AT&T Is Buying Oklahoma-Based Carrier

AT&T, the wireless carrier, agreed on Friday to acquire the rural wireless provider Dobson Communications Corporation for $2.8 billion in cash.

The offer of $13 a share adds about 1.7 million customers to AT&T’s nearly 62 million at a time when some analysts have questioned how much larger carriers can grow in a wireless market that is saturated.

The offer represents a 17 percent premium over Dobson’s $11.11 closing price on Friday. Including debt, the deal is worth about $5.1 billion.

Dobson, based in Oklahoma City, does business under the Cellular One brand in rural and suburban markets in 17 states and has provided roaming services to AT&T since 1990.

The chief executive of AT&T, Randall L. Stephenson, who took over for Ed Whitacre Jr. this month, has said AT&T will be a wireless-centered company going forward. The announcement of the deal came at the close of Mr. Stephenson’s first board meeting as chief executive.

Patrick Comack, an analyst for Zachary Investment Research, said he was surprised by an acquisition announcement so soon after Mr. Stephenson’s move to the top job. AT&T is still completing its integration of the BellSouth Corporation and the old AT&T long-distance business.
Source : http://www.nytimes.com

Backers of the Buyout Boom Seem to Be Backing Out

BUYOUT TROUBLES On several fronts, things are looking down for the buyout business. The investors who have fueled the boom in recent years have begun to show resistance on some private equity deals as interest rates have risen and banks have insisted on tougher lending terms. Shares of the buyout shop Blackstone Group, which went public last week, sank below their opening price on Tuesday and stayed there all week. Congress, meanwhile, is considering bills that would increase taxes on income earned by private equity managers.

Seven deals were reported on Monday, the day of the week that typically has the most merger announcements, down from 43 on the prior Monday and 84 on Monday, June 4, according to Thomson Financial.

The rest of the week had similar news. The discount chain Dollar General withdrew part of a debt offering it had planned to help finance its $6.9 billion buyout by Kohlberg Kravis Roberts. ServiceMaster may have to pay higher interest rates on loans it is seeking to finance its buyout by Clayton, Dubilier & Rice. And U.S. Foodservice, the American division of the big Dutch food outfit Royal Ahold, postponed a bond offering.

There are several big debt offerings in the works to finance some of the largest buyouts in history, including those of the First Data Corporation, Chrysler and the Texas utility TXU. A pullback by bond investors could spell more trouble for the buyout industry.

DOW JONES ACCORD Negotiators on Tuesday reached a tentative accord aimed at protecting the editorial integrity of The Wall Street Journal, opening the way to final negotiations for the News Corporation of Rupert Murdoch to acquire Dow Jones & Company, which owns the newspaper.

A person close to the talks provided a copy of the agreement to The New York Times on Friday. Under its terms, an independent, five-member committee would be formed that could block the hiring and firing of top editors, go to court to enforce the agreement, and conduct internal investigations and publish the results on the newspaper’s editorial page.

The Bancroft family, which holds a controlling interest in Dow Jones, has stated that it wants an independent editorial board — with most of the initial members chosen by the family — to oversee The Journal’s news operations and prevent Mr. Murdoch from exerting his influence on the newspaper. The proposed agreement, according to people who have been briefed on the talks, calls for initial committee members to be chosen jointly by Dow Jones and the News Corporation. Those members would then vote on replacements when vacancies occur. The family has so far not reacted publicly to the tentative deal, which was negotiated by a committee of the Dow Jones board.

It is still unknown whether the Bancrofts will try for a sale price higher than the $5 billion Mr. Murdoch has offered. Reuters quoted Mr. Murdoch as saying a final agreement would be reached “in the next two, three weeks’ time or not at all.” And he mused to Time magazine about the possibility of discontinuing the paper version of The Journal and publishing solely online.

QUESTIONABLE IMPORTS Pet food, toothpaste, toy trains, tires and now, seafood. Worries over the failure of Chinese imports to meet American health and safety standards were heightened Thursday when the Food and Drug Administration effectively blocked the sale of five types of farm-raised seafood from China because of instances of contamination from unapproved animal drugs and additives.

China is the biggest producer of farm-raised fish and the biggest supplier of seafood to the United States. Included in the F.D.A.’s “import alert” were shrimp; catfish; eel; basa, which resembles catfish; and dace, which is somewhat like carp.

The listed seafood can be sold in the United States only if importers provide independent documentation that it does not contain the contaminants, which are mostly antibacterial and antifungal agents used to prevent disease in fish.

Earlier in the week, federal officials ordered a small New Jersey retailer to recall 450,000 radial tires after it was discovered that a Chinese manufacturer had stopped including a safety feature that prevented the treads from separating.

Some in Congress called for a federal food-safety agreement with China to protect American consumers.

SLOW CONNECTIONS As Apple prepared to put the iPhone on the market, the chief executives of both Apple and AT&T defended their decision to use AT&T’s Edge wireless data network for the product’s Internet connections. Edge is widely accessible, but comparatively slow. Product reviews of the iPhone, which so far have been mostly positive, have noted its slow network connections.

Apple’s chief, Steven P. Jobs, and Randall L. Stephenson, the chief of AT&T, said that the iPhone works well on local Wi-Fi hotspots and that Edge was chosen for cellular connections because it was more widely available, especially in rural areas, than AT&T’s faster HSDPA network.

Now that the highly anticipated introduction of the iPhone is past, the question is whether demand for the $500 and $600 gadget will meet expectations.

PRICE PACTS GET AN O.K. The Supreme Court struck down a 96-year-old antitrust rule forbidding manufacturers and distributors to agree on minimum retail prices. The 5-to-4 decision will give manufacturers considerably more power to determine prices and restrict the flexibility of retailers to discount merchandise.

The old rule held that resale price maintenance agreements violated the Sherman Antitrust Act. The court on Thursday instructed judges to apply a case-by-case approach to assessing the impact on competition of such agreements. Opponents of the old rule said that in many cases it actually stifled competition.
Source : http://www.nytimes.com

UAW Workers Ratify Delphi Labor Agreement - Union

Workers represented by the United Auto Workers union at Delphi Corp. (DPHIQ) ratified a new labor agreement with the auto supplier, clearing a hurdle in the company's effort to exit Chapter 11.

The union said Friday that members approved the measure by a 68% to 32% vote. About 17,000 Delphi workers at 18 sites were eligible to vote on the deal.

Delphi is the former parts-making division of General Motors Corp. (GM) and has been in Chapter 11 since October 2005. The labor deal, in addition to aiding Delphi's efforts to come out of bankruptcy protection, is also significant for GM, which relies on Delphi for many parts and systems used in its cars.

Delphi now needs to finalize a capital investment plan that would shape its emergence from Chapter 11. Delphi also needs to finalize agreements with other unions that represent about 3,000 workers.

Before reaching a tentative agreement last week, the company and its unions had clashed over new labor terms. The UAW said in its statement Friday that 65.3% of production workers approved the deal while 79% of the skilled trades workers voted in favor.

The agreement calls for Delphi to offer wages of $14.50 to $16.23 an hour for all current workers. New hires would make $14 an hour. The agreement also calls for four UAW-represented plants to remain open. The rest will be sold, closed or taken over by GM.

Workers who began their employment with GM or who were hired before the lower- tier wage for new hires went into effect earned about $27 an hour.

About 4,000 of the 17,000 remaining Delphi UAW workers were making the higher wage. Delphi offered buyouts, early retirements and "flow backs" to jobs at GM last year.

Under the new agreement, Delphi will offer lump-sum payments, relocation allowances, buyouts and early-retirement packages to soften the blow for workers.

In addition, GM agreed to take control of some Delphi plants and open the door for certain Delphi employees to "flow back" to the auto maker.

GM also will incur expenses related to supplementing the paychecks for current Delphi workers in order to bridge the gap between what the auto supplier was willing to fork out and what the UAW was willing to accept. GM has said its financial exposure to Delphi will be $7 billion.

The UAW and Delphi still must negotiate so-called competitive operating agreements at the plant level, according to the contract. Those agreements cover issues such as work rules, job classifications and outsourcing, but not wages and benefits.

GM shares, which hit their highest level in more than two years on Thursday, were down 0.4% at $38.01 in recent trading. The stock has benefited from optimism about the Delphi deal and hopes about the prospects for GM's upcoming contract talks with the UAW.
Source : http://money.cnn.com/

Stocks Flat After Fed Holds Steady

Stock indexes finished Thursday's session almost unchanged after the Federal Reserve, finishing a two-day meeting, decided to hold interest rates steady.

An eagerly awaited statement from the Federal Reserve Open Market Committee made few changes. The Fed statement said economic growth was "moderate" during the first half of the year and expects the economy to "expand at a moderate pace over coming quarters."

Core inflation "improved modestly in recent months," the Fed statement said. But, "a sustained moderation in inflation pressures has yet to be convincingly demonstrated."

Markets also digested new economic data and a batch of earnings news, several from retailers.

In the first quarter, the U.S. gross domestic product grew at 0.7%, according to final figures released Thursday. That's revised up from 0.6%. Price data was also revised higher, with personal comsumption expenditures, a measure of the price of consumer goods and services, raised to 2.4% from 2.2% previously.

U.S. initial jobless claims fell 13,000 to 313,000 for the week ended June 23. The claims data were a little lower than expected, Action Economics says.

Despite some volatility after the statement was released, stock indexes ended the session almost exactly where they had started. The Dow Jones industrial average edged down 5.45 points, or 0.04%, to 13,422.28. The broader S&P 500 index was off 0.63 points, or 0.04%, to 1,505.71.

The tech-heavy Nasdaq Composite index was up 3.02 points, or 0.12%, to 2,608.37.

Stocks on the New York Stock Exchange were positive by a 19 to 14 ratio. On the Nasdaq exchange the ratio was 15 to 14.

In energy markets Thursday, oil moved back above $70 on worries about supplies, and then retreated. August WTI crude oil futures finished 60 cents higher at $69.57.

Among stocks in the news on Thursday, General Motors (GM) announced it would sell its Allison Transmission business for about $5.6 billion to the Carlyle Group and Onex. GM stock finished higher.

General Mills (GIS) fell after reporting earnings of 62 cents per share, vs. 61 cents a year ago on a 6.2% rise in sales. The firm sees fiscal 2008 earnings of $3.39 to $3.43 per share, a 7 to 8% increase over 2007.

Monsanto Co. (MON) reported earnings of $1.03 per share in its third quarter, vs. 60 cents a year ago. Sales rose 23% for the company, which expects increased use of its corn seeds globally. The stock was up on Thursday.

