Hit by the turmoil in equity and property markets, India's four richest realtors have lost nearly $33 billion (over Rs 1,50,000 crore) since March this year, with the richest of them, K P Singh of DLF, alone accounting for about two-thirds of it, Forbes magazine said.
Listing out the losses suffered by richest property owners in Asia in the ongoing turmoil, in a new report Forbes has named DLF's Singh, Unitech's Ramesh Chandra, Chandru Raheja of Mumbai-based Raheja group and Housing Development & Infrastructure's (HDIL) Rakesh Wadhawan among the eight realty barons from the region.
While Singh has lost $22.2 billion alone since March, Chandra has seen an erosion of about $8.6 billion in his fortune during the same period, when Raheja and Wadhawan have lost about $1.5 billion and $500 million, respectively.
In the latest list of India's 40 richest people published by Forbes earlier this month, K P Singh was ranked at the eighth spot, while Chandru Raheja and Ramesh Chandra were placed at the 20th and 27th positions, respectively.
Realty stocks have been among the worst hit in the ongoing meltdown at the bourses and a number of them registered losses even today when the overall market benchmark Sensex ended with significant gains.
While the Sensex today surged by 464 points or 5.5 per cent, the BSE Realty index dropped by two per cent. Unitech shares dropped by 9.4 per cent, DLF slipped 3.4 per cent and HDIL shed over four per cent.
"K P Singh's fortune is still a hefty $7.8 billion, but that's just a fraction of his previous worth. In March, we pegged his fortune at $30 billion. Shares of DLF, his real estate company, fell steeply over the past year despite Singh's attempts to boost prices through a buyback," the business magazine Forbes said in its report titled 'Asia's Collapsing Real Estate Fortunes'.
Nov 22, 2008
Business - India;Fog of uncertainty covers Delhi Airport this winter
Air travellers to Delhi airport, which handles over 35 per cent of the country’s air traffic, may expect the usual harrowing times this winter with a thicker fog expected.
Yesterday, the airport witnessed five hours of fog, the first time in the last decade that fog conditions started in November. “Last year was the best, we had only four days of fog in the two months of December and January. One cannot predict what kind of fog we will have this year but the situation will not be as good as last year,” said R K Jenamani, director-in-charge, meteorological department, Delhi airport.
An analysis of the last 24 years shows that the fog lasts from December 10 to January 31 for an average time period of 80 hours, he added. The worst case of fog at the airport was in January 2003 which saw 147 hours of fog.
“The fog may affect 60 per cent of the flights,” said Andrew Harrison, chief operating officer, Delhi International Airport Ltd, the GMR-led consortium developing and operating the Delhi airport.
On the positive side, the airport now has two runways that can operate under CAT III conditions (visibility below 350 metres) against only one runway last year. The new runway will be used for arrivals and the older one for departures. The secondary runway will remain unused.
Also, the airport has seven RVRs (instruments for measuring visibility ) this year instead of three last year, which will provide a better idea of the visbility.
However, the third runway has been facing problems with its instrument landing systems (ILS). It had closed within a week of starting operations earlier this year when the ILS collapsed. Also, according to sources, the surface movement control radar system, which monitors an aircraft after it lands or before it takes off, does not cover all three runways.
The fact that the net increase in passenger traffic this winter will be a mere 8 per cent over last winter might actually be a blessing since it will mean fewer choke points at the airport.
Meanwhile, capacity on the terminal side has been increased to accommodate around 1,000 more people (including travellers and visitors), and apart from customer care executives who were positioned last year to help visitors, the airport will have valets to take care of the luggage and trolleys.
On the airline side, though carriers like SpiceJet continue to lag in terms of CAT III trained pilots, Jet Airways has geared up to add to its CAT III trained crew.
“We have 330 Indian commanders 45 per cent of whom are CAT III trained this year compared to last year, when we had just three,” said a senior Jet Airways pilot.
“We do not have CAT III trained pilots because we do not have CAT III-equipped aircraft to begin with. None of our Boeing 737s are CAT III-equipped. If there are CAT III conditions at the airport, there might be delays in our landings,” said JS Dillon, EVP, flight operations, SpiceJet.
Last year, only two out of every ten domestic CAT III landings were made by private carriers and the rest by Air India, which continues to have the best trained crew in terms of CAT III flying
Yesterday, the airport witnessed five hours of fog, the first time in the last decade that fog conditions started in November. “Last year was the best, we had only four days of fog in the two months of December and January. One cannot predict what kind of fog we will have this year but the situation will not be as good as last year,” said R K Jenamani, director-in-charge, meteorological department, Delhi airport.
An analysis of the last 24 years shows that the fog lasts from December 10 to January 31 for an average time period of 80 hours, he added. The worst case of fog at the airport was in January 2003 which saw 147 hours of fog.
“The fog may affect 60 per cent of the flights,” said Andrew Harrison, chief operating officer, Delhi International Airport Ltd, the GMR-led consortium developing and operating the Delhi airport.
On the positive side, the airport now has two runways that can operate under CAT III conditions (visibility below 350 metres) against only one runway last year. The new runway will be used for arrivals and the older one for departures. The secondary runway will remain unused.
Also, the airport has seven RVRs (instruments for measuring visibility ) this year instead of three last year, which will provide a better idea of the visbility.
However, the third runway has been facing problems with its instrument landing systems (ILS). It had closed within a week of starting operations earlier this year when the ILS collapsed. Also, according to sources, the surface movement control radar system, which monitors an aircraft after it lands or before it takes off, does not cover all three runways.
The fact that the net increase in passenger traffic this winter will be a mere 8 per cent over last winter might actually be a blessing since it will mean fewer choke points at the airport.
Meanwhile, capacity on the terminal side has been increased to accommodate around 1,000 more people (including travellers and visitors), and apart from customer care executives who were positioned last year to help visitors, the airport will have valets to take care of the luggage and trolleys.
On the airline side, though carriers like SpiceJet continue to lag in terms of CAT III trained pilots, Jet Airways has geared up to add to its CAT III trained crew.
“We have 330 Indian commanders 45 per cent of whom are CAT III trained this year compared to last year, when we had just three,” said a senior Jet Airways pilot.
“We do not have CAT III trained pilots because we do not have CAT III-equipped aircraft to begin with. None of our Boeing 737s are CAT III-equipped. If there are CAT III conditions at the airport, there might be delays in our landings,” said JS Dillon, EVP, flight operations, SpiceJet.
Last year, only two out of every ten domestic CAT III landings were made by private carriers and the rest by Air India, which continues to have the best trained crew in terms of CAT III flying
Business - Citi may replace Pandit;report
Citigroup's board is considering firing its Chief Executive Vikram Pandit, who was appointed as CEO late last year to infuse confidence, as the banking giant finds itself searching for hope all over again.
Replacing Pandit - an enthusiastic defender of the company's existing mix of businesses - is one of the options being considered by Citi executives, along side selling all or part of the company, a public endorsement from the government or a new financial lifeline to stabilise the banking behemoth, after its shares took a sharp plunge this week.
In a series of tense meetings and telephone calls, the executives weighed several options, including whether to replace Citigroup's chief executive Vikram S Pandit or to sell all or part of the company, the New York Times reported.
The paper reported that the company's executives on Friday entered into talks with federal officials about how to stabilise the struggling financial giant.
The report came amidst some analysts saying that infusion of $50 to $100 billion might be needed to bail out the bank.
The course of action, however, remained uncertain on Friday night, the people involved in talks were quoted as saying, and other options may yet emerge. But after a year of gaping losses and an accelerating decline in share price, Citigroup, which has $2 trillion in assets and operations in scores of countries, is running out of time, analysts were quoted by The New York Times as saying.
The paper said, Citigroup's management and some board members held several calls with Henry M Paulson Jr, the Treasury secretary, and with the president of the Federal Reserve of Bank of New York, Timothy E Geithner, who later emerged as President-elect Barack Obama's choice to be Treasury secretary.
Replacing Pandit - an enthusiastic defender of the company's existing mix of businesses - is one of the options being considered by Citi executives, along side selling all or part of the company, a public endorsement from the government or a new financial lifeline to stabilise the banking behemoth, after its shares took a sharp plunge this week.
In a series of tense meetings and telephone calls, the executives weighed several options, including whether to replace Citigroup's chief executive Vikram S Pandit or to sell all or part of the company, the New York Times reported.
The paper reported that the company's executives on Friday entered into talks with federal officials about how to stabilise the struggling financial giant.
The report came amidst some analysts saying that infusion of $50 to $100 billion might be needed to bail out the bank.
The course of action, however, remained uncertain on Friday night, the people involved in talks were quoted as saying, and other options may yet emerge. But after a year of gaping losses and an accelerating decline in share price, Citigroup, which has $2 trillion in assets and operations in scores of countries, is running out of time, analysts were quoted by The New York Times as saying.
The paper said, Citigroup's management and some board members held several calls with Henry M Paulson Jr, the Treasury secretary, and with the president of the Federal Reserve of Bank of New York, Timothy E Geithner, who later emerged as President-elect Barack Obama's choice to be Treasury secretary.
Mktg - Ad that tickles back to concepts
S. Ramesh Kumar
Humour/fun in advertising should be relevant to the offering and can either have a humorous theme or just histrionic overtones that lighten the spirit of the consumer but get the brand’s message across.
Humour and fun in advertising is an interesting proposition for marketers if used in an appropriate manner. Whether it is an impulse buy such as Mentos (showing a student who cleverly deals with a professor) or a proposition for a product such as Itchguard (which showed a prospective bridegroom itching and scratching during the traditional bride-choosing event) that conveyed a functional benefit, humour can be used in a variety of situations depending on the product or service category.
Normally, the humour/fun needs to be oriented towards the market’s culture to ensure that interpretation serves the purpose and also to make sure it is not perceived in an offensive manner.
Culture has a bearing on what kind of humour/fun consumers will and will not accept in a particular market. Humour that hurts the religious sentiments of consumers will not be well received. It need not necessarily mean, either, slapstick comedy of the class of P. G. Wodehouse.
Humour/fun in advertising should be relevant to the offering and can either have a humorous theme or just histrionic overtones that lighten the mood of the consumer but get the brand’s message across.
A good example is Airtel’s TV spots involving topical celebrities. One shows a “mock” quarrel between them but effectively conveys the brand’s proposition of ease of paying bills. Of late, using film celebrities to convey the humorous proposition is gaining ground.
A brand of fabric softener (a new category that needs consumers try its product) used a voice in its audio that is similar to that of a film celebrity who is a rage, especially in the South.
Cinema is a part of a market’s culture. The brand with its new offering needs to capture the attention of the viewers in a cluttered advertising context of TV commercials.
A few brands, such as Fanta and Preeti appliances, have also used film comedians to effectively convey either the fun proposition or the functional proposition.
Shah Rukh Khan’s comical mannerisms have been used in a range of categories that includes the Santro brand of car.
Ericcson’s (mobile phones) “One black coffee please” advertisement will evoke smiles among consumers familiar with this advertisement of a few years ago. The brand’s proposition of “smallness” was woven around a man in a restaurant believing that he was being propositioned by an attractive young woman sitting next to his table, only to discover she was speaking into her mobile phone which was so small it couldn’t be seen and worse, had mistaken him for the waiter! It is also equally important that the humour in the ad should ensure that it does not distract consumers from the brand’s proposition.
The Indian context and humor
There are broadly four ways in which humour and fun have been applied in the Indian context. One approach is to introduce them in family relationships, another through relationships at an individual level, the third to associate fun/humour with group associations and the fourth through the usage of celebrities. These applications range from consumer durables to impulse products such as chewing gum.
The recent advertisement for Center Fresh shows the episode between father and son in the context of the father reviewing the marks scored by the son and the brand’s proposition of good taste conveyed humorously through the proposition “Mouth is busy”.
Hamam’s TV commercial shows the “skin glow” proposition being conveyed by the young girl’s statement, “In which direction does the sun rise?” Water purifier brand Pureit introduces the conversation between the mother and son and the brand’s proposition of prevention from diseases conveyed during this conversation in a light-hearted manner with the son’s expression adding to the appeal.
The advertisement of Vicks for Rs 5 too makes use of the mother-son relationship. The Eno antacid advertisement shows a family leaving out the male member from picnic because of an upset stomach only to make him well in a few seconds to join the party.
At the level of individual relationships, humour and fun can be used in different situations to convey the brand’s proposition. 3 Roses’ proposition of “Good time to talk” between a young couple or the Quaker Oats ad announcing the product variants with the husband proclaiming that for the first time he would frame the rules at home (with the brand’s offering for breakfast) are examples of such an approach.
Group associations with humour are widely used when the target segment is youth. Axe Temptation’s TVC, which has a robot made out of chocolate, is a good example of fun with a group association. Sachin Tendulkar in the Aviva insurance advertisement playing cricket with children and breaking the window pane before the proposition of the brand is conveyed is an interesting example in the services category. MotoYuva’s (Motorola) advertisement showing a college professor being fooled into posing for a caricature made on the phone and distributed is in tune with the “youth-mobile” trends.
Close-up’s proposition of a ‘Close-up smile’ was humorously conveyed between a youngster who is suppressing his laughter and another who is able to freely laugh out among a group of friends.
Celebrity use may be incorporated with any of the approaches depending on the type of product/brand.
Samsung uses a celebrity to convey its karaoke feature using a lighthearted execution.
There may also be other variants in which humour can be used to convey a brand’s proposition other than the four approaches using a creativity that blends with the proposition. Fevicol’s advertisement shows an unbreakable egg that is laid by a hen that feeds from a container on which “Fevicol” is inscribed.
The brand’s proposition, the extent of relevance to the target segment and the scope offered by a category for humour (chocolates vs washing machines, for example) are some of the important criteria that should be taken into consideration before humour or fun is used in the brand’s advertising.
(S. Ramesh Kumar is Professor of Marketing, IIM, Bangalore)
Humour/fun in advertising should be relevant to the offering and can either have a humorous theme or just histrionic overtones that lighten the spirit of the consumer but get the brand’s message across.
Humour and fun in advertising is an interesting proposition for marketers if used in an appropriate manner. Whether it is an impulse buy such as Mentos (showing a student who cleverly deals with a professor) or a proposition for a product such as Itchguard (which showed a prospective bridegroom itching and scratching during the traditional bride-choosing event) that conveyed a functional benefit, humour can be used in a variety of situations depending on the product or service category.
Normally, the humour/fun needs to be oriented towards the market’s culture to ensure that interpretation serves the purpose and also to make sure it is not perceived in an offensive manner.
Culture has a bearing on what kind of humour/fun consumers will and will not accept in a particular market. Humour that hurts the religious sentiments of consumers will not be well received. It need not necessarily mean, either, slapstick comedy of the class of P. G. Wodehouse.
Humour/fun in advertising should be relevant to the offering and can either have a humorous theme or just histrionic overtones that lighten the mood of the consumer but get the brand’s message across.
A good example is Airtel’s TV spots involving topical celebrities. One shows a “mock” quarrel between them but effectively conveys the brand’s proposition of ease of paying bills. Of late, using film celebrities to convey the humorous proposition is gaining ground.
A brand of fabric softener (a new category that needs consumers try its product) used a voice in its audio that is similar to that of a film celebrity who is a rage, especially in the South.
Cinema is a part of a market’s culture. The brand with its new offering needs to capture the attention of the viewers in a cluttered advertising context of TV commercials.
A few brands, such as Fanta and Preeti appliances, have also used film comedians to effectively convey either the fun proposition or the functional proposition.
Shah Rukh Khan’s comical mannerisms have been used in a range of categories that includes the Santro brand of car.
Ericcson’s (mobile phones) “One black coffee please” advertisement will evoke smiles among consumers familiar with this advertisement of a few years ago. The brand’s proposition of “smallness” was woven around a man in a restaurant believing that he was being propositioned by an attractive young woman sitting next to his table, only to discover she was speaking into her mobile phone which was so small it couldn’t be seen and worse, had mistaken him for the waiter! It is also equally important that the humour in the ad should ensure that it does not distract consumers from the brand’s proposition.
The Indian context and humor
There are broadly four ways in which humour and fun have been applied in the Indian context. One approach is to introduce them in family relationships, another through relationships at an individual level, the third to associate fun/humour with group associations and the fourth through the usage of celebrities. These applications range from consumer durables to impulse products such as chewing gum.
The recent advertisement for Center Fresh shows the episode between father and son in the context of the father reviewing the marks scored by the son and the brand’s proposition of good taste conveyed humorously through the proposition “Mouth is busy”.
Hamam’s TV commercial shows the “skin glow” proposition being conveyed by the young girl’s statement, “In which direction does the sun rise?” Water purifier brand Pureit introduces the conversation between the mother and son and the brand’s proposition of prevention from diseases conveyed during this conversation in a light-hearted manner with the son’s expression adding to the appeal.
The advertisement of Vicks for Rs 5 too makes use of the mother-son relationship. The Eno antacid advertisement shows a family leaving out the male member from picnic because of an upset stomach only to make him well in a few seconds to join the party.
At the level of individual relationships, humour and fun can be used in different situations to convey the brand’s proposition. 3 Roses’ proposition of “Good time to talk” between a young couple or the Quaker Oats ad announcing the product variants with the husband proclaiming that for the first time he would frame the rules at home (with the brand’s offering for breakfast) are examples of such an approach.
Group associations with humour are widely used when the target segment is youth. Axe Temptation’s TVC, which has a robot made out of chocolate, is a good example of fun with a group association. Sachin Tendulkar in the Aviva insurance advertisement playing cricket with children and breaking the window pane before the proposition of the brand is conveyed is an interesting example in the services category. MotoYuva’s (Motorola) advertisement showing a college professor being fooled into posing for a caricature made on the phone and distributed is in tune with the “youth-mobile” trends.
Close-up’s proposition of a ‘Close-up smile’ was humorously conveyed between a youngster who is suppressing his laughter and another who is able to freely laugh out among a group of friends.
Celebrity use may be incorporated with any of the approaches depending on the type of product/brand.
Samsung uses a celebrity to convey its karaoke feature using a lighthearted execution.
There may also be other variants in which humour can be used to convey a brand’s proposition other than the four approaches using a creativity that blends with the proposition. Fevicol’s advertisement shows an unbreakable egg that is laid by a hen that feeds from a container on which “Fevicol” is inscribed.
The brand’s proposition, the extent of relevance to the target segment and the scope offered by a category for humour (chocolates vs washing machines, for example) are some of the important criteria that should be taken into consideration before humour or fun is used in the brand’s advertising.
(S. Ramesh Kumar is Professor of Marketing, IIM, Bangalore)
Business - Where clicks cut carat costs
Sravanthi Challapalli
The site makes it sound all so swift and simple – select a diamond, the setting and place your order – and there are great savings to be had. But is it so easy, especially when you haven’t touched and felt the diamond first, and you don’t know what it might look like when it ultimately reaches you?
“It is easy,” aver Srinivasa Gopalan and Mithun Sacheti, Directors of the Chennai-based CaratLane, a Web site to sell certified and high-quality diamonds as well as readymade and custom-made diamond jewellery. “Even when you want to buy a solitaire, about 50-60 per cent of the solitaire-based jewellery is ordered by the jeweller after the customer confirms the transaction, so there is no touch-and-feel anyway,” says Srinivasa Gopalan.
CaratLane, which was soft-launched in August after being in the making for over a year, promises to provide high-quality diamonds, solitaires, in large part, at “incredible” cost savings for the Indian consumer. In the retail process, the diamonds are passed on from the manufacturer to the consumer with brokers and wholesalers in the chain contributing their bit to the ultimate cost, but in this venture, there’s only one intermediary – CaratLane – between the manufacturer and consumer, which shaves off as much as 5-7 per cent on jewellery that could otherwise cost over Rs 4 lakh (the savings are greater on smaller pieces of jewellery), say the administrators.
Usually, jewellery stores don’t have more than 5-50 solitaires in their inventory. A consumer would find it hard to get the right combination of factors – price, cut, colour, clarity, caratage – that she wants within that limited choice.
CaratLane, on the other hand, will have an inventory of nearly 40,000 diamonds of all shapes, colour, cut and clarity at prices starting from as low as Rs 15,000 and going up all the way to a few crores, claims Srinivasa Gopalan.
The suppliers, nearly 4,000 of them, are located in India, the US, Belgium and Hong Kong.
All the diamonds are certified by international agencies such as the Gemological Institute of America, American Gemological Society, International Gemological Institute, Belgium and Hoge Raad voor Diamont, Antwerp.
While the diamond is being sourced, the mount chosen by the consumer is prepared and the finished product shipped to the customer within 5-7 business days. CaratLane says this is another unique proposition it offers – most jewellers usually take twice that time to deliver.
“It’s a disruptive business model,” says Srinivasa Gopalan, “the choice is mind-boggling, the prices are lower. If you demystify the diamond part of it, it’s yet another product driven by specification.”
But what about all the superstition and sentiment associated with buying jewellery, especially precious stones? Won’t the idea of a family jeweller weeding out flawed and unsafe diamonds struggle with the temptation of savings in money?
“The jeweller is more emotional comfort than anything else. As for ‘dosham’ (flaws), we’ve addressed this typically South Indian sentiment by offering dosham-free diamonds too,” says Srinivasa Gopalan, adding that the savings in price will win over or convert quite a few.
The pricing is so attractive that even jewellers are eyeing it, bringing in a B2B angle to the business, says promoter Mithun Sacheti, whose family owns the Jaipur Gems jewellery business and stores.
Haggling over the price of the jewellery is a tradition, sometimes even a pleasurable ritual that customer and seller participate in. Where does that figure in a Web site such as CaratLane? Sacheti says haggling is on its way out, what with corporate jewellery stores selling their wares at fixed prices and people getting used to the idea.
Concerns of whether the diamond is genuinely that which was ordered are addressed by having the certifying laboratory testing the finished product and certifying it, as well as having it delivered to the customer in a tamper-proof box. As for returns, the Web site now offers the option of exchanging within 15 days what the customer has ordered, no questions asked. The solitaires can also be re-listed on CaratLane by the customer if she wants to dispose of it at a later stage.
There are various payment options – credit card, wire transfer, demand draft, cash deposits in various banks. The prices are more or less stable unless there’s a huge spike in gold prices.
Srinivasa Gopalan says CaratLane is a “market-defining portal which is redefining the way a traditional product will be bought in the future”. A call centre staffed by 15 people to educate and serve consumers works every day of the week. The jewellery is made at Jaipur Gems’ facilities.
In the US, online jewellery sales accounted for $4.5-5 billion or 7.4 per cent of all the jewellery bought in the US in 2007. In India, the e-commerce market is expected to reach a size of Rs 9,020 crore by the end of fiscal 2008, according to a survey conducted by the Internet and Mobile Association of India and IMRB.
Since the soft-launch in August, CaratLane has had 22 buyers from India and the neighbouring countries, the highest two spends being Rs 3.6 lakh and Rs 10.4 lakh. “The diamond jewellery market is estimated at Rs 20,000 crore. We don’t expect every customer to convert, but even if 5 per cent shop online, we’re looking at Rs 1,000 crore in the next few years,” says Srinivasa Gopalan.
It’s not just the diamonds but also the savings that can put the sparkle on your face.
The site makes it sound all so swift and simple – select a diamond, the setting and place your order – and there are great savings to be had. But is it so easy, especially when you haven’t touched and felt the diamond first, and you don’t know what it might look like when it ultimately reaches you?
“It is easy,” aver Srinivasa Gopalan and Mithun Sacheti, Directors of the Chennai-based CaratLane, a Web site to sell certified and high-quality diamonds as well as readymade and custom-made diamond jewellery. “Even when you want to buy a solitaire, about 50-60 per cent of the solitaire-based jewellery is ordered by the jeweller after the customer confirms the transaction, so there is no touch-and-feel anyway,” says Srinivasa Gopalan.
CaratLane, which was soft-launched in August after being in the making for over a year, promises to provide high-quality diamonds, solitaires, in large part, at “incredible” cost savings for the Indian consumer. In the retail process, the diamonds are passed on from the manufacturer to the consumer with brokers and wholesalers in the chain contributing their bit to the ultimate cost, but in this venture, there’s only one intermediary – CaratLane – between the manufacturer and consumer, which shaves off as much as 5-7 per cent on jewellery that could otherwise cost over Rs 4 lakh (the savings are greater on smaller pieces of jewellery), say the administrators.
Usually, jewellery stores don’t have more than 5-50 solitaires in their inventory. A consumer would find it hard to get the right combination of factors – price, cut, colour, clarity, caratage – that she wants within that limited choice.
CaratLane, on the other hand, will have an inventory of nearly 40,000 diamonds of all shapes, colour, cut and clarity at prices starting from as low as Rs 15,000 and going up all the way to a few crores, claims Srinivasa Gopalan.
The suppliers, nearly 4,000 of them, are located in India, the US, Belgium and Hong Kong.
All the diamonds are certified by international agencies such as the Gemological Institute of America, American Gemological Society, International Gemological Institute, Belgium and Hoge Raad voor Diamont, Antwerp.
While the diamond is being sourced, the mount chosen by the consumer is prepared and the finished product shipped to the customer within 5-7 business days. CaratLane says this is another unique proposition it offers – most jewellers usually take twice that time to deliver.
“It’s a disruptive business model,” says Srinivasa Gopalan, “the choice is mind-boggling, the prices are lower. If you demystify the diamond part of it, it’s yet another product driven by specification.”
But what about all the superstition and sentiment associated with buying jewellery, especially precious stones? Won’t the idea of a family jeweller weeding out flawed and unsafe diamonds struggle with the temptation of savings in money?
“The jeweller is more emotional comfort than anything else. As for ‘dosham’ (flaws), we’ve addressed this typically South Indian sentiment by offering dosham-free diamonds too,” says Srinivasa Gopalan, adding that the savings in price will win over or convert quite a few.
The pricing is so attractive that even jewellers are eyeing it, bringing in a B2B angle to the business, says promoter Mithun Sacheti, whose family owns the Jaipur Gems jewellery business and stores.
