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Drive to Unionize Fast-Food Workers Opens in N.Y.

November 30, 2012 by Leave a Comment

So when he heard about an unusual campaign that aims to unionize dozens of fast-food restaurants in New York in the hope of raising wages to $15 an hour, Mr. Hall, 23, was quick to sign on.

“It’s time for a change,” he said, “It’s time to put on the gloves.”

Mr. Hall has enlisted in what workplace experts say is the biggest effort to unionize fast-food workers ever undertaken in the United States, a campaign that will be announced publicly on Thursday. The effort — backed by community and civil rights groups, religious leaders and a labor union — has engaged 40 full-time organizers in recent months to enlist workers at McDonald’s, Wendy’s, Domino’s, Taco Bell and other fast-food restaurants across the city.

Over the decades there have been occasional efforts to unionize a fast-food restaurant here or there, but labor experts say there has never before been an effort to unionize dozens of such restaurants. The new campaign aims in part to raise low-end wages and reduce income inequality, and is also an uphill battle to win union recognition.

Ruth Milkman, a sociology professor at the City University of New York, said there had been so few efforts to unionize fast-food workers because it was such a daunting challenge.

“These jobs have extremely high turnover, so by the time you get around to organizing folks, they’re not on the job anymore,” she said. Nonetheless, she said the new effort might gain traction because it is taking place in New York, a city with deep union roots where many workers are sympathetic to unions.

Jonathan Westin, organizing director at New York Communities for Change, a community group that is playing a central role in the effort, said hundreds of workers had already voiced support for the campaign, called Fast Food Forward.

“The fast-food industry employs tens of thousands of workers in New York and pays them poverty wages,” Mr. Westin said. “A lot of them can’t afford to get by. A lot have to rely on public assistance, and taxpayers are often footing the bill because these companies are not paying a living wage.”

Mr. Westin said the campaign was using techniques that differed from those in most unionization drives, and was still developing overall strategy. He declined to say whether it would pursue unionization through elections or by getting workers to sign a majority of cards backing a union.

McDonald’s issued a statement about the incipient unionization push. “McDonald’s values our employees and has consistently remained committed to them, so in turn they can provide quality service to our customers,” the company said.

It added that the company had an “an open dialogue with our employees” and always encouraged them to express any concerns “so we can continue to be an even better employer.” McDonald’s noted that most of its restaurants were owned and operated by franchisees “who offer pay and benefits competitive within the” industry.

Even with a union, it might be hard to obtain wages of $15 an hour, and many employers say they would most likely employ fewer workers if they had to pay that much.

Mr. Westin’s group, New York Communities for Change, has played a major role in the recent uptick in unionizing low-wage workers in New York, many of whom are immigrants. In the past three months, his group has helped win unionization votes at four carwashes and six supermarkets in New York.

The sponsors of the fast-food campaign also include

UnitedNY.org, the Black Institute and the Service Employees International Union, a powerful union that is playing a quiet but important role behind the scenes.

Several religious leaders are backing the effort. “I’ve become involved because it is primarily a matter of justice,” said the Rev. Michael Walrond of the First Corinthian Baptist Church in Harlem. “We seek to protect those who are the most vulnerable in our culture, and some of the most vulnerable people in the city are fast-food workers who work for poverty wages.”

According to the State Labor Department, median pay for fast-food workers in the city is around $9 an hour — or about $18,500 a year for a full-time worker.

Linda Archer, a cashier at the McDonald’s on 42nd Street just west of Times Square, said she wished she earned that much. She earns $8 an hour after three years there and averages 24 hours a week, she said, meaning her pay totals about $10,000 a year.

“I feel I deserve $15 an hour,” said Ms. Archer, 59. “I work very hard.” She said she hoped a union would deliver affordable health insurance and paid sick days.

“My hope is we can all come together in a union without being intimidated,” she said.

TCB Management, the franchisee that operates Mr. Hall’s McDonald’s, and Lewis Foods, which runs Ms. Archer’s, did not respond to inquiries.

Tim McIntyre, a Domino’s Pizza spokesman, said the few efforts to unionize its stores and drivers had fallen flat.

“It’s a fairly high-turnover position, so there’s never been a successful union effort,” he said. “People who are doing this part time, seasonally or as they work their way through college don’t find much interest in membership.”

Richard W. Hurd, a labor relations professor at Cornell, said the organizations backing the fast-food campaign seemed intent on finding pressure points to push the restaurants to improve wages and benefits.

“But it’s going to be a lot harder for them to win union recognition,” he said. “It will be harder to unionize them than carwash workers because the parent companies will fight hard against it, because they worry if you unionize fast-food outlets in New York, that’s going to have a lot of ramifications elsewhere.”

Article source: http://www.nytimes.com/2012/11/29/nyregion/drive-to-unionize-fast-food-workers-opens-in-ny.html?partner=rss&emc=rss

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White House Plan on Fiscal Crisis Draws G.O.P. Ire

November 30, 2012 by Leave a Comment

The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced the goal of finding $400 billion in savings from Medicare and other social programs to be worked out next year, with no guarantees.

