Wednesday, June 13, 2007

Red-hot Rihanna hits No. 1



By JOHN WILLIAMS
Senior Editor, JAM! Showbiz

Pop-R&B sensation Rihanna may claim to be a bad girl, but Canadians don't seem to mind.

The 19-year-old's third full-length disc, "Good Girl Gone Bad," checked in at No. 1 on the album charts this week with over 17,000 in sales, according to data compiled by Nielsen SoundScan.

It marks the second straight time that Rihanna has come in on top. Her last album, "Girl Like Me," accomplished the feat in May of 2006, selling 12,000 copies.

Options Trade Cost Steve Jobs $4 Billion (TheStreet)

By Brett Arends
Mutual Funds Columnist

If you're kicking yourself for missing out on Apple right now, you're not alone. iPhone mania (should we now coin the phrase "i-Mania" for the next Apple product?) has sent the stock soaring to an all-time high. The stock is up a stunning 1,600% since early 2003.

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No one thought it would come this far. Even those who got in early, and stayed along for the amazing ride, wish they owned a lot more.

One name on that list will astonish you: Steve Jobs.

Yes, him.

I can reveal that the Apple CEO missed out on more than $4 billion in personal profit on Apple stock, thanks to a decision he made to cut his exposure to the stock four years ago.

Four billion dollars. And change.

Do you think he'd like this one back?

Apple media relations declined to comment.

It was early 2003 when Jobs and the board sat down to consider a problem. He had been hard at work rescuing the company since 1997, but his main compensation had been in the form of a $90 million airplane and a huge chunk of stock options that the tech crash had left worthless.

Most of the options had been granted at much higher prices. By early 2003 Apple stock was down 80% from its peak. The astonishing success of the iPod and iTunes remained mostly in the future, and Wall Street wasn't much interested.

Senators Seek to Penalize China for Trade Policy


By STEVEN R. WEISMAN (New York Times)

WASHINGTON, June 13 — A group of leading Republican and Democratic senators, signaling growing Congressional impatience with Chinese trade practices, proposed legislation today aimed at forcing penalties on China over its policy of suppressing the value of its currency to promote exports.

The legislation, which appeared likely to be opposed by the Bush administration, was offered by Senators Max Baucus, a Montana Democrat, and Charles Grassley, an Iowa Republican. They are. respectively, the chairman and the ranking Republican on the Senate Finance Committee, which oversees trade measures.

Joining them are Senators Charles E. Schumer, the New York Democrat, and Lindsey Graham, the South Carolina Republican, both of whom had sponsored a tougher version of the bill last year calling for tariff increases of 27 percent on Chinese goods. But that bill was withdrawn under administration pressure.

The new legislation is one of several bills that have been introduced in the House and Senate aimed at China, and many lawmakers and experts are predicting that some sort of anti-China legislation could pass this year, possibly even over a presidential veto.

The Chinese-American trade deficit last year was $232 billion, about a third of the total American trade deficit with its trading partners. After years of racking up trade surpluses, China is sitting on an estimated $1.4 trillion in foreign exchange reserves, and it has started to convert some of those reserves into purchases of American companies.

Only last month, the Chinese bought a $3 billion stake in the Blackstone Group and administration officials say they expect China to go on a shopping spree soon, much as Japan did in the 1980s. Administration officials say they are encouraging foreign investment in the United States but worried about Congressional opposition.

White House officials say Treasury Secretary Henry M. Paulson Jr. has warned China repeatedly that if it does not open its economy more to outside investments and exports, and make more progress in letting its currency float more freely, the administration may not be able to stop trade legislation against it.

“We have told the Chinese that there will be legislation on China,” said an administration official, speaking anonymously to be more candid. “What we don’t know is what form it will take.”

Mr. Paulson helped persuade Mr. Schumer and Mr. Grassley last year that their original bill would violate international trade rules. But he also asked for time to begin what he has called a cabinet-level “strategic economic dialogue” with China to get the Chinese leadership to change several economic practices.

The decision to reintroduce the bill now reflects a widespread feeling in Congress that Mr. Paulson’s approach has failed to achieve results, especially on the currency issue.

In a separate development today, the Treasury Department issued its semi-annual report to Congress on the exchange-rate policies of American trading partners. As before, the Bush administration took the position that China did not meet the “technical requirements” of being labeled a currency manipulator, a designation that might result in American sanctions against Beijing.

Despite refusing to designate China in that fashion, the Treasury Department said it had “forcefully” raised the issue of currency “at every available opportunity and will continue to do so.”