Haggling over the price of the jewellery is a tradition, sometimes even a pleasurable ritual that customer and seller participate in. Where does that figure in a Web site such as CaratLane? Sacheti says haggling is on its way out, what with corporate jewellery stores selling their wares at fixed prices and people getting used to the idea.
Concerns of whether the diamond is genuinely that which was ordered are addressed by having the certifying laboratory testing the finished product and certifying it, as well as having it delivered to the customer in a tamper-proof box. As for returns, the Web site now offers the option of exchanging within 15 days what the customer has ordered, no questions asked. The solitaires can also be re-listed on CaratLane by the customer if she wants to dispose of it at a later stage.
There are various payment options – credit card, wire transfer, demand draft, cash deposits in various banks. The prices are more or less stable unless there’s a huge spike in gold prices.
Srinivasa Gopalan says CaratLane is a “market-defining portal which is redefining the way a traditional product will be bought in the future”. A call centre staffed by 15 people to educate and serve consumers works every day of the week. The jewellery is made at Jaipur Gems’ facilities.
In the US, online jewellery sales accounted for $4.5-5 billion or 7.4 per cent of all the jewellery bought in the US in 2007. In India, the e-commerce market is expected to reach a size of Rs 9,020 crore by the end of fiscal 2008, according to a survey conducted by the Internet and Mobile Association of India and IMRB.
Since the soft-launch in August, CaratLane has had 22 buyers from India and the neighbouring countries, the highest two spends being Rs 3.6 lakh and Rs 10.4 lakh. “The diamond jewellery market is estimated at Rs 20,000 crore. We don’t expect every customer to convert, but even if 5 per cent shop online, we’re looking at Rs 1,000 crore in the next few years,” says Srinivasa Gopalan.
It’s not just the diamonds but also the savings that can put the sparkle on your face.
HR - Incentives for Innovation
Radhika Chadha
How can organisations ensure that short-term business goals are met while encouraging managers to experiment for the long-term?.
Very few innovation systems recognise the need for aligning the performance management system to innovation strategy.
‘An incentive is simply a means of urging people to do more of a good thing and less of a bad thing. An incentive is a bullet, a lever, a key: an often tiny object, with astonishing power to change a situation. We all learn to respond to incentives, negative and positive, from the outset of life.’
Steven Levitt and Stephen Dubner, Freakonomics
I was recently invited to watch a creativity workshop being conducted by a consultant visiting from abroad. The client was a software company that had decided its employees needed to be trained to deliver innovative solutions – the idea was tomove beyond pricing as a differentiator in these increasingly competitive times.
The audience was junior to lower-middle level managers and software engineers who huddled around the huge conference table in eager anticipation. The table itself looked like a kid’s playroom, chock-a-block with interesting thingummyjigs — furry wire worms, rubber bands of all shapes and sizes, Lego bricks, cards with provocative statements on them — meant to add an element of additional zest and fun to keep them creatively engaged.
The fun and games part went off well as the consultant enthralled the team with his stories about ideas that worked and bombed, and about tools for idea generation. Towards the end of the day, the facilitator started the wrap-up by stating emphatically that it was quite simple for these techniques to be used in their day-to-day jobs and that each employee should think about how to perform their role differently.
At this, the hitherto chatty group fell silent and shifted about uncomfortably. There was a palpable sense of unease and you could actually feel the charged up energy dissipating rapidly. Finally, one brave soul voiced the collective concern — “Why?” Slightly taken aback, the consultant threw back the question: “Why what?”
“Why innovate, why be creative?” asked the self-appointed representative. “We’ve got our operational goals and those are tough enough to meet. I work 24/7 just to keep up with my targets. Now you are asking us to do our jobs differently and that will take even more effort and maybe I will not achieve the outcome I plan because I am experimenting with innovative approaches. If I ignore all this and continue as normal, I will get my salary and my bonus anyway. If I try all this and I succeed, at the most I will get a badge or a jacket as a reward. Why bother?” The rest of the group nodded in agreement while the trainer and the senior management looked at each other uneasily as the conversation segued into unplanned territory.
Probably, this is what many feel at the end of such workshops — it so happened that here was someone willing to articulate their unease. The point is, it is not enough to simply exhort employees to “be innovative”, or run initiatives for changing culture or mindsets. Organisations that wish to be disruptive, to change their professional DNA, need to consciously provide incentives for innovation.
Very few innovation systems recognise the need for aligning the performance management system to innovation strategy. In the innovation context, the bullets that Levitt and Dubner talk about should cover two aspects — first, a set of metrics that make sense for new products and businesses and incentivise new business creation rather than current profits or revenues — my last column discussed this. The second, and equally important, is how organisations use incentives to change managerial attitudes towards innovation and risk-taking.
This is easier said than done — creating incentives to change organisational behaviour with regard to creativity and risk-taking is one of the most challenging tasks on the innovation agenda. On the one hand, we need innovation for long-term survival. On the other, short-term business-as-usual demands incentives that trigger efficiency and profitability improvement. Balancing the two is tricky — but essential.
An effective innovation incentive system would spur idea generation and innovative behaviour. A bad system can give rise to unwanted projects, or, what can be worse, many ‘unborn babies’ — valuable ideas that should have been given birth to, but were squelched in the minds of their creators. These negative outcomes could be because of fear, disinterest, or lack of encouragement, many of which can be traced back to the way incentives are planned and evaluated. An example: EVA (economic value added)-based performance management is fast becoming the system of choice. However, its focus on short-term financial measures is the opposite of what innovation incentives should be. Indeed, a substantial proportion of managers believe it affects their risk-taking ability.
When we get into the details, one debate that always comes up is whether financial incentives are better than non-financial ones. There seems to be a universal belief that innovators prefer recognition to monetary rewards. Actually, it would be a rare manager who would refuse a financial reward, but let that pass. Most innovation incentives appear to revolve around schemes (but without rewards), and an annual award for the most innovative idea. As the HR head of a large conglomerate, says, ‘These are signals to the team of what is important to top management.’ Perhaps, but one award a year may not be enough when the desired outcome is a flood of innovation across levels — the equivalent would probably be to hand out a bonus to just one employee each year.
In fact, there is a body of research that questions whether extrinsic rewards work at all in stimulating creativity, arguing instead that this is better spurred by the curiosity, challenge, interest and satisfaction in the job. Ideally, incentives should feed into career growth with innovative thinking treated as a critical component of managerial competency while awarding upward mobility. The manager who sticks his neck out hopes to get recognition and climb the corporate ladder in reward. Career advancement is the most obvious way in which organisations can reward innovative thinkers — and this would offer both recognition and financial benefits in one stroke.
Here are some questions for incentive designers to ponder — does the organisation walk the talk? What sort of an example is being set at the top? Who are the heroes in the organisation — the innovators or the harvesters? What sort of behaviour does senior management demonstrate?
If an organisation wants to celebrate risk-taking and innovation, then it should also reflect this in the appraisal and career planning at every level. If employees are to live and breathe innovation then they should also see tangible evidence of how such behaviour is being rewarded.
(Radhika Chadha is a consultant in strategy and innovation and co-author of Innovative India: Insights for the Thinking Manager. Karate-gy is the proprietary name of the strategic exercises conducted by Paradigm Management Knowhow Ltd.)
How can organisations ensure that short-term business goals are met while encouraging managers to experiment for the long-term?.
Very few innovation systems recognise the need for aligning the performance management system to innovation strategy.
‘An incentive is simply a means of urging people to do more of a good thing and less of a bad thing. An incentive is a bullet, a lever, a key: an often tiny object, with astonishing power to change a situation. We all learn to respond to incentives, negative and positive, from the outset of life.’
Steven Levitt and Stephen Dubner, Freakonomics
I was recently invited to watch a creativity workshop being conducted by a consultant visiting from abroad. The client was a software company that had decided its employees needed to be trained to deliver innovative solutions – the idea was tomove beyond pricing as a differentiator in these increasingly competitive times.
The audience was junior to lower-middle level managers and software engineers who huddled around the huge conference table in eager anticipation. The table itself looked like a kid’s playroom, chock-a-block with interesting thingummyjigs — furry wire worms, rubber bands of all shapes and sizes, Lego bricks, cards with provocative statements on them — meant to add an element of additional zest and fun to keep them creatively engaged.
The fun and games part went off well as the consultant enthralled the team with his stories about ideas that worked and bombed, and about tools for idea generation. Towards the end of the day, the facilitator started the wrap-up by stating emphatically that it was quite simple for these techniques to be used in their day-to-day jobs and that each employee should think about how to perform their role differently.
At this, the hitherto chatty group fell silent and shifted about uncomfortably. There was a palpable sense of unease and you could actually feel the charged up energy dissipating rapidly. Finally, one brave soul voiced the collective concern — “Why?” Slightly taken aback, the consultant threw back the question: “Why what?”
“Why innovate, why be creative?” asked the self-appointed representative. “We’ve got our operational goals and those are tough enough to meet. I work 24/7 just to keep up with my targets. Now you are asking us to do our jobs differently and that will take even more effort and maybe I will not achieve the outcome I plan because I am experimenting with innovative approaches. If I ignore all this and continue as normal, I will get my salary and my bonus anyway. If I try all this and I succeed, at the most I will get a badge or a jacket as a reward. Why bother?” The rest of the group nodded in agreement while the trainer and the senior management looked at each other uneasily as the conversation segued into unplanned territory.
Probably, this is what many feel at the end of such workshops — it so happened that here was someone willing to articulate their unease. The point is, it is not enough to simply exhort employees to “be innovative”, or run initiatives for changing culture or mindsets. Organisations that wish to be disruptive, to change their professional DNA, need to consciously provide incentives for innovation.
Very few innovation systems recognise the need for aligning the performance management system to innovation strategy. In the innovation context, the bullets that Levitt and Dubner talk about should cover two aspects — first, a set of metrics that make sense for new products and businesses and incentivise new business creation rather than current profits or revenues — my last column discussed this. The second, and equally important, is how organisations use incentives to change managerial attitudes towards innovation and risk-taking.
This is easier said than done — creating incentives to change organisational behaviour with regard to creativity and risk-taking is one of the most challenging tasks on the innovation agenda. On the one hand, we need innovation for long-term survival. On the other, short-term business-as-usual demands incentives that trigger efficiency and profitability improvement. Balancing the two is tricky — but essential.
An effective innovation incentive system would spur idea generation and innovative behaviour. A bad system can give rise to unwanted projects, or, what can be worse, many ‘unborn babies’ — valuable ideas that should have been given birth to, but were squelched in the minds of their creators. These negative outcomes could be because of fear, disinterest, or lack of encouragement, many of which can be traced back to the way incentives are planned and evaluated. An example: EVA (economic value added)-based performance management is fast becoming the system of choice. However, its focus on short-term financial measures is the opposite of what innovation incentives should be. Indeed, a substantial proportion of managers believe it affects their risk-taking ability.
When we get into the details, one debate that always comes up is whether financial incentives are better than non-financial ones. There seems to be a universal belief that innovators prefer recognition to monetary rewards. Actually, it would be a rare manager who would refuse a financial reward, but let that pass. Most innovation incentives appear to revolve around schemes (but without rewards), and an annual award for the most innovative idea. As the HR head of a large conglomerate, says, ‘These are signals to the team of what is important to top management.’ Perhaps, but one award a year may not be enough when the desired outcome is a flood of innovation across levels — the equivalent would probably be to hand out a bonus to just one employee each year.
In fact, there is a body of research that questions whether extrinsic rewards work at all in stimulating creativity, arguing instead that this is better spurred by the curiosity, challenge, interest and satisfaction in the job. Ideally, incentives should feed into career growth with innovative thinking treated as a critical component of managerial competency while awarding upward mobility. The manager who sticks his neck out hopes to get recognition and climb the corporate ladder in reward. Career advancement is the most obvious way in which organisations can reward innovative thinkers — and this would offer both recognition and financial benefits in one stroke.
Here are some questions for incentive designers to ponder — does the organisation walk the talk? What sort of an example is being set at the top? Who are the heroes in the organisation — the innovators or the harvesters? What sort of behaviour does senior management demonstrate?
If an organisation wants to celebrate risk-taking and innovation, then it should also reflect this in the appraisal and career planning at every level. If employees are to live and breathe innovation then they should also see tangible evidence of how such behaviour is being rewarded.
(Radhika Chadha is a consultant in strategy and innovation and co-author of Innovative India: Insights for the Thinking Manager. Karate-gy is the proprietary name of the strategic exercises conducted by Paradigm Management Knowhow Ltd.)
Business - India - Radio-More buck for the bang
Purvita Chatterjee
FM radio in India believes it is finally coming of age as an efficient and cost-effective medium of advertising. That belief manifested itself as a 15-20 per cent hike in ad rates in the last couple of months after a gap of more than a year. Also, th e launch of more radio stations during that period gave rise to much unsold inventory which had to be disposed of at throwaway prices and established radio stations had to compromise on their rates to take on the new competition.
The price hike is as much reward as rationalisation, all the more so as measurability, missing in most other media, is an advantage, say players in the Rs 750-crore industry. The slowdown of the economy has its advantages, too — the lower cost of radio advertising relative to other media can hopefully help sell more air time than ever.
B. Surendar, National Sales Head, Red FM, says, “A lot has changed in the markets in the past one year; the erstwhile perception-based market leaders have been toppled and there is greater accountability with the entry of RAM (Radio Audience Measurement).”
Red FM radio claims it has shown consistent performance in RAM both in terms of market share and cumulative listenership and that it is well-known for setting benchmarks when it comes to creative 360-degree solutions for clients as proved by consistently improving advertising shares, and boasts of a repertoire of award-winning campaigns, properties and the number one and most awarded radio jockeys in the country.
Radio City FM, which has also increased its airtime rates by 15-20 per cent, justifies it because of its ‘robust increase in listenership, reach and listener equity’ and that it is commensurate with the consistent, innovative delivery of quality of SEC AB audience to advertisers.
According to RAM data, Radio City has seen a consistent 10 per cent increase in reach in RAM markets alone at a time when the category witnessed a 2 per cent decline. The FM brand also enjoys sustained leadership across SECs in Mumbai with the highest ‘time spent listening’ (TSL) across audiences since February 2008.
Apurva Purohit, CEO, Radio City, said, “That radio delivers has been amply demonstrated by RAM. Be it having the lowest CPT (cost per thousand), having as high as a 15 per cent multiplier effect used in conjunction with a TV campaign or being three-fifth as effective as TV in raising awareness at one-seventh the cost, the power of radio is truly one to reckon with. As clients increasingly look at improving the delivery of their media rupee, there is no longer any doubt that radio is repeatedly proving its efficacy. Radio City’s increasing reach in the RAM markets and its robust TSL clearly makes it one of the best mass media vehicles for clients to invest in today.”
As for Radio Mirchi, this may not be the first time it has raised rates but is doing so after a long gap and claims that its pricing is in line with its deliveries.
As Prashant Panday, CEO, Radio Mirchi, says, “Price hikes happen usually once a year. This time, on account of the severe competition in the last couple of years, the price hike comes after nearly two years. It is to really take into account the much higher reach and TSL that we are delivering compared to two years ago when we were still trying to prove our effectiveness. Today, we have proven that we deliver. If you are to compare our deliveries with almost any TV channel or newspaper, we do far better. Our rate hike is only to align our pricing in line with what we deliver.”
With this, the share of radio in media is also expected to cross the threshold level of 4 per cent this year. As Panday says, “After growing at more than 50 per cent for the last two years, I see a growth of more than 100 per cent this year. This should take the share of radio in total media past the 6-per-cent-mark. In 2007, the share of radio is expected to have crossed 4 per cent.”
Others estimate an even higher share for media spends on radio. As Ashit Kukian, Executive Vice-President and National Head (Sales), Radio City, observes, “Radio might seem to be only a 4 per cent medium today but unlike television, it is primarily dominated by 3-4 top players and the size of these players garnering a large chunk of advertising is significant. Today, radio is making its presence felt and in two years, I see it touching the 7-8 per cent mark.”
Kukian points to a recent IMRB study on the radio industry, which says adding radio to an existing television campaign is expected to give the campaign a 15 per cent multiplier effect. Besides, if 10 per cent of a given TV budget is re-deployed to radio, the campaign’s efficiency is expected to increase by 15 per cent. Radio in isolation was measured to be three-fifth as effective as TV in raising awareness at one-seventh of the cost. The research has also shown that radio has the lowest ad avoidance compared to any other medium.
Radio’s share of the ad revenue pie is between 4 and 5 per cent today and it is expected to grow by 25-30 per cent this year.
While RAM has brought in measurability into the medium and is thus now attracting more advertisers, the economic downturn could also prove to be a boon for the medium. According to Panday, “The real challenge is to convince advertisers that in an economic downturn like we are witnessing now, the best medium to use is radio. This has been proven worldwide, but it will take a little time for advertisers in India to also realise the full potential of radio in adverse conditions. The fact is that radio is an extremely cost-effective medium. Today TV companies can claim higher reach than radio – but that’s only when they measure reach on a 1-minute minimum viewership basis. Ask any TV channel to provide reach on a minimum 5 minutes viewing basis and see how the numbers dwindle. In fact, our analysis shows that many popular TV channels may have reach as low as a few lakhs across the country!”
But can radio replace print as the immediate best option for advertisers? Yes, says Abraham Thomas, COO, Red FM. “Radio,” he continues, “is a high-tech, low cost option, which makes it so much more cost-efficient than print.” In spite of radio stations hiking ad rates, radio is inching closer to becoming the preferred medium. As Panday says, “Advertisers are responding favourably. Remember the overall media environment in the country. The biggest media business — print — has seen a price hike of between 25 and 50 per cent. This is unprecedented. With the ever-growing fragmentation in the TV space — now in the GEC space — the inflation in the TV business is extremely high. Outlays higher by 25 and 50 per cent are required today compared to a year ago.”
FM radio in India believes it is finally coming of age as an efficient and cost-effective medium of advertising. That belief manifested itself as a 15-20 per cent hike in ad rates in the last couple of months after a gap of more than a year. Also, th e launch of more radio stations during that period gave rise to much unsold inventory which had to be disposed of at throwaway prices and established radio stations had to compromise on their rates to take on the new competition.
The price hike is as much reward as rationalisation, all the more so as measurability, missing in most other media, is an advantage, say players in the Rs 750-crore industry. The slowdown of the economy has its advantages, too — the lower cost of radio advertising relative to other media can hopefully help sell more air time than ever.
B. Surendar, National Sales Head, Red FM, says, “A lot has changed in the markets in the past one year; the erstwhile perception-based market leaders have been toppled and there is greater accountability with the entry of RAM (Radio Audience Measurement).”
Red FM radio claims it has shown consistent performance in RAM both in terms of market share and cumulative listenership and that it is well-known for setting benchmarks when it comes to creative 360-degree solutions for clients as proved by consistently improving advertising shares, and boasts of a repertoire of award-winning campaigns, properties and the number one and most awarded radio jockeys in the country.
Radio City FM, which has also increased its airtime rates by 15-20 per cent, justifies it because of its ‘robust increase in listenership, reach and listener equity’ and that it is commensurate with the consistent, innovative delivery of quality of SEC AB audience to advertisers.
According to RAM data, Radio City has seen a consistent 10 per cent increase in reach in RAM markets alone at a time when the category witnessed a 2 per cent decline. The FM brand also enjoys sustained leadership across SECs in Mumbai with the highest ‘time spent listening’ (TSL) across audiences since February 2008.
Apurva Purohit, CEO, Radio City, said, “That radio delivers has been amply demonstrated by RAM. Be it having the lowest CPT (cost per thousand), having as high as a 15 per cent multiplier effect used in conjunction with a TV campaign or being three-fifth as effective as TV in raising awareness at one-seventh the cost, the power of radio is truly one to reckon with. As clients increasingly look at improving the delivery of their media rupee, there is no longer any doubt that radio is repeatedly proving its efficacy. Radio City’s increasing reach in the RAM markets and its robust TSL clearly makes it one of the best mass media vehicles for clients to invest in today.”
As for Radio Mirchi, this may not be the first time it has raised rates but is doing so after a long gap and claims that its pricing is in line with its deliveries.
As Prashant Panday, CEO, Radio Mirchi, says, “Price hikes happen usually once a year. This time, on account of the severe competition in the last couple of years, the price hike comes after nearly two years. It is to really take into account the much higher reach and TSL that we are delivering compared to two years ago when we were still trying to prove our effectiveness. Today, we have proven that we deliver. If you are to compare our deliveries with almost any TV channel or newspaper, we do far better. Our rate hike is only to align our pricing in line with what we deliver.”
With this, the share of radio in media is also expected to cross the threshold level of 4 per cent this year. As Panday says, “After growing at more than 50 per cent for the last two years, I see a growth of more than 100 per cent this year. This should take the share of radio in total media past the 6-per-cent-mark. In 2007, the share of radio is expected to have crossed 4 per cent.”
Others estimate an even higher share for media spends on radio. As Ashit Kukian, Executive Vice-President and National Head (Sales), Radio City, observes, “Radio might seem to be only a 4 per cent medium today but unlike television, it is primarily dominated by 3-4 top players and the size of these players garnering a large chunk of advertising is significant. Today, radio is making its presence felt and in two years, I see it touching the 7-8 per cent mark.”
Kukian points to a recent IMRB study on the radio industry, which says adding radio to an existing television campaign is expected to give the campaign a 15 per cent multiplier effect. Besides, if 10 per cent of a given TV budget is re-deployed to radio, the campaign’s efficiency is expected to increase by 15 per cent. Radio in isolation was measured to be three-fifth as effective as TV in raising awareness at one-seventh of the cost. The research has also shown that radio has the lowest ad avoidance compared to any other medium.
Radio’s share of the ad revenue pie is between 4 and 5 per cent today and it is expected to grow by 25-30 per cent this year.
While RAM has brought in measurability into the medium and is thus now attracting more advertisers, the economic downturn could also prove to be a boon for the medium. According to Panday, “The real challenge is to convince advertisers that in an economic downturn like we are witnessing now, the best medium to use is radio. This has been proven worldwide, but it will take a little time for advertisers in India to also realise the full potential of radio in adverse conditions. The fact is that radio is an extremely cost-effective medium. Today TV companies can claim higher reach than radio – but that’s only when they measure reach on a 1-minute minimum viewership basis. Ask any TV channel to provide reach on a minimum 5 minutes viewing basis and see how the numbers dwindle. In fact, our analysis shows that many popular TV channels may have reach as low as a few lakhs across the country!”
But can radio replace print as the immediate best option for advertisers? Yes, says Abraham Thomas, COO, Red FM. “Radio,” he continues, “is a high-tech, low cost option, which makes it so much more cost-efficient than print.” In spite of radio stations hiking ad rates, radio is inching closer to becoming the preferred medium. As Panday says, “Advertisers are responding favourably. Remember the overall media environment in the country. The biggest media business — print — has seen a price hike of between 25 and 50 per cent. This is unprecedented. With the ever-growing fragmentation in the TV space — now in the GEC space — the inflation in the TV business is extremely high. Outlays higher by 25 and 50 per cent are required today compared to a year ago.”
Business - Q&A COO,Oriflame Cosmetics;Jesper Martinsson
Bindu D. Menon
Meera Mohanty
Recession doesn’t worry direct selling company Oriflame. For one, it helps more people come into the direct selling business and second, cosmetics sales also rise as people like to pamper themselves, says Jesper Martinsson, Chief Operating Offi cer, Oriflame Cosmetics.
With over one lakh consultants and a plan to triple the sales in the next five years, the Swedish company has set its focus on India. Martinsson tells BrandLine that the growing middle class in the country is exciting and the company is planning to reach consumers in smaller towns besides the bigger towns and cities. The North-East is already seeing a quick growth. Oriflame has to now work out a distribution model that can tackle the economics of the large expanse that’s India.
At times of economic slowdown, how is the cosmetics industry doing?
The cosmetics market is growing, but we (Oriflame) are growing six-seven times faster than the market. So, we are clearly gaining the market share
Can you put a figure to that?
No. We don’t talk about individual markets. But if we are talking about the Asia region, we are growing at over forty per cent. We are present in six markets in Asia, and India is one of the biggest and also the fastest growing markets for us.
Oriflame is also doing well, on the whole. As many other European companies, we were founded and headquartered in Sweden. We are actually the fastest growing cosmetics company in the market, and were last year too, growing globally at 26 per cent. Oriflame Europe is very well penetrated, we have a good presence in world markets and are still growing well. But we will come to a point where we cannot grow that fast and therefore, we are looking at Latin America and Asia, where we see big growth opportunities.
Is the European market saturated?
No, but it’s becoming more and more difficult to grow. Even as we are growing at a steady pace, there isn’t a growth opportunity that we see in the future in European markets. The cosmetics industry is growing 3-4 per cent and we also have quite a big sales force relative to the population. In Europe, if you take the number of consultants we have and compare that to the population, each consultant will be serving around 250 consumers. But if that figure has to come down to 100, it will become a big issue.
But the opportunities in Latin America and Asia are very, very big. There are many more markets for us to open and also to improve penetration where we are present. And India is the most important market for Oriflame in Asia, and as we all know, the market is growing fast.
Have the input costs and the feedstock, which have gone up in the last couple of months, had a bearing on your sales?
No, not at all. We haven’t noticed anything. We are in the direct sales business and are not that affected by the current crisis. People will still buy cosmetics and amongst the products we are offering is also a business opportunity for people to earn some extra money. It is almost like, it should become more attractive to people during a crisis. We have been through various crises and recessions before and have not been affected.
We have actually had our best quarter in Oriflame globally this year, a fantastic third quarter. So, we are doing well, but of course you never know. We don’t see any issues, any slowdown anywhere in the world right now. You will still need your mascara, lipstick and cream during a recession. Actually, some say consumers buy even more during such times because they like to be nice to themselves.
Are you planning to launch any new range or line of products here?
We are looking into wellness. I don’t want to get into specifics, but there will be products like supplements and nutrients. The wellness industry is the fastest growing industry in the world, as you know. Another area for which we have products is oral care — we have successfully launched this in Europe. We have received lots of request for this range from India.
Could these be sold through retail, maybe?
We don’t know how to do retail and are not interested in learning new things at the moment. We are focussed on direct sales.
