search-engine

Google May Have to Intensify Monitoring of Keywords Following Ruling by EU

March 23, 2010

By Stephanie Bodoni March 23 (Bloomberg) — Google Inc. may have to more aggressively monitor the use of trademarked terms as keywords that link Internet searches to advertisements after a European Union court ruling today. Google doesn’t breach LVMH Moet Hennessy Louis Vuitton SA or other brand owners’ trademarks by selling protected keywords, the European Court of Justice in Luxembourg said. At the same time, Web companies may be liable for trademark breaches in ads if they knew of or had control over ad data, the court said. The ruling raises questions about whether Google, the owner of the most popular internet search engine, will have to alter the business model that drove sales to $23.7 billion last year. The company stores ad content on its systems, which the court today said may make Google liable for trademark breaches if national judges find it plays an “active role” in creating the promotions. “Google is totally dependent upon advertising and anything that might undermine their existing model is bad,” said Alex De Groote , a media analyst at Panmure Gordon & Co, adding the ruling sets an important precedent. “LVMH is a branded luxury goods company, so its own trademark, its own brand, is absolutely sacrosanct for them.” The decision is the first time the EU’s top court has ruled on the rights of companies such as LVMH to prevent search engines in the 27-nation region from distributing protected names as keywords. It doesn’t change how Mountain View, California-based Google sells the ads, which made up 97 percent of revenue last year. Monitor Ads Instead, Google may have to monitor ads linked to searches for terms that are trademarked to avoid the risk that national judges will rule against it. That may be a large workload for Google and other online companies. About half of all online searches involve brands or specific products, said Alexander Wisch , a media analyst at Standard & Poor’s Equity Research in London. The court said Internet hosts may be able to benefit from an exemption under the EU’s e-commerce law if their role in processing potentially infringing data is neutral. In the case of Google, its role played “in the drafting of the commercial message which accompanies the advertising link or in the establishment or selection of keywords is relevant,” said the court. The decision left it to national courts to analyze on a case by case basis whether the role played by Google is “of a mere technical, automatic and passive nature.” Leaving the decision as to who can and who can’t benefit from the liability exemption to national judges could be “dangerous for Google and other online service providers because it can lead to different readings of the ECJ judgment in different countries,” said Stijn Debaene , a partner at Field Fisher Waterhouse LLP in Brussels. EBay Dispute The decision may have implications for other online service providers, such as EBay Inc. , which last month in a dispute with LVMH was ordered by a French court to pay 200,000 euros ($270,000) for reserving misspelled versions of brand names. LVMH will use the ruling “to show that online referencing services such as Google and EBay do play an active and not a passive role,” said Pierre Gode, vice-president of Paris-based LVMH. “Our objective is not to cause a bloody combat or to break up the Internet, we just seek an access with intelligence,” Gode said. More Lawsuits Advertisers may face more lawsuits by LVMH and other brand owners after the court said that advertisers who buy protected keywords for ads on search engines without identifying whose products they sell will be liable for trademark breaches. This part of the ruling may force Google to “tweak their business model,” said Nicola Dagg , an intellectual property lawyer at Allen & Overy LLP in London. “Google will have to put forward a formula,” an alert to advertisers that they need to clearly show what products they sell, Dagg said. It will be “a very close judgment call for them” to take care they can’t be sued if keywords they sell lead to trademark breaches. France’s highest appeals court in 2008 sought guidance in three cases, one involving LVMH, on whether Google’s use of keywords breaches companies’ rights under the region’s trademark rules. LVMH accused Google of violating the luxury-goods maker’s trademarks by linking users who search for “Vuitton” and “LV” to Web sites selling counterfeit fashion accessories. Protected Trademarks In some countries, mainly in Europe, Google blocks names from being chosen as keywords once it’s received proof that they are protected trademarks. This isn’t the case in about 190 countries , including the U.K., Ireland and the U.S., following a change of its policy in June to give users more choices. The ruling “puts the onus on brand owners to police and notify Google,” said Tom Carl, a trademark lawyer at Taylor Wessing LLP in London. Google, owner of the most-used Internet search engine, and LVMH have been fighting for seven years in France over Internet searches linked to trademarks. Google is appealing a Paris court’s 2006 ruling in favor of LVMH claims that the U.S. search engine provider breached its trademarks. LVMH sued Google in 2003 and the Paris Central Court three years later ordered Google to pay 300,000 euros for trademark infringement. Today’s cases are C-236/08 Google France v. Louis Vuitton Malletier; C-237/08 Google France v Viaticum; C-238/08 Google France v CNRRH, Pierre-Alexis Thonet. To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net

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Google Tries to Sidestep Censorship in China

March 22, 2010

By Brian Womack March 22 (Bloomberg) — Google Inc. , following through on a promise to stop censoring search results in China, began redirecting traffic from its Chinese home page to the company’s unfiltered Hong Kong site, outside of mainland China. Google will offer uncensored results in simplified Chinese, designed for users on the mainland, according to a blog post today. The move follows a two-month dispute between the company and the Chinese government over censorship. “The Chinese government has been crystal clear throughout our discussions that self-censorship is a non-negotiable legal requirement,” Google said on the blog. “We believe this new approach of providing uncensored search in simplified Chinese from Google.com.hk is a sensible solution to the challenges we’ve faced — it’s entirely legal and will meaningfully increase access to information for people in China.” The question now is whether China will block access to the site from the mainland, said Aaron Kessler , an analyst at Kaufman Brothers LP in San Francisco. The Hong Kong site isn’t subject to the same censorship requirements as mainland sites. For example, it was displaying several results on the search term “Tiananmen Square massacre” today. While part of China, Hong Kong has a separate government and economy — a legacy of its role as a British territory until 1997. At the time of the handover, China promised to preserve Hong Kong’s capitalist system and free press for another 50 years. Next Step “It depends on what the Chinese government does — if they allow Google to accept traffic from mainland China or if they shut that down,” Kessler said. “It wouldn’t be hard for people to type in Google.hk.” The company challenged the government of the world’s most populous country in January by threatening to allow all search results to be shown on its Chinese-language Web site, including references to Tibet and the Tiananmen Square crackdown. Google has about 600 employees in China. The Chinese site, Google.cn, included the search engine, Google News and Google Images. Google dropped $2.50 to $557.50 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have declined 10 percent this year. ‘Sophisticated’ Attacks Google , the world’s top search engine, threatened to stop censoring content after reporting that its computers had been hacked from within China. The company said its systems were targeted by “highly sophisticated” attacks aimed at obtaining proprietary information, as well as personal data belonging to human-rights activists who use the company’s Gmail e-mail service. At least 20 other international companies in technology, finance and chemicals were similarly targeted, Google said at the time. “We also made clear that these attacks and the surveillance they uncovered — combined with attempts over the last year to further limit free speech on the Web in China including the persistent blocking of Web sites such as Facebook, Twitter, YouTube, Google Docs and Blogger — had led us to conclude that we could no longer continue censoring our results on google.cn,” Google said today on the blog. To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

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Aron Cramer: Google and China: When Should Business Leave on Human Rights Grounds?

March 22, 2010

With Google’s decision today to shut down its Chinese-based search engine, google.cn, the company has won considerable praise from organizations concerned about its human rights record. This approval stands in stark contrast to the condemnation the company received when first entering the country in 2006. The Financial Times cartoonist Ingram Pinn captured these contrasting perspectives perfectly, depicting Google as the speech-suppressing “Great Firewall of China” in 2006, then casting the company as the lone protestor stopping the tanks in their tracks in 2010. Google’s decision again raises a question of serious interest to business, the public, and governments: When is it right to cut ties and leave a country on human rights grounds? Leaving often seems like the clear-cut ethical winner in this debate. There often is, however, a case for companies to stay, provided there is a commitment to making a positive impact on human rights. Leaving may look and feel great to those of us in the West, but exiting a market may not always have the desired impact. Consider the case of the consumer electronics companies. They are increasingly under fire about whether the metals they source from the Democratic Republic of Congo (DRC)–tin, tantalum, and tungsten–may be helping fund the purchase of weapons that fuel violence and human rights abuses in one of the world’s toughest conflict zones. There is a consensus that “conflict minerals” should be eliminated from the electronics industry, and the tempting next step is to cut out all minerals sourced from the DRC. But that decision isn’t as simple as it may seem: Because end buyers purchase from refiners that often combine ore from multiple sources, traceability remains a problem, and it might not even be practical to “leave” the country. By contrast, what if companies were to leverage their purchasing power to drive positive change in the DRC? Perhaps there is a role for business to bring “development-oriented metals” to market by identifying specific mines where the benefits of mining are shared locally and production upholds human rights. As an alternative to leaving, companies could also explore diplomatic channels to encourage a sustainable trade in minerals in the DRC and the surrounding region. GE is taking a related approach in China and Vietnam, where the issues are very different than those in the DRC. Among the company’s top corporate responsibility priorities is “rule of law.” GE’s leadership believes that effective government in emerging markets is critical for both business success and human rights, and the company therefore works with government and civil society to establish transparent legal systems, encourage open law-drafting processes, and develop well-trained judges and lawyers. For example, GE attorneys teach classes at law schools in both countries, and the company’s foundation also invests in rule-of-law initiatives by providing grants such as one in China to an organization focused on commercial law, intellectual property rights protection, and citizens’ rights, and another in Vietnam to a program that aims to strengthen courts and enhance legal transparency. One might conclude that the comparisons between countries don’t work, because all situations are different. In fact, that is exactly the point: When it comes to determining whether a company’s decision to enter or exit a market is good or bad for human rights, there’s no one-size-fits-all rule, and the ethics of the decision will vary considerably with the context. As such, “are you in or are you out” may be the wrong question. No company automatically advances human rights by leaving a country, and, likewise, no company automatically improves the situation by staying. In all but the worst cases, it’s how business participates in challenging markets that is the ultimate test. Does the company have a clear understanding of how its products, services, and market presence will impact human rights? Has the company identified its most significant human rights risks, and does it understand how to mitigate them? Is it working with sympathetic government partners to advance human rights? Let’s also remember the opinions of the people these decisions are designed to support: the local population. Many companies left South Africa and Burma because democratically legitimized local movements called for mass divestments, which is not the case in China today. We don’t know yet whether Google’s decision, which essentially takes them out of the search business in China, will increase freedom of expression, privacy, and security. Some argue that the company should distance itself from censorship by leaving; others argue that the company should stay with a search engine that filters less (and more transparently) than the local competition. Whatever one’s opinion, the fact that an increasing number of companies are weighing these decisions demonstrates that human rights considerations are reaching senior leaders in business like never before. The time has come for us to applaud those companies that seek to integrate human rights into their decision-making, to criticize those that don’t — and to be open to the fact that this could mean praising both companies that seek to make an impact by staying in difficult markets as well as those that decide to leave. Aron Cramer is President and CEO of BSR, a global business network and consultancy focused on sustainability, and the coauthor of the forthcoming book Sustainable Excellence (Rodale 2010). Dunstan Allison Hope is BSR’s Managing Director, ICT Practice, and the coauthor of the forthcoming book Big Business, Big Responsibilities (Palgrave Macmillan 2010).

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Google’s Looming China Exit Leaves Asian Success Hinging on Korea, Japan

March 21, 2010

By Brian Womack and Mary Childs March 22 (Bloomberg) — Google Inc. ’s looming withdrawal from China adds to pressure to expand in South Korea and Japan, where the Web-search company has won a fraction of the popularity it enjoys in the U.S. and Europe. There is little doubt that Google’s Chinese search engine will be shut down after a two-month standoff with Chinese authorities, said Ben Schachter , an analyst at Broadpoint AmTech Inc. in San Francisco. An announcement from Google may come as soon as today, the China Business News reported last week. A pullout would sideline Google in China, a country that JPMorgan Chase & Co. estimates would account for $600 million of the company’s sales this year. While Google’s market share has topped 75 percent in the United Kingdom, Germany and France, the company handles less than 50 percent of searches in Japan and 8 percent in South Korea, according to research firm ComScore Inc. “These are growth markets,” said Andy Miedler , an analyst at Edward Jones & Co. in St. Louis. He recommends buying Google shares and doesn’t own any. “We want them to take chances to invest in these areas because they often offer higher growth potential.” Google, based in Mountain View, California, said Jan. 12 that it was the subject of a highly sophisticated cyber attack that originated in China. Hackers stole intellectual property from Google and targeted e-mail accounts of human-rights activists, the company said. Google responded to the attacks by threatening to stop censoring its search results in China, a plan that the country’s government has called “irresponsible.” Slower Progress China was one of the largest Asian markets where Google was making inroads, said Clay Moran , an analyst at Benchmark Co. in Boca Raton, Florida. The company’s market share in China increased to 36 percent in the fourth quarter from 31 percent in the previous three months, according to Beijing-based researcher Analysys International. “In Asia, Google’s progress has been slower,” Moran said. “But they were doing fairly well recently in China and beginning to gain some share and gain a little momentum, so clearly this will be a setback if they are to leave.” Google shares have fallen 5.2 percent on the Nasdaq Stock Market since the company announced it may pull out of China. That compares with a 4 percent gain by the Nasdaq Composite Index. The stock declined $6.40 to $560 on March 19. Jill Hazelbaker , a Google spokeswoman, didn’t return calls seeking comment. Baidu’s Reign Google’s departure would force Chinese Internet users to rely more on Baidu Inc. ’s search engine, which filters results deemed inappropriate by authorities. That company held 58.6 percent of the country’s online search market last quarter, compared with 35.6 percent for Google, according to Analysys. Advertisers also would have fewer options in the country, providing a boost to Baidu and other Chinese Internet companies, including Tencent Holdings Ltd. and Alibaba.com Ltd. Baidu could use Google’s exit to win more business outside of China as well, said James Hawkins, a Singapore-based managing director of digital advertising for the agency DGM Asia. That’s because Baidu could work on campaigns that span China and the rest of the world, whereas Google could not. “If you look at the big advertisers — your Apples, your Dells, your H-Ps , Sony — their No. 1 market is China,” he said. “If Google aren’t there, they’ll have to seek other opportunities. I am sure Baidu will be as pleased as punch.” Offshore Servers Chinese users may still be able to reach Google’s offshore servers, even if the company pulls out of the country. The key will be whether China lets people access Google.com, Hawkins said. China currently blocks important media sites that aren’t policed internally, said Robert Faris, director of research at the Berkman Center for Internet and Society at Harvard University. That includes YouTube, Twitter, Facebook and Blogger, he said. Google has performed better in the U.S. and Western Europe because its search technology was first built for the Roman alphabet and not Chinese characters, said Colin Gillis , an analyst at BGC Financial LP in New York. Google has since invested in search technology for characters used in China, Korea and Japan. Asia accounts for about 10 percent of Google’s $23.7 billion in annual revenue , he said. In South Korea, Google had 8 percent of the Web-search market in February, according to Reston, Virginia-based ComScore. The leader there is Seongnam, South Korea-based NHN Corp. ’s Naver, which has 51 percent. ‘An Underdog’ “Google is an underdog,” said Schachter, who recommends buying Google shares and doesn’t own any. “That’s not a position they’re used to being in.” Google is also lagging behind in Taiwan, where its market share slipped to 27 percent in February from 28 percent a year earlier, according to ComScore. The company had 32 percent of the Hong Kong market. Taking a stand against censorship in China may enhance Google’s reputation in other parts of Asia, said Whit Andrews , an analyst at research firm Gartner Inc. in Stamford, Connecticut. “Google can say, ‘We won’t censor, and we’ve given up an enormous opportunity,’” Andrews said. “It is not unreasonable to assume that some users attach to Google greater value because of its moral stance against censorship.” Efforts to gain traction have paid off for Google elsewhere in Asia, including Japan, where it took the top spot from Yahoo Japan Corp. Google had 48 percent of Web searches in Japan in February, up from 40 percent a year earlier, according to ComScore. Yahoo had 43 percent. Japan, India “Japan is clearly a large market and they are gaining share,” said Aaron Kessler , an analyst at Kaufman Brothers LP in San Francisco. He recommends buying Google stock and doesn’t own it. “That’s a key market for them.” Google is dominant in India. The site commanded 88 percent of the search market in February, according to ComScore. Google will lose out on the world’s biggest Internet market by users by leaving China. The number of Web surfers in the country will more than double to 840 million by 2013 from 2009, according to New York-based EMarketer Inc. “It’s an area that any investor would want to be in,” Broadpoint AmTech’s Schachter said. “To lose that potential — that’s really a problem.” To contact the reporters on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net ; Mary Childs in New York at Mchilds5@bloomberg.net .