KB Home (KBH) moved lower after it reported a $1.93 per share loss in the second quarter, vs. earnings of $2.45 per share a year ago. Revenue for the homebuilder dropped 36%. The firms says there is an oversupply of housing inventory, with aggressive competition and weak demand.

Bed Bath & Beyond (BBBY) fell after reporting earnings of 38 cents in the first quarter, vs. 35 cents a year ago. Same-store sales rose 1.6%, and total sales were up 11%. The overall retail environment, especially for home merchandise, is challenging, the firm said.

Family Dollar Stores (FDO) was also lower after it reported earnings of 40 cents per share in the third quarter, vs. 37 cents a year ago. Same-store sales were up 1.5%, and total sales rose 5.4%.

Rite Aid Corp. (RAD) was up after it reported earnings of 4 cents per share in the first quarter, vs. 1 cents a year ago on a 2.3% rise in same-store sales and a 2.8% rise in total sales.

Novellus Systems (NVLS) said it expects weaking demand in the semiconductor equipment industry. It expects its second quarter results will be at the low end of guidance it previously offered. Semiconductor equipment stocks were down more than 1% on Thursday.

European stock markets moved higher on Thursday. In London, the FTSE 100 index was up 0.67% to 6,571.30. Germany's DAX index was 1.54% higher at 7,921.36. In Paris, the CAC 40 index was up 1.09% at 6,006.31.

Asian markets were also up outside mainland China. In Japan, the Nikkei index was up 0.46% to 17,932.27. In Hong Kong, the Hang Seng index moved up 1.07% to 21,938.22. In China, the volatile Shanghai Composite index plunged 4.03% to 3,914.2.
Source : http://www.businessweek.com

GM Sells Allison Transmission for $5.6B

Shares of General Motors Corp. hit a two-year high Thursday after the automaker said it had agreed to sell its Allison Transmission commercial and military business to an investment conglomerate and a private equity firm.

The deal adds funds to GM's coffers as it gears up for crucial contract negotiations with unionized workers, although it also means losing a profitable division.

GM shares rose 91 cents, or 2.43 percent, to $38.32 in afternoon trading.

The sale to Onex Corp. and The Carlyle Group includes seven manufacturing plants in Indianapolis and its global distribution network and sales offices. A production facility in Baltimore, which makes conventional and hybrid transmissions for pickup trucks and sport utility vehicles, will remain with GM.

The Detroit automaker said the deal, expected to close as early as the third quarter of 2007 pending union and regulatory approval, is part of an effort to raise money and focus on its core business. It said in January it was considering a sale of Allison.

"This is another important step to strengthen our liquidity and provide resources to support our heavy investments in new products and technology," GM Chairman and Chief Executive Officer Rick Wagoner said in Thursday's statement. "At the same time, this sale will position Allison for growth with strong partners in Carlyle and Onex, which have well-established track records of working effectively with their management teams, unions and employees."

Pete Hastings, an auto industry corporate bonds analyst with Morgan Keenan & Co. in Memphis, Tenn., said GM likely viewed the business as nonessential and decided it would rather have the cash as it approaches contract negotiations later this year with the United Auto Workers. Key to those talks will be striking a deal for health care and other benefits for current employees and retirees, which many manufacturers say hinders their ability to compete against foreign rivals with cheaper labor costs.

"They've already got a war chest of sorts, and I think they're adding to it just to take care of what I would call a critical issue," Hastings said. "It's one of the remaining big items that they need to take care of."

In a note to investors, JPMorgan analyst Himanshu Patel said proceeds from Allison came in higher than anticipated and said the move may indicate that GM wants to create a retirees' health care fund similar to one approved by the United Steelworkers at Goodyear Tire & Rubber Co. late last year.

In that pact, Goodyear created a $1 billion retirees' health care fund that gets it off the hook for future health insurance benefits.

GM leaders, including Wagoner, previously have expressed interest in the Goodyear deal, but the company wouldn't directly comment Thursday on the speculation.

"We are looking at a variety of alternatives to address the health care burden," said GM spokesman Dan Flores. "We aren't going to speculate on the options we are exploring, but our focus is on working with the UAW to develop solutions together."

Indianapolis-based Allison designs and builds commercial-duty automatic transmissions, hybrid propulsion systems and parts for trucks and buses, off-highway equipment and military vehicles. The company boasts an 80 percent market share of all medium- and heavy-duty commercial transmissions, with annual revenues of more than $2 billion.

The Carlyle Group is a Washington, D.C.-based private equity firm, and Onex Corp. is a Toronto-based investment conglomerate. The two will be equal partners in the deal, both sides said.

Greg Ledford, Carlyle's managing director, said the new owners aim to eventually take Allison public. He said Carlyle and Onex would assume all UAW contracts for employees from GM, although he would not comment on any possible changes during collective bargaining later this year. The firms have no plans to close any of the seven plants, he said.

"I think it's the best automotive industrial company that I've every seen," Ledford said.

David Kudla, chief executive of Mainstay Capital Management, said in a note to investors Thursday that the new ownership "could create synergies in the military and government business units resulting in more military contracts."

In a telephone interview, Kudla said the deal increases GM's short-term liquidity and helps it finance its North American turnaround plan, but it also constitutes the shedding of another of the automaker's profitable divisions. GM sold 51 percent of its GMAC financing arm last year to a consortium of investors.

"It's debatable as to whether transmissions are considered core or noncore to an automotive company, but certainly from a business analysis, it's a division you'd like to have," he said.
Source : http://www.forbes.com

Western Digital to Buy Drive-Device Maker

Western Digital Corp., in agreeing to buy Komag Inc. for about $1 billion, underscored pressures on makers of disk drives to control key components for making the data-storage devices.

Komag, of San Jose, Calif., makes rotating disks that serve as data-recording media inside of drives. Western Digital, a major Komag customer based in Lake Forest, Calif., said that buying the component supplier would help the company keep pace with technology and pricing changes in the fiercely competitive industry.

"This acquisition puts us in position to be in greater control of our own destiny," said John Coyne, Western Digital's president and chief executive officer.

It could also help make Western Digital more competitive with Seagate Technology, which ranks No. 1 in drive revenue and has long manufactured most of its own disks internally. Western Digital, which says it is No. 2 in the drive market, in 2003 bought Read-Rite Corp. to create an internal source of recording heads -- another component Seagate has long built in-house.

But the deal, announced Thursday, also creates challenges for Western Digital. Komag, in a simultaneous announcement, projected a 30% drop in second-quarter revenue and a "substantial operating loss for the period."

Besides Western Digital, Komag also sells disks to Seagate as well as Hitachi Ltd. Though it plans to keep offering disks to those competitors, they may seek other suppliers, causing a quarterly revenue decline of $25 million to $30 million for three quarters or so, acknowledged Tim Leyden, Western Digital's vice president of finance.

Western Digital agreed to pay Komag holders $32.25 a share in cash. That represents a 9% percent premium over the price of Komag's shares at 4 p.m. yesterday, when the stock traded at $29.58, up 49 cents. But the stock had risen over the past several days amid rumors of a deal, analysts said.

Shaw Wu, an analyst at American Technology Research, called the price tag "quite expensive." But he and Richard Kugele, who tracks the industry for Needham & Co. agreed that the deal could help Western Digital.

"I think this type of merger was inevitable and was probably just accelerated by the softening conditions at Komag," Mr. Kugele said.
Source : http://online.wsj.com

U.S. tightens controls on Chinese seafood imports

Agency officials said the action, which takes effect immediately, covers farm-raised shrimp, eel, catfish, and two other kinds of fish, basa and dace, from China, which is the world's largest producer of farmed fish and the third-largest exporter of seafood to the U.S.

Importers will be allowed to distribute Chinese seafood after proving to the FDA that the products are not contaminated with illegal veterinary drugs or food products, officials said. Suppliers are required to provide a third-party laboratory analysis of their products and show documentation proving compliance with both Chinese and U.S. production standards to get imported seafood into the country, the FDA said.
Chinese fish farmers use four substances that are illegal in the U.S. to protect seafood from exposure to fungi, according to the FDA. Three have been shown to be carcinogenic and one may increase resistance to a "critically important class of antibiotics," officials said.
"FDA is initiating an import alert against several species of imported Chinese farmed seafood because of numerous cases of contamination with drugs and unsafe food additives," said Dr. David Acheson, the agency's assistant commissioner for food protection. "There is no imminent threat to public health because of the low levels of contaminants. However, the banned substances could cause serious health problems if consumed over a long period of time."
The agency is not asking for products to be withdrawn from the market, said Margaret Glavin, FDA's associate commissioner for regulatory affairs.
"We're not asking for ... people to take (seafood) out of their freezers and return it or throw it away," she said. "This is a long-term health concern, not an acute health concern.
"We don't know how much of this product is in the country," Glavin said, because there is no labeling requirement to designate the country of origin.
Shrimp and catfish are two of the 10 most frequently consumed seafood products in the U.S., according to the FDA. Chinese imports account for 7 percent of American shrimp consumption and 10 percent of catfish consumption, according to the National Fisheries Institute, a trade group.
"Consumers are going to be able to get catfish and shrimp ... at a comparable price," Stacey Viera, the group's spokeswoman, said Thursday. "For the seafood companies, this is something ... (that) will add an extra layer on the import process."
FDA officials brushed aside questions about increased scrutiny of Chinese products, saying extensive reviews dating to 2001 led to the import alerts.
"The focus recently has been on Chinese products," Acheson said.
Companies in half a dozen countries, including the Philippines and Mexico, are also on import alert for using the same contaminants, Glavin added.
Source : http://www.marketwatch.com

U.S. Fed leaves key interest rate unchanged at 5.25 percent

The U.S. Federal Reserve decided Thursday to leave a key interest rate unchanged at 5.25 percent, where it has stood for a year.

This was the eighth consecutive time that the central bank held the federal funds rate, interest commercial banks charge each other on overnight loans, steady at 5.25 percent since late June 2006.

After boosting rates at its 17 regular policy-setting meetings in a row over two years, the Fed paused in August last year and left rates alone in September, October, December, January, March and May.

As a result of the Thursday decision, commercial banks' prime lending rate, the benchmark for millions of consumer and business loans, will remain at 8.25 percent. The prime rate responds to changes in the federal funds rate.

The decision was widely expected by economists even though government data showed that the economy had slowed down significantly in the first three months. The tiny 0.7 percent rate was much slower than the 2.5 percent pace in the previous quarter.

