Archives for January 2013

All Nippon Says Grounded Dreamliners Have Cost $15 Million

January 31, 2013 by NewsMaker Leave a Comment

With a fleet of 17 Dreamliners, delivered in late 2011 ahead of any other airline, All Nippon is the world’s largest operator of Boeing’s new jet. But that fleet remains grounded as U.S. and Japanese investigators try to figure out why a battery burst into flames and another spewed smoke last month on 787s operated by All Nippon and Japan Airlines.

All Nippon has scrambled to use replacement aircraft to keep routes operating. But the airline has been forced to cancel about 450 domestic and international flights, affecting almost 60,000 customers. The airline has said it expects disruptions to continue, and was unsure how long the disruption to its services would continue.

The airline said Thursday that so far, the 787 grounding had caused an estimated $15.4 million in lost revenue, a disappointing reversal after the airline touted the big fuel savings brought about by the fuel-efficient jets. For now, All Nippon kept its profit forecast for the year through March unchanged at ¥40 billion, though it remains unclear how big an impact the Dreamliner woes will have on the airline’s future earnings and strategy.

Seven operators grounded their 787 fleets on Jan. 16 after regulators around the world followed U.S. and Japanese regulators in ordering the suspension of all flights until the battery problems could be resolved. Earlier that day, a 787 operated by All Nippon was forced to make an emergency landing in western Japan after pilots spotted a battery error signal and a strange smell in the cabin.

Just 10 days earlier, a similar battery burst into flames aboard a parked 787 operated by Japan Airlines at Boston’s Logan Airport. The charred remains of the lithium-ion batteries have been recovered from both planes, and are now being scrutinized by U.S. and Japanese investigators.

All Nippon has since said that it replaced batteries and chargers in its Dreamliners a total of 10 times before the emergency landing, and Japan Airlines said it had done so several times. U.S. investigators are now asking for more data on the devices’ past performance.

All Nippon has not asked Boeing for compensation linked to the grounded 787s, but will discuss the issue once the total financial impact is more clear, the executive vice president Kiyoshi Tonomoto was quoted by Reuters as saying.

According to Boeing, the two Japanese airlines account for about an eighth of the 848 orders the aircraft manufacturer has received for the Dreamliner so far. Japan Airlines, which owns seven of the jets, reports its earnings next week.

Article source: http://www.nytimes.com/2013/02/01/business/global/01iht-ana01.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: a540, disruptions, fleets

DealBook: Justice Dept. Seeks to Block 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.

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.

You’re the Boss Blog: How Much Training Do Sales Representatives Need?

January 31, 2013 by NewsMaker Leave a Comment

She Owns It

Portraits of women entrepreneurs.

Earl Wilson for The New York Times Beth Shaw: Why aren’t you performing?

During the last She Owns It business group meeting, Beth Shaw, who owns YogaFit, wondered why her new sales representative wasn’t selling what she was brought on to sell — YogaFit conference sponsorships, and the company’s branded merchandise, which includes clothing, yoga mats and DVDs. Initially, the conversation focused on compensation and learning curves. But as the discussion continued, a group member, Alexandra Mayzler, the owner of Thinking Caps Tutoring, raised the issue of training.

Specifically, she asked whether YogaFit had trained its new salesperson.

“If you’re a salesperson, I’m assuming …” Ms. Shaw began to answer.

“Uh uh,” said Deirdre Lord, who owns the Megawatt Hour.

“You’re shaking your head,” Ms. Shaw said to Ms. Mayzler, who replied that she makes no assumptions regarding the ability of new people to sell Thinking Caps’ services. She said sales at her company were relationship-driven. In fact, Thinking Caps doesn’t even use the term “sales.” Instead it describes that function as “networking and outreach.”

“We have a sales deck, we have a whole sponsor proposal,” Ms. Shaw said, protesting.

“So do we,” Ms. Mayzler said, adding that that’s not enough. For example, Thinking Caps just opened a Dallas office, which will be run by a clinical psychologist who has worked within schools. “She knows how to talk about this stuff,” Ms. Mayzler said. Still, the Dallas employee will go through extensive training designed to teach her how to have conversations that sell Thinking Caps’ services in a style consistent with its mission.

“Do you train her?” asked Susan Parker, the group member who owns Bari Jay.

“I’m not doing everything,” Ms. Mayzler said, adding, “I’m finally focusing on delegating.” One aspect of training involves learning the information in the Thinking Caps manual. Next, come conversations with three different Thinking Caps staff members. These include extensive role-playing and direction on points that must be hit when talking about Thinking Caps. Ms. Mayzler holds the final conversation with the trainee, who then shadows an experienced Thinking Caps staff member during meetings with potential clients.

