Even his famously noisy blog has quieted down, at least as it relates to the NBA. The former dot-com billionaire might criticize Google (GOOG, Fortune 500), YouTube and peer-to-peer technology. But the only criticism of the NBA on blogmaverick.com in the last month questions why Maverick player Devin Harris isn't on the All Star ballot, not the type of thing that will get folks in NBA offices upset.
Mark Cuban wants a little R-E-S-P-E-C-T

Cuban was at CNN to talk about Seats for Soldiers, a charity he's involved with that gives court-side seats to U.S. servicemembers returning from Iraq and Afghanistan. That night he showed up at the Mavericks-Knicks game at Madison Square Garden and even passed up an opportunity to take a shot at the Knicks' troubled management when asked by local sportswriters.

All of this is likely the result of the realization that unlike his 2000 purchase of the Mavs, when his dollars did all the talking that matters, his effort to buy the Cubs will at least partly depend on whether he is deemed acceptable by baseball Commissioner Bud Selig and the other baseball owners.

Rival bidder Canning is a minority owner of the Milwaukee Brewers, the club that Selig used to own. And Canning has been described in other reports as a longtime friend and business partner.

Cuban probably has the dollars he'll need to buy the Cubs. Forbes estimates his net worth at $2.6 billion. What he also has to show is that he has the temperament that MLB will want to see.

He's never going to be confused with some low-profile team owners. He does blog and e-mail with fans. He appeared on "Dancing with the Stars" this fall. He still gets excited when watching a game at courtside.

Just don't expect to see him live up to the more outrageous parts of his reputation, at least for the next few months.
(Source money.cnn.com)

Google invades wiki territory

2007-12-15T12:32:00.000+02:00

Search giant's upcoming service, "knol," will pose a challenge to nonprofit Wikipedia.

Google is working on a new Internet encyclopedia that will consist of material submitted by people who want to be identified as experts and possibly profit from their knowledge.

The concept, outlined late Thursday in a posting on Google's (GOOG, Fortune 500) Web site, poses a potential challenge to the nonprofit Wikipedia, which has drawn upon the collective wisdom of unpaid, anonymous contributors to emerge as a widely used reference tool.

Google is calling its alternative "knol" - the Mountain View-based company's shorthand for a "unit of knowledge."

For now, submissions are by invitation-only as Google fine-tunes the system, but the Internet search leader said it will eventually publish articles by all comers.

"There are millions of people who possess useful knowledge that they would love to share, and there are billions of people who can benefit from it," Ubi Manber, Google's vice president of engineering, wrote in the company's posting about the new service. "We believe that many do not share that knowledge today simply because it is not easy enough to do that."

Since it was founded on the same knowledge-sharing premise six years ago, Wikipedia has compiled 2.1 million English-language articles as well as millions more in dozens of other languages. The topics cover everything from Albert Einstein's theory of relativity to video games, such as "Beavis and Butt-head in Virtual Stupidity."

Wikipedia attracted 56.1 million U.S. visitors in October, making it the eighth most popular Web site, according to comScore Media Metrix. Google's properties, which include video-sharing site YouTube, drew 131.6 million U.S. visitors, second only to Yahoo Inc.

In a Friday interview, Wikipedia founder Jimmy Wales downplayed Google's latest move. "Google does a lot of cool stuff, but a lot of that cool stuff doesn't work out so great," he said.

Google's flops include a service that used to hire researchers to track down hard-to-find answers for befuddled Web surfers. The feature never took off in its four-year existence, prompting Google to pull the plug last year.

While Google tinkers with its encyclopedia, Wales already is poised to invade Google's turf with a Wikia search engine scheduled to debut later this month. The search engine will be operated by Wikia Inc., Wales' for-profit venture.

The Googlepedia, as some observers are already calling the new offering, will differ from Wikipedia by identifying who wrote each article and striving to reward the authors by giving them a chance to make money from Google's lucrative advertising network.

Critics say Wikipedia's cloak of anonymity has made its articles more vulnerable to mischief and other abuses that have led to inaccuracies.

Citizendium, an Internet encyclopedia launched earlier this year, also insists on identifying the writers of its articles. But, unlike Google, Citizendium relies on a collaborative editing process to verify the accuracy of its articles.

"Google will not serve as an editor in any way, and will not bless any content," Manber wrote. "All editorial responsibilities and control will rest with the authors."

Google is hoping to keep the contributors honest by allowing visitors to rate the entries and leave comments.

That won't be enough, predicted Larry Sanger, Citizendium's editor-in-chief who also helped start Wikipedia.

"Knol is apt to produce precisely the same sort of uneven content, with many of the same abuses, that Wikipedia has," Sanger wrote in a posting on Citizendium's site. "Without actual editors, the same sort of problems about misleading and damaging information are apt to plague knol."

Google, which is expected to earn more than $4 billion this year, also wants to make money off its encyclopedia. Although the resource will be available for free just like Google's search engine, the company wants to place ads related to the topics covered on each page.

The advertising is an option being left up to the person submitting an article. Google is trying to persuade the writers to participate by guaranteeing they will receive a "substantial" share of the revenue.

The profit incentive could turn Google's encyclopedia into a magnet for articles about highly commercial subjects instead of more academic topics, Wales predicted. "You may see an awful lot of articles about Viagra."
(Source money.cnn.com)

African Leaders Refuse to Accept EU's Trade Deal

2007-12-14T23:57:00.000+02:00

Most African leaders have stood together at the 2nd European Union (EU)-Africa Summit and refused to accept the EU´s proposed Economic Partnership Agreements (EPAs) signing instead interim trade agreements.

The summit which was attended by 67 heads of states from the two continents concluded on Sunday with the signing of the Joint Strategy set out by Africa and the EU, minus the initially proposed EPAs.

Heads of states including President Thabo Mbeki and Senegalese President Abdoulaye Wade refused to accept Economic Partnership Agreements set out by the European Union and asked that different trade agreements be negotiated.

"We are not talking any more about EPAs, we've rejected them...we're going to meet to see what we can put in place of the EPAs," President Wade told reporters on the second and final day of an EU-Africa summit in Lisbon.

Mr Wade dismissed pressure for new trade deals by 31 December, when a waiver by the World Trade Organization on preferential trade arrangements for developing countries expires.

Instead, by the close of the summit, interim economic agreements were put in place for signing in order to make sure that trade between the continents would not be disrupted by 1 January 2008.

At the press conference, only two heads of states from Africa were left to sign those agreements, according to the President of the EU Commission, Jose Barroso.

"What we are now initialing are not the EPAs, the discussion around the EPAs is ongoing, we understand the difficulties that exist when it comes to a new system of trade," he said.

He added that the formulation of the interim trade agreements was a good illustration of the spirit of partnership between the two continents.

Mr Barroso said the summit had resulted in eight concrete partnerships on peace and security, climate change and migration, amongst others.

"I now expect political leaders from the two continents to match their commitments," he said.

Mr Barroso added that climate change and good governance were also key issues that had been discussed at the summit along with trade.

Speaking on Saturday President Mbeki highlighted the need for good governance and human rights and said there was a great need to address the issue of migration.

"We continue to face challenges relating to governance in Africa, as this is the case with other regions of the world," President Mbeki said.

"However, to put the matter frankly, by far, the biggest challenge we face in terms of implementing our programmes on good governance and human rights is the issue of resources."

President Mbeki, current mediator between the Zimbabwean ruling party and main opposition, also said German Chancellor Angela Merkel was out of touch with the political situation in Zimbabwe after she criticised Zimbabwean President Robert Mugabe at the start of the summit.

Ms Merkel told leaders present that the situation in Zimbabwe was damaging the new image of Africa.

Meanwhile, Mr Barroso commended President Mbeki on the job he was doing as mediator in Zimbabwe.

Portuguese Prime Minister Jose Socrates said the summit was an extraordinary event and the fact that it was held was evidence that both continents had been able to overcome the impasse which had bogged them down over the last few years.

Mr Socrates said the summit was a milestone for Africa and the EU and a Lisbon Declaration would definitely result from the meeting.

He said all goals that had been set were achieved for the summit.

"We have adopted a joint strategy, an action plan and a monitoring mechanism - an agenda for which we will face the challenges," said Mr Socrates.

He added that there would definitely be another meeting soon and that Libya had already offered to host the next such summit.

African Union chairperson, Ghanaian President John Kufuor agreed with Mr Socrates saying that regular meetings were very important.

He also said the summit will mark a radical change in the relationship between Europe and Africa.
(Source allAfrica.com)

GM dominates 'Car of the Year' nominee list

2007-12-13T06:21:00.000+02:00

General Motors products capture four of six nominations in two categories for prestigious auto journalists' award.

General Motors looks like it's on track to win both the Car and Truck of the Year awards at the 2008 North American International Auto Show in Detroit next month.

The list of finalists for the awards was announced Wednesday and GM makes two out of the three products nominated for each award.

A sweep would be the second in a row for GM (Charts, Fortune 500). At the the 2007 show, it took both awards with the Saturn Aura and Chevrolet Silverado.

The nominees for 2008 North American Car of the Year are the Cadillac CTS, Chevrolet Malibu and Honda Accord. The Accord is a product of Honda Motor Co. (Charts)

Nominees for the Truck of Year are the Buick Enclave, Chevrolet Tahoe Hybrid and Mazda CX-9. Mazda is controlled by Ford Motor Co. (Charts, Fortune 500)

The winners are selected by a jury of 47 automotive journalists from the United States and Canada representing a range of media outlets including Fortune magazine, Edmunds.com, Road & Track and Chicago Tribune.

To be eligible, vehicles must be "all new" or "substantially redesigned" from the previous model year. The journalists selected the three cars and three trucks from a field of 13 cars and 15 trucks.

There will now be a second round of votes to select the two winning vehicles from among these six.

The winners will be announced Jan. 13 at the North American International Auto Show, also known as the Detroit Auto Show.

A GM sweep would mark the third year in a row in which one company won both awards. In 2006, Honda won both with the Civic and Ridgeline. That was the first time any company had done so since the awards began in 1994
(Source money.cnn.com)

Toyota debuts robo-maestro

2007-12-12T06:10:00.000+02:00

The Japanese automaker plans to make robots a core business, taking on the likes of Honda and Fujitsu.

Compared to a virtuoso, its rendition was a trifle stilted and, well, robotic. But Toyota's new robot plays a pretty solid "Pomp and Circumstance" on the violin.

The five-foot-tall all-white robot, shown Thursday, used its mechanical fingers to press the strings correctly and bowed with its other arm, coordinating the movements well.

Toyota Motor Corp. has already shown robots that roll around to work as guides and have fingers dexterous enough to play the trumpet.

Toyota President Katsuaki Watanabe said robotics will be a core business for the company in coming years. Toyota will test out its robots at hospitals, Toyota-related facilities and other places starting next year, he said. And the company hopes to put what it calls "partner robots" to real use by 2010, he said.

"We want to create robots that are useful for people in everyday life," he told reporters at a Toyota showroom in Tokyo.

Watanabe and other company officials said robotics was a natural extension of the automaker's use of robots in manufacturing, as well the development of technology for autos related to artificial intelligence, such as sensors and pre-crash safety systems.

Watanabe presented a vision of the future in which wheelchair-like "mobility robots" - also displayed Thursday - would offer "bed-to-bed" services to people, including the elderly and the sick, just like cars take people "door-to-door."

In a demonstration, a man got on the mobility robot, a motorized two-wheeled chair, then scooted around. Toyota showed how the moving machine could go up and down slopes and go over bumps without upsetting the person sitting on the chair because the wheels could adjust to such changes.

The Japanese government has been recently pushing companies and researchers to make robotics a pillar of this nation's business.

Toyota, maker of the Prius hybrid and best-selling Camry sedan, has been a relative latecomer in robots compared to its domestic rival Honda Motor Co., as well as other companies, including Hitachi (Charts), Fujitsu and NEC.

Honda has been working on robots since 1986, recognizing the technology as critical for its future in delivering mobility for the future. It is showing the latest technology in its own robot - the Asimo humanoid - next week.

Asimo - which stands for Advanced Step in Innovative Mobility and is play on the Japanese word for "legs" - first became available for rental in 2000. It's considered one of the world's most advanced humanoids. Seen often at Honda and other events, it can walk, even jog, wave, avoid obstacles and carry on simple conversations.

The 51-inch-tall bubble-headed Asimo looks like a real-life child in a white space-suit, as it has grown smaller and lighter in size with innovations over the years.

Trying to one-up its rival, Toyota has been aggressively beefing up its robotics team. In August, it announced that it was teaming up with Sony (Charts), which discontinued its Aibo dog-like robot last year, to develop an innovative, intelligent, single-seat vehicle.

Toyota said it is working with universities and its group companies to speed up robotics development, but ruled out a collaboration with Honda for the time being.

Toyota Executive Vice President Takeshi Uchiyamada said technology that Toyota has developed in industrial manufacturing and automotive engineering will "spiral up" into robots.

"We hope to create a robot that highlights Toyota's strengths," he said.

Also Thursday, the automaker showed its Robina robot, a legless robot-on-wheels, which has already been working as a guide at Toyota's showroom at its headquarters since earlier this year.

In the demonstration, Robina, which has a head shaped like a bobcut hairstyle, interacted smoothly with a person, including carrying on a simple dialogue. It also showed how it could sign its name in script holding a fat felt-tip pen with its three fingers.

"I am 120 centimeters tall and how much I weigh is a secret," the robot said clearly in a feminine voice. "I know a lot about the Prius."

Koji Endo, auto analyst with Credit Suisse in Tokyo, said it was still unclear whether Toyota's robotics will bear fruit as a real business. But he praised Toyota for trying to branch into new sectors, noting it's likely to produce innovations that will in the long run be a plus for its auto business.

Besides robots, Toyota has a housing operation and is carrying out research in biofuels. Honda is also expanding outside autos, including a jet business, and has long had a motorcycle unit.
(Source money.cnn.com)

Sony bringing back the 'wow factor'

2007-12-12T06:06:00.000+02:00

After telling reporters that the company has fixed its financial problems, CEO Howard Stringer reveals plans for PS3 Network, OLED TVs, but no robots.

Planned networking services for the PlayStation 3 video game console are a key part of Sony's new drive for innovation, Chief Executive Howard Stringer said Tuesday.

Stringer, who took over as Sony's chief executive in 2005, also said televisions using new panels called OLED and the Rolly music player with robotics technology were strong products that showed Sony is back after its restructuring efforts.

Such products "bring back some of the wow factor" that is a Sony trademark, he said, speaking to reporters at Sony's headquarters.

Stringer said the massive three-year cost-cutting drive he began to turn around the electronics and entertainment company had gone well, and immediate financial problems had been solved.