The housing slump, which started last year as interest rates were rising, was a big drag to the economic growth in the first quarter.

Investment in home building plunged by 15.8 percent, on an annualized basis, in the first quarter, deeper than the 15.4 percent drop previously estimated.

However, the economy has not lost all momentum for expansion. Continued increases in personal consumption expenditures had been a major pushing force.

Many economists expect the economy to expand at an annual rate of 2.3 percent to 3 percent in the April-to-June quarter.

A statement issued Thursday by the Fed showed that the central bank is still concerned more about inflationary pressures than slowdown in economic growth.

In the statement, the Fed said that economic growth appears to have been moderate during the first half of this year, despite the ongoing adjustment in the housing sector.

"The economy seems likely to continue to expand at a moderate pace over coming quarters," it added.

As for inflation, the Fed said readings on core inflation have improved modestly in recent months. Excluding volatile energy and food, the core inflation has been closely watched by the central bank as a key inflation measure.

However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated, said the Fed. "Moreover, the high level of resource utilization has the potential to sustain those pressures."

In these circumstances, the Fed's predominant policy concern " remains the risk that inflation will fail to moderate as expected. "

Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information, the Fed said.

Analysts believe that the Fed could hold interest rates steady through the rest of this year and well into 2008.
Source : http://english.people.com.cn

Amaranth distorted US natgas prices in 2006-US panel

U.S. regulators were powerless to stop "excessive speculation" by Amaranth Advisors LLC because the giant hedge fund exploited an unregulated electronic exchange to "dominate" and "distort" natural gas markets in 2006, a U.S. Senate panel said in a report issued on Sunday.

Before it folded in September after sustaining $6.4 billion in losses on bad bets on natural gas contracts, Greenwich, Connecticut-based Amaranth commanded a massive trading book that at one point included about 40 percent of natural gas futures contracts for delivery in the winter months of 2006-07, the Senate Permanent Subcommittee on Investigations said in a report that details its nine-month probe.

"Amaranth accumulated such large positions and traded such large volumes of natural gas futures that it distorted market prices, widened price spreads and increased price volatility," the panel wrote in its 130-page report.

Investigators drew their conclusions from over 2 million trading records they subpoenaed from the New York Mercantile Exchange (NYM.N: Quote, Profile, Research) and IntercontinentalExchange Inc. (ICE.N: Quote, Profile, Research), known to traders as the ICE.

The report, to be discussed at a subcommittee hearing on Monday, gives new ammunition to panel chairman Carl Levin, the Michigan Democrat who wants to give U.S. regulators at the Commodity Futures Trading Commission (CFTC) authority over electronic exchanges like the ICE, which is currently exempt from CFTC oversight.

Levin said Congress should close the "Enron loophole" inserted in the Commodity Futures Modernization Act of 2000 at the behest of lobbying efforts by now-defunct energy trader Enron Corp., which exempts electronic exchanges like the ICE from CFTC oversight.

"We need to put the cop back on the beat in all U.S. energy markets with stronger tools to stop price manipulation, excessive speculation and trading abuses," Levin said.

Amaranth's representatives said the fund did not dominate or distort natural gas prices, and pointed to a finding at the end of the report by Republican staff that "at least at times, Amaranth was responding to the market, rather than driving it."

"Amaranth did not manipulate the market and nothing in the (report) concludes otherwise," said Dan Webb, chairman of Winston and Strawn LLP and counsel to Amaranth.
Source : http://www.reuters.com

Sales Chief Is the Latest to Depart From Yahoo

Yahoo said Sunday that Wenda Harris Millard, its longtime chief sales officer, is leaving amid a reorganization of Yahoo’s sales team.

Ms. Millard, who joined Yahoo in October of 2001, said Sunday that she resigned to become president for media at Martha Stewart Living Omnimedia. Ms. Millard is a well-regarded executive on Madison Avenue and is the latest in a string of executives to leave Yahoo since an overhaul began in December. Her departure comes less than a week after Terry S. Semel, the chief executive, resigned amid growing unrest among shareholders over Yahoo’s lagging performance.

The revamping of Yahoo’s sales teams is the first organizational change announced since a co-founder, Jerry Yang, stepped in as chief executive and Susan L. Decker was promoted to president last week. The two are under intense pressure from Wall Street to improve Yahoo’s performance. Just last week Ms. Decker said that sales of graphical ads would be weaker than previously expected.

Ms. Decker said in an interview Sunday morning that Ms. Millard’s departure was the result of a long-planned merger of two separate groups, one charged with selling graphical ads and another responsible for selling the small text ads that appear alongside search results. The merged sales group will be run by David Karnstedt, who until now ran Yahoo’s search sales business. Mr. Karnstedt will now be head of North American sales reporting to Gregory Coleman, Yahoo’s executive vice president of global sales.

After the reorganization, Ms. Millard, who ran the graphical ads sales unit, was no longer needed, Ms. Decker said. “We made the decision to bring our sales forces together,” Ms. Decker said. “In making that decision, we felt we needed one leader.”

Ms. Millard said she was part of the team that planned the merging of the ad units and was slated to become head international sales. At the same time, Ms. Millard said she was weighing several other options. “I actually resigned this morning and I am taking one of those offers,” she said.

Executives who left Yahoo recently said that they expected departures of executives to continue, especially in the sales department, which is under pressure to deliver better results. “You are going to see a lot of people on the branded ad sales side leave,” one former Yahoo executive said recently. “There is tremendous day to day pressure to meet numbers.”

Yahoo hopes the organizational change will reinvigorate its sales with marketers who are increasingly seeking a simple way to buy all types of online advertisements. “The advertising marketplace is moving faster than a speeding bullet and advertisers are increasingly seeking solutions that span a wide variety of products,” said Mr. Coleman. “When we combine those unique assets, you can deliver better results for our customers.”

Ms. Millard joined Yahoo just as the bottom was falling from under the online ad market, after the collapse of the dot-com bubble. When the online market rebounded, Ms. Millard was instrumental in establishing Yahoo as destination for Fortune 500 companies to market their brands, said Stewart Barry, a securities analyst with ThinkEquity Partners.

While the company’s top properties like the Yahoo.com front page and the company’s finance sites, are performing well with those advertisers, Yahoo has experienced weakness in the sale of so-called nonpremium inventory, ad space that appears on lesser known portions Yahoo or alongside e-mail messages, Mr. Barry said.

“That takes sophisticated use of data and is a different type of sales process, and is not Wenda’s core competency,” Mr. Barry said.

It is in the sale of those non-premium graphical ads that Yahoo faces the most intense competition from the likes MySpace and Facebook, as well as countless of smaller Web sites that increasingly rely on advertising to support their business.
Source : http://www.nytimes.com

Blackstone shares jump 13% on US debut

Shares in private equity firm Blackstone Group rose 13 per cent in their stock market debut, as investors scrambled for a piece of the sixth richest initial public offering in US history.

Chief executive Stephen Schwarzman now controls a firm whose market value stands at about $US38 billion ($A45 billion). His personal wealth also skyrocketed, with a 24 per cent stake in Blackstone's management partnership worth around $US8 billion ($A9.5 billion), on top of the roughly $US449 million ($A530 million) he was expected to cash out in the IPO.

Exuberance about the booming private equity industry overshadowed mounting criticism of the lavish lifestyles of top executives from politicians, trade unions and the media.

The strength of Blackstone's debut marks a coming of age for the once secretive industry, as it joins Wall Street's publicly traded top tier investment houses.

"This is a new breed of publicly traded financial firm," said Matthew Rhodes-Kropf, a professor of finance at Columbia Business School.

"Once the market demonstrates its appetite for this type of investment, we're going to see all the biggest and the best go public - even after the incredibly negative press it has generated."

For those lucky enough to get in on the IPO - a difficult task since most shares were snapped up by big financial institutions and money managers - the stock barrelled past its $US31 initial price. The shares closed up $US4.06 or 13.1 per cent to $US35.06.

About 113.1 million shares traded hands - almost the full offering of 133.3 million shares. The deal's underwriters did not exercise their option for extra shares, but are expected to do so early next week.

The offering is the biggest US IPO for a private equity firm and the largest overall US IPO in five years. It could open the floodgates for other alternative investment funds to go public, with names like KKR and The Carlyle Group seen as the most likely candidates.

Blackstone's flotation of 12.3 per cent of its management partnership gives investors no real voting rights or direct connection to its $US88 billion ($A104 billion) portfolio of companies and real estate holdings.

Among its investments are Universal Studios Orlando, Madame Tussauds wax museums and the real estate titan Equity Office Properties Trust.

The firm reported a net profit on those holdings of $US2.27 billion ($A2.68 billion) in 2006, largely through what is known as "carried interest".

In essence, this is the money that the management firm earns based on the gains from the investments of its funds, and is generally 20 per cent off the top of the profits from those investments.

Rival buyout shops will likely want to mimic Blackstone's approach, which provided Schwarzman and co-founder Peter G Peterson with a clean way to unwind their stakes.

Unlike most IPOs where money raised boosts working capital to fuel expansion, the proceeds from Blackstone's IPO went mostly to its top executives so they could cash out their holdings.

In fact, the New York-based firm warned in a regulatory filing that it would not turn a profit for years to come because of high compensation expenses for its employees.

That did not stop investors.

"There was heavy demand out there, especially because this came a week early, and it opened pretty much as expected," said Ryan Larson, senior equity trader at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher.

Peterson, 80, took $US1.88 billion ($A2.22 billion) in cash out of the IPO. He will retain a small stake in the company but is expected to retire next year.
Source :http://news.ninemsn.com.au

Delphi Union Accord Closes Seven Plants, People Say (Update3)

Bankrupt auto-parts supplier Delphi Corp. will close seven plants represented by the United Auto Workers, keep four and sell the rest under an agreement reached with the union today, people with knowledge of the talks said.

Union workers at the former General Motors Corp. unit will get a combination of bonuses or buyouts, as well as the ability to accept available jobs at GM plants, based on their seniority, said the people, who asked not to be identified because the contract hasn't been ratified.

``It's a breakthrough in the industry, not only the auto supplier industry but also for the Detroit three,'' said Gerald Meyers, a former American Motors Corp. chief executive who is a business professor at the University of Michigan in Ann Arbor. ``It's very timely and necessary that the Delphi agreement be concluded at this point in time.''

The deal at Delphi, GM's largest supplier of parts, ends a two-year dispute that had threatened GM with a costly strike. GM Chief Executive Officer Rick Wagoner said this month that he wanted a Delphi agreement before his own labor talks with the UAW start next month. GM has had losses of more than $12 billion in the past two years.

