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Venezuela Vows to Reject Arbitration Ruling in Exxon Case

January 9, 2012 by Leave a Comment

Exxon took Venezuela to the World Bank’s International Center for Settlement of Investment Disputes, seeking as much as $12 billion in compensation after Mr. Chávez ordered the nationalization of the Cerro Negro oil project in 2007.

“I tell you now, we will not recognize any decision” by the center, Mr. Chávez said during a televised speech. He has repeatedly accused the United States oil major of using unfair deals in the past to “rob” Venezuela, an OPEC member, of its resources.

“They are trying the impossible: to get us to pay them,” he said. “We are not going to pay them anything.”

It was not immediately clear whether Mr. Chávez was also referring to about 20 other cases that Venezuela faces before the World Bank’s arbitration panel that were prompted by a wave of state takeovers in recent years.

They include separate multibillion-dollar proceedings brought by ConocoPhillips, another major American oil company.

Last week, an arbitration panel with the International Chamber of Commerce awarded Exxon $908 million in a separate case related to the Cerro Negro nationalization.

On Saturday, the Venezuelan oil minister, Rafael Ramírez, said he did not expect a verdict in Exxon’s World Bank case until the end of this year. Exxon said arguments were scheduled to start in February.

Both cases have been closely watched by the industry for precedents in future disputes between companies and oil-producing countries, which have increasingly sought a greater share of revenue as prices soar and reserves become tougher to find.

For years, Venezuela’s socialist leader has accused foreign oil companies of plundering the nation’s reserves, but he has maintained close ties with many of them.

Some lawyers said the decision by the International Chamber of Commerce covered only a commercial dispute between Exxon and Petróleos de Venezuela, the state-run oil company, over earnings Exxon lost as a result of the takeover.

By contrast, the World Bank case is over compensation for Exxon’s assets, and specialists say it could yield a larger award.

The government has insisted Exxon receive only slightly more than the $750 million it said it invested in the project, but Venezuela said in September it had offered to settle for $1 billion.

For years, Mr. Chávez has confronted oil companies with tax increases and contract changes aimed at increasing revenue from the industry to pay for state-led antipoverty programs.

Venezuela’s push to increase control over its oil industry has been followed by similar efforts in other oil-producing nations. Critics say it has scared investors away from Venezuela and left crude production stagnant.

But some oil companies have remained eager to invest in Venezuela’s Orinoco extra heavy oil belt, which is considered one of the world’s largest mostly untapped reserves of crude.

Chevron of the United States and Repsol of Spain signed deals in 2010 for new multibillion-dollar projects there.

Article source: http://feeds.nytimes.com/click.phdo?i=9143770b1bf64eb694bf03a3dbba7aa8

Filed Under: Business News Tagged With: , ,

Unboxed: How Samuel Palmisano of I.B.M. Stayed a Step Ahead

December 31, 2011 by Leave a Comment

Yet behind I.B.M.’s relentless progress over the last decade is a game plan that has been anything but conservative. The company shed multibillion-dollar businesses. It chose higher profit margins over corporate size, and expanded aggressively overseas, seeking sales, low-cost engineering talent and quicker organizational reflexes.

Investors, however, haven’t been bored. The company’s stock price has surged. In November, Warren E. Buffett, who typically shuns technology stocks, announced he had accumulated $10 billion of I.B.M. shares, a stake of more than 5 percent.

All of that didn’t just happen. A large portion of the credit goes to Samuel J. Palmisano, who steps down on Sunday after nearly a decade as chief executive. During his tenure, I.B.M. has been a textbook case of how to drive change in a big company — when so much of the study of business innovation focuses on start-ups and entrepreneurs.

This column is a glimpse of the thinking behind some of the major steps I.B.M. has taken under Mr. Palmisano’s leadership, based on two recent interviews with him.

He says his guiding framework boils down to four questions:

• “Why would someone spend their money with you — so what is unique about you?”

• “Why would somebody work for you?”

• “Why would society allow you to operate in their defined geography — their country?”

• “And why would somebody invest their money with you?”

Mr. Palmisano formulated those questions in the months after he became C.E.O. in March 2002 His predecessor, Louis V. Gerstner Jr., recruited to I.B.M. in 1993, had already pulled the company out of a financial tailspin, first reducing the size of the work force and cutting costs, and then leading a remarkable recovery.

In meetings after he took over, Mr. Palmisano told colleagues that I.B.M. was still good, but that it wasn’t the standard-setting corporation that it had been when he joined in 1973. (A history major at Johns Hopkins and a star offensive lineman on the football team, he turned down a tryout with the Oakland Raiders of the N.F.L. for a sales job at the company.)