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Google Advertisers in China Told to Switch on Speculation Site Will Shut

March 15, 2010

By Mark Lee and Brian Womack March 15 (Bloomberg) — Google Inc. advertisers in China are being advised to switch to rivals such as Baidu Inc. and business partners are exploring alternatives as speculation grows the U.S. company will shut its Web site in the country. “When we talk to clients, we have been pushing them in the direction of Baidu more,” said Vincent Kobler, managing director at EmporioAsia Leo Burnett in Shanghai, which buys advertising from Google and Chinese market leader Baidu on behalf of customers. “The Chinese government has taken a firm stance, and Google, they have their own principles and are going to shut down.” China’s government said last week Google would be “irresponsible” if it carried out a plan to end censorship at its Google.cn site, responding days after Chairman Eric Schmidt said talks with authorities may yield an outcome “soon.” A pullout may force advertisers and local Internet partners such as Sina Corp. and Tom Online Inc. to review their operation with the U.S. company. “Our co-operation with Google rests on the company maintaining its operations in China,” said Liu Qi, a Beijing- based spokesman at Sina , operator of China’s third-most visited Web site, which features Google’s search engine. The Chinese company has alternative arrangements in place to ensure it won’t be affected by Google’s possible pullout, Liu said. Mountain View, California-based Google said on Jan. 12 it plans to stop censoring search results on its Chinese site after the company was hit by cyber attacks originating in China, and may end its local operations pending talks with the government on the proposal. In 2006, the U.S. company agreed to comply with requirements to filter its search results on the Google.cn site to boost its business in the country, where the ruling Communist Party restricts information it deems unfavorable. Plan For Retreat “The company will have to bear the related results” if rules are violated, Li Yizhong , minister of industry and information technology, said on March 12. “If one company violates the Chinese law and be unfriendly and irresponsible, that’s unwanted and means the company doesn’t merit its world- class status.” Chinese regulators told some of Google’s biggest partners on March 12 that they should plan for the company’s retreat from the country, the New York Times reported yesterday, citing a person with knowledge of the notice. It indicated negotiations with the government had reached an impasse, the report said. Jill Hazelbaker , a spokeswoman for Google, declined to comment when contacted by Bloomberg News. Closure Google has drawn up detailed plans to shut its search engine in China and is “99.9 percent” certain of going ahead with the closure, the Financial Times reported March 13, citing a person it didn’t name. “If Google is no longer available, we will turn to other service providers,” said K.K. Tsang, Hong Kong-based chief executive officer at GroupM, which buys advertising space for clients. Toward the end of February, advertising officials such as Kobler said business with Google was returning to normal on speculation that the company may reach a compromise with the government or that any pullout won’t occur soon. “Things have stabilized,” Kobler said Feb. 24 as the U.S. company posted recruitment ads for engineers, managers and sales staff on its Web site and employees at its Beijing office said life had returned to normal six weeks after the pullout threat. Advertisers were returning after more than 20 percent of Google customers in China probably switched to alternative paid- search providers in the wake of the Jan. 12 announcement, Steven Chang , chief executive officer for China at ZenithOptimedia Group Ltd., which buys advertising on Google’s site on behalf of companies, said at the time. To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

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Smartphones Eclipse PCs by 2012 as IPhone, Android Take Off: Chart of Day

March 10, 2010

By Ian King March 10 (Bloomberg) — Demand for Apple Inc. ’s iPhone and Google Inc.’s Nexus One will help propel smartphone sales past those of personal computers in two years, Gartner Inc. forecasts. The CHART OF THE DAY shows that smartphone sales will more than triple to 491.9 million units by 2012 from 139.3 million in 2008, according to the Stamford, Connecticut-based research firm. The PC market will expand to 443.1 million units from 290.8 million in the same period, Gartner predicted on March 4. “Smartphones are headed towards that billion-unit category that handsets are in today,” said Jim McGregor , an analyst at research firm In-Stat in Scottsdale, Arizona. “The smartphone is the billion-unit pot of gold that everyone wants.” The rise of the smartphone has prompted the computer industry to respond with their own products in an attempt to retain control over consumer access the Internet. Intel Corp., the largest maker of computer chips, has revived an earlier failed attempt to get its processors into phones. So far, only LG Electronics Inc. has said it will make a phone using an Intel chip. Microsoft Corp., the biggest maker of computer software, unveiled a new version of its Windows mobile phone operating system earlier this month, aiming to hold off gains made by Apple and Google. Apple fired up interest in phones that double as handheld computers with the first iPhone, introduced in 2007. Google, owner of the world’s most visited search engine, has since responded with the Nexus One handset and Android operating system, which is being used by phone makers such as Motorola Inc. To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net

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Google Rivals Asked for Statements as FTC Probes Company’s AdMob Purchase

March 10, 2010

By Todd Shields and Dina Bass March 10 (Bloomberg) — U.S. regulators are seeking sworn declarations from Google Inc. competitors and advertisers as part of their probe of the Internet company’s bid to buy AdMob Inc., indicating the government may challenge the deal, said people with direct knowledge of the matter. The Federal Trade Commission is investigating whether Google’s proposed purchase of AdMob would reduce competition in the market for Internet advertising on mobile phones. At least two companies are being asked to sign statements, said the people, who declined to be identified because the probe isn’t being conducted in public. The declarations put on paper information that Google rivals gave the FTC in its investigation of the $750 million purchase of AdMob, announced in November. AdMob sells ads that appear on Web pages and applications on mobile phones. The agency is assessing whether the purchase would let Google parlay its dominance in Internet searches on computers to phones. Agency officials typically collect declarations “when they think there is some significant chance” the agency will ask a court to block a merger, or seek to modify a deal, said Stephen Calkins , a former general counsel at the FTC who is now a professor of law at Wayne State University’s law school in Detroit. Even so, it’s not uncommon for the agency to collect affidavits and then not litigate, he said. FTC Discussions Claudia Bourne-Farrell , an FTC spokeswoman, declined to comment. Google, owner of the most-used Internet search engine, said it is continuing to talk with the FTC and provide information. “We’re not going to discuss the details of that process,” Adam Kovacevich , a spokesman for the Mountain View, California- based company, said in a statement. “We’re confident that they’ll conclude that the rapidly growing mobile advertising space will remain highly competitive after this deal closes.” Google rose $9.94 to $570.13 at 2:02 p.m. New York time in Nasdaq Stock Market trading. The stock had declined 9.6 percent this year before today. Google and AdMob combined would form the largest mobile- advertising company — the companies combined had 21 percent of the U.S. market in 2009, according to Karsten Weide , an analyst with researcher IDC in San Mateo, California. Google said on Dec. 23 that the agency had asked for more information about the transaction. “It’s difficult to envision a scenario where this development, if true, is positive for Google-AdMob,” said Thomas Ensign , counsel in the antitrust, competition and trade practice of Freshfields Bruckhaus Deringer LLP in Washington. “But it doesn’t necessarily mean the agency is going to challenge the deal.” Google’s negotiations with the FTC may persuade the agency’s staff that the deal won’t harm competition, Calkins said. When the investigation is concluded, it’s up to the agency’s commissioners to decide whether to challenge the deal in court. To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net ; Dina Bass in Seattle at dbass2@bloomberg.net

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Cisco Introduces $90,000 Router That Accelerates Video Downloads from Web

March 9, 2010

By Rochelle Garner March 9 (Bloomberg) — Cisco Systems Inc. , seeking to boost sales to phone carriers, will start selling an Internet router that lets Web users download video, songs and other data faster. The router starts at $90,000, the San Jose, California- based company said in a statement today. Cisco, the world’s biggest network-equipment maker, has invested $1.6 billion in the product line, which AT&T Inc. has already tested. Cisco, which posted its first sales increase in a year last month, is benefiting as consumers watch more videos on YouTube, Hulu.com and other sites. Chief Executive Officer John Chambers called video “the killer app” because it needs more bandwidth than voice and data, spurring demand for the company’s products. “You’ll see us focused on video,” Chambers said today on a Web cast. “This talks about the next generation of the Internet changing our lives.” The router lets carriers offer Internet speeds of 1 gigabit per second, said Pankaj Patel , a Cisco senior vice president. That’s about 100 times faster than most home connections today. Cisco said the product allows all the people in China to have a video call simultaneously. Cisco rose 2 cents to $26.15 at 12:43 p.m. New York time on the Nasdaq Stock Market. Yesterday, the shares reached their highest level since June 2008. ‘Anticlimactic’ Investors may have been disappointed by today’s announcement because Cisco had advertised it as something that would change the Internet forever, said Simon Leopold , an analyst at Morgan Keegan & Co. in New York. The stock rose 3.7 percent yesterday. “It was a little bit anticlimactic given the degree of hype leading into it,” said Leopold, who rates Cisco shares “outperform” and doesn’t own any. “We expected something a little broader, more of an architectural shift, more of an end- to-end change to networks rather than a single product.” Global data traffic will probably more than double every year through 2013, fueled largely by video, according to Cisco. That increases demand for the company’s routers and switches, which direct the traffic. In general, large businesses buy switches for their corporate networks. Phone carriers and Internet-service providers, which account for about 35 percent of Cisco’s revenue, mostly purchase routers. AT&T said it tested the new router as part of a successful trial of “backbone network” technology that will support growing volumes of wireless and wired Internet traffic. The company, whose network is strained by demand for smartphones such as the iPhone, has said it is working to reduce congestion in markets such as New York and San Francisco. Google Network Cisco’s announcement comes after Google Inc. said it plans to build an experimental broadband service that will offer Internet speeds of 1 gigabit. Google, the world’s most popular search engine, is developing the network to show the potential of high-speed Internet service. “Google is a wonderful company,” Chambers said today. “We love anyone who puts loads on the network.” Cisco is also expanding in markets such as mobile Internet and videoconferencing to fuel demand for its products. Last year, Cisco acquired Pure Digital Technologies Inc., the maker of the Flip Video palm-size camcorders. Flip users can upload videos directly to Web sites, increasing network traffic. To contact the reporter on this story: Rochelle Garner in San Francisco at rgarner4@bloomberg.net

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Selling Google, Buying Baidu Helps Propel Scots Fund Baillie to 90% Return

March 3, 2010

By Peter Woodifield March 4 (Bloomberg) — When Google Inc. , owner of the most popular Internet search engine, said on Jan. 12 it may close its Web site in China, Edinburgh money manager James Anderson sold the stock and bought Beijing-based rival Baidu Inc. Since then, Baidu has risen 34 percent and Google has lost 8.5 percent. That kind of call helped propel Anderson’s closed- end fund, Baillie Gifford & Co.’s 1.87 billion-pound ($2.8 billion) Scottish Mortgage Trust Plc , to the best performance among its U.K. peers over the past year. “Google was admitting they had lost in China,” said Anderson, who is Baillie Gifford’s chief investment officer and responsible for 56 billion pounds in total. “It was revealing and added to the imputed value of Baidu.” Fund managers in the Scottish capital are increasingly moving their money to reflect the shift in economic power to countries such as China and Brazil from the U.S. and Europe. Scottish Mortgage has 60 percent of its assets in the U.S., U.K. and other European stocks, down from 80 percent in 2004, and Anderson expects that to fall further. The century-old Scottish Mortgage Trust’s biggest holding is Rio de Janeiro-based Petroleo Brasileiro SA , Brazil’s state- controlled oil producer, making up 5.1 percent of the fund. The company, known as Petrobras, is also the biggest stake for Murray International Trust Plc, another Edinburgh fund. “I like my ideas to come from the countries producing economic growth,” said Anderson, 50. ‘Special’ China The switch to Baidu from Google meant each company accounted for 2.7 percent of Scottish Mortgage’s assets as of Jan. 31, putting the Internet search companies among the fund’s 10 largest holdings. “We find many, many more individual Chinese companies that are great secular growth companies similar to what you saw in America,” Anderson said in an interview at his Edinburgh office. “China is a special category beyond all others.” Scottish Mortgage, Baillie Gifford’s first client, was founded in 1909 to invest in rubber estates in Malaysia and Sri Lanka to benefit from demand for automobile tires. Baillie Gifford’s main clients are U.S. retirement funds including The California Public Employees’ Retirement System, the largest U.S. public pension fund, as well as money managers such as Vanguard Group Inc. Investments in what Anderson calls “rising powers,” along with lessening dependence on the U.K. and avoidance of most financial stocks, helped boost returns. Best Return Scottish Mortgage is a general growth fund, which targets stocks and bonds that gain in price more than average. It advanced 90 percent over the year to March 1, compared with an average return of 50 percent for 30 similar funds, according to data from Chicago-based research firm Morningstar Inc. Anderson has run the fund since 2000. His second-biggest Chinese holding, after Baidu, is in Beijing-based New Oriental Education & Technology Group Inc. , the largest private-education company in the country. Other investments include Ctrip.com International Ltd. , China’s biggest online-ticketing company, Belle International Holdings Ltd. , the largest retailer of women’s shoes, and Tencent Holdings Ltd. , China’s biggest Internet company. Brazil accounts for three of Scottish Mortgage’s largest investments, with index-linked government bonds due 2045 and Vale SA , the world’s largest iron-ore producer, alongside Petrobras. Earnings from Brazil also are the reason behind his stake in Banco Santander SA , Spain’s largest bank. ‘Casino Banking’ “The western financial system and the western housing markets were unsustainable,” he said. “We have known that for 15 years. It was implausible that we could have continued. You need to split off casino banking from utility banking.” Scottish Mortgage had avoided large holdings in financial stocks “for some time,” although it made a mistake in owning shares of UBS AG , the largest Swiss bank by assets, said Anderson. UBS is down 17 percent over the past six months. The trust had 16 percent of its money in financial companies as of Jan. 31, while that industry makes up about 21 percent of the MSCI World Index . This year, Anderson bought or added to stakes including San Jose-based Cisco Systems Inc. , the world’s largest maker of networking equipment, Intuitive Surgical Inc. , maker of robotic surgical systems, Polish copper miner KGHM Polska Miedz SA and Poland’s former phone monopoly, Telekomunikacja Polska SA . In addition to Google, he’s cut or sold holdings in Atlas Copco AB, which the trust has owned for more than 20 years, China Mobile Ltd. and Porsche SE . The trust has added to its stake in Amazon.com Inc. , the world’s largest online retailer, its second-biggest holding. Amazon Chief Executive Officer Jeff Bezos is “in many ways more interesting” than Apple Inc.’s Steve Jobs , said Anderson, citing Amazon’s e-book reading device Kindle. Amazon shares are up 60 percent over the past six months, while Apple has risen 26 percent. “Kindle shows its culture of innovation,” he said. “Their great advantage is not in a particular product, it is that they can do more and more for less.” To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net .

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China IPOs in U.S. Suffer Longest Slump in Five Years as Buyers Evaporate

February 24, 2010

By Michael Tsang and Nikolaj Gammeltoft Feb. 25 (Bloomberg) — Initial public offerings by Chinese companies in the U.S. are suffering their longest slump since at least 2004 after providing twice the return of American IPOs over the past five years. IPOs by Chinese companies on American exchanges fell 4.8 percent on average last quarter and 6.7 percent in January and February , the most consistent retreat since Bloomberg began tracking the data. Demand is waning after investors paid more than twice the so-called tangible net assets to buy shares of companies from China Nuokang Bio-Pharmaceutical Inc. , whose profits stagnated in 2009, to China Hydroelectric Corp., which has reported four straight years of losses. While the country’s economy is forecast to expand more than three times as much as the U.S. this year, the central bank is moving to rein in lending and growth just as a global slump in IPOs deepens. “If you’re looking to reduce risk it’s probably the first market to exit,” said Madelynn Matlock , the Cincinnati-based manager of the Huntington International Equity Fund at Huntington Asset Advisors, which oversees $15 billion. “Too many public offerings from China coming too quickly to market, combined with less risk appetite and the monetary tightening in China, have spooked investors.” Consumer Confidence The Bloomberg IPO Index of 63 companies on American exchanges has slipped 3.5 percent in 2010 as U.S. consumer confidence slumped to the lowest level since April and investors speculated that Europe’s widening budget deficits will slow the global economic recovery. The MSCI AC World Index of developed and emerging equity markets completed its longest stretch of weekly declines in almost a year this month and is down 3.4 percent in 2010. U.S. companies from Imperial Capital Group Inc. in Los Angeles to Fort Lauderdale, Florida-based Patriot Risk Management Inc. have postponed IPOs this year, while New York- based Blackstone Group LP’s Travelport Ltd. and New Look Group Plc of Weymouth, England, pulled London offerings this month. Moscow-based United Co. Rusal , the world’s largest aluminum producer, has retreated 24 percent since completing the first Hong Kong listing of a Russian company in January. The performance of Chinese IPOs in the U.S. began to deteriorate last quarter. Investors in five of the seven companies that completed deals suffered losses in the first month of trading, while buyers of 16 of the 24 offerings by American companies made money, data compiled by Bloomberg show. Snake Venom China Nuokang , based in Shenyang in China’s northeastern province of Liaoning, raised $45 million selling ADRs, according to a Dec. 9 filing with the U.S. Securities and Exchange Commission. The IPO valued the company at a 135 percent premium to its $3.83 in per share tangible book value, a measure of shareholder equity that excludes assets that can’t be sold in liquidation, the SEC filing and Bloomberg data show. The maker of blood coagulants derived from snake venom reported that net income in the first nine months of 2009 was little changed from the previous year at 41.6 million yuan ($6.1 million), the filing showed. The company’s ADRs, which represent eight common shares, fell 16 percent in the first month on the Nasdaq Stock Market. ADRs represent ownership stakes in overseas companies that are issued by U.S. banks and usually trade on American exchanges. ‘Speculative Money’ “There’s more risk in Chinese IPOs,” said Jim Porter , founder of Hinsdale, Illinois-based New Century Capital Management LLC. “You’re buying with less knowledge and less experience with IPOs from that country and a lot of the time people barely get a chance to see what’s in the prospectus. It’s more speculative money.” Losses have accelerated as China’s central bank increased banks’ reserve requirements twice this year to curb inflation and damp asset prices. The mandatory level will rise 50 basis points, or 0.5 percentage point, effective today, the People’s Bank of China said on its Web site on Feb. 12. Policy makers are reining in credit after banks extended 19 percent of this year’s 7.5 trillion yuan lending target in January and property prices climbed the most in 21 months. Record lending and a 4 trillion yuan stimulus package had helped China lead the recovery from the first global recession since World War II. The economy is forecast to expand 9.5 percent this year, according to economists surveyed by Bloomberg, after increasing 8.7 percent in 2009. The U.S. is projected to grow 3 percent. Daqo, JinkoSolar So far this year, only one of the four Chinese companies that have completed IPOs gained, Bloomberg data show. Chongqing, China-based Daqo New Energy Corp. and JinkoSolar Holding Co. of Shangrao in China’s southeastern province of Jiangxi have shelved plans to sell shares in the U.S. China Hydroelectric , the Beijing-based operator of small- scale hydropower plants on the mainland, raised $96 million selling ADRs and warrants at $16 per unit last month. The biggest of the Chinese offerings this year valued the company at a 188 percent premium to its tangible book value. The ADRs have since fallen 36 percent. Chinese offerings on U.S. exchanges from Baidu Inc. to Suntech Power Holdings Co. enriched investors over the past five years. Shares of 67 mainland and Hong Kong companies gained 22 percent on average in the first four weeks of trading during that period, beating the 11 percent advance for U.S. IPOs, Bloomberg data show. Baidu, Suntech ADRs of Beijing-based Baidu , the owner of China’s most popular Internet search engine, almost tripled in the month after its $122 million IPO in 2005. Suntech, the world’s largest maker of polysilicon solar- power modules, advanced 95 percent in its first month of trading after selling shares in December 2005. The company is located in Wuxi in eastern China’s Jiangsu province. “We’ve had a period where there has been a lot of talk about China being more restrictive from a spending and a monetary policy perspective,” said Thomas S. Caldwell , who oversees more than $1 billion as chairman of Caldwell Investment Management Ltd. in Toronto. “The perception right now is that the Chinese venue doesn’t look attractive in the short-term.” To contact the reporters on this story: Michael Tsang in New York at mtsang1@bloomberg.net ; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net .