17,000 Workers

The agreement signals ``that the negotiations that are ahead of them for the next 90 days will be unhampered by the possibility that a Delphi strike could occur and General Motors might be shut down,'' he said. ``This agreement augers well for what is coming for the months ahead.''

Delphi will keep plants open in Lockport and Rochester, New York; Grand Rapids, Michigan; and Kokomo, Indiana, the people said.

The supplier will sell plants, including those in Sandusky and Dayton, Ohio, and Adrian and Flint, Michigan, said three people who attended a union meeting today in Detroit or were briefed by those in attendance. Among the seven plants to be closed is one in Columbus, Ohio, they said.

Delphi spokesman Lindsey Williams and UAW spokesman Roger Kerson declined to comment on details of the agreement.

The accord, if ratified, will be ``a major step toward emergence,'' Delphi Chief Restructuring Officer John Sheehan said in a statement today. The Troy, Michigan-based company declined to give details. GM said the deal covers 17,000 Delphi workers represented by the UAW, the biggest union at the partsmaker.

Averts Strike

GM doesn't expect its costs for Delphi to increase from its estimate in May, spokeswoman Renee Rashid-Merem said.

Delphi has sought wage and benefit cuts from the unions and financial help from former parent GM since filing for bankruptcy protection in October 2005. The agreement averts a potential strike that might have shut down assembly lines at GM, which gets more parts from Delphi than from any other supplier.

Delphi needs agreements with unions led by the UAW to trigger a potential $3.4 billion investment by a group headed by Appaloosa Management LP. David Tepper, president of Chatham, New Jersey-based Appaloosa, couldn't be reached for comment.

Delphi seeks to exit court protection later this year.

$7 Billion

GM is reviewing today's agreement, Rashid-Merem said in an interview. The Detroit-based automaker said in a May 24 filing it expects retirement costs for former GM workers at Delphi to total $7 billion. In addition, after an initial payment of $500 million, GM said it will have continuing labor-related costs of $300 million to $400 million annually for an unspecified time and ``transitional'' payments of an additional $100 million.

As part of the 1999 spinoff of Delphi, GM agreed to cover the retirement costs for certain former GM employees now with the company if Delphi couldn't cover those costs. Delphi also asked GM to help cover additional costs to allow it to emerge from bankruptcy.

UAW President Ron Gettelfinger and Vice President Cal Rapson confirmed the agreement in a statement and said details are being withheld for ``explanation and ratification meetings by our local unions.'' They didn't give a time frame for ratification.

After the bankruptcy filing, Delphi Executive Chairman Steve Miller said he wanted to keep only eight of 29 U.S. plants by Jan. 1, 2008, including the four UAW plants in New York, Michigan and Indiana that will be kept open. Miller intended to stop making brakes, chassis, catalysts, cockpits, door modules, instrument panels, wheel bearings and steering systems.

Asset Sales

Delphi has already announced the pending sales of an interiors unit, a brake-hose group, a catalyst business and a steering group.

Billionaire industrialist Ira Rennert's Renco Group Inc. said Feb. 20 that it wanted to buy the interiors unit, which makes cockpits and door parts at plants in the U.S., Mexico, Austria, Germany, China and South Korea.

Delphi said Jan. 29 that it plans to sell its brake-hose business to Harco Manufacturing Group LLC of Englewood/Clayton, Ohio. The next day, Delphi picked Platinum Equity Holdings LLC, founded in 1995 by billionaire Tom Gores, to buy its steering business. It is the biggest unit Delphi intends to sell.

Delphi also has a pending deal to sell its catalyst business to Umicore SA for $55.6 million, which includes a U.S. plant in Tulsa, Oklahoma.

GM shares fell 50 cents to $35.46 on June 22 in New York Stock Exchange composite trading. Delphi's were unchanged at $2.67 in over-the-counter trading.

All of the proposed sales must receive U.S. Bankruptcy Court approval. The labor accord also requires confirmation by U.S. Bankruptcy Judge Robert Drain.

The case is In re: Delphi Corp., 05-44481, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Source : http://www.bloomberg.com

Private Equity's Netscape?

Blackstone Group's debut may not look like private equity's Netscape moment at first glance. After all, shares of Stephen Schwarzman's buyout shop popped just 13% on their debut. Shares of the Internet browser that kicked off the dot-com boom in 1995 doubled. Even Fortress Investment Group, Blackstone's smaller rival, surged 68% on its opening day.



But like the Netscape Communications IPO, Blackstone's $7.1 billion share sale, including the chunk sold to China, is the clearest sign yet that investors have suspended their disbelief when judging the private-equity boom. The $39 billion value they have put on Blackstone ignores significant head winds the firm, and the industry as a whole, face. Kohlberg Kravis Roberts & Co.'s willingness to follow Blackstone into the public markets suggests investors will be willing to look at the glass as half full for some time.

Sure, there are differences between a Netscape and a Blackstone. The former was a novelty at the time: the first large Internet company to go public. Shares were hard to value. The firm had no profit and $17 million in revenue. But not unlike the arguments in favor of buying Blackstone, an irresistible growth story was promised to investors. And Netscape's hugely successful IPO opened the flood gates for other dot-com listings. Investors sorely regretted many of those purchases.

Investors are valuing Blackstone at more than 30 times historic pro forma earnings because they believe those earnings aren't only sustainable, but beatable. They haven't factored in threats to the industry's exploitation of tax loopholes, which may account for 20% of profits; the fact that compensation costs at Blackstone will rise over time; nor macroeconomics, such as the effect of rising interest rates on leveraged buyouts. Investors in Netscape did the same thing. It worked for a while. And then it didn't.

Will Ghana Roar?

Some scientists believe that there were tigers in Africa a million years ago. But they died out. The more recent hopes that the continent would generate tiger economies have been equally blighted.

Think of Ghana. When the former Gold Coast gained independence in 1957, its prospects were bright. The new country was rich in cocoa and gold and its population was relatively well-educated. But a long series of coups and persistent corruption dashed those hopes. Ghana is still resource-rich, but it relies on foreign aid for 11% of gross domestic product and 60% of the population still toils away in subsistence agriculture.

An oil discovery and some changed thinking may give Ghana another chance. As John Kufuor, the country's president, put it, "We're going to really zoom, accelerate."

Oil alone certainly won't work miracles, despite a local newspaper's enthusiastic headline: "Thank God, Oil at Last, Thank God." In Nigeria, Angola and Venezuela, huge oil wealth has been disastrous, thwarting the nonoil economy and fertilizing corruption. Fortunately for Ghana, the country's oil revenues are expected to be more moderate, at a little less than the current flow of foreign aid.

A few brave global investors believe that some African countries, including Ghana, are finally learning the lessons of African failure and Asian tiger triumphs. What makes economies successful aren't gifts from foreigners or royalties from oil producers, but bourgeois virtues: education, infrastructure, honest government, middle-class savings, a widespread work ethic, small families and so forth.

The new-found optimism may be a triumph of hope over experience, or a misreading of the effects of the current boom in resource prices. But it does look like a smaller portion of the windfall revenue is being wasted than in the past. That goes along with a growing middle class and more economically responsible government.

Right now, the only tigers in Africa are a few specimens imported from China. But Mr. Kufuor may be right in his hopes for an indigenous species: "You come back in five years, and you'll see that Ghana truly is the African tiger."
Source : http://online.wsj.com

Doha on edge as Brazil and India rebuke US

WORLD Trade Organisation director-general Pascal Lamy summoned trade ministers to Geneva last night in a desperate final attempt to rescue the Doha Round negotiations, which are on the brink of collapse.

Mr Lamy stepped in to convene the emergency talks between the four key players — Brazil, India, the European Union and the United States — collapsed in the East German city of Potsdam, in the continuing stand-off over cuts to farm subsidies and tariffs.

India's Commerce Minister, Kamal Nath, walked out of the talks after US Trade Representative Susan Schwab and Agriculture Secretary Mike Johanns insisted that the US must retain the right to give its farmers up to $US17 billion ($A20 billion) a year in trade subsidies.

Rising prices for farm produce have now cut US subsidies to about $US11 billion a year, and India and Brazil demanded the US accept that as a limit in the Doha Round. Mr Johanns said the US offer would have reduced farm subsidies below the level spent in five of the past nine years.

"It was useless to continue the discussion on the basis of the numbers put on the table," Brazil's Foreign Minister Celso Amorim told journalists. While the US wanted the freedom to raise its farm subsidies, he said, it demanded that developed countries cut their ceiling for tariffs on manufactured goods by more than half.

Mr Nath accused the EU and US of arrogance. "It is not just a question of figures, it is a question of attitude," he told the Financial Times. "The US does not realise that the world has changed."

But the US and the EU in turn blamed Brazil and India for failing to offer tariff cuts that would open markets for manufactured exports to developing countries. EU Trade Commissioner Peter Mandelson said the tariff cuts offered would not be "commercially meaningful".

Part of the problem is that most developing countries have significantly reduced their tariffs since the Uruguay Round agreement, so the tariff ceilings used in WTO negotiations bear no resemblance to levels of actual tariffs. Brazil and India have offered to cut tariff ceilings to 30 per cent, but the US insists that the ceiling be dropped to 18 per cent.

"We had two countries, India and Brazil, which I don't think really chose to negotiate," Mr Johanns said, while Ms Schwab said that while the EU and US had made "significant contributions", Brazil and India showed "rigidity".

Australia's Trade Minister Warren Truss declined to take sides, but called the breakdown disappointing. "Everyone has to make a contribution — developed and developing countries alike," he said.

The chair of the Business Council's trade taskforce, John Denton, warned of "severe and far-reaching consequences" if the round does not end in agreement this year. He called on the EU and US to "provide an example to other nations by offering substantial concessions".
Source : http://www.theage.com.au

Free Rides on Wichita Public Transportation

The Wichita City Council and Wichita Transit are offering free rides today as part of the 2nd Annual National Dump the Pump Day.

Sponsored by the American Public Transportation Association (APTA), the 2007 National Dump the Pump Day is a day that encourages people to ride public transportation to help improve the environment and to conserve gasoline.

"Public transportation plays a vital role in improving our environment," said Mayor Carl Brewer in a City of Wichita Proclamation. "The Wichita City Council agrees that public transportation is an important part of our nation's transportation system and provides citizens with other options than driving a car," he said.