“There’s a difference in how you sell sponsorships and how you sell merchandise,” said Jessica Johnson, who owns Johnson Security Bureau. For example, a deck may help YogaFit’s sales representative sell sponsorships, she said, but not apparel or videos.

But, said Ms. Shaw, the salesperson received leads for pro shops locating within health clubs and offering YogaFit trainings. “It’s not too much of a stretch to be like, ‘Hey, you’re carrying yoga mats, we’ve got yoga mats. Hey, you’ve got workout pants, we’ve got great workout pants,’” Ms. Shaw said.

Ms. Johnson said that, while Ms. Shaw’s suggestions were valid, she had to be sure the sales rep understood YogaFit’s “unique selling proposition.” A new salesperson must establish relationships with pro shops, while recognizing that they may already sell “29 different yoga mats,” she added.

“I understand your frustration because you’re responsible for your entire business,” Ms. Johnson said. Additionally she said, “You’re incenting this woman and giving her good compensation, and she’s come to you with what you think is credible experience, and you’re like, ‘Why are you not performing and what’s not working?’”

“Exactly,” said Ms. Shaw.

In terms of training, Ms. Shaw said the sales representative attended a YogaFit conference where she learned about YogaFit’s products and met several instructors. Additionally, she attended some of the company’s yoga trainings.

Ms. Johnson suggested that it might be beneficial to have the new salesperson make weekly or monthly presentations to YogaFit’s staff. These could take the form of a sales call, with role-playing.

“We’ve actually tried to get her to do that, and for some reason she’s been reluctant to even make a sales call in front of the sales team that she’s trying to train,” Ms. Shaw said.

Ms. Johnson and Ms. Lord agreed this was a bad sign. Still, Ms. Johnson wasn’t giving up. “My next suggestion would be to model to her an example sales call,” she said. “This is what a cold call looks like, this is what a warm call looks like, this is what a warm letter looks like, this is what a face-to-face looks like,” she continued. After a certain amount of repetition, Ms. Shaw could accompany the salesperson on a call to see how she does.

“Yeah, yeah,” said Ms. Shaw, who is no longer sure anything will work. “I now have given her a month and a week and the training period is up,” she said. Instead of continuing to bang her head against a wall, Ms. Shaw is ready to simply assign her salesperson to the customer service department for the duration of her contract, which is up on Feb. 18.

“Why not take until Feb. 18 to try to make her a better salesperson?” asked Ms. Parker. “Then either you have, hopefully, a good salesperson on Feb. 18, or you cut your losses,” she said.

“I agree with that,” Ms. Lord said.

As Ms. Shaw considered this, Ms. Johnson pointed out that the more important issue is, how she handles the issue going forward.

You can follow Adriana Gardella on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/01/31/how-much-training-do-sales-representatives-need/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: conference sponsorships, new york times, thinking caps

Today’s Economist: Simon Johnson: Jacob Lew, Mary Jo White and Dunbar’s Number

January 31, 2013 by NewsMaker Leave a Comment

Simon Johnson, former chief economist of the International Monetary Fund, is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”

Jacob J. Lew, the president’s nominee for Treasury secretary, and Mary Jo White, the nominee for chairwoman of the Securities and Exchange Commission, are making financial reformers nervous. The issue is not so much their track record, because neither has worked directly on financial-sector policy issues; it is much more about whom they know.

Today’s Economist

Perspectives from expert contributors.

Specifically, how many people do they know and trust outside the financial sector, away from the sphere of influence of the very large banks? More pointedly, when it comes to thinking about financial-sector policy, who exactly is in their inner circle?

Nobody knows a huge number of people, at least not well. In the language of anthropology and biology, the limit to a person’s social network is known as Dunbar’s Number – which is 147.5, although people often round it to 150. Our brains do not support the interactions required by larger social groups.

More precisely, the predicted size for most human groups, based mostly on the characteristics of our brains, is 100.2 to 231.1 people. For details and caveats, look at Robin Dunbar’s 1993 paper, “Co-evolution of neocortical size, group size and language in humans,” published in Behavioral and Brain Sciences (Issue 16, Pages 681-735). Or just think about the number of people you know well and would rely on for advice, particularly with complex and sensitive issues. When you get to know new people, you often lose track of your previous close colleagues or even good friends.