"The next cycle is actual innovation," he said, referring to software and other networking products he said will deliver growth for Sony.

Sony's network service, now used to download video games for the PlayStation 3, will be expanded to offer other kinds of content. He did not give details or a timetable.

Besides its core electronics business, Sony owns the Hollywood movie studio that made the "Spider-Man" series. Sony also has a joint venture in music with Bertelsmann AG that has Bruce Springsteen, Justin Timberlake and Beyonce Knowles under its labels.

Such entertainment content will likely be offered as downloads for the PlayStation 3 in Sony's effort to catch up with U.S. companies like Apple (Charts) and Microsoft (Charts, Fortune 500), which dominate in software. But Stringer said the network service will be open to outsider content.

When Welsh-American Stringer took the helm at Sony, the company - once a symbol of innovation with its Walkman line of personal stereos - had been stumbling, falling behind in flat-panel TVs and digital music players.

The three-year turnaround plan that Stringer engineered - which included massive job cuts, plant closures and dropping of unprofitable businesses -- will be completed in March next year.

The company has sold off part of its stake in its financial unit, which had a bank and insurer. Sony has also sold to Toshiba its advanced computer chip operations for making the "Cell" chip for the PlayStation 3.

Stringer talked proudly about the OLED TV and Rolly.

Sony began selling this month in Japan the world's first television for the commercial market with an organic light-emitting diode display, or OLED. The 11-inch display on the TV called XEL-1 measures just 3 millimeters, or 0.12 inches, thick, and delivers clear vivid images.

Rolly, which went on sale earlier this year, is a rolling dancing, egg-shaped music player that flaps its lid-like ends and flashes lights.

Stringer made clear he planned to stay on as chief executive and steer the next three-year plan.

"Am I going to be here for the next three years? And the answer is, 'Yes,"' he said.

Stringer was also upbeat about Sony's recent operations, saying that PlayStation 3 sales were going strong worldwide, boosted by price cuts and helped by a shortage of the rival Wii console from Nintendo.

As many as 200,000 PS3 machines were selling a week in Europe, while 40,000 to 50,000 PS3s were selling a week in Japan, Stringer said.

Stringer acknowledged it was still unclear which next-generation video platform will emerge the winner, although he said Blu-ray disc, the standard Sony backs, appeared to be ahead of the competing HD DVD format, backed by Toshiba and others.

Hollywood studios' response has been mixed in releasing films in either format or both.

"We have momentum," he said. "But that's all we have at the moment."

Stringer said Sony (Charts) has no plans to revive its robots business, such as the Aibo pet robot, because of the big investment required and competition against Toyota Motor Corp (Charts)., Honda Motor Co (Charts). and others.

"You always have to pick your bets," he said. "We made the decision two and a half years ago when we were confronting negative margins in the electronics company that if something had to go in the short term, that was it."
(Source money.cnn.com)

Universal Sets Music Free On Imeem

2007-12-11T07:14:00.000+02:00

The beleaguered music industry is beginning to show more enthusiasm for free, advertising-supported business models. The latest sign: Universal Music Group has agreed to provide its songs to online social network imeem.

Imeem now boasts deals with all four major record companies, including Sony BMG Music Entertainment, Warner Music Group (nyse: WMG - news - people ) and EMI Group, all of which have already inked deals with the social network.

It's a sharp turnaround from earlier this year, when none of the majors were willing to sign on to imeem's new ad-supported interactive service. In fact, Warner sued imeem, arguing that by allowing its members to upload and share MP3s of Warner music, it was infringing on its copyrights.

But in July, Warner dropped its suit and struck a partnership with imeem under which the major label allowed free, full-song streaming of its music in exchange for a cut of imeem's advertising revenue. Sony-BMG Music reached a similar deal with imeem in September, followed by EMI in October and now Universal. A source familiar with the Universal pact said the label is also receiving a small payment each time one of its songs is streamed.

Fueling the shift is the music industry's continuing struggle with sliding sales of compact discs, which still account for the vast majority of their recorded-music sales. Revenue from paid music downloads continues to grow, but isn't close to making up the difference.

Imeem isn't the first ad-supported music service to gain the support of all four major labels. Universal, Sony BMG, Warner and EMI have also been making their music available to ad-supported music downloading service Ruckus. Ruckus had an early advantage over other services in securing the majors' cooperation because it targeted colleges and universities, where illegal music downloading is a particularly serious problem.

Whether imeem succeeds will depend on how robust a community it can build on its site. It claims to have 19 million users; deals with major labels and leading independent music companies will help it grow that audience further.

In the meantime, imeem says it has signed advertising deals with major marketers such as Apple (nasdaq: AAPL - news - people ), Nike (nyse: NKE - news - people ), Microsoft (nasdaq: MSFT - news - people ) and Toyota (nyse: TM - news - people ). Imeem's label partners are also beginning to explore promotional opportunities on the site. For instance, Warner Music has created an imeem page to promote the release of Mothership, a new Led Zeppelin greatest hits collection. Warner has posted a selection of live concert videos on the page and is holding a Zeppelin trivia poll contest.

When imeem members upload songs and videos by partner-label recording artists, other users can stream them in full. For the moment, imeem has an advantage over News Corp. (nyse: NWS - news - people ) social-networking giant MySpace, where Universal has restricted its song and video clips to 90 seconds, citing the absence of a licensing deal. Universal also filed a copyright infringement suit against MySpace in 2006.

In a statement, Universal Music Chairman and Chief Executive Doug Morris made it clear why his company was treating imeem and MySpace differently.

"Imeem has developed an innovative way to make our artists' music a central part of the social-networking experience," Morris said. "More importantly, they've done so the right way--by working with [Universal] to provide an exciting musical experience for consumers, while ensuring that our artists are fairly compensated for the use of their works."
(Source forbes.com)

The Business Of Basketball

2007-12-09T23:26:00.000+02:00

You could not blame basketball fans for thinking the National Basketball Association is in big trouble. Just look at the news that has dominated the headlines the past several months. Ratings for the NBA Finals between San Antonio and Cleveland hit an all-time low. One of the league’s biggest stars, Kobe Bryant, went public with demands to be traded from the Los Angeles Lakers. A betting scandal involving a referee has scarred the league’s image. Seattle filed a lawsuit against the SuperSonics to prevent the team from leaving town. The scandalous New York Knicks, a vital market for the NBA, have proven to be completely inept both in a court of law and on the court.

But numbers compiled by Forbes tell quite a different story. The value of the typical NBA franchise rose 6% this year, to $372 million, as the Knicks became the first basketball team worth $600 million. NBA teams posted an average profit (in the sense of earnings before interest, taxes, depreciation and amortization) of $9.8 million, on revenues of $119 million. This is the highest income since Forbes began tracking basketball team finances 10 years ago.

The NBA's financial success is a result of three components: a steady increase in gate receipts; bigger TV deals, despite sagging ratings; and a collective bargaining agreement that tightly controls spending on players.
By The Numbers: The NBA's Most Valuable Teams

Ticket sales are not sexy--like streaming basketball games on the Internet or opening up offices in China--but they still pay the bills for teams. The NBA remains a gate-driven league. Gate receipts for the league rose 6% last season to $1.2 billion. At 33% of the league's $3.6 billion in revenue, it represents the NBA's largest revenue stream; national broadcast deals are next up at $1 billion or 28%. Last season, the league set an attendance record with 21.8 million fans, filling arenas to 92% capacity.

TV execs hoped LeBron James' first trip to the NBA Finals would goose falling ratings. But the 2007 Finals, which featured two small-market teams and a four-game sweep, proved to be a ratings disaster. The record-low rating of just 6.2% audience share was 27% lower than the previous year's Finals rating.

Yet two weeks after the Finals wrapped, the NBA and ESPN, ABC and TNT announced an eight-year, $7.4 billion extension to the agreement set to expire after the 2007-2008 season. It was a record both in terms of length and dollars for a national NBA TV deal, representing a 21% monetary increase over the current contract. The networks justified the increased payout by pointing to the value of the digital rights in the agreement. Networks continue to lust after sports programming because sports remain one of the few Tivo-proof options on television.

The NBA has had a salary cap for more than 20 years. It is a soft cap though, and usually exceeded by teams--only two team payrolls are below the cap this season. Starting with the 2001-2002 season, a new system was put in place as a result of a collective bargaining agreement between owners and players. This system rewarded owners who kept spending on players in check. Last season the Charlotte Bobcats and Utah Jazz both went from showing a loss to posting a profit thanks to a $6.3 million check from the league for keeping player spending under control.

One component of the new system is an escrow tax. The escrow tax is designed so that teams only spend 57% of league-wide revenues on player salaries. Last season, players contributed 9%, or $177 million, of their $2 billion salary haul to an escrow account. That money is split between owners and players, so total player salaries and benefits are reduced to 57% of league-wide revenue. Last season, owners divvied up $155 million of the escrow account, while $22 million went back to the players.

The second component of the system is a luxury tax. The luxury tax threshold is proving to be much more important than the salary cap number, as teams are loathe to pay the tax. Teams must pay one dollar in tax for every dollar they spend on players over a certain threshold--last season, it was $65.4 million. The tax is a double-whammy in that tax-paying teams are ineligible to receive distributions from the tax revenues collected. Five teams paid the tax last year, with the Knicks leading the way with a $45 million tax bill. The other four taxpaying teams chipped in $10 million.

The Knicks, like the New York Yankees in baseball, are its league's most valuable franchise, but still managed to post the biggest operating loss in the NBA last year. The reasons are similar: Both teams spend big money on players and are looking to build asset values of their teams as well as media properties. The Knicks spent $166 million on players last season, including luxury taxes, and lost $42 million--the $18.5 million severance for coach Larry Brown didn't help the bottom line either. In contrast, the Chicago Bulls spent $59 million on players and earned a profit of $59 million.

Several former bottom-feeding teams in the NBA saw big gains in our 2007 valuations. The Cavaliers, who rode on LeBron James' back to the NBA Finals, are now worth $455 million, up 20%. The Cavs also gained as a result of a new cable deal with FSN Ohio, worth $25 million a year on average--more than double the old contract. The agreement kicked off last season.

The Toronto Raptors' value jumped 18%, thanks to a surging Canadian dollar and better play on the court, where the team's win total went from 27 to 47. The Golden State Warriors value rose 16% thanks to improved play, and the value of the Orlando Magic increased 14% to $322 now that a new arena for the team has been approved.
(Source forbes.com)

Detroit flexes its muscle

2007-12-08T23:44:00.000+02:00

The day before lawmakers in Washington agreed on a plan to dramatically increase average fuel economy requirements for car companies, Chrysler Corp. had a little announcement of its own.

The company announced pricing for the Dodge Challenger coupe, which will hit American roads this summer with a 425-horsepower, 6.1-liter, V8 engine. The $37,995 price-tag doesn't include an expected gas-guzzler tax that could add as much as $2,100 to the final figure.

General Motors won't be far behind with itsresurrected Chevrolet Camaro expected to go on sale early next year. For its part, Ford is following up on its 500-horsepower Shelby GT500 with the 540-horsepower Shelby GT500KR. (Official fuel economy estimates are unavailable for these cars because they are not yet in production. Based on comparisons with current models, overall fuel economy will probably be in the mid-teens.)

This may raise the question: What in the green world are these companies thinking?

Actually, if you keep your eye on the big picture, it's not as crazy as it might seem.

(Source money.cnn.com)

Get the lowest price on anything

2007-12-07T23:16:00.000+02:00

Before you plunk down hard-earned cash, you can quickly see which stores are offering the best deals.

In the world of brick-and-mortar retailing, finding the best price is often a simple matter of driving to Costco or Wal-Mart.

But in Web world, hundreds of retailers and mom-and-pops are fighting one another, and your fellow shoppers have battleground intelligence to share.

When you're on a bargain hunt

Hit the "Hot Deals" forums at FatWallet.com and SlickDeals.net. Though both sites have a particular emphasis on pricey electronics, users regularly uncover and post discounts that run past 50% of the retail price on all sorts of items.

A recent post on SlickDeals pointed shoppers to a 50%-off sale at Kohls.com.

Another alert user followed up with a coupon code - think of it as the clip-out coupon of the digital world - to give another 20% off when entered in the checkout window. If you got in on the deal, you could have walked away with a $60 pair of casual shoes for $24 plus tax and shipping. The catch: The better the deal, the quicker the forum's users will wipe out a Web site's inventory.

When you're researching a product

Check out the reviews on Amazon.com. Pay particular attention to posts written by users who have a badge under their names designating them a "top reviewer." You can be more confident that their reviews are legitimate and not written by a seller.

You want a critical mass of reviews - at least 25 or so.

Another good source of customer reviews: Epinions.com.

Once you know what you want

Start at comparison shopper PriceGrabber.com. Search for your item and you'll get back quotes from major retailers and small outfits. Make sure you disclose your zip code, so the site can factor in tax and shipping.

Note the two or three lowest listed prices, then go to SlickDeals' coupons section and check to see whether any discounts are available that would cut your price further.

If you're truly industrious, you can earn a small rebate on your purchase by buying through the Cash Back section of Ebates.com or FatWallet.com. Merchants pay those sites a commission, which they share with you. Expect to save another 1% to 5%, depending on the store.
(Source money.cnn.com)

RIP Facebook?

2007-12-05T09:34:00.000+02:00

A lot of people say that Facebook has jumped the shark. That’s flat out wrong. In fact, Facebook is now being devoured by the shark. There’s so much blood in the water, it’s attracting other sharks. And if Facebook’s not careful, one of them is bound to come along and finish it off. I’ve never seen anything like it in the annals of fast-rising tech companies that fail.

The really weird part of this story is that there’s absolutely nothing wrong with Facebook. It works as well as it ever has, and many of the people who use it (my kids for instance) are unaware of the worsening situation about its privacy-invading Beacon social ads scheme that tracks people’s web-surfing habits even when they’re not on the site. That’s bound to change. The market is fickle, something better is in the wings, and as soon as it arrives, the alienated and angry mob will race to it. Delphi’s errors begat Prodigy and its errors begat AOL, which was crushed by the Web.

What’s surprising here is the speed with which this thing is coming undone — and the ease with which it could have been avoided. What’s harming Facebook - perhaps to a terminal degree - is enormously bad PR. For a social media company, these folks don’t understand the first thing about communication; they have alienated the press by being arrogant, aloof and dishonest. Their idea of press relations is sending a stupid message to a What’s New at Facebook Group that directs you to another website for a canned statement.

And it is killing them. That bad press extends from the blogosphere to mainstream media. No one who writes about Facebook likes it anymore. And while that might seem insidery — who cares what the press thinks? — it’s having dire repercussions. For one thing, advertisers care what the press thinks. Bad press is causing advertisers to jump ship. And that’s begetting even more bad press. It’s the opposite of a virtuous circle; it’s an economy being undone.