Earlier this year a report by ICF International, "Public Transportation and Petroleum Savings in the U.S.: Reducing Dependence on Oil," stated that the U.S. public transportation systems save 1.4 billion gallons of gasoline every year, the equivalent of 108 million cars filling up in a year.

"The 2007 National Dump the Pump Day is a public awareness day that emphasizes the environmental benefits of using public transportation," said APTA President William W. Millar. "It is also a day for people across the country to make a difference as they conserve gasoline and help our environment.
Source : http://www.wibw.com

GE, Pearson give up bid for Dow Jones

General Electric Co. and the Financial Times publisher Pearson have decided to give up the bidding for Dow Jones & Company, the companies said Thursday.

GE and Pearson said they would continue to explore "cooperative agreements between CNBC and the Financial Times Group" but have dropped Dow Jones from their discussions.

Pearson spokesman Luke Swanson said a competing bid from Rupert Murdoch's News Corp., a 60 dollar-a-share buyout offer on the table for Dow Jones, had proved too rich for the two companies to overcome.

Earlier this month, Los Angeles billionaire Ron Burkle has joined the bid battle against Rupert Murdoch' offer for Dow Jones.

Burkle told the Independent Association of Publishers' Employees, which represents 2,000 Dow Jones workers, that he was interested in working with the union to put together an offer for the company.

Last month, Dow Jones, the publisher of The Wall Street Journal received the bid from News Corporation to buy the company for about 5 billion dollars, or 60 dollars a share either in cash or a combination of cash and News Corp. stock.
Source : http://english.people.com.cn

GE, Pearson give up bid for Dow Jones

General Electric Co. and the Financial Times publisher Pearson have decided to give up the bidding for Dow Jones & Company, the companies said Thursday.

GE and Pearson said they would continue to explore "cooperative agreements between CNBC and the Financial Times Group" but have dropped Dow Jones from their discussions.

Pearson spokesman Luke Swanson said a competing bid from Rupert Murdoch's News Corp., a 60 dollar-a-share buyout offer on the table for Dow Jones, had proved too rich for the two companies to overcome.

Earlier this month, Los Angeles billionaire Ron Burkle has joined the bid battle against Rupert Murdoch' offer for Dow Jones.

Burkle told the Independent Association of Publishers' Employees, which represents 2,000 Dow Jones workers, that he was interested in working with the union to put together an offer for the company.

Last month, Dow Jones, the publisher of The Wall Street Journal received the bid from News Corporation to buy the company for about 5 billion dollars, or 60 dollars a share either in cash or a combination of cash and News Corp. stock.
Source : http://english.people.com.cn

Four-Party Talks on Trade Liberalization Collapse

Critical four-party talks to revive the long-stalled Doha Round of trade liberalization negotiations broke down in Germany Thursday, with the United States and European Union blaming India and Brazil for the impasse. VOA's Barry Wood has more.

In Washington, President Bush expressed disappointment and accused Brazil and India of sticking for their own interests at the expense of poorer countries. In Potsdam, Germany, U.S. Trade Representative Susan Schwab said India and Brazil demanded huge cuts in the developed countries' farm subsidies but refused to cut import tariffs that protect their domestic industries.

"It was clear that the U.S. and E.U. were prepared to make concessions - significant contributions to this round - there was a lack of flexibility, indeed a rigidity, with respect to the advanced developing countries [Brazil and India] who were present," said Susan Schwab.

U.S. Agriculture Secretary Mike Johanns agreed.

"We felt the mood was good, although there were still difficult issues left with the European Union," said Mike Johanns. "We did not find that with Brazil and India, unfortunately. And so the talks have sadly and unfortunately broken down. And that's where we find ourselves today."

The talks in Potsdam involved four key negotiating parties - the United States and European Union as well as India and Brazil representing a group of 20 developing countries.

The Brazilian and Indian delegates walked out a day before the talks were to end Friday. Brazil's Foreign Minister Celso Amorim was reported as saying the U.S. and European concessions on agricultural subsidies were so meager it was pointless to continue.

The talks, which are sponsored by the World Trade Organization and started six years ago in Doha, Qatar, have faltered several times over the farm subsidy issue. The United States, the world's biggest farm exporter, says it will cut its subsidies but only if developing countries open their markets to American imports.

EU trade commissioner Peter Mandelson said, despite the setback, it is still possible to reach an overall agreement this year, a sentiment shared by Schwab and WTO chief Pascal Lamy.

Schwab told reporters that, if the talks collapse, the biggest losers would be the poorest developing countries.
Source : http://voanews.com

Dollar little moved after latest jobless claims tally

The dollar barely budged early Thursday after the Labor Department reported that last week weekly jobless claims reached their highest level since April, rising 10,000 to 324,000. The increase had been predicted by some economists. "The dollar showed little initial reaction to the higher than forecast jobless claims," said Action Economics. The dollar last was up 0.01% at 123.55 yen, as the euro rose 0.02% to $1.3397. There's more data on the way. The May leading indicators report is due at 10 a.m. Eastern and the June Philadelphia Federal Reserve report on manufacturing will be released at noon Eastern


Source : http://www.marketwatch.com

Home Depot focuses on retail experience

The Home Depot's sale of its wholesale distribution business and its plans to buy back another $22.5 billion in stock may heighten hope for investors who were frustrated by most of former CEO Bob Nardelli's six-year reign.

Five months after Nardelli resigned amid a firestorm over his hefty pay and the company's lagging stock price, the world's largest home improvement store chain further distanced itself from his strategies Tuesday when it announced the $10.3 billion sale of Home Depot Supply to three private equity firms.

Atlanta-based Home Depot also said it would buy back up to $22.5 billion of the company's shares, or more than a quarter of its current market capitalization.

"Today's decision reflects our continued commitment to enhancing shareholder value, through an exclusive focus on our retail business and the return of cash to our shareholders," said Frank Blake, who took over as CEO when Nardelli resigned in January.

The announcement sent shares of The Home Depot Inc. up $2, or 5.2 percent, in extended trading after they gained 31 cents to end the regular session at $38.27. They've traded between $32.85 and $42.01 in the past 52 weeks.

Nardelli saw Home Depot Supply, which serves contractors, homebuilders and other business customers, as an opportunity for growth at a time when the housing market was strong. But Blake decided to consider shedding the supply unit to focus on Home Depot's more than 2,000 retail stores.

"Nardelli had a bit of the GE conglomerate mentality," said Patricia Edwards, a retail analyst in Seattle for Wentworth, Hauser and Violich. But a good retail company needs a good shopping experience, and Home Depot was suffering in that area to the point that it upset shareholders and employees, she said.

The changes announced Tuesday give Home Depot shareholders a much-needed "shot in the arm" and allow the company to refocus on its retail stores at a time when it is trying to regain market share from Lowe's Cos. and the entire home-improvement sector is suffering from the current housing slump, Edwards said.

Chief Financial Officer Carol Tome said the proceeds from the sale to Bain Capital Partners, The Carlyle Group, and Clayton, Dubilier & Rice will be invested back in the retail business, including investing in existing stores and building new ones.

The company said it will also use the proceeds to fund the $22.5 billion increase in its share repurchase program. Additional funding will come from existing cash on hand and by issuing $12 billion in senior unsecured notes.

Both Standard & Poor's Ratings Services and Moody's Investors Service put Home Depot's short-term credit ratings on review for possible downgrade because of the extra debt the company will incur.

Home Depot acquired several companies in recent years to create the supply division.

In March 2006, the company completed its $3.2 billion purchase of Orlando, Fla.-based Hughes Supply Inc., a distributor of construction, repair and maintenance products. The deal, Home Depot's largest acquisition ever, doubled the size of the supply division.

When Home Depot announced in February that it was considering shedding Home Depot Supply, analysts expected the division to sell for $8 billion to $11 billion, "so they came in at the high end and got a fairly fair price," Edwards said.

The division has more than 26,000 employees, with revenues last year of $12.1 billion, or about 13 percent of Home Depot's total sales. Tome said she wasn't aware of any plans by the new owners to reduce the work force.

Clayton, Dubilier & Rice partner David Novak and Steve Zide, managing director of Bain Capital, said in interviews Tuesday that the company is very well positioned among competitors and they expect it to grow.

"We're very excited about partnering with the Home Depot supply team, giving them the opportunity to execute their own plan" as opposed to trying to fit in within the larger company structure, Zide said.

Joe D'Angelo, Home Depot's chief operating officer, will continue to lead the supply division after the acquisition, which is expected to close in the third quarter, the buyers said.
Source : http://www.businessweek.com

Yahoo CEO has credibility problem

Jerry Yang isn't like Michael Dell, Steve Jobs and other high-profile executives who returned to rescue the companies they founded. Yang, Yahoo Inc.'s new chief executive, never left.

And that's part of his credibility problem — not just with outside investors hoping for a more radical management shake-up than they got this week, but also with current and former employees who have felt frustrated as they've watched rivals start to eat Yahoo's lunch.

Several ex-Yahooers said that an aversion to risk and a quarter-to-quarter mentality had crept in as the company super-sized itself in recent years. As archrival Google Inc. grew to dominate the Internet-advertising business, Yahoo appeared to hesitate. As others pulled the trigger on acquisitions of dynamic Web companies — Google bought YouTube, and News Corp. bought MySpace — Yahoo seemed to deliberate too long. Whether or not Yang was running the company, such people said, it has happened on his watch.

Under heavy criticism from disappointed investors, Yahoo announced Monday that Yang, 38, had taken over as CEO from Terry Semel, 64, the veteran Hollywood executive who arrived in 2001 and helped refocus the company in the aftermath of the dot-com stock collapse. In Yang's first move, he tapped former chief financial officer and rising star Susan L. Decker as president to help him restore confidence among Wall Street, advertisers and employees.

Investors initially embraced the changes, bidding up Yahoo shares in after-hours trading Monday, soon after the announcement. But on Tuesday the stock dropped 49 cents to $27.63, partly because of analysts' cool reaction and partly because of the company's statement that it wanted to stay independent. Some investors had been hoping that Yahoo's turmoil might lead it to put itself up for auction.

"Jerry Yang is widely acknowledged as a visionary — he built something out of nothing," Standard & Poor's analyst Scott Kessler said Tuesday. "But he's not really a manager and never has been, so there's a level of skepticism about this news."

Yang has long carried the title "chief Yahoo" and has been responsible for long-term strategy, not management, at the Sunnyvale, Calif.-based company. In fact, other than an administrative assistant, he has had no subordinates reporting to him, said a former executive who, like other ex-employees interviewed for this story, declined to be identified because they retained some personal or business ties to the company.