And what applies to ordinary mortals most definitely applies to the people elected or appointed to run the country. Whenever the world gets complicated – for example, because the financial sector has turned nasty – policy makers need trusted sources and established confidants in order to figure out which way is up and what needs to be done.

If most financial experts you know work at, for example, Citigroup, then you are more likely to see the financial world through their eyes. What is good for Citi (and its executives) will, in your mind, become close to what is good for the United States.

One of the most serious concerns about Treasury Secretary Timothy Geithner was that even though he had never worked in a bank, his social network was full of bankers, mostly because of his time at the Federal Reserve Bank of New York and his close connection with Robert Rubin, a former Treasury secretary and then a director of and senior adviser to Citigroup. In this network, many of Mr. Geithner’s deepest financial-sector connections appear to have been with people who were working at Citigroup in 2007-8. (See, for example, a 2009 article by Jo Becker and Gretchen Morgenson.)

This observation lines up remarkably well with the devastating critique of Mr. Geithner in Sheila Bair’s book, “Bull by the Horns.” The main concern of Ms. Bair, former chairwoman of the Federal Deposit Insurance Corporation, is that Mr. Geithner was too close to Citigroup and saw the world as its senior executives did.

As Treasury secretary, Mr. Geithner hired people from Citigroup – particularly people who had worked closely with Mr. Rubin (in government or in the private sector or both). Now Mr. Lew, a Citi alum with a central position in the Rubin network, is on the verge of becoming Treasury secretary. How likely is Mr. Lew to confront the risks created by unstable global megabanks? Does he personally know anyone who is concerned about the damage that Citigroup is likely to do in the future – or even has a critical view of what it has done in the past?

While Ms. White’s reputation as a prosecutor is second to none, as a defense lawyer she represented executives at several of the largest banks and knows many prominent financial-sector executives. Her husband, John W. White, now a corporate lawyer, had a senior role at the S.E.C. when Christopher Cox was its chairman, a time when the S.E.C. was aiding and abetting excessive deregulation at every opportunity; Ms. White will need to step aside in actions against companies her husband has advised. To whom will Ms. White turn when she wants to understand how to make the financial sector safer?

If confirmed, Mr. Lew and Ms. White face formidable policy agendas. They need to demonstrate both an impressive grip of the details of what works in financial sector reform, as well as the ability to ignore a great deal of whining and to resist other pressure from the megabanks.

The most prominent and urgent case-in-point is that regulators need to complete the Volcker Rule. Mandated by the Dodd-Frank financial reform legislation, this rule will limit the risk-taking of very large banks.

The hitch at this point is primarily the S.E.C. All kinds of excuses can be and have been offered. These have no merit. Congress passed Dodd-Frank more than two years ago, and the regulators have issued draft rules and considered all the comments imaginable. The banking side of the equation – the Federal Reserve, the F.D.I.C. and the Office of the Comptroller of the Currency – is on board. The Commodity Futures Trading Commission will not stand in the way. Everyone is waiting for the S.E.C. to pull the trigger.

If Ms. White cannot get the S.E.C. unstuck, the issue will fall to Mr. Lew, who as Treasury secretary is chairman of the Financial Stability Oversight Council. The legislative intent of Dodd-Frank on this point is clear; I’ve confirmed this by asking legislators what they intended. If a single regulator gets hung up on an issue, the oversight council can override that regulator – to prevent the kind of impasses and lacunas that previously created vulnerabilities in the regulatory system.

Even Mr. Geithner, not the world’s most dynamic reformer, used the power of the oversight council to press the S.E.C. forward on changing the rules for money-market funds. (Interestingly, the Fed has long wanted these rules changed – and Mr. Geithner’s social network obviously includes some top Fed officials.)

Is Mr. Lew willing to push the S.E.C. – perhaps by supporting Ms. White in a forceful fashion – on issuing and implementing the Volcker Rule? Hopefully, this will be a central question in both their confirmation hearings (with the Senate Finance Committee for Mr. Lew and the Senate Banking Committee for Ms. White).

Senator Elizabeth Warren, Democrat of Massachusetts, writing recently for Politico, made the most important point: the administration will only get serious about financial reform when it appoints officials with different attitudes – and, I would say, different social networks – from those who were at Treasury and the S.E.C. over the last four years.

“Personnel is policy,” people in Washington often remark. The next round of appointments, including those at the deputy and under secretary level, is very important. At this point, I am not optimistic about who will get these jobs.

