January 24, 2022

Common Sense: Waiting to Woo Vodafone, and Paying the Price

Yet Verizon shareholders seem to have taken the price in stride, even though it is $30 billion more than was rumored just a few months ago. Verizon shares are about the same as they were before rumors of the deal surfaced last week, even though the share price of the acquiring company usually drops. But consider the math: if 45 percent of Verizon Wireless is really worth $130 billion, then Verizon’s 55 percent stake alone should be worth $159 billion. Yet the enterprise value of all of Verizon, including its debt, was $176 billion this week.

That suggests Verizon is overpaying. And the staggering price also raises other questions: Why did Verizon wait so long to buy the rest of the wireless company? Why now? And why did it ever put its crown jewel, wireless assets, into a joint venture to begin with?

“I was advocating that we buy out Vodafone from Day 1,” Dennis Strigl, the former chief executive of Verizon Wireless, told me this week. “The whole issue for us was there was never a better time to buy than the year before. We just kept building more value and, therefore, a higher price. I wish we’d bought it in 2001.”

And Verizon could have bought it for even cheaper in 1999, when Vodafone outbid Bell Atlantic for AirTouch Communications, the company that provided the assets for Vodafone’s stake in Verizon Wireless. AirTouch would have given Bell Atlantic, which later emerged as Verizon Communications, a nationwide cellular footprint to compete with ATT, since Bell Atlantic at the time served New York and much of the East Coast, and AirTouch covered California and the West. (AirTouch itself resulted from a combination of the wireless assets of the former Bell operating companies Pacific Telesis and US West.)

According to Mr. Strigl, Verizon’s strategy was always to create a coast-to-coast network. To compete with ATT’s then-popular nationwide calling plan, Verizon started paying its customers’ roaming charges in areas where it did not offer service. “That wasn’t sustainable,” Mr. Strigl said.

But Bell Atlantic dropped out of the AirTouch bidding at $45 billion — $85 billion less than it is now paying just for AirTouch’s former cellular assets in the United States. (Air Touch also owned extensive international assets that were not part of the Verizon Wireless venture.) Vodafone, based in Britain, snagged the company for $62 billion, in what will now be seen as one of the best deals ever.

Of course, it is easy to say with the benefit of hindsight that Verizon missed the opportunity of a lifetime when it let AirTouch slip from its grasp. In 1999, the year of that deal, cellular service was erratic, cellphones were clumsy and mostly limited to voice calls, and customers were coping with roaming charges by turning off their phones except when making calls.

Vodafone’s chief executive then, Christopher Gent, now looks like a visionary. But he was criticized at the time for overpaying for AirTouch (and other acquisitions that transformed Vodafone into a global giant) and was excoriated in the British news media in 2003 for his £10.4 million pension. (Mr. Gent is now chairman of the pharmaceutical giant GlaxoSmithKline and a senior adviser at Bain Company.)

According to an investment banker working on the deal at the time (who did not want to be named because he is involved in the current deal as well), Verizon may have underestimated Vodafone’s determination to hold on to the wireless assets because it thought Vodafone was mostly interested in AirTouch’s international assets. “We did bid, but they didn’t want to sell,” Mr. Strigl said. “At least, they didn’t want to sell except at a very high price.”

Article source: http://www.nytimes.com/2013/09/07/business/waiting-to-woo-vodafone-and-paying-the-price.html?partner=rss&emc=rss

DealBook: After 4th-Quarter Loss, Societe Generale Plans Overhaul

The headquarters of Société Générale in Paris.Jacky Naegelen/ReutersThe headquarters of Société Générale in Paris.

5:05 a.m. | Updated

PARIS — Société Générale posted a larger-than-expected fourth-quarter loss on Wednesday and said it would move to cut costs and simplify operations.

The bank reported a net loss of 476 million euros, or $640 million, compared with a profit of 100 million euros in the period a year earlier. Analysts surveyed by Reuters had expected a net loss of about 237 million euros.

Profit was hurt by a charge of 686 million euros as the bank revalued its debt, an accounting obligation because the market for those securities has improved. The company also took 380 million euro write-down of good will in its investment banking business, mostly on its Newedge Group joint venture with Crédit Agricole.