To lead the charge against Google and other competitors, Kessler said, Yang will have to "rally the troops and get people excited."

As CEO, he also will be the public face of Yahoo, mainly responsible for articulating its vision — a role he has left to others in the past. A former Yahoo executive who admires Yang said that unlike some other Silicon Valley executives, Yang and co-founder David Filo "have not been that interested in being in the media."

Yang was not available for an interview Tuesday, a Yahoo spokeswoman said.

"Jerry has been in the trenches at Yahoo since day one, and his tremendous passion and work ethic has continued throughout his 12 years here," the company said in a statement, adding that Yang "has played a key role in forming the company strategy and driving our business forward."

Few people who know Yang doubt his competitive fire, least of all friends such as former Yahoo President Jeff Mallett, who has seen Yang transform himself from an utter hacker into a golfer who shoots in the low 80s.

"If Jerry doesn't know how to do something, he throws himself into it," said Mallett, chairman of Snocap, a tech company. "He doesn't want to catch up to you — he wants to beat you."

That kind of determination, in Mallett's view, makes Yang the right person for the top job now.

Google's explosive growth has set "a wickedly high benchmark" for Yahoo, Mallett said, but the pace of change in the industry means that no advantage is insurmountable. It was only in 2006 that Google's annual profit outpaced Yahoo's.

To some observers, Yahoo's main challenges are to narrow its focus and speed up development of new products and services. Kessler told the Associated Press that the large Santa Monica office that houses Yahoo's media operations might be a target for closure. But a Yahoo spokeswoman said that was not the case.

Yahoo's new Panama search-advertising technology shows promise, Kessler said. But rather than going head-to-head with Google on search, he said the company might devote more energy to becoming "the anti-Google" by further developing content-sharing partnerships with companies such as Viacom Inc. that have been angered by what they regard as Google's somewhat cavalier attitude toward intellectual property.

"There's no shortage of ideas there, but sometimes a lack of ability to see them through," said a former executive who left Yahoo recently and was still rooting for the company to succeed. "They move like molasses sometimes."

Another ex-Yahooer said that what some people mistake for excessive caution on Yang's part is actually discipline.

"Is it a cool technology, or is it a business?" the person asked, adding that Yang, to his credit, has a good record of being able to distinguish between the two.

Yahoo may be involved in too many projects to successfully run all of them, Mallett said, but he added that it was a cyclical problem for all big companies in a fast-changing industry.

"Every five years, you probably need to shoot the weak ones and focus on the strong ones," Mallett said. "It's pruning, and it's a natural process."
Source : http://www.latimes.com

High Court Backs Banks In Antitrust Suit on IPOs

The U.S. Supreme Court on Monday blocked an antitrust lawsuit against leading investment banks, a blow to investors who questioned the tactics of Wall Street firms during the tech bubble.

The class-action suit accused the firms of illegally rigging the initial public stock offerings of hundreds of technology companies. The New York-based U.S. Court of Appeals for the 2nd Circuit had ruled that the suit could proceed.

But by a 7 to 1 vote, the Supreme Court agreed with the securities industry, which argued that federal securities law preempted the suit.

The essential issue, Justice Stephen G. Breyer wrote for the majority, was whether allowing an antitrust suit over the alleged practices would prove "practically incompatible" with the smooth enforcement of securities law by the Securities and Exchange Commission.

In answering that question in the affirmative, Breyer emphasized the confusion that, he wrote, would result from subjecting IPO underwriters to both antitrust and securities laws -- confusion that would "threaten serious harm to the efficient functioning of the securities markets."

Stephen M. Shapiro, a Chicago lawyer who represented the Wall Street firms, said the Supreme Court's ruling "reaffirms the SEC's power and authority to speak with one voice in the securities industry. . . . That's very important for investor welfare, as well as the industry."

The SEC "has issued very detailed rules and regulations in this area," Shapiro said. "And if juries around the country can come up with their own rules in private antitrust lawsuits, then nobody has an incentive to obey the SEC rules. They become something like wastepaper."

Steven B. Caruso, a New York securities lawyer who frequently represents investors, said the ruling brings antitrust lawsuits by investors "closer to the realm of impossibility."

"It's unfortunate that the protection of investors is being left strictly to the SEC and that ordinary investors aren't able to get the protection of things like the antitrust laws," Caruso said.

Investment banks would have faced three times the damages in lawsuits brought forth under federal antitrust laws compared with penalties under securities rules, lawyers said.

The case originated in 2002, when a group of 60 investors filed suit in U.S. District Court in New York. They accused the Wall Street firms of inflating prices of newly issued stocks by agreeing to impose certain conditions on those who wanted the shares. Those conditions, the plaintiffs charged, included purchasing less desirable securities and buying additional shares at escalating prices.

The lawsuit named 16 investment banks and institutional investors, including units of Credit Suisse Group, Goldman Sachs, Bear Stearns, J.P. Morgan Chase, Lehman Brothers, Merrill Lynch, Citigroup, Deutsche Bank, Morgan Stanley, Janus Capital Group and Fidelity Investments. The case is Credit Suisse Securities v. Billing.
Source : http://www.washingtonpost.com/

Airbus' Big Paris Curtain-Raiser

For über aircraft salesman John Leahy, pitching Airbus jets to potential buyers over the past two years hasn't been a picnic. But on the first day of the 47th International Paris Air Show, the European jetmaker's legendarily aggressive sales chief was back in his element.

Inside Airbus' prefabricated chalet at Le Bourget Airport near Paris, Leahy giddily delivered a string of major airplane orders that, in a matter of four hours, resurrected Europe's fallen industrial hero. The American-born executive rolled out sales announcements one after another, barely giving the throng of international journalists enough time to down their fifth cup of espresso or digest a second helping of tasty veal chunks smothered in sumptuous brown sauce.

Leahy's morning and afternoon shows led to a mega-haul for the Toulouse-based airplane maker: some $42.6 billion in contracts, including big deals from Qatar Airways, US Airways (LCC), and a Middle Eastern leasing company for the new Airbus A350 XWB, a fuel-efficient midsize plane that aims to challenge Boeing's (BA) popular 787 Dreamliner.
Putting the Past Behind It

Emboldened once again, Leahy went on to make one of his famously audacious predictions: that Airbus will secure more than 280 orders during the weeklong show. That was the number of firm orders and pledges the company won two years ago at Le Bourget, when it announced orders totaling $33.5 billion, compared with $15 billion for Boeing. "I would expect to exceed that this year," Leahy said. "By how much? Why don't we wait until Friday to see?"

It has been a long and agonizing two years for Airbus since the last Paris air show, when it sat undisputedly atop the aviation world. The embarrassing story of how the company squandered its pole position since then is all too well known: It bet big on the 555-seat A380 superjumbo, only to see the plane end up being two years late. The production problems and delays have forced parent European Aeronautic Defence & Space to cut its projected profits by $6.4 billion through 2010.

Airbus still remains the world's No. 1 airplane producer, having delivered 430 planes last year compared with Boeing's 398. But in 2006, Boeing won the order contest for the first time in five years, thanks to surging demand for the Dreamliner. Armed with a huge $188 billion backlog in 2007, up from $124 billion in 2005, it expects to eclipse Airbus on deliveries in the near future.
Boeing Begins Comfortably Ahead

Still, the gains in new business for Airbus underscores the company's fighting spirit and the robustness of the commercial aircraft market. Airlines prefer to have two relatively strong airplane manufacturers because the rivalry spurs innovation and keeps prices down. After these past two years, Europe's aerospace champion had to prove it could recover from its missteps. "Airbus has avoided defeat," says Richard Aboulafia, veteran aerospace analyst for the Teal Group, a Fairfax (Va.)-based consulting company. "This could have been a devastating week if they hadn't shown some firmness to the order numbers."
Source : http://www.businessweek.com

Yahoo shakeup a sign company's bet on content failed to trump technology

Earlier this decade Yahoo gambled that content and Hollywood would be the key to its success.

Google banked on technology.

Monday's dramatic shake-up at Yahoo, with the ouster of showbiz veteran Terry Semel as CEO and the installation of co-founder Jerry Yang and financial wizard Sue Decker at the helm, is a long-awaited acknowledgment that Yahoo's bet was the wrong one. Yang as CEO and Decker as president are expected to refocus the Sunnyvale Internet giant on technology.

But is it too late?

While Semel, 64, oversaw a turnaround following the dot-com collapse of 2000, he has been under fire in recent years as Yahoo has been increasingly eclipsed by Google.

After failing to buy Google in 2002, Semel bought advertising technology that had inspired Google's business model - but failed to make integration a top priority until last year. The delay allowed Google to ring up $10.6 billion in advertising sales in 2006 - 40 percent more than Yahoo - while claiming 48 percent of the U.S. search market, compared to 28 percent for Yahoo, according to Comscore.

Yahoo at the same time focused on content partnerships, often with the Hollywood studios that Semel used to work with. Google focused almost obsessively on improving its core search technology.

The result: Yahoo's value has fallen by more than 35 percent since early 2006. A delay of new advertising software and a steady exodus of talent has prompted concern that the company has lost its competitive edge.

These numbers prompted Yahoo's shareholders to send Semel a powerful message last week that they didn't believe he was worth his paycheck, which would have been $71.7 million if he had remained at the company.

Even California Gov. Arnold Schwarzenegger took a dig at Semel at a dinner for entertainment honchos held at the Tech Museum in San Jose last week. Schwarzenegger noted that he did not accept a salary as governor "unlike Terry," who was one of the hosts.

In a letter to the board of directors, Semel noted he had desired to step back for some time. "It is the right thing to do, and the right time is now," Semel said. He will continue to serve as chairman of the board of directors.

Yahoo said it will not be paying Semel severance and that he will forfeit any unvested options.

Semel's options, which were worth $71 million in 2006, prompted a shareholder revolt at Yahoo's annual meeting last week. About one in three shareholders voted not to re-elect three members of the board of directors who made up the compensation committee.

Pat McGurn, executive vice president and special counsel of Institutional Shareholder Services, said the vote provided a catalyst for the board to act. "I think this was all about performance," he said.

"I am excited for the company," said Eric Jackson, a shareholder who sparred verbally with Semel at the meeting. "I think Jerry Yang and Sue Decker are very capable, and they will bring a lot of energy and passion to their new, enhanced jobs and will ultimately do a great job at leading the company."

Although Yang, 38, has never been chief executive of Yahoo, he has been part of the management team - with the title "chief Yahoo" - since co-creating the site with David Filo in 1994.

