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Archive for October 6, 2006

Business this week: 30th September – 6th October 2006

October 6, 2006 Leave a comment

The share prices of online gambling companies collapsed after America’s Congress passed legislation that stops banks and credit-card issuers from making payments to them, essentially banning punters in the United States from their websites. See article

Harrah’s Entertainment, the operator of Caesar’s Palace and other top casinos, revealed it had received a buy-out offer of around $15 billion from two private-equity firms. Although active in a range of industries, private-equity firms have until now largely stayed clear of gambling.

After failing to reach agreement on how to share the benefits of a potential deal, General Motors decided not to pursue an alliance with Renault and Nissan and ended negotiations on the matter. GM will now concentrate on its own restructuring plan as it seeks a return to profitability. The alliance’s non-starter is a blow to Kirk Kerkorian, a big GM investor who suggested the tie-up. Last week Mr Kerkorian gave notice of his intention to raise his stake in the carmaker. See article

EADS confirmed a further delay to the Airbus A380. It now expects to make the first delivery of the super-jumbo in October 2007, putting the project some two years behind its original schedule. The European aerospace company also upped the total amount of a projected profit shortfall over four years to euro4.8 billion ($6.1 billion) because of the delays. Airlines that have contracts for the A380 indicated they were considering their options. See article

Ryanair, Europe’s biggest low-cost airline, launched a takeover bid for Aer Lingus by buying a 16% stake in its fellow Irish carrier, which made its stockmarket debut this week after converting itself into a low-cost airline.

The first criminal charges were filed in relation to Hewlett-Packard’s boardroom spying scandal. California indicted HP‘s former chairman, Patricia Dunn, and former ethics lawyer as well as three outside investigators, who allegedly assisted the company to uncover a press leak. The five defendants face several charges, including identity theft.

Apple Computer completed its internal investigation into the way it has granted past stock-options and found 15 cases of improperly backdated grants. The report raised “serious concerns” about the actions of two former (unnamed) executives, but found no misconduct by the current management team, although Steve Jobs, Apple’s chief executive, had been aware of the practices “in a few instances”. He apologised.

The row between ImClone Systems and Carl Icahn came to the boil when the biomedical company accused the investor of sabotaging a proposed takeover offer it had received by withholding his support. Mr Icahn, who owns 14% of ImClone, is unhappy with the company’s performance and is seeking to oust six members of the board.

A further shake-up of Britain’s water companies seemed likely after a bidding war broke out for AWG, which owns Anglian Water. AWG had accepted a £2.2 billion ($4.1 billion) offer from an investment group before confirming it had received rival bids from (unnamed) interested parties. With South East Water agreeing to be bought in a separate offer by an Australian fund manager for £665m, speculation returned to the potential of a bid for Thames Water, Britain’s biggest water company.

Siemens said it would create a euro35m ($45m) fund to help employees at its former mobile-phone unit find new work. Last year the German engineering company sold the loss-making business to Taiwan’s BenQ, which says the losses are “unsustainable” and announced it would stop funding BenQ Mobile. Executives at Siemens are contributing to the workers’ fund by forgoing a (controversial) 30% salary increase.

Having fallen by 23% since early August to a seven-month low of less than $60 a barrel, oil prices rose on news that ministers from the Organisation of Petroleum Exporting Countries were discussing whether to cut oil production by 1m barrels per day. Any cut would be the first since 2004 and could come after an emergency meeting of the cartel.

Sony’s share price fell after Toshiba and Fujitsu said they, too, were recalling Sony batteries in some laptop computers because of fears they could overheat. Lenovo, which makes computers under the IBM brand, has also announced a recall after one of its laptops caught fire at Los Angeles airport. Dell and Apple issued recalls in August.

The Dow Jones Industrial Average broke its record closing high, which had been previously reached in January 2000. Amid the celebrations, some questioned why the DJIA continues to be viewed as the benchmark stockmarket barometer considering it is an average of only 30 share prices that ignores the market value of a company. See article

Correction: Last week we were wrong to say that Aer Lingus was the first airline to debut on the London Stock Exchange since 2000. Several airlines have floated on the LSE since then. Apologies. This has been corrected online.