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U.S. Unprepared to Battle Large Cyber Attack, Former Top Spy Official Says

February 23, 2010

By Jeff Bliss Feb. 23 (Bloomberg) — The U.S. isn’t prepared for a massive attack on its computer networks by another country, a former top intelligence official said. “If the nation went to war today, in a cyber war, we would lose,” former Director of National Intelligence Michael McConnell told a Senate panel today. McConnell joined a number of former government officials who have warned of cyber vulnerability. A bipartisan group of ex-federal officials said on Feb. 16 after a simulated cyber attack that the U.S. was unprepared to respond to the real thing. “We’re going to have a catastrophic event” before Americans are prompted to action, McConnell told the Senate Commerce, Science and Transportation Committee. He served in his intelligence post under President George W. Bush . The country is more vulnerable than other nations because a greater share of U.S. businesses and government agencies rely on the Internet, McConnell said. The U.S. also has more trade secrets that other countries want to steal, he said. Federal authorities are working with Google Inc. and security consultants to investigate a breach of the Mountain View, California, company’s computer defenses in China. Google, owner of the most popular Internet search engine, publicly disclosed the attack in January and threatened to leave China. The Chinese government has denied any involvement in the breach. McConnell said the government needs to get more involved in dictating security standards on the Internet. Several cyber-security measures being considered by Congress would give the government a greater role. They include legislation sponsored by Commerce panel Chairman Jay Rockefeller , a West Virginia Democrat, and Senator Olympia Snowe , a Maine Republican. To contact the reporter on this story: Jeff Bliss in Washington jbliss@bloomberg.net .

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Microsoft Profit Beats Estimates on Release of Windows 7 Operating System

January 28, 2010

By Dina Bass Jan. 28 (Bloomberg) — Microsoft Corp. , the world’s largest software maker, reported second-quarter profit that topped analysts’ estimates after Windows 7 spurred the first sales increase in a year. Second-quarter net income rose 60 percent to $6.66 billion, or 74 cents a share, beating the 59-cent average estimate of analysts surveyed by Bloomberg. Revenue climbed 14 percent to $19 billion, the company said today in a statement. Personal-computer buyers stepped up orders last quarter as the economy recovered and Microsoft released a new version of Windows. Sales of U.S. PCs running Windows rose about 50 percent over the holiday season, the company said earlier this month, citing data from NPD Group Inc. Microsoft is counting on Windows 7 to trigger a surge of upgrades by consumers and businesses. “Microsoft is in a great position,” sent Brent Thill , an analyst at UBS AG in San Francisco, who recommends buying the shares. “They have one of the best product cycles in the last five years, maybe 10, and it spans across their three biggest divisions.” Microsoft , based in Redmond, Washington, fell 51 cents to $29.16 at 4 p.m. New York time on the Nasdaq Stock Market. The stock climbed 19 percent last quarter, exceeding the 5.5 percent gain by the Standard and Poor’s 500 Index . Today’s earnings report is the first under Chief Financial Officer Peter Klein , who was named to the post in November. Second-quarter sales included $1.71 billion in deferred revenue from previous quarters. Analysts projected total sales of $17.9 billion for the period, which ended Dec. 31. A year earlier, net income was $4.17 billion, or 47 cents a share, on sales of $16.6 billion. No Forecast Microsoft, which stopped giving earnings forecasts in January 2009, didn’t give a specific outlook for profit and sales. Microsoft reiterated an October prediction that it will spend as much as $26.5 billion on operating expenses this fiscal year. PC shipments rose 15 percent worldwide last quarter, according to Framingham, Massachusetts-based IDC, which had predicted 11 percent growth. U.S. shipments were even more surprising. They jumped 24 percent, four times the rate that IDC had projected. Microsoft ’s Windows runs more than 90 percent of the world’s PCs. Many customers skipped the last version of the software, called Vista, raising speculation that buyers will upgrade this time around. Microsoft ’s Bing search engine, released in June, has increased its market share by 2.7 percentage points, according to research firm ComScore Inc. Microsoft had 10.7 percent of the U.S. search market in December, compared with 65.7 percent for Google Inc. and 17.3 percent for Yahoo! Inc. , according to ComScore. To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net

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Clinton Likely to Discuss Google, Censorship With China’s Yang, U.S. Says

January 27, 2010

By Indira Lakshmanan and Mary Childs Jan. 27 (Bloomberg) — Secretary of State Hillary Clinton is likely to raise her concerns about Web censorship and cyber attacks, such as those that targeted Google Inc. , with her Chinese counterpart tomorrow in London, a senior U.S. official said. Clinton has called for a transparent investigation of what Google described as an infiltration of its technology and the Gmail accounts of Chinese human rights activists. She and China’s Foreign Minister Yang Jiechi will be in London to attend a conference on Afghanistan’s future. In a speech in Washington Jan. 21, Clinton called on U.S. technology companies to resist censorship of the Internet and said perpetrators of cyber attacks such as those who targeted Google must face consequences. China said Clinton’s remarks were unjustified and damaged bilateral ties, and denied involvement in the cyber attacks. Google , which runs the most popular Internet search engine, said Jan. 12 it would stop censoring its search results as required by the Chinese government and might end operations in the country because of the intrusions. The company, based in Mountain View, California, said last week it is in discussions with Chinese authorities about how it operates in China. To contact the reporter on this story: Indira Lakshmanan in London at ilakshmanan@bloomberg.net ; Mary Childs in New York at mchilds4@bloomberg.net

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Stocks in Europe, Asia Drop to One-Month Low; Rio, BBVA, Man Group Decline

January 27, 2010

By Sarah Jones Jan. 27 (Bloomberg) — European and Asian stocks declined to the lowest levels in more than a month amid mounting concern that China and the U.S. will accelerate plans to unwind stimulus measures as the economy rebounds. Rio Tinto Group, the world’s third-biggest mining company, retreated for a sixth day as base metals fell. Banco Bilbao Vizcaya Argentaria SA , Spain’s second-biggest lender, sank the most in eight months after earnings missed estimates. Man Group Plc, the largest publicly traded hedge fund company, fell 4.8 percent after its flagship fund dropped the most in seven weeks. The Dow Jones Stoxx 600 Index lost 0.8 percent to 247.47 at 10:09 a.m. in London, heading for the lowest close since Dec. 18. The measure has fallen 2.5 percent this year as the U.S. called for limits on risk-taking by banks and China moved to restrict lending and cool economic growth. We could be facing a “10 percent correction,” Nick Nelson , London-based head of European equity strategy at UBS AG said in a Bloomberg Television interview. In China, “bank-loan growth was running at 35 percent year-on-year. It had to slow at some point.” Asian stocks declined for an eighth day, the longest losing streak since May 2005. The MSCI Asia Pacific Index slid 1.1 percent as Hong Kong’s Hang Seng briefly fell below 20,000. The MSCI World Index of equities in 23 developed nations retreated for a sixth day, the longest stretch of losses in 11 months. Chinese banks Some Chinese banks were ordered to recall excess loans advanced in January to meet regulatory requirements, the Securities Times reported today, citing an unidentified person familiar with the situation. A Credit Suisse Group AG index showed swaps traders raised to 73 percent the chance that the Reserve Bank of Australia will increase interest rates by 25 basis points when it meets next week, after consumer prices rose more than forecast by some economists. United Co. Rusal Ltd. , the world’s largest aluminum producer, slumped 11 percent to HK$9.66 in its Hong Kong trading debut as demand for new equity waned after the city’s benchmark index dropped from a November high. U.S. stocks fell in the final hour of trading yesterday as investors speculated that the Federal Reserve may signal more plans to unwind stimulus measures and as Elliott Wave International Chief Executive Officer Robert Prechter said a new bear market may have begun. Prechter, the analyst who predicted the financial-market meltdown that began in 2008, told CNBC he is “seeing signals like the ones we saw” when the Standard & Poor’s 500 Index was peaking in 2007 and at the top of the technology bubble in 2000. Fed Decision Futures on the S&P 500 slipped 0.1 percent today as the Fed prepares to issue its statement on interest rates, at about 2:15 p.m. New York time. The Federal Open Market Committee, gathering while Chairman Ben S. Bernanke awaits a Senate vote on whether to confirm him for a second term, is expected to keep the benchmark for short- term interest rates in the zero to 0.25 percent range, where it’s been since December 2008. Investors’ focus has been on how and when the central bank will signal its intention to start raising rates, and to dismantle the programs by which it has financed risky assets for the banking system. Yahoo! Inc., owner of the second-most-used Internet search engine in the U.S., rose 2.8 percent to $16.43 in German trading after reporting fourth-quarter sales that topped analysts’ estimates late yesterday. Caterpillar Inc. , the world’s largest maker of bulldozers and excavators, Boeing Co. and Abbott Laboratories are among companies due to announce earnings before the start of U.S. trading today. Mining Companies Rio Tinto sank 1.2 percent to 3,147.5 pence and Xstrata Plc dropped 3 percent to 1,052 pence. Copper led base metals lower on the London Metal Exchange amid concern demand from China, the largest consumer of copper, will fall. Lead, tin and nickel also retreated. BBVA fell 5.4 percent to 11.38 euros, the biggest intraday drop since May. The Spanish bank reported a 94 percent slump in fourth-quarter net income to 31 million euros ($44 million) as it wrote down goodwill on its U.S. business and set aside more for bad loans. That missed the 1.05 billion-euro median estimate in a Bloomberg survey. Man Group slid 4.8 percent to 250.6 pence for a ninth day of declines, the longest losing streak in almost five years. The net asset value of its flagship Man AHL Diversified Futures Ltd. fund fell 3.6 percent to $34.87 as of Jan. 25, erasing its gains for the year. Tullow Oil Plc dropped 5.1 percent to 1,154 pence after the U.K. explorer announced plans to sell up to 80.4 million new shares through an equity placing, representing about 10 percent of its existing ordinary share capital. The funds will finance further exploration and advance development in Uganda and Ghana, the company said. Wacker Chemie AG plunged 4.6 percent to 103.30 euros after the world’s second-largest maker of chemicals for solar modules and microchips reported an unexpected annual operating loss. To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net .

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Yahoo’s Sales Exceed Estimates as Online Ad Market Shows Signs of Rebound

January 26, 2010

By Brian Womack Jan. 26 (Bloomberg) — Yahoo! Inc. , owner of the second- most-used Internet search engine in the U.S., reported fourth- quarter sales that topped analysts’ estimates as the online advertising market showed signs of recovery. Excluding revenue passed on to partner sites, sales totaled $1.26 billion, topping an average estimate of $1.23 billion in a Bloomberg survey of analysts. Net income attributable to Yahoo was $153 million, or 11 cents a share, compared with a loss of $303.4 million, or 22 cents, a year earlier, the company said today in a statement. “We had a very solid quarter of results,” Chief Financial Officer Tim Morse said in an interview. “We definitely feel the business is gaining momentum.” After cutting costs last year, Yahoo is benefiting from a surge in online spending. Large companies in particular increased their Internet ad purchases, which likely boosted the prices for space, said Scott Kessler , an equity analyst at Standard & Poor’s in New York. “Yahoo’s Q4 results probably benefited from greater demand from larger advertisers in light of a healthier-than-expected holiday shopping season,” Kessler said. “Overall they’re spending more on the Internet.” Kessler has a “strong buy” rating on the stock and doesn’t own it. Company Forecast The Sunnyvale, California-based company forecast gross sales of $1.58 billion to $1.68 billion in the current quarter. That compares with an estimate of $1.55 billion by Gene Munster , an analyst at Piper Jaffray & Co. in Minneapolis. The U.S. online display ad market will rebound this year, growing 10 percent after a decline of 2 percent in 2009, he said in a research note. “While competition is increasing for display dollars from social networks and targeted portals, we believe Yahoo! remains a major element to most online media plans, given the site’s market leading reach,” he said. Yahoo shares rose 38 cents to $16.37 in extended trading after increasing 13 cents to $15.99 in Nasdaq Stock Market trading. The shares climbed 38 percent last year. Aaron Kessler , an analyst with Kaufman Brothers LP, said the company did well in display ad sales though failed to keep pace with Google Inc. in search ads. “It was a mixed quarter,” said Kessler, who has a “buy” rating on the stock and doesn’t own it. “There’s nothing to get too excited about.” Excluding some expenses, profit was 15 cents a share. Analysts had predicted 17 cents, according to the Bloomberg survey. Cost Cutting Under Carol Bartz , who took over as chief executive officer about a year ago, Yahoo has buoyed its profit by cutting costs, including closing underperforming businesses and reducing staff. Last year, Yahoo shut the Web-hosting unit GeoCities and an online storage site called Briefcase. Earlier this month, Yahoo said it would sell its Zimbra e-mail and collaboration software to VMware Inc. for an undisclosed price. The companies expect to complete the sale this quarter. Yahoo bought Zimbra in 2007 for $350 million. Yahoo also is looking to reduce costs associated with its search business, such as engineering. Yahoo struck a deal with Microsoft Corp. that’s expected to close early this year. Under the partnership, Yahoo will put Microsoft’s Bing search engine on its Web sites, and the two companies will split the related advertising revenue. Google Competition The partnership may help both companies compete better with Google , which claimed 65.7 percent of Internet searches in the U.S. last month, according to ComScore Inc. in Reston, Virginia. Microsoft’s share increased to 10.7 percent last month from 8 percent in May, before the June debut of Bing. Yahoo’s share declined to 17.3 percent from 20.1 percent over the same period. The pending partnership has hampered Yahoo’s ability to compete in the search market, Scott Kessler said. Once the deal is completed, Yahoo can design the search feature that users see on its pages, he said. “They can’t really do the kind of implementations and improvements they want to do until things have changed over,” he said. To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net .

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Ari Herzog: Inspiring You to Write a Popular Blog Post

January 24, 2010

The below advice previously appeared at AriWriter . The typical blog post is written, shared, indexed, and quickly forgotten to be replaced by newer blog posts about the same topic or by the same author. You can cross your fingers all you want in the hopes your best-written piece is shared by more people or indexed by more search engines than in the past, but crossing fingers will not boost a blog post’s value if nobody else believes there is value. For the same reason a video creator can not gauge how many people will view a video before it is created, a blogger can not predict the popularity of a post. While there are ways to resurrect and recycle the majority of old blog posts, there are also the few that survive the above tests and remain actively visited because of a high search engine index rate or limited online information. Take a look at my most popular blog post article of 2009, for instance, wherein I share screenshots explaining how I hacked a popular Facebook game . As of today, my post on the Bejeweled Blitz game has been shared 59 times on Facebook and 3 times on Twitter, not to mention being the recipient of 23 comments. The popularity of a blog post goes beyond comments and shares, though; you must also remember the ubiquitous Google, let alone other search engines. Based on a myriad of reasons known collectively as Google Page Rank, if a blog post is viewed so many times and commented and linked to so many more times, Google considers the information timely and valuable — and will continue to rank it high in a keyword’s results page until nobody else clicks on it or comments on it. Since I published the article in July 2009, it’s seen 1-2 comments every month. Google likes it. Querying a Google Analytics report (that excludes my own visits) on the most popular content viewed between January 18, 2009 and January 19, 2010, the Bejeweled Blitz article is most popular, with 91,018 pageviews across 70,662 unique visitors. In comparison, here’s an image of my top 5 viewed articles over the past year: Over 95% of those 70,662 visitors entered the page directly from a search engine or a referral link, with Google responsible for 60,869 unique visits. People typed a combination of 9,175 keywords to reach the page. Evident from over a dozen unique visits to the page while I typed this retrospective article, Google continues to share its value with you and your Facebook peers. I challenge you to write your next blog post from the perspective you are the Internet Newspaper. Write succinctly but clearly. Share a fact, a tidbit, or an image that nobody has seen before — but that everybody wants to see. Think to the future, but write for the present. Most of all, be yourself and write like the passionate scribe you decided to be when you created your first post. Don’t worry about comments or shares. Don’t worry about page rank. When you reach the gold nugget, savor the moment and share with all of us your tips for success. I don’t know why the Facebook article remains popular. I don’t know why people still view it, for there are surely comparable articles online. I have a hunch, though, for its success, and that is because I likely wrote what I wrote before everyone else wrote what they wrote; and in Google’s eyes, original ideas mean something.