It could have all been avoided with a smart adult running things. Facebook has no old hands in its corner, no advisers to tell the kids how to behave. Netscape had its Jim Barksdale, Google (GOOG) its Eric Schmidt. This company has no one babysitting it. And watching it now is like watching an unattended child play with a pack of matches in a wooden house.

Facebook’s problems are well known. They started when young Zuckerberg stood up and made preposterous statements to Madison Avenue — who let him say that stuff? What genius wrote those immortal lines and had such a tin ear for how it would play? The situation worsened when the company compounded its hubris with lies. Its ongoing contempt for the press and disregard for the First Amendment doesn’t help. And now, it has no one in its corner that anyone in the media trusts.

Facebook has turned all the people who rooted for it into a lynch mob. In the space of a month, it’s gone from media darling to devil. The most interesting thing about Facebook right now is who will replace it.

(source Josh Quittner money.cnn.com)

Motorola Investors Say Brown May Not Restore Cachet

2007-12-03T21:52:00.000+02:00

Greg Brown takes over the top spot at Motorola Inc. boasting 25 years in the technology industry and a resume stacked with operations expertise. That's precisely why some investors wanted someone else.

The decision last week to replace Ed Zander with Brown, Motorola's current president, continues a tradition of leaders who know how to run the mobile-phone maker's manufacturing and distribution. Shareholders may have preferred a chief executive officer who can excite customers and employees with new products that juice up sales.

Zander, a former engineer, couldn't do that and Brown, trained as an economist, may have the same problem, said Joan Lappin, a fund manager who had called for Zander's ouster.

``I don't see him as a person who is going to come in and razzle-dazzle the troops,'' said Lappin, president of Gramercy Capital Management in New York. She sold her Motorola shares last year and isn't buying them back. ``He's kind of a bland guy.''

Zander, 60, will step down in January after he failed to produce a successful follow-up to the Razr, now three years old and Motorola's best-seller. That led to three quarters of falling sales and market share losses. Brown, 47, faces the challenge of luring customers away from Apple Inc.'s iPhone, Research In Motion Ltd.'s BlackBerry, and new music and video devices from Nokia Oyj and Samsung Electronics Co.

`Disappointed'

``There are some investors who are disappointed that they didn't bring in somebody from the outside,'' said Raimundo Archibold, an Kaufman Brothers LP analyst in New York. He recommends buying Motorola shares and owns them himself. ``This would have been an opportunity to bring in some fresh blood.''

Brown has marketing experience from his time at AT&T Inc., where he worked more than 20 years ago. He also oversaw marketing as head of four Motorola business units, spokesman Chuck Kaiser said.

In an interview, Brown said the top challenge is to ``regain the momentum'' of the handset business. ``We've got to get that organization more profitable, refresh the product portfolio.''

Motorola, in Schaumburg, Illinois, rose 32 cents to $15.97 Nov. 30 on the New York Stock Exchange after announcing the decision, and slid 19 cents to $15.78 at 9:34 a.m. New York time today. The shares had fallen 22 percent this year before today.

The stock would have advanced more had Motorola picked an outsider, said Brad Williams, an analyst at MTB Investment Advisors in Baltimore. Apple and Waterloo, Ontario-based Research In Motion have more than doubled this year. Nokia has climbed 76 percent.

While Motorola started selling a new version of its Razr device, the handset was too similar to the old design to entice shoppers, analysts said. Motorola said last month that it had sold 900,000 units of the new Razr.

IPhone, BlackBerry

``Brown is not what they're lacking right now,'' said Williams at MTB, which manages $11 billion. His company sold its Motorola shares this year. ``He is not a product-marketing type of person. Look at Apple and RIM, who have more of a consumer focus.''

Williams said he won't buy Motorola stock until the company brings out ``great new products'' and moves beyond the Razr.

At Apple, Steve Jobs continually reinvents his products with new designs and features. Sales of the iPod and iPhone have helped the Cupertino, California-based company eclipse Motorola in market value since Jobs retook the CEO job 10 years ago.

Apple's iPhone, which blends the iPod media player with a Web-browsing mobile phone, sold more than 1.4 million units in three months after its debut in June. Research In Motion, which introduced the BlackBerry Curve video and music phone in May, more than doubled its total sales last quarter. Nokia's N95 camera phone and music devices from Samsung and Sony Ericsson Mobile Communications Ltd. stole sales in Europe and Asia.

Nokia's Lead

Nokia, based in Espoo, Finland, lifted its market share to 38.1 percent of unit sales in the third quarter from 35.1 percent a year earlier, according to Stamford, Connecticut-based research firm Gartner Inc. Samsung rose to 14.5 percent from 12.2 percent, while Motorola fell to 13.1 percent from 20.7 percent.

Motorola should have given ``a very careful look at external candidates'' to revitalize the company, said Paul Meeks, director of research for L.R. Burtschy & Co., a family-owned fund in Charleston, South Carolina. The fund manages $600 million and won't buy Motorola shares until Brown improves results.

``It's more of the same old, same old, with an internal instead of an external candidate,'' he said.

Operations Skills

Brown proved his operations-management skills by producing consistent earnings at Motorola's network division in a time of shrinking customer spending, said Lawrence Harris, an analyst at Oppenheimer & Co. in New York.

He also arranged the $3.9 billion purchase of Symbol Technologies, the second-largest transaction in Motorola's history, and returned the automotive business to profitability before selling it for $1 billion.

Brown will need to hire new talent and build design and marketing teams to develop products that consumers want, said Robert Forman, a partner at executive search firm CTPartners in Menlo Park, California.

``Brown understands how to build things,'' he said. ``He also understands how to distribute products. There might have been another CEO that could have been more consumer-driven.''
(Source bloomberg.com)

Apple’s U.S. Market Share Now 8.1%. Or is it 6.3%?

2007-12-02T20:47:00.000+02:00

After taking a brief October dip in advance of Leopard’s release, Apple’s (AAPL) share of the operating system market grew 3.34% in November to hit a record 6.81%, according to the results of a Net Applications survey issued today.

Microsoft’s (MSFT) Windows in its various flavors continues to dominate with a 92.42% share, as measured by the Web metrics firm. Among the operating systems gathered in the “other” category are Linux (.57%), Apple’s iPhone (.09%), Sony’s Playstation (.02%), SunOS (.01%) and Nintendo’s Wii (.01%).

Net Applications’ monthly surveys do not measure market share in terms of computer systems sold. Rather, they sample data from visitors to some 40,000 websites operated by their clients. As such, their findings are probably better described as a snapshot of installed base taken from a less than random sample. But they do reflect market share trends, and it’s always interesting to compare their results with those from firms like Gartner and IDC, which track quarterly shipments.

Net Applications’ October report, for example, showed Apple with a 6.61% market share. A couple weeks earlier, IDC had calculated Apple’s domestic market share in terms of units shipped in the 3rd quarter at 6.3% while Gartner’s estimate for the same period came in at 8.1%
(source money.cnn.com)

Dell profits up but under target

2007-11-30T10:57:00.001+02:00

Computer firm Dell has seen quarterly profits rise, helped by stronger laptop sales and lower costs for components.

Profits rose 27% to $766m (£371m) or 34 cents a share in the three months to 2 November, up from $601m (27 cents) a share in the same period in 2006.

Analysts said the numbers showed Dell was recovering but that it missed the average 35 cent a share forecast.

Faced with tough rivalry from Hewlett Packard, Dell has been trying to boost sales by selling at retail outlets.

Hewlett-Packard overtook Dell as the number one PC maker during 2006.

"We embarked this year on a long-term strategy to re-ignite growth," said Michael Dell, the firm's founder and chief executive.

He said the results showed "solid progress through investments in five key business priorities - consumer, emerging countries, notebooks, enterprise and small-medium business."

Brent Bracelin, an analyst with Pacific Crest Securities, said the earnings were roughly as expected after allowing for one-off expenses.

But he added: "The disappointment here is that you didn't see a follow-through of revenue upside to earnings upside....but the company is coming out of a two-year slump here and is still in turnaround mode."

Shares in the firm fell 7% in after hours trading. In May Dell outlined plans to sell personal computers through low-cost retailer Wal-Mart, marking a significant change for Dell, which had previously relied only on telephone, mail and internet sales.

Dell said US consumer business sales fell 6% however China, Brazil, Russia and India all saw strong growth.

According to Gartner, Dell shipped about 9.9 million computers worldwide during the quarter, while HP shipped 12.8 million.

The research firm puts Dell's share of the personal computer market at 14.4%, from 15.9% in the same quarter last year and less than HP's 18.6% stake.
(Source news.bbc.co.uk)

The owner of Currys and PC World saw half-year profits fall 26% after poor performance at its PC World and its Italian business, UniEuro.

2007-11-29T07:45:00.001+02:00

Electrical retailer DSG International saw underlying pre-tax profits hit £52.4m down from £70.3m in the first six months to 13 October 2007.

Overstocking of laptops and hardware at PC World contributed to "disappointing" results, it said.

The firm also highlighted the uncertain outlook in many of its markets.

"The economic fundamentals make it difficult to extrapolate trends into the rest of the financial year," said the firm, adding that it was "appropriate to be cautious about the consumer environment".

Sales of flat screen televisions helped its like-for-like electrical sales rise 6% in the UK and Ireland, and grow 4% in Scandinavia but continuing problems in Italy saw them slip by 3% in southern Europe.

Overall like-for-like sales increased 5% over six months.

(Source news.bbc.co.uk)

Citigroup-Abu Dhabi deal: A sign of the times

2007-11-28T08:12:00.001+02:00

Sovereign wealth funds are looking to park more of their $2 trillion with U.S. companies.

Citigroup's newfound $7.5 billion cash infusion from Abu Dhabi's state investment fund may not cure all that ails the embattled bank, but it heralds the growing influence of sovereign wealth funds.

With similar government-owned funds swimming in cash, more iconic U.S. firms like Citigroup may find themselves owned, at least in part, by foreign governments.

Sovereign wealth funds, which act as a country's investment arm, have long been investing money gained through exports or from the sale of commodities such as oil.

But because of their rapidly expanding size, these funds have become harder to ignore.

Located both in the oil-rich Middle East, as well as other nations such as Russia and Singapore, the funds' combined assets under management are expected in the next three years to quadruple in size to $7.9 trillion from $1.9 trillion, according to Merrill Lynch.

While government debt like U.S. Treasuries have long been their investment vehicle of choice, the funds' appetites have grown more complex as they have searched for greater returns, said Jay Bryson, global economist at Wachovia Corp.
Abu Dhabi buys Citi stake

"There are only so many Treasury securities or government bonds out there they can buy, so they are looking to diversify," said Bryson.

This year alone, sovereign wealth funds have gobbled up pieces of a number of U.S. firms. In May, China Investment Corp. purchased a nearly 10 percent stake of the private equity firm Blackstone Group (Charts).

In August, Istithmar, a financing arm of the United Arab Emirates, agreed to buy the department store operator Barneys for $942 million. And earlier this month, Mubadala Development Co., a separate investment arm of the government of Abu Dhabi, acquired a $622 million stake in the chipmaker AMD (Charts, Fortune 500).

Economists argue that investments by sovereign funds are important to the U.S. economy, providing capital to firms such as Citigroup (Charts, Fortune 500) and supporting the dollar. At the same time, the funds have have faced plenty of criticism.

World leaders at the October G7 meeting, worried that the funds may try to wield their investments as a diplomatic tool, called for greater transparency about investments.

Lawmakers in Washington have been equally cautious, despite a recent push by both the White House and some members of Congress to court foreign investors after last year's widely-publicized failure of Dubai Ports World to manage six U.S. ports.

The Citigroup-Abu Dhabi deal got a different reception on Tuesday. In a televised interview, Sen. Charles Schumer (D-N.Y.) said the investment would make the Wall Street firm "stronger."

"We just want to make sure other countries are as open to us investment as we are to them," Schumer said.

Going forward, sovereign wealth funds will most likely try to avoid scrutiny altogether by acquiring small stakes and forgoing management control, similar to the Citigroup-Abu Dhabi deal, said Edwin Truman, senior fellow at the Peterson Institute for International Economics.

"Sovereign wealth funds have learned from their experiences," said Truman.
(Source money.cnn.com)

Kodak Holders Focus on $40 Target With Digital Sales

2007-11-27T06:58:00.001+02:00

Julie Won, who helps manage $200 million at Hanson Investment Management, has endured ``snickers and giggles'' as a shareholder in Eastman Kodak Co., the camera and film maker struggling to remake itself into a digital- imaging company.

``It was a pretty dire story; we had some difficulty explaining our position to clients,'' said Burlington, Vermont- based Won. Her firm owns 66,197 Kodak shares. ``It's a painful turnaround, but they seem to be doing a good job with it.''

Kodak has climbed as much as 10 percent since Won started buying it in the third quarter of 2005, when the stock was trading as low as $20.95. She counts herself among investors who are banking on the stock to top $40 a share. Chief Executive Officer Antonio Perez's ``new Kodak'' posted back-to-back profits for the first time since 2004 as digital revenue more than doubled last quarter and the company amassed $1.85 billion in cash.

``They've been able to get out of the traditional business without too many terrible side effects,'' said Dublin-based Rory Flynn of AGF Management Ltd., who helps manage 3.67 million Kodak shares as part of its $55.1 billion under advisement. AGF had owned less than 500,000 shares up until the beginning of this year, according to Bloomberg data.

AGF is among eight of the top 20 investors that have added to their stake in the past two quarters as Rochester, New York- based Kodak hit a 52-week high of $30.20 in June. The shares dropped more than 10 percent in the two days after Perez announced third-quarter results as some investors sold on the good news and others focused on cash flow as a sign that the pain isn't over. Cash from operations fell to $1 million in the most recent quarter from $237 million a year earlier.

Digital Space

Kodak must still overcome concerns that the four-year restructuring plan is being hobbled by wider-than-expected losses on its new inkjet printers, a 2 percent operating margin last year that was one-ninth the average in the Standard & Poor's 500 Stock Index, and declining market share for its digital cameras.

The company's next step ``is to scale those businesses,'' Perez said on a Nov. 1 conference call. ``We have phenomenal properties in the digital space that have enormous possibilities for expansion.''

Perez, 62, plans to end the restructuring program by the end of next month. Kodak is counting on cameras that cost less than $200 and a new line of inkjet printers to drive digital- sales gains.

Kodak fell 8 cents to $23.07 at 4 p.m. in New York Stock Exchange composite trading and is down 11 percent this year.

Printer Sales

To further temper its declining film business, whose sales dropped 16 percent last quarter, Kodak is developing technology to enhance the quality of photos taken in low light and working with Motorola Inc. to improve cameras on mobile phones.