The four questions, he explains, were a way to focus thinking and prod the company beyond its comfort zone and to make I.B.M. pre-eminent again. He presented the four-question framework to the company’s top 300 managers at a meeting in early 2003 in Boca Raton, Fla.

“This needs to be our mission and goal, to make I.B.M. a great company,” he said, according to executives who attended the gathering.

THE pursuit of excellence in those four dimensions shaped the strategy. To focus on doing unique work, with its higher profits, meant getting out of low-margin businesses that were fading. I.B.M.’s long-range technology assessment in 2002 concluded that the personal computer business would no longer present much opportunity for innovation, at least not in the corporate market.

The hub of innovation would shift to services and software, often delivered over the Internet from data centers, connecting to all kinds of devices, including PCs. Today, that is called cloud computing; when I.B.M. started promoting the concept several years ago the company called it on-demand computing.

So Mr. Palmisano led a lengthy strategic review of the PC business, deciding to sell while it was still profitable. Internal arguments against a sell-off were intense: PCs pulled in sales of other I.B.M. products in corporate accounts, the cost of electronic parts for its larger computers would jump without the purchasing power of its big PC division, and the corporate brand and its reputation would suffer without PCs, the one I.B.M. product touched by millions of people.

Lately, Hewlett-Packard has engaged in a similar debate, first declaring that it was looking to sell its PC business, then backing off. “I’ve heard every one of the arguments, every one of them,” Mr. Palmisano says. “But if you decide you’re going to move to a different space, where there’s innovation and therefore you can do unique things and get some premium for that, the PC business wasn’t going to be it.”

Article source: http://www.nytimes.com/2012/01/01/business/how-samuel-palmisano-of-ibm-stayed-a-step-ahead-unboxed.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

DealBook: Corzine Out as Search for MF Global Funds Continues

November 5, 2011 by Leave a Comment

Jon S. Corzine on the trading floor of MF Global last year. Mr. Corzine’s Wall Street comeback ended early Friday.David Goldman for The New York TimesJon S. Corzine on the trading floor of MF Global last year. Mr. Corzine’s Wall Street comeback ended early Friday.

The missing customer money at MF Global is still missing.

On Friday, funds from the bankrupt brokerage firm suddenly surfaced at JPMorgan Chase. Washington and Wall Street, for a moment, were hopeful it was the money they had been searching for all week.

But then, just as quickly, nearly everyone agreed it was not the missing money, and the hunt was on again.

While MF Global has more than $2 billion in accounts at JPMorgan, regulators had previously accounted for those funds, according to people briefed on the matter who were not authorized to speak publicly. Federal officials estimate that roughly $600 million has been misplaced or misused or has disappeared altogether, two of the people said.

The revelation — and the sharp reversal — is the latest debacle in the bankruptcy of MF Global.

Adding to the drama, the firm’s chief executive, Jon S. Corzine, the former Democratic governor of New Jersey and head of Goldman Sachs, resigned early Friday. In a more surprising development, Gary Gensler, head of the Commodity Futures Trading Commission, will no longer participate in the investigation due to his long acquaintance with Mr. Corzine, according to a person with direct knowledge of the matter.

It is just the beginning. Regulators are still camped out at the brokerage firm’s Midtown Manhattan headquarters, poring over the books. Exchange officials are transferring customer accounts to other brokerage firms. And company executives are helping to close the firm.

The process of winding down MF Global will be long and arduous. The courts continue to sort through the mess at Lehman Brothers, more than three years after the investment bank filed for Chapter 11.

“It’s going to be complicated when you have a multibillion-dollar company,” said Professor J. Samuel Tenenbaum, the director of the Investor Protection Center at Northwestern University School of Law. “That just doesn’t happen overnight. It would be nice to think that you can get this done quickly, but that would be fanciful.”

The demise of MF Global can be traced to risky bets on European sovereign debt.

Soon after joining the firm in 2010, Mr. Corzine moved to transform the sleepy brokerage firm into a full-service investment bank in the mold of his former employer, Goldman. He aggressively bought up the bonds of troubled economies like Italy, Ireland and Spain, betting that the Continent would not let the countries default on their loans.

As the sovereign debt crisis dragged on this summer, regulators noticed the risky bets and pushed the firm to hold more capital against the investments. The move alarmed shareholders, clients and rating agencies, inciting a crisis of confidence. With the stock sliding, the firm searched desperately for a suitor.