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Lenovo Says Google Dispute With China Not Hurting Phone Business in China

January 21, 2010

By Mark Lee Jan. 22 (Bloomberg) — Lenovo Group Ltd. , whose investors today approved the buyback of a mobile-phone division, said its handset business in China won’t be affected by the possible exit from the country of technology supplier Google Inc. Google’s actions will have “no effect” on Lenovo’s new LePhone handset, which uses the U.S. company’s Android technology, Chief Technology Officer He Zhiqiang told reporters today in Hong Kong. Lenovo, China’s biggest maker of personal computers, plans to offer the smartphone for the Chinese market, He said. Google this week delayed the introduction of two handsets for China, the world’s biggest mobile-phone market, amid a dispute with Chinese Internet regulators over censorship following cyber attacks on its local Web site. The U.S. search engine operator said last week it may end its search-engine operations in the Asian country pending talks with the Chinese government. A Jan. 20 ceremony planned by Google and China Unicom (Hong Kong) Ltd. to introduce new handsets was postponed, Marsha Wang , spokeswoman for the U.S. company, said on Jan. 19, without giving a reason or a new date. Lenovo expects to eventually sell more handsets than computers in China, Chief Executive Officer Yang Yuanqing said today, without providing a timeframe. Lenovo investors approved the company’s plan to buy Lenovo Mobile Communication Technology Ltd. for $200 million, he said. To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

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China Needs to Explain, Investigate Google Web Attacks, U.S. Official Says

January 19, 2010

By Indira A.R. Lakshmanan Jan. 20 (Bloomberg) — The U.S. expects China to conduct a full and transparent investigation of Google Inc .’s accusations that its Chinese Web site was attacked in part to target e-mail accounts of human rights activists, a senior U.S. official said. The State Department hasn’t lodged a formal protest to the Chinese government over the incident, and whether one is issued may hinge on how China responds to U.S. questions in discussions planned in the coming days, said the official, speaking on condition of anonymity because of the case’s sensitivity. The U.S. envoy for East Asia yesterday said that while the Chinese government has denied involvement in the cyber attacks, it is in the “best position” to explain what happened to the operator of the world’s most-popular search engine. The envoy, Assistant Secretary of State Kurt Campbell , declined to comment on the pending U.S. protest, known as a demarche. Google has said the “highly sophisticated” attacks included theft of its intellectual property and targeted at least 20 other international companies in technology, finance and chemicals. The Mountain View, California-based company said it would stop censoring its search engine results as required by the Chinese government, and may end its operations in China. Clinton Speech Secretary of State Hillary Clinton will give a major address on Internet freedom and security tomorrow in Washington, in which she is likely to detail new initiatives by the U.S. government. Google officials informed Clinton and other national security officials about the cyber attacks the week before announcing them publicly, the Obama administration has said. While Clinton issued a statement of concern following Google’s announcement, she hasn’t spoken with a Chinese counterpart on the issue, the senior U.S. official said today. “It would be fair to say that the U.S. government has had multiple meetings with Chinese authorities on this matter and will have more in the coming days,” Campbell said yesterday. “President Obama has identified cyber security as a national priority that underpins global security and economic prosperity, and also contributes to free expression,” he said, noting that Obama “specifically made Internet freedom a central human rights issue of his trip to China.” Chinese Market An exit from China would leave Google, whose revenue growth slowed during the U.S. recession, on the sidelines of the world’s biggest Internet market by users. The number of Chinese Web users will grow to 840 million, or 61 percent of the population, by 2013, according to EMarketer Inc. in New York. That would be up from 396 million last year. It would also leave China without a foreign company operating independently to serve Web users. Local operator Baidu Inc., based in Beijing, accounted for 58.4 percent of the country’s search engine market last quarter, compared with Google’s 35.6 percent, according to researcher Analysys International. To contact the reporter on this story: Indira Lakshmanan in Washington at ilakshmanan@bloomberg.net

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Google Sends Right Message to China’s Police State: David Pauly

January 19, 2010

Commentary by David Pauly Jan. 19 (Bloomberg) — Here’s hoping Google Inc. makes good on its threat to quit China. It’s time someone in the U.S. stopped coddling the Chinese police state. The American government can’t, or won’t. Though Google is late coming around as an advocate of free speech in China, it still deserves applause. The company said last week it would stop censoring its Chinese search engine, Google.cn, as the communist government dictates — and might even close the business. Google got religion after discovering that last month hackers — read Chinese government technicians — tried to access accounts of, and managed to steal information from, human-rights activists who used Google e-mail. Hackers went after at least 20 other companies’ computers, Google said. Adobe Systems Inc. , the leading maker of graphics design software; Juniper Networks Inc. , the second-biggest maker of computer networking gear; and Rackspace Hosting Inc. , which manages Web sites, said they also had been attacked. Google can exit China without hurting its stockholders, at least in the short run. The company’s revenue from China would be as much as $350 million this year, about 1.5 percent of total sales, according to a report from Citigroup Inc. Still, the potential market is huge. Some 330 million Chinese use the Internet. The company could sell its Nexus One mobile phone to the Chinese. Market Shares Google’s departure would benefit search rival Baidu Inc. no end. The Beijing-based company now has 58 percent of the country’s Internet search market against Google’s 36 percent, according to researcher Analysis International. With only 6 percent of the market left for others, Google’s U.S. competitors in China clearly could afford to thumb their noses at the police state. Yahoo! Inc. and Microsoft Corp. do business there with partners. Microsoft Chief Executive Office Steve Ballmer said he has no plans to leave the country. It’s easy to see why most companies choose Chinese profit over political stands. China is now the U.S.’s No. 2 trading partner after Canada, with 2008 transactions of $409 billion. U.S. companies manufacture there. Money managers invest there. American companies keep doing business with the communist state in the face of complaints from the auto parts, steel, insurance and electronics industries that China manipulates its currency to help its exporters, prices products at unfairly low levels and protects its home markets from competition. Look Elsewhere Perhaps U.S. companies should seek cheap labor elsewhere. The U.S. government has both economic and political reasons for not challenging a government that muzzles its people and kills them if they get too obstreperous. China has been the biggest purchaser of U.S. debt at a time when the U.S. is borrowing massively to right its economy and financial system. China held about $800 billion of Treasury securities on Oct. 31. Still, China has nowhere else to invest its huge trading gains. The U.S. won’t have to borrow so heavily if its budget deficits begin to decline. The political front may be tougher. Barack Obama’s administration needs China’s cooperation, for example, in its effort to curtail the nuclear weapons capability of Iran and North Korea. Google may eventually compromise with China. That would be a shame. Someone in the U.S. has to let the dictatorship know what we stand for. Google slamming the door as it leaves China would be a welcome step. ( David Pauly is a Bloomberg News columnist. The opinions expressed are his own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. To contact the writer of this column: David Pauly in Fort Myers, Florida dpauly@bloomberg.net

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Baidu Chief Technology Officer Resigns, Second Executive to Go in 10 Days

January 18, 2010

By Bloomberg News Jan. 19 (Bloomberg) — Baidu Inc. ’s Chief Technology Officer Li Yinan resigned yesterday, 10 days after the operator of China’s most-used search engine said its Chief Operating Officer was also leaving the company. Li quit Baidu for personal reasons, the Beijing-based company said in an e-mailed statement without giving additional information. His departure comes after Peng Ye stood down as COO on Jan. 8. Baidu has lost two senior executives this month as its main rival Google Inc. said it may shut its China Web site and close its offices in the nation, exiting the world’s biggest Internet market. The Chinese search engine’s American depositary receipts have gained 21 percent since Jan. 12, when Google announced its possible departure. Li will move to a unit of China Mobile Ltd., China Business News said on its Web site yesterday, citing unidentified people at Baidu. Prior to joining the Chinese Internet company in October 2008, Li was a vice president at Chinese telecommunications equipment maker Huawei Technologies Co. China was home to 384 million Web users at the end of 2009, greater than the total population of the U.S., according to the China Internet Network Information Center, a government agency that registers online domain names. Baidu had a 58.4 percent share of the Chinese search market last year, compared with Google’s 35.6 percent shares, according to Beijing-based researcher Analysys International. For Related News and Information: Find stories about China’s Internet market: TNI CHINA INTERNET BN See China economic statistics: ECST CH See most-read stories about China today: MNI CHINA 1D

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Google Pledge to Stop China Censoring Spurs Increase in Tiananmen Searches

January 17, 2010

By Bloomberg News Jan. 18 (Bloomberg) — Searches on Google Inc. ’s Chinese Web site for information about the 1989 crackdown on protesters in Beijing’s Tiananmen Square have surged since the search engine said last week it will stop censoring results. Queries for “Truth of Tiananmen” grew at the second- fastest pace of any search term on the Google.cn site as of 9 a.m. local time today, according to data available on the company’s mainland Chinese Web site. China strictly controls information on the crackdown. The searches underline the growing conflict China faces as government efforts to control online content confront a surging population of Internet users who demand greater access to information. Hundreds of Chinese Web users gathered last week at Google’s Beijing offices to show support after the company said it may leave the nation. Google said today it’s meeting with the government and continues to censor its China site. “Irrespective of where one stands on the political spectrum of China, people will still be curious to test if censorship has been lifted,” said Cherian George, an associate professor at Nanyang Technological University, said by telephone from Singapore. “Internet censorship is ineffective in stopping determined activists or the highly-committed information seeker.” Google said last week it had discovered “highly sophisticated” attacks on its network emanating from China and attempts to access the accounts of human rights activists using its Gmail e-mail service. Internet Censorship Those attacks and increased limits on free speech online in the past year led Google to say Jan. 12 it was no longer willing to censor Google.cn and may shut the site and its offices in China if unable to reach an agreement with the government on operating an unfiltered search engine. Google continued today to censor its site in compliance with Chinese laws, Jessica Powell, a Tokyo-based spokeswoman at the company, said by e-mail. Searches for information on the Tiananmen Square crackdown began soon after Google’s announcement last week on censorship. “Tiananmen Square incident video” was the second fastest growing search term on Google.cn as of 6 p.m. on Jan. 14., according to data from the Web site. Terms related to the Tiananmen Square protests weren’t among Google.cn’s most-searched for in November and not one of the top 10 searches for 2009, according to data available on the Web site. Google.cn’s most-popular searches last year were for information about the solar eclipse that darkened China in July and the violent ethnic rioting that hit China’s westernmost Xinjiang province the same month, according to the data. Acid-Tests “The sudden surge in searches for Tiananmen related topics shows users have been trying to work out whether Google has now dropped censorship altogether,” said Isaac Mao, a fellow at Harvard University’s Berkman Center for Internet & Society . “Subjects like Tiananmen are good acid-tests.” Searches for information on the crackdown fell to the seventh-fastest growing as of 11 a.m. local time today. The fastest-growing volume of queries was for the Web log of Chinese financial analyst Wang Weichen. Differing phrases for Google’s departure from China were the fifth and 18th fastest growing searches, according to the site. China is the world’s biggest Internet market. It was home to 384 million Web users at the end of 2009, according to the China Internet Network Information Center, a government agency that registers online domain names. That’s more than triple the 110 million users the nation had four years ago when Google opened its mainland China site. Blocked Sites Authorities censor online content deemed critical of the government by shutting domestic Web sites and blocking access to ones based overseas, including those of Facebook Inc. and Twitter Inc. The Chinese government shut more than 100,000 Web sites in December in an “escalation” of its censorship efforts, according to Pali Capital Inc. analyst Tian Hou. Google agreed to censor search results on Google.cn when the Mountain View, California-based company started the site in January 2006. The company said it opened the site “in the belief that the benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor the results.” The company had a 35.6 percent share of the Chinese market last year, trailing leader Baidu Inc. ’s 58.4 percent share, according to researcher Analysys International. Chinese Support Crowds of Chinese Internet users gathered outside Google’s Beijing office after the company’s announcement. They arrived at the Tsinghua Science Park in western Beijing in freezing temperatures to lay fresh-cut flowers, candles and hand-written letters in front of the building. “The government was right in filtering some stuff on the Internet but we need more sources of information to separate truth from rumor,” said Shen Shihai, a 27-year-old who works for a technology company in the western city of Chengdu and took time out of a business trip to the Chinese capital to visit Google’s offices. The nation’s system of internet censorship, dubbed the “Great Firewall of China,” is the world’s most pervasive, according to Harvard University’s Berkman Center for Internet & Society. On the tablet outside Google’s Beijing offices where its logo is inscribed, Shen left a note that read in Chinese, “Google, bye. See you on the other side of the wall.” — With assistance from Alfred Cang in Shanghai. Mark McCord in Hong Kong. Editors: John Liu, Bret Okeson To contact Bloomberg News staff for this story: Baizhen Chua in Beijing at +86-10-6649-7561 or Bchua14@bloomberg.net Mark Lee in Hong Kong at +852-2977-6909 or Wlee37@bloomberg.net

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U.S. Stocks Drop From 15-Month High as JPMorgan Spurs Bank Profit Concern

January 16, 2010

By Nikolaj Gammeltoft Jan. 16 (Bloomberg) — U.S. stocks fell, pulling the Standard & Poor’s 500 Index down from a 15-month high, after profits at Alcoa Inc. and JPMorgan Chase & Co. disappointed investors and China took actions to slow economic growth. Alcoa , the biggest U.S. aluminum producer, dropped 8.2 percent, the largest weekly retreat since October, after fourth- quarter earnings trailed analysts’ estimates. JPMorgan Chase , the second-biggest U.S. financial company, slumped 2.2 percent after posting a loss in its retail banking unit. Phone companies in the S&P 500 fell 4 percent as a group, the most among 10 industries, on concern a new calling plan by Verizon Communications Inc. will spur a price war. “The corporate reports reflect that we have a fragile global recovery,” said Stephen Wood , who helps oversee $176 billion as chief market strategist for North America at Russell Investments in New York. “The market is digesting the confirmation that this will be a mediocre-but-real, tepid-but- measurable economic recovery.” The S&P 500 fell 0.8 percent to 1,136.03 after climbing to 1,148.46 on Jan. 14, the highest level since October 2008, boosted by consumer stocks. The Dow Jones Industrial Average lost 8.54 points, or 0.1 percent, to 10,609.65. Alcoa and JPMorgan heightened concerns that companies in the S&P 500 will fall short of analysts’ estimates calling for a combined 67 percent increase in fourth-quarter earnings, the first year-over-year gain in two years. The benchmark index for American equities has rallied 68 percent since March on speculation that interest rates near zero percent and more than $8 trillion of government spending and guarantees will end the worst recession since the 1930s. China Stocks fell around the world, with the MSCI World Index of 23 developed nations posting a weekly retreat of 0.2 percent. China raised bank reserve requirements for the first time since June 2008 to cool the world’s fastest-growing major economy. China expanded an estimated 8.5 percent last year. “China was the most aggressive and probably the earliest in terms of economic stimulus,” Wood said. “Now, we’re seeing them wean off that policy to avoid creating an asset bubble they can’t control, and that also set the tone for the week.” Alcoa’s results helped halt a six-day rally in the S&P 500 on Jan. 12, the strongest start to a year since 2006. The New York-based company fell the most in the Dow average, losing $1.82 to $15.63 after reporting profit excluding certain items of 1 cent a share, trailing the 6-cent average estimate of analysts. JPMorgan Results JPMorgan , the first of the largest U.S. banks to report fourth-quarter results, declined $1 to $43.68. The New York- based lender’s retail unit posted its first quarterly loss since the beginning of 2008, and the company boosted reserves for consumer loans by $1.9 billion. Goldman Sachs Group Inc. fell 5.2 percent on the week to $165.21. Bank of America Corp. lost 3.1 percent to $16.26. Intel slipped 0.1 percent to $20.80 after reporting earnings and sales beat the average analyst estimate. The world’s largest chipmaker posted fourth-quarter net income of 40 cents a share. Analysts surveyed by Bloomberg estimated net profit of 31 cents on average. “The earnings stories have been a mixed bag with moving parts,” said Michelle Clayman , chief investment officer at New Amsterdam Partners in New York, which manages $3 billion. “JPMorgan, Alcoa and to some extent even the Intel numbers are disappointing because they don’t give the market a sense of a clear direction.” Google, Verizon Google Inc. fell 3.7 percent to $580. The world’s most popular Internet search engine said it may shut its Chinese Web site following cyber attacks on e-mail accounts of human-rights activists. Verizon and AT&T Inc. , the largest mobile phone companies in the U.S., fell at least 3.7 percent after Verizon Wireless cut the price of calling plans with unlimited talk time. Merck & Co. had the biggest gain in the Dow Jones Industrial Average, adding 4.7 percent to $39.47. The drugmaker was rated “outperform” by Credit Suisse Group AG, which cited products that may be introduced over the next six to 24 months. Supervalu Inc. climbed the most in the S&P 500. The second- largest U.S. grocery chain rose 11 percent to $14.32 after lower costs pushed third-quarter profit above analysts’ estimates. Citigroup, Google and McDonald’s Corp. are among 65 companies in the S&P 500 scheduled to release quarterly results next week. To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