Société Générale also set aside 300 million euros as a provision against unexplained “litigation costs.” Like many of its global peers, the bank is under investigation from the authorities in a number of countries on suspicion that it conspired to manipulate the London interbank offered rate, or Libor. But bank officials declined to say whether that provision was specifically related to the investigation.

The bank said fourth-quarter net income would have been about 537 million euros excluding the one-time items. The bank’s shares fell 3.6 percent Wednesday in Paris trading.

Under Frédéric Oudéa, its chairman and chief executive, Société Générale has been working to emerge from the financial crisis as a leaner institution. It said that from mid-2011 to the end of 2012, it disposed of 16 billion euros of loan portfolio assets from the corporate and investment banking unit and an additional 19 billion euros of other assets.

The bank’s revamping, and an improvement in sentiment in the euro zone economy, has helped to restore its market standing. After a difficult 2011 that was marred by questions about Société Générale’s exposure to Greece, the bank’s shares have rallied, gaining 49 percent in the last year.

“We have achieved all our objectives” for 2012, Mr. Oudéa said in a conference call on Wednesday with analysts. He noted that the bank had sold TCW, an American asset-management unit; Geniki Bank in Greece; and National Société Générale Bank, an Egyptian lender.

In a research note to investors, Andrew Lim, a banking analyst at Espírito Santo in London, said that while “management has dealt convincingly with concerns about weak capital adequacy and liquidity in 2012, Société Générale is still struggling to convince investors that it can achieve improved returns.”

Société Générale said its Tier 1 capital ratio, a measure of the bank’s ability to withstand financial shocks, stood at 10.7 percent at the end of December, up 1.65 percentage points from a year earlier. The French firm said it expected to attain a Core Tier 1 capital target under the accounting rules known as the Basel III standard of 9 percent to 9.5 percent by the end of 2013.

The measures announced on Wednesday aim to focus the bank on three core businesses: French retail banking, international retail banking and financial services and corporate and investment banking and private banking.

The Société Générale group employs about 160,000 around the world, and it was not immediately clear whether the announcement of a reorganization, which officials said was likely to be accompanied by some branch closings, meant the bank would follow the lead of other large global institutions with a round of layoffs.

Mr. Oudéa did not provide much detail on his plans, saying in the conference call that he was committed to working with unions and employees to ensure that the reorganization went smoothly.

The French bank published its latest results a little more than five years after Jérôme Kerviel, a trader in the bank’s equity derivatives business, built unauthorized positions that led to a 4.9 billion euro loss for Société Générale.

Mr. Kerviel’s conviction on charges of breach of trust and forgery was upheld in October by the Paris Court of Appeals. He also was ordered to serve a three-year prison term, pending appeal, and to repay the bank for the full amount of the loss.

On Tuesday, Mr. Kerviel told the French radio station RTL that he was challenging the repayment order in a labor court, saying he had been ordered to pay without a third-party expert being allowed to study the damages. He added that he was suing Société Générale for an amount equivalent to the 4.9 billion euro trading loss.

Article source: http://dealbook.nytimes.com/2013/02/13/societe-generale-reports-loss-in-fourth-quarter/?partner=rss&emc=rss

DealBook: Morgan Stanley to Take Over Smith Barney, With Citigroup’s Blessing

James Gorman, chief executive of Morgan Stanley.Peter Foley/Bloomberg NewsJames Gorman, chief executive of Morgan Stanley.

9:16 p.m. | Updated

Morgan Stanley has reached an agreement to take full control of the Smith Barney retail brokerage joint venture, a business that it has called a crucial part of its future.

The deal announced on Tuesday, ending a wrangle of some months between the company and its partner, Citigroup, was a coup for Morgan Stanley. Now the challenge will be whether the business of advising wealthy customers on their investments can help lift Morgan Stanley’s sagging fortunes as its core investment banking and trading operations contend with difficult markets and a heavier regulatory burden.

After negotiations that stretched well into Monday night, Morgan Stanley and Citigroup agreed to value the brokerage operation at $13.5 billion. That figure was significantly closer to Morgan Stanley’s estimate of the unit’s worth, letting it buy the rest of the enterprise at a lower price. Citigroup said it would take a $2.9 billion after-tax write-down from the transaction.