But the missing money proved the death knell for MF Global.

Before dawn on Monday, the firm uncovered a nearly $1 billion hole in its customer accounts. The startling discovery scuttled a last-minute deal to sell part of the business to Interactive Brokers Group, a Connecticut rival. Out of options, MF Global filed for bankruptcy that morning.

Within hours, regulators, including the Securities and Exchange Commission and the Commodity Futures Trading Commission, started investigating MF Global and the missing money. The Federal Bureau of Investigation joined the fray on Tuesday. Federal authorities worried that MF Global had violated a basic principle in this business: customer assets must be kept separate from company funds.

As the scrutiny intensified, Mr. Corzine was said to have hired Andrew F. Levander, a prominent criminal defense lawyer. Mr. Levander, the chairman of Dechert, has represented other Wall Street executives including John Thain, the former chief executive of Merrill Lynch. Mr. Corzine has retained two bankruptcy lawyers from the firm Perkins Coie to represent him in the civil Chapter 11 proceedings.

Neither Mr. Corzine nor MF Global have been accused of any wrongdoing. MF Global says the shortfall is temporary, as additional money will flow in from banks and clearinghouses.

In resigning on Friday, Mr. Corzine ended what was supposed to be his grand return to Wall Street after nearly a decade in politics. The company said that he would not seek his $12 million in severance.

“I feel great sadness for what has transpired at MF Global and the impact it has had on the firm’s clients, employees and many others,” Mr. Corzine, 64, said in a statement. “I intend to continue to assist the company and its board in their efforts to respond to regulatory inquiries and issues related to the disposition of the firm’s assets.”

Mr. Gensler, head of the C.F.T.C., decided Thursday to step back from the inquiry, and the following day he did not participate in an agency briefing on MF Global; Mr. Gensler had worked for Mr. Corzine while both were at Goldman Sachs in the 1990s.

As regulators try to untangle the books, customers, whose accounts were frozen on Monday, are waiting to get their money back. The CME Group, the exchange where MF Global did business, is transferring client funds to other brokerage firms, including R.J. O’Brien and ABN Amro, people involved in the process said.

But customers won’t be made whole — at least not yet.

Industry groups pushed for customers to receive about 70 percent of their cash, according to the people involved in the process. But because roughly $600 million hasn’t been found, clients will only get on average 60 cents on the dollar, court filings show.

The situation puts customers, including individual investors, hedge funds and big companies, in a financial bind. Until the money surfaces, many clients will have to come up with extra cash to maintain their positions, or they will be forced to liquidate their trades, potentially at a loss.

It could take some time for the money to materialize, assuming it does.

With scarce information, even regulators and industry insiders are grasping for answers. The situation was underscored by the brief elation following media reports that the missing money might have turned up.

But, it hadn’t. JPMorgan, which confirmed MF Global had accounts with the bank, said in a statement “that it does not have any information as to whether any such balances are related in any way to the ‘missing’ customer funds.”

Azam Ahmed, Kevin Roose and Peter Lattman contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=1a417bd547043fc37090c7a96cd91e4f

Filed Under: Business News Tagged With: , ,

Ticket Sales Start-Up Aims at Smaller Box Offices

August 1, 2011 by Leave a Comment

On July 23, 3,000 carnivores salivated their way through Meatopia, a festival on a Brooklyn pier where 45 chefs from around the country offered fleshy dishes like veal belly gyros and Southern pulled-pork shooters.

Meatopia’s patrons were also guinea pigs of another sort. The festival was a test case for a new ticketing system that allows anyone to operate a sophisticated box office — complete with on-the-spot credit card processing and postevent data analysis — using little more than an iPad.

The system was created by Eventbrite, a San Francisco company that in five years has carved out a niche in the multibillion-dollar ticketing industry by focusing not on stadiums and major league sports but on the thousands of events below Ticketmaster’s radar. These can be as large as a Renaissance fair or as small as a private party. But they add up: last year Eventbrite sold 11 million tickets worth $207 million, and this year it projects $400 million in gross ticket sales.

“The notion here is the democratization of ticketing,” said Kevin Hartz, the company’s chief executive. “Things that were once available only to the biggest customers are made available to the masses. In the case of ticketing it was Madison Square Garden or the New York Yankees, but today any event large or small can have just as robust an offering for selling and managing tickets.”

Eventbrite is one of several young companies, including Ticketfly and Front Gate Tickets, that are challenging the major ticket providers by offering cheaper service, extensive social media integration and, most important to consumers, lower and simpler fees. But Eventbrite has perhaps the most aggressive growth strategy; for instance, it allows people to use it for free events for which tickets are required, at no charge.