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Yahoo Said to Be a Target of China Hacker Attacks

January 14, 2010

By Brian Womack and Ari Levy Jan. 14 (Bloomberg) — Yahoo! Inc. , owner of the No. 2 search engine in the U.S., was targeted by a Chinese attack similar to the one that affected Google Inc. , according to a person familiar with the matter. Google said this week that at least 20 other companies were targeted in a series of “highly sophisticated” attacks in December. Yahoo was one of those companies, said the person, who declined to be identified because the information isn’t public. Google said this week that it’s notifying the other companies, which spanned such industries as finance, technology, media and chemicals. Google declined to identify them. The Chinese attacks also included hackers going after human-rights activists via their Gmail e-mail accounts, Google said. The popularity of Yahoo’s e-mail service could have made it a target, said Danny Sullivan , editor-in-chief of the Search Engine Land site in Redding, Connecticut. “People are looking for places to communicate, and communicate without the Chinese authorities restricting them.” Yahoo, which said it “stands aligned” with Google in condemning the attacks, doesn’t disclose attacks on its computer systems. Yahoo sold its Chinese business in 2005, though it has a stake in the country’s Alibaba Group. “ Yahoo does not generally disclose that type of information, but we take security very seriously and we take appropriate action in the event of any kind of breach,” the company said in a statement. Adobe Attacked After Google’s announcement, Adobe Systems Inc. said its network systems also were attacked, in a “sophisticated, coordinated” effort. San Jose, California-based Adobe, the world’s biggest maker of graphic-design programs, didn’t say where the attack originated. Google , the most popular search engine, said this week it would end self-censorship of its product in China. Depending on how the government reacts, the Mountain View, California-based company said it may have to close its site and shut down offices in the country. The Chinese government said global Internet companies are welcome in the country provided they obey laws that restrict their content. “The Chinese government administers the Internet according to law and we have explicit stipulations over what content can be spread on the Internet,” Jiang Yu , a Foreign Ministry spokeswoman, said at a regular briefing in Beijing today. A separate Chinese government official today defended the nation’s right to censor the Internet. ‘Protecting Security’ “Effective guidance of public opinion on the Internet is an important way of protecting the security of online information,” Wang Chen, director of the State Council Information Office, said in a question-and-answer session with reporters, a transcript of which was posted on the office’s Web site today. Wang’s remarks suggest China will not grant Google’s request to allow unfiltered Internet searches, said Duncan Clark , the Beijing-based chairman of BDA China, a telecommunications and Internet consulting company. “Google.cn is toast,” Clark said in an interview. “Just keep pressing refresh on your browser and see what happens.” An exit would leave Google on the sidelines of an Internet market that’s larger than the U.S. population. The number of Chinese Internet users should grow to 840 million, or 61 percent of the population, by 2013, according to EMarketer Inc. in New York. That’s up from 396 million, or 30 percent of the population, last year. Google and Yahoo were criticized by U.S. lawmakers in 2006 for complying with the Chinese government’s restrictions on the Internet. Yahoo co-founder Jerry Yang said in 2005 that a court order obliged the Sunnyvale, California-based company to hand over user records. That move led to the conviction of a Chinese journalist. Yahoo rose 22 cents to $16.90 on the Nasdaq Stock Market. Google fell $3.39 to $587.09. To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net Ari Levy in San Francisco at alevy5@bloomberg.net

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`Don’t-Be-Evil’ Guys Tell China to Google This: William Pesek

January 13, 2010

Commentary by William Pesek Jan. 14 (Bloomberg) — Sergey Brin and Larry Page are finally living up to their motto: “Don’t Be Evil.” It turns out that Google Inc. ’s founders have a conscience even after helping China censor cyberspace. Yesterday, the most popular Internet search engine said it may shut its Chinese Web site and offices. It’s about time, guys. It was always as distasteful as it was incongruous for the banner-waver of the information economy to help China keep its 1.3 billion people in the dark. In a January 2006 column, for example, I suggested we should be honest and refer to it as CommunistGoogle.com. Better late than never, though. Such a high-level rebuke is important because it shines a spotlight on how much energy governments expend on censoring the Internet. This conversation is about to get more traction than ever. It’s one that Asian officials from Beijing to Jakarta very much need to have for the good of their economies. This story has many facets. One is the “what-were- these-otherwise-bright-guys-thinking?” question. Google seems oddly aghast at discovering a “highly sophisticated” attack aimed at gaining access to e-mail accounts of human- rights activists. You would think that with their collective intelligence, Brin and Page might have known they weren’t dealing with Sweden. Google’s Gesture Another is how shareholders will respond to Google imperiling its future in the nation with the most Internet users. After all, few others have been willing to do that. Not Bill Gates ’s Microsoft Corp., not the techies at Yahoo! Inc. and not the engineers at Cisco Systems Inc. Technology companies tend to see dollar signs, not ethical dilemmas, when operating in China. The onus is now on them to match Google’s gesture. Finally, there may be diplomatic fallout. U.S. Secretary of State Hillary Clinton called on China to explain allegations that “raise very serious concerns and questions.” President Barack Obama is off to a rocky start with the biggest holder of U.S. Treasuries. He may come under pressure to take a harder line toward China. The issue here is how the third-largest economy effectively ties one arm behind its back. It’s also about how many Asian governments ignore the consequences of policing cyberspace, much to the detriment of their economic futures. Greater Accountability The democracy-is-always-best mantra doesn’t help here. Yet a free press and unfettered cyberspace are ingredients for nations to thrive. In China’s case, the key to broadening the benefits of 10 percent growth is tackling official corruption and protecting the environment. Only greater public accountability will achieve that, and only increased transparency will provide it. It’s not just China, Myanmar and North Korea that block the Web. Countries such as India, Indonesia and Thailand aren’t above blocking sites or content from time to time. Lawmakers in Japan and South Korea have been making noises about new Internet-content rules. Google’s China move may prompt politicians to reconsider such measures. Transparency pressures corporate executives , too. Sure, muckraking journalists sometimes go too far. Scandals sell newspapers. The press and the Internet play important roles in keeping top managers honest. Last year’s safety scares involving Chinese seafood, dumplings, pet food, toothpaste, medicine and toys could have been uncovered sooner if information flowed more freely. Censoring the Internet It is hard to know how any major economy could create an indigenous technology industry while censoring the Internet. Pundits always said controlling the Web would be futile. Governments, they argued, would find it harder and harder to police fast-changing technologies and fast-learning bloggers. The opposite happened in China. There, the trend has been ever-tighter control, an evolving effort that was very much on display during the Beijing Olympics in 2008. China is learning, adapting and improving its censorship mechanisms. The Great Firewall of China is hard to beat. Critics will still find much to dislike about Mountain View, California-based Google. They argue it threatens everything from privacy to intellectual property to national security. And the way Google mines Gmail-message content for advertising purposes is a bit too China-like for comfort. Maybe the motto “Don’t Be Evil” should morph into something like “Don’t Be Too Evil.” Hats Off Hats off to Google, though. Shareholders won’t be happy that a China pullout would deprive Google of an estimated $600 million in annual revenue from 338 million Internet users. And it’s safe to say investors in Baidu Inc. , China’s most popular search engine, are jumping for joy over that possibility. It’s the right thing for Google to do. The company said at least 20 other large enterprises in industries such as finance, technology, media and chemicals had been targeted by hackers. The attacks, combined with increasing attempts to limit free speech on the Web, were an obvious last straw for Silicon Valley’s most-watched company. Technology peers should follow Google’s example and stop selling their corporate souls to China’s Communist Party. ( William Pesek is a Bloomberg News columnist. The opinions expressed are his own.) Click on “Send Comment” in the sidebar display to send a letter to the editor. For Related News and Information: China’s economic growth: GDPNTTLY GP On Google earnings: GOOG US TCNI ERN More Pesek columns: NI PESEK More Bloomberg columns: NI COLUMNS or OPED

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Stocks in U.S., Europe Advance as Bonds, Crude Oil Retreat; Pound Climbs

January 13, 2010

By Gavin Serkin Jan. 13 (Bloomberg) — Emerging-market stocks and oil slid, while the pound rose, as central banks prepared to scale back emergency economic support. U.S. equities advanced as Kraft Foods Inc. said profit topped its forecast and analyst upgrades lifted consumer and drug companies. The MSCI Emerging Markets Index slipped more than 1 percent at 11:28 a.m. in New York, its biggest drop since Dec. 17, and the Shanghai Composite Index lost 3.1 percent, the most in seven weeks. The Standard & Poor’s 500 Index added 0.2 percent, while Google Inc. lost 1.3 percent after saying it may exit China. Oil dropped below $79 a barrel, and corn plunged to a more than two- month low. The pound strengthened against all 16 major counterparts and government bonds slid, with the 10-year Treasury note yield rising 3 basis points to 3.74 percent. Federal Reserve Bank of Philadelphia President Charles Plosser said U.S. rates should rise as the economy recovers. The Bank of England’s Andrew Sentance was cited by the Guardian as saying policy makers may have to increase U.K. borrowing costs this year. China yesterday raised the proportion of deposits banks must set aside as reserves, a move that may herald an interest-rate increase. “China tightened policy sooner than people were thinking, so that spooked the market,” said Nicholas Field , who helps manage about $11 billion in emerging-market stocks at Schroders Plc in London. “We have now passed that sweet spot where economies are starting to recover and there is a great earnings boost from the low point. This is not a collapse or a crash, but we will get a correction.” China, Dubai Banks in China will need to increase deposits set aside as reserves starting Jan. 18, sooner than the April timing predicted by economists in a Bloomberg survey last week. Industrial Bank Co. slumped 6.5 percent in Shanghai. Hong Kong’s Hang Seng Index dropped 2.6 percent, the most since Nov. 27. The S&P 500, the benchmark gauge for U.S. equities, rebounded after dropping yesterday for the first time this year. Kraft added as much as 2.8 percent, while Merck & Co. and Wyndham Worldwide Corp. added at least 3.6 percent as analysts advised buying the shares. Google, the owner of the most popular Internet search engine, fell 1.5 percent after saying it may shut its Chinese Web site and offices after a “highly sophisticated” cyber attack aimed at the e-mail accounts of human-rights activists. Crude oil futures fell after a government report showed a bigger-than-forecast increase in inventories. Crude dropped as low as $78.37 a barrel in New York. Corn for March delivery dropped as much as 6.2 percent to $3.68 a bushel in Chicago trading, the lowest on an intraday basis since October, after the U.S. raised its production estimate to a record. Wheat declined 1.5 percent. Dubai Slumps Dubai led stock declines in the Gulf with the Dubai Financial Market General Index dropping 2.7 percent to a four- week low and Abu Dhabi’s index retreating 1.6 percent. The MSCI World Index of 23 developed nations’ stocks lost 0.3 percent as shares in Asia fell the most in almost seven weeks. Japan Airlines Corp. tumbled 81 percent to a record low on concern it will file for bankruptcy. Europe’s Dow Jones Stoxx 600 Index fluctuated between gains and losses. Infineon Technologies AG rose more than 3.4 percent in Frankfurt after Goldman Sachs Group Inc. recommended Europe’s second-largest maker of semiconductors. Societe Generale SA, France’s second-biggest bank by market value, led banks lower, plunging more than 3.4 percent in Paris after saying it had 1.4 billion euros ($2.03 billion) of writedowns and provisions on risky assets in the fourth quarter. Pound Rallies The pound advanced 0.7 percent against the dollar and 0.7 percent compared with the euro after the Guardian cited Sentance as saying policy makers have done enough to stimulate the economy. Gilts dropped, with the yield on the two-year note rising four basis points to 1.23 percent. Treasuries fell for the first time this week before the government auctions $21 billion of 10-year securities today, part of $84 billion of notes and bonds being sold this week. The ten-year note yields rose three basis points to 3.74 percent. Governments around the world are selling unprecedented amounts of debt to help finance stimulus measures designed to revive their economies. Germany’s gross domestic product fell 5 percent in 2009, after expanding 1.3 percent in 2008, the Federal Statistics Office said in Frankfurt today. Germany, Italy and Portugal sold a combined 16.3 billion euros ($24 billion) of debt today. To contact the reporter on this story: Gavin Serkin at gserkin@bloomberg.net

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Asian Stocks, Copper, Oil Fall as China Forces Banks to Increase Reserves

January 12, 2010

By Darren Boey Jan. 13 (Bloomberg) — Asian stocks fell the most in more than five weeks, while copper and oil declined after China raised the amount banks have to hold in reserve. Hong Kong’s Hang Seng Index slumped the most in seven weeks. The MSCI Asia Pacific Index lost 1.1 percent to 125.09 as of 2:10 p.m. in Tokyo, led by banks and commodity producers. Copper dropped 0.7 percent in London and oil declined 1 percent in New York. South Korea’s won fell 0.2 percent to 1,125.45 per dollar, while the Malaysian ringgit sank 0.2 percent to 3.348 on concern China’s policy move will slow growth in Asia. Investors are getting more skittish after China, which is leading the recovery from the global economic slump, yesterday raised the bank reserve ratio after allowing bill yields to climb in the past week in an attempt to cool inflation and unsustainable gains in property and stock prices. The cost of insuring against defaults in Asia rose and Indonesia scaled back plans to raise funds. “Anything related to China has been affected,” said Jason Teh , who helps manage $3.2 billion at Investors Mutual in Sydney. “The increasing of the reserve requirements by the Chinese banks is weighing down on commodity-related exposures. Commodities were heavily relying on the China story.” The MSCI Asia Pacific Index’s drop snapped a three-day, 2.6 percent advance. Futures on the Standard & Poor’s 500 Index added 0.2 percent. The index fell 0.9 percent in regular trading. Unexpected Decision China’s Shanghai Composite Index fell 2.3 percent and Hong Kong’s Hang Seng Index dropped 2.2 percent, the most since Nov. 27, as the Chinese central bank’s unexpected move to restrain lending spurred concern that higher interest rates will follow. The People’s Bank of China yesterday raised the proportion of deposits that banks must set aside as reserves by 50 basis points starting Jan. 18. Economists hadn’t anticipated the move until at least April, the median of 11 forecasts in a Bloomberg News survey showed last week. “It marks the government’s exit from the overly loose monetary policy put in place last year,” said Yan Ji, who helps oversee $1.2 billion at HSBC Jintrust Fund Management Co. in Shanghai. “We expect a one-off interest-rate rise in the second half of the year.” Industrial & Commercial Bank of China Ltd. , the country’s biggest lender, slid 3.9 percent to 5.13 yuan in Shanghai. and China Construction Bank Corp. fell 3.2 percent to 5.97 yuan. Baoshan Iron & Steel Co. , China’s biggest steelmaker, lost 4.1 percent to 8.63 yuan after Morgan Stanley cut its rating on the Chinese steelmaker to “equal-weight.” Google Shutdown? Along with the reserve ratio, the PBOC has increased rates at bill auctions in the past week. The bank guided three-month bill yields higher for the first time in 19 weeks a Jan. 7 auction and followed with a similar step at a sale of one-year bills yesterday. Shares of Google Inc. , owner of the most popular Internet search engine, dropped 1.1 percent in U.S. after-hours trading. The company said it’s considering shutting its Chinese Web site and offices after discovering a “highly sophisticated” attack last month aimed at gaining access to e-mail accounts of human- rights activists. Baidu Inc. , operator of China’s most popular online search engine, rose 7 percent to $413.52 after hours. Export-related shares around the region fell on concern a slowdown in China demand may hurt sales. LG Electronics Inc. , the world’s second-biggest maker of liquid-crystal-display televisions, lost 1.8 percent to 110,000 won. Komatsu Ltd., which gets 18 percent of its revenue from China, dropped 2.5 percent to 2,044 yen in Tokyo. Commodity Producers “China is making a faster-than-expected tightening move, and that should have a short-term impact on countries that depends much on the nation for exports such as South Korea,” said Kim Yong Tae, a fund manager at Yurie Asset Management Inc., which manages the equivalent to $2.7 billion in assets. Shares of Asian commodity producers declined on concern demand in China will decline. Korea Zinc Co. , the world’s second-biggest zinc refiner, fell 4.4 percent to 194,000 won. Cnooc Ltd., China’s largest offshore oil producer, sank 4 percent to HK$12.66. Alumina Ltd. slumped 3.3 percent to A$1.895 in Sydney. Copper for three-month delivery in London fell 0.7 percent to $7,405 a metric ton. Copper for March delivery in New York increased 0.5 percent to $3.3645 a pound, rebounding from a 1 percent drop, as yesterday’s 2.7 percent loss, the biggest for the most active contract since Oct. 1, attracted buyers. Aluminum for April delivery in Shanghai dropped 3.9 percent, having earlier slumped 5 percent from the previous settlement, the most allowed by the exchange in one day. Record Crop Corn for March delivery in Chicago lost as much as 3.4 percent to $3.79 a bushel, the lowest price since Dec. 9. The drop extended a 7.1 percent slump yesterday, the largest for the most active contract since June 30, after the government said U.S. farmers harvested a record crop and projected bigger global inventories before the next harvest. It traded at $3.81 a bushel at 12:15 p.m. Singapore time. Oil declined for a third a day as the American Petroleum Institute reported an increase in U.S. crude and distillate supplies. Crude oil for February delivery dropped as much as 1.3 percent to $79.78 a barrel in electronic trading on the New York Mercantile Exchange, and was recently at $80.02. Yesterday, the contract fell 2.1 percent to settle at $80.79, the biggest one- day decline since Dec. 9. Bond risk rose today as investors grew more wary about corporate creditworthiness. The Markit iTraxx Japan index added 4 basis points to 121 basis points, according to Morgan Stanley. The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan was little changed at 88.5 basis points, having earlier climbed 2.5 basis points, ICAP Plc prices show. Larger Role The Markit iTraxx Australia index climbed 4 basis points to 80.5 basis points, Citigroup Inc. prices show. That’s the highest since Jan. 5, according to CMA DataVision. “The tightening in China is trimming expectations that we have more growth on the road, and markets are going to be less supported,” said Sebastien Barbe , a Hong Kong-based strategist at Calyon. “It means all the support from China in the last year is going to moderate for Asia.” Dominique Strauss-Kahn, the International Monetary Fund’s managing director, said in September that China will play a larger role in shaping a sustainable recovery from the global recession. The IMF has forecast 9 percent growth for China next year and 6.5 percent for India. The Group of Seven economies are forecast by the IMF to expand just 1.25 percent in 2010. The difference in yield to own bonds in developing countries instead of Treasuries widened 7 basis points in the past two days to 2.71 percentage points yesterday, according to the JPMorgan Emerging Markets Bond Index Plus . Indonesia yesterday sold $2 billion in 10-year bonds at a higher yield than the similar-rated Philippine government, even after cutting the size of its issuance and scrapping plans for a 30-year issuance. — With assistance from Glenys Sim and Luzi Ann Javier in Singapore, Tom Kohn and Bob Chen in Hong Kong, Zhang Shidong in Shanghai, Saeromi Shin in Seoul and Ben Sharples in Melbourne. Editors: Darren Boey , Patrick Chu . To contact Bloomberg News staff for this story: Darren Boey in Hong Kong at +852-2977-6646 or dboey@bloomberg.net .