He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might be outweighed by spending increases, including at least $50 billion in infrastructure spending, mortgage relief, an extension of unemployment insurance and a deferral of automatic cuts to physician reimbursements under Medicare.

“The Democrats have yet to get serious about real spending cuts,” Mr. Boehner said after the meeting. “No substantive progress has been made in the talks between the White House and the House over the last two weeks.”

Amy Brundage, a White House spokeswoman, said: “Right now, the only thing preventing us from reaching a deal that averts the fiscal cliff and avoids a tax hike on 98 percent of Americans is the refusal of Congressional Republicans to ask the very wealthiest individuals to pay higher tax rates. The president has already signed into law over $1 trillion in spending cuts and we remain willing to do tough things to compromise, and it’s time for Republicans in Washington to join the chorus of other voices — from the business community to middle-class Americans across the country — who support a balanced approach that asks more from the wealthiest Americans.”

Beneath the outward shows of frustration and rancor, Democrats said a deal could still be reached before hundreds of billions of dollars in automatic tax increases and spending cuts go into effect, threatening the fragile economy. Senator Charles E. Schumer, Democrat of New York, pointed to conservative Republicans who have suggested that the House quickly pass Democratic legislation in the Senate extending the expiring tax cuts for income below $250,000.

“All you have to do is just listen to what’s happening out there and you realize there is progress,” he said.

But publicly, the leaders of neither side were giving an inch. And Republican aides said the details of the White House proposal pointed to a re-elected president who believes he can bully Congress.

“They took a step backward, moving away from consensus and significantly closer to the cliff,” said Senator Mitch McConnell of Kentucky, the Republican leader.

The president’s proposal does stick to the broad framework of the deal Mr. Boehner wants: an upfront deficit-reduction “down payment” that would serve to cancel the automatic tax increases and spending cuts while still signaling seriousness on the deficit, followed by a second stage in which Congress would work next year on overhauling the tax code and social programs to secure more deficit reduction.

But the details show how far the president is ready to push House Republicans. The upfront tax increases in the proposal go beyond what Senate Democrats were able to pass earlier this year. Tax rates would go up for higher-income earners, as in the Senate bill, but Mr. Obama wants their dividends to be taxed as ordinary income, something the Senate did not approve. He also wants the estate tax to be levied at 45 percent on inheritances over $3.5 million, a step several Democratic senators balked at. The Senate bill made no changes to the estate tax, which currently taxes inheritances over $5 million at 35 percent. On Jan. 1, the estate tax is scheduled to rise to 55 percent beginning with inheritances exceeding $1 million.

Administration negotiators also want the initial stage to include an extension of the payroll tax cut or an equivalent policy aimed at working-class families, an extension of a business tax credit for investments, and the extension of a number of other expiring business tax credits, like the one on research and development.

To ensure that there are no more crises like the debt ceiling impasse last year, Mr. Geithner proposed permanently ending Congressional purview over the federal borrowing limit, Republican aides said. He said that Congress could be allowed to pass a resolution blocking an increase in the debt limit, but that the president would be able to veto that resolution. Congress could block a higher borrowing limit only if two-thirds of lawmakers overrode the veto.

In total, Mr. Geithner presented the package as a $4 trillion reduction in future deficits, but that too was disputed. The figure includes cuts to domestic programs agreed to last year that the White House put at $1.2 trillion but that Republicans say is about $300 billion less. And it counts savings from ending the wars in Iraq and Afghanistan, even though no one has proposed maintaining war spending over the next decade at the current rate.

“Listen, this is not a game,” Mr. Boehner said. “Jobs are on the line. The American economy is on the line. And this is a moment for adult leadership.”

Senate Democratic leaders left their meeting with Mr. Geithner ecstatic. If the Republicans want additional spending cuts in that down payment, the onus is on them to put them on the table, said Senator Harry Reid of Nevada, the Democratic leader.

Article source: http://www.nytimes.com/2012/11/30/us/politics/fiscal-talks-in-congress-seem-to-reach-impasse.html?partner=rss&emc=rss

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Advertising: Bazooka Gum Overhauls Brand and Loses Comic Strips

November 30, 2012 by Leave a Comment

Total domestic sales of bubble gum are projected to total $206.9 million in 2012, from $332.4 million in 2007, a drop of 38 percent, according to Euromonitor International, a market research firm.

Bazooka bubble gum, which was introduced in 1947, fell even more, from $17 million in 2007 to a projected $8.8 million in 2012, a drop of 48 percent.

Now, in what the brand is calling a reimagined Bazooka, it has overhauled its logo and packaging.

Gone is the red, white and blue color scheme and geometric design of the brand, replaced with more saturated hues like fuchsia and yellow, and with the splattered-paint look of graffiti.

The new packaging is by Goodwin Design Group, of Wallingford, Pa., which also undertook a less pronounced Bazooka package redesign in 2006. It will begin appearing in stores in January.

