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Business this week: 15th – 20th December 2006

January 4, 2007 Leave a comment

Business this week

Dec 19th 2006
From The Economist print edition

Nokia and Siemens put back the planned merger of their telecoms-equipment businesses (agreed on last June) because of a widening investigation into a bribery scandal at Siemens. German authorities are looking into various allegations, including that company money, amounting to possibly euro420m ($550m), was siphoned into secret accounts to sweeten potential customers.

Apple Computer delayed filing its annual report (for the year to September 30th) because it needs to restate some earnings to account for stock-option grants. The company is the biggest out of dozens this year, mostly in the tech industry, to have reported the backdating of stock options.

Biomet agreed to a $10.9 billion buy-out from a group of private-equity firms. The designer and maker of artificial joints also said it would postpone its quarterly earnings after an internal review found that its procedures for granting stock options “were not well documented”.

Italy‘s Autostrade and Spain’s Abertis scrapped their euro25 billion ($33 billion) plan to merge. The cross-border deal, which would have created the world’s biggest toll-road operator, faced strong political opposition in Italy.

Japan Tobacco made an offer to buy Gallaher, a British cigarette-maker. At £7.5 billion ($14.7 billion), it would be the biggest-ever foreign acquisition by a Japanese company. Speculation mounted that rival bids were being prepared.

Private-equity firms Kohlberg Kravis Roberts and Permira bought a controlling stake in ProSiebenSat.1, valuing the German commercial broadcaster at around euro5.6 billion ($7.4 billion). The new owners want to combine their new purchase with other media assets they hold in Europe, so presenting a challenge to RTL, a broadcaster that operates in 11 countries and is owned by Germany‘s Bertelsmann.

Thailand‘s central bank was forced into a humiliating retreat after imposing capital controls designed to rein in the soaring baht. After the stockmarket plunged, it removed curbs on foreign equity investors, but left restrictions on other non-trade inflows. See article

Apollo Management, a private-equity firm, agreed to pay $9 billion for Realogy, a real-estate company that includes the Century 21 and Coldwell Banker franchises in its portfolio. Some analysts viewed the deal as a vote of confidence in America’s housing market amid signs that this year’s price falls may be bottoming out. Realogy was formed this year after the break-up of the conglomerate Cendant.

Express Scripts made a counterbid for Caremark, valuing its rival at $26 billion. Both companies manage pharmacy services to consumers and health-care firms. Last month CVS, America’s biggest retail-drug chain, made an offer to acquire Caremark, but the deal failed to inspire investors.

Australia‘s competition regulator said it would review the A$11.1 billion ($8.6 billion) bid for Qantas Airways from a private-equity consortium led by Macquarie Bank. The carrier’s board initially rejected the offer but then approved it to shareholders after the consortium dropped its break fee. The regulator will investigate whether, among other things, Macquarie’s 49% stake in Sydney airport would hinder airline competition.

Westinghouse Electric won a much-sought contract to build four nuclear reactors in China, which is expanding its use of atomic power. Much was made of the politics behind the deal. Westinghouse is owned by Japan‘s Toshiba, possibly signalling a thaw in Sino-Japanese relations, but is based in America. The news came after trade talks in Beijing between senior American and Chinese officials.

Statoil, Norway’s state-controlled oil company, agreed to buy the oil and gas assets of Norsk Hydro, a compatriot in which the Norwegian government has a 44% stake. The combined company will have a market value of some NKr616 billion ($97 billion) and will be the world’s largest offshore operator. Both companies have been looking at ways to expand since they (and others) were passed over as potential partners in the Shtokman gas field by the Russian government in October.

Following a 4% cut in output that came into effect in November, the Organisation of Petroleum Exporting Countries said it would reduce production by a further 2%, to 25.8m barrels a day, from February 1st. The oil cartel’s decision came despite the urging of Samuel Bodman, America’s energy secretary, not to do so. Meanwhile, OPEC announced that Angola would become its 12th member from January 1st, the first country to join the organisation since Gabon (which has since left) in 1975.