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Google to Stop Censoring China Results, May Shut Site

January 12, 2010

By Brian Womack and Ari Levy Jan. 12 (Bloomberg) — Google Inc. , owner of the world’s most popular Internet search engine, plans to stop censoring results on its Chinese site, Google.cn, a move that may lead to shutting down the service. The company said it will discuss the plan with Chinese authorities and is willing to close the site, according to a blog post today. Google also said it has evidence that an attack on its China Web site was aimed at accessing Gmail accounts of Chinese human-rights activists. “Over the next few weeks, we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all,” the Mountain View, California-based company said. “We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.” Google has clashed with authorities since it started a censored version of its site four years ago in China, which leads the world in Internet users. The company said today that attacks on its site and surveillance of users prompted it to review its business operations in the country. The move signals that Google is hewing closer to its “Don’t be evil” motto, said Heath Terry , an analyst at FBR Capital Markets. “This is their way of opening up this important conversation,” said Terry, who is in New York. “This is their way of starting to move the conversation forward.” Google is still a “long way away from getting out of China,” Terry said. The company can threaten to leave the country because China accounts for such a small piece of Google’s sales, he said. Baidu Gains Google’s president of its Chinese operations, Kai-Fu Lee , stepped down in September. The country’s online search market is dominated by Chinese company Baidu Inc. Google fell $10.48, or 1.8 percent, to $580 in extended trading after closing at $590.48 on the Nasdaq Stock Market. The shares have dropped 4.8 percent this year. Baidu’s American Depository Receipts added $13.51, or 3.5 percent, to $400 in extended trading. In investigating the attack on its own site, Google said it discovered that at least 20 other large companies in industries such as finance, technology, media and chemicals had been similarly targeted. Google said it is in the process of notifying those companies and working with the “relevant U.S. authorities.” Gmail Accounts Dozens of accounts of Gmail users, who are advocates of human rights in the U.S., China and Europe, were accessed, most likely through “phishing scams or malware placed on the users’ computers,” Google said. Only two of those accounts appear to have been accessed and the information gathered was limited to account information, such as the date created and the subject line, not the content of the e-mails, Google said. In June, Google suspended its “suggest” search prompt feature on its Chinese site after the local-language service was criticized by the government for providing links to pornographic material. China adopted “punitive measures” against the company’s international site, Foreign Ministry spokesman Qin Gang said on June 25, and the service became inaccessible to Chinese Web users for hours. China has more Internet users than the total population of the U.S., according to the China Internet Network Information Center , a government-backed agency that licenses online domain names. To contact the reporter on this story: Brian Womack in San Francisco at Bwomack1@bloomberg.net ;

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Hottest Cities For Job Seekers – Where The Jobs Are Now

December 29, 2009

Just call it “the bailout effect.” Likely fueled by huge increases in government spending, Washington, D.C. may the best city in America for job seekers, according to a new ranking by the job search engine JuJu.com. The folks at JuJu.com worked off the latest data from the Bureau of Labor Statistics and compared the number of job seekers to the number of job postings on their site. According to their calculations, there are just under two unemployed individuals per advertised job in Washington, D.C. Detroit ranked at the bottom on the list, with nearly 21 unemployed people for every job posting. To be fair, Juju.com’s method leaves a little bit to be desired. Rival job site Indeed.com runs its own set of rankings using a very similar calculation and comes up with some very different numbers. In an October ranking , Indeed.com also found the nation’s capitol to be the best city to find a job, but came up with a significantly lower job seeker-to-job posting ratio. And earlier this year, the Milken Institute, a nonpartisan think tank, got even more granular and examined smaller cities’ job-creating potential by examining things like costs, wages, taxes and technology. (Cities in Texas dominated the list .) Still, by sheer number of publicly advertised positions, Juju.com’s list suggests a few unexpectedly hot cities. Here’s the top ten: 1 Washington, DC 1.87 2 San Jose, CA 2.68 3 Baltimore, MD 2.91 4 Boston, MA 3.11 5 New York, NY 3.35 6 Salt Lake City, UT 3.35 7 Hartford, CT 3.60 8 Denver, CO 3.81 9 San Antonio, TX 3.84 10 Austin, TX 4.30 Here are the bottom ten cities on JuJu.com’s list: 40 Portland, OR 8.91 41 Orlando, FL 8.92 42 Providence, RI 0 9.23 43 Birmingham, AL 9.62 44 Los Angeles, CA 10.43 45 Sacramento, CA 10.97 46 Las Vegas, NV 11.85 47 Riverside, CA 12.35 48 Miami, FL 0 14.47 49 St. Louis, MO 17.98 50 Detroit, MI 20.76 Get HuffPost Business On Facebook and Twitter !

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U.S. Stocks Rise as Oil Helps S&P 500 Index Erase Half of Bear-Market Drop

December 23, 2009

By Rita Nazareth Dec. 23 (Bloomberg) — U.S. stocks advanced, erasing half the Standard & Poor’s 500 Index’s loss from the bear market that ended in March, after consumer spending rose and rallies in oil and copper drove gains in commodity producers. Schlumberger Ltd. , the biggest oilfield contractor, and Yahoo! Inc. , the second most-popular search engine, rallied at least 2.7 percent as crude climbed to almost $76 a barrel and analysts advised buying the shares. New York Times Co. and Gannett Co. jumped as Wells Fargo & Co. upgraded the newspaper owners. Home Depot Inc. and Lowe’s Cos. slid at least 1.4 percent after purchases of new homes unexpectedly dropped. The Standard & Poor’s 500 Index rose 0.3 percent to 1,120.90 at 1:53 p.m. in New York, surpassing 1,120.84, the level marking a 50 percent recovery of losses from the biggest stock-market collapse since the 1930s. The Dow Jones Industrial Average added 7.33 points, or 0.1 percent, to 10,472.26. “The path of least resistance will continue to be to the upside,” Robert Doll , who helps oversee about $3.2 trillion as chief investment officer for global equities at New York-based BlackRock Inc., said in a Bloomberg Television interview. The economic recovery “means earnings should be somewhat better and liquidity should still be plentiful. That’s a recipe for equities moving higher,” Doll said. Stocks rose at the start of trading after consumer spending increased and rallies in oil and copper drove gains in commodity producers. The S&P 500 erased its gain after the government’s report on new-home sales. Equities gained yesterday, sending the stock index to its highest level since October 2008, after existing home sales topped forecasts. Best Year Since ‘03 The S&P 500 has climbed 24 percent this year, poised for the biggest annual gain since 2003. Equities have been buoyed by record-low interest rates and by governments worldwide that have committed about $12 trillion to revive the economy. Spending by U.S. consumers increased in November for the sixth time in seven months as households took advantage of holiday discounts. The 0.5 percent increase in purchases was smaller than the median estimate of economists surveyed by Bloomberg News, Commerce Department figures showed. Incomes climbed 0.4 percent, the biggest increase since May, and price measures showed inflation cooled. ‘Spending Mode’ “Consumers are in a spending mode,” said Michael Mullaney , a money manager at Fiduciary Trust Co. in Boston, which oversees $9 billion. “The economy and earnings will continue to surprise. Stocks should still do pretty well.” Schlumberger added 2.8 percent to $65.74 as crude oil rose for a second day. The shares were raised to “overweight” from “equal weight” at Barclays Plc, which cited the company’s “financial strength, deep management and a product line that benefits more than most from increased exploration activity.” Yahoo gained 3.8 percent to $16.58. The stock was rated “overweight” in resumed coverage at Morgan Stanley, which cited usage growth after the company redesigned its homepage and improvement in the online advertising market. Gannett Co. jumped 5 percent to $15.13. The USA Today publisher was raised to “outperform” from “underperform” by Wells Fargo & Co., which said “the newspaper ad market is improving more quickly than we previously anticipated, particularly in December.” New York Times Co. had the biggest gain in the S&P 500, surging 8.2 percent to $11.93 after Wells Fargo upgraded the newspaper publisher to “market perform” from “underperform.” Housing Incentives Purchases of new homes in the U.S. unexpectedly fell last month, spurring concern that a recovery from the worst housing slump since the Great Depression will be slow to develop. Purchases dropped 11 percent to an annual pace of 355,000, lower than the lowest estimate of economists surveyed by Bloomberg News, figures from the Commerce Department showed. The prospect that a government tax incentive would expire, combined with a 10 percent jobless rate and competition from foreclosed properties may have hurt builders such as Beazer Homes USA Inc. President Barack Obama and Congress extended an $8,000 first-time buyer credit and expanded it to include current homeowners in a bid to boost demand. Still, the measure may have pulled sales forward and could result in fewer purchases in coming months. “Today’s home sales report is not an indication that the recovery is in jeopardy,” said Scott Tapley , who helps oversee $2.5 billion at 1st Source Investment Advisors Inc. in South Bend, Indiana. “The numbers have been distorted for the past six months by the expiration and then the extension of the first-time buyer incentive credit, so there’s a lot volatility in those figures.” Home Improvement Home Depot , the biggest home-improvement retailer, fell 1.4 percent to $28.88, while Lowe’s , the second-largest, lost 1.9 percent to $23.40. Financial companies had the biggest decline among 10 S&P 500 industries, falling 0.3 percent, while banks retreated 1.3 percent, for the biggest drop among 24 industries. American International Group Inc. fell 4.8 percent to $29.58. The company’s consumer lending unit was downgraded to junk by Moody’s Investors Service on prospects the bailed-out insurer may stop supporting the business after November 2010. JPMorgan Chase & Co. declined 0.9 percent to $41.57. The second-biggest U.S. bank had its 2009 estimates lowered by Rochdale Securities LLC analyst Richard Bove , who cited a slowdown in trading in the fourth quarter. Cintas Corp. had the biggest decline in the S&P 500, dropping 11 percent to $26.41. The largest U.S. supplier of uniforms reported second-quarter earnings excluding some items of 39 cents a share. Ten analysts estimated earnings of 43 cents, on average, in a Bloomberg survey. Recouping Losses The S&P 500 has recouped half the losses following its October 2007 peak, a sign to chart watchers that the index may gain 9.4 percent to 1,226. A so-called 50 percent retracement suggests that the index is likely to next regain 61.8 percent of losses since its peak, according to the Fibonacci analysis. The bear market between October 2007 and March 9, 2009, drove the S&P 500 down 57 percent to 676.53. The index reached an all-time high of 1,565.15 two years ago. Financial markets in the U.S. have rebounded to the healthiest state since the freezing of investment funds by BNP Paribas SA in August 2007 marked the start of the credit crisis. The Bloomberg U.S. Financial Conditions Index rose to 0.063 after holding below zero for the past 28 months. The gauge tracks how far indicators such as bond yield spreads, the S&P 500 and Chicago Board Options Exchange Volatility Index, or VIX, stray from their averages between 1994 and June 2008. The VIX index , the benchmark for U.S. stock volatility, slipped below 20 yesterday for the first time since August 2008, signaling this year’s rally in equities has quelled demand for protection against market swings. To contact the reporter on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net .

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Ron Ashkenas: Restrict My Choices, Please

December 22, 2009

Cross-posted from Harvard Business Online I don’t know about you, but to me the holiday shopping process can be overwhelming. No matter what gift category you want to consider, there are dozens of physical and web-based channels to explore; and within each channel there are hundreds of potential products; and for many of the products, there are dozens of variations. For people with decidophobia (fear of making decisions), it must be a nightmare. For everyone else, it’s simply mentally exhausting. While the abundance of consumer choice is most exaggerated during the holidays, it is really a year-round issue . We’ve become a culture of product and service proliferation. We add more and more choices on the assumption that each consumer has very specific, unique, tastes and needs. And since companies have the capability to mass customize, they take advantage. For example, the iPhone App Store adds 10,000 new applications every week. It’s an incredible outpouring of creativity from all corners of the globe and it’s revolutionizing mobile telephony, computing, and day-to-day behavior. That’s the positive side. But there are downsides too. First is the question of how we choose which of the many products and variations we actually want. No matter how good a search engine is attached to the products, we still end up with more possibilities than anyone can comprehend. And much of the time, we can’t even think of the right questions to put into the search process, or we don’t know enough to make good choices. So we get overwhelmed with information. And at the end of the day, when we’ve made a supposedly informed choice, we learn of someone else that made a different choice and feel that maybe we bought the wrong thing. Think of the two people sitting next to each other on the airplane that find out that they each paid completely different fares for the same trip. Another downside is the cost involved in supporting and managing all of the alternative products and services. Physical stores, and even virtual ones, can only carry so much inventory, manage so much administration, and deal with so many suppliers and partners. Sure, the web-based world makes much of this easier — like with Apple’s App Store — but it still takes time and people to evaluate apps, insure their quality, and monitor their performance. With physical products and other services, the administrative and management costs are exponentially higher. Given the downsides of product and service proliferation, less choice can be a competitive advantage. One of the best examples is Aldi — a German-based chain of discount grocery stores that is rapidly expanding around the world and developing a devoted following of customers. Part of the Aldi philosophy is that less is more. Each store is limited to no more than 1,400 different items. So instead of having a dozen choices of frozen juice, you get just one or two. And if a store manager, or the company, wants to add new products, they have to subtract an equivalent number. This not only makes it easier for the consumer to make choices, but it also dramatically lowers costs that are then passed on to the consumer. It’s the opposite of the “super-store.” The Aldi philosophy may not be for every company or for every product. But it certainly is worth paying attention to as a possible antidote for a world that is becoming increasingly complex. To what extent would you welcome less choice? Ron Ashkenas is a managing partner of Robert H. Schaffer & Associates a Stamford, Connecticut consulting firm and the author of Simply Effective: How to Cut Through Complexity in Your Organization and Get Things Done .