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The two companies outlined steps that would allow Morgan Stanley to buy the 49 percent of the business that it did not already own within three years. That will begin with the purchase of a 14 percent stake that will close by the end of September. Morgan Stanley will buy an additional 15 percent by next June.

That will fulfill a major part of the turnaround effort undertaken by Morgan Stanley’s chief, James Gorman. In a statement, he described the agreement as “a significant milestone for Morgan Stanley in the implementation of our strategy.”

The joint venture, Morgan Stanley Smith Barney, was born in 2009, forged from Citigroup’s Smith Barney unit and Morgan Stanley’s counterpart, as a way to benefit both companies. For Citigroup, which had long identified the brokerage as a nonessential asset to be sold off to free up capital, the deal will speed up its own rehabilitation plan.

“As we have shown, the more we put the past behind us, the more we can focus on our future, which is in the core businesses in Citicorp,” Vikram Pandit, Citigroup’s chief, said in a statement.

Howard Chen, an analyst at Credit Suisse, called the settlement a win for both firms, allowing them to more quickly achieve their objectives. “It’s a point of progress in capital management and increases the potential for capital return to shareholders,” he said.

Shares of Morgan Stanley jumped nearly 4 percent on Tuesday, to $17.25, while those in Citigroup rose 2.6 percent, to $32.66.

The retail brokerage business is one that Mr. Gorman knows well, having overseen both Merrill Lynch’s and Morgan Stanley’s units. Analysts say that it is an operation that requires relatively little capital for the company, while its most successful wealth advisers can bring in millions of dollars in revenue.

And Morgan Stanley Smith Barney is one of the biggest such businesses around. It accounts for the bulk of its Morgan Stanley’s wealth management business, which has nearly 17,000 wealth advisers and $1.7 trillion in assets under management.

Roughly 74 percent of the overall division’s clients have entrusted more than $1 million in assets to the firm’s wealth advisers.

The unit reported a $418 million profit for the first half of the year, up 15 percent from the year-ago period. Its revenue slipped 4 percent, however, to $5.9 billion.

But Mr. Gorman’s strategy isn’t without risk. The most productive advisers are constantly being poached by rival brokerages, or can choose to set up shop on their own. And when those individuals leave, they nearly always take their entire roster of clients, draining their former employers of millions of dollars in assets to manage.

Morgan Stanley Smith Barney’s own brokers have complained that the integration of the two firms’ operations has been anything but smooth, marred by technology issues. And rivals like Bank of America’s Merrill Lynch and Wells Fargo have been competing fiercely for clients.

While a clearly drawn path to Morgan Stanley’s eventual takeover of the brokerage has existed for years, getting there was difficult. In July, the two companies brought in an independent appraiser, Perella Weinberg Partners, to value the brokerage operation after each provided vastly different estimates of its worth. Morgan Stanley estimated its worth at a little over $9 billion, while Citigroup said it was worth closer to $23 billion.

While some of the disparity between the two estimates could be attributed to tactical posturing, both sides had substantive disagreements over how to value the brokerage and related assets like tax benefits, according to a person involved in the talks.

That prompted senior executives at both firms to plead their case. Besides Mr. Gorman, Morgan Stanley called upon Robert Kindler, the firm’s head of global mergers and acquisitions, and Gary Shedlin, a specialist in financial institutions. And Citigroup drew upon Edward J. Kelly, the chairman of its institutional clients group and a top dealmaker, and David Head, a co-head of financial institutions investment banking.

An e-mail from Perella Weinberg with the firm’s appraisal — less than $13.5 billion — reached Mr. Gorman and Mr. Pandit in their Midtown Manhattan offices shortly after 4 p.m., according to people briefed on the matter.

Because of rules set by both firms governing the appraisal process, the low figure meant that Morgan Stanley Smith Barney could have valued the business at more than $10 billion below Citigroup’s estimates. That could have led to a significant accounting charge for the bank.

And because Perella Weinberg’s appraisal covered only the 14 percent stake that Morgan Stanley is seeking to buy at the moment, further haggling over the brokerage’s value loomed.

Both firms then decided to negotiate an all-encompassing settlement that would obviate the need for additional drama. Senior negotiators for Citigroup arrived at Morgan Stanley’s offices off Times Square early Monday evening, for talks that stretched long into the night.