While Kodak's printers cost about $50 more than similar models from Hewlett-Packard Co. and Seiko Epson Corp., refill ink packages, including photo-quality paper, cost about 9 cents less per page, said Ron Glaz, program director with Framingham, Massachusetts-based research firm IDC.

Kodak projects sales of 500,000 inkjet printers this year and may introduce new models for 2008. That accounts for about 0.5 percent of the global photo printing market of 78.6 million units last year, Glaz said. Perez wants to have 10 percent of that pie by the end of the decade.

``I think they'll make the half-million,'' Glaz said. ``They're trying to shift consumer behavior and it takes a while for that behavior to change.''

Inkjet Costs

Costs tied to the introduction of Kodak's entry into the $55 billion inkjet printing market have been higher than the company expected. The losses may top $200 million this year and could widen next year, said Christopher Whitmore, an analyst with Deutsche Bank in San Francisco.

``The losses in inkjet could get bigger before they get smaller,'' he said in an interview. ``It's still very early but the initial costs appear to be pressuring cash flow.''

Concern that competition in the electronic-imaging market is too cutthroat has led some investors like Colin Symons of Pittsburgh-based Symons Capital Management to dump the stock. Digital margins, narrower than those in film to begin with, have faced pressure as Kodak struggles to control costs.

Perez plans to re-enter the market for cameras costing less than $200 to regain its No. 1 spot in U.S. digital sales. Kodak has 15 percent of the U.S. market and ranked third behind Canon Inc. and Sony Corp. in the past two quarters, according to IDC.

Promising Projects

``We're not confident that they're going to be able to command good margins because there's so many competitors,'' said Symons, who sold his 169,723 shares in July. ``They just became too risky.''

The company missed its initial restructuring target of boosting sales to $16 billion by 2006. Kodak posted $13.3 billion in sales last year.

Some shareholders say Perez has handled the turnaround well. Under the five-year tenure of predecessor Daniel Carp, the stock plunged 60 percent, compared with a 13 percent slip since Perez took over in June 2005.

``He's kept them from making a bunch of mistakes,'' said Christopher Zook, chairman and chief investment officer at CAZ Investment. The Houston firm owns 226,828 Kodak shares and has held the stock since at least 2005. ``He hasn't chased projects that are speculative. He's gone after more economically viable and high visibility projects that have a higher probability of succeeding.''

Perez may be looking to reward shareholder patience with its first buyback since March 2001. On the company's third- quarter conference call, he said Kodak would decide how to use the $1.85 billion in cash on the balance sheet by February's investor conference. Zook and other investors would rather that money be used to ensure a lasting turnaround.

Once Perez can accomplish that, Zook said the stock will ``move from the 20s to the 40s so fast your head will spin.''
(Source bloomberg.com)

Sony sells 'substantial' stake to Dubai investors

2007-11-26T17:52:00.000+02:00

Shares of Japan's electronics company jumps after Dubai International Capital purchases a stake of undisclosed size.

Dubai International Capital, an investment company owned by the ruler of this booming Persian Gulf city-state, has acquired a stake of undisclosed size in the Japanese electronics and media company Sony Corp.
Sony's (Charts) U.S. shares rose 4.2 percent in trading Monday morning following the announcement.
The purchase is the latest by Middle East investors who have become more aggressive in looking for investment opportunities overseas.
United Arab Emirates-based DIC described its investment in Sony as "substantial" in a statement posted on the company's Web site, but did not provide a specific ownership percentage.
Sony spokesman Daichi Yamafuji confirmed Dubai International Capital's purchase but refused to provide any other details.
"It's the other party that acquired the stake and we decline to discuss any other details such as the number of shares involved," he said.Dubai Ports redux over China deal
The chief executive of Dubai International Capital, Sameer Al Ansari, said the investment in Sony, which owns consumer electronics, video game and movie businesses, was "consistent with our mandate of supporting premier global companies."
"The combination of Sony's truly global brand, its leadership in product design and its global footprint will spur the business' medium term growth as it capitalizes on positive underlying trends and emerging technologies," said Al Ansari in the company's statement.
Dubai International Capital was established in 2004 and is owned by Dubai-ruler Sheikh Mohammed bin Rashid Al Maktoum. It has made several other prominent investments this year, acquiring 9.9 percent of Och-Ziff Capital Management Group (Charts), a U.S.-based alternative asset manager, and 3.12 percent of European Aeronautic Defense & Space Co., which builds Airbus commercial planes and military aircraft. The firm also holds stakes in Daimler AG (Charts) and British bank HSBC Holdings PLC (Charts).
Sovereign funds in the Middle East, like Dubai International Capital, have been building up their investments overseas recently, many of them on the back of rising oil prices that have brought the region record cash flows.
Many companies have welcomed such investments because the funds tend to be stable investors, but some countries like the U.S. have expressed concern that their acquisitions could target sensitive industries with links to national security.
(source money.cnn.com)

Yen Gains Versus 16 Major Currencies as Investors Reduce Risks

2007-11-25T11:12:00.001+02:00

The yen rose against all 16 most- actively traded currencies this week as spreading losses in U.S. financial companies and real estate prompted investors to retreat from higher-yielding assets funded by loans in Japan.

The yen increased to the highest level since June 2005 against the dollar yesterday. The U.S. dollar fell to all-time lows against the euro and Swiss franc on expectations the Federal Reserve may cut borrowing costs next month. A report may show next week that sales of previously owned homes in the U.S. dropped in October to the fewest since at least 1999, according to a Bloomberg News survey.

``The real game in town is the yen,'' said David Woo, global head of foreign-exchange strategy at Barclays Capital in London. ``The yen is really flying. The U.S. economy is facing a lot of uncertainties.''

The yen rose 2.5 percent against the dollar this week, after touching a two-year high of 107.55 yen. The yen also gained 1.4 percent against the euro to 160.55 per euro. Japan's currency strengthened to 221.31 yen per pound yesterday, the most since Aug. 17.

The Organization for Economic Cooperation and Development said Nov. 22 that the estimated losses from U.S. subprime foreclosures may reach as much as $300 billion, on top of the more than $60 billion the world's biggest banks, brokers and insurers have announced they will write down. Freddie Mac, the second-largest U.S. mortgage-finance company, may report wider losses than it forecast as the slump in credit markets worsens, Moody's Investors Service said.

Swiss Franc

The Swiss franc, also used as a funding currency for so- called carry trades, gained against 14 of the 16 major currencies. It rose to a record 1.0890 versus the dollar yesterday, and strengthened to a three-month high of 1.63 against the euro. In carry trades, investors sell currencies in countries with low borrowing costs and buy higher-yielding assets elsewhere, profiting from the difference.

``The main trend is for the yen to appreciate further because of risk aversion,'' said Hidetoshi Yanagihara, senior currency trader at Mizuho Corporate Bank in New York. ``The market is thinking the turmoil in the financial sector will continue.''

The U.S. currency yesterday touched $1.4967 per euro, the weakest since the European currency started trading in January 1999. The dollar also dropped below 7.4 against China's yuan for the first time since a fixed exchange rate was scrapped in 2005.

Dollar Index

The U.S. Dollar Index traded on the ICE Futures in New York touched 74.484 yesterday, the lowest since the gauge started trading in 1973. The index tracks the value of the dollar against six major currencies, including euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc.

Futures contracts traded on the Chicago Board of Trade showed a 94 percent chance of the Fed cutting its benchmark interest rate a quarter percentage point to 4.25 percent at the Dec. 11 policy meeting. The European Central Bank's benchmark borrowing costs are at 4 percent.

The U.S. currency has lost 12 percent against the euro this year as the housing recession and lower interest rates dimmed the allure of dollar-denominated assets. The Fed has cut the key rate 0.75 percentage point to 4.5 percent since Sept. 18.

``There's speculation in the market as to whether the dollar is in terminal decline,'' said Michael Klawitter, a currency analyst at Dresdner Kleinwort in Frankfurt. ``It's looking increasingly possible that the dollar will lose its status as the major transaction and reserve currency.''

Home Sales

Existing home sales probably declined to an annual rate of 5 million in October, from 5.04 million in the previous month, according to the median forecast of 56 economists surveyed by Bloomberg News. That would be the lowest since the National Association of Realtors compiled the data in 1999. The report is scheduled for release on Nov. 28.

``If the housing data turns out to be horrible again, the market will feel assured the Fed must cut rates in December,'' said Boris Schlossberg, senior currency strategist at DailyFX.com in New York. ``They will push it through $1.5 against the euro.''

China's yuan strengthened 0.25 percent this week against the dollar. The currency's appreciation ``should accelerate,'' ECB President Jean-Claude Trichet said on Nov. 22. Trichet will lead a delegation to Beijing next week for two days of talks with Chinese authorities on trade and allowing faster appreciation of the yuan.

While the yuan has risen about 5 percent against the dollar this year, it weakened by almost 7 percent versus the euro, raising the cost of European goods for Chinese consumers.
(Source bloomberg.com)

Glaxo shares gain on rotavirus trial data

2007-11-24T08:52:00.000+02:00

GlaxoSmithKline's rotavirus drug candidate Rotarix protected infants through two consecutive rotavirus seasons, study finds.

Shares of GlaxoSmithKline PLC rose Friday after a medical journal published data showing its rotavirus drug candidate Rotarix provides protection against the five most commonly circulating forms of the virus.

Rotavirus causes diarrhea in infants. The drug candidate is already under review by the Food and Drug Administration. The new data, from a late-stage study involving almost 4,000 European infants, was published in The Lancet.

Rotarix was created by Avant Immunotherapeutics Inc. and licensed to GlaxoSmithKline. The drug is already available in more than 90 countries.

The late-stage study data show that two doses of Rotarix provided protection through two consecutive rotavirus seasons, or until subjects were about 2-years-old.

Shares of GlaxoSmithKline increased 6 percent in morning trading on the New York Stock Exchange Friday. The stock has traded between $47.49 and $59.98 during the last 52 weeks.
(Source money.cnn.com)

Shell veteran Greer takes over at Regal after Ukraine deal

2007-11-23T07:09:00.000+02:00

Regal Petroleum has named David Greer, a veteran oil man from Shell, as chairman and chief executive as part of a sudden shake-up in the top management at the London-based energy company.

The surprise announcement comes a day after Regalentered into exclusive negotiations to transfer a majority stake in its Ukrainian operations to Shell.

Neil Ritson, who announced the agreement with Shell two days ago, is understood to have resigned as chief executive yesterday because he was opposed to an initial plan for Mr Greer to join the company as executive chairman.

Francesco Scolaro, who is stepping down as non-executive chairman, will continue on the board. Another Shell veteran, Antonio Mozetic, has been appointed as a non-executive, while Harry Verkuil, a former Shell exploration and production manager, is joining as an executive director in January.

Under a memorandum of understanding signed between Regal and Shell on Wednesday, the oil major would pay $410m (£195m) for a 51 per cent stake in a Regal subsidiary which holds the licences for two gas and condensate fields in central-eastern Ukraine.

Regal's founder, Frank Timis, still owns a 19.95 per cent stake in the company.

Mr Greer, who has worked for Shell International exploration and production for 28 years, was most recently the deputy chief executive and project director of the Sakhalin-2 project, the major liquefied natural gas development off the east coast of Russia. He said that he was looking forward to developing the company's Ukrainian assets.

"I am very pleased and honoured to be offered this position and to be given the opportunity to participate in the further development of the company's exciting portfolio of assets, particularly in the Ukraine," he said.

"The past board members have done a tremendous job getting our licences ratified by the courts over there ... With my background in the development arena, I would want to make the most of it ... It's a challenge but I'm looking forward to it."

Mr Greer declined to comment on Regal's recent agreementwith Shell.

Shares in Regal slipped 1p to end at 163p.
(Source news.independent.co.uk)

Red flags and roadblocks for Apple investors

2007-11-22T17:27:00.000+02:00

The participants on AFB tend to be bullish on Apple and long the stock, but they’re smart investors and have good antennae for anything that could affect their holdings — up or down. So I was interested to see how they would respond when a member who calls himself (or herself) “lumi” opened a new thread early this morning with these questions:

What are the chief potential stumbling blocks, things that *could* either delay or derail AAPL’s projected growth trajectory? What events would be red flags or precursors to correction or erosion?

The early responders have taken the challenge seriously, as they usually do on AFB, and offered answers that are quite insightful. The most interesting so far was posted by Alexis W. Cabot, an investor based in Rome. With his permission, I quote it in full:

Steve Jobs continued leadership of the company is still essential. We all know how his idea of what works and what doesn’t permeates the decision thinking process at Apple, but Apple must learn to do without him, otherwise it will not be a great company. General Electric has done a great job at creating internal leaders that are excellent managers and have kept the company at the top of corporate America for a century. Apple must have it’s own management creation process in place.

Corporate hubris. Signs that the company starts believing it can do no wrong and that customers will buy anything they produce will be when the company has peaked. Apple went through this phase in the late 1980’s and we all know how that ended. Apple’s insistence on revenue sharing with the networks just to sell a Jesus Phone would be nice for us shareholders, but there is a wider world out there that has laws against such restrictions on trade. I hope that Apple/SJ doesn’t shoot itself in the foot if it insists too much on these revenue sharing deals.

Inability to build lasting partnerships. As SJ himself said at All Things Digital that Apple has to learn how to make better partnerships. Never has Apple needed more content and networking partners than before. It needs to work with music and movie companies, with it’s own set of histrionics, and then with the highly regulated and staid cell-phone networks.

Souring US relations with China and the rest of the world. A trade war between the incumbent superpower and the aspiring one are likely to derail Apple’s (and most of corporate America) growth. It will be more expensive to outsource and then sell to China, which has one of the most rapidly growing and homogeneous middle classes of the world. Given the poor job the US has done in managing its international relations, this is a growing possibility.
(Source money.cnn.com)

Market falls on credit, economic concerns

2007-11-21T22:05:00.000+02:00

U.S. stocks fell on Wednesday, with the benchmark S&P 500 index briefly dipping into negative territory for the year, on persistent fears that fallout from the credit crisis and the housing slump will hurt economic growth.

Financial services companies, including Goldman Sachs Group Inc. (GS.N), led the sell-off, while bellwether General Electric (GE.N) dropped on concerns about the economy.

U.S. Treasury Secretary Henry Paulson said the number of potential U.S. home-loan defaults will be significantly bigger in 2008 than in 2007. His comments in an interview with The Wall Street Journal helped set the market's negative tone.

Shares of mortgage lenders, including Countrywide Financial Corp (CFC.N), also tumbled. American International Group Inc (AIG.N), the world's biggest insurer by market value, was the top drag on both the Dow and the S&P 500, dropping as much as 6 percent.