"They have got the right guy," said Allen Weiner, an analyst with Gartner who has known Yang for more than a decade. Weiner said having an engineer in charge will help motivate engineers and attract technical talent.

Yahoo's stock jumped almost 3 percent to close at $28.12 after the news leaked. The stock climbed an additional 4 percent in after-hours trading after the news was confirmed.

But some analysts were skeptical that the management change would solve Yahoo's problems, which include weakness in selling advertising on Web sites not owned by Yahoo.

Indeed, Yahoo's woes led the Sunnyvale company to enter into talks with Microsoft, which reportedly drafted a $50 billion offer to buy Yahoo.

David Garrity, research director of Dinosaur Securities, said the management shake-up increases the chances that Yahoo will be bought in the next 12 months.

While Semel was a lightning rod for criticism of the company, Yang deserved some of that scrutiny, said Trip Chowdhry, a financial analyst with Global Equities Research in Half Moon Bay. As an executive officer at Yahoo since its founding and its second-largest individual shareholder, Yang had the opportunity in recent years to help steer Yahoo in the right direction.

But he didn't take action until shareholders raised a fuss about Semel's compensation, Chowdhry said.

In a conference call with analysts, Yang described Semel as "true role model and a mentor," who had fostered an open, honest culture. Yang said he had learned to be a better leader - and a better person - by watching Semel.

Yang and Decker endorsed Yahoo's current strategy and said deals with eBay, Comcast and a consortium of 12 newspaper companies, including MediaNews, the owner of the Mercury News, would lead to significant growth in the years ahead.

"Yahoo is a company that started with a vision and a dream, and make no mistake, that dream is very much alive," Yang said during the conference call. "We intend not merely to be a strong competitor but to be an even bigger winner in our industry."

Source : http://www.mercurynews.com/

Boeing and Airbus snag new orders

Airbus racked up a series of big orders at the opening Monday of the world's biggest air show, stealing some early limelight from U.S. rival Boeing Co.

With the manufacturers' intense competition again expected to be a dominant theme of the weeklong show at Le Bourget, north of Paris, both looked to make a splash from the start, with billions of dollars worth of orders announced.

Airbus booked orders from US Airways, Qatar Airlines, Emirates and Jazeera Airways for a raft of planes, including its problem-plagued A350 and superjumbo A380 models.

US Airways Group Inc. ordered 60 A320 single-aisle aircraft and 32 widebody aircraft. It also increased its previously announced order of 20 A350s by two to 22 A350 XWBs in both the 800 and larger 900 series configuration.

The A320s will replace Boeing 737-300/400s, which will be eliminated from the fleet, the carrier said. It added that it expects to take delivery of the first A350-800 in 2014, becoming the North American launch customer for the fleet type.

Qatar ordered 80 A350 XWBs, three A380s and three A320 family aircraft. The A350 order was a confirmation of Qatar's' earlier commitments to buy the 80 jets. Qatar Airways Chief Executive Akbar Al Baker said the order for the A350s is worth $16 billion.

Two of the orders for the A380, Airbus's flagship double-decker plane, are conversions of earlier options into firm orders, he said, and the airline is taking one new order, bringing its total order for A380s to five. The three firm orders together are worth about $750 million, he said.

Wiring and other technical problems are behind a costly two-year delay in delivery of the A380. The holdup could reduce profit by 4.8 billion euros ($6.2 billion) for Airbus parent European Aeronautic Defense & Space Co. NV over the next four years.

Emirates is by far the biggest single customer for the A380. It initially ordered 43 A380s and took another four in May. Emirates is believed to have obtained significantly improved financial terms for these aircraft and the latest batch of eight.

Jazeera Airways signed an order for 30 single-aisle A320 jets worth between $2.1 billion and $2.4 billion at list prices.

Emirates ordered an additional A380, boosting to 55 the number of A380s ordered by the Dubai-based airline.

However, Emirates remained undecided about whether it will sign up for Boeing's new 787 Dreamliner or its wide-bodied Airbus rival, the A350 WXB.

"We've got some talking to do to both Boeing and Airbus with regard to the commercial terms of the deal, but I think we're in a good position to make an aircraft decision in the next few months," said Emirates President Tim Clark.

Clark said the carrier would select only one of the aircraft, rather than buying some of each.

Airbus was forced last year to launch a costly redesign of the planned A350 after airlines scorned its earlier model—resulting in the extra-wide-body or XWB model—and is having to renegotiate existing orders.

Prior to Monday's orders, Airbus had only 13 firm orders for the mid-size, long-range plane, compared with 584 orders for Chicago-based Boeing's Dreamliner—the first commercial jet made of light, sturdy, carbon-fiber composites instead of aluminum.

Scott Carson, the head of Boeing Commercial Airplanes, said Monday that the Dreamliner was on track for test flights in August or September, and delivery to its first customers in May.

Carson also announced Monday that GE Commercial Aviation Services had ordered six of its 777 freighters, worth $1.42 billion at list prices. The order takes the number of 777s ordered by GECAS to 39, including 14 freighters.

In another deal for Boeing, Jakarta-based Lion Air ordered an additional 40 737-900ER planes. Valued at more than $3 billion at list prices, that brings Lion Air's combined orders for the 737-900ER to 100.

The Paris show comes amid revived fortunes for the commercial airline industry. After two years in the red, the industry will make a profit of just over $5 billion this year, despite rising fuel costs, says the International Air Transport Association, whose 250 members claim to represent 94 percent of international air traffic.

Airlines often reserve big announcements for the show to ensure maximum impact.

At the last show in 2005, Airbus announced orders worth $33.5 billion, double Boeing's $15 billion based on list prices—which are usually discounted for the deals.

Away from the rivalry between Boeing and Airbus, Rolls-Royce PLC said Monday it had received the largest-ever firm engine order for its civil aerospace business from Qatar. The $5.6 billion order is for Trent XWB engines to power Qatar's new fleet of 80 Airbus A350 XWB twinjets, with deliveries beginning in 2013.
Source : http://www.mercurynews.com

Fasten seatbelts and adopt the brace position

Crying wolf is an occupational hazard for business journalists. We are apt to see financial horrors beyond every dip in the markets: rightly challenging complacency, but wrongly assuming that each shadow will turn into a monster.

The best example of this is reporting of the debt markets and their crucial link with the rest of the economy. Many commentators have been warning of the dangers of a global credit crunch ever since a freakish period of low interest rates began coming to an end in 2003.

But just as sceptics underestimated the longevity of the bull market in the 1990s by missing the impact of new computer technology, anyone who thought the sky was going to fall in during 2004 has missed out on three years of another productivity miracle - this time in the financial services industry.

Whatever you might think about the fortunes made by hedge funds and investment banks, they have revolutionised the financial world with more sophisticated pricing of risk. This has allowed long-term interest rates in the bond market to stay low despite repeated ratcheting up of base rates by central banks.

Like all good things, it must come to an end, but merely saying so adds little. What matters is timing. Well, I'm sticking my neck out and saying that the time has come. The writing is on the wall - on Wall Street, in fact.

A two-week rout in the US Treasury market has ended what Alan Greenspan, the former Federal Reserve chairman, famously called the "conundrum" of the long-term bond market. The market rallied slightly in the past couple of days, but what is noticeable is that it has not bounced back significantly: the elastic has snapped.

What follows next may turn out to be mild turbulence or the start of a steeper nosedive. Either way, it seems a prudent time to adopt the brace position. This does not mean running for the woods to stockpile baked beans and Kalashnikovs, but, as I explain on page 17 of this weekend's news section, there is a worrying circularity in today's economy. Cheap money underpins everything: from the housing market and high street spending to private equity buyouts and the stock market boom.

Of course, we all need to get on with our lives. Perhaps recklessly, the family Roberts is hoping to press ahead with a house purchase this week. On these pages, we will also continue to provide investors with useful share tips where we see value, particularly in big-cap shares.

But the most extreme manifestations of cheap money are already showing the effects. The commercial property market is coming off the boil rapidly. Hedge fund performance has slipped sharply, underperforming ordinary stock markets so far this year, even before those colossal fees. And the best days of the private equity industry look to be behind it.

Private equity, public shame
# Private equity to give in over tax

Pride usually comes before a fall. In the case of the masters of the universe in private equity, there will be humble pie to eat first.

The big hitters from KKR, 3i, Permira, Blackstone and Carlyle are due to prostrate themselves before a hostile committee of MPs this week - hoping to improve on the calamitous performance of their industry lobby group at a similar hearing last week. All indications point to a climbdown on the symbolic issue of tax relief for their share of the gains.

Introduced to encourage entrepreneurship, the 10pc rate has become a rallying point for critics of the industry. Curiously, it now also looks to be a rallying point for its defenders, who hope that in making a concession on this point they can avoid a more damaging backlash elsewhere.

Opinions are divided on the real relevance of this so-called taper relief. Some, like Jon Moulton, have pointed out that it does not matter as much as we think because many of the super rich partners at the biggest firms are domiciled overseas for tax purposes and therefore do not pay capital gains tax to begin with.

But this is not the whole story. Neil Goulden, the boss of private equity owned Gala Coral, whom we profile on page 10, estimates that 1,000 of his staff also benefit from the taper relief. Once we start differentiating between different classes of entrepreneurs, the whole point of dedicated tax breaks starts to unravel. For this reason, I agree with Moulton that the best answer would be a simplified, reduced, flat tax for all.

The more interesting question is whether concessions on this point by the industry will be enough. MPs are likely to be readily swayed by the argument that if the biggest beneficiaries will continue to escape tax anyway, more stringent rebalancing is needed.

Their time would be more productively spent looking at the market failures. Why has competition among private equity firms not driven down fees? Why are public companies and investors so willing to sell out? Answering these mysteries would be a more constructive way of tackling a problem that many are still not convinced exists. But don't expect such subtleties to get in the way of Wednesday's show trial.

Echoes of Pearson

Marjorie Scardino and Jeffrey Immelt go way back. The chief executive of Pearson and the chairman of General Electric might inhabit different levels of the corporate stratosphere but for the boss of a mid-size British media group, Dame Marjorie has pretty good connections at the highest level of corporate America.

News that the owner of the Financial Times has turned to Immelt for ideas on how to see off Rupert Murdoch's bid for Dow Jones, the US newspaper group, is therefore not surprising. What is surprising is that anyone thinks a joint bid seriously offers the answer. Just because GE and Pearson are both challenged by Murdoch does not mean they need a common response.