What emerged was Tuesday’s deal — and a looming end to the Smith Barney name, coined from the 1938 merger of Charles D. Barney Company and Edward B. Smith. The unit will be re-christened Morgan Stanley Wealth Management.


This post has been revised to reflect the following correction:

Correction: September 11, 2012

An earlier version of this article misstated the role played by the investment bank Perella Weinberg Partners, While the bank did provide an appraisal of the Smith Barney brokerage business, it was Morgan Stanley and Citigroup that came up with the $13.5 billion valuation of the business.

Article source: http://dealbook.nytimes.com/2012/09/11/morgan-stanley-smith-barney-is-valued-at-13-5-billion/?partner=rss&emc=rss

DealBook: Heineken Faces Challenge Over Asian Brewer

LONDON — Heineken’s efforts to secure a controlling stake in Asia Pacific Breweries is facing a setback after Thai Beverage increased its stake in Fraser Neave, the Singapore-based conglomerate that had agreed to sell its rights in the Asian brewer to Heineken for around $4.1 billion.

Fraser Neave announced on Monday that Thai Beverage was increasing its stake to 26.2 percent, making it the company’s largest shareholder and putting Thai Beverage in a strong position to dictate whether Fraser Neave shareholders support Heineken’s takeover offer.

Kindest Place, a separate company controlled by the son-in-law of Thai Beverage’s chairman, also has bought an 8.6 percent stake in Asia Pacific Breweries. This month, the company had offered to buy Fraser Neave’s 7.3 percent direct stake in the Asian brewer.

Heineken plans to use Asia Pacific Breweries’ market share across the region to bolster its own operations in Asia. The jockeying may force Heineken to increase its offer for the 40 percent stake in the Asian brewer that Fraser Neave owns through a joint venture with Heineken.

Analysts say Heineken may have to raise its $40-a-share offer to around $44 to secure control of Asia Pacific Breweries without having Thai Beverage as a vocal minority owner.

“We think that Heineken would prefer not to have Thai Bev as an ongoing minority within A.P.B., which could continue to restrict how that company is managed,” Nomura analysts said in a note to investors.

Thai Beverage’s stake is not Heineken’s only potential problem. The Japanese brewer Kirin also owns a 15 percent share of Fraser Neave and may look to acquire the company’s soft drinks business.

Fraser Neave shareholders are expected to vote on Heineken’s takeover offer by early September. If approved, the deal will close by the end of the year.

The efforts to control Asia Pacific Breweries come as brewers are turning to emerging markets because of a slowdown in Western economies.

Earlier this year, Anheuser-Busch InBev, whose beer brands include Budweiser and Stella Artois, agreed to buy the half of the Mexican brewer Grupo Modelo that it did not already own for $20.1 billion. SABMiller also bought Foster’s Group, the biggest beer company in Australia, for $10.15 billion late last year.

Article source: http://dealbook.nytimes.com/2012/08/14/heineken-faces-challenge-over-asian-brewer/?partner=rss&emc=rss

Sony to Cease Its Flat-Screen Partnership With Samsung

Sony, which makes the Bravia liquid-crystal-display televisions, said in a statement that it would sell its stake of nearly 50 percent in the jointly owned manufacturer, S-LCD, to Samsung, of South Korea, for 1.08 trillion won, or $935 million.

Sony’s exit from the joint venture, which was set up in Tangjeong, South Korea, in April 2004, will let it switch to less-expensive outsourcing options that may help it to resuscitate its struggling television business. The only other LCD panels Sony manufactures are through its joint venture with Sharp, in which Sony owns a 7 percent stake.

Cutthroat competition in a peaking market is squeezing profit margins for TV manufacturers, especially Sony, which analysts have long criticized for its high production costs. A strong yen has also weighed on Sony’s profit by eroding the value of its overseas earnings when they are repatriated into yen.

Last month, Sony warned that it would lose money for its fourth consecutive fiscal year, which ends next March. Sony’s television unit alone accounts for billions of yen in losses.

The company said it would report a further write-down of 66 billion yen, or about $845 million, for the final three months of 2011 because of its exit from the Samsung joint venture. But it expected to cut costs in its LCD business by 50 billion yen a year as a result of the departure, Sony said.

Sony “aims to secure a flexible and steady supply of LCD panels from Samsung, based on market prices and without the responsibility and costs of operating a manufacturing facility,” it said in the statement.