Eventbrite sells tickets in advance through its Web site, but until now it has been ill-equipped to deal with sales at the door. At last year’s Meatopia, for example, the walk-up line moved slowly, and valuable marketing information like e-mail addresses was not collected.

To deal with similar situations, and to compete more directly with the big guns of the industry, in June the company introduced Eventbrite at the Door. Using an iPad app and a credit card scanner, Eventbrite at the Door customers can let in advance ticket holders and sell 400 new tickets per hour.

Eventbrite’s new system can handle events of any size, the company says. At Meatopia, fewer than 20 percent of tickets were sold at the door. But Randy Fisher, the executive producer, praised Eventbrite at the Door for how quickly it processed those transactions, and for the detailed analysis it generated.

“Eventbrite is to ticket sales what Google is to search terms,” Mr. Fisher said. “It was that quick.”

The company is not yet profitable, Mr. Hartz said. But it has notable support. In May, it raised $50 million from Tiger Global Management, bringing its total investment to $80 million. Its board includes a former chief executive of Ticketmaster, Sean Moriarty, who said that Eventbrite’s fee structure was one of its biggest advantages.

The company charges consumers 2.5 percent of the cost of each ticket plus 99 cents, plus credit card charges of about 3 percent. For a $20 ticket, those fees would come to about $2.10, or 10.5 percent — much less than customers are used to paying through Ticketmaster, where surcharges are often 30 percent or higher.

“We make every effort to run a profitable and successful business, but also do our best to make the fees appear fair and appropriate and not be a burden or an inhibitor to selling a ticket,” Mr. Moriarty said.

But Eventbrite faces challenges in competing for the industry’s major accounts. Ticket surcharges are deeply ingrained in the economics of the music business. Most theaters rely on the fees they get through major ticket providers. And while Eventbrite has surpassed many competing start-ups in sales volume, it is still a small fish compared with Ticketmaster, which last year sold about 120 million tickets worth $7.2 billion.

“A lot of people in the music business don’t want ticketing democratized,” said Josh Baron, editor of the music magazine Relix and co-author of the book “Ticket Masters: The Rise of the Concert Industry and How the Public Got Scalped.” “It’s a business, and venues want money.”

Mr. Hartz said that Eventbrite did not pay advances to theaters, as other ticketing companies did, and did not try to encourage theaters to sign exclusive contracts. That could hinder the company in its efforts to pursue the higher end of the concert business. But Mr. Hartz said he believed that Eventbrite still had plenty of room to grow.

“No event is too large or too small for Eventbrite,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=77e4a84eb623656b7c02a387b6a98ff0

Filed Under: Business News Tagged With: , ,

China Posts 1st Quarterly Trade Deficit Since 2004

April 10, 2011 by Leave a Comment

BEIJING (AP) — China reported its first quarterly trade deficit since 2004 on Sunday as surging prices for commodities pushed up its import bill.

The General Administration of Customs said in an online statement that China posted a trade deficit of $1.02 billion from January to March this year.

However, China reported a small trade surplus of $140 million in March, up from a deficit of $7.3 billion the month before, it said.

Export growth in the first quarter was strong, it said, increasing 26.5 percent to $399.64 billion compared to a year earlier, but imports soared 32.6 percent during that period, to $400.66 billion.

“The value of imports in the first quarter hit a record high for the first time of more than $400 billion,” the administration said.

It said China imported more mechanical and electrical equipment, including cars, as well as iron ore and soybeans, than it did a year ago and that the prices of those commodities had all shot up.

Analysts expect a Chinese global trade surplus this year of $160 billion-$200 billion but say that should narrow if oil and commodity prices stay high. Last year, China ran a trade surplus of about $16 billion a month.

A smaller trade surplus might help to ease trade strains with Washington and other governments that complain Beijing is giving its exporters an unfair advantage with currency controls and other policies.

Stronger imports could help economies looking to China’s robust growth to drive demand for their goods. Imports also might benefit from ongoing government efforts to boost consumer spending to reduce reliance on exports and investment.

China is a major importer of oil, iron ore and raw materials and runs a deficit with suppliers such as Saudi Arabia and Australia. It pays for that by running multibillion-dollar surpluses with the United States and Europe.

___

Online:

General Administration of Customs of China (in Chinese):

http://www.customs.gov.cn

Article source: http://www.nytimes.com/aponline/2011/04/09/business/AP-AS-China-Trade.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,
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