"We just can't seem to break free of the financial concerns that are out there. The unwinding of the real estate and the mortgage market continues to weigh on investor concerns," said Bucky Hellwig, senior vice president at Morgan Asset Management, in Birmingham, Alabama. "There is also more of a focus now on balance sheets of financials rather than their earnings -and that's never a good sign."

The Dow Jones industrial average (.DJI) was down 66.08 points, or 0.51 percent, at 12,944.06. The Standard & Poor's 500 Index (.SPX) was down 6.58 points, or 0.46 percent, at 1,433.04. The Nasdaq Composite Index (.IXIC) was down 5.24 points, or 0.20 percent, at 2,591.57.

For the year the S&P 500 was up 1 percent, after earlier dipping into the red.

The prospect of $100 oil hurt the shares of big manufacturers and retailers on concern about the impact of higher fuel costs on businesses and consumers. Earlier, a survey showed U.S. consumer sentiment fell in November to its lowest in two years.

U.S. crude for January delivery hit a record $99.29 earlier on Wednesday before retreating on the New York Mercantile Exchange. NYMEX January crude fell 73 cents, or 0.7 percent, to $97.30 a barrel.

Risk aversion drove investors to seek a safe haven in U.S. government bonds. By 2 p.m. (1900 GMT) when the market closed early ahead of the Thanksgiving holiday, the yield of the benchmark 10-year Treasury note was 4.01 percent. Earlier it had dipped below 4 percent for the first time since September 2005.

Shares of Goldman Sachs dropped 2.1 percent to $212.99 on the New York Stock Exchange, while AIG fell 4.5 percent to $52.00. On Tuesday, an AIG shareholder sued several of the company's officials over the insurer's exposure to the subprime mortgage crisis.

Shares of Countrywide, the biggest U.S. mortgage lender, declined 8.3 percent to $9.43 on the New York Stock Exchange.

Among big manufacturers, General Electric (GE.N) fell 2.6 percent to $37.06, while among retailers, home improvement chain Home Depot Inc (HD.N) declined 1.1 percent to $28.18.

But stocks were off the day's worst levels, due in part to a turnaround in the shares of General Motors. GM shares reversed course after finance company GMAC said it was exploring the sale of parts of its troubled mortgage-lending arm, Residential Capital LLC (ResCap). GM owns 49 percent of GMAC.

GM slid nearly 7 percent in early morning trading, before rebounding in late afternoon trading, when it was up 3.3 percent at $27.16.
(Source REUTERS)

Smart’s Fortwo aiming for big U.S. sales

2007-11-21T21:34:00.001+02:00

Tiny car, three feet shorter than Mini, makes debut in January

The 8-foot, 8-inch Smart Fortwo micro car comes to U.S. shores in January, and even with gasoline prices well above the $3-a-gallon mark it remains to be seen whether Americans will flock to buy the tiny, two-seater car.

Ranging in price from $11,590 for the base version to $16,590 for a fully loaded Fortwo Passion convertible, the 1,800-pound car boasts 40 miles per gallon — a big draw for drivers worried about high gas prices.

Smart has already sold more than 770,000 Fortwos in 36 countries, and Smart USA is banking on robust sales in the United States. The Smarts on sale here will be made in France and sold through 73 U.S. dealers, including Mercedes dealers and dealerships that are part of the Penske Automotive Group owned by racing icon Roger Penske. Penske is chairman of Smart USA, a division of Daimler AG’s Mercedes-Benz brand.
Story continues below ↓advertisement

Smart says more than 30,000 consumers have put down a refundable $99 deposit to reserve a Smart car. Those deposits do not guarantee sales, but the company is hoping to move at least 30,000 units in the first year, said spokeswoman Jessica Gemmara.

“There will obviously be some fallout from the reservation program because of life changes, or because people move — things like that, but our goal is to fulfill all those orders,” she said at the Los Angeles auto show, where Smart has a large exhibit aimed at drumming up more business.

While small cars represent a tiny portion of the U.S. market, sales are growing, according to the Power Information Network, a division of market research firm J.D. Power and Associates.

Subcompact cars — defined as those cars smaller than compact cars, such as the Ford Focus and Honda Civic — made up 2.4 percent of the U.S. market in the first 10 months of this year, compared with 1.7 percent a year ago, according to J.D. Power data.

Other cars in the subcompact segment include the Chevrolet Aveo, Honda’s Fit and Toyota’s Yaris, the most popular subcompact on the market, which has managed sales of 73,874 units so far this year in hatchback and liftback versions.

Such strong sales are unlikely for the Fortwo, some analysts say. Even in Europe Smart has never been profitable. Daimler announced a restructuring of the division last year, when sales fell to 102,700 vehicles worldwide from 124,300 in 2005.

Not many U.S. subcompact cars sell in the 30,000-unit range. Close competitors like the Kia Rio and Scion xA sold 28,388 units and 32,603 units in 2006, respectively, while the significantly larger Scion xB sold 61,306 units and the popular Mini Cooper sold 39,171 units.

Another key issue is safety, particularly given the Smart Fortwo’s diminutive size. It is significantly smaller even than other subcompacts, so concerns about a collision with a large SUV or truck are likely to keep buyers away, analysts say. At 105.6 inches the Smart Fortwo is 45 inches shorter than a Yaris and 40 inches shorter than a Mini Cooper.

And at just 1,800 pounds, the Fortwo is 500 pounds lighter than any other subcompact, putting its occupants at a potentially significant disadvantage in a collision.

The Fortwo has a steel safety cage and four air bags, including two in front and two on the sides to protect the head and abdomen. It also has standard electronic stability control, which is designed to stop vehicles from swerving off the road, and Smart USA President Dave Schembri says the Fortwo is designed to get four out of five stars on U.S. crash tests and recently got four stars on an equivalent European test. The U.S. government will test the Smart car after it arrives on the market.

Another possible indicator of low demand for the Fortwo is that many city dwellers, considered to be a prime target market for the Smart cars, use car sharing services like Zipcar or rent cars for shopping trips or weekends away. A Fortwo might be too small for such needs with only 8 cubic feet of storage room, compared with nearly 26 in the rival Yaris liftback (with rear seats folded forward).

But demand for the Fortwo could come from unlikely sources, according to Smart’s Jessica Gemmara.

“We’ve seen strong interest in places that surprised us, like Birmingham, Ala., or Tulsa, Okla.,” she said. “These are places in the heartland of America where people tend to own a truck and don’t want to drive a rinky-dink car, but we’ve seen some of the biggest turnouts in these places, and once these people get to touch and experience the car they’re just as interested as (big) city dwellers.”
(Source msnbc.msn.com)

Global Stocks, U.S. Futures Drop;

2007-11-21T12:36:00.000+02:00

Volkswagen, Wal-Mart Fall Stocks declined in Europe and Asia, led by exporters and banks, after crude oil approached $100 a barrel and the U.S. Federal Reserve lowered its growth outlook for the world's biggest economy. U.S. index futures retreated.

Volkswagen AG and Royal Philips Electronics NV led a slump by European companies most dependent on U.S. sales. Honda Motor Co. and Toyota Motor Corp. dropped as the yen strengthened to a two-year high against the dollar. Credit Suisse Group and Societe Generale SA fell after Goldman, Sachs & Co. added the stocks to its ``conviction sell'' list. Wal-Mart Stores Inc., the world's largest retailer, retreated in Germany as oil surged to a record.
The MSCI World Index lost 0.7 percent to 1,560.51 as of 9:20 a.m. in London. Futures on the Standard & Poor's 500 Index slipped 0.9 percent to 1,432.8. Bonds rallied as investors sought the relative safety of government debt.
``The whole market is going to take a hit for fear the U.S. slowdown may spill over,'' said Luca Martina, who helps manage the equivalent of about $4.45 billion for private clients at Credit Suisse Private Banking in Turin, Italy. ``High oil prices certainly don't help.''
The slump in stocks and the Fed's lowered growth forecast for 2008 sparked demand for U.S. and European government bonds. Yields on 10-year U.S. Treasuries dropped below 4 percent for the first time since 2005, while two-year yields on European bonds slipped to their lowest in 11 months.
Concern that widening credit-market losses and record fuel costs will crimp economic growth in the U.S. pushed the yen beyond 109 to the dollar for the first time in more than two years. The U.S. currency also slid to the weakest against the euro since the single European currency's debut in 1999.
Oil rose above $99 a barrel for the first time as the slumping dollar increased demand for commodities.
European Investors
The MSCI World has retreated 4.5 percent this quarter in dollar terms, lashed by writedowns at the world's largest financial firms tied to the U.S. subprime mortgage slump. European-based investors have fared worse, with the index tumbling 8.1 percent when measured in euros.
For European investors, the S&P 500 is down 9.4 percent so far this year, while Japan's Nikkei 225 Stock Average has slid 15 percent. In local currency terms, the S&P 500 has gained 1.5 percent, and the Nikkei has lost 12 percent.
Europe's Dow Jones Stoxx 600 Index lost 1.4 percent to 353.49 today. Germany's DAX fell 1.2 percent, as did the U.K.'s FTSE 100. France's CAC 40 declined 1.4 percent.
The MSCI Asia Pacific Index dropped 2.2 percent to 154.57. Japan's Nikkei slid 2.5 percent, and South Korea's Kospi index lost 3.5 percent.
`Worse Day by Day'
``The picture is getting worse day by day,'' said Alberto Magnani, who manages the equivalent of about $300 million at Abbacus Sim SpA in Genoa, Italy. Losses related to the credit market turmoil are ``spreading to the overall economy.''
Volkswagen, Europe's largest automaker, dropped 1.7 percent to 161.88 euros. Consumer electronics producer Philips lost 3.3 percent to 26.52 euros. North America accounted for 14 percent of the carmaker's sales last year, while Philips got 28 percent of its revenue from the U.S.
Honda, Japan's second-largest carmaker, dropped 5.7 percent to 3,620 yen. Toyota Motor, the world's most-valuable carmaker, fell 2.8 percent to 5,940 yen.
Wal-Mart lost 39 cents to $45.11 in Germany. Crude oil for January delivery climbed as much as $1.26, or 1.3 percent, to a record $99.29 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
Credit Suisse, SocGen
Credit Suisse slid 3.4 percent to 62.2 Swiss francs. Goldman Sachs added the bank to its ``conviction sell'' list because of the company's reliance on trading and capital markets to generate earnings.
``We continue to prefer banks with exposure to structural growth in emerging markets over banks with exposure to a potential cyclical recovery,'' London-based Goldman analysts wrote in a note to clients.
Societe Generale slid 3.8 percent to 96.74 euros. Goldman also cut Societe Generale to ``sell'' from ``neutral,'' and added the stock to its ``conviction sell'' list.
Paris-based Societe Generale may need to write down holdings of collateralized debt obligations as losses from the U.S. subprime mortgage market get worse, analysts wrote. The bank's shares are expensive compared with those of French peers, they added. ADRs of Societe Generale sank 3 percent from the stock's Paris close.
Lloyds TSB Group Plc, the U.K.'s No. 1 provider of personal loans, declined 2.8 percent to 458.75 pence. Goldman also added the shares to its ``conviction sell'' list.
LSE, Ericsson
London Stock Exchange Group Plc, Europe's largest stock market by the value of companies listed, dropped 7.3 percent to 1,749 pence after Banca Monte dei Paschi di Siena SpA, Italy's third-largest bank, sold its 2.9 percent stake in the exchange.
Ericsson AB, the world's largest maker of wireless phone networks, retreated 4.8 percent to 15.24 kronor. Goldman Sachs downgraded the shares to ``neutral,'' removing them from its ``conviction buy'' list.
Analysts including Tim Boddy in London cited a ``deteriorating fourth-quarter revenue outlook and the growing probability that the wireless infrastructure market will decline again in 2008,'' according to a note sent to clients today.
(Source bloomberg.com)

Oil makes fresh run at $100

2007-11-21T10:26:00.000+02:00

Crude sets new closing high, rising over $3 a barrel, on refinery outages, falling dollar and Fed hints at further rate cuts.

NEW YORK (AP) -- Oil prices rose sharply Tuesday, closing at a new record high and once again approaching $100 a barrel, as futures drew strength from a declining dollar, news of refinery problems and speculation that the Federal Reserve will again cut interest rates next month.

Light, sweet crude for January delivery surged $3.21 to settle at $98.03 a barrel on the New York Mercantile Exchange, surpassing the previous closing record of $96.70 set Nov. 6. Crude rose as high as $98.30 earlier, just 32 cents shy of oil's all time trading high of $98.62, set Nov. 7.

Gasoline prices, meanwhile, extended their decline at the pump.

Oil futures, which offer a hedge against a weak dollar, picked up momentum as the dollar fell to a new low against the euro, and added to their gains after the Fed forecast slowing growth and tame inflation next year.

Gas fell 0.5 cent overnight, retreating further from its most recent spike above $3. At a national average of $3.09 a gallon, according to AAA and the Oil Price Information Service, gas prices have fallen 2.2 cents in a little less than a week. Last week, many analysts predicted prices would instead rise another 10 to 15 cents a gallon to catch up with surging oil prices.

"More than likely, [prices will] probably hold steady through the end of the year," said Fred Rozell, retail pricing director at the Oil Price Information Service. "But that doesn't mean you're going to see relief in terms of lower prices."

Because gas prices are closely tied to the price of crude, pump prices could start rising again if crude does reach $100 a barrel, or higher. Oil peaked two weeks ago at $98.62 a barrel before pulling back to the low- to mid-$90s.
Gas prices hit working class

Many analysts cite speculative investing fueled by the weak dollar as a key reason for oil's fall rally.

"Expectations of interest rate cuts by the Federal Reserve are sending the dollar lower and this is once again drawing buyers ... into the crude oil market," said Addison Armstrong, an analyst at TFS Energy Futures LLC in Stamford, Conn., in a research note.

The Fed said it thinks business growth will slow next year, with gross domestic product growing between 1.8 percent and 2.5 percent. That's less than the Fed's previous projections. Meanwhile, overall inflation should fall next year to between a 1.8 percent and 2.1 percent increase, the Fed said.

"They just opened the door for the possibility of more rate cuts," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

However, the rising cost of energy could also persuade the Fed to either leave rates stable or raise them - the latter would likely lend support for the dollar and could pull oil prices back down.

Energy futures received an additional lift from word of problems at two oil facilities Tuesday. A Valero Energy Corp. (Charts, Fortune 500) refinery in Memphis, Tenn., that processes 180,000 barrels of crude a day has shut down for 10 days of unplanned maintenance and a Royal Dutch Shell (Charts) plant that converts bitumen from Alberta's oil sands region into 155,000 barrels a day of synthetic crude oil was temporarily shut down due to fire.