We are gradually looking to introduce more and more products. We have, today by far, the largest portfolio amongst direct selling companies. We have twice the number of products as our competitor, but we are looking to broaden the portfolio. We are looking to develop special products, colours for the Indian skin type. It’s a project that our research and development team is working on.
We produce more than a hundred products. In fact, one of the first products that our founders started with 41 years ago is produced in India for all the sixty markets. It’s called Tender Care.
We have talked about the cosmetic products, but what we are even more proud of in Oriflame is the business opportunity that we offer. We have 2.6 million active sales consultants in the world leading and building their own businesses within the Oriflame framework. The way we pay our remuneration and the way the system works is something that we are proud of. I have been with Oriflame for 12 years and one of the most fun things in the job is to see people changing their lives and fulfilling their dreams. Coming back to India we feel there is a good match between the cosmetics and directs sale.
What do you think of your price points here?
I think we have a good positioning. We are not the cheapest but we maintain good quality. Quality is very important in any business and even more important in direct sales, where selling is from a friend to another. When you are selling to a friend you don’t want to fool them.
What is the investment for the coming year? What are the challenges?
We cannot share figures but we are increasing our investments in marketing in 2009. What we can say is that in the next five years we should have at least tripled our sales in India.
One important thing for us is to spread geographically. The challenge for us is to work out smarter distribution systems because our consultants can’t pay higher freight charges — those cost more than the product. That’s a key area we will be investing in.
Do you ever see yourself being a mass product?
Probably not. Not to that extent as you see some of the retail brands. On some products on the toiletries which is on the heavier price, it’s very hard for us to compete.
In colour cosmetics, I think we offer value for money. Skin care is really the heritage of Oriflame, that is how we started, it’s the most complex product and we have developed several break-through technologies.
One range that we have been very successful with in India is the whitening range. Swedish people like to be brown.
I, for example, am going on a holiday and am looking forward to sunbathing. In Sweden, we sell creams so that people can become brown and in India we sell creams to make people fairer.
Meera Mohanty
Recession doesn’t worry direct selling company Oriflame. For one, it helps more people come into the direct selling business and second, cosmetics sales also rise as people like to pamper themselves, says Jesper Martinsson, Chief Operating Offi cer, Oriflame Cosmetics.
With over one lakh consultants and a plan to triple the sales in the next five years, the Swedish company has set its focus on India. Martinsson tells BrandLine that the growing middle class in the country is exciting and the company is planning to reach consumers in smaller towns besides the bigger towns and cities. The North-East is already seeing a quick growth. Oriflame has to now work out a distribution model that can tackle the economics of the large expanse that’s India.
At times of economic slowdown, how is the cosmetics industry doing?
The cosmetics market is growing, but we (Oriflame) are growing six-seven times faster than the market. So, we are clearly gaining the market share
Can you put a figure to that?
No. We don’t talk about individual markets. But if we are talking about the Asia region, we are growing at over forty per cent. We are present in six markets in Asia, and India is one of the biggest and also the fastest growing markets for us.
Oriflame is also doing well, on the whole. As many other European companies, we were founded and headquartered in Sweden. We are actually the fastest growing cosmetics company in the market, and were last year too, growing globally at 26 per cent. Oriflame Europe is very well penetrated, we have a good presence in world markets and are still growing well. But we will come to a point where we cannot grow that fast and therefore, we are looking at Latin America and Asia, where we see big growth opportunities.
Is the European market saturated?
No, but it’s becoming more and more difficult to grow. Even as we are growing at a steady pace, there isn’t a growth opportunity that we see in the future in European markets. The cosmetics industry is growing 3-4 per cent and we also have quite a big sales force relative to the population. In Europe, if you take the number of consultants we have and compare that to the population, each consultant will be serving around 250 consumers. But if that figure has to come down to 100, it will become a big issue.
But the opportunities in Latin America and Asia are very, very big. There are many more markets for us to open and also to improve penetration where we are present. And India is the most important market for Oriflame in Asia, and as we all know, the market is growing fast.
Have the input costs and the feedstock, which have gone up in the last couple of months, had a bearing on your sales?
No, not at all. We haven’t noticed anything. We are in the direct sales business and are not that affected by the current crisis. People will still buy cosmetics and amongst the products we are offering is also a business opportunity for people to earn some extra money. It is almost like, it should become more attractive to people during a crisis. We have been through various crises and recessions before and have not been affected.
We have actually had our best quarter in Oriflame globally this year, a fantastic third quarter. So, we are doing well, but of course you never know. We don’t see any issues, any slowdown anywhere in the world right now. You will still need your mascara, lipstick and cream during a recession. Actually, some say consumers buy even more during such times because they like to be nice to themselves.
Are you planning to launch any new range or line of products here?
We are looking into wellness. I don’t want to get into specifics, but there will be products like supplements and nutrients. The wellness industry is the fastest growing industry in the world, as you know. Another area for which we have products is oral care — we have successfully launched this in Europe. We have received lots of request for this range from India.
Could these be sold through retail, maybe?
We don’t know how to do retail and are not interested in learning new things at the moment. We are focussed on direct sales.
We are gradually looking to introduce more and more products. We have, today by far, the largest portfolio amongst direct selling companies. We have twice the number of products as our competitor, but we are looking to broaden the portfolio. We are looking to develop special products, colours for the Indian skin type. It’s a project that our research and development team is working on.
We produce more than a hundred products. In fact, one of the first products that our founders started with 41 years ago is produced in India for all the sixty markets. It’s called Tender Care.
We have talked about the cosmetic products, but what we are even more proud of in Oriflame is the business opportunity that we offer. We have 2.6 million active sales consultants in the world leading and building their own businesses within the Oriflame framework. The way we pay our remuneration and the way the system works is something that we are proud of. I have been with Oriflame for 12 years and one of the most fun things in the job is to see people changing their lives and fulfilling their dreams. Coming back to India we feel there is a good match between the cosmetics and directs sale.
What do you think of your price points here?
I think we have a good positioning. We are not the cheapest but we maintain good quality. Quality is very important in any business and even more important in direct sales, where selling is from a friend to another. When you are selling to a friend you don’t want to fool them.
What is the investment for the coming year? What are the challenges?
We cannot share figures but we are increasing our investments in marketing in 2009. What we can say is that in the next five years we should have at least tripled our sales in India.
One important thing for us is to spread geographically. The challenge for us is to work out smarter distribution systems because our consultants can’t pay higher freight charges — those cost more than the product. That’s a key area we will be investing in.
Do you ever see yourself being a mass product?
Probably not. Not to that extent as you see some of the retail brands. On some products on the toiletries which is on the heavier price, it’s very hard for us to compete.
In colour cosmetics, I think we offer value for money. Skin care is really the heritage of Oriflame, that is how we started, it’s the most complex product and we have developed several break-through technologies.
One range that we have been very successful with in India is the whitening range. Swedish people like to be brown.
I, for example, am going on a holiday and am looking forward to sunbathing. In Sweden, we sell creams so that people can become brown and in India we sell creams to make people fairer.
Lifestyle - India;Youngsters finding themselves under scrutiny in Virtual world
Namitha Handa
As the older generation gets Net-savvy, youngsters are finding themselves under scrutiny in the virtual world
“I was doing a good job of hiding my relationships from my parents, but I guess my happy days are over,” says Niharika Singh. The nemesis of Niharika’s happy days was not real; it was a digital demon, one that lurks in almost every house in urban Mumbai. It was a social networking site.
“Everything was going smoothly,” she says, “And then I announced, on my social networking site, the relationship I was having, with a boy.”
All of Niharika’s friends knew of her relationship, but what she had forgotten to take into account were the newest ‘friends’ on her Facebook account. “My uncles and aunts began to send me ‘friend requests’, and I had no choice, but to accept them. As soon as they read my Wall, my relationship information was conveyed straight to my mother, from whom I had kept this information.”
Niharika is not alone in Mumbai, as the older generation links-up with the Internet age, a growing number of youngsters are finding their cyberspace “violated”, especially by relatives.
But like Darwin postulated... things evolve, and the youth have been taking precautions: “I have put my aunts and uncles on hold, in the sense that I haven’t accepted their invitations. I use the simple excuse: ‘I don’t go online that often’. The truth is that I have some photographs that I would rather they not see,” says Sonia Nath.
But with Niharika the breach of trust still rankles: “It is so irritating. Now you don’t even have freedom on the Internet.”
Most youngsters, however, believe that putting relatives’ request on hold simply adds to the suspicion levels. “If you don’t add them; or use the highest level of security they sense something is wrong, and will inform your parents anyway. So you actually can’t do much, but delete all photographs you don’t want your relatives to see,” says Saloni Dabas.
Of course, as the Mumbaikar diaspora spreads across the globe, not everyone is reluctant to have relatives among their social networking ‘pals’. “This is one of the cheapest ways to keep in touch with your relatives who have settled abroad. It’s like being part of their life, even when you are far away,” says Gayatri Shrikande.
Gaurav Gupta agrees with Gayatri, but also empathises with Niharika. “Social networking sites enable people to know you better. But, at the same time, I believe the people we are with our friends, is different from whom we are with our families, so that can be an issue. And what is cool with friends might not go down well with relatives,” he says.
Eventually it’s up to site members to decide whom they give access to. But familial ties are beginning to bind the digital sphere, and that has got kids surfing the grey matter. A no-relatives-allowed networking site? Give it a few months.
As the older generation gets Net-savvy, youngsters are finding themselves under scrutiny in the virtual world
“I was doing a good job of hiding my relationships from my parents, but I guess my happy days are over,” says Niharika Singh. The nemesis of Niharika’s happy days was not real; it was a digital demon, one that lurks in almost every house in urban Mumbai. It was a social networking site.
“Everything was going smoothly,” she says, “And then I announced, on my social networking site, the relationship I was having, with a boy.”
All of Niharika’s friends knew of her relationship, but what she had forgotten to take into account were the newest ‘friends’ on her Facebook account. “My uncles and aunts began to send me ‘friend requests’, and I had no choice, but to accept them. As soon as they read my Wall, my relationship information was conveyed straight to my mother, from whom I had kept this information.”
Niharika is not alone in Mumbai, as the older generation links-up with the Internet age, a growing number of youngsters are finding their cyberspace “violated”, especially by relatives.
But like Darwin postulated... things evolve, and the youth have been taking precautions: “I have put my aunts and uncles on hold, in the sense that I haven’t accepted their invitations. I use the simple excuse: ‘I don’t go online that often’. The truth is that I have some photographs that I would rather they not see,” says Sonia Nath.
But with Niharika the breach of trust still rankles: “It is so irritating. Now you don’t even have freedom on the Internet.”
Most youngsters, however, believe that putting relatives’ request on hold simply adds to the suspicion levels. “If you don’t add them; or use the highest level of security they sense something is wrong, and will inform your parents anyway. So you actually can’t do much, but delete all photographs you don’t want your relatives to see,” says Saloni Dabas.
Of course, as the Mumbaikar diaspora spreads across the globe, not everyone is reluctant to have relatives among their social networking ‘pals’. “This is one of the cheapest ways to keep in touch with your relatives who have settled abroad. It’s like being part of their life, even when you are far away,” says Gayatri Shrikande.
Gaurav Gupta agrees with Gayatri, but also empathises with Niharika. “Social networking sites enable people to know you better. But, at the same time, I believe the people we are with our friends, is different from whom we are with our families, so that can be an issue. And what is cool with friends might not go down well with relatives,” he says.
Eventually it’s up to site members to decide whom they give access to. But familial ties are beginning to bind the digital sphere, and that has got kids surfing the grey matter. A no-relatives-allowed networking site? Give it a few months.
Entertainment - India;The fanatic for Good films
Priyanka Joshi
Priyanka Joshi chats up Sunil Doshi, who is treating Indian audiences to films that are heady in content, to animation titles and the best of world cinema.
I f you are a fan of intelligent, multiplex cinema, you may know Sunil Doshi as the man who bankrolled Mixed Doubles and Bheja Fry. But for this session, the producer-distributor is expecting to talk of newer things: In fact, what he is expecting perhaps is yet another, slightly boring, session spent “educating” yet another journalist on some of his new acquisitions from Japanese cinema — animation films.
As director, Alliance Media & Entertainment, Doshi has just acquired 11 animation titles from Japan’s biggest production house, Studio Ghibli: Films like Princess Mononoke and Academy Award-winner Spirited Away, successful and acclaimed the world-over — if not in India, just as yet.
Having set himself the task of educating cinegoers (and journalists) as to this genre of filmmaking, Doshi brightens up when I mention that not only do I know of these films but have even seen them! “Aren’t they just great?” he asks, excited like a child, er, may be not. Because when I point out that animation is seen as a kiddy pastime in India, his frustration is visible: “That’s the biggest misinterpretation we have in India.”
Cue to launch into a lengthy monologue: “Studio Ghibli, Japan’s premier animation studio, was founded by two of animation’s greatest creators, Hayao Miyazaki and Isao Takahata,” he says, “Many of their films have not just won commercial success but have even won numerous awards and I am glad that I can help good cinema reach out to individuals,” he finishes.
On the other hand, even the cynics among us would be hard put to escape Doshi’s enthusiasm. He manages to convince me that “concept-driven” animation and children’s films are good business propositions. That’s why, he says, he will invest around $10 million on his latest business venture, Junior, that will produce children’s films as well as TV content. “And don’t expect my children’s films to have larger-than-life stars,” he says, with a hint of derision before quickly adding, “I am not averse to them but I make my films on my terms.”
For starters, Junior will release Azur & Asmar, an animated feature film by writer, director and artist Michel Ocelot. “It’s an Arabian Nights-style story about two re-united half-brothers, one white, one black and their genie-seeking adventures in a far-off land,” he lists. Justifying how the animation is not just for kids, he explains that the fairytale addresses themes of racism, nationhood, inheritance and idealism. A little prodding and he admits that the success of Azur & Asmat may establish whether Indian audiences take to animation at all.
Doshi also wears the hat of director, NDTV Lumière, an initiative to bring world cinema to India. He has been involved in building an impressive film collection of over 450 movies. “They are the best and have been handpicked by my team and I,” says the movie buff, who confesses to spending hours at end watching films.
Lumière has been organising corporate screenings and providing films to international film festivals in India, including in Mumbai, Kolkata, Thiruvananthapuram and Goa. When he is not negotiating rights for Oscar- nominated titles, Doshi returns to his production company — Handmade Films — and gets busy, well, “giving opportunities to newcomers”. “The new guys are bringing their ideas to the front and this will fire up filmmaking in India,” he forecasts.
His self-belief is well-rooted in films like Bheja Fry, now a case study for small filmmakers. This was a film with a budget of just about Rs 55-70 lakh. But it went on to make several times its production cost. He continues to invest in similar ventures but says that he refuses to look at the accounts sheet after the release of every film. “We look at long-term creative benefits. If there are some financial profits at the end of a year or two, we’re happy. Otherwise, the companies will continue to release and distribute films we believe in,” he says.
Doshi has extended his passion for cinema into production, acquisition and distribution of different genres of films at various film festivals abroad too. This explains why he’s at Cannes and other places on the festival circuit regularly. Feature-length fiction films that Handmade promoted in Cannes this year included Jaideep Varma’s comedy Hulla, Maneej Premnath’s thriller The Waiting Room, Rupali Guha’s Aamras, and Bela Negi’s Driving Lessons. He points out that all these have been directed by first-timers.
Doshi ends the interview on an assuring note: “We’ve the crème de la crème of cinema coming soon to theatres and homes.” We’ll wait and watch.
Priyanka Joshi chats up Sunil Doshi, who is treating Indian audiences to films that are heady in content, to animation titles and the best of world cinema.
I f you are a fan of intelligent, multiplex cinema, you may know Sunil Doshi as the man who bankrolled Mixed Doubles and Bheja Fry. But for this session, the producer-distributor is expecting to talk of newer things: In fact, what he is expecting perhaps is yet another, slightly boring, session spent “educating” yet another journalist on some of his new acquisitions from Japanese cinema — animation films.
As director, Alliance Media & Entertainment, Doshi has just acquired 11 animation titles from Japan’s biggest production house, Studio Ghibli: Films like Princess Mononoke and Academy Award-winner Spirited Away, successful and acclaimed the world-over — if not in India, just as yet.
Having set himself the task of educating cinegoers (and journalists) as to this genre of filmmaking, Doshi brightens up when I mention that not only do I know of these films but have even seen them! “Aren’t they just great?” he asks, excited like a child, er, may be not. Because when I point out that animation is seen as a kiddy pastime in India, his frustration is visible: “That’s the biggest misinterpretation we have in India.”
Cue to launch into a lengthy monologue: “Studio Ghibli, Japan’s premier animation studio, was founded by two of animation’s greatest creators, Hayao Miyazaki and Isao Takahata,” he says, “Many of their films have not just won commercial success but have even won numerous awards and I am glad that I can help good cinema reach out to individuals,” he finishes.
On the other hand, even the cynics among us would be hard put to escape Doshi’s enthusiasm. He manages to convince me that “concept-driven” animation and children’s films are good business propositions. That’s why, he says, he will invest around $10 million on his latest business venture, Junior, that will produce children’s films as well as TV content. “And don’t expect my children’s films to have larger-than-life stars,” he says, with a hint of derision before quickly adding, “I am not averse to them but I make my films on my terms.”
For starters, Junior will release Azur & Asmar, an animated feature film by writer, director and artist Michel Ocelot. “It’s an Arabian Nights-style story about two re-united half-brothers, one white, one black and their genie-seeking adventures in a far-off land,” he lists. Justifying how the animation is not just for kids, he explains that the fairytale addresses themes of racism, nationhood, inheritance and idealism. A little prodding and he admits that the success of Azur & Asmat may establish whether Indian audiences take to animation at all.
Doshi also wears the hat of director, NDTV Lumière, an initiative to bring world cinema to India. He has been involved in building an impressive film collection of over 450 movies. “They are the best and have been handpicked by my team and I,” says the movie buff, who confesses to spending hours at end watching films.
Lumière has been organising corporate screenings and providing films to international film festivals in India, including in Mumbai, Kolkata, Thiruvananthapuram and Goa. When he is not negotiating rights for Oscar- nominated titles, Doshi returns to his production company — Handmade Films — and gets busy, well, “giving opportunities to newcomers”. “The new guys are bringing their ideas to the front and this will fire up filmmaking in India,” he forecasts.
His self-belief is well-rooted in films like Bheja Fry, now a case study for small filmmakers. This was a film with a budget of just about Rs 55-70 lakh. But it went on to make several times its production cost. He continues to invest in similar ventures but says that he refuses to look at the accounts sheet after the release of every film. “We look at long-term creative benefits. If there are some financial profits at the end of a year or two, we’re happy. Otherwise, the companies will continue to release and distribute films we believe in,” he says.
Doshi has extended his passion for cinema into production, acquisition and distribution of different genres of films at various film festivals abroad too. This explains why he’s at Cannes and other places on the festival circuit regularly. Feature-length fiction films that Handmade promoted in Cannes this year included Jaideep Varma’s comedy Hulla, Maneej Premnath’s thriller The Waiting Room, Rupali Guha’s Aamras, and Bela Negi’s Driving Lessons. He points out that all these have been directed by first-timers.
Doshi ends the interview on an assuring note: “We’ve the crème de la crème of cinema coming soon to theatres and homes.” We’ll wait and watch.
Business - Bollywood in recession ?
Gaurav Malani & Reshma Kelkar
The usage of the term recession has never been so common as it has been in the past few months. The younger generation might have theoretically Fear factor in Indian cinema
studied the syndrome in economics classes but are practically experiencing its effect only now. The recession has extended its range globally and India is no exception. While we keep reading about the market crunch across various industry sectors in the daily news, the Indian film industry, too couldn't evade its sting.
"While a worldwide recession has hit every business and industry at large, the Indian motion picture business felt it particularly hard because it has been long overpriced. Production, acquisition and talent salary costs had illogically shot through the roof with no commensurate returns for distributors sitting at the end of the value chain." remarks Tanuj Garg, Head - UK & Europe (International Marketing, Distribution & Syndication) at Studio 18.
But how is the recession affecting the movie world? Budding filmmaker Aniruddh Mitra explains, "The bad paymasters have got the opportunity to openly say 'no funds hence no payment', while the good ones are asking their unit members to charge less to reduce the price so that they can sell the films or at least find a buyer".
Though the crisis clearly carries negative vibes, some believe there could be positive outcome from the recession as well. "The bad side is the obvious i.e., workers not getting their dues, loss of work opportunities and some producers taking advantage of the crisis and faking no funds", says Mitra. "However the good part is that the bubble of over pricing would burst now and bring sanity to the budgeting of a film. Meaning, there is no justification in an artist getting Rs 64 cr for a film while the cinematographer has to be contended with Rs 20-40 lacs."
But hasn't the industry always been artist-oriented and our scripts been hero-bound? "The scene was always like this but has worsened in recent times. Picture this - an artist demands 7 cr after the success of his début film and sticks to his remuneration despite giving continuous flops thereafter. Where is the reward for hard work and consistency in our industry? Now if the overpriced artists charge less, there could be some sanity and scope for more films to be made even if couple of them bomb at the box office."
Who will be affected the most from the recession - actors, producers, distributors or exhibitors? Tanuj says, "With the credit crunch, the situation deteriorated as the principal revenue generators for a distributor became cash-strapped. Consequently boutique producers and actors on a honeymoon phase are among the most affected with the pricing nose-diving and an inevitable correction on the anvil,"
However the bigger belief is that the producers are the most affected lot. The distributors and exhibitors can throw their hands up and say 'sorry Fear factor in Indian cinema
I can't take your films as my funds have dried up'. But then what does the producer do? He has committed the film, paid people advances and gone ahead with shooting. He is in no position to force his colleagues to reduce their price, nor can he dump the project - in which case he loses both face and his investment.
As per industry buzz, the films where the buyers have withdrawn while the producers have gone ahead shooting based on the buyer's initial assurances include Vipul Shah's London Dreams, Sanjay Dutt - Akshay Kumar starrer Blue and all the three films starring Himesh Reshamiya.
Also affected are middle level workers and technicians. Their source of income has dried up with the producers appearing in a surrender mood.
But while on one hand we talk about cash-crunch and cost-cuttings, on the other hand we do see recent films doing encouraging business and the better ones like Golmaal Returns, Fashion and Dostana have even celebrated their grand success through lavish parties. Trade analyst Atul Kumar explains the paradox saying, "Celebrating success of Golmaal Returns and Fashion can be welcomed as an oasis in desert of crisis, which is looming largely over Bollywood. We need some reason to celebrate to forget tension. Otherwise global recession is definitely affecting our industry and don't be surprised to hear about some stars actually accommodating makers at much lower fees than their initial inflated price."
While adversely affecting the investing power, the recession is also inadvertently stabilizing Bollywood's internal economy. The early effects have already started showing but only time will define the long term damage.
Nevertheless as showman Raj Kapoor always maintained 'the show will continue to go on' in Bollywood. How else can you explain the likes of Bipasha Basu and Katrina Kaif being paid in crores for few minutes of performance on the New Year's Eve? That's what you call having one's cake and eating it too...
The usage of the term recession has never been so common as it has been in the past few months. The younger generation might have theoretically Fear factor in Indian cinema
studied the syndrome in economics classes but are practically experiencing its effect only now. The recession has extended its range globally and India is no exception. While we keep reading about the market crunch across various industry sectors in the daily news, the Indian film industry, too couldn't evade its sting.
"While a worldwide recession has hit every business and industry at large, the Indian motion picture business felt it particularly hard because it has been long overpriced. Production, acquisition and talent salary costs had illogically shot through the roof with no commensurate returns for distributors sitting at the end of the value chain." remarks Tanuj Garg, Head - UK & Europe (International Marketing, Distribution & Syndication) at Studio 18.
But how is the recession affecting the movie world? Budding filmmaker Aniruddh Mitra explains, "The bad paymasters have got the opportunity to openly say 'no funds hence no payment', while the good ones are asking their unit members to charge less to reduce the price so that they can sell the films or at least find a buyer".
Though the crisis clearly carries negative vibes, some believe there could be positive outcome from the recession as well. "The bad side is the obvious i.e., workers not getting their dues, loss of work opportunities and some producers taking advantage of the crisis and faking no funds", says Mitra. "However the good part is that the bubble of over pricing would burst now and bring sanity to the budgeting of a film. Meaning, there is no justification in an artist getting Rs 64 cr for a film while the cinematographer has to be contended with Rs 20-40 lacs."
But hasn't the industry always been artist-oriented and our scripts been hero-bound? "The scene was always like this but has worsened in recent times. Picture this - an artist demands 7 cr after the success of his début film and sticks to his remuneration despite giving continuous flops thereafter. Where is the reward for hard work and consistency in our industry? Now if the overpriced artists charge less, there could be some sanity and scope for more films to be made even if couple of them bomb at the box office."
Who will be affected the most from the recession - actors, producers, distributors or exhibitors? Tanuj says, "With the credit crunch, the situation deteriorated as the principal revenue generators for a distributor became cash-strapped. Consequently boutique producers and actors on a honeymoon phase are among the most affected with the pricing nose-diving and an inevitable correction on the anvil,"
However the bigger belief is that the producers are the most affected lot. The distributors and exhibitors can throw their hands up and say 'sorry Fear factor in Indian cinema
I can't take your films as my funds have dried up'. But then what does the producer do? He has committed the film, paid people advances and gone ahead with shooting. He is in no position to force his colleagues to reduce their price, nor can he dump the project - in which case he loses both face and his investment.
As per industry buzz, the films where the buyers have withdrawn while the producers have gone ahead shooting based on the buyer's initial assurances include Vipul Shah's London Dreams, Sanjay Dutt - Akshay Kumar starrer Blue and all the three films starring Himesh Reshamiya.
Also affected are middle level workers and technicians. Their source of income has dried up with the producers appearing in a surrender mood.