“What we’re trying to do with the relaunch is to make the brand relevant again to today’s kids,” said Anthony Trani, vice president of marketing at Bazooka Candy Brands, a division of the Topps Company.

Ken Carbone, a founder of the Carbone Smolan Agency, a Manhattan branding and design firm, reviewed the new Bazooka design, and said it “takes visual cues from comic books and skateboard culture and graffiti” and that it “feels right for today.”

But Mr. Carbone, the co-author with Leslie Smolan of “ ‘Dialog’: What Makes a Great Design Partnership,” questioned why the gum veered so far from its original design.

“I wonder if they couldn’t have taken more from what they had and re-energized it to make it look cool, like the Juicy Fruit model and Hershey’s model,” said Mr. Carbone, referring to the gum brand and chocolate bar that have tweaked their looks over the years but not metamorphosed. “I think this is a little bit of an overreach,” he said, “because they had some equity and authenticity” in their original design.

Bazooka, however, which has struggled to get shelf space in the last decade, said the bold approach was winning over retailers. Among those not carrying the brand now that will begin stocking it early in 2013 are Target, 7-Eleven and Kroger.

The gum originally sold for a penny in individual pieces on countertop displays in penny candy stores. The new standard package will feature 10 pieces of gum, five each of the original flavor and of a new flavor, blue raspberry.

A piece of the rectangular gum will increase in size to 6 grams from 4.5 grams, a mouthful compared with brands like Stride, with pieces at 1.9 grams, and Dentyne Ice, at 1.5 grams. (Along with being more elastic than typical gum, bubble gum generally comes in bigger pieces, giving chewers more to inflate.)

In recent years, sugarless gums have increasingly been marketed for functional benefits, like freshening breath, whitening teeth and strengthening teeth, with some brands even winning approval to carry the American Dental Association seal and a statement that chewing sugarless gum after eating helps reduce cavities.

But the draw for regular gum tends to be more indulgent, with 17.9 percent of those who chew regular gum doing so because they like the taste, in contrast to 15.1 percent of sugarless chewers, according to a 2010 report from the National Confectioners Association, an industry group.

The favorite flavor among consumers age 6 to 12, bubble gum drops to third place among those age 13 to 17 and to fifth for those 18 and older, according to the study. Frequency of gum chewing is highest among those age 13 to 17, who on average chew 314 times a year, in contrast to 234 times for those 18 to 24 and 211 times for those 25 to 34.

Bazooka is pitched to children from 10 to 13, according to the brand.

The brand, which said it had not advertised in more than five years, also will embark on a television and online advertising campaign. The campaign is by Flint Steel, a new agency in Manhattan, which also is redesigning the brand’s Web site. Commercials are expected to appear in March.

What adults may remember best about Bazooka, however, is disappearing. The tiny comic strip featuring the eyepatch-wearing brand mascot Bazooka Joe that has been wrapped around each piece of gum since 1953 is being replaced.

New inserts will feature brainteasers, like a challenge to list 10 comic book heroes named after animals, or activities, like instructions on folding the insert into an airplane. They also include codes that, when entered at BazookaJoe.com, will unlock content like videos and video games.

Bazooka Joe and his sidekick, Mort, who wears his turtleneck up over his mouth, will appear only occasionally as illustrations in the new inserts, but without the antics and corny jokes of the three-panel strips.

Only 7 percent of children age 6 to 12 are aware of the Bazooka Joe character, according to E-Poll Market Research, a brand and celebrity research firm that last collected data about the character in 2007. In contrast , an average 30 percent of children are aware of food product mascots, the firm said. Among children who are aware of Bazooka Joe, 41 percent liked the character, below the average likability for food characters, which is 54 percent.

Mr. Trani stressed that the brand was not discarding Bazooka Joe, who in the past has appeared not just in comics, but also on packaging, on store displays and in advertising.

“Instead of a cheesy joke,” Mr. Trani said, “we wanted to have a fun, engaging activity for kids, but the purpose wasn’t to not include Bazooka Joe.”

“To me it is all about doing one thing really well,” he said, “and that is refreshing the Bazooka brand.”

Article source: http://www.nytimes.com/2012/11/30/business/media/bazooka-gum-overhauls-brand-and-loses-comic-strips.html?partner=rss&emc=rss

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Senate Judiciary Committee Approves Overhaul of Electronic Communications Privacy Act

November 30, 2012 by Leave a Comment

The bill is not expected to make it through Congress this year and will be the subject of negotiations next year with the Republican-led House. But the Senate panel’s approval was a first step toward an overhaul of a 1986 law that governs e-mail access and that is widely seen as outdated.

Senator Patrick Leahy, the Vermont Democrat who is chairman of the committee, was an architect of the 1986 law and is leading the effort to remake it. He said at the meeting on Thursday that e-mails stored by third parties should receive the same protection as papers stored in a filing cabinet in an individual’s house.

“Like many Americans, I am concerned about the growing and unwelcome intrusions into our private lives in cyberspace,” Mr. Leahy said. “I also understand that we must update our digital privacy laws to keep pace with the rapid advances in technology.”