Is the second Obama administration hiring people who understand and can implement financial reform? Or is it again merely promoting people whose social networks are disproportionately tilted toward the big Wall Street banks?

Article source: http://economix.blogs.nytimes.com/2013/01/31/jacob-lew-mary-jo-white-and-dunbars-number/?partner=rss&emc=rss

Filed Under: Economy News Tagged With: mary jo white, national debt, sphere of influence

North Dakota Went Boom

January 31, 2013 by NewsMaker Leave a Comment

Apart from a few fanatics who sometimes turned up at midnight, the landmen would begin arriving at the courthouse around 6 a.m. In the dead of winter, it would still be dark and often 20 or 30 below zero, and because the courthouse didn’t open until 7:30, the landmen would leave their briefcases outside the entrance, on the steps, in the order they arrived. And then they would go back to their cars and trucks to wait with the engines running, their faces wreathed in coffee steam. Sometimes there were more than 20 briefcases filed on the courthouse steps. The former landman who told me this — Brent Brannan, now director of the North Dakota Oil and Gas Research Program — said he sometimes thought he could see the whole boom in that one image, briefcases waiting for the day to start, and it killed him a little that he never took a picture.

For many years North Dakota has been a frontier — not the classic 19th-century kind based on American avarice and the lure of opportunity in unsettled lands, but the kind that comes afterward, when a place has been stripped bare or just forgotten because it was a hard garden that no one wanted too much to begin with, and now it has reverted to the wilderness that widens around dying towns. In a way, of course, this kind of frontier is as much a state of mind as an actual place, a melancholy mood you can’t shake as you drive all day in a raw spring rain with nothing but fence posts and featureless cattle range for company thinking, Is this all there is? until finally you get out at some windswept intersection and gratefully fall on the fellowship of a dog-faced bar with a jukebox of songs about people on their way to somewhere else.

All of which may explain the shock of coming around a bend and suddenly finding a derrick illuminated at night, or a gas flare framed by stars, or dozens of neatly ranked trailers in a “man camp,” or a vast yard of drill pipe, or a herd of water trucks, or tracts of almost-finished single-family homes with Tyvek paper flapping in the wind of what just yesterday was a wheat field. North Dakota has had oil booms before but never one so big, never one that rivaled the land rush precipitated more than a century ago by the transcontinental railroads, never one that so radically changed the subtext of the Dakota frontier from the Bitter Past That Was to the Better Future That May Yet Be.

It’s hard to think of what oil hasn’t done to life in the small communities of western North Dakota, good and bad. It has minted millionaires, paid off mortgages, created businesses; it has raised rents, stressed roads, vexed planners and overwhelmed schools; it has polluted streams, spoiled fields and boosted crime. It has confounded kids running lemonade stands: 50 cents a cup but your customer has only hundreds in his payday wallet. Oil has financed multimillion-dollar recreation centers and new hospital wings. It has fitted highways with passing lanes and rumble strips. It has forced McDonald’s to offer bonuses and brought job seekers from all over the country — truck drivers, frack hands, pipe fitters, teachers, manicurists, strippers. It has ginned up an unreleased reality show called “Boomtown Girls,” which follows the lives of “five bold and brave sisters” in the formerly drowsy farm center of Williston, N.D. Williston, whose population has tripled in the past 10 years, lies in the middle of the 150,000-square-mile Williston Basin, a depression in the crust of the earth that geologists now believe contains one of the largest oil fields in the world.

In the fall of 2011 in Crosby, N.D., Continental Resources, the oil company with the most acreage leased in the basin, erected a self-congratulatory granite monument celebrating its work in the so-called Bakken Formation, the Williston Basin rocks that, as Continental put it, ushered in “a new era in the American oil industry.” The number of rigs drilling new wells in North Dakota’s part of the basin reached a record 218 last May. It has now leveled off at around 200, as thousands of wells have been completed under deadline pressure to secure expiring mineral leases. Many thousands more will be spudded in the next two years as the boom moves from discovery to production and crews drill “infill” wells, complete pipelines, fortify roads, enlarge refineries and build natural-gas pumping stations and oil-loading train yards.

North Dakota’s last oil boom, 30 years ago, collapsed so quickly when prices crashed that workers in the small city of Dickinson left the coffee in their cups when they quit their trailers. Apostles of “Bakken gold” insist that what’s different this time is that this time is different, the history of frontier avarice notwithstanding. This is the boom that is going to change everything without the remorse and misgivings that have marked the aftermath of so many past orgies of resource extraction. This is the boom that won’t leave the land trashed, won’t destroy communities, won’t afflict the state with the so-called Dutch Disease in which natural-resource development and the sugar rush of fast cash paradoxically make other parts of the economy less competitive and more difficult to sustain. This is the boom being managed by local people certain they know how to look after their interests and safeguard the land they live on. This is the Big One that North Dakota has been waiting for for more than a century.

