Archives for January 2013

Chinese Firm Will Run Strategic Pakistani Port at Gwadar

January 31, 2013 by NewsMaker Leave a Comment

The minister, Qamar Zaman Kaira, said that control of the port at Gwadar, near Pakistan’s border with Iran, would pass from the Port of Singapore Authority to a company he identified as China Overseas Port Holdings, in a move that had been anticipated for some time.

Mr. Kaira said the Chinese company would inject money into the Gwadar port, which has failed to meet the lofty goals set by the military ruler Gen. Pervez Musharraf on its completion in late 2006 and now lies largely unused.

“We hope that the Chinese company will invest to make the port operational,” Mr. Kaira said, according to Reuters.

A spokesman for the Singaporean company declined to comment, as did the Chinese government. However, at a news briefing in Beijing on Thursday, a Foreign Ministry spokesman noted that China would “actively support anything that is beneficial to the China-Pakistan friendship.”

The fate of Gwadar, once billed as Pakistan’s answer to the bustling port city of Dubai, United Arab Emirates, has been a focus of speculation about China’s military and economic ambitions in South Asia for the past decade. Some American strategists have described it as the westernmost link in the “string of pearls,” a line of China-friendly ports stretching from mainland China to the Persian Gulf, that could ultimately ease expansion by the Chinese Navy in the region. Gwadar is close to the Strait of Hormuz, an important oil-shipping lane.

But other analysts note that Gwadar is many years from reaching its potential, and they suggest that fears of creeping Chinese influence might be overblown. “There may be a strategic dimension to this, where the Chinese want to mark their presence in an important part of the world,” said Hasan Karrar, an assistant professor of Asian history at the Lahore University of Management Sciences, referring to the management transfer at Gwadar. “But I wouldn’t go so far as saying this implies a military projection in the region.”

The supply lines for the American-led coalition forces in Afghanistan mainly pass through ports farther east in Pakistan and do not involve Gwadar.

Of greater likely concern to Washington was another announcement Pakistan made on Wednesday, saying that it was pressing ahead with a joint energy project with Iran that the United States strongly opposes.

Mr. Kaira said the cabinet had approved an Iranian offer to partly finance the 490-mile-long Pakistan segment of a planned gas pipeline between the two countries. Last year, Secretary of State Hillary Rodham Clinton warned that the project could lead to possible sanctions against Pakistan.

But political analysts in Pakistan saw the announcement as part of Pakistani election politics, and there is wider skepticism that Pakistan can bring the $1.6 billion project to completion. At present Pakistan is suffering from a major energy crisis, including a severe gas shortage that has caused lengthy lines outside fuel stations.

The gas pipeline, which enjoys broad public support, represents positive news for the government of President Asif Ali Zardari before it dissolves in preparation for elections that are expected to take place in May. And although Iran has offered a $500 million finance deal to help Pakistan build its part of the pipeline, Western officials say the Zardari government will still struggle to meet its part of the deal.

Both the Gwadar port and the pipeline to Iran offer the potential of reducing Pakistan’s strategic dependence on the United States, but as yet have failed to deliver.

Commissioned by General Musharraf, the Gwadar port project initially set off a flurry of excited property speculation in what was once a quiet fishing village. Developers presented flashy plans for luxury apartment blocks amid talk the port could rival Dubai.

China paid for 75 percent of the $248 million construction costs, while the Port of Singapore Authority won a 40-year contract to manage the facility, which started in early 2007. General Musharraf assuaged critics of the Chinese involvement by saying the port would not be put to any military use.

But Pakistan has failed to build the port or transportation infrastructure needed to develop the port, the property bubble has burst and, according to the port management Web site, the last ship to dock there arrived in November. “The government never built the infrastructure that the port needed — roads, rail or storage depots,” said Khurram Husain, a freelance business journalist. “Why would any shipping company come to the port if it has no service to offer?”

According to reports in the Pakistani news media, the Port of Singapore Authority sought to withdraw from the management contract after the Pakistani government failed to hand over land needed to develop the facility.