Mr. Leahy held a hearing about two years ago on whether and how to update the 1986 law, called the Electronic Communications Privacy Act. But the effort has moved slowly, in part because some law enforcement officials have opposed restricting an investigative tool now used increasingly.

Under the law, authorities need to obtain a search warrant from a judge — requiring them to meet the high standard of showing that there is probable cause to believe that a subject is engaged in wrongdoing — only when they want to read e-mails that have not yet been opened by their recipient and that are fewer than 180 days old.

But the law gives less protection to messages that a recipient has read and left in his or her account. In some cases, officials may obtain a court order for such material merely by presenting a judge with facts suggesting the messages are relevant to an investigation; in other cases, prosecutors can issue a subpoena demanding the materials without any court involvement.

Senator Leahy’s bill would generally require prosecutors to obtain a search warrant from a judge, under the stricter probable-cause standard, to compel a provider to turn over all categories of e-mails and other private documents.

The Center for Democracy and Technology, a nonprofit organization that advocates for electronic privacy rights, hailed the committee vote as “historic.”

In a statement, Gregory T. Nojeim, director of the center’s program on security and technology, said it “sets the stage for updating the law to reflect the reality of how people use technology in their daily lives. It keeps the government from turning cloud providers into a one-stop convenience store for government investigators and requires government investigators to do for online communications what they already do in the offline world: get a warrant before reading postal letters or searching our homes.“

Still, the ranking Republican on the committee, Senator Charles Grassley of Iowa, argued that the bill does not strike the proper balance between privacy and public safety. He expressed concerns that changing the standard of proof for obtaining e-mails would inhibit certain investigations, such as child pornography or child abduction cases.

Mr. Leahy argued that the bill does not alter criminal and antiterrorism laws related to search warrants, including exceptions in emergencies where time is of the essence. But he also said the bill was a starting point and he was open to further negotiations. The panel approved it by a voice vote.

Article source: http://www.nytimes.com/2012/11/30/technology/senate-committee-approves-stricter-privacy-for-e-mail.html?partner=rss&emc=rss

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George C. Kern Jr., Expert in Merger Law, Dies at 86

November 30, 2012 by Leave a Comment

His death was confirmed by H. Rodgin Cohen, the senior chairman of Mr. Kern’s former law firm, Sullivan Cromwell.

Mr. Kern founded the mergers and acquisitions practice at Sullivan Cromwell in the late 1970s. His aim was to compete with two other firms — Wachtell, Lipton, Rosen Katz and Skadden, Arps, Slate, Meagher Flom — that had pioneered legal strategies for companies involved in the often bitter fights.

Mr. Kern referred to his team of lawyers, who worked with the firm’s top litigation, tax, antitrust and securities experts, as “a flying squad geared for instant response.” He was at the center of such big battles that he became the firm’s biggest moneymaker in the mid-1980s.

In one of the most celebrated cases, Mr. Kern helped the Gulf Oil Company fend off the colorful corporate raider T. Boone Pickens and merge with Chevron in 1984. The $13.2 billion deal was then the largest merger in United States history, though it has since been surpassed.

Mr. Kern also represented the Carnation Company when it was acquired by Nestlé in 1985 in a $3 billion deal, which was then the largest nonoil acquisition in history.

Mr. Kern himself became the center of controversy in 1987 when the Securities and Exchange Commission charged that he had failed to promptly disclose developments in his defense of the Allied Stores Corporation in a takeover battle in 1986.

Mr. Kern, who was also a director of Allied, denied any wrongdoing, saying that the information involved a possible alternate bid for Allied that was too poorly financed to be taken seriously.

An administrative law judge ruled that he had violated federal disclosure rules. But the judge also declined to impose any sanctions against Mr. Kern, and the commission eventually voted to drop any efforts to penalize him.

Friends said Mr. Kern was gratified that some of his main rivals at Wachtell, Lipton and Skadden, Arps came to his defense in the case, as did his own firm.

George Calvin Kern Jr., who was known for his booming voice and an often disheveled appearance that stood out at the silk-stocking firm, was born on April 19, 1926, in Baltimore, the son of George and the former Alice Gaskins. He graduated from Princeton after serving for two years in the Navy.

From 1947 to 1949, he worked in Germany as the director of the State Department’s information centers in Heidelberg and Mannheim and as deputy director of public information for United States military authorities during the Berlin blockade.

He graduated from Yale Law School and joined Sullivan Cromwell in 1952. He also worked on antitrust issues and became a partner in 1960. He retired from the firm in 1993.

An opera buff, he built a personal collection of record albums that numbered more than 200,000, his daughter, Heath Kern Gibson, said.

Mr. Kern’s wife of 42 years, the former Joan Shorell, died in 2005. Besides his daughter, he is survived by a granddaughter.