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Politics this week: 15th – 20th December 2006

January 4, 2007 Leave a comment

Politics this week

Dec 19th 2006
From The Economist print edition

America, China, Japan, Russia and South Korea resumed talks with North Korea in Beijing after a gap of more than a year. The discussions are intended to bring an end to its nuclear-weapons programme—North Korea carried out a nuclear test in October. See articleE+

Reuters
Reuters

All the senior economic officials in George Bush’s cabinet joined Hank Paulson, America’s treasury secretary, in Beijing for the first meeting in a new twice-yearly “strategic economic dialogue” with China. The two sides haggled inconclusively about trade and exchange rates. See article

The son of a prominent Indian politician was convicted of the murder in 1999 of Jessica Lal, a model, at a crowded party. The case had caused outrage when it appeared that, despite the presence of large numbers of witnesses, the murderer would go free. See article

Anton Balasingam, chief negotiator for the Liberation Tigers of Tamil Eelam, the rebels fighting for a Tamil homeland in Sri Lanka, died in London. He was seen as a moderate in an otherwise ruthlessly uncompromising leadership.

King Jigme Singye Wangchuk of Bhutan abdicated in favour of his son. A revered monarch, he has promised that the country will hold its first democratic elections in 2008.

The peace process in Nepal took another step forward with an agreement between mainstream political parties and rebel Maoists on an interim constitution to prepare for elections next year.

The fragility of the Democrats’ hold on the incoming American Senate was thrown into sharp focus when Senator Tim Johnson, from South Dakota, suffered a brain haemorrhage. Mr Johnson is said to be recovering after surgery, but if he dies, South Dakota‘s Republican governor will appoint someone to fill the remainder of his term. A Republican replacement for Mr Johnson would upset the new Democratic majority of one in the chamber.

The death penalty in two states was more or less put on hold over concerns that executions by lethal injection had been botched. Florida’s governor, Jeb Bush, ordered a halt to executions after a convicted killer took 34 minutes to die and a judge in California ruled that the state’s method of administering the injections was cruel and therefore unconstitutional.

Two of the oldest Episcopalian parishes in the United States, with roots in the colonial era, voted to break away from the national church to protest against its growing acceptance of gays and the ordination of women. Located in Virginia, the parishes aligned themselves with a conservative Nigerian church. The debate over homosexuality and the role of women in the church threatens to produce a schism in the worldwide Anglican communion. See article

New Jersey‘s legislature passed a bill recognising civil unions between gay couples, which gives same-sex partners the same rights and benefits as married people in the state.

President Mahmoud Abbas called for a general election in the Palestinian territories, as violence between the ruling Islamists of Hamas and Mr Abbas’s secular Fatah party increased in the Gaza Strip. See articleE+

Supporters of Iran‘s populist president, Mahmoud Ahmadinejad, did badly in elections to local councils and to the assembly of experts. The assembly can choose Iran‘s supreme leader, who has more power than the president. See article

A Libyan court sentenced five Bulgarian nurses and a Palestinian doctor to death after they were found guilty—on flimsy evidence—of deliberately infecting hundreds of Libyan children with AIDS. See article

Nigeria‘s ruling party picked a reclusive Muslim state governor, Umaru Yar’Adua, as its candidate in next year’s presidential election. He was strongly backed by the incumbent president, Olusegun Obasanjo, who is to step down after two terms. See article

Robert Mugabe, who has run Zimbabwe since 1980, won his ruling party’s backing to postpone the next presidential election from 2008 to 2010.

Some 250 foreign aid workers left the Darfur region of Sudan after some of them were shot at and their vehicles stolen at gunpoint. The government in Khartoum continued to re
fuse to accept a hybrid peacekeeping force from the African Union and the UN.

AFP
AFP

As part of a promised offensive on law and order, Mexico’s new president, Felipe Calderón, deployed 6,000 troops and police against drug gangs in the western state of Michoacán and placed two separate federal police forces under a single command.

Hundreds of thousands of protesters took part in demonstrations in Santa Cruz and other cities of eastern Bolivia. They demanded greater autonomy and protested at the plans of Evo Morales, the country’s socialist president, to rewrite the constitution.

Ecuador withdrew its ambassador from Colombia in disapproval of the decision by Álvaro Uribe’s government to resume aerial spraying of coca plantations near the border between the two countries. See article

Cuba‘s government made a concerted effort to deny reports that Fidel Castro, the island’s president, was dying of cancer. Officials told visiting American congressmen that Mr Castro would make a public appearance soon.