Mr. Kaira said Wednesday that both the Singaporean and Chinese companies had agreed to transfer the contract for control of the port, but he did not give a timetable.

Bree Feng contributed research from Beijing.

Article source: http://www.nytimes.com/2013/02/01/world/asia/chinese-firm-will-run-strategic-pakistani-port-at-gwadar.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: city of dubai, lahore university of management sciences, persian gulf

U.P.S. Reports a Loss and Forecasts Lower Profit in 2013

January 31, 2013 by NewsMaker Leave a Comment

U.P.S. followed a stream of other big companies like Rockwell Automation and Northrop Grumman that were also weighed down by pension-related charges. A prolonged period of low interest rates is driving up companies’ pension costs.

Even factoring out the $3 billion noncash pension charge, U.P.S., the world’s largest package-delivery company, reported a fourth-quarter profit that still missed Wall Street’s expectations.

U.P.S. said it faced a $225 million rise in pension costs this year.

“This will be a significant drag in 2013,” the chief financial officer, Kurt Kuehn, told investors in a conference call.

The company expects earnings to rise 6 to 12 percent in 2013, from $4.80 to $5.06 a share, below the average Wall Street target of $5.11.

“It’s going to come down to worldwide economic growth,” said Helane Becker, a Dahlman Rose analyst.

U.P.S. posted a fourth-quarter net loss of $1.75 billion, or $1.83 a share, after the pension charge, in contrast to a net profit of $725 million, or 74 cents a share, in the period a year earlier.

Revenue rose 2.9 percent, to $14.57 billion from $14.17 billion. U.P.S. said costs related to Hurricane Sandy, which pounded the New York metropolitan area in late October, sliced profit by 5 cents a share in the quarter.

Factoring out one-time, noncash items, profit came to $1.32 a share, below the analysts’ average estimate of $1.38, according to Thomson Reuters.

“We remain in a cycle of mixed growth and mixed signals,” the chief executive, D. Scott Davis, told investors in the conference call. “Fiscal uncertainty continues to erode business confidence and growth prospects.”

A Morningstar analyst, Keith Schoonmaker, said one good sign in the quarter was the 7.7 percent rise in next-day air shipments in the United States.

“We need to cut through the pension clutter and look at economic results,” Mr. Schoonmaker said. “This is a company that has tremendous operating capability, so when you feed them a little bit more volume into their system, this company is able to make hay with that.”

U.P.S.’s largest American rival, FedEx, has been struggling with falling profits as customers increasingly send goods by ground, which is less costly and less profitable than by air.

Article source: http://www.nytimes.com/2013/02/01/business/ups-posts-a-loss-and-forecasts-lower-profit.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: business confidence, grumman, package delivery company

Europe Says Johnson & Johnson Paid to Delay Generic Fentanyl

January 31, 2013 by NewsMaker Leave a Comment

The case focuses on monthly payments that a Netherlands-based subsidiary of Johnson Johnson made to Sandoz, a unit of the Swiss company Novartis. While the companies have said the payments were legitimate, the European Union’s antitrust chief said on Thursday that the money probably changed hands to keep lower-cost versions of the drug, called fentanyl, off the market in the Netherlands.

European authorities are “determined to fight undue delays in the market entry of generic medicines,” Joaquín Almunia, the European competition commissioner, said in a statement on Thursday.

Agreements to delay the introduction of generic drugs have come under heightened scrutiny in both Europe and the United States in recent years, with regulators on both sides of the Atlantic concluding that such deals are anticompetitive. In the United States, the Supreme Court is scheduled to take up the issue in March. Typically, such arrangements are a result of patent disputes between brand-name and generic drug makers, although no such dispute was mentioned in the most recent case involving Johnson Johnson and Novartis.

“From our perspective in the United States, we hope to have a real resolution of this issue with the Supreme Court this term,” said Jay Lefkowitz, a lawyer who has represented several drug companies in such cases. But because many companies sell their products around the world, “this is something that people are taking note of, for sure.”