But while on one hand we talk about cash-crunch and cost-cuttings, on the other hand we do see recent films doing encouraging business and the better ones like Golmaal Returns, Fashion and Dostana have even celebrated their grand success through lavish parties. Trade analyst Atul Kumar explains the paradox saying, "Celebrating success of Golmaal Returns and Fashion can be welcomed as an oasis in desert of crisis, which is looming largely over Bollywood. We need some reason to celebrate to forget tension. Otherwise global recession is definitely affecting our industry and don't be surprised to hear about some stars actually accommodating makers at much lower fees than their initial inflated price."
While adversely affecting the investing power, the recession is also inadvertently stabilizing Bollywood's internal economy. The early effects have already started showing but only time will define the long term damage.
Nevertheless as showman Raj Kapoor always maintained 'the show will continue to go on' in Bollywood. How else can you explain the likes of Bipasha Basu and Katrina Kaif being paid in crores for few minutes of performance on the New Year's Eve? That's what you call having one's cake and eating it too...
Business - India;Google sees strong shift towards online ads
Sravanthi Challapalli
Chennai, Nov. 21 Google India is seeing a very strong shift towards online advertising, and more so in the face of a slowdown, says Mr Parminder Singh, Business Head (Technology), Google India. Speaking to Business Line, he said that advertisers are now more cautious of how they spend their money and conscious of ways to make it go that extra mile.
Online advertising offers better targeting and flexibility to control ad spend as it need not be committed to a campaign upfront as in traditional advertising. It also provides the facility to gauge the extent of the impact. Google has several kinds of advertising — search ads, gadget ads, display ads and click-to-play video ads — which advertisers could customise to their needs and get information on how Internet users used the ads. The advertising model also allows for advertisers to pay lesser and lesser as the clicks on their ads rise. As the placement of the ad is determined through the auction model, the advertisers decide how much the cost of the click should be, Mr Singh said.
“Even for companies doing well, there is some uncertainty these days, so online advertising — which is measurable, targeted more accurately and served up at the moment of relevance (as in an ad for a camera phone appearing on a web site concerned with mobile phones) — comes in handy at times like this,” he explained. Google conducts Digital Days, which are fairly exhaustive sessions that are an effort to educated and convince advertisers to invest in online advertising.
“Brands are being built online. Online advertising’s advantage is not restricted to lead generation. People are realising that online and offline ads have their own value. It’s not an either-or situation — all media have an impact on each other,” said Mr Singh.
Travelguru, a portal for hotel and air ticket booking and an advertiser which uses the Google platform, says the approach now is strictly driven by return on investments. “There is complete focus on marketing/advertising platforms which are measurable and have clear returns. As we are able to acquire customers at a good CPA (cost per action), there is no need to curtail this investment,” says a spokesperson.
Travelguru’s predominant media of promotion are print and TV, considering that much of India’s population isn’t very computer-literate. “However, mass media advertising does not have the same ROI focus as online advertising and is more of a ‘brand building’ play,” says the spokesperson. “With less measurability, it often gets heightened scrutiny at such periods of slowdown.”
Chennai, Nov. 21 Google India is seeing a very strong shift towards online advertising, and more so in the face of a slowdown, says Mr Parminder Singh, Business Head (Technology), Google India. Speaking to Business Line, he said that advertisers are now more cautious of how they spend their money and conscious of ways to make it go that extra mile.
Online advertising offers better targeting and flexibility to control ad spend as it need not be committed to a campaign upfront as in traditional advertising. It also provides the facility to gauge the extent of the impact. Google has several kinds of advertising — search ads, gadget ads, display ads and click-to-play video ads — which advertisers could customise to their needs and get information on how Internet users used the ads. The advertising model also allows for advertisers to pay lesser and lesser as the clicks on their ads rise. As the placement of the ad is determined through the auction model, the advertisers decide how much the cost of the click should be, Mr Singh said.
“Even for companies doing well, there is some uncertainty these days, so online advertising — which is measurable, targeted more accurately and served up at the moment of relevance (as in an ad for a camera phone appearing on a web site concerned with mobile phones) — comes in handy at times like this,” he explained. Google conducts Digital Days, which are fairly exhaustive sessions that are an effort to educated and convince advertisers to invest in online advertising.
“Brands are being built online. Online advertising’s advantage is not restricted to lead generation. People are realising that online and offline ads have their own value. It’s not an either-or situation — all media have an impact on each other,” said Mr Singh.
Travelguru, a portal for hotel and air ticket booking and an advertiser which uses the Google platform, says the approach now is strictly driven by return on investments. “There is complete focus on marketing/advertising platforms which are measurable and have clear returns. As we are able to acquire customers at a good CPA (cost per action), there is no need to curtail this investment,” says a spokesperson.
Travelguru’s predominant media of promotion are print and TV, considering that much of India’s population isn’t very computer-literate. “However, mass media advertising does not have the same ROI focus as online advertising and is more of a ‘brand building’ play,” says the spokesperson. “With less measurability, it often gets heightened scrutiny at such periods of slowdown.”
Business - India;Liquor industry raising a toast to slowdown
M Padmakshan
MUMBAI: Here’s one industry that’s on a high even in the times of slowdown. The liquor industry has not only bucked the financial crisis affecting most other sectors, but has managed to post a higher growth rate of 18-20%, against its normal growth rate of 10-12%.
It is no wonder that industry players are raising a toast. “My industry is recession proof,” said Vijay Mallya, who controls 70% of the spirits market through his UB Group.
UB has reason to cheer. The April-October sales figures show a 18% rise over the corresponding period last year. Sales grew by 13% in the same period last year. Vijay Rekhi, who heads United Spirits, the spirits behemoth of UB Group, said: “This is an unprecedented growth.”
It has been seen that in times of gloom, alcohol consumption goes up. This boosts sales of the Indian Made Foreign Liquor (IMFL) segment which offers hundreds of brands in various ranges of price, style and quality to consumers. Industry sources peg current average monthly sales figure at 13-14 million cases, a rise of 17% over the average monthly sales figure for last year.
The spirits industry has a penchant for reading recession as boom. This view has its origin in the bootlegging boom during the Great Depression of the 1930s, which was necessitated by an increased demand for alcohol that could not be catered to by legal channels.
But this consumption trend is not unique to recession. A similar pattern is seen during the times of boom too, when tipplers drink in celebration of the good times. The last few years of boom have seen the spirits industry growing from 90 million cases to 160 million cases, with an average rate of growth of 12%. This year the industry saw the pace of growth moving upwards to over 18%.
Deepak Roy, director of Kishore Chhabria-led ABD (Allied Blenders & Distillers) which manufactures Officer’s Choice whisky said: “We are set to cross 9 million cases of Officer’s Choice whisky this year. There is a 17% growth this year for the brand against the 12% growth last year.”
Raju Vaziraney, chief operating officer (COO) of Radico Khaitan, the second-largest spirits company in India that owns 8 PM whisky brand, said that onsite drinking has come down to 10-15%, while offsite drinking has gone up by about 20%. Offsite drinking constitutes almost 80% of total liquor sales. Offsite drinking is preferred over onsite drinking because the latter is costlier.
In the liquor industry parlance, onsite drinking refers to drinking at bars and restaurants, while offsite drinking refers to people drinking at home. Usually, 80% of the sales are for offsite drinking and this is where the sales have gone up considerably. This has helped to boost overall sales by 15-18% despite a decrease in sales at bars and restaurants.
Zoraster Zend, owner of Peekay Wines, Mumbai, one of the largest distributors of spirits and wines in the country, confirms the rise in sales. “The sales are definitely higher. We, however, have not quantified it so far,” he said.
MUMBAI: Here’s one industry that’s on a high even in the times of slowdown. The liquor industry has not only bucked the financial crisis affecting most other sectors, but has managed to post a higher growth rate of 18-20%, against its normal growth rate of 10-12%.
It is no wonder that industry players are raising a toast. “My industry is recession proof,” said Vijay Mallya, who controls 70% of the spirits market through his UB Group.
UB has reason to cheer. The April-October sales figures show a 18% rise over the corresponding period last year. Sales grew by 13% in the same period last year. Vijay Rekhi, who heads United Spirits, the spirits behemoth of UB Group, said: “This is an unprecedented growth.”
It has been seen that in times of gloom, alcohol consumption goes up. This boosts sales of the Indian Made Foreign Liquor (IMFL) segment which offers hundreds of brands in various ranges of price, style and quality to consumers. Industry sources peg current average monthly sales figure at 13-14 million cases, a rise of 17% over the average monthly sales figure for last year.
The spirits industry has a penchant for reading recession as boom. This view has its origin in the bootlegging boom during the Great Depression of the 1930s, which was necessitated by an increased demand for alcohol that could not be catered to by legal channels.
But this consumption trend is not unique to recession. A similar pattern is seen during the times of boom too, when tipplers drink in celebration of the good times. The last few years of boom have seen the spirits industry growing from 90 million cases to 160 million cases, with an average rate of growth of 12%. This year the industry saw the pace of growth moving upwards to over 18%.
Deepak Roy, director of Kishore Chhabria-led ABD (Allied Blenders & Distillers) which manufactures Officer’s Choice whisky said: “We are set to cross 9 million cases of Officer’s Choice whisky this year. There is a 17% growth this year for the brand against the 12% growth last year.”
Raju Vaziraney, chief operating officer (COO) of Radico Khaitan, the second-largest spirits company in India that owns 8 PM whisky brand, said that onsite drinking has come down to 10-15%, while offsite drinking has gone up by about 20%. Offsite drinking constitutes almost 80% of total liquor sales. Offsite drinking is preferred over onsite drinking because the latter is costlier.
In the liquor industry parlance, onsite drinking refers to drinking at bars and restaurants, while offsite drinking refers to people drinking at home. Usually, 80% of the sales are for offsite drinking and this is where the sales have gone up considerably. This has helped to boost overall sales by 15-18% despite a decrease in sales at bars and restaurants.
Zoraster Zend, owner of Peekay Wines, Mumbai, one of the largest distributors of spirits and wines in the country, confirms the rise in sales. “The sales are definitely higher. We, however, have not quantified it so far,” he said.
Personality - Arun Sarin;Pushing frontiers across continents
Joji Thomas Philip
Arun Sarin isn’t a man who rests on his laurels. After stepping down as CEO of Vodafone in July 2008 with the hosannas of the City of London ringing
pleasantly in his ears, he certainly hasn’t walked off into the sunset.
To the inevitable ‘what next’ question, his answer is succinct yet discreet: “My next venture will definitely have to do with something global, but it will involve India, it will be related to technology and will also be linked to investments.”
“I’ve been keeping busy...I’ve trekked in the Himalayas across Nepal and Bhutan, caught up with friends and moved back to California,” he says of the preceding months, but that is obviously a sabbatical, a breather he’s taken several times in his 30-year professional career, just before taking on a new challenge.
Much has been said about 54-year-old Sarin’s military school background in Bangalore and his prowess as a boxer in his youth, but even his later interest in surfing may have contributed to his near-legendary pugnacious ability to stand up to sustained battering.
Though best known in India for pulling off the acquisition of Hutchison Essar, Sarin earned the reluctant admiration of his peers in London’s corporati when he exited markets where Vodafone was not making headway, fought off a coup led by shareholders opposed to his decisions, embraced convergence, and most importantly, turned the company’s Euro-centric worldview towards emerging markets (especially India) and putting it back on the path of profitability.
Even the Hutchison Essar deal was ‘touch and go’ as Vodafone was unsure of whether it could beat its competitors, especially, the ‘Indian players’ till the last moment. More so since Sarin had to also battle his own shareholders to bid for it in the first place.
“In hindsight, Hutchison went to the right company but it could have gone either way,” he told ET. By the time Sarin announced he was stepping down in March 2008, he had the satisfaction of showing naysayers that he had steered the world’s largest telco towards a dramatic improvement in its financial results, buoyed by its performance in the emerging markets, led by India.
When he stepped into the shoes of Chris Gent at Vodafone in 2003, very few people knew, let alone thought much of, the small-built, wiry Indian from California with a curiously trans-continental accent. By the time he stepped down in 2008, Sarin had become a global Indian icon, a chief executive known around the world for effecting a spectacular, if tough turnaround, based on his belief in emerging markets.
“When I took over, Vodafone had very little exposure to emerging markets. But now, we are well spread and are no longer a predominantly European player and have operations across Asia and Africa,” he says.
Sarin’s business acumen may never have come to the fore had he followed the family tradition and joined the Armed Forces. He got admission to the National Defence Academy, but his mother put her foot down. So the disappointed brilliant student turned to engineering. “IIT Kharagpur was an accident,” says Sarin modestly. “I filled up the forms because a friend had an extra one.”
The IIT degree honed his already-sharp mind even more, leading him to a double masters in engineering and management from University of California at Berkeley in 1978. He then headed for a job in, what he calls “the most happening sector of those times”, the oil industry. But he already had his sights on the next big thing, telecom. Believing that mobile telephony was the boom area, he joined the Pacific Telesis Group.
“This was the time when there were so many doubts about this technology,” Sarin recollects. A decade later, when he was at the helm of Pacific’s AirTouch business, it demerged the mobile phone operator. Consequently, Sarin played a key role in AirTouch’s $66.5-billion merger with Vodafone and headed the combined entity’s operations in the US, Asia and Australasia. He left in 2000 when Vodafone merged its US interests into Verizon Wireless.
For the next two years, Sarin remained as a non-executive director at Vodafone while exploring the dotcom space. “The internet was very hot. I was fascinated by infospace and after oil and mobile telephony, this seemed to be the next big boom before the bubble burst,” he recounts frankly. So it was back to familiar territory for Sarin, telecom. There was also an emotional quotient: “When you sell your company, you also want to ensure it is doing well. This tempted me back.”
His mantra for Vodafone was to ‘push the boundaries’ and he became CEO at a time when both analysts and investors had started questioning the company’s aggressive takeover-driven expansion plans. Sarin fought pitched battles with them to push ahead with his agenda. It didn’t help as he had to back out of the auction for AT&T and announce a £23-billion writeoff in 2006, the biggest-ever loss in British corporate history.
In June 2006, he survived a “substantial protest vote” to stay at the helm and got further flak in August 2007 when he decided not to exercise Vodafone’s rights to sell 45% in Verizon Wireless. He was proved right when the value of the Verizon investment doubled but he does say that the failure to bag AT&T taught him valuable lessons.
“We went for it because we needed our own company and brand in the US. This was the same strategy for India. While we had a 10% in Bharti, we needed our own asset here,” he adds.
“If I had quit then, shareholders would have been worse off. In three areas, strategically, operationally and from people’s point of view, there was lot to be completed. Leadership required clear execution and I left as soon as we got a grip on these three key issues,” he says but adds that his resignation wasn’t because Vodafone had finally reached full-year profitability after several years, but because he was convinced that he had put a stable and forward-looking system and strategy in place.
Sarin’s leadership skills are readily acknowledged by competitors and friends alike. Vodafone Essar MD Asim Ghosh, for instance, says Sarin has an easy charismatic manner and the ability to cut through complex issues for a simple solution. “Most importantly, he has the courage to stick his neck out on big decisions. Without doubt, he is a great leader, not only in telecom, but also in global business,” says Ghosh.
Sarin’s salutary tale, and his ultimate vindication, came at a time when there were very few India-born CEOs on the high table. In a sense, he forged the template of the tough-talking, visionary Indian CEOs, paving the way for others.
“When I took over, there were no Indians in such roles. There are several now, (PepsiCo’s) Indra Nooyi, (Citigroup’s) Vikram Pandit, Lakshmi Mittal and Ratan Tata among others. They are the best of the breed and I see a lot more Indians in such roles of being global leaders over the next 5-10 years,” says Sarin.
Arun Sarin isn’t a man who rests on his laurels. After stepping down as CEO of Vodafone in July 2008 with the hosannas of the City of London ringing
pleasantly in his ears, he certainly hasn’t walked off into the sunset.
To the inevitable ‘what next’ question, his answer is succinct yet discreet: “My next venture will definitely have to do with something global, but it will involve India, it will be related to technology and will also be linked to investments.”
“I’ve been keeping busy...I’ve trekked in the Himalayas across Nepal and Bhutan, caught up with friends and moved back to California,” he says of the preceding months, but that is obviously a sabbatical, a breather he’s taken several times in his 30-year professional career, just before taking on a new challenge.
Much has been said about 54-year-old Sarin’s military school background in Bangalore and his prowess as a boxer in his youth, but even his later interest in surfing may have contributed to his near-legendary pugnacious ability to stand up to sustained battering.
Though best known in India for pulling off the acquisition of Hutchison Essar, Sarin earned the reluctant admiration of his peers in London’s corporati when he exited markets where Vodafone was not making headway, fought off a coup led by shareholders opposed to his decisions, embraced convergence, and most importantly, turned the company’s Euro-centric worldview towards emerging markets (especially India) and putting it back on the path of profitability.
Even the Hutchison Essar deal was ‘touch and go’ as Vodafone was unsure of whether it could beat its competitors, especially, the ‘Indian players’ till the last moment. More so since Sarin had to also battle his own shareholders to bid for it in the first place.
“In hindsight, Hutchison went to the right company but it could have gone either way,” he told ET. By the time Sarin announced he was stepping down in March 2008, he had the satisfaction of showing naysayers that he had steered the world’s largest telco towards a dramatic improvement in its financial results, buoyed by its performance in the emerging markets, led by India.
When he stepped into the shoes of Chris Gent at Vodafone in 2003, very few people knew, let alone thought much of, the small-built, wiry Indian from California with a curiously trans-continental accent. By the time he stepped down in 2008, Sarin had become a global Indian icon, a chief executive known around the world for effecting a spectacular, if tough turnaround, based on his belief in emerging markets.
“When I took over, Vodafone had very little exposure to emerging markets. But now, we are well spread and are no longer a predominantly European player and have operations across Asia and Africa,” he says.
Sarin’s business acumen may never have come to the fore had he followed the family tradition and joined the Armed Forces. He got admission to the National Defence Academy, but his mother put her foot down. So the disappointed brilliant student turned to engineering. “IIT Kharagpur was an accident,” says Sarin modestly. “I filled up the forms because a friend had an extra one.”
The IIT degree honed his already-sharp mind even more, leading him to a double masters in engineering and management from University of California at Berkeley in 1978. He then headed for a job in, what he calls “the most happening sector of those times”, the oil industry. But he already had his sights on the next big thing, telecom. Believing that mobile telephony was the boom area, he joined the Pacific Telesis Group.
“This was the time when there were so many doubts about this technology,” Sarin recollects. A decade later, when he was at the helm of Pacific’s AirTouch business, it demerged the mobile phone operator. Consequently, Sarin played a key role in AirTouch’s $66.5-billion merger with Vodafone and headed the combined entity’s operations in the US, Asia and Australasia. He left in 2000 when Vodafone merged its US interests into Verizon Wireless.
For the next two years, Sarin remained as a non-executive director at Vodafone while exploring the dotcom space. “The internet was very hot. I was fascinated by infospace and after oil and mobile telephony, this seemed to be the next big boom before the bubble burst,” he recounts frankly. So it was back to familiar territory for Sarin, telecom. There was also an emotional quotient: “When you sell your company, you also want to ensure it is doing well. This tempted me back.”
His mantra for Vodafone was to ‘push the boundaries’ and he became CEO at a time when both analysts and investors had started questioning the company’s aggressive takeover-driven expansion plans. Sarin fought pitched battles with them to push ahead with his agenda. It didn’t help as he had to back out of the auction for AT&T and announce a £23-billion writeoff in 2006, the biggest-ever loss in British corporate history.
In June 2006, he survived a “substantial protest vote” to stay at the helm and got further flak in August 2007 when he decided not to exercise Vodafone’s rights to sell 45% in Verizon Wireless. He was proved right when the value of the Verizon investment doubled but he does say that the failure to bag AT&T taught him valuable lessons.
“We went for it because we needed our own company and brand in the US. This was the same strategy for India. While we had a 10% in Bharti, we needed our own asset here,” he adds.
“If I had quit then, shareholders would have been worse off. In three areas, strategically, operationally and from people’s point of view, there was lot to be completed. Leadership required clear execution and I left as soon as we got a grip on these three key issues,” he says but adds that his resignation wasn’t because Vodafone had finally reached full-year profitability after several years, but because he was convinced that he had put a stable and forward-looking system and strategy in place.
Sarin’s leadership skills are readily acknowledged by competitors and friends alike. Vodafone Essar MD Asim Ghosh, for instance, says Sarin has an easy charismatic manner and the ability to cut through complex issues for a simple solution. “Most importantly, he has the courage to stick his neck out on big decisions. Without doubt, he is a great leader, not only in telecom, but also in global business,” says Ghosh.
Sarin’s salutary tale, and his ultimate vindication, came at a time when there were very few India-born CEOs on the high table. In a sense, he forged the template of the tough-talking, visionary Indian CEOs, paving the way for others.
“When I took over, there were no Indians in such roles. There are several now, (PepsiCo’s) Indra Nooyi, (Citigroup’s) Vikram Pandit, Lakshmi Mittal and Ratan Tata among others. They are the best of the breed and I see a lot more Indians in such roles of being global leaders over the next 5-10 years,” says Sarin.
Dheeraj Tiwari & Aman Dhall
NEW DELHI: Time was when paypackets separated the men from the boys, with public sector bosses falling way behind their private sector peers. Now,
CEOs of government-owned companies can give some of their private sector rivals a run for their money.
According to an ET analysis, the chairman & managing director (CMD) of a public sector oil major will now be earning a respectable Rs 5,76,000 per month, thanks to the pay revision bonanza, factoring in a 200% performance-related bonus.
That means a huge leap of 450% over his current monthly salary of Rs 1,02,500 per month and will put him (pay-wise at least) ahead of Infosys chairman NR Narayana Murthy, who earns Rs 4,16,666 per month (as on March 2008). He, however, would still be far behind Wipro chairman Azim H Premji’s monthly salary of Rs 10,95,726.
Even so, this salary hike is a representative picture of the new pay scenario in the higher echelons of the public sector companies. At present, CMDs of public sector undertakings (PSU) draw a basic pay in the range of Rs 27,750-Rs 31,500.
They are also entitled to get 68.8% of basic pay as dearness allowance (DA), 30% house rent allowance (HRA), 30% statutory allowance, 30% fitment benefit and 50% other allowances. So, for example, if a PSU CMD is at the upper-end of the basic salary bracket (Rs 31,500), his total emoluments, excluding the performance-related pay (PRP), will be Rs 97,272.
The PRP is taken from the 5% distributable profit, or profit after tax. And then there is the added sweetner that the salary revision carries, the retrospective effect. This means the CMD of a navratna PSU may get arrears of around Rs 20 lakh as well.
According to the ET analysis based on the figures as on March 31, 2008, the top earning CMDs of PSUs include NTPC’s Ram Sharan Sharma (Rs 1,62,145), Bhel’s K Ravi Kumar (Rs 1,61,285), Gail’s UD Choubey (Rs 1,56,666), IOC’s Sarthak Behuria (Rs 1,40,750), SAIL’s SK Roongta (Rs 1,34,024) and ONGC’s Radhey Shyam Sharma (Rs 1,02,500).
Clearly, while the market capitalisation of some of these PSUs are much higher than private sector companies, the salaries of their CMDs are much lower. Take the whopping difference in the paypackets of the bosses of telecom major Bharti Airtel and ONGC, India’s largest oil & gas company.
Bharti’s market capitalisation is Rs 1,12,411.67 crore, while ONGC’s Rs 1,39,112.27 crore. But there’s a gaping Rs 1,61,90,343 difference in the salaries of their top honchos, RS Sharma’s Rs 1,02,500 per month to Sunil Bharti Mittal’s Rs 1,62,092,843 per month.
In fact, even after the pay revision, Mr Sharma would be far behind some of the other leading private sector bosses, who are not promoters, such as L&T CEO AM Naik, whose remuneration as of March 31, 2008, was Rs 69,93,083
This, despite the fact that PSUs top the list in terms of market capitalisation, with ONGC weighing in at Rs 1,39,112.27 crore, NTPC (Rs 1,13,869.86 crore), Bhel (Rs 58,458.48 crore), Power Grid (Rs 29,146.23 crore), which makes them much larger than some of their private sector competitors such as Reliance Petroleum (Rs 31,477.5 crore), Tata Power (Rs 14,033.77 crore) and L&T (Rs 41,690.74 crore).
After the new pay scales kick in, the basic salary of a PSU CMD will move into the highest end of the new bracket (Rs 80,000-1,25,000), while dearness allowance will be calculated at around 13%. The rest of the allowances will remain the same.
In addition, a profitable PSU can now give up to 200% as PRP. Assuming that a CMD of a blue-chip PSU falls into the highest bracket, his salary without PRP will be Rs 3,16,125, which will go up to Rs 5,76,125, if the company gives 200% as performance pay.
Similarly, for CMDs of miniratna companies, the revised pay will mean an increase of around 200%, even without the 200% PRP, which a CMD of a profitable PSU will be entitled to.
NEW DELHI: Time was when paypackets separated the men from the boys, with public sector bosses falling way behind their private sector peers. Now,
CEOs of government-owned companies can give some of their private sector rivals a run for their money.
According to an ET analysis, the chairman & managing director (CMD) of a public sector oil major will now be earning a respectable Rs 5,76,000 per month, thanks to the pay revision bonanza, factoring in a 200% performance-related bonus.
That means a huge leap of 450% over his current monthly salary of Rs 1,02,500 per month and will put him (pay-wise at least) ahead of Infosys chairman NR Narayana Murthy, who earns Rs 4,16,666 per month (as on March 2008). He, however, would still be far behind Wipro chairman Azim H Premji’s monthly salary of Rs 10,95,726.
Even so, this salary hike is a representative picture of the new pay scenario in the higher echelons of the public sector companies. At present, CMDs of public sector undertakings (PSU) draw a basic pay in the range of Rs 27,750-Rs 31,500.
They are also entitled to get 68.8% of basic pay as dearness allowance (DA), 30% house rent allowance (HRA), 30% statutory allowance, 30% fitment benefit and 50% other allowances. So, for example, if a PSU CMD is at the upper-end of the basic salary bracket (Rs 31,500), his total emoluments, excluding the performance-related pay (PRP), will be Rs 97,272.