Immelt, for one, has made it pretty clear he does not want to own a newspaper. What then would he contribute to a joint Dow Jones bid? Ownership of its newswire business? Some air time for reporters in his TV studios? Or just the cash?

GE does not do charity at the best of times, and Immelt is under pressure from his own shareholders to rationalise an underperforming conglomerate - not ride to the rescue of friends in need. It is true that his business TV channel CNBC is threatened by Murdoch, but not to this extent.

Pearson too is finally beginning to convince investors that its best future lies in education, not financial media. A $5bn bid for an even more challenged rival, with or without friendly US backing, would set relations with its own shareholders back years.

What the talks do reveal, however, is how concerned Pearson must be feeling. The prospect of a resurgent Dow Jones giving the Financial Times a run for its money in Europe and Asia comes at a frustrating time.

Circulation and profits at the Pink 'Un are up, but still far from the scale needed to prove that the global newspaper model really works. A renewed challenge from the Wall Street Journal and Murdoch's News Corporation would only underline just how isolated the FT still looks in the global media game.

Ironically, Pearson has been a seller of global business newspapers more often than a buyer. It pulled out of Spain and is now under pressure to do likewise in France, where it owns Les Echos. If it fails to find a way of getting someone else to pay for a takeover of Dow Jones, pressure is bound to return to find a more suitable partner for the FT.

Immelt was probably just being polite.
Source : http://www.telegraph.co.uk

Discount counterfeits can be dangerous

Discount stores that scour the world for deals sometimes give shoppers something they didn't bargain for: bogus products of uncertain origin that may even be dangerous.

A prime example: this week's recall of toothpaste believed to be both counterfeit and toxic.

Government tests on the toothpaste, bought by federal investigators at a discount store in Maryland, revealed it contained diethylene glycol, a chemical found in antifreeze, a Food and Drug Administration spokesman said Thursday. Although the toothpaste was labeled as "Colgate," Colgate-Palmolive Co. said the imported 5-ounce tubes were falsely packaged counterfeits.

Foes of counterfeiting said it was an example of how it's more than CDs, DVDs, handbags and sunglasses that are getting faked these days.

"This has really become an issue where every industry is affected," said Caroline Joiner, executive director of the U.S. Chamber of Commerce's anti-counterfeiting and piracy initiative. The Chamber unveiled a lobbying effort Thursday to step up federal efforts in combatting a problem it estimates costs U.S. companies $250 billion a year in lost sales.

Lately, counterfeit drugs have repeatedly made headlines, even though the FDA concedes they are quite rare in the U.S. drug distribution system. Worries about fake drugs recently helped sink legislation in the Senate that would have permitted the importation of prescription drugs. When fake drugs do crop up, it's typically after they've been purchased over the Internet.

In May, the FDA relayed reports from three consumers who had purchased bogus Xenical, a weight-loss drug, from a pair of Web sites. Testing revealed that none of the capsules contained the active ingredient in Xenical - though one did include a drug found in Meridia, a competing medication, the FDA said. Other capsules contained nothing more than talc and starch.

Meanwhile, the galaxy of counterfeits continues to expand to include an ever-broader range of consumer products.

"It's to a point where we see fake auto parts -fake brake pads. We see toothpaste tainted with antifreeze and Underwriters Laboratories tags on electric cords that are fake and catch on fire," Joiner said.

In 2006, U.S. agents increased their seizures of counterfeit goods by 83 percent, making more than 14,000 seizures worth at least $155 million, the Homeland Security Department said earlier this year.

Even though many bogus goods, including the toothpaste, have murky origins, signs point to overseas - and China in particular. That country was the source of 81 percent of all phony goods seized in 2006, according to federal statistics.

The recalled toothpaste was labeled as made in South Africa but its toxic ingredient previously has been found in Chinese-made toothpastes. Colgate-Palmolive pointed out the packages it had examined bore several misspellings, including "SOUTH AFRLCA." That suggests even the bogus product's true origin may have been faked.

Its distributor could do little to explain the ultimate source of the toothpaste, which it sold at 60 cents to 70 cents a tube to discount stores in New York, New Jersey, Pennsylvania and Maryland.

"We do not make it, we don't import it, we just buy it from a guy," said Chris Kim, manager of MS USA Trading Inc., the North Bergen, N.J., company that recalled the 100 cases of suspect toothpaste. A telephone message left for the source identified by Kim - a man he knows only as "Dialo" - was not immediately returned Thursday.

Discount stores in particular can be vulnerable to fakes, said John Drengenberg, consumer affairs manager for Underwriters Laboratories. For the last three years, the nonprofit product safety certification group has helped train the retailers to recognize counterfeits, problematic distributors and what categories of products are prone to fakery.

"They are looking for goods at a certain cost level and this could, annoyingly, lead to products that are counterfeit," Drengenberg said of the stores. They can be an important outlet not only for fakes but other dangerous goods as well, federal officials said.

The Consumer Product Safety Commission, for example, has announced well more than a dozen recalls of children's jewelry this year because they contain lead, which is toxic if ingested. The Chinese-made jewelry is predominantly sold through discount outlets, CPSC spokesman Scott Wolfson said.

A message left with the Retail Dollar Store Association seeking comment was not immediately returned.

Overall, federal regulators are stepping up their scrutiny of Chinese-made goods. Wolfson said products made in China account for more than 60 percent of the recalls the CSPC has announced so far this year.

And FDA investigators have been stopping Chinese toothpaste imports at the border and scouring the shelves of discount stores where it's typically sold, after receiving reports from abroad that it can contain diethylene glycol. The South African "Colgate" got caught in that dragnet, FDA spokesman Doug Arbesfeld said.

Subsequent FDA testing showed the South African-labeled toothpaste contained 3 percent diethylene glycol by weight. The chemical, used as a lower-cost substitute for the sweetener glycerin, previously has been found in Chinese-made toothpaste also sold in discount stores.

"It's a low health risk but the bottom line is, it doesn't belong in toothpaste," Arbesfeld said of the chemical.
Source : http://seattlepi.nwsource.com

Yahoo stockholders vote against anticensorship proposal

Yahoo shareholders voted down a proposal that would have forced management to adopt stronger policies regarding government attempts to limit Internet access and to curtail freedom of speech in countries where Yahoo operates.


Shareholders voted only 15.2 percent of Yahoo shares in favor of this proposal at the company's annual shareholders' meeting on Tuesday, which also included the rejection of a proposal to tie executive pay to company performance. The meeting also featured tense exchanges between Chairman and CEO Terry Semel and shareholders critical of his job and of the company's financial performance.

Yahoo's management had recommended that shareholders vote against this anticensorship proposal, which was presented by the New York City Comptroller's Office on behalf of the New York City Pension Funds.

The organization, which owned about $124 million in Yahoo shares as of last Friday, also saw a similar proposal defeated last month at Google's shareholders meeting.

Yahoo, Google, and other Internet companies are under pressure by shareholders and human rights groups to resist demands from governments to censor search-engine results that these governments find politically objectionable.

Critics also want Internet companies to refuse governments' requests to turn over members' information when the intention behind those requests is to persecute otherwise law-abiding journalists and dissidents.

The defeated proposal would have required Yahoo to implement a series of policies, such as not hosting individuals' data in countries where political dissent is considered a crime.

The proposal also called for Yahoo to not engage in self-censorship and to use all legal means to resist censorship demands, complying with them only if legally bound to do so.

In recommending shareholders vote "no," Yahoo said in the meeting's proxy statement that the proposal would give the company "insufficient flexibility" to respond to legal requirements in the countries where it operates.

Yahoo also said it shares many of the proposals' concerns and objectives, but that its presence is a positive force toward reform in countries where speech and press freedom is limited.

The company believes that there is only so much pressure that the private sector can apply to foreign governments, and that it's more powerful to establish bilateral and multilateral dialogues about political and human rights issues to bring about change.

Yahoo also listed in the proxy statement a series of steps it is taking to address Internet freedom problems, including participating in policy discussions with private sector peers, governments, universities and other organizations.

Yahoo has also created a team made up of Yahoo employees to coordinate and support Yahoo's efforts at addressing privacy and free expression issues.

Because it has taken what it considers sufficient steps to address censorship and civil liberties issues, Yahoo's board of directors also recommended voting against a related proposal.

That proposal, made by an individual shareholder, sought to amend Yahoo's corporate bylaws to establish a board committee on human rights authorized to review the human rights implications of company policies. Only 4.1 percent of shares were voted in its favor.

Shareholders also rejected a proposal by the Washington, D.C.-based United Brotherhood of Carpenters Pension Fund to establish a pay-for-superior-performance standard in the company's executive compensation plan for senior executives. The proposal called for linking the level of senior executive pay to the company's performance relative to other companies in its sector. Almost 35 percent of the shares were voted in favor of the proposal, and 62.3 percent against it.

Yahoo's board opposed the proposal, saying that although it believes that a link must exist between executive pay and company performance, the board needs the flexibility of weighing other considerations as well.

This has been an issue at Yahoo, which has had generally underwhelming financial performance in the past two years, particularly when contrasted with Google's stellar revenue growth and profitability.

Semel has gotten most of the blame as Yahoo has failed to capitalize on the fast-growing market of search advertising, the engine of Google's financial success.

Semel has also been faulted for failing to acquire hot Internet startups that ended up getting scooped up by rivals, as was the case with News Corp.'s acquisition of MySpace and Google's purchase of YouTube.

At Tuesday's meeting, some shareholders pelted Semel with blunt questions and in-your-face criticism, which lead to some tense exchanges.

A shareholder said he had been disappointed that Semel hadn't apologized to shareholders for the company's financial performance.

"Do you still have the fire in the belly to do this job?" the man asked Semel.

"Absolutely. Yahoo has more opportunities going forward than perhaps any other time in its history," Semel replied, as he began to answer the shareholder's questions.

The two sparred a bit later, when, after hearing Semel's answers, the shareholder asked the CEO: "Are you saying you're happy being a stronger number two than being number one in search?"

"I don't think I said that at all, and I think you're being a little cute about that," Semel retorted.

After Semel and co-founder Jerry Yang addressed another of his questions, the shareholder shot back at Semel, saying: "I wasn't trying to be cute. I'm a shareholder. I love this company.... I have some simple questions. If I didn't love this company, I'd sell my shares and show up next year" at the Google shareholders' meeting instead.

Semel then thanked him for his commitment to the company. "I take your questions as being constructive. I think when you began it was a little hard to judge that," Semel said.
Source : http://computerworld.com.sg