The report also repeated assertions by Mr. Paulson and others that China has experienced its rapid economic growth by maintaining a “severely unbalanced” economy that is driven by exports and policies that discourage domestic consumption by the Chinese themselves.

The consensus of Western economists is that China has acted to keep the value of its currency, known as the yuan, low by purchasing dollars on a vast scale and compiling historically high reserves of dollars and other foreign currencies. A higher value of the yuan relative to the dollar would make Chinese exports more expensive and imports less so.

China has acknowledged that it must change its currency practices but appealed for patience. The yuan has appreciated about 8 percent in relation to the dollar since July 2005. But economists say that the yuan has stayed at about the same value in relation to an aggregation of the dollar and all other currencies.

With China’s currency levels artificially low, especially against European currencies, European leaders have also begun warning China over its trade practices. Peter Mandelson, the European Union’s trade commissioner, warned last week that China was “at a crossroads” in its trade relations with the West.

The Bush administration has tried to persuade China to change its economic practices, but with limited success, and has taken more confrontational actions of its own in the last several months.

Among these actions have been a new policy of calculating what are subsidies to Chinese goods that could lead to increased tariffs on exports. In addition, the United States has taken China to court at the World Trade Organization, charging that its policies on subsidies and protection of copyrights and trademarks are illegal.

The new legislation proposed by Senators Baucus, Grassley, Schumer and Graham was drafted in order to force the administration to impose penalties on China in a way that would be compliant with World Trade Organization rules, which bar protectionist measures except under some circumstances.

The legislation would require the Treasury Department to report on “fundamentally misaligned currencies” that would require “priority action” leading to consultations with the International Monetary Fund and the World Trade Organization. If these talks failed, certain penalties would then kick in.

Among these would be, in the case of China, a shift in American policies opposing China’s bid for more voting share at the I.M.F. In addition, the United States would more be required to more readily accuse China of “dumping” exports at below cost, leading to possible tariffs on Chinese goods.

The legislation would allow the American president to waive these and other punitive actions for a time, invoking national security concerns, but also allow Congress to register its disapproval of any such waivers.

President Bush and Treasury Secretary Paulson have argued that any such punitive measures only make it harder to persuade the Chinese to change their economic practices. When the administration imposed penalties earlier this year, for example, the Chinese accused the United States of fomenting a crisis atmosphere, making cooperation more difficult.

Retail Sales Surge 1.4 Percent in May


By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON (AP) - Consumers brushed off rising gasoline prices and slumping home sales to storm the malls in May, pushing retail sales up by the largest amount in 16 months.
The Commerce Department reported that retail sales surged by 1.4 percent last month, compared to April, double the increase that analysts had been expecting. Retail sales had fallen by 0.1 percent in April.

The May strength was widespread with auto dealers, department stores, specialty clothing stores and hardware stores enjoying an especially good month.

Sales would have been strong even without last month's big jump in gasoline prices, which saw prices top $3.20 per gallon. Excluding sales at gasoline stations, overall retail sales would still have been up 1.2 percent.

Meanwhile, the Federal Reserve reported Wednesday that the economy headed into the summer with strong momentum, bolstered by consumer spending and a rebound in manufacturing.

The new Fed survey will serve as the basis for discussion when the Fed next meets to consider interest rates. With the economy showing signs of rebounding, most analysts believe the Fed will leave rates unchanged at the June 27-28 meeting and possibly for the rest of the year.

In a separate report, the Commerce Department said that businesses increased their inventories held on shelves and backlots by 0.4 percent in April, slightly higher than the 0.3 percent gain that Wall Street had expected.

Businesses had drawn down inventories in the first three months of this year, a factor that helped slow the economy's growth to a barely discernible 0.6 percent rate in the January-March period. That was the weakest performance in more than four years. However, inventory rebuilding is expected to help contribute to a rebound in growth in the second quarter.

The strong showing for retail sales caught analysts by surprise. They had been forecasting a more moderate rebound of 0.7 percent.

The increase should ease fears that consumer spending, which accounts for two-thirds of the economy, could falter in coming months under the impact of the surge in gasoline prices, the significant correction in housing and recent increases in interest rates.

The government report painted a more optimistic picture of consumer spending than last week's report from the nation's big chain stores, which reported moderate gains in their survey of same-store sales after a dismal April, a month that had been hurt by bad weather and the fact that Easter came early this year.

The 1.4 percent increase in May sales was the biggest one-month advance since a 3.3 percent surge in January 2006. It left sales at a seasonally adjusted annual rate of $377.9 billion in May.