Meanwhile, Samsung Electronics, the world leader in flat-panel televisions, would gain freer rein in producing its next-generation displays by taking control of S-LCD. Samsung said in a regulatory filing that its board had approved the plan Monday.

The roots of the Sony-Samsung alliance date from the late 1990s, when Samsung emerged from the Asian financial crisis as a powerhouse because of relentless cost-cutting and aggressive overseas marketing.

At the same time, Sony was falling behind in several important markets, most notably in computer displays and flat-panel TVs, where it clung to the older technology of cathode ray tubes while consumers flocked to LCDs and plasma screens.

Sony looked to Samsung to reverse its flagging fortunes, forging a series of deals, including the $2 billion state-of-the-art LCD joint venture in South Korea. The companies also together backed the Blu-ray disc format and have entered into patent-sharing relationships.

For Samsung, those deals stood as an acknowledgment of its emergence as a global player. It has now taken over from Sony as the consumer electronics king. In its latest full financial year, Samsung earned $14 billion on sales of more than $134 billion, while Sony lost $3 billion on sales of $92 billion.

In comparison, Apple, the most profitable consumer electronics company in the world, generated $25.9 billion on sales of $108 billion.

Article source: http://feeds.nytimes.com/click.phdo?i=9b248431df6ea4f2e25b2fba3cb43ba8

Sony Sells Stake in LCD Panel Joint Venture

TOKYO — In a bid to streamline its money-losing television business, Sony said Monday it would sell its stake in its flat-panel joint venture with Samsung Electronics, letting go of more of its production capacity at a time when outsourcing has become the norm in the world of manufacturing.

Sony, the Tokyo-based technology and entertainment giant, which makes the Bravia liquid-crystal display televisions, said in a statement
that it would sell its nearly 50 percent stake in the jointly-owned manufacturer, S-LCD, to Samsung of South Korea for 1.08 trillion won, or $939 million.

Sony’s exit from the joint venture, set up in Tanjeong, South Korea, in April 2004, would allow it to switch to less expensive outsourcing options that might allow it to resuscitate its struggling TV business. The only other LCD panels Sony manufactures are at its joint venture with Sharp, in which Sony owns a 7 percent stake.

Cutthroat competition in a peaking market is squeezing margins for TV manufacturers, especially Sony, which analysts have long criticized for high production costs. A strong yen has also weighed on Sony’s bottom line by eroding the value of its overseas earnings when repatriated into the home currency.

Last month, Sony warned that it would lose money for the fourth year in a row in its current financial year, which ends next March. Its television unit alone is contributing billions of yen in losses.

Sony said it would report a further impairment loss of 66 billion yen, or $856 million, for the last three months of 2011 due to its exit from the Samsung joint venture. But it expected to slash costs in its LCD business by 50 billion yen a year as a result of the move, it said in the statement.

Sony “aims to secure a flexible and steady supply of LCD panels from Samsung, based on market prices and without the responsibility and costs of operating a manufacturing facility,” it said in the statement.

Meanwhile, Samsung Electronics, the world leader in flat-panel TVs, would have freer rein in producing its next-generation displays by taking control of S-LCD. The manufacturer said in a regulatory filing that its board had approved of the plan Monday.

The roots of the Sony-Samsung alliance go back to the late 1990’s, when Samsung emerged from the Asian financial crisis as a powerhouse, thanks to relentless cost-cutting and aggressive overseas marketing.

At the same time, Sony was falling behind in several important markets, most notably in computer displays and flat-panel TVs, where the once cutting-edge manufacturer still clung to the older technology of cathode ray tubes while consumers flocked to LCD and plasma-screen TVs.

In the face of total defeat in TVs, Sony looked to Samsung to reverse its flagging fortunes, forging a series of deals, including the $2 billion state-of-the-art LCD joint venture in South Korea. The companies also together backed the Blu-ray disc format and have entered into patent-sharing relationships.

For Samsung, those deals came as an acknowledgment of its emergence as a global player. The South Korean manufacturer has now taken over from Sony as the consumer electronics king. In its latest full financial year, Samsung earned $14 billion on sales of more than $134 billion, while Sony lost $3 billion on sales of $92 billion.