Oil product futures surged on the news. Gasoline futures for December delivery rose 7.12 cents to $2.4528 a gallon, while December heating oil futures climbed 8.53 cents to $2.6895 a gallon.

"When you get this kind of problem in this kind of environment, prices will rise," Flynn said.

Economic reports gave investors more reasons to buy, analysts said. China's economy will likely grow at a rate of 11.5 percent in 2007, state media quoted Chinese Premier Wen Jiabao as saying on Tuesday. And in the U.S., the Commerce Department said housing construction rose by 3 percent in October, the first increase after three months of declines and the biggest since last February.
Ditching the dollar

Growing demand from China is another reason oil prices have risen in recent years. And signs of significant economic growth in the U.S. support prices because energy investors believe a strong economy will demand more oil and gasoline.

Natural gas futures fell 31.6 cents to $7.471 per 1,000 cubic feet on the Nymex. Natural gas inventories are at record levels, and several recent forecasts have predicted a warmer than normal winter.

In London, January Brent crude futures rose $3.31 to $95.59 a barrel on the ICE Futures exchange.

Traders were also anticipating Wednesday's petroleum inventory report from the Energy Department's Energy Information Administration. Analysts surveyed by Dow Jones Newswires, on average, predict that crude oil inventories rose by 800,000 barrels last week, while refinery use grew by 0.4 percentage point to 88.1 percent of capacity.

Gasoline inventories likely grew by 700,000 barrels, the analysts predicted, while inventories of distillates, which include heating oil and diesel fuel, fell by 400,000 barrels.

While oil supplies likely rose last week, prices were being supported Tuesday by concerns there would be a bullish surprise in the EIA report, such as an unexpected decline in inventories.
(Source money.cnn.com)

A Buffett investment that wasn't

2007-11-20T17:24:00.000+02:00

Stories about the Berkshire billionaire buying into CarMax were not quite what they seemed, reports Fortune's Alex Taylor III.

(Fortune) -- With auto stocks beaten down, prominent investors looking for bargains have been on the prowl. Kirk Kerkorian bought nearly 10% of General Motors's shares last year, which he subsequently sold, and Cerberus Capital Management, the private equity group, took majority control of Chrysler earlier this year.

Last week, it began to look as if CarMax, one of the pioneers of the used-car superstore, had become the next target. Legndary investor Warren Buffett was said to be buying in. Headlines like "Buffett buys major stake in CarMax" and "Buffett Buy Sends CarMax shares soaring" appeared. Copycat investors sent CarMax's stock price shooting up when the news broke on November 15.

CarMax's (Charts, Fortune 500) stock jumped $1.62, up 7.5%. But the story as reported by many news outlets isn't accurate, because Buffett wasn't directly involved in the purchase. The stock was bought by GEICO, the auto insurer and a subsidiary of Buffett's company, Berkshire Hathway. There's a big difference, as I'll explain.

On its face, the notion of Buffett's involvement was logical. CarMax had been struggling, with its stock having hit a low for the year of $18.88 a week earlier. But analysts like its business model: Clean-scrubbed salespeople, working on a fixed commission, selling high-quality used cars at a fixed price with no haggling. "We most likely concur with Warren Buffet's [sic] long-term view of CarMax's prospects," wrote Goldman Sachs' Matthew J. Fassier.

Though CarMax was facing headwinds from the expected slowdown in consumer spending, its sales were still moving up and several analysts had recommended the stock. So CarMax looked like a typical Buffett deal. The renowned value investor likes to make big, long-term bets on companies with strong brand names with straight-forward business models. What could be more straight-forward than the used car business?

But a close reading of the 13-F SEC filing by Buffett's company, Berkshire Hathaway (Charts, Fortune 500), suggests that Buffett wasn't directly involved. First of all, the size of the investment - less than 14 million shares worth $258 million - wouldn't be big enough to interest Buffett. That's pocket change for him. Berkshire recently had investments worth $108 billion so Buffett has to take big stakes in order to make a significant impact on his portfolio.

Another clue in the filing is that three of the holders of the CarMax shares are associated with GEICO. GEICO has its own portfolio of stocks, as well as its own legendary stockpicker, Lou Simpson, president and CEO of capital operations. But Simpson takes smaller positions than Buffett because he has less capital to invest. And, as people familiar with the operations of Berkshire Hathaway know, Simpson makes his own investment decisions.

Urban legend though it may be, the news of Buffett's alleged investment may be difficult to stamp out. CarMax certainly isn't trying very hard. When it heard about the Berkshire investment, it started celebrating about the fortuitous timing - the company is planning to open a new outlet in Omaha next month and had invited Buffett to the opening. "Now I'm thinking he might actually do it," Katherine Kenny, the assistant vice president of investor relations, was quoted as saying.

When informed by Fortune a few days later that Buffett himself was likely not the actual buyer of the shares, she replied: "We don't really care. We're just happy that Berkshire is interested in and confident in our business plan." Some investors seem to have gotten the message, though. The stock price has since settled back down to $21.74 - basically where it was before the Buffett reports.
(Source money.cnn.com)

Office Depot's profit dips

2007-11-20T15:27:00.001+02:00

Office-supply store chain says its third-quarter results fell 9% due to lower consumer spending, U.K. slowdown, higher costs in North America.

Office Depot's third-quarter profit sinks on weakness in North America, which was hurt mostly by the slumping housing market.

DELRAY BEACH, Fla. (AP) -- Office Depot Inc., the nation's second biggest office-supply store chain, said Tuesday its third-quarter profit fell 9 percent, hurt by lower consumer spending, an economic slowdown in the U.K. and higher costs in North America.

The company had delayed its quarterly results in order to revise some past financial statements. An independent review of vendor-program accounting found weakness in its internal controls and led to the firing of four merchandising employees.

Office Depot (Charts, Fortune 500) has retained Peter J. Solomon Co. to review its capital structure options and independently advise the company on the proper course of action.

Net income fell to $117.5 million, or 43 cents per share, in the three months ended Sept. 29 from $129.1 million, or 45 cents, in the year-ago quarter. The latest period includes a $33 million tax benefit.

Sales climbed 2 percent to $3.94 billion from $3.86 billion in the prior-year period.

Analysts surveyed by Thomson Financial predicted profit of 40 cents on slightly higher revenue of $3.95 billion.

The company said North American retail same-store sales fell 5 percent for the quarter, hurt mostly by the slumping housing market. Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

North American business services segment sales fell 3 percent. While international sales grew 13 percent from the year-ago quarter, the company said the international division still hasn't met expectations.

"There are signs of an economic slowdown in the U.K. which, if it persists, could provide continued challenges to the division's operations in the future," Office Depot said in a statement.

It is second in the office-supply business behind Staples Inc (Charts, Fortune 500).

Software division leads HP recovery

2007-11-20T06:48:00.001+02:00

SAN FRANCISCO — Hewlett-Packard (HPQ) reported higher-than-expected quarterly earnings Monday, as the computer maker continued to reinvent and diversify itself.

HP reported revenue of $28.3 billion in its fourth fiscal quarter, ended Oct. 31. That's an increase of 15% from $24.6 billion a year ago. Every major division reported revenue gains.

But HP's fledgling software division was the star. Aided by the $4.5 billion purchase of Mercury Interactive in 2006, software revenue doubled to $698 million.

That's important, as HP is trying to move away from its dependence on traditional business such as PCs and printers, says software analyst Stuart Williams at Technology Business Research.

CEO Mark Hurd has been restructuring the company since he was hired in 2005, when HP was struggling with performance and management problems.

That job is not yet done, Hurd says. But the low-key Hurd acknowledged how far HP has come. "We like how we are positioned," he said in a conference call Monday.

HP said net income of $2.2 billion, or 81 cents a share, rose from $1.7 billion, or 60 cents a share, a year ago.

The company's PC division reported a 30% increase in revenue. Sales of back-office computer servers and storage systems jumped 4%. Low component prices helped.

The printer division — an industry juggernaut — wasn't as impressive. Revenue grew 4%; net income was flat. "We had expected a bit more pickup" in lucrative printer ink sales, says Josh Farina, hardware analyst at Technology Business Research.

HP could face bigger challenges going forward. The company's turnaround has been so impressive that "it will be difficult to keep their core business growing at this clip," says tech analyst Crawford Del Prete at researcher IDC.

HP has also benefited from market conditions that play to its strengths. HP's presence in retail stores has been a boon as consumer laptop sales took off, for example. But the market could shift at any time, Del Prete says.

Another threat: rival Dell, which has struggled with an accounting probe and other problems in recent months. Dell has launched its own recovery plan, which could make it a more formidable competitor.

HP expects revenue of $27.4 billion to $27.5 billion in the current quarter, with earnings per share of 75 cents. The company also authorized $8 billion for share buybacks. The news, released after markets closed, sent HP shares up nearly 1%, to $50.25 in after-hours trading.

Why is broadband switching so hard?

2007-11-19T21:18:00.000+02:00

Download a song, email a friend, send a video to granny - it should all be so simple in our brave new technological world with broadband internet.

More than half the households in Britain have taken the plunge already, with BT alone grabbing four million subscribers in a market worth upwards of £1bn a year.

But try to take advantage of the temptingly low prices for high-speed services by switching from one provider to another, and all of a sudden things are not so easy.

The situation has become so bad that watchdog Ofcom is about to produce a report that will be fiercely critical of the companies' tactics to stall defections.

Karen Darby, founder of simplySwitch. com, which advises consumers on switching utilities and broadband services, says one of the companies' tactics is for call centre workers to be given bonuses to put off customers who want to switch.

Ofcom claims to be doing its best but admits problems remain.

One huge difficulty has been providers refusing to hand over the special Migration Authorisation Code (Mac) needed by customers who want to change.

Brian Holm, 70, and his wife, Elizabeth, 69, of Workington, Cumbria, said they experienced this frustration when they tried to switch their broadband supplier from AOL to Tiscali.

'We needed the Mac, but what a kerfuffle,' said Elizabeth. 'Brian could not get off the phone it just went on so long. The man told us we didn't need the code.'

The Holms now have to wait four weeks for the service to be switched. By contrast, changing their electricity and gas supplier took five minutes with an nPower representative in a local supermarket. Ofcom says it is looking closely at the problems. Last week, it fined service provider Prodigy £30,000 for failing to provide information about how it was complying with the Mac rules.

'We acted in February to make service providers hand over Macs to consumers who wanted to switch,' an Ofcom spokesman said. But Darby and other experts say that new barriers have simply been thrown up.

'I am a victim of this,' said Darby, whose company is owned by The Mail on Sunday's parent company,. 'Dropping my Tiscali service involved being passed around a dozen phone operators before ending up where I started.'

Virgin Media, which has come in for much criticism for its customer service, has a single number for customers to dial. But once they have rung the 0845 line, the problems start, with difficult menus and long queues.

McDonald's Eyes Ballooning Coffee Market

2007-11-19T10:26:00.000+02:00

Clash of the Titans? McDonald's Eyes Ballooning Coffee Market, but Franchisees Not Happy

NEW YORK (Associated Press) - McDonald's Corp. executives came out swinging when they announced their assault on the comfy world of coffee shops.
After the success of its upgraded drip coffee _ which even managed to snag a thumbs-up from testers at Consumer Reports earlier this year _ the fast food chain known for super-size meals is gearing up for a massive expansion into the world of lattes.
"We want to move from beverages as an accompaniment to being a beverage destination," Don Thompson, president of McDonald's USA, said in a meeting with analysts Tuesday. "Our speed, our convenience, the value that we can afford to customers without quality comprise will make us a formidable player."
Restaurants will offer lattes, mochas, cappuccinos and espressos with a choice of different flavorings and milk. Industry watchers say the drinks cost about 50 cents less than at Starbucks.
But as it tries to cash in on the fast-growing specialty coffee market, the world's largest restaurant chain is already finding itself at odds with the unlikeliest of groups: Its own franchise owners.
"There's a real groundswell of resistance among the franchisees about this," said Richard Adams, a consultant for McDonald's franchise owners. He estimated the effort has a 50-50 chance of getting off the ground because of franchise opposition.
Store owners are balking at the plan's estimated $100,000 price tag to cover renovations and initial new equipment.
And many are concerned that little customer interest in McMochas means it will could take years to recoup their investment, even on the famously high-margin coffee drinks.
"They're going to have whipped cream on their face," Adams said.
McDonald's said it's confident the new coffee will win over new customers and help individual stores boost annual revenue by about $125,000 once the coffee products, along with new bottled drinks, smoothies and other beverages are added to stores.
Zachary Aisley, a 27-year-old from Woodland Hills, Calif., has been impressed with the value and taste of McDonald's attempts at premium drip coffees and iced coffees. Now he's looking forward to sampling the company's lattes and mochas to see if they merit more frequent visits.
"I think their addition could bring me into the store," he said. "And I would definitely be likely to go in and try it."
If McDonald's can persuade its franchisees to sign on, analysts say it can likely thrive in the growing $12 billion specialty coffee market, which includes both brewed coffee and beans.
About one in five Americans drinks some kind of espresso-based coffee each day, and the market is supposed to grow by at least 4 percent each year until 2011.
"With coffee gaining so much ground, McDonald's almost has to go there," said Sharon Zackfia, a restaurant and retail analyst with William Blair & Co. "The feeling that the coffee business is a single pie and everyone is fighting for different slices doesn't seem to acknowledge that the pie is growing."
In response, companies are scrambling to offer more steamy drinks and snacks.
Dunkin' Brands Inc. added espresso beverages to Dunkin' Donuts shops in 2003 and credits the full-line of coffee drinks with helping its aggressive growth plans.
And Canadian coffee chain Tim Hortons, which is expanding its own U.S. presence, said customer demand for one-stop food and coffee shopping is growing.
"I think we're all now competing in the same space," said spokeswoman Rachel Douglas. "I think the lines are blurring, and I think consumers are demanding that."
A full-court press by McDonald's couldn't come at a worse time for Starbucks Corp., the world's largest chain of coffee houses, which is struggling with rising dairy prices, growing competition and flattening store traffic in the U.S.
In a conference call with analysts last week, executives with Seattle-based Starbucks said they welcomed the competition. Then they threw in a subtle jab.
"We understand all too well that we have built a very attractive business for others to look at and try and take away, whether it's 1 percent on the margin or big companies that are trying to take more," Starbucks Chairman Howard Schultz said. "We are up for the defense and we are going to get on the offense."
McDonald's first launched its so-called premium coffee about 18 months ago, followed by limited tests of sweet tea and iced coffee. Since then, it has added the specialty coffee drinks at about 800 U.S. stores, and it announced Tuesday that it intends to add the beverages to locations nationwide by early 2009.
A Starbucks spokesman declined to comment on the news, offering a company statement that it remains "focused on exceeding ... customers' expectations."
In a seemingly coffee-saturated society, there's little chance of a full-fledged coffee war between McDonald's, Starbucks and the myriad of other coffee purveyors like Dunkin' Donuts and Caribou Coffee Co.
"I think that they appeal to two different types of customers," said Morningstar analyst John Owens. "I think there's room for both McDonald's and Starbucks to be successful in selling coffee. This isn't something where one is going to be completely victorious over the other."