The PRP is taken from the 5% distributable profit, or profit after tax. And then there is the added sweetner that the salary revision carries, the retrospective effect. This means the CMD of a navratna PSU may get arrears of around Rs 20 lakh as well.
According to the ET analysis based on the figures as on March 31, 2008, the top earning CMDs of PSUs include NTPC’s Ram Sharan Sharma (Rs 1,62,145), Bhel’s K Ravi Kumar (Rs 1,61,285), Gail’s UD Choubey (Rs 1,56,666), IOC’s Sarthak Behuria (Rs 1,40,750), SAIL’s SK Roongta (Rs 1,34,024) and ONGC’s Radhey Shyam Sharma (Rs 1,02,500).
Clearly, while the market capitalisation of some of these PSUs are much higher than private sector companies, the salaries of their CMDs are much lower. Take the whopping difference in the paypackets of the bosses of telecom major Bharti Airtel and ONGC, India’s largest oil & gas company.
Bharti’s market capitalisation is Rs 1,12,411.67 crore, while ONGC’s Rs 1,39,112.27 crore. But there’s a gaping Rs 1,61,90,343 difference in the salaries of their top honchos, RS Sharma’s Rs 1,02,500 per month to Sunil Bharti Mittal’s Rs 1,62,092,843 per month.
In fact, even after the pay revision, Mr Sharma would be far behind some of the other leading private sector bosses, who are not promoters, such as L&T CEO AM Naik, whose remuneration as of March 31, 2008, was Rs 69,93,083
This, despite the fact that PSUs top the list in terms of market capitalisation, with ONGC weighing in at Rs 1,39,112.27 crore, NTPC (Rs 1,13,869.86 crore), Bhel (Rs 58,458.48 crore), Power Grid (Rs 29,146.23 crore), which makes them much larger than some of their private sector competitors such as Reliance Petroleum (Rs 31,477.5 crore), Tata Power (Rs 14,033.77 crore) and L&T (Rs 41,690.74 crore).
After the new pay scales kick in, the basic salary of a PSU CMD will move into the highest end of the new bracket (Rs 80,000-1,25,000), while dearness allowance will be calculated at around 13%. The rest of the allowances will remain the same.
In addition, a profitable PSU can now give up to 200% as PRP. Assuming that a CMD of a blue-chip PSU falls into the highest bracket, his salary without PRP will be Rs 3,16,125, which will go up to Rs 5,76,125, if the company gives 200% as performance pay.
Similarly, for CMDs of miniratna companies, the revised pay will mean an increase of around 200%, even without the 200% PRP, which a CMD of a profitable PSU will be entitled to.
Business - Goldman Sachs not interested in buying Citibank
NEW YORK: Goldman Sachs Group Inc is not interested in buying hard-hit Citigroup Inc, even with substantial US government financial support, a Competitive economies
Ghosts of 1929
2008: Year of global financial crisis
Other Fed tools against downturn
person familiar with Goldman's strategy said Friday.
Citigroup shares tumbled for a fifth straight day, closing Friday at a 14-year low and giving the once-mighty bank a market value of just $21 billion.
The plunging stock price fueled speculation Friday that the bank would have to find a buyer quickly or sell businesses to stay afloat. Citi's board met Friday to consider these and other options, though the bank ruled out a sale of brokerage unit Smith Barney.
Yet Goldman -- whose stock rose 2.5 percent Friday and which now has about the same market value as Citi -- continues to resist such a deal because it would be disruptive to Goldman's culture and could make it vulnerable to big losses from some of Citi's assets, the source said.
That reluctance has not changed since Goldman Chief Executive Lloyd Blankfein was encouraged by government officials to call Citi CEO Vikram Pandit. The call, which took place in September, lasted less than a minute and neither side was interested, people familiar with the matter said.
Even with the possibility of US government financial support, Goldman is reluctant, the source said. Goldman declined to comment, citing its policy of not responding to market speculation.
The US Treasury and Federal Reserve could still put pressure on a large bank -- only a few remain -- to carry out a private-sector rescue.
That power of persuasion was evident in March, when JPMorgan Chase & Co was urged to acquire Bear Stearns, with the Federal Reserve agreeing to absorb losses on a mortgage portfolio.
Ghosts of 1929
2008: Year of global financial crisis
Other Fed tools against downturn
person familiar with Goldman's strategy said Friday.
Citigroup shares tumbled for a fifth straight day, closing Friday at a 14-year low and giving the once-mighty bank a market value of just $21 billion.
The plunging stock price fueled speculation Friday that the bank would have to find a buyer quickly or sell businesses to stay afloat. Citi's board met Friday to consider these and other options, though the bank ruled out a sale of brokerage unit Smith Barney.
Yet Goldman -- whose stock rose 2.5 percent Friday and which now has about the same market value as Citi -- continues to resist such a deal because it would be disruptive to Goldman's culture and could make it vulnerable to big losses from some of Citi's assets, the source said.
That reluctance has not changed since Goldman Chief Executive Lloyd Blankfein was encouraged by government officials to call Citi CEO Vikram Pandit. The call, which took place in September, lasted less than a minute and neither side was interested, people familiar with the matter said.
Even with the possibility of US government financial support, Goldman is reluctant, the source said. Goldman declined to comment, citing its policy of not responding to market speculation.
The US Treasury and Federal Reserve could still put pressure on a large bank -- only a few remain -- to carry out a private-sector rescue.
That power of persuasion was evident in March, when JPMorgan Chase & Co was urged to acquire Bear Stearns, with the Federal Reserve agreeing to absorb losses on a mortgage portfolio.
Mktg - McDonald's launches new flavour of French fries
NEW DELHI: McDonald’s has launched a new flavour of French fries by the name Shake-Shake Fries.
Shake-Shake Fries has been introduced for a limited period only, from 20 November to 31 December, 2008.
Says McDonald’s head marketing – North and East India Jyoti Rakheja, “Launch of Shake-Shake Fries is a part of our continuous endeavour to deliver great taste and value to our customers. With the newly launched Fries, it's not just about the flavour, but also about the experience of popping the fries into the bag, adding a chatpata seasoning in it and shaking it up and down. It is an extension of the basic French fries with an added flavour to it. The idea is get the consumers to have fun while enjoying their favourite fries.”
Leo Burnett has created the 25-second television commercial that introduces the new flavour of fries.
The newly launched fries will be available across 155 McDonald’s restaurants at a price of Rs 60 for large fries and Rs 55 for medium fries.
Shake-Shake Fries has been introduced for a limited period only, from 20 November to 31 December, 2008.
Says McDonald’s head marketing – North and East India Jyoti Rakheja, “Launch of Shake-Shake Fries is a part of our continuous endeavour to deliver great taste and value to our customers. With the newly launched Fries, it's not just about the flavour, but also about the experience of popping the fries into the bag, adding a chatpata seasoning in it and shaking it up and down. It is an extension of the basic French fries with an added flavour to it. The idea is get the consumers to have fun while enjoying their favourite fries.”
Leo Burnett has created the 25-second television commercial that introduces the new flavour of fries.
The newly launched fries will be available across 155 McDonald’s restaurants at a price of Rs 60 for large fries and Rs 55 for medium fries.
Tech - US develops tiny flying robots
DAYTON: If only we could be a fly on the wall when our enemies are plotting to attack us. Better yet, what if that fly could record voices, transmit
video and even fire tiny weapons?
That kind of James Bond-style fantasy is actually on the drawing board. US military engineers are trying to design flying robots disguised as insects that could one day spy on enemies and conduct dangerous missions without risking lives.
"The way we envision it is, there would be a bunch of these sent out in a swarm," said Greg Parker, who helps lead the research project at Wright-Patterson Air Force Base in Dayton. "If we know there's a possibility of bad guys in a certain building, how do we find out? We think this would fill that void."
In essence, the research seeks to miniaturise the Unmanned Aerial Vehicle drones used in Iraq and Afghanistan for surveillance and reconnaissance.
The next generation of drones, called Micro Aerial Vehicles, or MAVs, could be as tiny as bumblebees and capable of flying undetected into buildings, where they could photograph, record, and even attack insurgents and terrorists.
By identifying and assaulting adversaries more precisely, the robots would also help reduce or avoid civilian casualties, the military says.
Parker and his colleagues plan to start by developing a bird-sized robot as soon as 2015, followed by the insect-sized models by 2030.
The vehicles could be useful on battlefields where the biggest challenge is collecting reliable intelligence about enemies.
"If we could get inside the buildings and inside the rooms where their activities are unfolding, we would be able to get the kind of intelligence we need to shut them down," said Loren Thompson, a defense analyst with the Lexington Institute in Arlington, Virginia.
video and even fire tiny weapons?
That kind of James Bond-style fantasy is actually on the drawing board. US military engineers are trying to design flying robots disguised as insects that could one day spy on enemies and conduct dangerous missions without risking lives.
"The way we envision it is, there would be a bunch of these sent out in a swarm," said Greg Parker, who helps lead the research project at Wright-Patterson Air Force Base in Dayton. "If we know there's a possibility of bad guys in a certain building, how do we find out? We think this would fill that void."
In essence, the research seeks to miniaturise the Unmanned Aerial Vehicle drones used in Iraq and Afghanistan for surveillance and reconnaissance.
The next generation of drones, called Micro Aerial Vehicles, or MAVs, could be as tiny as bumblebees and capable of flying undetected into buildings, where they could photograph, record, and even attack insurgents and terrorists.
By identifying and assaulting adversaries more precisely, the robots would also help reduce or avoid civilian casualties, the military says.
Parker and his colleagues plan to start by developing a bird-sized robot as soon as 2015, followed by the insect-sized models by 2030.
The vehicles could be useful on battlefields where the biggest challenge is collecting reliable intelligence about enemies.
"If we could get inside the buildings and inside the rooms where their activities are unfolding, we would be able to get the kind of intelligence we need to shut them down," said Loren Thompson, a defense analyst with the Lexington Institute in Arlington, Virginia.
Lifestyle - Malaysia's top Islamic body bans yoga for muslims
KUALA LUMPUR: Malaysia's top Islamic body on Saturday banned Muslims from practicing yoga, saying the Indian physical exercise contains elements of
Hinduism and could corrupt Muslims.
The National Fatwa Council, which has the authority to rule on how Muslims must conduct their faith, issued a fatwa, or edict, saying yoga involves not just physical exercise but also includes Hindu spiritual elements, chanting and worship.
Council chairman Abdul Shukor Husin told reporters that many Muslims who practice the globally popular yoga failed to understand that its ultimate aim was to be one with a god of a different religion.
``We are of the view that yoga, which originates from Hinduism, combines physical exercise, religious elements, chanting and worshipping for the purpose of achieving inner peace and ultimately to be one with god,'' he said.
``It is inappropriate. It can destroy the faith of a Muslim,'' he said.
The Fatwa Council's decisions are not legally binding on Muslims, who comprise nearly two-thirds of Malaysia's 27 million people, unless they are enshrined in national or Shariah laws.
However, many Muslims abide by the edicts out of deference, and the council does have the authority to ostracize an offending Muslim from society.
The fatwa reflects the growing strain of conservatism in Malaysia, which has always taken pride in its multiethnicity. About 25 per cent of Malaysians are ethnic Chinese and 8 per cent ethnic Indians, mostly Hindus.
Recently, the council issued an edict banning tomboys, ruling that girls who act like boys violate the tenets of Islam.
The issue of yoga came into the limelight last month when an Islamic scholar expressed an opinion at a seminar that it was un-Islamic, prompting the Fatwa Council to step in.
Local newspapers have received several letters from Muslims, expressing indignation at the scholar's view, saying yoga is simply a way to maintain health and has nothing to do with religion.
There are no figures for how many Muslims practice yoga, but many yoga classes have a sprinkling of Muslims attending.
In a recent blog, social activist Marina Mahathir criticized the council for even considering a yoga ban, calling it ``a classic case of reacting out of fear and ignorance.''
``Yoga may have spiritual roots but most of us do it for the exercise, both for the mind and body,'' Marina wrote.
Hinduism and could corrupt Muslims.
The National Fatwa Council, which has the authority to rule on how Muslims must conduct their faith, issued a fatwa, or edict, saying yoga involves not just physical exercise but also includes Hindu spiritual elements, chanting and worship.
Council chairman Abdul Shukor Husin told reporters that many Muslims who practice the globally popular yoga failed to understand that its ultimate aim was to be one with a god of a different religion.
``We are of the view that yoga, which originates from Hinduism, combines physical exercise, religious elements, chanting and worshipping for the purpose of achieving inner peace and ultimately to be one with god,'' he said.
``It is inappropriate. It can destroy the faith of a Muslim,'' he said.
The Fatwa Council's decisions are not legally binding on Muslims, who comprise nearly two-thirds of Malaysia's 27 million people, unless they are enshrined in national or Shariah laws.
However, many Muslims abide by the edicts out of deference, and the council does have the authority to ostracize an offending Muslim from society.
The fatwa reflects the growing strain of conservatism in Malaysia, which has always taken pride in its multiethnicity. About 25 per cent of Malaysians are ethnic Chinese and 8 per cent ethnic Indians, mostly Hindus.
Recently, the council issued an edict banning tomboys, ruling that girls who act like boys violate the tenets of Islam.
The issue of yoga came into the limelight last month when an Islamic scholar expressed an opinion at a seminar that it was un-Islamic, prompting the Fatwa Council to step in.
Local newspapers have received several letters from Muslims, expressing indignation at the scholar's view, saying yoga is simply a way to maintain health and has nothing to do with religion.
There are no figures for how many Muslims practice yoga, but many yoga classes have a sprinkling of Muslims attending.
In a recent blog, social activist Marina Mahathir criticized the council for even considering a yoga ban, calling it ``a classic case of reacting out of fear and ignorance.''
``Yoga may have spiritual roots but most of us do it for the exercise, both for the mind and body,'' Marina wrote.
India - Widows sold as bonded labourers 100 kms from Bangalore
Rishikesh Bahadur Desai
TUMKUR/BANGALORE: If Bangalore has entered e-age, barely 100 km from the city stone-age practices still persist.
Unbelievable though it may sound, widows are treated like cattle, are 'bought and sold' in a custom treated as sacred by the 'Handi Koracha' community. Worse, local authorities well aware of the issue are not lifting a finger to help the victims of this de-humanising tradition.
Selling widows is a routine custom of the pig-rearing Kunchalu Koracha or Handi Korachas. The centuries-old 'Ruka' tradition is a norm with the community that lives in hamlets along the Karnataka-Andhra Pradesh border.
Widowed women thus sold, are used as bonded labourers to rear pigs or make brooms by their new owners.
They run errands and do menial household work. Of course, similar rules do not apply to men. Unfortunately most community members don't think of 'Ruka,'as evil and few victims protest.
"This is a common practice. Even today, women are bought and sold," Sunkappa, an elderly member of the community, told TOI. His sister Nagamma was sold by her in-laws four years ago. When this news hit the headlines, it created a sensation. The state government promised to help her and uplift the backward Handi Koracha community.
A caravan of officials descended on R Hosakote village September last. The villagers were promised free houses, loans and pigs at subsidized rates. "Over 300 applications were received. But not a single one seems to have been processed. No one has got any assistance till now," says Sogadu Venkatesh, a social worker who is campaigning against the practice.
The community
Kunchalu Koracha or Handi Korachas live in Kolar, Tumkur, Davanagere and Bellary districts. They are a sub-sect of Korachas, listed under the Scheduled Castes in Karnataka and under Scheduled Tribes in Andhra Pradesh. Their occupations are pig-rearing and broom-making.
None among the commmunity has ever been to college. Around 20 students are in school now with girls outnumbering boys. They have had no political representation till now. No Handi Koracha has made it to the panchayats or the assembly or parliament.
What is Ruka?
It is a counter-dowry practice in which the parents of the groom pay money to the bride. During marriage, a bunch of coins tied in a piece of cloth is given to the bride to keep for life. This is treated as a solemn promise from her that she would serve her husband and in-laws for life. This provides her parents-in-law absolute control over her life. In case of her husband's death they can sell her if they feel it is expensive to keep her and her children in their household and feed them.
Government shocked
Social welfare minister D Sudhakar said he was shocked to hear about such practices. He said he would provide a free house, loan to Nagamma for self-employment and free education for her children. He said the matter would be investigated and the guilty would be brought to book. He also said educational programmes would be taken up to wean away the community from such practices.
When reminded that similar promises were made by the government four years ago and that they were not met, he said he would call for details on their status and take up follow-up action. He may have to start from the fundamentals as the state government is yet to appoint chairpersons for the state women's commission and the state SC/ST commission.
Expertspeak
G K Karanth, director of the centre for multi-disciplinary development research, feels all the stake-holders - the government, community and the civil society - have a role to play in abolishing this practice.
The government should assess why such barbaric practices persist. What are the hindrances to ending them; whether it is ignorance, exclusion, economic opportunity, or die-hard preservationism. Solutions can be evolved based on such data, Karanth who is the joint editor of the book 'Challenging Untouchability: Dalit Initiatives and Experiences from Karnataka' said.
He also felt that evil practices should be condemned even if they are part of community or tribal customs. "While I uphold the cultural rights of indigenous communities, I feel the need for a cultural ombudsman to look at these things and suggest what can be done," he said.
NGOs ready to help
Bangalore-based women's rights group Wimochana conducted a fact finding study about the practice last year.
They could not get much material as many people did not speak about it openly. "However, we are in touch with some local groups that are working at creating awareness against such practices," Wimochana's Madhu Bhushan said.
She said long term measures were needed to tackle such issues. "The government should take more responsible steps towards educating the communities and ending poverty among the community members that is the root cause of such practices," she said.
TUMKUR/BANGALORE: If Bangalore has entered e-age, barely 100 km from the city stone-age practices still persist.
Unbelievable though it may sound, widows are treated like cattle, are 'bought and sold' in a custom treated as sacred by the 'Handi Koracha' community. Worse, local authorities well aware of the issue are not lifting a finger to help the victims of this de-humanising tradition.
Selling widows is a routine custom of the pig-rearing Kunchalu Koracha or Handi Korachas. The centuries-old 'Ruka' tradition is a norm with the community that lives in hamlets along the Karnataka-Andhra Pradesh border.
Widowed women thus sold, are used as bonded labourers to rear pigs or make brooms by their new owners.
They run errands and do menial household work. Of course, similar rules do not apply to men. Unfortunately most community members don't think of 'Ruka,'as evil and few victims protest.
"This is a common practice. Even today, women are bought and sold," Sunkappa, an elderly member of the community, told TOI. His sister Nagamma was sold by her in-laws four years ago. When this news hit the headlines, it created a sensation. The state government promised to help her and uplift the backward Handi Koracha community.
A caravan of officials descended on R Hosakote village September last. The villagers were promised free houses, loans and pigs at subsidized rates. "Over 300 applications were received. But not a single one seems to have been processed. No one has got any assistance till now," says Sogadu Venkatesh, a social worker who is campaigning against the practice.
The community
Kunchalu Koracha or Handi Korachas live in Kolar, Tumkur, Davanagere and Bellary districts. They are a sub-sect of Korachas, listed under the Scheduled Castes in Karnataka and under Scheduled Tribes in Andhra Pradesh. Their occupations are pig-rearing and broom-making.
None among the commmunity has ever been to college. Around 20 students are in school now with girls outnumbering boys. They have had no political representation till now. No Handi Koracha has made it to the panchayats or the assembly or parliament.
What is Ruka?
It is a counter-dowry practice in which the parents of the groom pay money to the bride. During marriage, a bunch of coins tied in a piece of cloth is given to the bride to keep for life. This is treated as a solemn promise from her that she would serve her husband and in-laws for life. This provides her parents-in-law absolute control over her life. In case of her husband's death they can sell her if they feel it is expensive to keep her and her children in their household and feed them.
Government shocked
Social welfare minister D Sudhakar said he was shocked to hear about such practices. He said he would provide a free house, loan to Nagamma for self-employment and free education for her children. He said the matter would be investigated and the guilty would be brought to book. He also said educational programmes would be taken up to wean away the community from such practices.
When reminded that similar promises were made by the government four years ago and that they were not met, he said he would call for details on their status and take up follow-up action. He may have to start from the fundamentals as the state government is yet to appoint chairpersons for the state women's commission and the state SC/ST commission.
Expertspeak
G K Karanth, director of the centre for multi-disciplinary development research, feels all the stake-holders - the government, community and the civil society - have a role to play in abolishing this practice.
The government should assess why such barbaric practices persist. What are the hindrances to ending them; whether it is ignorance, exclusion, economic opportunity, or die-hard preservationism. Solutions can be evolved based on such data, Karanth who is the joint editor of the book 'Challenging Untouchability: Dalit Initiatives and Experiences from Karnataka' said.
He also felt that evil practices should be condemned even if they are part of community or tribal customs. "While I uphold the cultural rights of indigenous communities, I feel the need for a cultural ombudsman to look at these things and suggest what can be done," he said.
NGOs ready to help
Bangalore-based women's rights group Wimochana conducted a fact finding study about the practice last year.
They could not get much material as many people did not speak about it openly. "However, we are in touch with some local groups that are working at creating awareness against such practices," Wimochana's Madhu Bhushan said.
She said long term measures were needed to tackle such issues. "The government should take more responsible steps towards educating the communities and ending poverty among the community members that is the root cause of such practices," she said.
Health - Avoid bad cholestrol to shed fat
An easy way to burn fat - and lose weight - could be the avoidance of bad cholesterol, according to a new study.
The study, by researchers at Sweden's Karolinska Institutet, has found that LDL, or bad cholesterol, is also a regulator of fat turnover besides its well-established detrimental effects in promoting atherosclerosis.
Johan Björkegren and colleagues found that LDL slowed the rate of fat breakdown in adipocytes, the peripheral cells responsible for fat storage, open-access journal PLoS ONE reported.
Earlier studies have shown the fatty acids released from the peripheral fat to the blood boost the synthesis of LDL precursors in the liver.
The current study suggests that high levels of LDL could inhibit the releasing fatty acids of the peripheral fat.
“The results of our study provide evidence of a reciprocal link between the liver and peripheral fat regulating fat turnover", said Björkegren.
This finding suggests that lowering cholesterol in the blood may also affect build-up of peripheral fat.
The study was conducted on cell cultures and tissue from humans as well as in animal models with different levels of LDL.
The study, by researchers at Sweden's Karolinska Institutet, has found that LDL, or bad cholesterol, is also a regulator of fat turnover besides its well-established detrimental effects in promoting atherosclerosis.
Johan Björkegren and colleagues found that LDL slowed the rate of fat breakdown in adipocytes, the peripheral cells responsible for fat storage, open-access journal PLoS ONE reported.
Earlier studies have shown the fatty acids released from the peripheral fat to the blood boost the synthesis of LDL precursors in the liver.
The current study suggests that high levels of LDL could inhibit the releasing fatty acids of the peripheral fat.
“The results of our study provide evidence of a reciprocal link between the liver and peripheral fat regulating fat turnover", said Björkegren.
This finding suggests that lowering cholesterol in the blood may also affect build-up of peripheral fat.
The study was conducted on cell cultures and tissue from humans as well as in animal models with different levels of LDL.
Columnists - Khushwant Singh;Wrapped in ochre,damned in deed
We are told that India is the homeland of sants, mahatmas, rishis and sadhus. We believe we are guided by those who have spent years introspecting or meditating to find out the truth about themselves and the world. After that, they achieve peace of mind and are qualified to become gurus entitled to preach peace and love for humanity. To show that they have no worldly ambitions, they wear saffron or ochre robes, symbolising renunciation. Does this hold good in today’s India?
I give three instances of women who wore saffron and style themselves as Sadhvis. One is Rithambra. Sudhir Kakkar, India’s leading psychiatrist has quoted her speeches spouting hate against Muslims. She is also the author of the slogan ‘ek aur dhakka’ — one more push — to bring down the Babri Masjid. On TV channels, she preaches love and understanding. She is also seen with children, to create the impression of being a loving mother.
Then, there is Uma Bharati, who does not call herself a Sadhvi but wears saffron. She has not made up her mind whether she wants to be a politician or a spiritual leader. She celebrated the demolition of Babri Masjid by embracing Murli Manohar Joshi. She has been the Chief Minister of Madhya Pradesh. She is also seen hugging cows and calves, a living image of a gau-rakshak (protector of the cow). We saw her sitting in the front row in one of Asaram Bapu’s congregations and proclaiming in English, “I love you”. That was before Bapu lost his aura and was accused of amassing property. Whatever her other achievements, she is unable to control her temper. We saw her fling her papers and storm out of a meeting of the top-brass of the BJP. And recently, in full view of thousands of her admirers she slapped an important supporter. Realising what the political outcome would be, she ran after him to apologise and kissed him (on the forehead).
Most of all I am disillusioned by the charges laid against Sadhvi Pragya Singh Thakur. Her doctor father is a member of the RSS. She was an activist of the Akhil Bharatiya Vidyarthi Parishad (ABVP), the student wing of the BJP. She evidently has a personality problem: a girl with masculine tendencies. She wears a turban, rides a motor cycle, and ticks off strangers she thinks are making passes at girls. What she needed was psychiatric guidance. What she is accused of is being one of the gang that planted bombs in Muslim localities, which took six lives. She is in dire trouble if she fails to clear her name of this diabolical conspiracy. She has shaken my confidence about saintly men and women in saffron or ochre robes. We may have to change the name of our beloved Hindustan to Pakhandistan — the land of humbugs.