In comparison, Apple, the world’s most profitable consumer electronics company, earned $25.92 billion on sales of $108 billion.

Article source: http://feeds.nytimes.com/click.phdo?i=9b248431df6ea4f2e25b2fba3cb43ba8

Half of Votes Counted, Ford Labor Contract Leans Into ‘Yes’ Territory

As of late Friday morning, the contract was supported by 50.8 percent of voters so far, the union said on a Facebook page dedicated to its negotiations with Ford. It said 6,271 “yes” votes had been counted, compared with 6,085 “no” votes.

Until then, the “no” votes had been leading after workers at three large plants — one in Wayne, Mich., and two in Chicago — rejected the deal, largely over complaints that most workers would not receive wage increases. The swing into positive territory happened when 79 percent of workers at a plant in Flat Rock, Mich., voted in favor of the contract, according to the Web site of Local 3000 there; that is the largest margin of approval reported publicly so far.

The Flat Rock plant, which makes the Ford Mustang and a Mazda sedan as part of a joint venture, is in line to begin building the Ford Fusion midsize sedan if the contract passes, saving it from layoffs or possible closing after Mazda ends production there next year.

Voting is scheduled to finish Tuesday. The outcome largely hinges on how many of the more than 10,000 workers at U.A.W. locals in Dearborn, Mich., and Louisville, Ky., support the contract in the coming days.

If the deal fails, negotiators could return to the bargaining table under an indefinite extension of the old contract, the union could call a strike, or Ford could lock out the workers.

Union leaders across the country have begun assembling strike committees and distributing information about strike pay and procedures. At the same time, many have stepped up efforts to win support for the deal, warning workers that rejecting the agreement could result in a worse outcome.

“With the way the economy is and the way labor’s been under attack, I think to vote it down expecting to get more – I don’t think that’s realistic,” said Keith Brown, the president of Local 245 in Dearborn, Mich.

In 2009, Ford workers turned down concessions that the company sought to the four-year contract it signed in 2007. Mr. Brown said he hoped that workers would realize that turning down an entirely new contract could have more negative consequences than voting against modifications to an existing contract.

Ford is the only American auto company that the U.A.W. can strike against during this round of contract talks, but both the company and the union have said they wanted to maintain a civil relationship.

If the Ford contract passes, workers would get bonuses of $6,000, or $5,000 if they were hired less than a year ago. They also would receive a $3,752 advance on next year’s profit-sharing checks in November and $1,500 annually from 2012 through 2015.

The total of the bonuses is at least 50 percent more than G.M. and Chrysler agreed to pay their workers. G.M. workers have already ratified their new contract, and voting at Chrysler, which reached a tentative deal Wednesday, is to begin soon.

Article source: http://feeds.nytimes.com/click.phdo?i=c96adc46a68df5784edaf7ff3b2bcee5

Citing Stalemate, Verizon Workers Strike

The strike involves Verizon telephone field technicians, call center workers and cable installers from Massachusetts to Virginia and is expected to cause some delays in repairing and installing land line phones and Verizon’s FiOS television and Internet service.

Officials with the two unions, the Communications Workers of America and the International Brotherhood of Electrical Workers, said Verizon was demanding far too many concessions — on health coverage, pensions and other matters — and was not backing off many of them.

Verizon executives say far-reaching concessions are needed because of a long-term drop in revenue and profit in its land line telephone business and because of intense competition in television and Internet services.

The strike involves Verizon’s wire lines division, which include its traditional land lines to homes and business as well as FiOS. Unlike Verizon Wireless, a joint venture in which Verizon is the majority owner, the wire lines division is heavily unionized, with the Communications Workers representing 35,000 employees and the Electrical Workers 10,000.

In announcing the strike at 12:20 a.m., the communications workers complained that almost 100 of Verizon’s demands for concessions remained on the negotiating table.

“Since bargaining began on June 22, Verizon has refused to move from a long list of concession demands,” the union said in its post-midnight statement. “Even at the 11th hour, as contracts were set to expire, Verizon continued to seek to strip away 50 years of collective bargaining gains for middle class workers and their families.”

Early Sunday morning, Verizon issued a statement saying its attempts to reach a construct with the two unions were unsuccessful. The company said, “In anticipation of this development, Verizon has activated a contingency plan to ensure customers experience limited disruption in service during this time.”

