Archive for May, 2007

Business this week: 12th – 18th May 2007

May 18, 2007 Leave a comment

Business this week

May 17th 2007
From The Economist print edition

DaimlerChrysler found a buyer for its troubled North American division. The German carmaker agreed to sell an 80.1% stake in Chrysler for $7.4 billion to Cerberus Capital Management, which said it would continue with Chrysler’s restructuring blueprint and also assume multi-billion-dollar liabilities for workers’ health-care and pension plans. Chrysler’s biggest labour union welcomed the deal, but negotiations are expected over the management and burden of benefits. See article

Meanwhile, DaimlerChrysler reported that quarterly net profit had more than doubled, to euro2 billion ($2.6 billion), compared with a year ago because Mercedes, its luxury-car unit, had revved up its performance, offsetting losses from Chrysler.

Hanson, once one of the world’s best-known conglomerates and now a supplier of building materials, agreed to an £8 billion ($15.8 billion) takeover from HeidelbergCement. Co-founded by the late Lord Hanson in 1964, the Hanson group made a series of “corporate raids” that gave it diverse interests, including tobacco, gold mining and chemicals. The conglomerate was split in four in 1996. See article

Tyco settled class-action lawsuits brought by shareholders for $3 billion. The conglomerate’s share price collapsed in 2002 amid an accounting scandal for which its former boss, Dennis Kozlowski (of the infamous $15,000 umbrella stand) and former finance chief were convicted. It is soon to split into three companies.

Warburg Pincus, a private-equity firm, said it would take over Bausch & Lomb in a $4.5 billion deal. The eye-care company was dealt a serious blow last year when it had to recall contact-lens solution that had been found to produce fungal eye infections.

Reuters and Thomson made their merger official in an £8.7 billion ($17.2 billion) transaction to create the world’s largest provider of financial data. The trustees that uphold Reuters’ independence gave their approval, but the deal will be scrutinised over the coming months by competition regulators in America and Europe.

Spain’s Telefónica sold its 75% stake in Endemol, a Dutch media-production company that is responsible for starting the fashion for reality-TV with programmes such as “Big Brother”. The stake was bought for euro2.6 billion ($3.5 billion) by a consortium that includes Mediaset, the Italian media group controlled by Silvio Berlusconi, Italy’s former prime minister. The low cost of Endemol’s programming is a hit with broadcasters worldwide. Telefónica is divesting its interest to focus on its core telecoms business.

Germany’s Merck said it would sell its generic-drugs business to Mylan, based in Pennsylvania, for euro4.9 billion ($6.6 billion). The deal provides Mylan with a foothold in 90 countries where Merck retails the drugs, but some analysts fear that the price Mylan is paying, which is greater than its own market value, is too high.

Citigroup had its best day on the stockmarket in four years after it emerged that Edward Lampert, a hedge-fund manager with a reputation for investing in undervalued shares, had bought a stake in the bank worth $800m.

Amazon said it would open a digital-music store later this year, underscoring the desire among online retailers to offer music free from digital-rights protection and enable downloads on to all types of music players. Following a similar deal with Apple, EMI will make its catalogue of songs available on Amazon’s site.

Harrah’s Entertainment declared it would build a casino and resort at Biloxi, Mississippi, that will cost around $1 billion. Named Margaritaville, the venture is being planned together with Jimmy Buffett, a singer-songwriter, and is described by the company as the single largest investment in the Gulf state since Hurricane Katrina struck in 2005.

The Organisation for Economic Co-operation and Development invited Chile, Estonia, Israel, Russia and Slovenia to begin membership talks. The Paris-based club of industrialised countries, which has admitted only one member in the past decade, is also strengthening its ties with Brazil, China, India, Indonesia and South Africa.

A raft of statistics indicated that the housing market in America is still anaemic and might remain so for some time. The number of building permits, a signal of future construction, fell in April to its lowest level for ten years. The housing-market slump continued to have knock-on effects. Quarterly net profit at Home Depot, America’s biggest home-improvement retailer, dropped by 30%, compared with last year, to $1 billion.