For May, sales at general merchandise stores, the category that includes department stores, were up 1 percent and sales at department stores rose by 1.3 percent, the best showing in 19 months. Sales at specialty clothing stores jumped 2.7 percent, rebounding from a dismal 1.5 percent drop in April.

Sales of autos and auto parts were up 1.8 percent, the best performance in nearly a year, while sales were up 2.1 percent at hardware stores and 1.8 percent at sporting goods stores.

Sales at gasoline stations rose by 3.8 percent, the biggest increase in more than a year, but much of that gain reflected the big jump in prices. Retail sales are not adjusted for inflation.

Mercedes Fills Marketing Post


By Andrew McMains

NEW YORK Mercedes-Benz USA has named Steve Cannon, a principal at The Richards Group who held several posts at Mercedes early in his career, to fill the vp, marketing position Mark McNabb vacated in January.

Cannon, who becomes the company's fifth marketing chief in eight years, will oversee marketing communications, market research and product management for Mercedes and sister brand Maybach in the U.S., Mercedes said. He starts June 25 and will report to president and CEO Ernst Lieb.

TNS Cuts Ad-Growth Forecast


By Katy Bachman/Mediaweek

NEW YORK After reporting weak advertising growth for the first quarter, TNS Media Intelligence today downgraded its year-end forecast to increase 1.7 percent to $152.3 billion. The ad tracking research firm had originally expected advertising to grow 2.6 percent.

The first half of the year will be the slowest, growing only 1.2 percent, followed by some improvement in the second half of 2.3 percent.

The new forecast is the smallest annual gain since the 2001 recession. "The advertising market has moved onto a slower track than we thought possible just six months ago," said Steven Fredericks, president and CEO of TNS.

With a slowing economy, advertisers are taking a more cautious approach, especially the medium and smaller-size advertisers that are more sensitive to economic conditions. "With the slowdown in economic activity, that swing money moves to the sidelines," said Jon Swallen, svp and director of research at TNS.

Marketers also continue to scale back their budgets for traditional media in favor of some of the less expensive and newer digital alternatives. Internet display advertising is forecast to grow 16 percent.

TV advertising growth is expected to be mixed. Cable network TV is forecast to increase a 5.9 percent. In contrast, network TV is seen growing only 1.3 percent, syndication TV will be up 1.2 percent and spot TV will dip 5.5 percent.

Other media projected to show gains include outdoor (up 4.6 percent); consumer and Sunday magazines (up 4.5 percent) and Spanish-language media (Hispanic network and spot TV, magazines and newspapers, up 3.7 percent).

The outlook for newspapers, which account for 17 percent of the total ad volume, is a drop of 2.9 percent.

Declines are also forecasted for radio (down 0.3 percent) and business-to-business magazines (down 1.5 percent).

"Local media are taking a bigger hit than national media," said Swallen. "A lot of the core local categories have cut back, such as auto, or like telecom and retail, are consolidating and shifting out of local into national."

Some categories will remain competitive, but not strong enough to offset sluggish conditions among telecom, prescription drug and direct response advertisers.

Shift to online ads cuts spending forecast

Bloomberg

NEW YORK -- U.S. advertising spending will rise less this year than forecast earlier by TNS Media Intelligence, climbing 1.7 percent, to $152.3 billion, as small businesses limit spending and bigger companies shift money to the Internet and away from traditional mass media.

Worse-than-expected first-half ad sales by newspapers and television broadcasters led TNS to cut its December forecast for a 2.6 percent gain in 2007 spending, the New York-based research company said Tuesday. It said U.S. ad spending rose 4.1 percent last year.

"The soft economy trickled back to the ad market," Jon Swallen, a TNS senior vice president, said in an interview. "A large chunk of ad spending tracks the economy, especially from small- to midsize companies."

Local advertisers are the lifeblood of struggling media such as newspapers and radio and television broadcasters, Swallen said. Their shift to online classified ads in particular has led newspaper publishers to report advertising revenue declines in recent months.

Newspaper advertising spending is projected to fall 2.9 percent this year, while spending on "spot" television ads will drop 5.5 percent from 2006, TNS said. Ads in business magazines will fall 1.5 percent, TNS said, while Web advertising gains will accelerate.

Smaller businesses have been what Swallen called a "swing market" in advertising in recent years, forcing the overall industry to grow when they spend freely and contract when they pull back. In the first quarter, smaller companies increased spending by just 0.1 percent from 2006, Swallen said.

Internet display ads are projected to increase by 16 percent, up from TNS's earlier growth forecast of 13 percent. The Internet now accounts for about 7 percent of U.S. ad spending, said TNS, which doesn't forecast the market for ads tied to Internet search results.