Mark C. Reed, Verizon’s executive vice president of human resources, said, “It’s regrettable for our employees and our customers” that the two unions “have decided to walk away from the table instead of continuing to work through the issues.”

But Candice Johnson, a spokeswoman for the communications workers, said at 12:30 a.m. that the talks were continuing, emphatically denying that the unions had broken off talks.

In its statement, Verizon said it had “trained tens of thousands of management employees, retirees and others to fill the roles and responsibilities of its union-represented wireline workers.”

Mr. Reed said, “We are confident that we have the talent and resources in place to meet the needs and demands of our customers.”

In the talks that have been held in recent weeks in New York and Philadelphia, Verizon has asked its unionized workers to start contributing to their health care premiums, proposing that workers pay $1,300 to $3,000 for family coverage, depending on the plan. Verizon executives say the contributions would be similar to those already made by its 135,000 nonunion employees.

Verizon has also called for freezing pensions for current employees and eliminating traditional pensions for future workers, while making its 401(k) plans somewhat more generous for both. It would also like to limit sick days to five a year, as opposed to the current policy, which company executives say sets no limit.

In addition, Verizon wants to make it easier to lay off workers without having to buy them out and wants to tie raises more closely to job performance, denying annual raises to subpar performers.

Union officials say these proposals are the most aggressive Verizon has ever made.

Verizon called its unionized employees well paid, saying that many field technicians earn more than $100,000 a year, including overtime, with an additional $50,000 in benefits. But union officials say that the field technicians and call center workers generally earn $60,000 to $77,000 before overtime and that benefits come to well under $50,000 a year.

The crux of the clash is Verizon’s financial health. The company says its traditional wire line division is struggling, while the union says Verizon’s overall business, including Verizon Wireless, is thriving.

Verizon earned $6.9 billion in net income for the first six months of this year, amid strong growth in its majority-owned Verizon Wireless cellphone operation. And its hefty investment in FiOS is starting to pay off.

But the company has repeatedly said it needs to rein in costs in its wire lines division because it has lost business to wireless companies, to Internet companies like Vonage and Skype and to cable television companies, many of them nonunion, like Comcast and Time Warner.

Article source: http://feeds.nytimes.com/click.phdo?i=841d73ef4cd615773a4364abd8416be6

Is Hulu Boxed In?

Every sitcom. Every drama, documentary, reality show.

All of it — everything — Right Here Now.

This is the radical potential of the Internet. And this is the implicit promise of Hulu, the innovative Web site that drew the original borders of online television — the TV of tomorrow.

Hulu’s stated mission: “Help people find and enjoy the world’s premium video content when, where and how they want it.”

In the space of just four years, Hulu has done just that — to a point. Only now, with its industry in flux and the company up for sale, the divide between what is and what might be seems as daunting as ever.

This is the future of TV? Really? Today you can watch some shows on Hulu in their entirety. But others you can’t watch at all. Most fall somewhere in between — bound by contractual handcuffs that hamper prospective viewers. Making it even more baffling, some episodes are free while others require an $8-a-month subscription.

“It makes catching up on a show or starting a new show very difficult,” complains Marta Garczarczyk, a fund-raiser for a science museum in Minnesota who tried to watch the ABC’s “Cougar Town” and Fox’s “Glee” through the site last season.

Hulu executives largely have their hands tied. Viewers want more shows on more screens. But Hulu’s partners — the big networks — want steady profits. And, for the moment, the networks seem to have the upper hand.

Hulu is a joint venture of NBC Universal, part of Comcast; Fox Entertainment, part of the News Corporation; and ABC, part of Disney. An investment firm, Providence Equity Partners, owns about 10 percent.

Partnerships of rivals rarely last. And so Hulu finds itself on the block this summer. Representatives of Google, Yahoo, Amazon, Apple and others have kicked the tires, although no clear buyer has yet emerged and Hulu has steadfastly declined to comment.

But no matter who ends up spending billions to buy Hulu, the trick will be satisfying viewers. As Jason Kilar, Hulu’s visionary chief executive, put it in a blog post last February, “History has shown that incumbents tend to fight trends that challenge established ways and, in the process, lose focus on what matters most: customers.”