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Politics this week: 12th – 18th May 2007

May 18, 2007 Leave a comment

articles from this week’s edition of The Economist
China and US trade | The candidates: Hillary Clinton | The alchemists of finance | Species inflation | Pakistan | Divorce for DaimlerChrysler | A growing rift between the West and Russia | Gordon Brown starts shadow-boxing | Paul Wolfowitz on the brink | Human rights in Colombia | Zimbabwe’s deepening crisis | International accounting standards | Elections in South-East Asia | The poison between Nixon and Kissinger | Alfred Chandler, business historian

Politics this week

May 17th 2007
From The Economist print edition


Pakistan was shaken by its worst violence in years amid the crisis surrounding the sacking of the country’s top judge. Around 40 people were killed during rioting in Karachi, damaging the attempt of the president, General Pervez Musharraf, to run a military government under a veneer of constitutionality. Separately, a suicide-bomber killed at least 25 people in an attack on a hotel frequented by Afghans in Pakistan’s north-western city of Peshawar. See article

Officials in Afghanistan displayed the body of Mullah Dadullah, the Taliban‘s most notorious commander, killed in a battle with American special forces. See article

Jos�� Ramos-Horta, a Nobel peace laureate, won a decisive victory in a presidential election in Timor-Leste over Francisco Guterres, a former guerrilla running under his nom-de-guerre, ���Lu-Olo���. See article

A pair of passenger trains crossed the border between North and South Korea for the first time since 1951, furthering the countries’ engagement effort.

Iranian and American diplomats looked likely to meet openly for the first time in 28 years, perhaps by the end of the month, mainly to discuss ways of making Iraq more stable. It was understood that Iran’s nuclear question would be kept off the agenda. See article

Fighting in the Gaza Strip between supporters of the two main parts of
the Palestinian unity administration left at least 40 dead and threatened to destroy the government. See article

Ban Ki-moon, the United Nations secretary-general, said he would ask the Security Council to ���take the necessary steps��� to set up a proposed tribunal of ���international character��� to try the suspected assassins of Rafik Hariri, five-times prime minister of Lebanon, who was killed two years ago. Lebanon’s parliament had reached a stalemate in trying to ratify the tribunal.

Demonstrating its growing ties with Africa, China launched a Nigerian communications satellite into orbit, the first time a foreign country had bought both a Chinese satellite and its launching service. See article

African Union (AU) peacekeepers in Somalia suffered their biggest loss since they arrived in March when four Ugandans were killed by a roadside bomb in the capital, Mogadishu. America and the AU have warned Ethiopia against withdrawing its troops, who were largely responsible for ending Islamist rule there, until the AU can send thousands more.


More troubles for Colombia’s president, ��lvaro Uribe. He fired the police chief after revelations of illegal phone-tapping of opposition leaders; several of his allies were among 19 politicians and business leaders whose arrests were ordered over ties to right-wing paramilitaries; and a jailed paramilitary leader levelled unsubstantiated allegations that the vice-president and defence minister incited paramilitary action in the 1990s. Both men are known to have met paramilitary leaders, but as part of peace efforts. See article

In Mexico, a senior intelligence official in charge of monitoring drug gangs was shot dead as he drove to his office. The country’s drug gangs are resisting a crackdown by the government.

In an apparent swipe at Venezuela’s president, Hugo Ch��vez, Pope Benedict XVI expressed concern about ���authoritarian forms of government��� in a speech opening a conference of Latin American bishops in Brazil. He also criticised Marxism and capitalism.

In Brazil, a rancher was convicted of ordering the killing of Dorothy Stang, an American nun and Amazon rainforest activist who was murdered on a jungle road in 2005.