Article source: http://www.nytimes.com/2012/11/30/business/george-c-kern-jr-expert-in-merger-law-dies-at-86.html?partner=rss&emc=rss

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German Finance Minister Urges Lawmakers to Approve Greek Debt Deal

November 30, 2012 by Leave a Comment

BERLIN — Germany’s finance minister urged lawmakers on Friday to support a deal to trim Greece’s debt load and keep the country afloat, but insisted that it would be irresponsible to hold out the prospect of more radical debt forgiveness now.

The deal made Tuesday by the finance ministers of the 17 European Union countries that use the euro paved the way for Greece to receive €44 billion, or $57 billion, in critical rescue loans, without which the country would face bankruptcy and a possible exit from the euro.

It also contains measures, including a debt buyback program and an interest rate cut on loans that are aimed at cutting back Greece’s debts and giving it more time to push through economic reforms and trim its budget deficit.

It stops short, however, of forgiving outright debt owed to Germany, the lead creditor, and other euro zone governments. Chancellor Angela Merkel’s government has strongly opposed a discount, or “haircut,” in advance of elections next year.

Finance Minister Wolfgang Schäuble told lawmakers on Friday that the latest deal would keep the pressure on Greece to fulfill its promises and that blocking loan payouts would have ramifications all around Europe.

“We have always pushed the principle of conditionality, and that goes here too,” Mr. Schäuble said. “Greece will only receive all this relief if it continues to implement its reform measures, one after another.”

The German Parliament has to approve euro zone rescue measures. The bailouts of Greece and others have not been popular in Germany, Europe’s biggest economy, and there has been growing unease about them within Ms. Merkel’s coalition.

A solid majority is anticipated in Friday’s vote as two opposition parties are expected to vote largely in favor.

Many economists say that Greece’s debt burden — forecast to reach some 190 percent of its gross domestic product next year — can only be managed by writing off more government loans. Germany’s opposition parties also argue that the move will be inevitable sooner or later.

Frank-Walter Steinmeier, a leading member of the main opposition Social Democrats, said the deal on the table was “not a sustainable solution for Greece” and argued that the government had merely “bought time” — above all to avoid addressing “unpleasant truths.”

“Everything points toward a haircut in the end, but you are avoiding this truth like the plague,” Mr. Steinmeier told Mr. Schäuble.

Mr. Steinmeier said his party would back the deal, however, because “we cannot leave the Greeks in the lurch.”

The government argues that full-scale debt relief is legally impossible at present and would send the wrong message.

“If you say debt will be forgiven, then people’s readiness to save in order to get further aid is weakened,” Mr. Schäuble said. “If we want to help Greece along this difficult road, we must advance step by step, and the wrong speculation at the wrong time doesn’t solve the problem.”

Article source: http://www.nytimes.com/2012/12/01/business/global/german-finance-minister-urges-lawmakers-to-approve-greek-debt-deal.html?partner=rss&emc=rss

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Unemployment in Euro Zone Reached New High in October

November 30, 2012 by Leave a Comment

Annual inflation in the euro zone was 2.2 percent in November, the European Union’s statistics office, Eurostat, said on Friday, dropping from 2.5 percent in October.

Months of stubborn inflation combined with record unemployment have made life even harder for indebted families struggling through three years of a public debt crisis that has forced governments and companies to drastically cut jobs.

One of the smallest rises in energy price inflation in a year helped bring consumer inflation to near the European Central Bank’s target of 2 percent, according to Eurostat’s first estimate.

But the euro zone economy, which this year sank into its second recession since 2009, may manage only a weak recovery next year and unemployment levels will continue to rise, economists and policymakers say.

“We have not yet emerged from the crisis,” the European Central Bank president, Mario Draghi, said on Friday. “The recovery for most of the euro zone will certainly begin in the second half of 2013,” he told France’s Europe 1 radio.

Unemployment rose to 11.7 percent in October, Eurostat said, up from 11.6 percent in September and a marked increase from the 9.9 percent level a year ago, leaving almost 19 million people out of a job.

Portugal, for instance, shed more than one in 20 public sector jobs in the first nine months of 2012, while employers ranging from car makers to financial groups have announced thousands of job cuts since September.

Still, the overall number masks wide divergences across the 17-nation bloc, with Austrian unemployment running at 4.3 percent of the working population and Spain’s joblessness levels at 26.2 percent, the highest in Europe.

Article source: http://www.nytimes.com/2012/12/01/business/global/daily-euro-zone-watch.html?partner=rss&emc=rss

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DealBook: Vinod Khosla Keeps Long-Term Bet on Clean Technology

November 30, 2012 by Leave a Comment

Vinod Khosla, founder of Khosla Ventures.Stephen Lam/ReutersThe venture capitalist Vinod Khosla at the TechCrunch Disrupt conference in San Francisco in September.

Vinod Khosla crowed about the clean energy industry last year. Three of the biofuel start-ups in his venture capital portfolio had just gone public, and the stocks had risen considerably after their debuts. “I challenge anybody to claim that clean tech done right is a disaster,” Mr. Khosla said at a conference, rebuffing recent criticism. “We’ve generated more profits there than anybody has.”