But — through no fault of Mr. Kilar — further limitations on the site’s bounty of free video may be on the horizon. For all the innovation that Hulu represents, the site also lays bare the gulf between what online viewers want and what TV companies are willing to give them.

“Customers always win,” Mr. Kilar has been known to tell his staff.

Maybe. But not always without a fight.

EVEN critics of Hulu concede that this company has accomplished something astonishing. It has helped to free television from the tyranny of the TV set.

For decades, people watched television one way: through a boxy contraption, tied to a schedule set by broadcasters. It was all supported by advertisers and beamed free over the airwaves.

As cable and satellite choices proliferated in the 1980s and 1990s, the business model changed: shows and channels were financed both by advertisers and subscribers. But the TV set and its TV Guide-era schedules still reigned. Not until 2006, when ABC became the first network to stream shows like “Lost” and “Grey’s Anatomy” on the Internet, did television programming truly roam free. A year after that, Hulu began taking mainstream the idea of streaming on TV, computers and cellphones.

The first hint of television’s unbundling actually came back in the 1980s, when viewers snapped up videocassette recorders. For the first time, they could record shows and watch them when they wanted. Once that happened, there was no going back. VCRs paved the way for TiVo and DVD box sets.

Each generation of technology met resistance from some in the television industry, a fact that Mr. Kilar knew at first hand before joining Hulu. While working at Amazon.com in the late 1990s, he wrote the business plan for the company’s VHS and DVD businesses. He witnessed skirmishes with TV studio chiefs who worried that direct sales of shows would damage the Blockbuster rental model. Over time, the studios came to embrace the sales model.

Article source: http://www.nytimes.com/2011/07/24/business/media/hulu-billed-as-tomorrows-tv-looks-boxed-in-today.html?partner=rss&emc=rss

DealBook: Vodafone to Buy Essar Stake in Indian Joint Venture for $5 Billion

Vodafone, the giant British mobile phone company, said on Thursday that it would pay $5 billion in cash for the Essar Group’s one-third stake of an Indian joint venture owned by the two companies.

The deal will increase Vodafone’s exposure to one of its most important and fastest-growing markets.

“We’re adding about 3 million customers a month,” said Ben Padovan, a Vodafone spokesman. “India has a population of 1.2 billion, and penetration is about 60 percent, so there’s a lot of market share to go for.”

The move resolves many months of conflict between the companies, as Essar, a conglomerate with interests in steel, power and shipping, has sought to determine the value of its interest and explored the possibility of an initial public offering for its shares.

This year, the two partners quarreled over Essar’s plans to reverse list its stake in the venture by merging some of its shares into India Securities, already a public company — a deal that Vodafone argued would have inflated the value of its stake.

Vodafone is exercising a call option on 11 percent of the joint venture, and Essar a complementary put for 22 percent of the shares. The transaction is expected to settle by November, but will not affect Vodafone’s recently published net debt figures, the company said.

Vodafone currently has a direct equity interest in 42 percent of the company, and the Essar deal will give it 75 percent, Mr. Padovan said.

The rest is in the hands of entities controlled by Indian parters. Indian regulations prohibit foreign investors from owning more than 74 percent of domestic telecommunications companies, and Vodafone plans to divest about 1.3 percent of its stake to remain within the law.

Vodafone has also been embroiled in a lengthy tax dispute regarding its initial stake in the joint venture, which it acquired in 2007 from the Hong Kong billionaire Li Ka-shing’s Hutchison Telecommunications International.

The case is to come before the Supreme Court of India in July, and could leave the company on the hook for up to $2.5 billion in capital gains, in a deal where, paradoxically, it was the buyer.

Last year in May, Vodafone took a $3.5 billion write-down on the value of its Indian business, which has been battered by fierce competition from rivals like Bharti Airtel and Reliance Communications.

The Indian mobile telecommunications market is the second-largest in the world, after China’s, and one of the fastest growing. But the sector is crowded, with more than a dozen companies vying for customers and driving down prices.

Most countries have between three and four major telecommunications operators, and if Indian law were changed to let rival telecoms to conduct takeovers, the sector might see a wave of consolidation.

A representative for Essar was not immediately available for comment.

Article source: http://dealbook.nytimes.com/2011/03/31/vodafone-to-buy-out-essar-stake-for-5-billion/?partner=rss&emc=rss