The Republican presidential candidates held their second debate, with each jostling to prove his conservative credentials. Outside the official field, Fred Thompson, a television actor and former senator, did his undeclared campaign no harm by addressing the Council for National Policy, an umbrella group of conservatives. See article

Jerry Falwell died at the age of 73. Mr Falwell, a pastor and televangelist, was a co-founder of the Moral Majority, a powerful conservative political force during the 1980s. He once said: ���The idea that religion and politics don’t mix was invented by the devil to keep Christians from running their own country.��� See article

Antonio Villaraigosa became the latest mayor to present an ���action plan��� on climate change, submitting some 50 ideas to help Los Angeles cut its emissions by 35% before 2030. Unlike a similar initiative from New York, Mr Villaraigosa steered clear of proposing a congestion charge.

After five years of opposition to a UN convention on the law of the sea, George Bush urged the Senate to ratify the treaty. It would enhance the mobility of American armed forces, the president said.

Getty Images
Getty Images

Nicolas Sarkozy was inaugurated as France’s new president. He flew to Berlin to meet Chancellor Angela Merkel and declare that the European Union must be lifted out of its current paralysis. His centre-right government is expected to include a socialist, Bernard Kouchner, as foreign minister. See article

The American secretary of state, Co
ndoleezza Rice
, visited Moscow. She and Russia’s president, Vladimir Putin, agreed to tone down their hostile language, but did not resolve underlying differences. Nor did the German foreign minister, Frank-Walter Steinmeier, who flew to Moscow ahead of a summit. See article

Serbia formed a new coalition government four months after an election. The EU enlargement commissioner promised to talk about accession negotiations, but only if the new government hands over Ratko Mladic, a former Bosnian Serb commander, to the war-crimes tribunal in The Hague. See article

Armenia’s parliamentary election was won by pro-government parties. The election was judged by international observers to be much fairer than the previous one in 2003. See article

Gordon Brown secured his position as Britain’s next Labour Party leader and prime minister, once Tony Blair goes in June, after vacuuming up the support of the party’s MPs. A desultory challenge to Mr Brown from left-wingers failed to get off the ground. See article

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Politics this week: 28th April – 4th May 2007

urkey’s prime minister, Recep Tayyip Erdogan, called for an early general election after the constitutional court rejected a parliamentary vote on his nomination of the foreign minister, Abdullah Gul, for president. Turkey’s powerful generals say that Mr Gul has a hidden Islamist agenda. A million secularists rallied in Istanbul. Turkey’s stockmarket fell sharply. See article

Russia reacted furiously to Estonia’s removal of a Soviet war memorial from the centre of Tallinn to a military cemetery. Protesters blockaded the Estonian embassy in Moscow, prompting a rebuke from the European Union. Russia cut oil and coal exports. See article

Nicolas Sarkozy kept a small lead in France’s presidential election. In a televised debate, he kept his cool under a blustering attack from his Socialist rival, Ségolène Royal. The voters will decide on May 6th. See article

Venezuela’s government took control of oilfields in the Orinoco heavy-oil belt previously operated by multinationals. It had earlier obliged the multinationals to sign new contracts under which they have become minority partners in joint ventures with the state. Meanwhile, President Hugo Chávez said that Venezuela would withdraw from the IMF and the World Bank.

Raúl Castro, Cuba’s acting president, led government officials at the country’s traditional May Day mass celebration. His elder brother, Fidel Castro, Cuba’s convalescing leader, did not appear despite earlier speculation that he might.

Politicians in the English-speaking Caribbean expressed disappointment at the lack of foreign spectators at the seven-week cricket World Cup. In the final, played in Barbados, Australia beat Sri Lanka amid much confusion about the rules. See article

After being lambasted by a report into Israel’s conduct of last summer’s war in Lebanon, Israel’s prime minister, Ehud Olmert, seemed to have fended off growing calls for him to resign, including one from his foreign minister. See article

Iraq’s interior minister said that the leader of al-Qaeda in Iraq had been killed by other insurgents, suggesting a split over how to respond to government feelers to negotiate. See article


Iraq’s neighbours, along with representatives of the G8 group of rich countries, the European Union, the United States and the Arab League, met in the Egyptian resort of Sharm el-Sheikh to discuss ways of ending the mayhem in Iraq.