AFP
AFP

Tony Blair became the first British prime minister ever to be questioned by police during a criminal investigation. He was questioned as a witness in an inquiry into alleged cash payments from party donors in return for peerages in the House of Lords. Mr Blair said it was “perfectly natural” that he should assist. See article

Silvio Berlusconi, Italy‘s former prime minister and the current centre-right opposition leader, went to America for health checks. Mr Berlusconi, who is 70, collapsed at a political rally last month.

A Spanish scheduled flight landed at Gibraltar airport for the first time. The Iberia flight to the British colony followed a three-way deal between the parties in September.

An ageing French rock star, Johnny Hallyday, caused a political stir when he said he would move to Switzerland to escape French taxes. Mr Hallyday claims that 68% of his income goes to the taxman.

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Rojo: Person of the Year; Best of Everything 2006

January 4, 2007 Leave a comment

Rojo: Person of the Year; Best of Everything 2006

Top Stories For the Week of December 18 – December 22

 It’s the end of the year and time for some annointing. TIME magazine this week chose “you”-meaning YouTube users, bloggers, citizen journalists, and online social networkers-as its person of the year (via Bloggers Blog). Meaning anyone with some sort of connection to the Internet and a total cop-out, snarks Gothamist. We’re all supposed to feel flattered or intrigued, writes Gawker, but at least they didn’t choose “blogs.”

Does this mean crowdsourcing becomes the next buzzword du jour, asks Marc’s Voice? And what happened to Mahmoud Ahmadinejad, writes BAGnewsNotes? Business 2.0 claims it chose “you” waayyy back in July. If TIME was gunning for Linkbaiter of the Year, they got it, says ProBlogger Blog Tips, passing out some year-end tips on getting your post noticed.

 This was also the year of Bubble 2.0. If you think there isn’t one-those exotic valuations are justified!-watch as Facebook board member Peter Thiel increases Facebook’s value from $1 billion to $8 billion with a wave of his hand. Thiel gets away with this because of Facebook’s college-age users, blogs Paul Kedrosky. Elsewhere in bubble-land, Don Dodge explains why the next bubble-burst won’t be as devastating as the last one, primarily because VCs and acquiring companies will be left holding the bag rather than stockholders-but then, 2006 IPOs have already beat 2005, so hang on.

 Big media changes were also afoot in 2006. Fresh from his Long Tail successes, Chris Anderson proposes radical transparency for media organizations, blogs The Bivings Report, including showing what they’re working on, promptly uploading raw interview transcripts, and wikifying published stories. It may be too far from traditional models, says digital digs, while Publishing 2.0 writes that fulfilling Anderson’s vision means deciding whether to serve your online readers or your print readers. Finally, Anderson wades through the hullabaloo and posts caveats and improvements at The Long Tail.

 Read/Write Web lists the top 10 Web domains of 2006 and finds they account for a higher percentage of total Internet traffic than the top 10 of 2001. Apple iPhone rumors raged all year long and are still going strong, with Unofficial Apple Weblog and Andy Beal fanning the flames. Meanwhile, GigaOM spots the real iPhone-made by Linksys. After you hang up, check out Gizmodo‘s top five “I’m a Mac” parody commercials-the 12-second Mac vs. PC vs. Halo parody is priceless. 2006 was also the year of fake blogs with the latest being a PlayStation 3 flog which Sony took down after it was found to be registered to a marketing firm (via Blog Herald).

 In year-end lists, Forbes.com captures the 10 best- and worst-selling games of the year, with bests including Madden NFL ’07, Grand Theft Auto: San Andreas and the surprise puzzle hit Brain Age. IFILM Featured Videos covers the year’s best viral videos, including Connie Chung’s singing, Brokeback to the Future and Michael Richards’ racist rant. Rough Type lists the top 10 searches on Google, Yahoo and AOL and, finding almost zero overlap, declares the engines to be for dweebs, horndogs and geezers, respectively. Wrong! shouts Business 2.0, demonstrating that AOL’s true top 10 searches are google, ebay, yahoo, yahoo.com, mapquest, google.com, myspace.com, myspace, www.google.com and www.yahoo.com. Sign of the times.