Fentanyl is widely used in Europe and the United States, typically paid for by government-provided health plans or, in many cases in the United States, by private insurance. Although the pricing of such drugs is usually negotiated behind closed doors, generic versions are typically much cheaper.

Mr. Almunia warned pharmaceutical companies against practices that raised costs for European governments, squeezed by austerity and an economic slowdown, which must buy medicines for state-supported health care plans. It is “important to make sure that pharmaceutical companies do not free-ride our welfare state and health insurance systems, especially in this period of constraints on public spending,” he said.

A goal of European authorities has been to increase patient access to less costly medicines as name-brand drug patents worth tens of billions of euros expire. The end of a drug’s patent protection — typically after as long as 25 years in Europe — can hurt a pharmaceutical company’s bottom line but benefits governments and private insurers by lowering their costs.

Patent expirations also open opportunities for generic competitors, which is why in some cases drug makers have been accused of paying generic competitors to delay bringing their products to market.

A preliminary investigation by Mr. Almunia’s office found that the Johnson Johnson unit in the Netherlands, Janssen-Cilag, made the payments to stop Novartis from selling generic fentanyl in the Netherlands for more than a year, from July 2005 until December 2006. That kept prices artificially high, according to the European Commission, the European Union’s administrative body that enforces antitrust law. Mr. Almunia’s office would not disclose the amount of money that Janssen-Cilag paid to Sandoz, nor would officials indicate whether the investigation would go beyond the Netherlands.

Both companies will have the chance to formally respond to the accusation.

A spokesman for the Johnson Johnson subsidiary said in a statement that the company had acted properly. “Janssen continues to believe that these arrangements were legitimate,” the spokesman, Stefan Gijssels, said on Thursday. “Janssen supports a sustainable health care system, where patients have access to both innovative and generic drugs,” he said.

Sandoz said in a statement that it and Novartis “operate to the highest of standards and take the position of the commission seriously.” It also indicated that it and Novartis would seek to rebut the accusations made by the commission by using their “rights of defense as provided for in the process.”

The case is the latest in a series of actions by authorities in Europe and the United States to crack down on so-called pay-to-delay tactics by pharmaceutical companies and comes at a time when the biggest name-brand drug makers are losing billions of dollars in sales to generic competition as best-selling drugs lose their patent protection.

United States regulators have argued for years that such arrangements were anticompetitive. But the pharmaceutical companies have argued that the deals in question were simply legal settlements over patent disputes that helped the companies avoid costly litigation.

James Kanter reported from Brussels and Katie Thomas from New York

Article source: http://www.nytimes.com/2013/02/01/business/global/eu-says-drug-makers-paid-to-delay-generic-version.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: generic drugs, sandoz, undue delays

Claims for Unemployment Aid Rise, but Raise Little Concern

January 31, 2013 by NewsMaker Leave a Comment

WASHINGTON (AP) — The number of Americans seeking unemployment aid rose sharply last week but remained at a level consistent with moderate hiring.

Weekly applications for unemployment benefits leapt 38,000 to a seasonally adjusted 368,000, the Labor Department said Thursday. Applications plummeted in the previous two weeks to five-year lows; applications fell by a combined 45,000 in the second and third weeks of January.

The volatility reflects the government’s difficulty adjusting the data to account for layoffs after the holiday shopping season. Job cuts typically spike in the second week in January as retailers dismiss temporary employees hired for the winter holidays. Layoffs then fall in the second half of the month.

The department tries to adjust for such fluctuations but the January figures can still be volatile. The four-week average, a less volatile measure, ticked up to 352,000, just above a four-year low.

Most economists weren’t concerned by the increase.

“This just reverses some of the previous sharp falls without altering the gradual downward trend,” said Paul Dales, an economist at Capital Economics.

On Friday, the government is scheduled to issue its January jobs report. Analysts forecast that it will show employers added 155,000 jobs, the same as in December. The unemployment rate is expected to remain at 7.8 percent for the third straight month.

That’s consistent with the number of people seeking unemployment aid. Applications fluctuated between 360,000 and 390,000 for most of last year. At the same time, employers added an average of 153,000 jobs a month.