Chip Brown is a contributing writer for the magazine. He last wrote about the filmmaker Whit Stillman.

Alec Soth is a photographer in Minnesota. He recently published “LBM Dispatch No. 3: Michigan.”

Editor: Sheila Glaser

Article source: http://www.nytimes.com/2013/02/03/magazine/north-dakota-went-boom.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: cattle, landman, oil and gas

Hong Kong Still Attracting Retailers Despite Forbidding Costs

January 31, 2013 by NewsMaker Leave a Comment

HONG KONG — Hong Kong is one of the busiest and most crowded shopping meccas in the world — with sky-high retail rents to match — but that has not stopped retailers from opening yet more stores in the city of seven million, attracted by hordes of visiting consumers.

The latest arrival is Tommy Bahama, a U.S. clothing and lifestyle brand, which joined the fray Wednesday with the opening of a 370-square-meter, or 4,000-square-foot, store in the Wan Chai district, its first outlet in the city.

Amid models and canapés, Tommy Bahama executives were coy about just how much they had to fork over in rent.

But the store, said Terry Pillow, the chief executive officer, is “one of the most expensive locations” the company operates — “in a similar range” as a recently opened, significantly larger, flagship store on Fifth Avenue in New York.

That comes as little surprise.

Reports from the real estate services company CBRE last year ranked Hong Kong as the world’s most expensive location for prime real estate and office rents, and ECA International, which advises companies posting employees abroad, published a poll this week showing that Hong Kong was the most expensive place to rent high-end apartments. The cost of buying a home, likewise, has soared, despite repeated efforts by the government to cool the market.

Moreover, even those companies that are prepared to bite the bullet on rent might struggle to find what they need.

It took Mr. Pillow and his colleagues at Tommy Bahama, whose casual wear is in the “affordable luxury” range of the market, four years to find a site they liked, in terms of store size and location.

They considered many of the high-end shopping malls, which are inhabited by all the usual suspects of the fashion world, but in the end, they settled on Wan Chai, a neighborhood that is better known for its bars and nightlife than for high-end shopping. But that fits with Tommy Bahama’s neighborhood-bar-type image, the company’s executives said.

“We were in a hurry to come to Hong Kong, but it was important for us to come to Hong Kong in the right way,” Mr. Pillow said.

So acute is the space-cost situation that analysts have begun to warn that Hong Kong has become too expensive for its own good.

Executives at CBRE in Hong Kong warned last October that the space constraints meant the city’s standing as a key location in Asia was “under threat.” Long waiting lists for spots in schools and high housing costs add to the financial pain and are increasingly causing companies to think twice about deploying expatriate employees or expanding teams in the city.

“Hong Kong has been losing out to Singapore in the past few years because of that,” Lee Quane, regional director for ECA International, said by telephone.

Similarly, in the retail sector, the lack and cost of suitable space has meant that some companies have taken relatively long to come to Hong Kong, industry analysts and real estate experts say.

Gap and American Eagle Outfitters, for example, opened shops in Hong Kong only in 2011. Forever 21, another popular U.S. brand, opened a large store in the bustling shopping district of Causeway Bay early last year, and Abercrombie Fitch’s flagship store, in the heart of Central, the financial district, opened last August.

The British brand Topshop, which is well established in other parts of Asia — it has eight shops each in Indonesia and Malaysia, six in Singapore and four in Japan — is opening its first store in Hong Kong this year, in May.

However, retail executives clearly believe that the expense of having a presence in Hong Kong is worth it.

After all, Hong Kong’s shopping population is vastly increased by the millions of tourists who flock to the city every month.

Last year, 48.6 million visitors came to Hong Kong, nearly three-quarters of them from mainland China, whose increasingly affluent consumers are eager to capitalize on the lower taxes in Hong Kong and greater certainty that what they are buying is the genuine article.

For retailers like Tommy Bahama, Louis Vuitton and Prada, Hong Kong is a necessary location, and a store in the city means visibility that extends well beyond the city, which is a special administrative region of China, into the vast mainland Chinese market.

“It’s a dog-eat-dog world out there,” said Rob Goldberg, senior vice-president for marketing at Tommy Bahama, referring to Hong Kong’s property and rental costs. “But if you can make it here, you’ll make it anywhere.”