New lingo
India and Pakistan have invented a new language that I have named IPA, short for Indo-Pak Angrezi. In Pakistan, it is English mixed with Urdu and Punjabi. In India, it is English mixed with Hindi, Punjabi and Mumbai Hindustani. In both countries, grammar is ignored, as is spelling. In India, the pioneers were the late Devyani Chaubal of Bombay and Shobhaa De of Mumbai. In Pakistan, it is Moni Mohsin. Her weekly column in the Friday Times of Lahore is the most widely read in IPA in both countries. She is the maharani of this bastard language. She made her name to fame with her novel The End of Innocence (Penguin), based in a country estate close to Lahore. Now, a selection of her articles in IPA have been published in India: The Diary of a Social Butterfly (Random House). It makes hilarious reading for those who know a little Urdu and are not fussy about spelling. I give a few samples. This one is on her organising a protest march against the US-British intrusion in Iraq and her family’s reaction. “I’ve chup karaoed everybody — The Old Bag, the Gruesome Twosome, Janoo, even Bush and his English chaprassi, ‘Tony the Phoney’ as Janoo calls him. I’ve chup karaoed them with anti-Iraq war jaloos, which has come on CNN, BBC, even Fox. After all, five thousands women and children marching through Gullberg is no joke, And all khaata-peeta khandani types who are doing it for their principles and not for the hundred rupees the rent-a-crowd types get. Nobody can say after this that we Gullberg-wallahs don’t stand out and speak out — or was it stand up and speek out ? Khair, whatever. Sab ko hum ne impress kar diya hai, and that’s that.”
Again, this is from the impending visit of the Indian Polo team to Lahore: “So much of mazza!! I’m tau going off my rocket with all the parties-sharties, shaadi-vaadis and khannas galore. And the Polo: voh tau even more better. So many polo functions, and all by special invitation only so that no aera-vagheras could get in. Serves them right, I tell you. Trying to muscle in where they don’t belong.
But what a pity keh no glam Indians showed up at the polo. Itna main look forward kar rahi thi, na, to entertaining Shahrukh Khan and Salman and Hrithik in my new sun room with its pink wall-to-wall and apple green velvet curtains. Chalo, next time.”
I give three instances of women who wore saffron and style themselves as Sadhvis. One is Rithambra. Sudhir Kakkar, India’s leading psychiatrist has quoted her speeches spouting hate against Muslims. She is also the author of the slogan ‘ek aur dhakka’ — one more push — to bring down the Babri Masjid. On TV channels, she preaches love and understanding. She is also seen with children, to create the impression of being a loving mother.
Then, there is Uma Bharati, who does not call herself a Sadhvi but wears saffron. She has not made up her mind whether she wants to be a politician or a spiritual leader. She celebrated the demolition of Babri Masjid by embracing Murli Manohar Joshi. She has been the Chief Minister of Madhya Pradesh. She is also seen hugging cows and calves, a living image of a gau-rakshak (protector of the cow). We saw her sitting in the front row in one of Asaram Bapu’s congregations and proclaiming in English, “I love you”. That was before Bapu lost his aura and was accused of amassing property. Whatever her other achievements, she is unable to control her temper. We saw her fling her papers and storm out of a meeting of the top-brass of the BJP. And recently, in full view of thousands of her admirers she slapped an important supporter. Realising what the political outcome would be, she ran after him to apologise and kissed him (on the forehead).
Most of all I am disillusioned by the charges laid against Sadhvi Pragya Singh Thakur. Her doctor father is a member of the RSS. She was an activist of the Akhil Bharatiya Vidyarthi Parishad (ABVP), the student wing of the BJP. She evidently has a personality problem: a girl with masculine tendencies. She wears a turban, rides a motor cycle, and ticks off strangers she thinks are making passes at girls. What she needed was psychiatric guidance. What she is accused of is being one of the gang that planted bombs in Muslim localities, which took six lives. She is in dire trouble if she fails to clear her name of this diabolical conspiracy. She has shaken my confidence about saintly men and women in saffron or ochre robes. We may have to change the name of our beloved Hindustan to Pakhandistan — the land of humbugs.
New lingo
India and Pakistan have invented a new language that I have named IPA, short for Indo-Pak Angrezi. In Pakistan, it is English mixed with Urdu and Punjabi. In India, it is English mixed with Hindi, Punjabi and Mumbai Hindustani. In both countries, grammar is ignored, as is spelling. In India, the pioneers were the late Devyani Chaubal of Bombay and Shobhaa De of Mumbai. In Pakistan, it is Moni Mohsin. Her weekly column in the Friday Times of Lahore is the most widely read in IPA in both countries. She is the maharani of this bastard language. She made her name to fame with her novel The End of Innocence (Penguin), based in a country estate close to Lahore. Now, a selection of her articles in IPA have been published in India: The Diary of a Social Butterfly (Random House). It makes hilarious reading for those who know a little Urdu and are not fussy about spelling. I give a few samples. This one is on her organising a protest march against the US-British intrusion in Iraq and her family’s reaction. “I’ve chup karaoed everybody — The Old Bag, the Gruesome Twosome, Janoo, even Bush and his English chaprassi, ‘Tony the Phoney’ as Janoo calls him. I’ve chup karaoed them with anti-Iraq war jaloos, which has come on CNN, BBC, even Fox. After all, five thousands women and children marching through Gullberg is no joke, And all khaata-peeta khandani types who are doing it for their principles and not for the hundred rupees the rent-a-crowd types get. Nobody can say after this that we Gullberg-wallahs don’t stand out and speak out — or was it stand up and speek out ? Khair, whatever. Sab ko hum ne impress kar diya hai, and that’s that.”
Again, this is from the impending visit of the Indian Polo team to Lahore: “So much of mazza!! I’m tau going off my rocket with all the parties-sharties, shaadi-vaadis and khannas galore. And the Polo: voh tau even more better. So many polo functions, and all by special invitation only so that no aera-vagheras could get in. Serves them right, I tell you. Trying to muscle in where they don’t belong.
But what a pity keh no glam Indians showed up at the polo. Itna main look forward kar rahi thi, na, to entertaining Shahrukh Khan and Salman and Hrithik in my new sun room with its pink wall-to-wall and apple green velvet curtains. Chalo, next time.”
Columnists - Barkha Dutt;Seize the moment
For all those who went into a hysterical overdrive after Barack Obama hinted at a more aggressive American role in Kashmir, take pause. The first phase of the Assembly elections has not just belied the prophecies of the pundits and the punters; it has conclusively shown that the sentiment in the Valley is far too complex to be slotted into easy categories. But even more compellingly, the quiet, almost crafty way, in which Kashmiris have bucked all expectations, proves that no one can claim ownership of what they really feel or think. Not the Indian government, not the Pakistani patrons, not journalists like myself who thought we understood, not the cynical commentators who said it was time for India to let go, not even the azadi proponents who argued that no compromise was palatable or possible, and certainly, not America.
Salman Rushdie, who dedicated the book to his Kashmiri grandparents, may have first captured this instinctive rejection of foisted knowledge, in Shalimar the Clown. In a thinly disguised allegory of Western intervention in the region, this is
what the Jewish-American Ambassador to Kashmir is told by the woman he has courted, seduced and then abandoned. “You took beauty and created hideousness,” says Boonyi Kaul, a Pandit, to the European born, Max. “Look at me. I am the meaning of your deeds. I am the meaning of your so-called love, your destructive, selfish, wanton love. I was honest and you turned me into your lie. This is not me. This is not me. This is you.”
It could almost be what the Kashmiris are saying to all of us today — no matter where we stand along the political or ideological axis. When we hold up a mirror to them, they don’t see themselves; instead they see variations of what we want them to be or what we have pushed them to be.
So, how does one understand what’s happened last week? First, these are the bare, indisputable, facts. More people voted in the Valley than anyone thought was possible, given that the state was just emerging from the violent shadow of the Amarnath controversy. The turnout was significant, not just in border areas like Gurez (which has traditionally been out of step with the pro-azadi sentiment), but also in the two other sensitive seats of Bandipore and Sonawari. By and large — and this is the most miraculous achievement of all — there have not been any complaints of coercion and no stories of troops making reluctant citizens vote at gunpoint. But yes, separatist politicians, who gave calls for the elections to be boycotted, have either been locked up in their homes or made to keep shut. The year 2002, widely accepted as a watershed election for its fairness and transparency, still had to grapple with the gun. Militant violence tailed candidates and voters alike. This time, so far at least, those guns, too, are silent.
Could we be looking at this as the biggest shift in the Valley? Is there a possible transition from violence to non-violence, both by those who take to the streets to protest the idea of India and those whose duty it is to defend it? It’s probably too early to draw firm conclusions, but increasingly it looks like the new battlefield in J&K is going to be intellectual, ideological and emotional. We may witness a clash of ideas more than a clash of armies.
Does the fact that people participated in the political process mean they no longer want azadi? No, it doesn’t, much as mainstream politicians would have us believe. But, does it mean that they have finally begun to feel like stakeholders who have invested in the system? Yes, it does, much as the separatist lobby would like to deny it.
The power to vote out a politician in an election that gives them the space to do so has made people believe that the Assembly does have some meaning. The Amarnath controversy may have divided the state, but ironically as J&K fought over allegations of an economic blockade, both sides realised that they needed to be heard inside the political system. To that extent, the polls became more, not less important. Azadi definitely remains a philosophical and sentimental aspiration in the Valley, but the leaky drain and the schools without teachers also matter, and in a tactile and more immediate way. Neither cancels out or displaces the other, and that’s what makes it all so complex.
It may be too early to say, but it also looks like India and Pakistan have made some headway in back-channel talks on Kashmir. The meeting between the two national security advisors is said to have turned the tide. Indo-Pak watchers know that peace is usually a temporary lull in a stormy relationship. But if the relative peace holds through the length of the Assembly elections, it could be transformative for both sides.
The lesson from the first phase of elections is a modest one. There is an opportunity for another chance to mend and build broken trust and then, possibly, the relationship. It would be a mistake for hawks in policy-making to gloat and think a resolution is around the corner. It would be an equal mistake for the hawks in the separatist camp to cry foul in an election that has been transparent and has shown that people would rather participate in the system than remain on its margins. A window has opened; New Delhi must not let the curtains drape over it.
Barkha Dutt is Group Editor, English News, NDTV
Salman Rushdie, who dedicated the book to his Kashmiri grandparents, may have first captured this instinctive rejection of foisted knowledge, in Shalimar the Clown. In a thinly disguised allegory of Western intervention in the region, this is
what the Jewish-American Ambassador to Kashmir is told by the woman he has courted, seduced and then abandoned. “You took beauty and created hideousness,” says Boonyi Kaul, a Pandit, to the European born, Max. “Look at me. I am the meaning of your deeds. I am the meaning of your so-called love, your destructive, selfish, wanton love. I was honest and you turned me into your lie. This is not me. This is not me. This is you.”
It could almost be what the Kashmiris are saying to all of us today — no matter where we stand along the political or ideological axis. When we hold up a mirror to them, they don’t see themselves; instead they see variations of what we want them to be or what we have pushed them to be.
So, how does one understand what’s happened last week? First, these are the bare, indisputable, facts. More people voted in the Valley than anyone thought was possible, given that the state was just emerging from the violent shadow of the Amarnath controversy. The turnout was significant, not just in border areas like Gurez (which has traditionally been out of step with the pro-azadi sentiment), but also in the two other sensitive seats of Bandipore and Sonawari. By and large — and this is the most miraculous achievement of all — there have not been any complaints of coercion and no stories of troops making reluctant citizens vote at gunpoint. But yes, separatist politicians, who gave calls for the elections to be boycotted, have either been locked up in their homes or made to keep shut. The year 2002, widely accepted as a watershed election for its fairness and transparency, still had to grapple with the gun. Militant violence tailed candidates and voters alike. This time, so far at least, those guns, too, are silent.
Could we be looking at this as the biggest shift in the Valley? Is there a possible transition from violence to non-violence, both by those who take to the streets to protest the idea of India and those whose duty it is to defend it? It’s probably too early to draw firm conclusions, but increasingly it looks like the new battlefield in J&K is going to be intellectual, ideological and emotional. We may witness a clash of ideas more than a clash of armies.
Does the fact that people participated in the political process mean they no longer want azadi? No, it doesn’t, much as mainstream politicians would have us believe. But, does it mean that they have finally begun to feel like stakeholders who have invested in the system? Yes, it does, much as the separatist lobby would like to deny it.
The power to vote out a politician in an election that gives them the space to do so has made people believe that the Assembly does have some meaning. The Amarnath controversy may have divided the state, but ironically as J&K fought over allegations of an economic blockade, both sides realised that they needed to be heard inside the political system. To that extent, the polls became more, not less important. Azadi definitely remains a philosophical and sentimental aspiration in the Valley, but the leaky drain and the schools without teachers also matter, and in a tactile and more immediate way. Neither cancels out or displaces the other, and that’s what makes it all so complex.
It may be too early to say, but it also looks like India and Pakistan have made some headway in back-channel talks on Kashmir. The meeting between the two national security advisors is said to have turned the tide. Indo-Pak watchers know that peace is usually a temporary lull in a stormy relationship. But if the relative peace holds through the length of the Assembly elections, it could be transformative for both sides.
The lesson from the first phase of elections is a modest one. There is an opportunity for another chance to mend and build broken trust and then, possibly, the relationship. It would be a mistake for hawks in policy-making to gloat and think a resolution is around the corner. It would be an equal mistake for the hawks in the separatist camp to cry foul in an election that has been transparent and has shown that people would rather participate in the system than remain on its margins. A window has opened; New Delhi must not let the curtains drape over it.
Barkha Dutt is Group Editor, English News, NDTV
World - Recession & Strategic realities in East Asia
P. S. Suryanarayana
Several countries hope to ride out the current crisis by banking on the growth trajectories of China and India despite their new concerns over the emerging scene.
East Asian states, which planned to prevent a future shock in their own backyards when the current financial crisis first hit other regions several weeks ago, are coming to terms with reality. It is now recognised across East Asia, home to a number of one-time economic tigers, that the gathering ‘global crisis’ may no longer be warded off in this region.
Japan, still the world’s second largest economy, has now formally declared recession. And, Singapore, the main financial centre in the Southeast Asian sub-region, is also not fighting shy of acknowledging a similar economic slowdown in the city-state. In some contrast, Malaysia, another key economy, has so far managed to stay above the recession mark by shaping a stimulus package. More importantly, the big East Asian picture is dominated by political-level expectations that China’s huge economic stimulus may work wonders. These expectations have not so far been neutralised by China’s new assessments that the worsening global conditions had now begun to “weigh on [its own] job market.”
On balance, though, the actual and potential fallout along the Asiatic rim of the Pacific Ocean is still far from clear. Lacking still are definitive data from the different national authorities and varied interest groups.
Anecdotal evidence in this situation is indicative of job losses in not just the financial sector, more especially banks. Here, too, no discernible pattern across this vast region is being talked about at the moment. As informally identified by interlocutors, some key sectors, where recession has already set in or is taking hold in the region as a whole are shipping and aviation. Tourism, construction industry, and information technology are also being mentioned among those already affected in different measure in different states.
Although the practice of employing foreign workers is prevalent in many countries globally, Southeast Asian states like Malaysia and Singapore are in the top bracket in this category. Indian professionals are present across the high-end spectrum in this region, while skilled and unskilled workers from South Asia, including India, are very conspicuous, too.
Instances of a sudden increase in the home-bound remittances by Indian workers have come to light, especially in Singapore, indicative of a possible winding-down of their work. Nonetheless, the available anecdotal evidence in this regard is insufficient to draw any definitive conclusion one way or another about actual or potential job losses in the unskilled sector.
Of greater certainty, as of now, is that East Asia is free of gory stories such as acute-distress deaths among native and foreign workers and professionals. The impact of job cuts by multinational companies, especially banks, is of course being felt among foreign professionals, including Indians, in East Asia, too.
Yet, braving the predictions of a ‘global economic crisis’ beyond the financial domain, India and Malaysia are engaged in what can be seen as exemplary South-South cooperation. An India-Malaysia Capital Markets Forum, a thematic anti-thesis to the current fears of a global financial meltdown, was launched on November 20. And, the coincidental awarding of a Mumbai monorail contract to a consortium of corporate players from India and Malaysia could not have been better timed to buck the doomsday prophecies. Malaysia sees India as a major partner for economic engagement, and New Delhi is reciprocating such sentiments and deep interest, says Indian High Commissioner Ashok Kantha.
On a different plane, the Association of South East Asian Nations (ASEAN), which includes Malaysia, can tap the resources of key dialogue partners – China, Japan, and South Korea. Besides Malaysia, the 10-member ASEAN has in its fold key sub-regional economies like Indonesia, Singapore, Thailand, and Vietnam. In 2000, these eight countries helped evolve the Chiang Mai Initiative for inter-state cooperation of the kind relevant at this stage to prevent or bust economic crises in East Asia.
International envoys, including India’s S. Jaishankar, call for a close look at the nuances of economic diplomacy by Japan, China, and India in the context of the recent Group-20 Summit. While larger strategic considerations will obviously determine state-sponsored diplomacy in the evolving global situation, non-official experts are, as can be expected, divided in their opinions.
A dominant view, outside the ambience of official diplomacy, is that China, despite its stunning growth in recent years, wants to be counted only as a developing economy in the G-20 equations. After Barack Obama’s election, a Chinese official said China, the largest developing country, and the United States, the largest developed economy, must engage each other more meaningfully.
So, several Southeast Asian countries hope to ride out the current crisis by banking on the growth trajectories of China and also India, despite their new concerns over the emerging scene. Much will depend on how far China, now under growing economic pressure from the U.S., can fulfil such hopes by accommodating the relatively less developed countries.
Unsurprisingly in these circumstances, Japan has pledged $100 billion towards the International Monetary Fund. Beyond Japan’s intentions of signalling its solidarity with the developing bloc, it is obvious that the game-plan is also to show that China, with huge foreign exchange reserves, hasn’t done so. Of course, Japan has often been accused of resorting to cheque-book diplomacy to earn points as a responsible stake-holder in the international system. However, a top Japanese official has told this correspondent that it is better to be “damned” for cheque-book diplomacy rather than for not resorting to it! And, Tokyo can now argue that such diplomacy to meet a global financial crisis is not at all out of place and may indeed be a ‘creative’ way.
Several countries hope to ride out the current crisis by banking on the growth trajectories of China and India despite their new concerns over the emerging scene.
East Asian states, which planned to prevent a future shock in their own backyards when the current financial crisis first hit other regions several weeks ago, are coming to terms with reality. It is now recognised across East Asia, home to a number of one-time economic tigers, that the gathering ‘global crisis’ may no longer be warded off in this region.
Japan, still the world’s second largest economy, has now formally declared recession. And, Singapore, the main financial centre in the Southeast Asian sub-region, is also not fighting shy of acknowledging a similar economic slowdown in the city-state. In some contrast, Malaysia, another key economy, has so far managed to stay above the recession mark by shaping a stimulus package. More importantly, the big East Asian picture is dominated by political-level expectations that China’s huge economic stimulus may work wonders. These expectations have not so far been neutralised by China’s new assessments that the worsening global conditions had now begun to “weigh on [its own] job market.”
On balance, though, the actual and potential fallout along the Asiatic rim of the Pacific Ocean is still far from clear. Lacking still are definitive data from the different national authorities and varied interest groups.
Anecdotal evidence in this situation is indicative of job losses in not just the financial sector, more especially banks. Here, too, no discernible pattern across this vast region is being talked about at the moment. As informally identified by interlocutors, some key sectors, where recession has already set in or is taking hold in the region as a whole are shipping and aviation. Tourism, construction industry, and information technology are also being mentioned among those already affected in different measure in different states.
Although the practice of employing foreign workers is prevalent in many countries globally, Southeast Asian states like Malaysia and Singapore are in the top bracket in this category. Indian professionals are present across the high-end spectrum in this region, while skilled and unskilled workers from South Asia, including India, are very conspicuous, too.
Instances of a sudden increase in the home-bound remittances by Indian workers have come to light, especially in Singapore, indicative of a possible winding-down of their work. Nonetheless, the available anecdotal evidence in this regard is insufficient to draw any definitive conclusion one way or another about actual or potential job losses in the unskilled sector.
Of greater certainty, as of now, is that East Asia is free of gory stories such as acute-distress deaths among native and foreign workers and professionals. The impact of job cuts by multinational companies, especially banks, is of course being felt among foreign professionals, including Indians, in East Asia, too.
Yet, braving the predictions of a ‘global economic crisis’ beyond the financial domain, India and Malaysia are engaged in what can be seen as exemplary South-South cooperation. An India-Malaysia Capital Markets Forum, a thematic anti-thesis to the current fears of a global financial meltdown, was launched on November 20. And, the coincidental awarding of a Mumbai monorail contract to a consortium of corporate players from India and Malaysia could not have been better timed to buck the doomsday prophecies. Malaysia sees India as a major partner for economic engagement, and New Delhi is reciprocating such sentiments and deep interest, says Indian High Commissioner Ashok Kantha.
On a different plane, the Association of South East Asian Nations (ASEAN), which includes Malaysia, can tap the resources of key dialogue partners – China, Japan, and South Korea. Besides Malaysia, the 10-member ASEAN has in its fold key sub-regional economies like Indonesia, Singapore, Thailand, and Vietnam. In 2000, these eight countries helped evolve the Chiang Mai Initiative for inter-state cooperation of the kind relevant at this stage to prevent or bust economic crises in East Asia.
International envoys, including India’s S. Jaishankar, call for a close look at the nuances of economic diplomacy by Japan, China, and India in the context of the recent Group-20 Summit. While larger strategic considerations will obviously determine state-sponsored diplomacy in the evolving global situation, non-official experts are, as can be expected, divided in their opinions.
A dominant view, outside the ambience of official diplomacy, is that China, despite its stunning growth in recent years, wants to be counted only as a developing economy in the G-20 equations. After Barack Obama’s election, a Chinese official said China, the largest developing country, and the United States, the largest developed economy, must engage each other more meaningfully.
So, several Southeast Asian countries hope to ride out the current crisis by banking on the growth trajectories of China and also India, despite their new concerns over the emerging scene. Much will depend on how far China, now under growing economic pressure from the U.S., can fulfil such hopes by accommodating the relatively less developed countries.
Unsurprisingly in these circumstances, Japan has pledged $100 billion towards the International Monetary Fund. Beyond Japan’s intentions of signalling its solidarity with the developing bloc, it is obvious that the game-plan is also to show that China, with huge foreign exchange reserves, hasn’t done so. Of course, Japan has often been accused of resorting to cheque-book diplomacy to earn points as a responsible stake-holder in the international system. However, a top Japanese official has told this correspondent that it is better to be “damned” for cheque-book diplomacy rather than for not resorting to it! And, Tokyo can now argue that such diplomacy to meet a global financial crisis is not at all out of place and may indeed be a ‘creative’ way.
World - What lies ahead in the Maldives ?
N. Sathiya Moorthy
Mohammed Nasheed’s election has ushered in multi-party democracy in the Indian Ocean atolls-nation, accustomed to the autocracy of the predecessor President, Maumoon Abdul Gayoom.
In his 40s, he is one of the youngest elected heads of state or government in the world. People, particularly the younger generation, heeded his call to ‘vote for change,’ and his boyish grin and ‘outsider image’ did the rest. A failing economy is only one of the problems that he has inherited — and he cannot fail his constituency, his nation.
Whatever applies to U.S. President-elect Barack Obama applies equally, if not more, to the 41-year-old Maldivian President, Mohammed Nasheed. Popularly known as Anni, the marine graduate from the U.K. was ahead of his time. Amnesty International hailed him as a ‘Prisoner of Conscience.’ His election has ushered in multi-party democracy in the Indian Ocean atolls-nation, accustomed to the autocracy of the predecessor President, Maumoon Abdul Gayoom.
Credit should go to Mr. Gayoom for having facilitated democratic reforms, however halting and unwilling these might have been. His 30-year rule witnessed six farcical elections, based on a one-party, one-candidate norm, after the Maldives shook off the vestiges of an elected sultanate to evolve into a ‘modern state’ under his deposed predecessor, Ibrahim Nasir. Building on Mr. Nasir’s initiatives, Mr. Gayoom made resort-tourism and fishing the mainstay of the economy, and modern education, up to A-level, that of the exclusive Sunni-Islamic society.
Mr. Gayoom’s inability to grow with the nation and meet the growing aspirations of the new generation contributed to his alienation. This took the form of pro-democracy protests. Absolute power corrupted absolutely, and there were recurring complaints of large-scale nepotism and financial irregularities. Mr. Gayoom could not retain his friends, either. Barring Mr. Nasheed, most leaders of the political opposition, to whichever party they belonged, had been in the Gayoom regime at some point. Like the voters, they too saw a ‘dynastic succession’ plan that involved Mr. Gayoom’s brother Yamin on the one hand and daughter Dhuniya Maumoon, supposedly on the other.
Mr. Nasheed and friends might have arrived too early for a Maldives that did not bother much when they were repeatedly jailed or banished from the country. Their persistence and perseverance paid off when Mr. Gayoom, bowing also to international opinion, could not but legitimise political activity three years ago. The Maldivian Democratic Party (MDP), of which Mr. Nasheed was co-founder, was the first to register itself in 2005.
‘Honour and dignity’
As President-elect, Mr. Nasheed began well by declaring that there would be no witch-hunting. Mr. Gayoom had a political role to play in the Maldives, and would be allowed to stay in the country with ‘honour and dignity,’ Mr. Nasheed declared in his acceptance speech. It was an obvious reference to the circumstances in which Mr. Gayoom’s predecessor, Mr. Nasir, migrated to Singapore after being overthrown in 1978. Mr. Nasheed has also promised to move Parliament to grant pension and privileges to the outgoing President. Conceding defeat, Mr. Gayoom promised a smooth transition and has ensured as much.
Yet, as an Executive President with limited experience in electoral politics and none in political administration, Mr. Nasheed has his task cut out. Both the first round of polling in which he got around 25 per cent of the popular vote and the run-off, where his tally was 55 per cent, were Gayoom-centric. As President, Mr. Nasheed has to carry the loose coalition of parties that backed him either in the first-round polling or the run-off, beyond the reasonably smooth Ministry-formation, through the February elections to the Majlis, or national Parliament. By making good his run-off campaign to seek a fresh mandate halfway through his five-year term, he may hope to keep the alliance intact, if only to try and ensure that Mr. Gayoom’s Dhivehi Rayyithunge Party (DRP) is not in the reckoning.
Economic and fiscal crises
The Maldives has a population of 300,000. Its per capita income is the highest for any country in South Asia — made possible by the opening up of resort-tourism to the private sector. Yet, the rich-poor divide has only grown. As the “people’s President,” Mr. Nasheed will be called upon to use the instruments of state to ensure an equitable distribution of the huge earnings of the private sector in a nation with zero taxation for local citizens. After a point, the Maldives cannot expect the international community to feed its poor when the nation can very well afford to find ways to do it.