Since then, Mr. Khosla, the founder of Khosla Ventures, has watched much of those paper gains evaporate. As the clean energy industry broadly has taken a hit, shares of the biofuel companies — Amyris, Gevo and KiOR — have slumped 70 percent to 90 percent from their peaks. His stakes, once worth as much as $1.3 billion, are now valued at roughly $378 million.

The billionaire investor has been caught in the cyclical downdraft.

The public stocks of solar, wind and biofuel companies are suffering amid industrywide pressures. The price of natural gas remains low. Europe has pulled back on incentives. American subsidies are in question after the bankruptcy of the solar panel maker Solyndra. And China is providing formidable low-cost competition.

“The whole clean tech sector has been out of favor,” said Pavel Molchanov, an analyst at Raymond James Associates, a brokerage firm. “I’d be hard pressed to name one trading above its I.P.O. price.”

Despite the crosscurrents, Mr. Khosla seems unwavering in his commitment. He is pouring money into start-ups. Khosla Ventures recently invested more in LightSail Energy, a three-year-old start-up working to develop low-cost energy storage. He is also sticking with his public companies. His firm, for example, still owns 54 percent of KiOR.

“He’s a visionary who likes to make big bets on ideas that can really change the world,” said Andy Bechtolsheim, who co-founded Sun Microsystems with Mr. Khosla 30 years ago and shares a house with him at Big Sur on the California coast. “I would think he’s made a larger personal bet on green tech than anybody else.”

While the public markets are raising short-term doubts, the long-term investment thinking remains unchanged. Governments around the globe are pushing to find alternative sources of energy in an effort to reduce their dependence on fossil fuels that may hurt the environment. In a television interview in 2007, Mr. Khosla said “mainstream solutions” could replace up to 80 percent of oil-based power. Without them, he said, “this planet is history the way we know it today.” After Hurricane Sandy, the subject of global warming — and changing climate conditions — has again come to the forefront.

In a recent blog post on the Forbes Web site, Mr. Khosla acknowledged the shift in market sentiment. “Clean tech went through a time when it was in vogue and now it is not,” he wrote. “The financing environment for clean tech companies is tough today,” he added. But he said he still expected “to do better than industry averages by keeping our losing companies to a minority.”

Since founding his venture capital firm in 2004, Mr. Khosla has become one of the most vocal advocates for clean tech innovation, buying stakes in about 60 industry start-ups. Ausra, a solar thermal start-up that had drawn $130 million in venture backing, was sold in 2010 to the French nuclear plant builder Areva for about $250 million, according to one industry estimate. And SeaMicro, a low-power server maker, was bought this year by Advanced Micro Devices for $334 million, more than five times the amount invested by its venture backers, according to a SeaMicro co-founder, Andrew Feldman.

It’s unclear how the broader clean tech portfolio has performed at Khosla Ventures. Mr. Khosla declined to disclose the firm’s returns or to comment for the article.

But one of his funds, which raised $1 billion to invest in clean tech and other start-ups, shows gain of 30 percent since its inception in 2009, according to filings by the California Public Employees’ Retirement System, the largest state pension fund. In his Forbes blog post, Mr. Khosla said a recent fund, which raised $1.05 billion in October 2011, was oversubscribed, and his firm’s broader performance since 2006 had “well exceeded typical venture funds.” In that period, venture funds over all have returned 7.25 percent annually after fees, according to industry data.

Mr. Khosla’s commitment is an outgrowth of his three decades at the cutting edge of technology.

A native of India, Mr. Khosla, 57, earned a master’s degree in biomedical engineering from Carnegie Mellon and an M.B.A. from Stanford in 1980. After starting the design automation company Daisy Systems in 1982, he co-founded Sun Microsystems, then a growing technology company.

At Sun, he supplied drive and vision. But Mr. Khosla, who is known for his blunt talk and intense manner, was replaced as chief executive two years later and left the company shortly thereafter.

In 1986, he joined the venture capital firm Kleiner Perkins Caufield Byers. Over the next two decades, Mr. Khosla scored sizable returns betting on the growth of fiber optic networks. Two companies, Cerent and Siara Systems, were sold for a combined $15 billion-plus at the height of the late-1990s dot-com bubble.

Mr. Khosla was looking into alternative fuel technologies at Kleiner Perkins when a business plan for an ethanol start-up crossed his desk in 2003. The plan “sat on a corner of my desk for nearly 18 months while I read everything I could about petroleum and its alternatives,” he wrote in an article for Wired magazine in 2006.

When he branched out on his own in 2004, Mr. Khosla invested millions in the ethanol start-up, Celunol. He soon established himself as a top venture capitalist in clean tech, attracting prominent outside investors like Microsoft’s founder, Bill Gates. Former Prime Minister Tony Blair of Britain joined the firm as a senior adviser.

Over the years, Mr. Khosla has experienced his share of blowups.

In September 2011, Khosla-backed Range Fuels, a wood-chips-to-ethanol company, went bankrupt after receiving a $44 million grant from the Department of Energy and $33 million under a Department of Agriculture loan guarantee. When The Wall Street Journal editorial page criticized Range Fuels as an “exercise in corporate welfare,” Mr. Khosla lashed back, saying the authors inhabited an “ivory tower” that was “full of people who don’t understand technology.”