Sony PlayStation 3 Sales Rising After Price Cut, New Model

2007-11-15T13:16:00.000+02:00

LOS ANGELES (AP)--Sony Corp. (SNE) said sales of its PlayStation 3 gaming consoles have risen fast in the United States since it cut the price of its 80 gigabyte model by $100 and launched a 40 gigabyte model.

In the two weeks ending Nov. 11, Sony said it sold more than 100,000 consoles of all types.

The price cuts makes the PS3 more competitive against Nintendo Co.'s (NTDOY) Wii and Microsoft Corp.'s (MSFT) Xbox 360 as the holiday season opens, Sony Chairman and Chief Executive Howard Stringer said.

"It's the breakthrough we've been anticipating," Stringer told the Associated Press Wednesday. "We've been holding our breath."

Sony said it had been selling between 30,000 and 40,000 consoles per week before the Oct. 29 price cut.

In the first week after the price drop, sales rose to 75,000. Sales rose again to more than 100,000 per week after the introduction of the 40 gigabyte model on Nov. 2, Sony said.

Lagging sales of the PlayStation 3, compared to sales of the Wii and XBox 360, prompted Sony to cut the price in the U.S. as it had in Japan and Europe.

"Obviously, we've taken so much heat over the year on PS3," Stringer said from his office in Tokyo. "Finally, the turning point has been passed."

Stringer said Sony is poised to benefit from the difficulty Nintendo has had producing Wii consoles fast enough to keep up with demand.

"It's a little fortuitous that the Wii is running out of hardware," Stringer said.

Executives said the rising sales also boost the Blu-ray high-definition DVD format. A Blu-ray drive comes with the PS3.

"It puts us vastly ahead of where the other format is going to be in terms of an installed base in people's homes by the end of this holiday season," Andrew House, Sony's chief marketing officer, said.

Toshiba Corp. has been selling players for its rival DVD format for high- definition as low as $200 and prices are expected to drop further.

Disney to launch cell phone carrier services in Japan - report

2007-11-12T10:56:00.000+02:00

TOKYO, Nov. 11, 2007 (Thomson Financial delivered by Newstex) -- US media and entertainment giant Disney will launch cell phone carrier services in Japan early next year by leasing local telecommunications networks, a press report said Sunday.

The Japanese unit of Walt Disney Co (NYSE:DCQ) (NYSE:DIS) has reached a basic agreement with Japanese Internet and telecom conglomerate Softbank Corp to tie up in cell phone operations, the business daily Nikkei reported.

Under the deal, the US firm will lease telecom networks from a Softbank unit, Softbank Mobile Corp., and start providing nationwide service, the report said.

No officials were immediately available at the two firms to comment on the report.

Disney will also join forces with Softbank to develop handsets and consign their output to other companies, the report said.

It added that the new phones would be sold at Softbank Mobile's 2,400 sales outlets across Japan and Disney will aim to sign up more than one million subscribers.

Disney will use its famous characters in designing its handsets and offering its animated films for downloads exclusively to subscribers, the daily said.

Launching cell phone services in Japan requires a huge initial investment because it costs about one trillion yen (8.7 billion US dollars) to build a network of base stations, the daily said.

As a result, Japan's cell phone service market is almost completely monopolised by NTT DoCoMo (NYSE:DCM) , KDDI Corp and Softbank Mobile.
(Source money.cnn.com)

Tesco extends euro ATM scheme

2007-07-15T11:02:00.000+03:00

Tesco Personal Finance has extended its service which allows customers to pick up their summer holiday euros as they shop.

Having rolled out a successful six-month trial of four euro ATMs, the group has decided to roll the service out in some 20 locations.

These will include Gatwick, Finchley and Dover, while a further five will also be opened at stores in Northern Ireland over the next few weeks.

Stewart Gow, head of ATMs at Tesco, said that customers could "pick up their euros at a competitive exchange rate at no charge whilst they do their weekly shop which is convenient".

Explaining that the group wanted to make travel money "accessible", Mr Gow also said that the ATM service provides an "easy way for customers to get their holiday money".

He said that the trial run had proved to be very popular and said that the group wanted to "improve our customers' experience every time they deal with us".
(Source MoneyNews)

Dollar-euro? It's the yen, stupid

2007-07-15T11:00:00.000+03:00

The dollar slid to a one-month low of ¥120.96 yen on Wednesday, raising concerns that a strengthening of the Japanese currency could put billions of dollars worth of low-cost yen loans in peril.

The yen rallied a sharp 2 percent over two sessions early this week - its most notable strength since it rallied about 4.5 percent over two weeks starting in late February, according to Ashraf Laidi, chief analyst at CMC Markets in New York.

Since then, the currency has given back some gains against the dollar, which was trading at ¥122.05 in New York Friday. And for the year, the dollar is still up about 3 percent against the yen.

But this week's jump in the yen still rattled Laidi and other currency traders and analysts.

For years, investors have been borrowing at Japan's super-low interest rates and selling yen to buy investments in higher-yielding currencies - a trading bet known on Wall Street as the "yen carry trade."

A big, sustained rebound in the yen could jeopardize those trades, Laidi said. "The yen is a funding currency. When it rallies, it makes the repayment of those yen loans more expensive, even though interest rates are low," he said.

Traders attributed the yen's jump against the dollar this week to problems in the subprime mortgage market in the United States, which caused some investors to seek safer places for their assets - and exit the yen carry trade.

"The carry trade took a bit of a knock earlier in the week when U.S. credit markets were going a bit crazy and equities were tumbling," said Richard Franulovich, a senior currency strategist at Westpac Banking in New York.

That effect was short-lived as stocks stabilized and bullish investors sent the Dow industrials and S&P 500 to new highs Thursday.

Of course, it isn't just U.S. conditions that influence the yen's movement against the dollar. Stronger economic growth in Japan could also lend more support to the yen in the longer-term.

Japan's gross domestic product, the broadest measure of a nation's economic activity, grew at a 3.3 percent annual rate in the first quarter, bolstering expectations for higher interest rates ahead. Higher rates would tend to make Japan more attractive to investors, bolstering the yen.

Japan hiked rates from near zero about a year ago but it's been easygoing since then. Rates currently stand at 0.5 percent, although the Bank of Japan is widely expected to raise them again next month. In comparison, the Federal Reserve is expected to keep holding rates steady, as it has for the last year, for some time.

With growth picking up and rates heading higher, Japanese retail investors could start to feel more confident about the economy and divert their savings from overseas investments to domestic stocks, analysts said.

That could boost the yen and remove support for the carry trade, since it isn't just hedge funds borrowing yen and using the proceeds from yen sales to invest overseas, but also everyday Japanese investing their money in foreign bonds and other assets.

The great concern is that if everyone tries to unwind the carry trade quickly that could slow a tide of money that's helped drive a record boom in private equity buyouts and push stocks higher worldwide.

But such an unwinding - if it happens - wouldn't necessarily trigger hard and fast movements in the markets, some say.

"I think it is difficult to make strong statements about what is happening with regards to the carry trade," Paul Donovan, chief global economist at UBS in London, said. "To the extent that 'carry trades' involve retail investors, this is not an agile trade that turns in a course of a week."

So even though the dollar is at an all-time low against the euro, its movement against the yen may be what bears closer watching.
(Source CNN Money)

Can Oracle's Database 11g Deliver?

2007-07-14T13:30:00.000+03:00

Given Oracle's penchant for juicy headlines the past year -- an espionage suit against one rival, a strategic sucker punch against another, and $5 billion spent on a dozen acquisitions -- it's easy to forget what the world's second-biggest software company actually does for a living.

Get ready for a reminder. At an event in Manhattan on July 11, Oracle (ORCL) co-President Charles Phillips and other company executives christened the first new version of the company's $10 billion-a-year database software since 2004.

"Lockbox" Security

The market has changed considerably since Oracle introduced version 10g. Databases are ballooning in size as companies process more transactions and analyze more information. "What was considered a big database three years ago is now considered a pipsqueak," says Andrew Mendelsohn, Oracle's senior vice-president for database development. Customers are increasingly storing new types of information like e-mail messages, maps, and videos as they comply with federal regulations and make use of new media. At the same time, they're trying to cut back on labor costs for information technology.

Oracle has developed features for 11g to address those trends. The new software is designed for easier installation, addressing pressures on IT departments to quickly change systems to support new products or manage mergers and acquisitions. "That's the No. 1 thing we're going to deal with in this release," Mendelsohn says. Also built into 11g is new data-compression technology to let companies stuff more information into supersized databases while spending less on disk space.

And 11g can cordon off information so it's only changeable by a CFO or auditor. "If you're concerned about security and compliance, then it's definitely a must-have," says Ari Kaplan, president of the Independent Oracle Users Group, which includes 20,000 members. Kaplan is also a senior consultant at Datalink (DTLK), which designs systems that use Oracle software. "Everything that happens in the database is put in a lockbox."

Bigger Stock Boost?

It's a product Oracle is counting on to keep its sales and stock price on the rise. Sales of databases and related middleware have been growing more than 15% a quarter, accounting for two-thirds of Oracle's $14.2 billion in software revenue for its fiscal year ended May 31. Some Wall Street analysts expect the new database system, Oracle 11g, to help fuel a 20% gain in stock price over the next year. That's on top of a 16% gain the shares have logged since the start of 2007.

In a positive sign, the 18% growth in sales of new database and middleware licenses that Oracle posted in its latest quarter offers "a strong indication" that corporate software spending isn't slowing down, according to a late June report by Brent Thill, Citigroup's (C) software research director [see BusinessWeek.com, 6/27/07, "Oracle's Mixed Message"]. Now, "many investors are questioning if Oracle can deliver an encore," he said, raising his target for Oracle shares to $24 over the next 12 months; the shares closed July 11, up 26 cents, at $19.98.

High Margins

Credit Suisse (CS) software analyst Jason Maynard also predicts Oracle's shares can touch $24 within a year, arguing in a June 26 research note that the company can improve on its impressive 46% operating margins. Morgan Stanley (MS) research analyst Peter Kuper says Oracle's database business, especially the lucrative technical support fees it collects from customers, have helped the company achieve some of the highest margins in the software business. "They're hitting levels few companies ever get to," he says.

In its just-ended fiscal year, Oracle booked $9.5 billion in database and middleware revenue. It also generated $4.7 billion in revenue from applications software, the result of a two-and-a-half year buyout binge of PeopleSoft, Siebel Systems, and about 30 other companies. The pitch to investors along the way has been this: As Oracle adds applications that manage human resources, sales, manufacturing, and other operations, sales of that software pull along more installations of its flagship database, which underpins those programs.

Partly as a result, Oracle keeps adding market share. The company controlled more than 47% of the $15.2 billion database market in 2006, according to market research company Gartner (IT). That's way ahead of IBM's (IBM) roughly 21% share and Microsoft's (MSFT) 17.4%. Oracle's Mendelsohn says the company's dominant position on computers that run the open-source Linux operating system has helped the market share gains. Oracle also has been investing in expanding its business through U.S. computer resellers to reach more small and midsized companies. At the other end of the scale, Oracle recently inked large database deals with China Mobile (CHL), FedEx (FDX), and Daewoo Securities.

The Action in Middleware

But there are challenges. Microsoft's SQL Server database is capturing a bigger slice of the market -- its share grew by 28% in 2006, compared with 15% growth for Oracle, Gartner says -- as more companies use the Windows operating system and other Microsoft products for key computing tasks. Meanwhile, IBM has made efforts to scale down its DB2 database to appeal to customers with more modest needs. And cheap, open-source databases from MySQL and other companies have risen in popularity [see BusinessWeek.com, 6/26/07, "The Worth of Open Source? Open Question"].

Oracle is trying hard to complement its database business by acquiring and developing more middleware, the software that binds other programs together. Oracle reports database and middleware sales together. "The middleware business is getting to the size where it's really moving the needle now," CEO Larry Ellison said during Oracle's last conference call with analysts.

It was a rare stick-to-your-knitting performance by Ellison. For much of the past year, he's been more apt to spend time deprecating SAP, filing a lurid espionage suit against that German rival [see BusinessWeek.com, 7/4/07, "SAP's TomorrowNow Troubles"], and undercutting Red Hat's (RHT) Linux business by selling support for the open-source operating system at a fraction of the price. For investors, a renewed emphasis on the basics could make for an even better growth story.

(Source MSN Money)

The best 500 companies in first quarter 2007

2007-07-12T00:18:00.000+03:00

Rank	Company	Global 500 revenues rank	2006 Profits ($ millions)	Profits % change from 2005
1	Exxon Mobil	2	39,500.0	9.3
2	Royal Dutch Shell	3	25,442.0	0.5
3	UAL*	366	22,876.0	N.A.
4	BP	4	22,000.0	-1.5
5	Citigroup	14	21,538.0	-12.4
6	Bank of America Corp.	21	21,133.0	28.4
7	General Electric	11	20,829.0	27.4
8	Gazprom	52	20,321.3	36.7
9	Pfizer	115	19,337.0	139.2
10	Chevron	7	17,138.0	21.6
11	HSBC Holdings	22	15,789.0	4.7
12	ConocoPhillips	9	15,550.0	14.9
13	Total	10	14,764.7	-3.2
14	J.P. Morgan Chase & Co.	31	14,444.0	70.3
15	Toyota Motor	6	14,055.8	16.0
16	American International Group	23	14,048.0	34.1
17	China National Petroleum	24	13,265.3	2.4
18	Petronas	121	12,862.8	11.2
19	Petrobras	65	12,826.0	24.0
20	Microsoft	139	12,599.0	2.8
21	Altria Group	71	12,022.0	15.2
22	Royal Bank of Scotland	54	11,762.2	17.6
23	ENI	26	11,564.1	5.9
24	Wal-Mart Stores	1	11,284.0	0.5
25	Johnson & Johnson	112	11,053.0	6.2
26	Berkshire Hathaway	33	11,015.0	29.2
27	BHP Billiton	205	10,450.0	63.3
28	GlaxoSmithKline	147	9,915.0	13.3
29	UBS	27	9,776.6	-13.2
30	ING Group	13	9,650.8	7.7
31	Goldman Sachs Group	72	9,537.0	69.5
32	Santander Central Hispano Group	75	9,530.3	23.3
33	International Business Machines	42	9,492.0	19.6
34	BNP Paribas	25	9,169.0	26.1
35	Credit Suisse	47	9,034.8	92.5
36	Crédit Agricole	18	8,975.8	20.7
37	Allianz	19	8,808.9	61.9
38	Procter & Gamble	74	8,684.0	19.7
39	Wells Fargo	126	8,482.0	10.6
40	Barclays	83	8,410.0	34.2
41	Samsung Electronics	46	8,301.9	11.3
42	Telefónica	77	7,820.2	41.6
43	Wachovia Corp.	131	7,791.0	17.3
44	Mitsubishi UFJ Financial Group	118	7,532.2	10.6
45	Deutsche Bank	35	7,510.3	71.3
46	Merrill Lynch	70	7,499.0	46.6
47	Lukoil	110	7,484.0	16.2
48	Morgan Stanley	61	7,472.0	51.3
49	Rio Tinto Group	313	7,438.0	42.6
50	AT&T	86	7,356.0	53.7

(Source CNN Money)

J&J, ConocoPhillips plan stock buybacks worth $25B

2007-07-10T13:19:00.000+03:00

Johnson & Johnson (JNJ) and ConocoPhillips (COP) announced on Monday plans to repurchase a combined $25 billion of stock, adding to this year's record pace of U.S. share buybacks.