"It appears that total measured expenditures will pose their smallest gain since the 2001 advertising recession," said Steven Fredericks, TNS president.

Our chance to learn to love the buy-out bogeyman

FINANCIAL TIMES

Ford Motor’s plans for the sale of Jaguar and Land Rover are barely off the drawing board and problems are building up on the production line. Talks about the future of the two marques are at a very early stage, yet the buy-out bogeyman is already haunting the debate. If “asset-stripping” private equity firms are among the buyers, union leaders say, the government must step in to “protect” the companies.

Corporate change in the UK automotive sector always leads to union agitation – and government embarrassment. Before the 2005 election, ministers offered a £110m bridging loan to try to sweeten a Chinese rescue deal for MG Rover, and then, when the company collapsed, lent it £6.5m anyway. In 2004, Tony Blair and Gordon Brown stepped into a dispute between Ford and the unions over plans to stop production at Jaguar’s Coventry plant, to little avail: car production at the historic factory ended last year.

India Inc Set For Hiring Spree in Q3 (IBN Live)

New Delhi: It continues to rain jobs in the Indian economy and, if a survey by global employment consultancy firm Manpower is to be believed, Indian Inc is going to hire many more people in the third quarter of 2007.

The survey says as the economy continues to gain strength, hiring by India Inc is expected to remain strong in the third quarter of this fiscal with as many as 42 per cent corporates planning to recruit more.

The survey, released on Tuesday, says of the 27 countries and territories surveyed globally this quarter, the hiring intentions continue to be robust in India with an eight percentage points quarter-over-quarter increase in the overall Net Employment Outlook. On a year-over-year basis, however, it shows a 4 percentage point decrease, the survey says.

However, among the eight countries and territories surveyed across the Asia-Pacific region, only Indian employers are anticipating a third quarter outlook stronger than the previous quarter.

Out of the 4,925 employers interviewed in 30 Indian cities in seven core sectors, 42 per cent expected an increase in staffing levels in the Q3 2007. While 3 per cent anticipate a decrease, 42 per cent expect no change, putting the country’s employment outlook at 39 per cent.

According to the survey, employers in the service industry have the most optimistic outlook at +46 per cent and those in public administration and education show the weakest hiring intentions at +27 per cent.

Hiring intentions in finance, insurance and real estate industries too were found to be very strong with an increase of 13 percentage points in the Net Employment Outlook. This is the first improvement since the fourth quarter of 2006. Outlooks in five out of the seven industry sectors have improved quarter-over-quarter.

"The continued confidence and global competitiveness of the Indian information technology sector has fuelled the increased activity in the labour market," Soumen Basu, Executive Chairman of Manpower India, says.

According to Basu, the IT and IT-enabled services industry is expected to increase its contribution to the gross domestic product (GDP) this year and this growth will certainly augment hiring activities.

While employers in the Services sector report the most optimistic outlook with the Public Administration and Education employers indicating the weakest hiring intentions with a Net Employment Outlook of . Hiring intentions in the Finance Insurance & Real Estate industry are considerably stronger quarter-over-quarter.

In India, the survey covered seven key industry sectors including finance, insurance, real estate; manufacturing; mining and construction; public administration and education; services; transportation and utilities; wholesale and retail trade.

On year-over-year, however, the mining and construction sector employers reported the largest decline in hiring activity — down 12 percentage points. Transportation and utilities and wholesale and retail trade sectors both reported an improvement of 1 percentage point, while no change was reported in the manufacturing sector.

In regional trends, employers in the South are the most optimistic with a Net Employment Outlook of +44 per cent — an improvement of 13 percentage points over the previous quarter — while hiring intentions are weakest in the North at +33 per cent — 2 percentage points weaker than previous quarter.

Employers in the East expect robust hiring activity in this quarter, with an improvement of 11 percentage points over the previous quarter. Employers in the West reported a Net Employment Outlook of +41 per cent, which too is an improvement of 12 percentage points as compared to the previous quarter.

Yahoo Shareholders Narrowly Back Board


By Riva Richmond
Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Shareholders in Yahoo Inc. (YHOO) voted in favor of the Internet company's slate of directors. But with some board members winning approval with as low as 66% of the vote, it appeared that recent calls to rebuke members who were responsible for approving generous pay packages for Yahoo executives resonated with shareholders.

Last year, each of Yahoo's directors were approved with roughly 97% or greater of shareholder votes, according to a company filing. In general, approval rates of 95% or higher are common, and a withhold rate of more than 20% is considered high. As such, approvals with only two-thirds of the vote could be considered a victory for shareholder activists who have condemned high executive pay at the company.