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Politics this week: 30th September – 6th October 2006

October 6, 2006 Leave a comment

The Republicans had a bad week as attention focused on what the leadership in the House of Representatives knew about Mark Foley’s lurid overtures to teenage pages on Capitol Hill, and when they knew it. Mr Foley resigned from his safe seat in central Florida after sexually suggestive e-mails he sent to some of the young men came to light. See article

With a month to go before the mid-term elections the White House was put on the defensive over its Iraq policy after the publication of Bob Woodward’s latest book. The veteran Washington insider depicts an administration striving to suppress downbeat assessments about the situation in the country. See article

AP
AP

George Bush signed a homeland security bill that provides funds to construct 700 miles of fencing along the border with Mexico. Congress rushed through the measure before it adjourned last week.

A man entered an Amish schoolhouse in Pennsylvania and shot ten young girls, killing five. The gunman, who committed suicide, apparently had a background of sexual molestation but it is not thought he bore a particular grudge against the Amish. See article

The publisher of Miami Herald Media resigned after three journalists he had sacked for taking “unethical” government payments were reinstated. The journalists, based at the Miami Herald‘s Spanish-language sister publication, did some work for Radio Martí, an anti-Castro, government-funded broadcaster.

AFP
AFP

Luiz Inácio Lula da Silva failed to win a majority of the votes in Brazil’s presidential election, forcing a run-off on October 29th. His opponent will be Geraldo Alckmin, a former governor of São Paulo. See article

An airliner collided with a private jet and crashed into the Amazon rainforest killing all 155 aboard, Brazil’s worst aviation disaster. The private jet’s two American pilots managed to land their plane and were ordered to stay in the country.

Tensions rose between North Korea and its neighbours as it announced its intention to carry out a nuclear test. Japan and South Korea gave warning of serious consequences if a test proceeded. America said it was “not going to accept” a nuclear North Korea. China urged the reclusive state to “exercise necessary calm and restraint”. See article

India said it would provide evidence to Pakistan that its intelligence services were involved in July’s bombings in Mumbai. Pakistan described the allegation as “baseless”. See article

NATO assumed full command of peacekeeping in Afghanistan, taking charge of 10,000 American troops in the east of the country. The alliance now has 33,000 troops in Afghanistan; some 8,000 American soldiers are also there to hunt terrorists.

Thailand’s military junta appointed a former army chief as the country’s interim prime minister. General Surayud Chulanont, who is close to the king, promised a return to democracy. Meanwhile, Thaksin Shinawatra, the ousted prime minister, now in exile, resigned as the leader of the Thai Rak Thai party, the dominant force in Thai politics before the recent coup. See article

South Korea’s foreign minister seemed certain to become the next United Nations secretary-general after winning an informal poll in the Security Council. Ban Ki-moon is expected to receive a formal endorsement next week. See articleE+

A row between Georgia and Russia got worse. The Georgians sent four alleged Russian spies back to Moscow and the Russians cut all air, road and sea links. The countries’ two presidents, Russia’s Vladimir Putin and Georgia’s Mikhail Saakashvili, traded public insults. See article

Three people are to run for the French Socialist Party’s presidential nomination. The favourite is Ségolène Royal; the other two candidates are Laurent Fabius, a former prime minister, and Dominique Strauss-Kahn, a former finance minister. See article

The minority centre-right Czech government under Mirek Topolanek lost a vote of confidence. The Czechs have not had a secure government since the election in June produced a dead heat; another election now looks likely.

Hungary’s president put pressure on the prime minister, Ferenc Gyurcsany, to step down after his Socialists did badly in local elections. Mr Gyurcsany has been under pressure ever since he admitted repeatedly lying to voters, but he still refuses to go.

The prime minister of Montenegro, Milo Djukanovic, who led the country to independence this summer, is resigning for personal reasons.