That’s just been enough to slowly push down the unemployment rate, which fell 0.7 percentage points last year to 7.8 percent.

The number of people continuing to claim benefits also rose. More than 5.9 million people received benefits in the week ended Jan. 12, the latest data available. That’s 250,000 more than the previous week.

Steady hiring is needed to resume economic growth. The government said Wednesday that the economy shrank at an annual rate of 0.1 percent in the October-December quarter, hurt by a sharp cut in military spending, fewer exports and sluggish growth in company stockpiles.

The contraction points to what is likely to be the biggest headwind for the economy this year: sharp government spending cuts and continuing budget fights.

Two important drivers of growth improved last quarter. Consumer spending, which accounts for 70 percent of economic activity, increased at a faster pace and businesses invested more in equipment and software.

Homebuilders are stepping up construction to meet rising demand. That could create more construction jobs.

Home prices are rising steadily. That tends to make Americans feel wealthier and more likely to spend. Housing could add as much as 1 percentage point to economic growth this year, some economists estimate.

And auto sales reached their highest level in five years in 2012. That’s increasing production and hiring atAmerican automakers and their suppliers.

Article source: http://www.nytimes.com/2013/02/01/business/growth-in-consumer-spending-slows.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: aid applications, economist, holiday shopping

You’re the Boss Blog: Why American Giant Re-Designed Its Web Site

January 31, 2013 by NewsMaker Leave a Comment

Site Insight

What’s wrong with this site?

Last week we kicked off this column with a behind-the-scenes look at American Giant’s Web site. Started by Bayard Winthrop in February 2012, the company sells high quality, American-made sweatshirts not through retail stores but rather online. This presents the challenge of marketing a sweatshirt based on quality that cannot be touched — relying instead on the power of photography and story telling.

The post focused on American Giant’s decision to invest $35,000 to replace its site photography only months after the site went live. Looking for feedback, we ended the column with a few questions about whether readers believe the company made the right call.

In this follow-up Mr.Winthrop shares the results of the upgrade to the photography and site content. He believes the changes had the following impact:

o The value of an average order increased by 34.5 percent. Before the photo refresh, the average visitor to the site spent $100. Post refresh, the average visitor spent $134.50, a huge increase.

o Visitors who left the site after viewing the home page declined by 5.2 percent. Because e-commerce is the company’s sole channel to reach customers, American Giant values every person who comes to the site. Updated, the site has been able to engage more of those potential customers.

o The percentage of customers who actually buy something — the site’s conversion rate — grew by 13.9 percent.

As an interesting twist — businesses and great movies always have their twists — American Giant garnered some outstanding reviews for its sweatshirts in early December, resulting in the company selling out all of its inventory and starting a waiting list for March deliveries. The above results were achieved before those reviews were published.

Readers of my first post left comments that suggested a number of interesting questions that I posed to Mr.Winthrop:

You sold out of clothing. How did that happen?

I was worried I had actually overbought — and we know that excess inventory can sink a company quickly. When the press hit, we sold out in a matter of days. Planning is an art, not a science when you first start. We are working diligently to replenish inventory as fast as possible. In fact, I am at our fabric-cutting facility right now.

What did you think of the reader’s suggestion that you are spending too much time on photography and not enough on other aspects of the site, such as search-engine optimization, zoom functionality and even the site’s speed?

That is fair but it is a question of focus. The first 18 months is about building a great product. The best way to launch a brand is by building loyal customers, which is done by building great products, pricing them right and taking care of your customers. We will get to optimization and other marketing wins but right now it is about the product.

You also got some comments about whether your clothes are cut properly for Americans, including a mention of a term that was new to me: “The Banana Republic Syndrome.”

I believe Banana Republic is an example of a company that got fit right. Look how successful they are, the customer base they have developed. We designed fit around our core customer. The obligation of the brand is to put a stake in the ground around who our customer is — and to stick to it. We can’t win them all but we can be consistent and communicate about it. We offer measuring instructions and an unconditional return policy and free shipping both ways. Try two sizes and two colors and return the ones that don’t fit.