Ahead of the company's annual meeting, three advisory firms recommended shareholders withhold their votes from three company directors that comprise Yahoo's compensation committee - Roy Bostock, a veteran advertising executive; Ron Burkle, a billionaire best known for his investments in supermarkets; and Arthur Kern, a former radio broadcast executive - due to concerns about excessive compensation for Chief Executive Terry Semel.

The results may also have been influenced by shareholder activist Eric Jackson of Naples, Fla., a small investor who has mounted an online campaign to push for a new strategy at the company as well as the ouster of Semel and the majority of the company's directors. Jackson has said he gathered the support of investors who own about 2 million Yahoo shares, or less than 1% of its outstanding stock, for a "Plan B" for the company.

The meeting included a charged exchange between Semel and Jackson during its final question-and-answer period during which Jackson said he was "surprised" that Semel didn't apologize to shareholders for the company's poor performance and asked how the company would better compete with Google. Semel at one point charged Jackson with being "cute" during a followup question, but then backed off and thanked the owner of 96 Yahoo shares for his "constructive" questions.

Semel defended Yahoo's ad business as a strong one, diversified in both search and display markets that is well-positioned to take advantage of an expanding ad market. He said Yahoo's results in search will improve, thanks to its Panama system overhaul, and that Panama's capabilities will be expanded beyond search advertising. Semel also said the company began "another large project" a number of months ago to create a platform for serving newspapers and others that will have capabilities that go beyond online advertising.

Shareholder discontent has been building as Yahoo's growth has slowed, share price has lagged and position at the center of the Internet has been eclipsed by rival Google Inc. (GOOG). Yahoo's stock has fallen 10% from a year ago, while Google's stock is up more than 30%.

The lackluster performance has fueled complaints about Semel's outsized pay package, which at a value of $71.7 million last year made him the highest-paid CEO among Standard & Poor's 500 companies that have filed with regulators this year, according to an Associated Press analysis.

As part of a three-year arrangement, Semel's salary dropped to $1 in May 2006 from $600,000 previously. He was also awarded stock-option grants (priced at the market value of Yahoo shares when granted) on 6.8 million shares as part of his 2006 bonus and the three-year retention pact. Yahoo says the package ensures that "substantially all" of Semel's compensation is tied to the company's performance.

Meanwhile, investors defeated a shareholder proposal calling for executive pay based on performance, including payouts occurring only when performance exceeds that of peers in its industry. Though the proposal failed, it received a fairly high approval level of 35% of the vote.

Yahoo investors also voted on two shareholder proposals that stem from Yahoo's disclosure of information to the Chinese government that helped lead to the imprisonment of at least one dissident, defeating both.

A proposal calling for the creation of a board committee on human rights was defeated by 81% of the vote, while another calling for new company policies related to censoring and disclosing information at a government's request was defeated by 71% of the vote. Yahoo's board recommended that shareholders vote against the proposals, saying the company is already taking measures to address such issues.

A shareholder, claiming 100 Yahoo shares, read what he said was a message from Gao Qingsheng, the mother of jailed Chinese journalist Shi Tao, who is suing Yahoo for helping Chinese officials jail her son. Shi was sentenced to 10 years in prison in 2005 after sending an email about Chinese media restrictions using Yahoo's email service.

"My son's career has been destroyed and his health is deteriorating in prison," Gao wrote. "How many more families are suffering the same miserable life I have now?"

Yahoo founder Jerry Yang addressed the meeting with a lengthy accounting of Yahoo's efforts around protecting freedom of expression, including seeking the help of the U.S. government, expressing its concerns to China, and working with academics and human-rights groups on an industry code of conduct, which he said could be completed by the end of this year.

"We remain deeply concerned about governments that imprison their own citizens," Yang said. "Yahoo condemns these actions."

He also said Yahoo has a team of people who now do formal human-rights assessments of company initiatives and come up with strategies to limit risks to free expression. In China, it also now notifies users that certain search terms may be screened and that email content is subject to Chinese law.

Yet Yang repeated Yahoo's assertions that Yahoo must abide by the laws of countries it operates in, such as China, and that, on balance, its role in countries that restrict freedom of expression is constructive.

Yahoo, he said, "can have a transformative effect" on these societies by providing access to information that hasn't been available before and improves people's lives.

Yahoo shares closed Tuesday's regular session down 30 cents, or 1.1%, at $27.05.

-By Riva Richmond, Dow Jones Newswires