The International Criminal Court issued arrest warrants for Ahmed Haroun, Sudan’s minister for humanitarian affairs, and Ali Kosheib, a leader of the janjaweed militia. They are charged with mass murder, rape and other crimes in Darfur. The Sudanese government has a legal duty to hand over the two men, but repeated its refusal to do so.

For the first time since last month’s resumption of civil war in Somalia, African Union peacekeeping troops gingerly patrolled the capital, Mogadishu, following the exodus of more than 300,000 civilians. But the UN Security Council called for a plan to deploy UN peacekeepers to take over from the floundering AU force, to which only Uganda has so far contributed troops.

Despite continuing calls by disgruntled opposition candidates and an array of foreign observers for last month’s Nigerian presidential election to be run again, Umaru Yar’Adua was certified by the electoral commission to have won. He said he would review the “conduct” of elections for the future.

Although rejecting their compensation claims on technical grounds, Japan’s Supreme Court ruled that two Chinese women had indeed been abducted by Japanese soldiers and forced into sexual slavery during the second world war. The ruling came as Japan’s prime minister, Shinzo Abe, visited Washington and repeated his half-apology for publicly doubting the Japanese army’s role in coercing so-called “comfort women”. See article

China expressed its indignation as Taiwan persuaded St Lucia to switch diplomatic allegiance to it from the mainland. Meanwhile, China proposed a route for the Olympic torch in 2008 that would take it from Taiwan to Hong Kong, which Taiwan rejected on the ground that this implied Taiwan belonged to China.

The final obstacle to holding the long-delayed trials of former leaders of Cambodia’s murderous Khmer Rouge regime was cleared: the local bar association dropped a demand to charge heavy fees to foreign lawyers participating in the trials.

A suicide-bomber killed at least 28 people and injured around 50, including Pakistan’s interior minister, in the country’s lawless North-West Frontier province.

The fledgling air force of Sri Lanka’s Tamil Tigers bombed targets in and around Colombo, the capital, prompting some commercial airlines to suspend flights. See article

As promised, George Bush wielded a veto, only the second of his presidency, against a military-spending bill sent to him by Congress because it set a Democratic timetable for pulling troops out of Iraq. Mr Bush held talks at the White House with both parties to seek a compromise. The Democrats said that a new bill must, at the very least, include “benchmarks” for Iraq. See article

Human Rights Watch, a worldwide organisation that has its headquarters in New York, issued a report on Wal-Mart that accused the retailer of denying basic rights to its workers by thwarting their attempts to organise in a union. Wal-Mart, America’s biggest private employer, said the report was based on “unsubstantiated allegations”.

Supporters of immigrant rights took to the streets in several American cities. Fewer people took part than a year ago when similar events were held; Chicago saw the biggest protest, of 150,000 people. In Los Angeles, the police said they were investigating their handling of a rally that erupted into violence.


Celebrations got under way in Jamestown, Virginia, to mark the 400th anniversary of the founding of the first permanent English settlement in the New World. Queen Elizabeth II was due to visit the site this week. President George Bush is going to attend the festivities on May 13th. See article

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Business this week: 28th April – 4th May 2007

articles from this week’s edition of The Economist
Democracy v secularism in Turkey | Why Rupert Murdoch wants the WSJ | The London bombers, convicted | The case for education vouchers | Can Israel’s Ehud Olmert hang on? | Russia squeezes Estonia | The candidates: Rudy Giuliani | Spanish business | The world goes to town | Religion in Latin America | PayPal v Google’s Checkout | Japan’s newly assertive world role | Rape in ducks | Vaclav Havel | David Halberstam, chronicler of post-war America

Business this week

May 3rd 2007
From The Economist print edition

News Corporation, which counts the Fox television channels among its holdings, confirmed it had made a $5 billion friendly bid for Dow Jones, publisher of the Wall Street Journal. Rupert Murdoch, News Corp‘s boss, described his offer as generous, but the Bancroft family, the controlling shareholders in Dow Jones, rejected a deal. The company’s share price soared by 55% as investors speculated about rival bids. See article

The board of Cablevision Systems accepted a $10.6 billion buy-out from Charles and James Dolan, respectively its chairman and chief executive. The Dolan family founded Cablevision, which serves New York with cable-TV and owns some of the city’s best-known concerns, such as the New York Knicks basketball team and Madison Square Garden. They persuaded the board to go private after a lengthy campaign, but some shareholders are resisting the offer.