In his address to the nation after being sworn in, Mr. Nasheed kept up a poll promise to give 2000 Maldivian rufiah (12.5 rufiah makes $1) a month each to men and women above the age of 65. Their number is around 17,000. There are other areas too where the government will have to take similar initiatives, and has to be seen as being as imaginative as it is pro-active.
Otherwise, too, the Maldives is in the midst of yet another fiscal problem. The foreign exchange crisis can be felt on the streets of Male, where banks do not have dollars for exchange. Spread across 1,192 islands grouped into 26 administrative units along its 950-km-length north-south orientation, the country cannot find the funds to meet the developmental needs of a thinly-distributed population in the 199 inhabited islands. The low density of population has made it difficult to reach healthcare and education, among other facilities, to every citizen.
What can India do?
The post-9/11 years have made the Maldives, along with Sri Lanka, the first line of defence for India along the all-important Indian Ocean sea-lane, through which most of the world’s oil is transported. Visiting India in July ahead of the presidential polls, Mr. Nasheed and other MDP leaders pooh-poohed suggestions that as President Mr. Gayoom had granted an isolated island for China to develop. They would not have any of it anyway if returned to power, Mr. Nasheed said at the time.
While smaller neighbours are ill-equipped to meet their strategic needs, India’s perception of their security should go beyond the traditional concepts. New Delhi needs to ensure political and economic stability of such nations, both in its own self-interest and otherwise. It needs to build on the goodwill that cuts across most party loyalties and instil it in future generations in the Maldives for a sustained relationship.
In an interview as President-elect, Mr. Nasheed spoke about setting up a ‘sovereign wealth fund’ from the $60-billion yearly foreign exchange earnings, to create a new ‘homeland’ for Maldivians, whose country faces submersion. He mentioned India, Sri Lanka or Australia in this context – the former two owing to historical and cultural linkages, and the latter because of the availability of land. While the ‘homeland’ concept is politically sensitive and constitutionally complex for the intended hosts, India needs to look at the underlying concern in a positive way.
Vice-President Hamid Ansari represented India at the swearing-in ceremony of Mr. Nasheed. The Government of India is evidently alive to the needs of the Maldivian government and people, both in hard and soft areas like infrastructure and energy, healthcare and education. Long before the presidential polls, the MDP leadership began engaging the Indian industry, and President Nasheed has already invited the private sector in the country to participate in Maldives’ growth and development. He is expected to take it up with the Indian leadership during his maiden presidential visit to New Delhi in the coming weeks. In the past, India had extended both budgetary and non-budgetary support to the Maldives – and there is scope and hope for greater cooperation.
Yet, the question remains. Should India offer the Maldives and Maldivians fish for their daily plate, or teach them fishing, and make them self-reliant and self-confident in their time? The answer is simple and straight. Self-supporting Maldivians and a self-confident Maldives are in the all-round interest of India, now and ever.
Mohammed Nasheed’s election has ushered in multi-party democracy in the Indian Ocean atolls-nation, accustomed to the autocracy of the predecessor President, Maumoon Abdul Gayoom.
In his 40s, he is one of the youngest elected heads of state or government in the world. People, particularly the younger generation, heeded his call to ‘vote for change,’ and his boyish grin and ‘outsider image’ did the rest. A failing economy is only one of the problems that he has inherited — and he cannot fail his constituency, his nation.
Whatever applies to U.S. President-elect Barack Obama applies equally, if not more, to the 41-year-old Maldivian President, Mohammed Nasheed. Popularly known as Anni, the marine graduate from the U.K. was ahead of his time. Amnesty International hailed him as a ‘Prisoner of Conscience.’ His election has ushered in multi-party democracy in the Indian Ocean atolls-nation, accustomed to the autocracy of the predecessor President, Maumoon Abdul Gayoom.
Credit should go to Mr. Gayoom for having facilitated democratic reforms, however halting and unwilling these might have been. His 30-year rule witnessed six farcical elections, based on a one-party, one-candidate norm, after the Maldives shook off the vestiges of an elected sultanate to evolve into a ‘modern state’ under his deposed predecessor, Ibrahim Nasir. Building on Mr. Nasir’s initiatives, Mr. Gayoom made resort-tourism and fishing the mainstay of the economy, and modern education, up to A-level, that of the exclusive Sunni-Islamic society.
Mr. Gayoom’s inability to grow with the nation and meet the growing aspirations of the new generation contributed to his alienation. This took the form of pro-democracy protests. Absolute power corrupted absolutely, and there were recurring complaints of large-scale nepotism and financial irregularities. Mr. Gayoom could not retain his friends, either. Barring Mr. Nasheed, most leaders of the political opposition, to whichever party they belonged, had been in the Gayoom regime at some point. Like the voters, they too saw a ‘dynastic succession’ plan that involved Mr. Gayoom’s brother Yamin on the one hand and daughter Dhuniya Maumoon, supposedly on the other.
Mr. Nasheed and friends might have arrived too early for a Maldives that did not bother much when they were repeatedly jailed or banished from the country. Their persistence and perseverance paid off when Mr. Gayoom, bowing also to international opinion, could not but legitimise political activity three years ago. The Maldivian Democratic Party (MDP), of which Mr. Nasheed was co-founder, was the first to register itself in 2005.
‘Honour and dignity’
As President-elect, Mr. Nasheed began well by declaring that there would be no witch-hunting. Mr. Gayoom had a political role to play in the Maldives, and would be allowed to stay in the country with ‘honour and dignity,’ Mr. Nasheed declared in his acceptance speech. It was an obvious reference to the circumstances in which Mr. Gayoom’s predecessor, Mr. Nasir, migrated to Singapore after being overthrown in 1978. Mr. Nasheed has also promised to move Parliament to grant pension and privileges to the outgoing President. Conceding defeat, Mr. Gayoom promised a smooth transition and has ensured as much.
Yet, as an Executive President with limited experience in electoral politics and none in political administration, Mr. Nasheed has his task cut out. Both the first round of polling in which he got around 25 per cent of the popular vote and the run-off, where his tally was 55 per cent, were Gayoom-centric. As President, Mr. Nasheed has to carry the loose coalition of parties that backed him either in the first-round polling or the run-off, beyond the reasonably smooth Ministry-formation, through the February elections to the Majlis, or national Parliament. By making good his run-off campaign to seek a fresh mandate halfway through his five-year term, he may hope to keep the alliance intact, if only to try and ensure that Mr. Gayoom’s Dhivehi Rayyithunge Party (DRP) is not in the reckoning.
Economic and fiscal crises
The Maldives has a population of 300,000. Its per capita income is the highest for any country in South Asia — made possible by the opening up of resort-tourism to the private sector. Yet, the rich-poor divide has only grown. As the “people’s President,” Mr. Nasheed will be called upon to use the instruments of state to ensure an equitable distribution of the huge earnings of the private sector in a nation with zero taxation for local citizens. After a point, the Maldives cannot expect the international community to feed its poor when the nation can very well afford to find ways to do it.
In his address to the nation after being sworn in, Mr. Nasheed kept up a poll promise to give 2000 Maldivian rufiah (12.5 rufiah makes $1) a month each to men and women above the age of 65. Their number is around 17,000. There are other areas too where the government will have to take similar initiatives, and has to be seen as being as imaginative as it is pro-active.
Otherwise, too, the Maldives is in the midst of yet another fiscal problem. The foreign exchange crisis can be felt on the streets of Male, where banks do not have dollars for exchange. Spread across 1,192 islands grouped into 26 administrative units along its 950-km-length north-south orientation, the country cannot find the funds to meet the developmental needs of a thinly-distributed population in the 199 inhabited islands. The low density of population has made it difficult to reach healthcare and education, among other facilities, to every citizen.
What can India do?
The post-9/11 years have made the Maldives, along with Sri Lanka, the first line of defence for India along the all-important Indian Ocean sea-lane, through which most of the world’s oil is transported. Visiting India in July ahead of the presidential polls, Mr. Nasheed and other MDP leaders pooh-poohed suggestions that as President Mr. Gayoom had granted an isolated island for China to develop. They would not have any of it anyway if returned to power, Mr. Nasheed said at the time.
While smaller neighbours are ill-equipped to meet their strategic needs, India’s perception of their security should go beyond the traditional concepts. New Delhi needs to ensure political and economic stability of such nations, both in its own self-interest and otherwise. It needs to build on the goodwill that cuts across most party loyalties and instil it in future generations in the Maldives for a sustained relationship.
In an interview as President-elect, Mr. Nasheed spoke about setting up a ‘sovereign wealth fund’ from the $60-billion yearly foreign exchange earnings, to create a new ‘homeland’ for Maldivians, whose country faces submersion. He mentioned India, Sri Lanka or Australia in this context – the former two owing to historical and cultural linkages, and the latter because of the availability of land. While the ‘homeland’ concept is politically sensitive and constitutionally complex for the intended hosts, India needs to look at the underlying concern in a positive way.
Vice-President Hamid Ansari represented India at the swearing-in ceremony of Mr. Nasheed. The Government of India is evidently alive to the needs of the Maldivian government and people, both in hard and soft areas like infrastructure and energy, healthcare and education. Long before the presidential polls, the MDP leadership began engaging the Indian industry, and President Nasheed has already invited the private sector in the country to participate in Maldives’ growth and development. He is expected to take it up with the Indian leadership during his maiden presidential visit to New Delhi in the coming weeks. In the past, India had extended both budgetary and non-budgetary support to the Maldives – and there is scope and hope for greater cooperation.
Yet, the question remains. Should India offer the Maldives and Maldivians fish for their daily plate, or teach them fishing, and make them self-reliant and self-confident in their time? The answer is simple and straight. Self-supporting Maldivians and a self-confident Maldives are in the all-round interest of India, now and ever.
World - Bridging gender gaps
Hard times hit vulnerable sections of a society the most. Two recent global studies are timely reminders that gender inequalities, which persist in varying degrees across the world, are a dampener on economic growth, and that they should not be overlooked in the looming global economic downturn. The reports, one by the United Nations Population Fund (UNFPA), and the other by the World Economic Forum (WEF), differ in their approach to this global reality, but agree on the p oint that there are compelling economic advantages flowing from the empowerment of women. The crisis, as the UNFPA report— “Reaching Common Ground: Culture, Gender and Human Rights” — points out, is both “widespread and deep-rooted in many cultures.” The inequities are shocking. Nearly 60 per cent of the world’s one billion poorest people are women and girls; 66 per cent of adult illiterates are women, and 70 per cent of the out-of-school children are girls. The UNFPA advocates giving due regard to cultural sensitivities while addressing gender inequities. At the same time, it makes clear that this does not mean the “acceptance of harmful traditional practices.” One area in which its suggestion has direct relevance is maternal health. In India, the percentage of births under the supervision of skilled attendants is a mere 47 per cent, compared with the global figure of 66 per cent. The National Rural Health Mission can make a meaningful intervention by mainstreaming cultural sensitivities in its approach.
The WEF’s “Global Gender Gap Index” places India at an abysmal 113 among 130 countries. Its rank is even lower in three of the four sub-indices — economic participation and opportunity (125), educational attainment (116), and health and survival (128); but it scores high (25) in political empowerment. The report brings out the correlation between gender equality and the economic performance of countries and, in the current economic climate, warns that “investment in gender equality, along with other important global challenges, may fall.” In the Indian context, an important area where the approach indicated by the two reports can make a difference is in correcting the bias against the girl child. This year’s Economic Survey points out that the incidence of female foeticide is higher in urban-educated, prosperous classes and in States with low sex ratio. India’s multi-dimensional strategy to ensure the rights of a girl child to be born and to survive will benefit from these reports. Culture-specific approaches that emphasise economic advantages of empowerment make for a better and more effective strategy to bridge gender gaps.
The WEF’s “Global Gender Gap Index” places India at an abysmal 113 among 130 countries. Its rank is even lower in three of the four sub-indices — economic participation and opportunity (125), educational attainment (116), and health and survival (128); but it scores high (25) in political empowerment. The report brings out the correlation between gender equality and the economic performance of countries and, in the current economic climate, warns that “investment in gender equality, along with other important global challenges, may fall.” In the Indian context, an important area where the approach indicated by the two reports can make a difference is in correcting the bias against the girl child. This year’s Economic Survey points out that the incidence of female foeticide is higher in urban-educated, prosperous classes and in States with low sex ratio. India’s multi-dimensional strategy to ensure the rights of a girl child to be born and to survive will benefit from these reports. Culture-specific approaches that emphasise economic advantages of empowerment make for a better and more effective strategy to bridge gender gaps.
India - Mutually reinforcing trends
On Thursday the rupee closed at an all-time low of Rs.50.20 to the dollar. The currency has been under tremendous pressure as the demand for dollars continued unabated. It is not at all surprising that the sharp depreciation has coincided with an accelerated slide in the stock markets. The Sensex recovered partially on Friday but closed well below 9,000. No one is betting against a further decline in the stock prices. India’s predicament with its currency and stock m arkets is by no means unique: currencies of many other emerging markets have also fallen to record lows even as their stock markets plunged. For instance, on Thursday the Indonesian rupiah and the South Korean won fell to their lowest levels since the Asian financial crisis of 1998. The meltdown in the stock markets around the world has been the main contributor to the great turmoil in currency markets. It has prompted a sharp downward shift in the risk appetite of investors. As they continue to exit from the domestic markets, the demand for dollars has increased. Risk-averse investors the world over have been flocking to the safety and liquidity offered by the United States government securities market. This explains the paradox of the dollar remaining strong even as the U.S. economy is seen slipping into a severe recession. The staggering figures of unemployment released recently, along with other bleak economic data, pushed the S&P index on Thursday to its lowest level in over 11 years.
In India, there are other factors besides the outflow of capital that contribute to the decline in the stock prices as well as the rupee depreciation. The extraordinary demand for dollars is also attributed to a freeze in the inter-bank market for dollar funds. On the one hand, this constrained the Indian banks extending trade credits in foreign currency to importers and exporters, and on the other increased the scramble for dollars. The downward pressure on the rupee is expected to continue, if not increase, over the near term. The government’s intervention by way of augmenting dollar inflows through doing away with restrictions on external borrowings and increasing the interest rates on non-resident deposits with banks may be of a limited value at a time of grave financial crisis and the general loss of confidence in the financial system. Over the short term at least, a further depreciation of the rupee can be checked only through strong intervention by the RBI. However, the sharp drawdown in the reserves has already become a cause for worry. The outlook for the rupee and the stock markets will depend on how quickly the global economy, and along with it the domestic economy, overcomes the crisis.
In India, there are other factors besides the outflow of capital that contribute to the decline in the stock prices as well as the rupee depreciation. The extraordinary demand for dollars is also attributed to a freeze in the inter-bank market for dollar funds. On the one hand, this constrained the Indian banks extending trade credits in foreign currency to importers and exporters, and on the other increased the scramble for dollars. The downward pressure on the rupee is expected to continue, if not increase, over the near term. The government’s intervention by way of augmenting dollar inflows through doing away with restrictions on external borrowings and increasing the interest rates on non-resident deposits with banks may be of a limited value at a time of grave financial crisis and the general loss of confidence in the financial system. Over the short term at least, a further depreciation of the rupee can be checked only through strong intervention by the RBI. However, the sharp drawdown in the reserves has already become a cause for worry. The outlook for the rupee and the stock markets will depend on how quickly the global economy, and along with it the domestic economy, overcomes the crisis.
World - India,China will lead the world;Report
Washington: China and India are likely to emerge atop a multipolar international system as the U.S. economic and political clout declines over the next two decades, according to U.S. intelligence agencies projections.
Not only will new players Brazil, Russia, India and China — have a seat at the international high table, they will bring new stakes and rules of the game, said the National Intelligence Council analysis “Global Trends 2025- A Transformed World” released here on Thursday.
The whole international system, as constructed following the Second World War, will be revolutionised, said the report based on a global survey of experts and trends by U.S. intelligence analysts.
It was timed to be ready for the incoming administration of U.S. President-elect Barack Obama, who takes office on January 20.
Though the rise of no other state can equal the impact of the rise of such populous states as China and India, other countries with potentially high-performing economies could play increasingly important roles on the world stage, it said.
For example Iran, Indonesia, and Turkey could do so especially for establishing new patterns in the Muslim world.
But for Russia, remaining in the top tier where it has been since its remarkable resurgence during the late 1990s and early part of the 21st century may be extremely difficult, it said.
Describing the current financial crisis on Wall Street as the beginning of a global economic rebalancing, it said the U.S. dollar’s role as the major world currency will weaken to the point where it becomes a “first among equals.”
The world of the near future will be subject to an increased likelihood of conflict over scarce resources, including food and water, and will be haunted by the persistence of rogue states and terrorist groups with greater access to nuclear weapons, it said.
“Although we believe chances are good that China and India will continue to rise, their ascent is not guaranteed and will require overcoming high economic and social hurdles.
“Because of this, both countries are likely to remain inwardly focused and per capita wealth will lag substantially behind Western economies throughout the period to 2025 and beyond,” it added.
Individuals in these emerging economic powerhouses are likely to feel still poor in relation to Westerners though their collective GDP increasingly will outdistance those of individual Western states, the report said.
Few countries are poised to have more impact on the world over the next 15-20 years than China, it said.
“If current trends persist, by 2025 China will have the world’s second largest economy and will be a leading military power. It could also be the largest importer of natural resources and an even greater polluter than it is now.”
Owing to the large populations and expansive landmasses of the new powers like India and China, another constellation of powerhouses is unlikely to erupt on the world scene over the next decade or two
However, up-and coming developing states could account for an increasing proportion of the world’s economic growth by 2025.
“The international system, will be almost unrecognisable by 2025, owing to the rise of emerging powers, a globalising economy, an historic transfer of wealth from West to East, and the growing influence of non-state actors.
“Although the United States is likely to remain the single most powerful actor, the United States’ relative strength — even in the military realm, will decline and US leverage will become more strained,” it said.
“Strategic rivalries are most likely to revolve around trade, investments and technological innovation and acquisition, but we cannot rule out a 19th century-like scenario of arms races, territorial expansion and military rivalries,” the report said. — IANS
Not only will new players Brazil, Russia, India and China — have a seat at the international high table, they will bring new stakes and rules of the game, said the National Intelligence Council analysis “Global Trends 2025- A Transformed World” released here on Thursday.
The whole international system, as constructed following the Second World War, will be revolutionised, said the report based on a global survey of experts and trends by U.S. intelligence analysts.
It was timed to be ready for the incoming administration of U.S. President-elect Barack Obama, who takes office on January 20.
Though the rise of no other state can equal the impact of the rise of such populous states as China and India, other countries with potentially high-performing economies could play increasingly important roles on the world stage, it said.
For example Iran, Indonesia, and Turkey could do so especially for establishing new patterns in the Muslim world.
But for Russia, remaining in the top tier where it has been since its remarkable resurgence during the late 1990s and early part of the 21st century may be extremely difficult, it said.
Describing the current financial crisis on Wall Street as the beginning of a global economic rebalancing, it said the U.S. dollar’s role as the major world currency will weaken to the point where it becomes a “first among equals.”
The world of the near future will be subject to an increased likelihood of conflict over scarce resources, including food and water, and will be haunted by the persistence of rogue states and terrorist groups with greater access to nuclear weapons, it said.
“Although we believe chances are good that China and India will continue to rise, their ascent is not guaranteed and will require overcoming high economic and social hurdles.
“Because of this, both countries are likely to remain inwardly focused and per capita wealth will lag substantially behind Western economies throughout the period to 2025 and beyond,” it added.
Individuals in these emerging economic powerhouses are likely to feel still poor in relation to Westerners though their collective GDP increasingly will outdistance those of individual Western states, the report said.
Few countries are poised to have more impact on the world over the next 15-20 years than China, it said.
“If current trends persist, by 2025 China will have the world’s second largest economy and will be a leading military power. It could also be the largest importer of natural resources and an even greater polluter than it is now.”
Owing to the large populations and expansive landmasses of the new powers like India and China, another constellation of powerhouses is unlikely to erupt on the world scene over the next decade or two
However, up-and coming developing states could account for an increasing proportion of the world’s economic growth by 2025.
“The international system, will be almost unrecognisable by 2025, owing to the rise of emerging powers, a globalising economy, an historic transfer of wealth from West to East, and the growing influence of non-state actors.
“Although the United States is likely to remain the single most powerful actor, the United States’ relative strength — even in the military realm, will decline and US leverage will become more strained,” it said.
“Strategic rivalries are most likely to revolve around trade, investments and technological innovation and acquisition, but we cannot rule out a 19th century-like scenario of arms races, territorial expansion and military rivalries,” the report said. — IANS
India - Titans enter electoral battle in J&K
Shujaat Bukhari
SRINAGAR: The ongoing Assembly elections in Jammu and Kashmir is witnessing high profile contests and the former Chief Minister, Mufti Mohammad Sayeed, and his daughter Mehbooba Mufti are the latest to join the fray.
Though he was initially reluctant to contest the elections, Mr. Sayeed is now all set to be the People’s Democratic Party (PDP) nominee from Anantnag constituency in South Kashmir. PDP president Mehbooba Mufti on Friday confirmed that he would contest the elections.
“There is a lot of pressure from people for him to contest keeping in view his good work as Chief Minister from 2002 to 2005,” she told journalists here.
Mr. Sayeed faces NC’s Mehboob Baig who won the seat in 2002.
Ms. Mehbooba will herself contest from Wachi constituency in Pulwama district. She has shifted to this seat for lack of a suitable candidate, party sources said. She had first won the election from her home constituency Bijbehara in 1996 as Congress candidate. She later resigned and founded the PDP. She shifted to Pahalgam in 2002 and vacated the seat for her father.
As for the NC, both Farooq Abdullah and his son Omar Abdullah are contesting the elections.
While Mr. Omar Abdullah is trying his luck from Ganderbal for the second time, Dr. Farooq Abdullah is contesting from Hazratbal. He had quit poll politics in 2002 and handed over the baton to his son, both as Chief Ministerial candidate and party president. Another former Chief Minister, Ghulam Nabi Azad, will contest the elections from Bhaderwah constituency. He won the elections from the same constituency in 2006 after taking over as Chief Minister in 2005.
SRINAGAR: The ongoing Assembly elections in Jammu and Kashmir is witnessing high profile contests and the former Chief Minister, Mufti Mohammad Sayeed, and his daughter Mehbooba Mufti are the latest to join the fray.
Though he was initially reluctant to contest the elections, Mr. Sayeed is now all set to be the People’s Democratic Party (PDP) nominee from Anantnag constituency in South Kashmir. PDP president Mehbooba Mufti on Friday confirmed that he would contest the elections.
“There is a lot of pressure from people for him to contest keeping in view his good work as Chief Minister from 2002 to 2005,” she told journalists here.
Mr. Sayeed faces NC’s Mehboob Baig who won the seat in 2002.
Ms. Mehbooba will herself contest from Wachi constituency in Pulwama district. She has shifted to this seat for lack of a suitable candidate, party sources said. She had first won the election from her home constituency Bijbehara in 1996 as Congress candidate. She later resigned and founded the PDP. She shifted to Pahalgam in 2002 and vacated the seat for her father.
As for the NC, both Farooq Abdullah and his son Omar Abdullah are contesting the elections.
While Mr. Omar Abdullah is trying his luck from Ganderbal for the second time, Dr. Farooq Abdullah is contesting from Hazratbal. He had quit poll politics in 2002 and handed over the baton to his son, both as Chief Ministerial candidate and party president. Another former Chief Minister, Ghulam Nabi Azad, will contest the elections from Bhaderwah constituency. He won the elections from the same constituency in 2006 after taking over as Chief Minister in 2005.
World - Dubai parties despite global gloom
DUBAI: While the rest of the world was tightening its belt, Dubai threw a $20-million party on Thursday complete with Hollywood celebrities like Robert DeNiro and a fireworks show that organisers said was visible from outer space.
The party, which was headlined by Australian pop star Kylie Minogue in her Middle East debut, was to celebrate a new $1.5-billion resort — Atlantis Palm Jumeirah — built off the Gulf coast on an artificial island in the shape of a palm tree. Ms. Minogue reportedly earned $4 million for her performance.
Does this all seem a bit too much at a time when much of the world is reeling under the global financial crisis?
Not really, according to Sol Kerzner, the chairman of Kerzner International, which owns the Atlantis hotel.
“When you consider $20 million, it’s a lot of money [until] you consider it up against establishing a $1.5-billion resort,” Mr. Kerzner said on Thursday.
Kerzner International split the $20-million bill with state-owned Nakheel, which built the Palm island where the Atlantis is located.
Mr. Kerzner acknowledged that the party was planned long before the global economy slipped into a tailspin.
“If I had it all over again and I understood that the timing was what it was, one might modify a couple of the things ... but not significantly,” said Mr. Kerzner, who announced sweeping layoffs last week at the original Atlantis in the Bahamas.
New projects on hold
He said new projects were being put on hold at his company as costs were being scaled back — a response to cash-strapped tourists rethinking their holiday plans.
The Atlantis resort opened for tourists in September. Its top floor aims squarely at the ultra-wealthy. A three-bedroom, three-bathroom suite complete with a gold-leaf, 18-seat dining table is on offer for $25,000 a night.
The rest of the 113-acre resort is dedicated to family entertainment with a giant, open-air tank with 65,000 fish, stingrays and other sea creatures, including a rare whale-shark.
There’s also a dolphinarium with more than two dozen bottlenose dolphins flown in from the Solomon Islands last year amid protests from animal rights organisations.
Rs.18-lakh suite
Bollywood actor Shah Rukh Khan bagged the most exclusive suite at the opening party of the resort.
The over Rs.18 lakh-a night exclusive suite, suspended between the resort’s two towers, was initially slated for talk show queen Oprah Winfrey but when she pulled out from the party, it went to Shah Rukh Khan, the Daily Mail reported. — AP, PTI
The party, which was headlined by Australian pop star Kylie Minogue in her Middle East debut, was to celebrate a new $1.5-billion resort — Atlantis Palm Jumeirah — built off the Gulf coast on an artificial island in the shape of a palm tree. Ms. Minogue reportedly earned $4 million for her performance.