Who are your core customers?

They are 25 to 35, live in an urban setting, active but not an athlete, sporty, not couch potatoes, not into the European slim cut. We cut a little bit on the relaxed side. We are a flattering fit for a guy carrying five to 10 extra pounds.”

Would you like to have your business’s Web site or mobile app reviewed? This is an opportunity for companies looking for an honest (and free) appraisal of their online presence and marketing efforts.

To be considered, tell us about your experiences — why you started your site, what works, what doesn’t and why you would like to have the site reviewed — in an e-mail to youretheboss@abesmarket.com.

Richard Demb is co-founder of Abe’s Market, an online marketplace for natural products that is based in Chicago. You can follow him on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/01/31/why-american-giant-re-designed-its-web-site/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: bayard, high quality, sweatshirt

State of the Art: BlackBerry, Rebuilt, Lives to Fight Another Day

January 31, 2013 by NewsMaker Leave a Comment

This apology is for the bespectacled student at my talk in Cleveland, and the lady in the red dress in Florida, and anyone else who’s recently asked me about the future of the BlackBerry. I told all of them the same thing: that it’s doomed.

That wasn’t an outrageous opinion. Once dominant, the BlackBerry has slipped to a single-digit percentage of the smartphone market. The company’s stock has crashed almost 90 percent from its 2008 peak. In the last two years, the BlackBerry’s maker, Research in Motion, released a disastrous tablet, laid off thousands of employees and fired its C.E.O.’s. The whole operation seemed to be one gnat-sneeze away from total collapse.

The company — which changed its name on Wednesday to simply BlackBerry — kept saying that it had a miraculous new BlackBerry in the wings with a new operating system called BlackBerry 10. But it was delayed and delayed and delayed. Nobody believed anything the company said anymore. Besides — even if there were some great phone, what prayer did BlackBerry have of catching up to the iPhone and Android phones now? Even Microsoft, with its slick, quick Windows Phone, hasn’t managed that trick.

Well, BlackBerry’s Hail Mary pass, its bet-the-farm phone, is finally here. It’s the BlackBerry Z10, and guess what? It’s lovely, fast and efficient, bristling with fresh, useful ideas.

And here’s the shocker — it’s complete. The iPhone, Android and Windows Phone all entered life missing important features. Not this one; BlackBerry couldn’t risk building a lifeboat with leaks. So it’s all here: a well-stocked app store, a music and movie store, Mac and Windows software for loading files, speech recognition, turn-by-turn navigation, parental controls, copy and paste, Find My Phone (with remote-control lock and erase) and on and on.

The hardware is all here, too. The BlackBerry’s 4.2-inch screen is even sharper than the iPhone’s vaunted Retina display (356 pixels per inch versus 326). Both front and back cameras can film in high definition (1080p back, 720p front).

The thin, sleek, black BlackBerry has 16 gigabytes of storage, plus a memory card slot for expansion. Its textured back panel pops off easily so that you can swap batteries. It will be available from all four major carriers — Verizon, ATT, Sprint and T-Mobile — and Verizon said it would charge $200 with a two-year contract.

Some of BlackBerry 10’s ideas are truly ingenious. A subtle light blinks above the screen to indicate that something — a text, an e-mail message, voice mail, a Facebook post — is waiting for you. Without even pressing a physical button, you swipe up the screen; the Lock screen lifts like a drape as you slide your thumb, revealing what’s underneath. It’s fast and cool.

There are no individual app icons for Messages or Mail. Instead, all communication channels (including Facebook, Twitter and phone calls) are listed in the Hub — a master in-box list that appears at the left edge when you swipe inward. Each reveals how many new messages await and offers a one-tap jump into the corresponding app. It’s a one-stop command center that makes eminent sense.

The BlackBerry’s big selling point has always been its physical keyboard. The company says it will, in fact, sell a model with physical keys (and a smaller screen) called the Q10.