J&J, the world's largest maker of health care products, will use a combination of cash and debt to fund a $10 billion repurchase program, the company's largest. ConocoPhillips, the third-biggest U.S. oil producer, plans to buy back as much as $15 billion of its shares through 2008.

The buyback announcements follow record repurchase programs initiated this year by Home Depot (HD) and IBM. (IBM)

U.S. companies have announced $415 billion of share buybacks in 2007, 24% ahead of last year's record pace, according to Birinyi Associates data as of June 29.

"Corporations are flush with cash to the extent they feel they can grow their businesses and still have money left over to return to shareholders," said James Awad, who oversees about $1.3 billion as chairman of Awad Asset Management in New York. "One of the legs of this bull market has been that the supply of common stocks has been shrinking."

The Standard & Poor's 500 index needs to rise 0.5% to break its June 4 record, while the Dow Jones industrial average is 0.2% away from its all-time high. In the first quarter, S&P 500 companies spent $118 billion on buybacks, the most for a quarter, according to S&P.

J&J said it will use its AAA credit rating to finance an unspecified portion of the repurchases, which have no time limit.

The stock gained 59 cents, or 1%, to close at $62.72 Monday in New York Stock Exchange composite trading. The shares have gained 2.9% in the past year, underperforming the 16% increase in the 54-member S&P 500 Health Care index.

ConocoPhillips will spend $2 billion to $3 billion repurchasing stock in the third quarter, and a similar amount in the fourth, it said.

ConocoPhillips shares gained $3.01, or 3.7%, to a record $84.05. The stock is the second-worst performer in the seven-member S&P 500 Integrated Oil and Gas index this year after ExxonMobil, the world's largest oil company.

Home Depot last month said it may buy back a record $22.5 billion of its stock, using proceeds from the sale of its contractor-supplies unit, existing cash and $12 billion of bonds. The shares have climbed 5.1% since the announcement. They fell 0.2% to $40.23 Monday.

IBM in April added $15 billion to its stock-buyback program, the most ever. The company said it would take on debt to finance much of the buyback. The shares have gained 14% since the announcement. They fell 0.1% to $108.97 Monday.
(Source USA Today)

Apple Issues Battery Program for IPhone

2007-07-09T08:26:00.000+03:00

A consumer advocacy group has expressed outrage over Apple Inc.'s battery replacement program for the iPhone, while developers and hackers are trying to figure out ways they could expand the capabilities of the hot new gadget.

The hybrid cell phone, iPod media player and wireless Web-browsing device launched to much fanfare on June 29. On the same day, the Foundation for Consumer and Taxpayer Rights fired off a letter to Apple and AT&T Inc., the cell phone's exclusive carrier, complaining that customers were being left in the dark about the procedure and cost of replacing the gadget's battery.

The iPhone's battery is apparently soldered on inside the device and cannot be swapped out by the owner like most other cell phones.

Apple spokeswoman Jennifer Hakes said Thursday the company posted the battery replacement details on its Web site last Friday after the product went on sale.

Users would have to submit their iPhone to Apple for battery service. The service will cost users $79, plus $6.95 for shipping, and will take three business days.

The procedure is similar to the one it has for the company's best-selling iPod players, but because some users will not want to live without their cell phones, Apple is also offering a loaner iPhone for $29 while the gadget is under repair.

Harvey Rosenfield, founder of the Santa Monica, Calif.-based consumer watchdog group that wrote the letter last week, contends the iPhone's battery and repair costs should have been clearly disclosed earlier. The company outlined its cellular service rates and many other features of the iPhone in advance of its launch, which drew snaking lines around stores across the country.

"Some of them might be waking up now," Rosenfield said, "wondering who they got in bed with."

Apple did not have an immediate comment on the consumer group's concerns.

Rosenfield said he didn't detect the battery information, which is located under several layers of links on Apple's support page on its Web site, until earlier this week. Technology blogs also started reporting their discoveries of it this week while one of the questions Wall Street Journal tech columnist Walt Mossberg fielded Thursday from his readers was about what happens when the iPhone battery dies.

"The cell phone industry is notorious for not being consumer-friendly while Apple has a fairly good reputation, so for Apple to stand on a technicality of a hidden disclosure that's going to cost the user as much as 20 percent of the purchase price I think will prove to be a colossal mistake," Rosenfield said.

The iPhone costs $499 or $599, depending on the model, and requires a minimum two-year $60-a-month service plan with AT&T.

The consumer and taxpayer organization has gone to court over these kinds of issues in the past. It is embroiled in a pending lawsuit against Cingular, now part of AT&T, over its service termination fees, and is also one of the plaintiffs in a pending lawsuit against Apple over an early model iPod Nano that was allegedly defective because it scratched easily.

In addition, Rosenfield said, replacing the iPhone battery should be free to begin with while the product is under its one-year warranty.

He also questioned why Apple chose to go against the norm of what cell phone users are accustomed to -- swapping out their own batteries and generally at a cost that is less than half of what Apple is charging now for the iPhone.

"I'm just surprised at Apple's decision to defy the common practice of allowing people to purchase replacement batteries," he said. "And the fact that the information is buried is just not appropriate."

Apple has not disclosed how many iPhones were available at launch, though analysts have speculated the amount was 500,000 or more. AT&T said the gadget had sold out at most of its stores on the night of the launch while many Apple stores ran out of stock by early this week. Those ordering the iPhone online through Apple's Web site on Thursday were being promised delivery would be in two to four weeks.

Meanwhile, software developers anxious to find ways they could introduce applications tailored for the iPhone's Web browser were preparing to get together in Silicon Valley this weekend at an ad hoc conference called iPhoneDevCamp.

Also, a tech-savvy audience cheered the latest work this week of a hacker known for cracking copy-protection technology and creating workarounds of Apple products. Jon Lech Johansen, also known as "DVD Jon," posted on his blog Tuesday a method for people to turn on the iPod and Wi-Fi features -- but not the cell phone functions -- of the iPhone without going through the required activation process and service fees of AT&T.
(Source MSN Money)

Microsoft extends Xbox 360 warranty

2007-07-08T11:16:00.000+03:00

Under a new warranty, Microsoft will pay for shipping and repairs for three years, worldwide, for consoles afflicted with what gamers call "the red ring of death."

Microsoft(MSFT) on Thursday extended the warranty on its Xbox 360 video game console and said it will take a charge of more than $1 billion to pay for "anticipated costs."

Under the new warranty, Microsoft will pay for shipping and repairs for three years, worldwide, for consoles afflicted with what gamers call "the red ring of death." Previously, the warranty expired after a year for U.S. customers and two years for Europeans.

Microsoft said it should take two to four weeks to repair damaged consoles.

The charge will be $1.05 billion to $1.15 billion for the quarter ended June 30. Microsoft reports its fourth-quarter results July 19.

The announcements come amid customer complaints and speculation among bloggers that Microsoft was running out of "coffins," special return-shipping boxes Microsoft provides to gamers with dead consoles.
FIND MORE STORIES IN: Thursday | Microsoft | Xbox | Bach | Robbie Bach

Microsoft acknowledged "an unacceptable number of repairs." It said it had investigated the sources of hardware failures indicated by three red flashing lights. The software giant has made manufacturing and production changes to reduce the hardware failures, says Robbie Bach, president of the entertainment and devices division.

"There isn't one certain problem; it's a combination of a number of different factors," Bach said in an interview.

Bach declined to say what Microsoft fixed, nor would he say how many gamers sent in machines for repair. The percentage is "a meaningful number, and it has our attention," he said.

Microsoft shipped 11.6 million Xboxes through June, compared with a target of about 12 million, CFO Chris Liddell said in a conference call Thursday.

"The majority of Xbox 360 owners are having a great experience with their console and have from Day One," Bach added.

Analysts said the scope of the problem, plus nagging concerns about the reliability of the Xbox 360 — introduced to much fanfare in November 2005 — forced Microsoft to take drastic actions.

"Microsoft is finally acknowledging that there's a serious problem and doing what it has to do to keep existing customers happy and buying games," says Matt Rosoff, an analyst at Directions on Microsoft.

But the charge and change in warranty could hinder sales as Microsoft dukes it out with Sony(SNE) and Nintendo in the $12.5 billion console market, he says.

Microsoft's entertainment and devices division, which makes the Xbox 360 and the Zune digital music player, reported an operating loss of $315 million on $929 million in sales in the third quarter this year.

Microsoft made its announcements after markets closed. Its stock fell 11 cents to $29.88 in after-hours trading.

(Source USA Today)

The remarkable story of Boeing's 787

2007-07-08T11:10:00.000+03:00

The Dreamliner, the fastest-selling commercial plane in history, rolls out this weekend.

The Boeing 787 Dreamliner is aptly named. When it lifts off the runway at Seattle's Boeing Field for its first test flight this summer, it will carry the dreams of more than 900 small subcontractors that helped create it. With 584 copies on order as of June, it's the fastest-selling new plane in the history of commercial aviation and will keep Boeing and its suppliers busy for a decade or longer.
For some subcontractors, catching a ride on the 787, scheduled for rollout this weekend, will be their big break. Missing the flight has already put one would-be contractor in peril: Thermion Systems International (See "Iced out of a deal with Boeing?"), which thought it had a deal to supply de-icing equipment, says it was elbowed out of the program and is struggling to survive.
cruiser, is packed with technological firsts, including the pioneering use of composites in a commercial liner's airframe. Equally remarkable is the way in which Boeing has structured its manufacturing process, bestowing unprecedented opportunities on small suppliers and ushering in a new era for the aerospace industry.
Boeing says 70% of the 787 has been outsourced; rival Airbus is relying on subcontractors for about 50% of its A350 plane, now in development. "This farming-out of the airplane's construction is revolutionary," says Richard Aboulafia, vice president at Teal Group, an aerospace consulting firm (tealgroup.com).
For decades, Boeing has outsourced a portion of the work on its planes, and its reliance on sub-contractors has risen with each succeeding generation of aircraft. But with the Dreamliner program, the aerospace giant has reached a point where its role has changed. It now functions less as a manufacturer than as a project manager, supervising its first- and second-tier subcontractors, each of which may rely on scores of more specialized subcontractors. Boeing handles final assembly, marrying the cockpit, fuselage, wings, and tail sections, which are completed elsewhere and delivered to its plant. "Boeing's objective is to get these 'supplier partners' to do as much heavy lifting as possible," Aboulafia says. "That gives small businesses more responsibility."
Boeing says it can't supply a full list of subcontractors that are working on the project, but industry analysts estimate that their numbers are greater than the 900-plus that contributed to the 777, which began construction in 1990. Boeing spokesperson Loretta Gunter confirms that the processes used to construct the two planes are markedly different. "We have fewer first-tier subcontractors on the 787 than we did on the 777 because each is providing bigger components," she says. "Likewise, many of them are contracting out bigger jobs to their subs."
Boeing's new manufacturing template has captured the imagination of the aerospace industry. Recently officials from Airbus told analysts that the company will up its outsourcing to become more competitive. "For any company that wants to be successful in aerospace manufacturing, Boeing's new strategy is the way forward," says Aboulafia. "Which is ultimately good news for small business."
It's already good for Kreisler Manufacturing in Elmwood Park, N.J. Kreisler started out as a jewelry manufacturer, but when things got tough in that business, management decided its metal-finishing skills could be transferred to the aerospace industry. To cut costs and get into the European stream of the global outsourcing system, it invested in a new 52-employee machine shop in Kraków, Poland. "Our presence in Poland made us competitive from a global standpoint," says Brad Barnes, 53, Kreisler's director of sales and marketing.
Kreisler became part of the Dream-liner program through Rolls-Royce, which was hired to develop engines for the plane. Rolls contracted with multinational conglomerate Parker-Hannifin to make the fuel and hydraulic-flow systems. Parker-Hannifin hired Western Filter Group, a company based in Valencia, Calif., to supply the filtration equipment for the 787's hydraulic system, and it gave the order for fuel-manifold and associated tubing for the engines to Kreisler. As part of that agreement, Kreisler received certification from Rolls-Royce for various types of welding work. Having demonstrated its expertise on the 787, Kreisler is prepared to take on more projects for Rolls-Royce, which would become the company's first European customer.
Not only is Boeing pushing responsibility out to more subs, it is also demanding more from them. Many have created new systems and products, rather than simply filling orders to Boeing specs.
Green Hills Software of Santa Barbara, for example, won the assignment to write the operating system for the on-board flight-control computers. That's the kind of critically important work usually reserved for tier-one contractors. Green Hills was hired by tier-one contractor Honeywell, which specified Green Hills as part of its work for Boeing on the flight-control system. "Honeywell doesn't specialize in operating systems," says Dave Chandler, senior vice president of sales for Green Hills. "It's easier for us to handle because that's the only thing we do."
American Panel, based in Alpharetta, Ga., is another small company entrusted with critical technology and another small player whose product was identified specifically by a larger contractor when dealing with Boeing. It supplies LCD displays that go into instrumentation systems built by Astronautics Corp. of America. "Being able to create a display that's readable in bright sunlight is a very narrow niche," explains Jim Niemczyk, vice president of business development for American Panel. He's convinced that riding in the 787 is just the start: "Once our screen is on the latest, greatest plane, Boeing is going to want to retrofit it on all of them," he says.
(source money.cnn.com)

The Art of making Money

2007-07-07T21:28:00.000+03:00

For those interested in the art of making money i have created this blog to join up news of the biggest mergers and transactions in the world. I will post information about the biggest players and the finest products which sum up the biggest turn-overs.