Tommy Bahama executives said they were “very happy” with the performance of the Hong Kong store so far (The shop opened quietly two weeks ago but had its official ribbon-cutting event Wednesday.)

The company is looking for more locations in the city, as well as in mainland China.

Riva Hiranand contributed reporting.

Article source: http://www.nytimes.com/2013/02/01/business/global/01iht-retail01.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: chief executive officer, high end shopping, tommy bahama

Ericsson Sales Rise on Spending to Upgrade Mobile Networks

January 31, 2013 by NewsMaker Leave a Comment

BERLIN — Ericsson, the world’s biggest maker of mobile network equipment, said on Thursday that its sales and profit grew faster than expected in the fourth quarter as phone operators in the United States and Canada spent heavily to upgrade wireless networks.

The company booked a net loss during the quarter as it wrote down the value of ST-Ericsson, an unprofitable smartphone component venture with the French chipmaker ST Microelectronics.

But investors apparently looked past that to focus on the underlying growth. Shares of Stockholm-based Ericsson rose almost 10 percent after the earnings report, which showed that demand from North America had helped lift Ericsson’s global sales of network equipment, the company’s main business, by 6 percent from a year earlier.

Ericsson’s sales of equipment, software and services in the three months through December rose 5 percent to 66.9 billion kronor, or $10.6 billion.

“This suggests the declining sales of network equipment we have seen for some time has finally begun to turn around,” said Hakan Wranne, an analyst at Swedbank in Stockholm.

In North America, Ericsson said sales of mobile broadband and other network gear to U.S. and Canadian operators surged 86 percent to 9.4 billion kronor in the quarter from a year earlier, without providing a comparative figure. Sales of equipment rose 10 percent in Western Europe, and 38 percent in India, part of an upswing in half of Ericsson’s global sales regions.

The increase followed four quarters of declining global network sales.

“We continue to believe the long-term fundamentals of this industry are attractive,” Hans Vestberg, the Ericsson chief executive, said. “I think it is clear that society will be using mobile broadband and the cloud much more than they are now.”

Ericsson said it took an 8.6 billion kronor charge against earnings in the period for ST-Ericsson, which is based in Geneva and has generated about $2.8 billion in losses since February 2009. The charge caused Ericsson to report a loss of 6.3 billion kronor for the fourth quarter.

Ericsson had warned investors of the charge on December 20.

ST-Ericsson employs 5,090 workers and makes processor modules and modems for some Samsung, Motorola and Sony smartphones.

Mr. Vestberg said he had no new information on the future of ST-Ericsson, which reported a $71 million loss in the quarter on unchanged sales of $358 million. Last month, ST Microelectronics announced plans to leave the venture and Ericsson said it had no intention of buying its partner’s stake.

“We continue to believe that the modern technology in this venture is of strategic importance to the industry,” Mr. Vestberg said. “We are now in a discussion among the shareholders about our options going forward. We don’t exclude anything at this point.”

Mr. Wranne, the Swedbank analyst, said he thought it was possible that Ericsson might simply resort to shutting down the joint venture sometime this year.

“Both parents have essentially turned their back on the company and what I think they have done is essentially killed it,” Mr. Wranne said. “At this point, it is not certain whether the venture will be operating six months from now.”

With the charge against earnings, Ericsson has written off the entire value of its investment in ST-Ericsson, said Jan Frykhammar, the Ericsson chief financial officer. The business began to deteriorate after Nokia, its biggest client, announced plans in 2011 to halt its Symbian smartphone line, which had used many ST-Ericsson components.

Ericsson’s main network equipment business, which made up 53 percent of its sales in the quarter, more than made up for the ST-Ericsson write-off. Sales of Ericsson’s equipment, software and services in North America rose 51 percent to 17 billion kronor.

Excluding the ST-Ericsson charges, Ericsson’s operating profit in the quarter rose by 17 percent to 4.8 billion kronor.

Sales in the quarter rose on an annual basis in all regions except Scandinavia, the Mediterranean region of southern Europe, China, the Middle East and Latin America.

The gains are a harbinger a new phase of purchasing by global phone operators, Mr. Vestberg said, as they compete to sell mobile broadband services to the rapidly expanding ranks of smartphone users. Ericsson expects the number of mobile broadband users around the world to rise 40 percent to 2.1 billion by the end of this year from 1.5 billion in 2012.