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Nokia `Comes With Music’ Package May Be Too Late to Fight Apple’s IPhone

December 16, 2009

By Diana ben-Aaron Dec. 16 (Bloomberg) — Nokia Oyj Chief Executive Officer Olli-Pekka Kallasvuo said this month he’s “really bullish” about the company’s “Comes With Music” package, a phone bundled with unlimited songs. Analysts say it leaves them cold. Services like Comes With Music from Nokia, the world’s largest mobile-phone maker, to take on Apple Inc.’s iPhone are too little too late, said Tero Kuittinen , an analyst at Greenwich, Connecticut-based MKM Partners. “The time to really push for a premium service to compete with Apple was two to four years ago,” said Kuittinen, who has a “sell” rating on Nokia. “I give it a year before they close it.” The offering is part of Kallasvuo’s push into mobile services, which is aimed at stemming Nokia’s market-share declines. With dozens of ways to stream, rip or pirate tracks, the service faces consumers reluctant to pay for music access. Other hurdles include Apple’s stronghold on audiophiles with its pay-per-song model, the popularity of streaming services such as Spotify and carriers pushing their own offerings. Analysts view the service, unveiled about 14 months ago and touted as a strong offering by Kallasvuo at the investor meeting Dec. 2, as a test of Nokia’s ability to respond to consumer demand. Nokia’s share of the smart-phone market, the industry’s fastest-growing segment, fell to 35 percent in the third quarter from 41 percent, while Apple’s iPhone gained. Nokia has tumbled 86 percent on the Helsinki stock market since it peaked at 64.88 euros ($95.06) in June 2000. Crowded Market Sold in 15 countries, Nokia’s Comes With Music has clocked more than 10 million downloads in both Mexico and Brazil, two of its most successful markets. Spokeswoman Arja Suominen declined to provide overall numbers. Apple had 100 million downloads after iTunes had been open for about the same time, and has sold more than 8.5 billion tracks since starting in April 2003. Espoo, Finland-based Nokia is counting on music, maps, e- mail and media to increase the appeal of its smart phones. In addition to Apple’s iPhone, Nokia faces competition in this segment from Research In Motion Ltd. ’s BlackBerry, Samsung Electronics Co. ’s devices and Motorola Inc. Google Inc. , the most popular Internet search engine, is also developing a mobile phone that uses its Android operating system, making the market even more crowded. Nokia is rolling out more phones with bundled services, aiming to get 300 million service users by the end of 2011. As of Dec. 11, it had 79.4 million. Nokia last month began shipping the X6, its first phone sold only with a Comes With Music package. Its next phone with the package will be the 5235, with a suggested price of 145 euros. Pricing Confusion “We have received some great user feedback for the service,” said Liz Schimel , head of global music at Nokia. “We take a long-term view of Comes With Music rather than seeing it as a short-term promotion.” Nokia says downloading the top 100 albums on Apple’s iTunes would cost 934 euros plus the cost of the device, compared with an all-inclusive 450 euros for the X6. Still, the high upfront cost and the confusing array of Nokia’s packages have turned consumers away, analysts said. Comes With Music is available from 25 carriers on more than 20 devices. The price of the music is rolled into the handset price or monthly bills, making it difficult to see how much the music really costs. Also, the unlimited downloads end after 12 to 24 months, although users can keep the tracks on their devices. “It’s a complicated message to send to consumers,” said Paul Brindley , chief executive officer of Music Ally in London, which researches the digital music industry. “Buying access to the service is quite complex and quite hard to understand.” ‘A Disaster’ Nokia undermined the service in its first year with poor handsets and confusing marketing, said Ben Wood , an analyst with market researcher CCS Insight. Advertising for the service was “ colorful but oblique ,” he said, adding that Nokia should have shown someone buying a truckload of CDs for next to nothing. Nokia also stumbled in requiring customers to buy specific handsets to get the unlimited music downloads, analysts said. “It’s been nothing short of a disaster,” said Steve Mayall , a director at Music Ally. “It was poorly executed and there was also a general level of disbelief of having unlimited music on a handset for one price.” Universal Music Chief Executive Officer Doug Morris said while building the cost of music into the product is a good idea, Nokia may not have been as good as Apple with the device. Carrier Competition “Proper hardware and interface are what users want to pay for,” said Thomas Langer , an analyst with WestLB who says Nokia’s high-end product portfolio is still disappointing. “You can get music at Wal-Mart or Amazon.” Nokia’s music service was trumpeted in May by France Telecom SA’s Orange unit. Seven months later, Orange isn’t advertising Comes With Music on its Web site. It’s selling its own streaming music and video packages, and gives away 10 hours a month of free listening with prepaid top-ups. “People haven’t been willing to pay for music,” said Yves Maitre , Orange’s chief of devices and multimedia. “Customers want music as part of an entertainment package including TV and videos, and they want transparency about what they are paying.” Vodafone Group Plc’s 360 suite duplicates most of Nokia’s service offerings including music. Specialized music phones and bundles have had their day, said Patrick Chomet , Vodafone’s devices chief. Consumer Behavior “Music is becoming something like what the camera has been,” said Chomet, whose company doesn’t offer Comes With Music. “People expect a mid-tier to high-end mobile phone to have it.” As much as 95 percent of digital music downloads are illegal copies, according to the London-based International Federation of the Phonographic Industry. “Research with young people in 10 countries showed virtually none of them were willing to pay for music,” said Stephanie Baghdassarian , a Gartner Inc. analyst in Paris. Kids copy music from CDs and the Internet just as adults do, they share tracks from mobile-to-mobile using Bluetooth, she said. When they do pay for music, they prefer to stick with the Apple model. “If people are really interested in music they’ll probably choose an iPhone or a separate Apple device for the purpose,” said Michael Schroeder , an analyst at FIM Bank in Helsinki with a “reduce” rating on Nokia shares. “Apple attracts a kind of user that’s ready to pay a bit more for the phone and a bit more for applications. The average Nokia user is looking for the last dime.” To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

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Google Says Its Employees Worldwide Are Testing Phone Using Android System

December 12, 2009

By Jonathan Thaw and Brian Womack Dec. 12 (Bloomberg) — Google Inc. , seeking to push further into the market for mobile phones and advertising, said employees are testing a device that uses its Android operating system. The phone is based on hardware manufactured by a partner and it will allow the company to experiment with new features, Google said today in a blog post. Employees worldwide are testing the device, the company said. Separately, the Wall Street Journal reported that Google will sell the device next year directly to consumers. Google, owner of the most-popular Internet search engine, is expanding its products for mobile phones as demand increases for devices that can surf the Web, take pictures and play music. Google’s Android software was first offered on phones last year, and Verizon Wireless released a device called Droid in November that uses the program. Offering its own device would put Google into direct competition with Apple Inc. , maker of the iPhone, and Research In Motion Ltd.’s BlackBerry. It would also create new rivalries with manufacturers such as Motorola Inc., which already make Android devices. Google said its employees are “dogfooding” its new device, a term that refers to companies using their own products, or “eating your own dog food.” Google and T-Mobile USA Inc. introduced the first Android phone in September 2008, a bid to lure consumers away from the iPhone and BlackBerry. The Journal, citing people familiar with the matter, said the new phone will be called Nexus One and is being made by HTC Corp. Katie Watson , a spokeswoman for Mountain View, California- based Google, declined to comment beyond the company’s blog posting. Google fell 99 cents to $590.51 in Nasdaq Stock Market trading yesterday. The shares have almost doubled this year. To contact the reporter on this story: Jonathan Thaw at jthaw@bloomberg.net ; Brian Womack at bwomack1@bloomberg.net

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Video: Schmidt Says Google-News Corp. in Friendly Conversations: Video

December 3, 2009

Dec. 3 (Bloomberg) — Eric Schmidt, chief executive officer of Google Inc., talks with Bloomberg’s Pimm Fox about the possibility that News Corp. will list its stories on Microsoft Corp.’s Bing search engine. Schmidt, speaking from Washington, also discusses the Obama administration’s economic policies, Google’s revenues from its mobile business and the outlook for the media industry. (Source: Bloomberg)

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Microsoft, News Corp Have Talked About De-Indexing From Google

November 22, 2009

Microsoft has had discussions with News Corp over a plan that would involve the media company’s being paid to “de-index” its news websites from Google, setting the scene for a search engine battle that could offer a ray of light to the newspaper industry.

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Advertising Veteran Henry Lawson Joins Covario Advisory Board

November 4, 2009

SAN DIEGO, CA–(Marketwire – November 4, 2009) – Covario, the leading provider of search engine marketing (SEM and SEO) software and services to the Fortune 500, is pleased to announce the addition of Henry Lawson to its Advisory Board. Mr. Lawson was most recently the President of Donovan Data Systems (DDS) worldwide and Chief Executive Officer for Donovan Data Systems – Europe. DDS is the leading provider of transactional systems and infrastructure for the advertising industry. DDS processes millions of transactions every day, supporting marketing communications companies, advertisers and media owners around the world in their media buying and research, creative workflow and financial management. At DDS, Mr. Lawson’s primary responsibility was the management of DDS operations in Europe, the management of major media agency and holding group relationships, and the introduction of new products and applications for media planning and buying.

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Icahn Steps Down as Yahoo Director, Saying Turmoil Over With Bartz Aboard

October 24, 2009

By Brian Womack Oct. 24 (Bloomberg) — Billionaire Carl Icahn , who joined Yahoo! Inc. ’s board last year after threatening a proxy fight, stepped down from the position, saying the company no longer needed an activist director. Icahn’s attention is now focused elsewhere and he doesn’t have enough time to devote to Yahoo , according to a letter to the board that he released yesterday. His resignation took effect immediately. Icahn, 73, had sought to take control of the board and oust then-Chief Executive Officer Jerry Yang last year, after the company spurned a $47.5 billion acquisition offer by Microsoft Corp. To ward off a proxy fight, Yahoo gave board seats to Icahn and two of his candidates in August 2008. Since Icahn became a director, Yahoo hired Carol Bartz as CEO and forged a search- engine partnership with Microsoft. “When I joined the board, the company was in a state of turmoil,” Icahn said in the letter. “In the period since then, we have all worked together to achieve much for the company, most notably bringing Carol on to be the CEO and then consummating the search deal with Microsoft .” Icahn didn’t respond to a phone message seeking comment. Now that an outright acquisition of Yahoo by Microsoft seems unlikely, Icahn had less to contribute to the board, said Aaron Kessler , an analyst at Kaufman Bros. LP in San Francisco. “There’s not really much from an activist’s standpoint to really do right now,” said Kessler, who has a hold rating on the shares and doesn’t own them. Microsoft Deal Under an agreement announced in July, Yahoo will use Microsoft’s Bing search engine on its Web sites, with the companies splitting related ad revenue. The partnership is meant to challenge Google Inc. ’s dominance in the market. “Carol is doing a great job and I believe the Microsoft transaction will provide great long-term benefits, the potential of which many still do not understand,” said Icahn. Roy Bostock , chairman of the board, said he was grateful for Icahn’s “active role” in shaping Yahoo . “Carl has been an important member of our board and has helped us through some significant transitions,” Bostock said in an e-mailed statement. Yahoo , owner of the No. 2 search engine in the U.S., fell 45 cents to $17.22 yesterday in Nasdaq Stock Market trading. The shares have climbed 41 percent this year. To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

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EBay Profit Falls 29% as Growth Plan Squeezes Online Auctioneer’s Margins

October 21, 2009

By Joseph Galante Oct. 21 (Bloomberg) — EBay Inc. , the most visited U.S. e-commerce site, forecast fourth-quarter profit that missed some analysts’ estimates after shifting into faster-growing but less- lucrative businesses. The shares fell 5.4 percent. Excluding some costs, earnings will be 38 cents to 40 cents a share, the San Jose, California-based company said today in a statement. The midpoint of that range missed the 40 cents predicted by analysts in a Bloomberg survey . EBay has sought to revive growth amid sluggish consumer spending and mounting competition from sites such as Amazon.com Inc. Chief Executive Officer John Donahoe , who took over last year, improved the site’s search engine, making it easier for buyers to find what they want. He also changed EBay’s fee structure in an effort to attract more sellers and acquired the payment service Bill Me Later. “People are just looking at the earnings guidance for the fourth quarter, which is a little below the Street’s expectations,” said Aaron Kessler , an analyst at Kaufman Bros. in San Francisco. He recommends buying the shares and doesn’t own any. “They’re heading in the right direction. It’s not going to be an easy road.” EBay fell $1.36 to $23.67 in late trading after the results were released. The shares, up 79 percent this year, closed at $25.03 on the Nasdaq Stock Market. Third Quarter Third-quarter net income declined to $349.7 million, or 27 cents a share, from $492.2 million, or 38 cents, a year earlier. Sales rose to $2.24 billion. Analysts had estimated $2.14 billion. Excluding some items, earnings were 38 cents a share, compared with the 37 cents predicted by analysts. Sales this quarter will be $2.2 billion to $2.3 billion, EBay said. Analysts had projected $2.26 billion. Donahoe said last month that his three-year turnaround plan is on track. EBay will grow in line with the broader e-commerce market next year and exceed it in 2011, he said. Forrester Research Inc. predicts that online sales in the U.S. will expand 13 percent next year and 10 percent in 2011. The turnaround has included changing listing fees, fighting fraud and streamlining parts of the business. This month, EBay said it would eliminate about 60 workers . It also announced plans in May to close a 700-person customer-service office in Vancouver. Donahoe is trying to attract more fixed-price transactions to EBay’s site , a break from the company’s origins as an auction service. While EBay attracts more visitors than any other U.S. e-commerce site, it has lost customers to Amazon.com , the world’s largest online retailer. In addition to its e-commerce sites, EBay runs the PayPal online-payment service and the Skype Internet-calling business. EBay is selling Skype to a group of investors led by private- equity firm Silver Lake for about $2 billion. EBay had originally planned to spin off Skype as an initial public offering, saying the business had little synergy with the parent company. To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net

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U.S. Stock Futures Decline After GE, Bank of America Results; Dollar Gains

October 16, 2009

By Daniel Hauck Oct. 16 (Bloomberg) — European stocks rose to a one-year high as Google Inc. ’s earnings buoyed speculation that the global economic rebound is accelerating. The dollar snapped a four-day decline. The Dow Jones Stoxx 600 Index of European shares added 0.3 percent at 11:45 a.m. in London. Futures on the Standard & Poor’s 500 Index pared earlier gains and were little changed after General Electric Co. posted sales that trailed analysts’ estimates. The dollar strengthened 0.2 percent against the euro, while corn and soybeans climbed in Chicago. Google, the world’s most popular Internet search engine, reported a 27 percent increase in third-quarter net income yesterday as the economic recovery boosted demand for online ads and e-commerce. Companies from Royal Philips Electronics NV to JPMorgan Chase & Co. already reported earnings that exceeded projections this week. Industrial production in the U.S. probably rose in September for a third consecutive month, data from the Federal Reserve may show today. “The reporting season has so far delivered some major stimuli with some positive surprises,” Viola Stork , an economist at German state-owned bank Helaba Landesbank Hessen- Thueringen in Frankfurt, wrote in a note today. There has been “upbeat sentiment in the equity markets during the past few days,” she said. GE, Google U.S. futures pared their advance as GE slid 1.4 percent in pre-market New York trading. The world’s biggest maker of jet engines and medical-imaging machines announced third-quarter revenue of $37.8 billion, trailing the $39.7-billion estimate of analysts surveyed by Bloomberg. Bank of America Corp. will also announce results today. Analysts surveyed by Bloomberg estimate that profits for S&P 500 companies will rebound 62 percent in the last three months of the year after falling for nine straight quarters, the longest streak since the Great Depression. Google gained 3.6 percent in pre-market New York trading. Chief Executive Officer Eric Schmidt said yesterday that the worst of the recession has passed and the company has “the confidence to be optimistic.” Energy companies led the advance in Europe’s Stoxx 600 , climbing 2.2 percent as a group. A seven-month, 57 percent rally has pushed the regional index’s valuation to 49.5 times earnings, near the most expensive level since 2003, weekly data compiled by Bloomberg show. Repsol YPF SA added 1.4 percent in Madrid as Spain’s biggest oil company discovered crude oil in a natural-gas well offshore Venezuela. Lloyds Banking Group Plc rose 2.8 percent after Deutsche Bank AG recommended the U.K.’s largest mortgage lender. Thailand, Corn Thailand’s SET Index rallied 3.5 percent after Finance Minister Korn Chatikavanij said shares may rebound from their biggest two-day loss in a year on reduced foreign selling and an economic recovery. Corn for delivery in December rose 1.1 percent to $3.7725 a bushel and soybeans for November added 1.3 percent to $9.955 a bushel after freezing temperatures in the U.S. Midwest. The Dollar Index , which IntercontinentalExchange Inc. uses to track the currency against six major U.S. trading partners, rose from a 14-month low. The gauge added 0.2 percent to 75.601 as some investors bet that its declines were exaggerated given the signs of an economic recovery. U.K. gilts led declines in government bonds as the gains in stocks sapped demand for the relative safety of fixed income. The yield on the 10-year note increased 7 basis points to 3.63 percent. Industrial Production The yield on the 10-year Treasury was little changed at 3.47 percent. The Fed may say today at 9:15 a.m. in Washington that output at U.S. factories, mines and utilities climbed 0.2 percent in September, following increases of 0.8 percent and 1 percent in August and July, according to the median forecast of 77 economists surveyed by Bloomberg News. The Reuters/University of Michigan preliminary index of consumer confidence at 10 a.m. may show that sentiment this month slipped from the highest level in more than a year, economists said. To contact the reporters on this story: Daniel Hauck in London at dhauck1@bloomberg.net .