But you might not need it. On the all-touch-screen model, BlackBerry has come up with a mind-bogglingly clever typing system. Stay with me here:

As you type a word, tiny, complete words appear over certain on-screen keys — guesses as to the word you’re most likely to want. If you’ve typed “made of sil,” for example, the word “silicone” appears over the letter I key, “silver” over the V, and “silk” over the K. You can fling one of these words into your text by flicking upward from the key — or ignore it and keep typing.

How well does it work? In this passage, the only letters I actually had to type are shown in bold. The BlackBerry proposed the rest: “I’m going to have to cancel for tonight. There is a really good episode of Dancing With the Stars on.”

I type 20 characters; it typed 61 for me.

But wait, there’s more. The more you use the BlackBerry, the more it learns your way of writing. When I tried that same passage later, I typed only one letter: the I in “I’m.” Thereafter, the phone predicted each successive word in those sentences, requiring no letter-key presses at all. Freaky and brilliant and very, very fast.

There’s speech recognition, too. Hold in the Play/Pause key to get the Z10’s Siri-like assistant. Siri-like in concept, that is — you can say “send an e-mail to Harvey Smith,” “schedule an appointment” and a few other things — but it’s slower, less accurate and far narrower in scope. You can also speak to type, but the accuracy is so bad, you won’t use it.

E-mail: pogue@nytimes.com

This article has been revised to reflect the following correction:

Correction: January 30, 2013

An earlier version of this column reported incorrect information on the amount that cellphone carriers would charge for the new BlackBerry Z10. ATT, Sprint and T-Mobile said they would announce pricing information in the future; they have not announced they will charge $200 with a two-year contract (as Verizon has).

Article source: http://www.nytimes.com/2013/01/31/technology/the-blackberry-refreshed-lives-to-fight-another-day.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: blackberry, hail mary pass, speech recognition

European Officials Say Drug Makers Paid to Delay Generic Version

January 31, 2013 by NewsMaker Leave a Comment

The case focuses on monthly payments that a Netherlands-based subsidiary of the American company Johnson Johnson made to Sandoz, a unit of the Swiss company Novartis. While the companies have said the payments were legitimate, the European Union’s antitrust chief said Thursday that the money probably changed hands to keep lower-cost versions of a drug called fentanyl off the market in the Netherlands.

European authorities are “determined to fight undue delays in the market entry of generic medicines,” Joaquín Almunia, the E.U. competition commissioner, said in a statement Thursday.

His office would not disclose the amount of money the Johnson Johnson unit in the Netherlands, Janssen-Cilag, paid to Sandoz. Nor would officials indicate whether the investigation would go beyond the Netherlands.

Mr. Almunia warned pharmaceutical companies against practices that raised costs for European governments, squeezed by austerity and an economic slowdown, which must buy medicines for state supported health care plans. It is “important to make sure that pharmaceutical companies do not free-ride our welfare state and health insurance systems, especially in this period of constraints on public spending,” he said.

A goal of European authorities has been to increase patient access to less costly medicines as name-brand drug patents worth tens of billions of euros expire. The end of a drug’s patent protection — typically up to 25 years in Europe — can hurt a pharmaceutical company’s bottom line, but benefits governments and private insurers by lowering their costs.

Patent expirations also open opportunities for generic competitors, which is why in some cases drug makers have been accused of paying generic competitors to delay bringing their products to market.

A preliminary investigation by Mr. Almunia’s office found that Janssen-Cilag made the payments to stop Novartis from selling generic fentanyl in the Netherlands for more than a year, from July 2005 until December 2006. That kept prices artificially high, according to the European Commission, the Union’s administrative body that enforces antitrust law.

Both companies will have the chance to formally respond to the accusation.

The commission, which first announced the inquiry in October 2011, can fine companies up to 10 percent of their annual global sales for antitrust abuses. Penalties are typically lower, though, because officials usually base fines on sales of the main product involved in the case, and then increase the amount based on the duration of the offense and other factors.