By the end of this year, three in 10 cellphone users around the world will be operating smartphones and subscribing to mobile broadband service, Ericsson predicted. Demand for fast wireless Internet will in turn lift demand for Ericsson’s networks, Mr. Vestberg said. In the last quarter, he said, 40 percent of all cellphones sold worldwide were smartphones.

Operators, recognizing the strong consumer interest in mobile broadband, are stepping up their orders for new data networks that can handle the heavy traffic demands on their grids. “Operators and customers are focusing now on mobile broadband,” Mr. Vestberg said. “We are clearly seeing a change in their behavior.”

Shares of Ericsson rose 9.8 percent, or 6.55 kronor, to 73.45 kronor in Stockholm.

Article source: http://www.nytimes.com/2013/02/01/technology/ericsson-sales-rise-on-spending-to-upgrade-mobile-networks.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: phone operators, smartphone, stockholm

Powering the Philippine Economy With Elvis and Zeppelin

January 31, 2013 by NewsMaker Leave a Comment

MANILA — For more than 30 years, Josetoni Tonnette Acaylar has been singing and playing the piano throughout Asia.

He has provided relaxing background music and taken requests for pop and jazz standards in more five-star hotel lobbies and smoky lounges than he can recall, in Brunei, China, Dubai, Hong Kong and other locales.

In one job in Japan, he was told to take off his tuxedo and work in the kitchen, washing dishes and scrubbing floors. “Sometimes they would pull me out of the kitchen, give me a jacket and yell, ‘Play the piano!’ and I would have to perform,” Mr. Acaylar recalled with a laugh.

Mr. Acaylar is just one of the thousands of musicians from the Philippines who are prominent in bars, lounges and clubs around Asia and the Middle East. But the band used to be much bigger.

In 2002 alone, more than 40,000 entertainers left the Philippines to work overseas, primarily in Japan. After allegations of prostitution among some entertainers, however, the Japanese government found that many of the female musicians could not actually play a musical instrument, and that many of the vocalists did not have much of a voice.

After the crackdown, the number of performers who left the Philippines to work overseas dropped to 4,050 in 2006, from 43,818 in 2004. The figure now hovers around 1,500 to 2,000 a year, government statistics show, with Japan remaining the top destination, followed by Malaysia, South Korea and China.

“We only allow musicians and entertainers to work in legitimate establishments such as cruise ships and major hotels,” said Yolanda E. Paragua, a senior official with the Philippine Overseas Employment Administration. “Not in honky-tonk type places.”

The musicians are among the millions of people from the Philippines who work overseas and help power the country’s economy with remittances. And the Philippine economy is indeed thriving: in 2012, gross domestic product grew 6.6 percent, surpassing the government’s forecast for growth of 5 percent to 6 percent, data released Thursday showed. The country had the second-highest growth rate in the world in 2012, after China, according to Reuters.

Government expenditure in the Philippines jumped nearly 12 percent in 2012, while private spending, which was bolstered by remittances from abroad, was up 6.1 percent, Reuters reported.

In the past, the Philippine Overseas Employment Administration held auditions to verify the legitimacy of musicians seeking to work overseas, said Celso J. Hernandez, the head of the agency’s operations and surveillance division.

After the Japanese crackdown, however, the Philippine government discontinued the practice. These days, the government relies on vetting by licensed recruitment agencies, although it still examines the musicians’ paperwork.

The Philippines has a rich music scene, with bands playing hard rock, reggae, jazz, blues and nearly every other form of music each night in numerous clubs around the country. Musicians in the country, as elsewhere, often dream of writing their own works, signing a deal with a major recording label and achieving fame and fortune. But many of those who do not succeed on that path can still find regular work overseas.

Domingo Mercado Jr., who goes by the stage name Jojo, wrote and performed original music when he left high school, as part of a nine-piece band called Music and Imagination. Some of his friends have had a taste of fame, but he went in another direction.

“I resigned from the band and took a job in Korea,” said Mr. Mercado, 45. “I gave up on my dream.”

Mr. Mercado has performed across Asia as a singer and guitarist since 1994. He recently returned from a six-month job on a cruise ship.

Although singers and musicians from the Philippines can be found performing in many hotel lounges around Asia, the field is actually quite specialized and highly competitive. “A hotel might need many waiters, cooks and housekeepers,” Mr. Hernandez of the overseas employment agency said. “But they only need one or two musicians.”