Sometimes, Mr. Khosla’s companies had to pivot from their original plans and focus on new markets. For example, Calera was founded in 2007 with plans to use power plant exhaust to make cement. Mr. Khosla called its technology “game changing” in 2008.

But the company encountered some setbacks. It postponed plans for commercial-scale production in 2010 pending further research and later cut its 145-employee work force by two-thirds. Since then, Calera has broadened its focus, developing other products like fillers for paper and plastics.

Like many venture capital investors, Mr. Khosla will risk a few strikeouts for the chance to hit home runs. “My willingness to fail is what gives me the ability to succeed,” the investor has said frequently.

The odds can be especially brutal in clean technology. The projects are often capital-intensive — like $200 million or more for a biofuels plant — and they can take years to pay out, said Sam Shelton, a research engineer at Georgia Institute of Technology. By comparison, social media start-ups often require little upfront money and few employees. “The economics are totally different,” Mr. Shelton said.

In part, Mr. Khosla aims to take stakes when the companies are still getting off the ground, rather than waiting until they’re more mature and more expensive. He first bought a stake in KiOR, which aims to convert wood chips to gas and diesel fuel, in 2007. The company is now completing the first of five planned plants in Mississippi with the help of a $75 million interest-free loan from the state.

Mr. Khosla is “always thinking at a very high level about the potential of an idea,” KiOR’s chief executive, Fred Cannon, said. “He has a very good feel for when to step on the gas.”

After jumping in early, Mr. Khosla appears willing to ride out the swings, in both directions. Over the years, public filings indicate he has plowed roughly $80 million into KiOR, amassing a 54 percent stake in the company. Although the stock is off its peak levels and I.P.O. investors are still underwater, his holdings are worth $356 million — a threefold gain.

This post has been revised to reflect the following correction:

Correction: November 30, 2012

An earlier version of this article mischaracterized Mr. Khosla’s return on his investment in KiOR. He invested roughly $80 million and his holdings are worth $356 million — a threefold gain, not a fourfold gain.

Article source: http://dealbook.nytimes.com/2012/11/29/despite-setbacks-investor-is-bullish-on-clean-technology/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Sales at Nation’s Retailers Fell Short of Expectations in November

November 30, 2012 by Leave a Comment

The reporting period included Thanksgiving and Black Friday, the official kickoff of the critical holiday shopping season. Early reports regarding those days had been mixed, and the individual retailers’ dim results suggest a big challenge in the coming weeks for retailers.

Craig Johnson, a retail consultant and president of Customer Growth Partners, said that early November was weak across the board and not just in the Northeast, which was hit by Hurricane Sandy in late October.

“The traditional post-Black Friday lull, normally starting the following week, started on … Black Friday,” Mr. Johnson wrote in an e-mail. Activity in shopping malls slowed down starting about noon that Friday, he said, “right about the time the early bird specials expired, and long after the Thanksgiving evening doorbuster items were all sold out — leaving financially stressed consumers with little reason to shop” so many weeks away from Christmas.

Over all, the 16 retailers tracked by Thomson Reuters that reported results Thursday recorded a 1.6 percent increase in sales at stores that were open at least a year. Analysts had expected a 3.3 percent jump.

It was the major chains’ results that were most troubling. Target, Kohl’s and Macy’s typically promote holiday shopping heavily, while Nordstrom sales tend to give an indication of how higher-income consumers are feeling.

Kohl’s sales at stores open at least a year dropped 5.6 percent, recording negative sales in all regions. Analysts expected a 1.9 percent gain. The company seemed to be the victim of its own “showrooming,” when consumers visit stores to see the merchandise but end up buying online. The company noted “a significant shift in Black Friday-related sales into our e-commerce channel.”

Target’s sales at stores open at least a year fell 1 percent, and its overall sales for the month decreased 0.1 percent from last November. Analysts had been looking for a 2.1 percent increase. Gregg Steinhafel, chief executive, said in a statement that profitability “remained on plan.”

Nordstrom, where same-store sales fell 1.1 percent, said the problem was a weaker-than-expected clearance sale. “Customers continue to demonstrate a strong preference for fashion and newness, which has made clearance events less compelling,” the company said. Hurricane Sandy also hurt sales in the first part of the month, it said. Analysts had projected a 4.3 percent increase.

Macy’s same-store sales fell 0.7 percent, missing analyst expectations of a 1.5 percent increase. The company said it had the largest-volume Thanksgiving weekend in its history — meaning the highest number of transactions, though not necessarily sales — but blamed Hurricane Sandy for the month’s decline.

Many of the nation’s big retailers no longer report same-store sales, including Walmart, the largest, J. C. Penney and Saks. Early on Black Friday morning, Walmart sent out a statement reporting larger crowds than last year at its stores.