Fentanyl is a painkiller that is stronger than morphine, according to the commission. In skin-patch form, which is the type at issue in the investigation, the drug is used to relieve moderate to severe pain that lasts for a long time, does not go away and cannot be treated with other medications, according to the Web site of the U.S. National Library of Medicine. In lozenge form, fentanyl is used to treat sudden episodes of pain, known as breakthrough pain, in cancer patients who are already taking other painkillers, according to the Web site of Cephalon, a company owned by Teva of Israel, which markets the drug under the Actiq brand.

A spokesman for the Johnson Johnson subsidiary said in a statement that the company had not acted improperly. “Janssen continues to believe that these arrangements were legitimate,” the spokesman, Stefan Gijssels, said Thursday. “Janssen supports a sustainable health care system, where patients have access to both innovative and generic drugs,” he said.

Sandoz said in a statement that it and “Novartis operate to the highest of standards and take the position of the commission seriously.” It also indicated that it and Novartis would seek to rebut the accusations made by the commission by using their “rights of defense as provided for in the process.”

The case is the latest in a series of actions by authorities in Europe and the United States to crack down on so-called pay-to-delay tactics by pharmaceutical companies, and comes at a time when the biggest name-brand drug makers are losing billions of dollars in sales to generic competition as best-selling drugs lose their patent protection.

In the United States, the Supreme Court is scheduled in March to take up the issue of whether such deals in the pharmaceutical sector violate antitrust law.

Article source: http://www.nytimes.com/2013/02/01/business/global/eu-says-drug-makers-paid-to-delay-generic-version.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: european authorities, insurance systems, swiss company

STMicroelectronics May Pay $500 Million to Exit Venture

January 31, 2013 by NewsMaker Leave a Comment

PARIS — STMicroelectronics, the biggest European chip maker, may have to spend up to $500 million this year to wind down the mobile chip-making joint venture with Ericsson that has been a ball-and-chain on its results, the company’s chief executive said Thursday.

“We’re committed to going fast,” Carlo Bozotti, the chief executive, said during a briefing in Paris. “It’s important for us to move on, to become a leaner company.”

Mr. Bozotti also said he had seen “encouraging signs” that the semiconductor market was improving this year after a rocky 2012, but “we’ll have to see if that’s sustainable.”

Shares of STMicroelectronics closed up 3.5 percent in Paris trading. Analysts said positive outlooks issued by STMicroelectronics and the company’s German rival, Infineon Technologies, helped lift the stock price.

STMicroelectronics, an Italian-French company with its headquarters in Geneva, and the Swedish mobile networking giant Ericsson bet big on chips to power smartphones. But their joint venture, ST-Ericsson, foundered as big customers like Nokia and BlackBerry were smashed by competition from Apple and Samsung, which rely heavily on chips made by Qualcomm. The venture has lost about $2.8 billion since 2009.

Negotiations to sell or close down the company, which employs more than 5,000 people, will be a delicate matter. Complicating any deal, at a time of economic stagnation and fears for the future of European industry, is the fact that the French and Italian governments own a combined 27.5 percent stake in STMicroelectronics. At any rate, a near-term closure of the company is thought to be unlikely, as ST-Ericsson has long-term supplier contracts it has promised to fulfill.

Mr. Bozotti said STMicroelectronics expected to dispose of its ST-Ericsson stake “during the third quarter of 2013,” though he gave no indication of how the company planned to do so. The cost would probably be in the range of $300 million to $500 million, he said, “including around $100 million in the first quarter.”

STMicroelectronics is one of the biggest high-technology enterprises in Europe and an industry leader in areas with strong growth prospects, like sensors and microcontrollers. Its chip-making and research and development facilities around Grenoble are at the heart of the innovation cluster that serves as France’s answer to Silicon Valley.

Mr. Bozotti spoke after STMicroelectronics announced late Wednesday a $544 million write-down of good will and other intangible assets on its share of ST-Ericsson, a charge that reduced the accounting value of the 50-50 joint venture to “a negligible amount” on its books. The charge led the company’s fourth-quarter net loss to balloon to $428 million from an $11 million loss a year earlier.

STMicroelectronics said its full-year 2012 revenue slid nearly 13 percent, to $8.5 billion, largely because sales to Nokia fell. Just four years ago, the Finnish cellphone maker accounted for about a fifth of all its sales; STMicroelectronics did not disclose the current level but acknowledged that it was far lower.