Bosnia’s election returned a clutch of leaders who may break the country apart. The prospect has also receded of more reforms necessary to start accession talks with the European Union. See article

The inability of the besieged Hamas-run Palestinian Authority to pay civil servants or the security forces resulted in violent clashes between Hamas and Fatah militia in Gaza and the West Bank. Some 12 people were killed. See article

On a visit to the Middle East Condoleezza Rice, America’s secretary of state, exchanged opinions with “moderate” Arab leaders and urged Israel to temper its blockade of the Palestinian territories. See article

In a bid to reduce sectarian killing in Baghdad, Iraq’s prime minister announced that local security committees would be set up to supervise the security forces. Dozens of murdered bodies are discovered in the city each day. See article

Levy Mwanawasa was comfortably re-elected as Zambia’s president, with international observers saying the poll was reasonably honest and open. Supporters of the opposition leader protested violently in Lusaka, claiming the results were rigged. See article

AFP
AFP

The remains of Pierre de Brazza, a French explorer who died in 1905, were exhumed in Algeria and placed in a mausoleum in Brazzaville, Congo’s capital city.

Tensions increased in the Democratic Republic of Congo ahead of a presidential run-off election. An unmanned surveillance drone used by UN peacekeepers crashed in Kinshasa, the capital, killing a woman and sparking protests. See article

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$1M Crowdsourcing; YouTube Doubt; Foley Train Wreck

October 6, 2006 Leave a comment

Are better DVD picks worth a million bucks? They are to Netflix. Long Tail explains that the company’s million-dollar contest to create better DVD recommendations is an inspired business move: better search drives demand down the tail of time, where acquisition costs are typically lower. It looks like crowdsourcing, but since just one person will win, it’s winner-take-all outsourcing, blogs Techdirt. Want to win? Better include Ajax in the answer, blogs Ajaxian. Netflix should just encourage people to form clubs around actors, directors or genres, then compare viewing history (anonymously), says business2blog. Or take a cue from MovieTally which has great missing NetFlix features, writes TechCrunch. Don’t sell those theater stocks, though; Netflix CEO Reed Hastings thinks there will always be a place for theaters as a unique entertainment destination (via Hacking Netflix).

 In other video news, Forrester jumped onto the YouTube-will-get-sued bandwagon, saying one copyright suit will force it to yank all copyrighted material from the site (via CNET). But online video-editing and storage tools like StashSpace may fill that gap, letting individual users create more and better video material. And YouTube pessimism didn’t prevent Netscape from taking video submissions, writes Bloggers Blog, or Fox from expanding its TV offerings through MySpace. At the same time, Wal-mart quietly killed its ill-conceived MySpace clone (reported via The Blog Herald).

 In blogger news, PayPerPost wants to expand the offerings of splogs: It will pay bloggers for posts mentioning particular products or advertisers, blogs Somewhat Frank, who can’t seem to decide whether this is good or bad. Valleywag has no such doubts, labeling it mercenary and will ruin the bloggers it touches. Meanwhile Cisco is taking a different advertising tack, asking various technorati to define “the human network,” the tagline for its current marketing campaign (via John Battelle). If all you want to do is get on the front page of digg, though, follow SEO BlackHat’s 10 snarky steps (write about digg, appeal to Apple fanboys, and say Microsoft sucks to name a few).

 Wall Street is cheering a new record for the Dow this week. Too bad all-time highs can signal crushing lows, blogs Wonkette. Besides, other market measures like the S&P, the Russell 2000 and key sectors just aren’t keeping up, writes Big Picture-but Blogging Stocks captions a bit by Jim Cramer saying that falling energy prices mean there’s still headroom.

 But even a record-setting Dow is an afterthought next to the Mark Foley train wreck. The Florida Republican resigned from the House on Thursday after ABC News revealed questionable e-mails he’d written to teenage male pages. House speaker Dennis Hastert quickly called for an FBI investigation, but prominent Republicans are saying Hastert didn’t act for months (via Firedoglake).

 Under siege, Hastert took to the airwaves, telling Rush Limbaugh that Foley’s victims were out to get him and the GOP (via Daily Kos). Meanwhile Rep. Thomas Reynolds of New York, who runs the Republican national campaign effort, surrounded himself with children during a press conference to avoid facing adult questions. With Michelle Malkin describing newly revealed Foley e-mails as “stomach-turning” and National Review calling for his head, Hastert’s hours may be numbered-will he resign before Friday at 5:00 or after, asks Eschaton. Too bad the GOP didn’t out Foley itself when it found out about his activities last year, blogs Politik Ditto.

Wonkette rounds up late-breaking Foley gossip here. And all this after President Bush declared Monday Child Health Day.

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