Lord Browne resigned as chief executive of BP after a court lifted an injunction against a tabloid newspaper from publishing details about his relationship with a male escort. The judge in the case declared that Lord Browne had lied about the circumstances of the affair. Lord Browne is credited with turning around BP‘s fortunes through a series of transforming deals, but as he is resigning before he was due to retire in July, he will forgo a multi-million pound bonus. See article

Eni, Italy’s biggest oil company, said it would buy assets in the Gulf of Mexico held by Dominion Resources, based in Virginia, for $4.8 billion. Eni has been operating in the United States since 1966 and said the deal would more than triple its production in the Gulf.

Delta Air Lines exited bankruptcy protection after a 19-month restructuring programme that saw it shed some 6,000 jobs. After several difficult years for the industry, Northwest Airlines is now the only big American carrier operating under bankruptcy protection, from which it expects to emerge this summer. See article

David Sidwell said he would retire as Morgan Stanley‘s chief financial officer at the end of the year. Mr Sidwell, 54, wants to spend more time working with a care charity in New York.

Deutsche Börse agreed to acquire International Securities Exchange, which is based in New York and is America’s largest equity-options market. The $2.8 billion deal is a boon for the German exchange, which has been thwarted in its previous efforts to combine with other institutions. However, analysts expect a counterbid for ISE given its fast-growing options business.

Spain’s Telefónica said it and a group of Italian financial institutions would buy the euro4.1 billion ($5.6 billion) controlling stake in Telecom Italia held by Pirelli, a conglomerate. The decision is a disappointment for América Móvil, a Mexican mobile-phone operator, which had tried to secure the stake. Its endeavour (initially in partnership with AT&T)had met stiff resistance from Italian politicians who argued that TI was a strategic asset that should not fall into foreign hands. See article

Carl Icahn intensified his efforts to win a seat on Motorola‘s board by sending a letter to shareholders in which he criticised “oversight and leadership” at the mobile-phone maker. The investor castigated Ed Zander, Motorola‘s boss, for sounding “like something straight out of Alice in Wonderland” when he reportedly said he loved his job but hated his customers.

Edward Whitacre announced that he would retire as chairman and chief executive of AT&T in June. Mr Whitacre, who took up the posts in 1990 and is the longest-serving boss of a large telecoms company, made several huge acquisitions during his tenure and is credited with instigating the industry’s consolidation.

India’s Foreign Investment Promotion Board decided that Vodafone‘s acquisition of a controlling stake in Hutchison Essar, the country’s fourth-biggest mobile-phone operator, did not breach Indian regulations on foreign investment. The government had appeared to be in some doubt about approving the deal.

Ahold, one of the world’s biggest food retailers, agreed to sell US Foodservice, its American distribution business, to a private-equity consortium for $7.1 billion. The sale severs Ahold’s ties with the unit, which caused the Dutch company to restate earnings by $1 billion after an accounting scandal in 2003.

A sluggish housing market was given as the main explanation as to why America’s economy grew at an annualised rate of 1.3% in the first quarter, the slowest growth in four years. See article

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Rojo: MyJournal; Digg Riot; Conspiracy Theories

Top Stories For the Week of April 30 – May 4

 Will they call it MyJournal? After years of unrequited lust, News Corp. and MySpace owner Rupert Murdoch finally made his bid for Dow Jones, publishers of the Wall Street Journal, blogs BuzzMachine. Murdoch’s move spiked DJ shares by a remarkable $20 to $57.28 before trading was halted, approaching Murdoch’s $60/share offer (via PaidContent). The controlling Bancroft family hasn’t said no, blogs Valleywag, and Paul Kedrosky figures that after a century of control the family may finally be ready to cash out.