Specialty and warehouse stores fared better than the large chains. Costco posted a 6 percent rise in same-store sales, half a percentage point above analysts’ expectations. Limited, the parent company of Victoria’s Secret, said same-store sales rose 5 percent. Gap missed its 3.9 percent estimated increase, but still posted a 3 percent rise. Same-store sales rose 13. 2 percent at Stage Stores and 7.1 percent at Stein Mart, two small chains.

Some shoppers said the deals this year were not good enough to get them to buy. “We looked through the ads and didn’t see anything we really wanted,” said Lisa Apple, 46, who was shopping in Columbus, Ohio, on Black Friday. “The good deals were on TVs, but how many TVs do you need?”

Another shopper, Laura Schimpf, 32, who lives in Delaware, Ohio, and works for the state’s government, agreed. “The deals don’t seem too good. We really had to hunt for good ones. I’ve been looking online for three weeks,” she said.

Christopher Maag contributed reporting from Columbus, Ohio.

Article source: http://www.nytimes.com/2012/11/30/business/sales-at-nations-retailers-fall-short.html?partner=rss&emc=rss

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Hacking Report Urges Tougher British Press Standards

November 30, 2012 by Leave a Comment

Weighing in at 1,987 pages in four hefty volumes, the report reprised nine months of testimony by 337 witnesses at an inquiry led by Lord Justice Sir Brian Leveson. The judge was appointed by Prime Minister David Cameron to lead a review of newspaper ethics and practices at the height of the scandal that erupted around The News of the World, a now-shuttered Sunday tabloid owned by Rupert Murdoch’s British newspaper subsidiary.

Exploring an issue with deep resonance in British politics, the report examined the nuances of the relationship between Mr. Murdoch, as the country’s most powerful media baron, and a generation of British politicians. It specifically rejected the suggestion that Mr. Cameron and Mr. Murdoch struck a “deal” trading election support for Mr. Cameron’s Conservatives in 2010 for policies favoring the Murdoch empire in Britain.

It also advocated for a new form of independent self-regulation for the newspaper industry that would be much tougher than the widely discredited system that has been in place for the past 60 years. Under the new plan, embraced by Mr. Cameron and other party leaders, the existing Press Complaints Commission would be replaced with a body that would be independent of the newspapers and the government and have wide investigative powers and the authority to set fines of up to $1.6 million.

But the political leaders vehemently split over the Leveson recommendation that the new system be backed by a parliamentary statute. Supporters of the provision, in the opposition Labour Party and the left-of-center Liberal Democrats, but also numerous among Conservatives, saw statutory underpinning as giving the new body real teeth. Opponents, including Mr. Cameron, described legislating any part of the new system as “crossing the Rubicon” on the way to state-sanctioned press controls, and reversing a tradition dating to the abandonment of newspaper licensing in 1695.

“I’m proud of the fact that we have managed to last for hundreds of years in this country without statutory regulation,” Mr. Cameron said, “and if we can continue with that, we should.”

That was countered by Ed Miliband, the Labour leader, and, more awkwardly for Mr. Cameron, by Nick Clegg, leader of the Liberal Democrats, who is deputy prime minister in the coalition government led by the prime minister. Both said that sticking with self-regulation with no legislative framework to sustain it would invite newspapers to slide back into the old pattern of abuses.

Advocates for press freedom in Britain and abroad expressed alarm at the Leveson proposals. “A media regulatory body anchored by statute cannot be described as voluntary,” said Joel Simon, the executive director of the Committee to Protect Journalists. “Moreover, adopting statutory regulation would undermine press freedom in the U.K. and give legitimacy to governments around the world that routinely silence journalists through such controls.”

For Mr. Cameron, the looming political split posed a potentially serious risk because an unofficial head count suggested that a statute-backed system might command a clear majority in the House of Commons. Mr. Cameron and other party leaders went straight from the Commons into a meeting in quest of a compromise, possibly one that would hold the threat of legislative action over the newspapers if they failed to adopt a sufficiently robust system of their own.

The report offered few new insights into the tabloid scandal, which set off public revulsion with the disclosure in July 2011 that The News of the World had intercepted voice mail messages left by anguished relatives on the cellphone of a missing teenager who was later found murdered. Investigations by Scotland Yard have since uncovered what has been described as a web of criminal practices, including computer hacking and bribery of public officials, at The News of the World and a sister tabloid in the Murdoch stable, The Sun, a daily that is Britain’s most widely circulated paper.

While harsh in condemning newspaper practices it said had “wreaked havoc in the lives of innocent people,” the report was sparing in its conclusions about two major figures who have been caught up in the public furor, Mr. Cameron and Mr. Murdoch. Both escaped significant censure, surprising many who expected that Lord Leveson might excoriate them as exemplars of a longstanding tradition of cozy ties between leading British politicians and newspaper barons.

Reporting was contributed by Sarah Lyall, Stephen Castle, Lark Turner and Sandy Macaskill.

Article source: http://www.nytimes.com/2012/11/30/world/europe/leveson-report-phone-hacking-scandal-britain.html?partner=rss&emc=rss

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