Article source: http://www.nytimes.com/2013/02/01/business/global/powering-the-philippine-economy-with-elvis-and-zeppelin.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: philippine overseas employment, remittances, statistics show

DealBook: Deutsche Bank Posts Surprise $3 Billion Loss

January 31, 2013 by NewsMaker Leave a Comment

Michael Probst/Associated PressJürgen Fitschen, left, and Anshu Jain, the co-chief executives of Deutsche Bank.

FRANKFURT – Deutsche Bank, Germany’s largest lender, reported a surprise net loss of 2.2 billion euros ($3 billion) for the fourth quarter of 2012 on Thursday, hurt by the diminished value of some assets as well as costs related to numerous legal proceedings.

The results underline the task ahead for Jürgen Fitschen and Anshu Jain, the co- chief executives who took over the bank less than seven months ago and have declared their intention to deal more severely with the legacy of the financial crisis.

“This is the most comprehensive reconfiguration of Deutsche Bank in recent times,” Mr. Fitschen and Mr. Jain said in a statement. They warned that “deliberate but sometimes uncomfortable change” lay ahead, adding that “this journey will take years not months.”

Deutsche Bank avoided a government bailout during the financial crisis, but has faced numerous lawsuits and official investigations, including a tax-evasion inquiry that led to a raid on company headquarters last month by German police.

“Significant” charges related to legal proceedings contributed to the loss, Deutsche Bank said, without providing specifics.

Analysts consider the bank to be among the most highly leveraged in Europe, and bank management has promised to reduce the number of risky activities, a process that sometimes requires it to recognize the reduced value of assets and book losses.

Despite the loss, Deutsche Bank said fourth-quarter revenue rose 14 percent, to 7.9 billion euros, from the period a year earlier. The bank also said it had increased the amount of capital held as insurance against risk, and reduced the amount of money it needed to set aside to cover possible bad loans. The bank said it had reduced total employee pay to the lowest level in years.

The bank had warned in December that it would incur major charges in the quarter, without saying how much.

Article source: http://dealbook.nytimes.com/2013/01/31/deutsche-bank-books-3-billion-loss-in-fourth-quarter/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: bank management, michael probst, risky activities

Media Decoder Blog: Backstage to Acquire Sonicbids

January 31, 2013 by NewsMaker Leave a Comment

Looking for a part on Broadway? Or maybe a showcase at South by Southwest? Both searches could end up fielded by the same company, now that two of the leading sites that help actors and up-and-coming musicians find work are joining together.

Backstage, a publication that since the “Mad Men” age has been a highly trafficked job board for actors, will announce on Wednesday that it is buying Sonicbids, a Web site that lets bands book performances at festivals, clubs and elsewhere.

The deal is estimated at $15 million, and will be financed by Guggenheim Partners, whose media properties include Dick Clark Productions and Prometheus Global Media, the company behind trade publications like Billboard and The Hollywood Reporter.

Backstage and Sonicbids serve separate parts of the entertainment world, but they have similar business models, offering users some access free and charging subscriptions for more extensive features. John Amato, the chief executive of Backstage, and Panos Panay, the founder of Sonicbids, said in a joint interview on Tuesday that the combined company would have 600,000 registered users, with 60,000 of them paying subscribers.

Listings by and for performers seeking work are the bread and butter of both sites. Backstage is still published in print, but Mr. Amato said that more than 70 percent of its business is online. Since 1960, Backstage has been the bible of casting calls and audition notices for Broadway, film and television.

“If you have a desk job, there are a lot of places you can go to find a job online,” said Mr. Amato, who will lead the combined company. “If you are a creative, there aren’t a lot of those places.”

Sonicbids, founded in 2001, lets its users build online press kits and apply for shows with promoters. It competes with other artist-services companies like ReverbNation, and also Myspace, where musicians of every level can create public profiles. Sonicbids is also the platform used by the South by Southwest festival for band applications.

The site has also tried to make itself a talent forum to attract corporate brands, like Bud Light and Gap, that are looking for music for ads or promotional campaigns.

“We find that bands are not just looking for gigs,” Mr. Panay said. “They are also looking to connect with brands, to have their music in TV commercials, to have their music on Broadway and in film.”

Sonicbids, based in Boston, will retain its name and staff, as will Backstage, which has offices in New York and Los Angeles.

Ben Sisario writes about the music industry. Follow @sisario on Twitter.

Article source: http://mediadecoder.blogs.nytimes.com/2013/01/30/backstage-to-acquire-sonicbids/?partner=rss&emc=rss

Filed Under: Media Business Tagged With: film and television, public profiles, south by southwest

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