The bottom line was “horrible,” Thomas Becker, an electronics sector analyst at Commerzbank, said of the results, “but the underlying numbers were not that bad.”

He said that shares of STMicroelectronics and Infineon — which forecast a rise in second-quarter sales and operating profit on Thursday — got a lift “because some investors may be hoping to get in on the upswing in the semiconductor cycle.”

The company is refocusing its business, Mr. Bozotti said, and expects growth in 2013 to be driven primarily by sales of devices in its imaging, analog and microsensor, and microcontroller businesses. He said STMicroelectronics would cut its quarterly costs to $600 million to $650 million by 2014, from around $900 million currently.

Article source: http://www.nytimes.com/2013/02/01/technology/stmicroelectronics-may-pay-500-million-to-exit-venture.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: mobile networking, networking giant, semiconductor market

DealBook: Justice Dept. Seeks to Block $20 Billion Merger of Brewers

January 31, 2013 by NewsMaker Leave a Comment

Carolyn Kaster/Associated PressThe deal would add Corona to Anheuser-Busch InBev’s brands of beer.

4:06 p.m. | Updated

The Justice Department sued on Thursday to block Anheuser-Busch InBev’s proposed $20.1 billion deal to buy control of Grupo Modelo of Mexico, arguing that the merger would significantly reduce competition in the American beer market.

The deal, announced last summer, would add Corona Extra to the company’s formidable stable of brands, including Budweiser and Stella Artois.

But the Justice Department said in its lawsuit, filed in Federal District Court in Washington, that allowing the merger to proceed would reduce competition in the beer industry across the country as a whole and in 26 metropolitan areas in particular. The combined company would control about 46 percent of annual sales in the country, the government said, far outpacing Anheuser-Busch InBev’s closest competitor, MillerCoors.

Growth in Consumer Spending Slows

January 31, 2013 by NewsMaker Leave a Comment

WASHINGTON — American consumers increased their spending in December at a slower pace, while their income grew by the largest amount in eight years, the Commerce Department said Thursday. Income surged because companies rushed to pay dividends and bonuses before tax increases.

The 0.2 percent rise in consumer spending last month was slightly slower than the 0.4 percent increase in November.

Income jumped 2.6 percent in December from November, the biggest gain since December 2004.

Economists expect consumer spending, which accounts for about 70 percent of economic activity, to slow this year. That’s because consumers are receiving less take-home pay starting this month.

Congress and the White House reached a deal on Jan. 1 to prevent income taxes from rising on all but the wealthiest Americans. But they allowed a temporary reduction in Social Security taxes to expire this year. That means a person earning $50,000 a year will have about $1,000 less to spend in 2013. A household with two high-paid workers will have up to $4,500 less.

The diminished pay could slow consumer spending and economic growth at a precarious moment.

The economy unexpectedly shrank in the October-December period at an annual rate of 0.1 percent, the government said Wednesday. The dip was a reminder of the economy’s vulnerability as automatic cuts in government spending loom.

Some analysts have estimated that the roughly $120 billion in higher Social Security taxes could subtract up to 0.7 percentage point from growth this year.

Separately, the Labor Department reported Thursday that the number of Americans seeking unemployment aid rose sharply last week but remained at a level consistent with moderate hiring.

Weekly applications for unemployment benefits leapt 38,000 to a seasonally adjusted 368,000, the government said. The increase comes after applications plummeted in the previous two weeks to five-year lows.

The volatility reflects the government’s difficulty adjusting the data to account for layoffs after the holiday shopping season. Job cuts typically increase in the second week in January as retailers dismiss temporary employees hired for the winter holidays. Layoffs then fall in the second half of the month.

The department attempts to adjust for such fluctuations but the January figures can still be volatile. The four-week average, a less volatile measure, ticked up to 352,000, just above a four-year low.

Article source: http://www.nytimes.com/2013/02/01/business/growth-in-consumer-spending-slows.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: government spending, percentage point, reminder

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