Speaking of cash, employees at Murdoch’s other New York paper, the Post, would like to see some – as in for modern computers, LEXIS accounts, and running water in the bathrooms, blogs Gawker. Murdoch’s bid was pure marketing genius, says Paul Kedrosky’s Infectious Greed but Bloomberg thinks it could also spur an auction that brings in big bidders like Google.

 Bloggers were also buzzing about other media news: On a Virginia Tech campus still recovering from the shootings, the first book deal arrives as journalism professor Roland Lazenby and his students sell their school’s resilience and recovery to Plume, blogs Gawker. Even the New York Times bought shooting-related search-engine keywords – for up to five bucks each, blogs PaidContent. To millions of MySpace accounts already choked with content, Sony adds five-minute “minisodes” of undead Aaron Spelling series like Charlie’s Angels and T.J. Hooker, blogs Mashable! And Joost launched to the world this week with 150 ad-supported personal TV channels that can carry everything from steamy swimsuit videos to frosty NHL games, writes GigaOm.

 Meanwhile over at Digg this week, the power of Web 2.0 was in full effect, reports Gizmodo where geeks revolted over the site’s decision to nix a story that netted 15,000+ diggs and contained the HD-DVD AACS Processing Key number for cracking the copy protection on an HD-DVD. Digg’s founder Kevin Rose finally caved and the story went back up.

 Yahoo parried Google’s DoubleClick deal by buying the rest of Right Media, an ad-market maker with 19,000 participants that could greatly expand its advertiser base, blogs Nice counter play, blogs Mashable!, but $680 million is an awesome amount and GOOG is still pulling ahead of the pack. No matter, Yahoo needed a bold move to counter Google’s march and this was it – but PaidContent notes that the Google and Yahoo deals pour $4 billion into an advertising form that currently lags behind search advertising. Next: will MSFT pay a big premium for 24/7 Real Media?

 Google took further steps into Yahoo turf with iGoogle, its Ajax-based personal homepages that compete with My Yahoo (via TechCrunch). VentureBeat lists some of the new iGoogle gadgets and Micro Persuasion cites the millions who already have personalized Google pages – then adds Forrester stats showing few use those pages or find their ads useful.

 Elsewhere, the Food and Drug Administration gave inspectors the authority to ;detain” all food imports from China – for humans or animals – suspected of melamine contamination, blogs MetaFilter. Why is the FDA so startled? Adding melamine, a coal-based compound used in plastics and fertilizer (via small dead animals), to animal feed is common practice in China to boost protein readings without boosting protein content says Daou Report. First dogs and cats dropped dead from renal failure, blogs HorsesAss; now humans wonder whether they’ve been eating Chinese melamine as well. Bon app��tit: Melamine-contaminated feed was provided to 38 Indiana poultry farms whose chickens are already in the human food chain.

 In politics, John Edwards launches the first TV ads of his campaign, urging Congress to stand up to President Bush’s veto of the war-funding bill (via Taegan Goddard), while Fred Thompson is shocked that potential GOP primary opponents are digging up dirt on him rather than Dems. Mitt Romney can expect never-ending questions about the ;secretive” Mormon Church (via ABC News), and Joe Biden finally did something right, saying the one thing he would want with him on a desert island is his wife, Jill. (Hillary wanted a good book.)

William F. Buckley Jr. emerged from retirement to slam George Tenet‘s 60 Minutes appearance in the National Review, wondering how someone so vain, emotional and unreasoning could have led the agency. Besides, Tenet only confirms what many already knew.

 Finally, if you thought a mere petroleum fire could melt structural steel on that freeway overpass in California, Boing Boing wants you to know the truth is far, far, far, far, far more sinister.

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