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Stocks in U.S., Europe Advance on Earnings Outlook; Oil, Metal Prices Gain

October 12, 2009

By Sapna Maheshwari and Lynn Thomasson Oct. 12 (Bloomberg) — U.S. and European stocks rose, sending the MSCI World Index to near a one-year high, on speculation improving corporate earnings will extend a seven- month rally in equities. Oil advanced to a six-week high and metal prices gained as the dollar retreated. Black & Decker Corp. advanced the most since July after the maker of power tools raised its third-quarter earnings forecast. Freeport-McMoRan Copper & Gold Inc. added 1.9 percent as copper increased. Advanced Micro Devices Inc. rallied 6 percent as UBS AG recommended the shares. The Standard & Poor’s 500 Index rose for a sixth straight day, its longest streak since June 2007. “The market will continue with a positive bias,” said Stanley Nabi , New York-based vice chairman of Silvercrest Asset Management Group, which oversees $8 billion. “The profit reports that will begin to come out this week should be very solid and the economic data that’s coming out is quite encouraging.” The S&P 500 advanced 0.6 percent to 1,077.88 at 11:46 a.m. in New York, above its highest close since Oct. 3, 2008. The Dow Jones Industrial Average rose 43.23 points, or 0.4 percent, to 9,908.17. The MSCI World Index of 23 developed nations climbed 0.6 percent to above its highest close since Oct. 1, 2008. The S&P 500 last week jumped 4.5 percent, its best advance since July, as Alcoa Inc. started the third-quarter earnings season with an unexpected profit and economic data signaled the U.S. recession is ending. ‘Recovery Is Under Way’ “Last week’s earnings showed that analyst expectations can be surpassed and that not everything is priced in yet,” said Gregor Mast , an equity strategist at Clariden Leu AG in Zurich, which oversees about $88 billion. “We believe that the recession is over and the recovery is under way.” Companies from Intel Corp. to Goldman Sachs Group Inc. are scheduled to report earnings this week. S&P 500 companies will report a ninth straight quarter of declining profits, the longest streak since the Great Depression, before returning to growth in the final three months of the year, analysts’ estimates compiled by Bloomberg show. Royal Philips Electronics NV helped lead Europe’s Stoxx 600 to a 0.9 percent gain after Europe’s biggest consumer- electronics maker said operating earnings at its consumer unit more than doubled. Black & Decker surged 6.6 percent to $50.36. The manufacturer of the Dewalt brand said net earnings will be about 91 cents a share in the third quarter because sales were higher than estimated. In July, it forecast earnings of 35 cents to 45 cents. Analysts projected 43 cents, the average of 10 estimates. Commodity Producers Freeport rose 1.9 percent to $75.78. Copper climbed on speculation demand for raw materials is increasing as the global economy recovers from its worst recession since World War II. Alcoa , the largest U.S. aluminum company, gained 1.2 percent to $14.41. Oil and gas producers rallied the most among the 10 main industries in the S&P 500, adding 1.8 percent as a group. Exxon Mobil Corp. , the largest U.S. energy company, climbed 1.5 percent to $70.30 for a sixth straight day of gains. Crude rose on the New York Mercantile Exchange for a third day, climbing 2.4 percent to $73.51 a barrel. The Dollar Index , which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, dropped 0.5 percent to 76.06. The S&P 500 and the dollar are moving in opposite directions by the most in at least four decades. The stock index has surged 59 percent since March 9. The Dollar Index fell 15 percent during the same period, including the steepest two-quarter drop since 1991. Dollar, Stocks Correlation Their so-called correlation coefficient using 120 days of data is minus 0.43. When it sank to minus 0.45 in July, it was the lowest in the history of the 42-year-old Dollar Index. Investors outside the U.S. are purchasing companies in the S&P 500 at the cheapest valuations on record, their buying power boosted by a seven-month decline in the dollar. The index is valued at the biggest discount to the MSCI World Index of 23 developed countries since May 2003, according to monthly data compiled by Bloomberg. AMD added 6 percent to $6.23. The second-largest maker of personal-computer processors was raised to “buy” from “neutral” at UBS, which said near-term growth will improve on increased computer sales. Visa Inc. and MasterCard Inc. advanced at least 1.3 percent. The world’s biggest card-payment networks were upgraded to “outperform” from “neutral” by Credit Suisse Group AG. The analysts said revenue will increase as the “shift from cash to plastic continues.” Google, Ford Rally Google Inc. climbed 1.6 percent to $524.65. Analysts at Goldman Sachs Group Inc. raised earnings estimates for the Internet search engine operator on speculation companies will spend more on advertising. Ford Motor Co. jumped 6.7 percent to $7.59. The only major U.S. carmaker not to seek bankruptcy protection said sales in Europe rose 12 percent in September as new versions of the Fiesta and Ka subcompacts attracted buyers. The S&P 500 didn’t update for almost an hour in early trading today after a computer malfunction at the Chicago Board Options Exchange prevented the dissemination of updates. To contact the reporters on this story: Sapna Maheshwari in New York at smaheshwar11@bloomberg.net ; Lynn Thomasson in New York at lthomasson@bloomberg.net .

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Relevant Searches Attracts Veteran Sales Executive From Efficient Frontier to Drive Growth

September 23, 2009

LAS VEGAS, NV–(Marketwire – September 23, 2009) – SHOP.ORG 2009 ANNUAL SUMMIT — Relevant Searches , a Search Engine Marketing firm pioneering Search Engine Optimization 2.0, today announced the appointment of Geoffrey Price as Senior Vice President of Worldwide Sales. With more than 11 years experience in executive leadership and sales roles, Price is ideally suited to lead Relevant Searches’ revenue expansion and serve as a strategic executive of the company.

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Maury Domengeaux Joins Relevant Searches as CEO

September 22, 2009

Silicon Valley Veteran Tapped to Drive Adoption of Next-Generation Search Engine Marketing

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Microsoft-Yahoo Web Search Deal Faces In-Depth Justice Department Review

September 10, 2009

By Dina Bass and Kelly Riddell Sept. 11 (Bloomberg) — Microsoft Corp. and Yahoo! Inc. have been asked by the U.S. Justice Department for more details on a proposed Internet-search partnership, expanding the agency’s review of the agreement. The request means regulators will do a more extensive examination, rather than approve the deal immediately. Microsoft predicted an in-depth review when the accord was announced in July, said company spokesman Jack Evans . He declined to comment on the contents of the request. Over the course of the review, the companies expect to be asked about their search-engine investments, ad pricing and product plans, a person familiar with the matter said. The outcome will shape the future of the market for Internet search ads, where Google has triple the U.S. sales of its two rivals. The companies may face more difficulty proving the deal won’t hurt competition as regulators step up oversight of the technology industry, said Michael Katz , a former chief economist in the Justice Department’s antitrust unit. “The antitrust agencies are pretty skeptical of the argument that you need to be bigger to compete,” said Katz, now a professor at the University of California at Berkeley. “The Justice Department will respond, ‘Why can’t you get bigger by competing?’” Under the partnership, signed in July, Yahoo will use Microsoft’s Bing search engine on its Web sites. Yahoo will sell ads that appear next to Web-search results, with the companies splitting the revenue. Bing Investment Even though the antitrust agency will scrutinize the deal closely, the companies probably can get it done as long as they do enough to persuade the Justice Department that the agreement doesn’t hurt competition, Katz said. During the Justice Department’s review, Redmond, Washington-based Microsoft expects to be asked to disclose its spending on Bing to ensure the company made enough investments to create a viable product, the person familiar with the matter said. Both companies also anticipate regulators will ask for their individual search-engine product plans so it can assess whether there’s an incentive to compete more or less vigorously as a result of the deal. “Those plans will help the DOJ understand what the competitive impacts of the merger might be,” said Greg Neppl , an antitrust lawyer at Foley & Lardner LLP in Washington. If the department were to find the accord hinders innovation, it could seek to block the deal. Ad Pricing The government will also seek information on how the companies’ online-ad auctions operate and what might happen to prices as a result of the combination, the person said. While regulators will investigate pricing, it’s unlikely that they will dictate what prices will be, the person said. The requests will help the agency determine whether to impose conditions to foster competition, or block the deal. Mountain View, California-based Google scrapped plans to team up with Yahoo last year after the Justice Department threatened to sue, saying the proposal would have helped them “become collaborators rather than competitors.” “Google was dominant a year ago and is dominant today,” said Brad Smith , Microsoft’s general counsel. “Even if this is approved, Google will be dominant a year from now — but if this agreement is approved, at least there is a chance for a more credible No. 2 to emerge.” Laura Sweeney , a spokeswoman for the Justice Department, said the agency is aware of the proposed Microsoft-Yahoo partnership, and declined to comment further. Fully Cooperating “ Yahoo and Microsoft are cooperating fully with the Justice Department and firmly believe that the information they will be providing will confirm that this deal is not only good for both companies, but it is also good for advertisers, good for publishers and good for consumers,” Adam Grossberg , a Yahoo spokesman, said in an e-mail. The companies are now responding to the latest request, which they received earlier this week, Microsoft’s Evans said yesterday. They still expect the deal to close on schedule. Microsoft rose 22 cents to $25 yesterday in Nasdaq Stock Market trading . Sunnyvale, California-based Yahoo added 67 cents to $15.45, while Google advanced $6.97 to $470.94. Microsoft has risen 29 percent this year , compared with a 27 percent gain at Yahoo and a 53 percent jump for Google. “There has traditionally been a lot of competition online, and our experience is that competition brings about great things for users,” Google spokesman Adam Kovacevich said in an e-mailed statement. “We’re interested to learn more about the deal.” Of the three largest search engines, Google had 75 percent of search-ad spending in the U.S. last quarter, with the rest going to Microsoft and Yahoo , according to data from search-ad firm Efficient Frontier Inc. in Sunnyvale, California. The market should expand to $12 billion this year, according to New York researcher EMarketer Inc. European Commission In Europe, Microsoft is also likely to notify the European Commission about the agreement, said Neil Macehiter , a partner at Cambridge, England-based technology consultant Macehiter Ward-Dutton. If the commission gets involved, it will conduct an initial 25 working-day review, which can be extended by 90 days if the regulator has “serious doubts” about competition issues. Last week, the Brussels-based commission put on hold Oracle Corp.’s $7.4 billion acquisition of Sun Microsystems Inc., saying its initial probe suggested the deal may reduce competition and lead to higher prices. “I’d bet on Microsoft-Yahoo prevailing because it would be difficult for Microsoft to leverage its position,” Macehiter said. Google Partnership Microsoft objected to a proposed partnership between Yahoo and Google last year, saying the accord would allow them to fix prices. Now the software maker is on the other side of the same argument, and will likely tell the agency the venture won’t raise prices, said Andre Barlow, a Washington-based lawyer who worked for the Justice Department’s antitrust division and is now a partner at Doyle Barlow & Mazard PLLC. Advertisers probably will face questions on the deal too. Carl Fremont , executive vice president at Digitas , an online ad agency, said a Microsoft-Yahoo combination would force Google to keep on improving its search engine. “From a product offering side, I believe it will be better over time,” said Fremont, whose firm is owned by Paris-based Publicis Groupe SA . “It creates new competition in the market.” To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net ; Kelly Riddell in Washington at kriddell1@bloomberg.net

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Facebook’s Zuckerberg Plans to Increase Staff 50% Amid Engineer Surplus

August 24, 2009

By Brian Womack Aug. 24 (Bloomberg) — Facebook Inc. plans to expand its staff by as much as 50 percent this year as it benefits from a surplus of engineers amid the recession, Chief Executive Officer Mark Zuckerberg said. “No one else has been hiring,” Zuckerberg, 25, said in an interview. “It’s been a great environment for us because the economy has helped out.” The world’s most popular social-networking Web site , which has 1,000 employees, will build its workforce at a slower pace than typical startups, Zuckerberg said. Google Inc. , the most- used Internet search engine, almost doubled its staff annually in the three years through 2005, a year after it went public. Zuckerberg said he’s trying to keep a lid on costs, an effort to reach positive cash flow next year. In May, Facebook moved into a decades-old building in Palo Alto, California, that he calls “the bunker” — with unfinished cement floors and fading stickers on the front door. “The thing I want to remind people of is we’re way closer to the beginning than the end,” Zuckerberg said in the Aug. 20 interview. “A lot of times buildings can be a signal that you’ve made it. I would rather that our building feel much more like a very large garage.” Facebook, which has grown to more than 250 million users, is still proving itself to potential advertisers. An IDC survey last year found users of social-networking sites were less likely than other Web users to click on ads or buy the item if they did, said Karsten Weide , a San Mateo, California-based analyst at the research firm. “I’m a little bit skeptical,” Weide said. “They may have to stretch the money that they have — both the investment and the revenue.” Crane Stays Facebook makes money from advertising and an online payment system for gifts that users buy on the site. Revenue should grow 70 percent this year from 2008, Chief Operating Officer Sheryl Sandberg said earlier this year. Board member Marc Andreessen said the company should post at least $500 million in revenue this year. Started in Zuckerberg’s Harvard University dorm room in 2004, Facebook has tried to stay close to cash flow positive since its inception, he said. Prior to the move in May, employees installed much of the cable themselves in the new building, which previously housed Agilent Technologies Inc. An old crane remains in an eating area because it was too expensive to move out. “The first servers that I had I rented for $85 a month,” Zuckerberg said. “We’d put ads on the site and then when I had money to get another server, I’d get another.” Investments The company has received investments totaling more than $600 million. Digital Sky Technologies, a Russian investment firm, paid $200 million for less than 2 percent of the company in May. “We think of that mostly as a buffer,” Zuckerberg said. “We didn’t take that round of financing with any particular goal in mind.” That deal valued Facebook at $10 billion. Digital Sky agreed to the valuation because it expects Facebook to lure more brand-name advertisers, Alexander Tamas , a partner in the investment firm’s London office, said in May. Facebook employees still have perks. The company offers three free meals a day and there’s a basketball court and horseshoe pits behind the building. Marketing Tool J.C. Penney Co. , the third-largest U.S. department-store chain, bought ads on Facebook earlier this month to draw users to its own page as back-to-school shopping got under way, said Nick Bomersbach, vice president of the retailer’s jcp.com. J.C. Penney’s Facebook page went from having about 22,000 “fans” to almost 500,000, he said. “It’s a much more significant part of our marketing mix and it will continue to be a bigger part of our marketing mix,” Bomersbach said. Nike Inc. , which also advertises on Facebook, seized on the site as a marketing tool, said Stefan Olander, director of global brand connections. Nike’s page has a place where people who play basketball can schedule games. “You create an entire environment,” he said. “We layer on top of that the filter of sports and what we know really well.” Facebook made its second acquisition this month, agreeing to buy social-networking site FriendFeed to gain engineering talent. FriendFeed’s co-founders had worked at Mountain View, California-based Google on products including Google Maps and Gmail. Zuckerberg said he aims to eventually have 1 billion users, though he declined to give a time frame. He said he expects social networks to become as essential as Web browsers and operating systems. “It’s just really neat to see the impact of what we and other companies are doing,” Zuckerberg said, citing the use of social networks in June by Iranian activists after the government was accused of rigging the presidential election. “That’s just something that I think would be an awesome platform to have across the world.” To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

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Publicis Will Acquire Razorfish Ad Agency From Microsoft for $530 Million

August 9, 2009

By Gregory Viscusi Aug. 9 (Bloomberg) — Publicis Groupe SA , owner of the Saatchi & Saatchi ad firm, said it is buying Microsoft Corp. ’s Razorfish advertising agency for $530 million in cash and stock to expand in Internet advertising. Razorfish will continue to operate under its own name, and will remain Microsoft’s “agency of record” for online advertising and marketing, the companies said in a joint statement. In buying Razorfish, Publicis expands its digital-ad business as demand slows for traditional print and television campaigns. The Paris-based company said last month that first- half revenue fell, hurt by slackening ad spending and the bankruptcy of its client General Motors Corp. “The purchase of Razorfish is a new step in our strategic plan to be the unquestionable leader in digital communication,” Publicis Chief Executive Officer Maurice Levy said in a statement. “Once this acquisition is complete, about a quarter of our revenue will come from digital communication and our ability to grow and conquer will be reinforced.” Publicis will give Microsoft 6.5 million of its shares, which have a current market value of 162 million euros ($231 million), with the remainder paid in cash. The value of the shares will be based on the average price in the 20 trading days leading up to the eighth day before the transaction closes. Publicis said it already owns the shares and won’t be issuing new ones. Microsoft will own 3 percent of the French company after the deal is closed, which is expected in the fourth quarter, Levy said today in a conference call. Razorfish Clients Redmond, Washington-based Microsoft acquired Razorfish, which designs digital adverting campaigns, as part of its $6 billion purchase of AQuantive Inc. in 2007. Razorfish, whose clients include McDonald’s Corp. and Levi Strauss & Co., also works with Microsoft rivals Google Inc. and Yahoo! Inc. In 2008, Razorfish had revenue of about $380 million, Levy said. “We are paying between 1.4 and 1.5 times sales, which in the digital world is reasonable,” Levy said. Razorfish employs about 2,000 people, and gets 75 percent of its revenue from the U.S. It also has offices in China, France, Germany, Spain, Japan, Australia and Britain. Chief executive Bob Lord will stay with the company, the statement said. Publicis expects to now make only small acquisitions in the two areas it wants to expand in, which are digital advertising and developing countries, Levy said. “Don’t expect any acquisitions of this magnitude in the short or medium term,” he said on the call. Last year, Publicis bought the Performics search-marketing business from Google , the most popular Internet search engine, for an undisclosed amount. Publicis paid $1.3 billion in 2007 for online agency Digitas Inc. Microsoft rose 10 cents to $23.56 on the Nasdaq Stock Market Aug. 7, giving it a market value of $210 billion. Publicis fell 1.7 percent to 24.90 euros in Paris trading, for a value of 4.9 billion euros ($7 billion). To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net .

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Yahoo’s Bartz Gets `Vote of No Confidence’ as Microsoft Deal Sinks Shares

July 29, 2009

By Dina Bass and Brian Womack July 30 (Bloomberg) — The honeymoon is over for Yahoo! Inc. Chief Executive Officer Carol Bartz . Yahoo shares , which had surged 42 percent since Bartz took over in January, slumped 12 percent yesterday after the company agreed to outsource its Internet-search business to Microsoft Corp

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Yahoo Drops as Microsoft Search-Deal Terms Less Favorable Than Anticipated

July 29, 2009

By Brian Womack and Dina Bass July 29 (Bloomberg) — Microsoft Corp. and Yahoo! Inc.

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Microsoft, Yahoo Said to Be Near Accord to Challenge Google in Web Search

July 29, 2009

By Dina Bass and Brian Womack July 29 (Bloomberg) — Microsoft Corp. and Yahoo! Inc. are getting closer to signing an Internet-search partnership to challenge market leader Google Inc., a person familiar with the matter said. An agreement may be announced as soon as today, said the person, who declined to be identified because the talks are private.

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Microsoft, Yahoo Near Web Search Deal

July 28, 2009

SEATTLE — Microsoft Corp.

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