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Business this week: 23rd December – 5th January 2007

January 4, 2007 Leave a comment

Business this week

Jan 4th 2007
From The Economist print edition

François Pinault said he was “keeping his options open” about making a bid for Suez, a French utility company. The statement from the retail and luxury-goods tycoon (made through his holding company) came after France’s stockmarket regulator asked him to spell out his intentions in response to speculation in the media. Suez, which is mired in a politically controversial merger attempt with Gaz de France, sought further clarification of Mr Pinault’s remarks.

Apple Computer filed its earnings, which had been delayed because of restatements for stock-option grants. The company has completed a review of its procedures for granting such options and expressed its confidence in its chief executive, Steve Jobs.

Home Depot announced that Robert Nardelli was stepping down as its boss. Critics of the retailer’s penchant for awarding its executives generous pay while the company lost ground to its competitors were not placated by the $210m severance package presented to Mr Nardelli. See article

Speculation increased about the outcome of manoeuvring to take control of Hutch. India’s fourth-largest mobile-phone operator is co-owned by Hong Kong‘s Hutchison Telecom, which has a 67% stake, and India’s Essar Group, which controls the remainder. Both companies are said to be mulling various possibilities including a sale, estimated at up to $17 billion.

A plan to develop a Franco-German internet search engine to rival Google was reportedly scrapped. Quaero was included in a list of initiatives designed to challenge America’s dominance of the internet trumpeted by France’s Jacques Chirac. However, German officials grumbled about the cost and have indicated they will produce their own, scaled-down search engine.

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Politics this week: 23rd December – 5th January 2007

January 4, 2007 Leave a comment

Politics this week

Jan 4th 2007
From The Economist print edition

Saddam Hussein, the former leader of Iraq, was executed by hanging. He had been convicted by an Iraqi court of the killings of 148 Shias from the town of Dujail in the 1980s. Iraqi authorities released official footage of the execution to prove that he was dead; but unofficial mobile-phone footage quickly surfaced showing guards taunting Saddam just before his death, further exacerbating ethnic tensions. See article

In a military campaign lasting barely a week, Somalia‘s previously weak transitional government, together with Ethiopian armed forces, routed the Islamist militias that had held sway over the capital, Mogadishu, and much of the south of the country since last summer. The victors, with the help of American naval forces, are now tracking down the remaining al-Qaeda operatives who were thought to be fighting with the Islamists. See article

After a year of relentless diplomatic pressure, the Sudanese government at last accepted a small United Nations force to operate alongside the existing African Union force in Darfur. See article

Gerald Ford was given a full state funeral in Washington, DC. The former American president, who held the office for fewer than 900 days in the 1970s, died on December 26th, aged 93. See article

Preparations were made for the swearing-in of America’s 110th Congress, and for Nancy Pelosi to become the first female speaker of the House of Representatives. The Democrats vowed to implement their agenda quickly. Plans include an increase in the minimum wage and the lifting of federal restrictions on stem-cell research. See article

In a written new-year message read out on state-controlled media, Cuba‘s invalid president, Fidel Castro, said he was recovering slowly from intestinal surgery last July, but admitted that it was likely to be “a long process”. Officials have denied reports that he is suffering from cancer or any other terminal illness. See article

Luiz Inácio Lula da Silva was sworn in for a second term as Brazil‘s president. He pledged to spur sluggish growth and tackle gang-related violence, which killed 19 people in Rio de Janeiro last week. See article

Romania and Bulgaria celebrated their entry into the European Union as its 26th and 27th members. Slovenia became the first eastern European country to join the euro area, as its 13th member. See article

Spain’s hopes of peace in the Basque region were set back when it became clear that ETA, the Basque separatist group, was responsible for a van bombing at Madrid airport that killed two people. See article

Eight bombs rocked Bangkok, killing three people. Thailand‘s military-backed government hinted that supporters of Thaksin Shinawatra, the former prime minister who was deposed last autumn, may have been responsible. Mr Thaksin denied any involvement. See article

Bangladesh‘s main opposition party said it would boycott a general election, scheduled for January 22nd, claiming the poll would be rigged. The Awami League only recently agreed to take part in the ballot after it mounted a series of strikes and protests to push for electoral reform.

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