Does this all seem a bit too much at a time when much of the world is reeling under the global financial crisis?
Not really, according to Sol Kerzner, the chairman of Kerzner International, which owns the Atlantis hotel.
“When you consider $20 million, it’s a lot of money [until] you consider it up against establishing a $1.5-billion resort,” Mr. Kerzner said on Thursday.
Kerzner International split the $20-million bill with state-owned Nakheel, which built the Palm island where the Atlantis is located.
Mr. Kerzner acknowledged that the party was planned long before the global economy slipped into a tailspin.
“If I had it all over again and I understood that the timing was what it was, one might modify a couple of the things ... but not significantly,” said Mr. Kerzner, who announced sweeping layoffs last week at the original Atlantis in the Bahamas.
New projects on hold
He said new projects were being put on hold at his company as costs were being scaled back — a response to cash-strapped tourists rethinking their holiday plans.
The Atlantis resort opened for tourists in September. Its top floor aims squarely at the ultra-wealthy. A three-bedroom, three-bathroom suite complete with a gold-leaf, 18-seat dining table is on offer for $25,000 a night.
The rest of the 113-acre resort is dedicated to family entertainment with a giant, open-air tank with 65,000 fish, stingrays and other sea creatures, including a rare whale-shark.
There’s also a dolphinarium with more than two dozen bottlenose dolphins flown in from the Solomon Islands last year amid protests from animal rights organisations.
Rs.18-lakh suite
Bollywood actor Shah Rukh Khan bagged the most exclusive suite at the opening party of the resort.
The over Rs.18 lakh-a night exclusive suite, suspended between the resort’s two towers, was initially slated for talk show queen Oprah Winfrey but when she pulled out from the party, it went to Shah Rukh Khan, the Daily Mail reported. — AP, PTI
India - Kalanidhi writes to Karunanidhi
CHENNAI: The Managing Director of the Sun Network Private Ltd Kalanithi Maran on Friday said it was on Chief Minister M Karunanidhi’s suggestion and insistence that the division of Sun TV shares was made between the two families.
Releasing the letter written by Mr Kalanithi Maran to the Chief Minister, former Union Minister Mr Dayanidhi Maran said when the company left Anna Arivalayam and handed over the property to the DMK Trust, 200 photographs were taken, which showed the premises in an “as is where is condition.” As for the opinion polls published in Dinakaran, he said other newspapers also published such polls.
Mr. Kalanithi Maran, in his letter, said: “Please do not keep on levelling false charges against us. In the last one and a half years, when others accused us unnecessarily, we maintained silence. But, today, when you made false charges through the press, we are unable to bear them.”
Releasing the letter written by Mr Kalanithi Maran to the Chief Minister, former Union Minister Mr Dayanidhi Maran said when the company left Anna Arivalayam and handed over the property to the DMK Trust, 200 photographs were taken, which showed the premises in an “as is where is condition.” As for the opinion polls published in Dinakaran, he said other newspapers also published such polls.
Mr. Kalanithi Maran, in his letter, said: “Please do not keep on levelling false charges against us. In the last one and a half years, when others accused us unnecessarily, we maintained silence. But, today, when you made false charges through the press, we are unable to bear them.”
India - Karunanidhi lists reasons for rift with Maran brothers
CHENNAI: In effect ruling out a rapprochement, Chief Minister and DMK president M. Karunanidhi on Thursday listed out the issues and incidents that led to the rift between him and the Maran brothers, Dayanidhi and Kalanithi, owners of the Sun TV Network.
Mr. Karunanidhi said that even in his dreams he did not think that the sons of his nephew Murasoli Maran would turn against him and become his enemies. Writing in the party organ ‘Murasoli,’ Mr. Karunanidhi narrated three incidents, which he said showed that the Marans were acting against him, his family and the Dravida Munnetra Kazhagam and the government.
The first incident related to the hurried manner in which Mr. Karunanidhi and his family were asked to offload shares in the Sun TV Network. The second was the opinion polls published in the Tamil daily ‘Dinakaran,’ owned by the Marans. The third was the manner in which the Sun TV Network vacated its premises at Anna Arivalayam, the DMK headquarters. Mr. Karunanidhi said that he and his family members were given Rs. 100 crore for offloading their stakes in the Sun TV Network group. “What was the compulsion to offload the shares when Sun TV was functioning perfectly? What was the profit made by Sun TV? I was not interested in knowing all these details. When many shareholders did not come forward to sign the agreement, I convinced all of them and ensured that there was no bitterness,” the Chief Minister recalled.
On the opinion poll, which placed Dayanidhi Maran above all other Union Ministers from Tamil Nadu, Mr. Karunanidhi said he had questioned the need for an opinion poll when there was no election. “Is it fair to publish an opinion poll that has given just one per cent support to Anbumani Ramadoss, an alliance partner? Would it not turn the PMK partymen’s anger at the DMK? Will the friends in the Congress welcome granting 27 per cent support to Finance Minister P. Chidambaram, who has long experience and enjoys support across the country, and crediting Dayanidhi Maran with 64 per cent. What purpose is going to be achieved by giving 7 per cent support to DMK Minister T.R. Baalu? Not just me, all the senior politicians of Tamil Nadu found the opinion poll wrong. I was upset after reading it. I personally told Kalanithi Maran and Dayanidhi Maran to stop the opinion poll. But my advice was rejected,” he said.
Subsequently, another opinion poll on the people’s choice of his heir-apparent projected that M.K. Stalin had the highest acceptability with a 70 per cent rating, while M.K. Azhagiri and Kanimozhi polled two per cent votes each. “If the first opinion poll sought to create confusion among allies, the second tried to create confusion among members of the family," he said.
Mr. Karunanidhi said Mr. Azhagiri and Ms. Kanimozhi had laid no claim to being his heir. Referring to the attacks on the Dinakaran office in Madurai, the Chief Minister said Mr. Azhagiri might not have been angered by the publication of the opinion poll. “But will his supporters remain silent? So they entered the Dinakaran office and indulged in violence without his knowledge. Though Mr. Azhagiri did not approve of the violence, such a situation was created and three innocent employees were killed. Who is responsible for it?”
Mr. Karunanidhi said Sun TV was asked to vacate Anna Arivalayam after the network started launching a campaign against the DMK government, Electricity Minister Arcot N. Veeraswami and Union Minister A. Raja. “As a grandfather I might tolerate this. But how can I tolerate the deliberate mudslinging on the party and the government?" he asked.
Mr. Karunanidhi also published in ‘Murasoli’ six photographs of the damage caused to Anna Arivalayam after Sun TV vacated the premises.
Mr. Karunanidhi said that even in his dreams he did not think that the sons of his nephew Murasoli Maran would turn against him and become his enemies. Writing in the party organ ‘Murasoli,’ Mr. Karunanidhi narrated three incidents, which he said showed that the Marans were acting against him, his family and the Dravida Munnetra Kazhagam and the government.
The first incident related to the hurried manner in which Mr. Karunanidhi and his family were asked to offload shares in the Sun TV Network. The second was the opinion polls published in the Tamil daily ‘Dinakaran,’ owned by the Marans. The third was the manner in which the Sun TV Network vacated its premises at Anna Arivalayam, the DMK headquarters. Mr. Karunanidhi said that he and his family members were given Rs. 100 crore for offloading their stakes in the Sun TV Network group. “What was the compulsion to offload the shares when Sun TV was functioning perfectly? What was the profit made by Sun TV? I was not interested in knowing all these details. When many shareholders did not come forward to sign the agreement, I convinced all of them and ensured that there was no bitterness,” the Chief Minister recalled.
On the opinion poll, which placed Dayanidhi Maran above all other Union Ministers from Tamil Nadu, Mr. Karunanidhi said he had questioned the need for an opinion poll when there was no election. “Is it fair to publish an opinion poll that has given just one per cent support to Anbumani Ramadoss, an alliance partner? Would it not turn the PMK partymen’s anger at the DMK? Will the friends in the Congress welcome granting 27 per cent support to Finance Minister P. Chidambaram, who has long experience and enjoys support across the country, and crediting Dayanidhi Maran with 64 per cent. What purpose is going to be achieved by giving 7 per cent support to DMK Minister T.R. Baalu? Not just me, all the senior politicians of Tamil Nadu found the opinion poll wrong. I was upset after reading it. I personally told Kalanithi Maran and Dayanidhi Maran to stop the opinion poll. But my advice was rejected,” he said.
Subsequently, another opinion poll on the people’s choice of his heir-apparent projected that M.K. Stalin had the highest acceptability with a 70 per cent rating, while M.K. Azhagiri and Kanimozhi polled two per cent votes each. “If the first opinion poll sought to create confusion among allies, the second tried to create confusion among members of the family," he said.
Mr. Karunanidhi said Mr. Azhagiri and Ms. Kanimozhi had laid no claim to being his heir. Referring to the attacks on the Dinakaran office in Madurai, the Chief Minister said Mr. Azhagiri might not have been angered by the publication of the opinion poll. “But will his supporters remain silent? So they entered the Dinakaran office and indulged in violence without his knowledge. Though Mr. Azhagiri did not approve of the violence, such a situation was created and three innocent employees were killed. Who is responsible for it?”
Mr. Karunanidhi said Sun TV was asked to vacate Anna Arivalayam after the network started launching a campaign against the DMK government, Electricity Minister Arcot N. Veeraswami and Union Minister A. Raja. “As a grandfather I might tolerate this. But how can I tolerate the deliberate mudslinging on the party and the government?" he asked.
Mr. Karunanidhi also published in ‘Murasoli’ six photographs of the damage caused to Anna Arivalayam after Sun TV vacated the premises.
Entertainment - SRK bags most exclusive suite at Palm Atlantis
LONDON: Bollywood Superstar Shah Rukh Khan bagged the most exclusive suite at the opening party of Dubai's Atlantis Palm Jumeirah, leaving behind a host of Hollywood celebrities.
The over Rs 18 lakh-a night exclusive suite, suspended between the resort's two towers, was initially slated for talk show queen Oprah Winfrey but when she pulled out from the party, it went to King Khan, the Daily Mail reported.
Hollywood legend Robert De Niro a partner in the Nobu restaurant chain which has a site in the resort - had to make do with an over 11 lakh-a night presidential suite.
While filmstars Lindsay Lohan and Charlize Theron bagged Rs seven lakh-a night suite in Lost Chambers submerged, alongside one of the world's largest aquariums in the depths of the Atlantis resort with a bedroom view of 65,000 sharks, rays and fish, the paper said.
The opening of Dubai's Atlantis Palm Jumeirah, a man-made island shaped like palm tree, was attended by over two thousand film stars, popstars, supermodels and billionaires from around the world.
The highlight of the ceremony was a performance by Australian singer Kylie Minogue and her 113-strong dance troupe on the beach.
Minogue's performance was followed by a one-million-rocket firework display with 100 computer-guided rockets, seven times bigger than Beijing Olympics, which is the largest firework display till date.
Guests included filmstars such as Robert De Niro, Charlize Theron, Denzil Washington, Mischa Barton and Lindsay Lohan, supermodels Agyness Deyn, Petra Nemcova and Yasmin Le Bon, musicans Janet Jackson, Lily Allen and Shirley Bassey, sports legends like Michael Jordan and Boris Becker and some local royalty - the Royal Family of Dubai among others.
The over Rs 18 lakh-a night exclusive suite, suspended between the resort's two towers, was initially slated for talk show queen Oprah Winfrey but when she pulled out from the party, it went to King Khan, the Daily Mail reported.
Hollywood legend Robert De Niro a partner in the Nobu restaurant chain which has a site in the resort - had to make do with an over 11 lakh-a night presidential suite.
While filmstars Lindsay Lohan and Charlize Theron bagged Rs seven lakh-a night suite in Lost Chambers submerged, alongside one of the world's largest aquariums in the depths of the Atlantis resort with a bedroom view of 65,000 sharks, rays and fish, the paper said.
The opening of Dubai's Atlantis Palm Jumeirah, a man-made island shaped like palm tree, was attended by over two thousand film stars, popstars, supermodels and billionaires from around the world.
The highlight of the ceremony was a performance by Australian singer Kylie Minogue and her 113-strong dance troupe on the beach.
Minogue's performance was followed by a one-million-rocket firework display with 100 computer-guided rockets, seven times bigger than Beijing Olympics, which is the largest firework display till date.
Guests included filmstars such as Robert De Niro, Charlize Theron, Denzil Washington, Mischa Barton and Lindsay Lohan, supermodels Agyness Deyn, Petra Nemcova and Yasmin Le Bon, musicans Janet Jackson, Lily Allen and Shirley Bassey, sports legends like Michael Jordan and Boris Becker and some local royalty - the Royal Family of Dubai among others.
Business - Q&A Donald Trump Jr
Alexandra Wolfe
There are lots of Donald Jr.’s in the world, but only one who is the son of the Donald, as in Donald Trump Sr. We caught up with the familial apprentice at Michael’s restaurant in Manhattan, where Trump Jr. had come to lunch, accompanied by his publicist, Richard Rubenstein. Richard, perhaps fittingly, is the son of well-known publicist Howard Rubenstein, who has represented the Donald over the years. Young Rubenstein, it soon becomes clear, is along to make sure that Donald Jr. remains perpetually aware of his Trumpness as he begins to talk with Condé Nast Portfolio about life in the fast lane (and in his father’s shadow).
Recently promoted by the Donald to executive vice president for development and acquisitions at the Trump Organization, Donald Jr. is considered to be next in line to take over his father’s real estate empire. While one of his current projects is overseeing the construction of Trump Soho, a luxury high-rise hotel in downtown Manhattan, he had just returned from a series of whirlwind trips to Asia and the Middle East, where the company is also looking to develop properties. But not long after he had announced the creation of a hedge fund to invest $1 billion in what had been India’s hot real estate market, the U.S. and global markets began to melt down, causing him to offer a reassessment of the Trump Organization’s near-term prospects. Our interview, which began at the restaurant, continued through a rainy tour of the Trump Soho project.
How are you weathering the current market crisis?
It’s going to be bad, and it’s going to be bad for quite some time. We haven’t been investing substantial equity in many projects for the past couple of years because we didn’t want to be competing with stupid money. We’re in a good position because we haven’t been long much in the past few years. We’ll look for the opportunities that will present themselves. For companies like ours with a strong cash balance, cash will be king and we’ll see a lot of good opportunities for pennies on the dollar. We’re not overly leveraged like we have been in the past.
Are there any new deals in the pipeline in this environment?
Big landowners are coming to us and saying, “Can you come in?” They know we have a lot of cash, and we add premium because of the brand. So we’re seeing a tremendous amount of deal flow, but it’s still not going well for anyone. Today, to try to build or sell anything is virtually impossible. If you adjust for inflation, you’re not going to hit the 2005 peak for years. People are saying it won’t be like 1930, but all of a sudden it’s like 1930. Valuations across the board are coming down.
Could you have seen this crash coming?
I didn’t think it was going to be this bad, but it had to happen. Everything else has been overvalued for so long.
You just got back from Kazakhstan. How much do you travel?
My passport reads like a phone book, especially now that so much of what’s going on in the world is going on in emerging markets. Yes, I just got back from the land of Borat. They’re getting $2,000 a square foot for certain high-end properties. When I was there, a home just sold for $20 million.
You were recently in India shopping the real estate market. Are you still interested in investing?
Yeah, but I’ll take my time. [The trip before this one] I got so sick I thought I was going to die. This time, I told them I wanted plain pasta made in bottled water with no sauce. That’s all I ate, except a granola bar.
Why India?
We don’t have to take a lot of the equity risks that perhaps a lot of other developers have to take. We partner with a local company in a joint venture. It makes sense because we’re able to generate so much premium for our brand. They can build as long as they’re building to our standard.
Richard Rubenstein (interjecting): But it will still have Trump written all over it. It will still say luxury like all Trump properties. Come on, be a Trump! You haven’t even mentioned Dubai yet.
You’re building the flagship hotel for one of Dubai’s new Palm Islands. How does that stack up with the rest of your projects?
It’s very cool, because if you want to build a one-story building in downtown New York, you’ll have everyone and their brother fighting you and saying it’s too much. America has gotten to that point where you can’t do anything without someone complaining. But when you go to Dubai, you’re limited purely by your imagination and the laws of physics. It’s the one place where developers are allowed to have a little artistic vision, as opposed to a hostile environment.
Are you a golfer?
I’ve come to enjoy it better, but golf would be perfect for me if it were 12 holes. After the first nine holes, I lose interest. Then I get sloppy.
Any other hobbies?
I like fly-fishing and hunting. You’re in nature. I want to get away from the structured, manicured world that I create and immerse myself in something that’s perhaps more natural. I tend not to talk about the hunting thing—people react to it. I love trout fishing, but I spend a lot of Sundays in the office.
How would you compare your office with your father’s? How different are your styles?
His is a little more ’80s. I’m not gonna lie—I love ’80s music, I love ’80s movies, but ’80s style? I’m kind of like, “Eh, if you see my dad’s office, it’s so ’80s you can pinpoint the month—September ’82.” Our office [the one Donald Jr. shares with his Trump siblings] is much more contemporary and elegant and more in the direction of where we’ll be taking the brand in the future. Every time he comes down to our floor, I can see him eyeing our offices as though he knows he wants to move, but he won’t admit it to us.
In terms of style, will Trump Soho be totally ’80s too?
It’s very un-Trump in terms of what you’d look for in many Trump buildings, but it has the same ultimate luxury level of perhaps any hotel in New York, and certainly when you look at it relative to other downtown hotels. This is going to be the first really five-star product in that market. David Rockwell is doing the interiors and the design, and he’s much more fitting in a fresh, young, hip Soho building than many of the other incredible designers we’ve worked with who are much more Upper East Side. It would be out of place and out of context to do our more typical Trump building here.
Isn’t this a bad time to try to be selling condos, even in a building like Trump Soho?
Do you get the kinds of closings you want? Maybe not, but we have a lot of flexibility because what we don’t sell, we can rent. But it’s a mess. It’s scary. I know of buyers who have virtually perfect credit ratings who want to put down 40 to 50 percent, and they can’t get a loan for the rest, and that’s unheard of.
Passerby (outside Trump Soho): Where is the closest subway?
I think it’s this way. Or it could be up there. I don’t know. I haven’t taken the subway in a long time.
There are lots of Donald Jr.’s in the world, but only one who is the son of the Donald, as in Donald Trump Sr. We caught up with the familial apprentice at Michael’s restaurant in Manhattan, where Trump Jr. had come to lunch, accompanied by his publicist, Richard Rubenstein. Richard, perhaps fittingly, is the son of well-known publicist Howard Rubenstein, who has represented the Donald over the years. Young Rubenstein, it soon becomes clear, is along to make sure that Donald Jr. remains perpetually aware of his Trumpness as he begins to talk with Condé Nast Portfolio about life in the fast lane (and in his father’s shadow).
Recently promoted by the Donald to executive vice president for development and acquisitions at the Trump Organization, Donald Jr. is considered to be next in line to take over his father’s real estate empire. While one of his current projects is overseeing the construction of Trump Soho, a luxury high-rise hotel in downtown Manhattan, he had just returned from a series of whirlwind trips to Asia and the Middle East, where the company is also looking to develop properties. But not long after he had announced the creation of a hedge fund to invest $1 billion in what had been India’s hot real estate market, the U.S. and global markets began to melt down, causing him to offer a reassessment of the Trump Organization’s near-term prospects. Our interview, which began at the restaurant, continued through a rainy tour of the Trump Soho project.
How are you weathering the current market crisis?
It’s going to be bad, and it’s going to be bad for quite some time. We haven’t been investing substantial equity in many projects for the past couple of years because we didn’t want to be competing with stupid money. We’re in a good position because we haven’t been long much in the past few years. We’ll look for the opportunities that will present themselves. For companies like ours with a strong cash balance, cash will be king and we’ll see a lot of good opportunities for pennies on the dollar. We’re not overly leveraged like we have been in the past.
Are there any new deals in the pipeline in this environment?
Big landowners are coming to us and saying, “Can you come in?” They know we have a lot of cash, and we add premium because of the brand. So we’re seeing a tremendous amount of deal flow, but it’s still not going well for anyone. Today, to try to build or sell anything is virtually impossible. If you adjust for inflation, you’re not going to hit the 2005 peak for years. People are saying it won’t be like 1930, but all of a sudden it’s like 1930. Valuations across the board are coming down.
Could you have seen this crash coming?
I didn’t think it was going to be this bad, but it had to happen. Everything else has been overvalued for so long.
You just got back from Kazakhstan. How much do you travel?
My passport reads like a phone book, especially now that so much of what’s going on in the world is going on in emerging markets. Yes, I just got back from the land of Borat. They’re getting $2,000 a square foot for certain high-end properties. When I was there, a home just sold for $20 million.
You were recently in India shopping the real estate market. Are you still interested in investing?
Yeah, but I’ll take my time. [The trip before this one] I got so sick I thought I was going to die. This time, I told them I wanted plain pasta made in bottled water with no sauce. That’s all I ate, except a granola bar.
Why India?
We don’t have to take a lot of the equity risks that perhaps a lot of other developers have to take. We partner with a local company in a joint venture. It makes sense because we’re able to generate so much premium for our brand. They can build as long as they’re building to our standard.
Richard Rubenstein (interjecting): But it will still have Trump written all over it. It will still say luxury like all Trump properties. Come on, be a Trump! You haven’t even mentioned Dubai yet.
You’re building the flagship hotel for one of Dubai’s new Palm Islands. How does that stack up with the rest of your projects?
It’s very cool, because if you want to build a one-story building in downtown New York, you’ll have everyone and their brother fighting you and saying it’s too much. America has gotten to that point where you can’t do anything without someone complaining. But when you go to Dubai, you’re limited purely by your imagination and the laws of physics. It’s the one place where developers are allowed to have a little artistic vision, as opposed to a hostile environment.
Are you a golfer?
I’ve come to enjoy it better, but golf would be perfect for me if it were 12 holes. After the first nine holes, I lose interest. Then I get sloppy.
Any other hobbies?
I like fly-fishing and hunting. You’re in nature. I want to get away from the structured, manicured world that I create and immerse myself in something that’s perhaps more natural. I tend not to talk about the hunting thing—people react to it. I love trout fishing, but I spend a lot of Sundays in the office.
How would you compare your office with your father’s? How different are your styles?
His is a little more ’80s. I’m not gonna lie—I love ’80s music, I love ’80s movies, but ’80s style? I’m kind of like, “Eh, if you see my dad’s office, it’s so ’80s you can pinpoint the month—September ’82.” Our office [the one Donald Jr. shares with his Trump siblings] is much more contemporary and elegant and more in the direction of where we’ll be taking the brand in the future. Every time he comes down to our floor, I can see him eyeing our offices as though he knows he wants to move, but he won’t admit it to us.
In terms of style, will Trump Soho be totally ’80s too?
It’s very un-Trump in terms of what you’d look for in many Trump buildings, but it has the same ultimate luxury level of perhaps any hotel in New York, and certainly when you look at it relative to other downtown hotels. This is going to be the first really five-star product in that market. David Rockwell is doing the interiors and the design, and he’s much more fitting in a fresh, young, hip Soho building than many of the other incredible designers we’ve worked with who are much more Upper East Side. It would be out of place and out of context to do our more typical Trump building here.
Isn’t this a bad time to try to be selling condos, even in a building like Trump Soho?
Do you get the kinds of closings you want? Maybe not, but we have a lot of flexibility because what we don’t sell, we can rent. But it’s a mess. It’s scary. I know of buyers who have virtually perfect credit ratings who want to put down 40 to 50 percent, and they can’t get a loan for the rest, and that’s unheard of.
Passerby (outside Trump Soho): Where is the closest subway?
I think it’s this way. Or it could be up there. I don’t know. I haven’t taken the subway in a long time.
Business - Luxury Discounts
Sophia Banay
The Wall Street stockbroker had used FlatRate Moving, a high-end moving service, a half-dozen times over the years. They moved him from a modest apartment on the Upper East Side to a grander one on the Upper West. He called when he moved to an even better building in Midtown. Most recently, FlatRate helped settle him and his wife and child into a 3,000-square-foot loft in Soho, one of Manhattan's priciest neighborhoods.
FlatRate got another call two months ago. The client was packing up his family for a two-bedroom apartment in the less expensive Park Slope, Brooklyn. He had lost his job and was no longer in a position to pay the $3,000 to $5,000 a month he'd shelled out before.
"We did the move almost at cost"—for under $1,200, says Michael Kessler, FlatRate's vice president of marketing and sales.
Now, FlatRate gets calls for "downgrade" moves about once a day, Kessler says, mostly from clients in the financial world, many of whom are leaving Manhattan for Brooklyn or Queens. The company just introduced an "economy" moving package that leaves out extras like an on-site liaison to supervise the move; photographed inventory of the apartment; and complete packing and unpacking service. With the new package, FlatRate hands off some used boxes and clients—like the client who lost his job at Lehman Brothers and moved from the Upper East Side to Astoria, Queens—pack up themselves.
The economic downturn isn't just hitting the middle class; the wealthiest layer of consumers is also getting pummeled. More than 110,000 Wall Street jobs have been lost this year. and bonuses are expected to plummet Many C.E.O.'s have seen their net worths tank along with stock prices. Hedge funds, those secretive bastions of wealth, aren't doing much better, having lost $130 billion in the past three months.
In response, providers of luxury goods and services—elite movers, exclusive spas, exclusive restaurants, and even private-jet charter companies—are introducing promotions and deals, often for the first time ( view slideshow of luxury deals). These are the types of wares that don't normally go on sale, since they fall into the "If you have to ask…" category. Still, businesses are quietly reaching out to consumers battered by the economy but not ready—yet—to give up their high-flying lifestyles. (See a slideshow of discounts here.)
"We don't want to give something away if we don't have to," says David McCown, senior vice president of Air Partner, a jet charter company that is based in New York. "But we're willing to do it."
Air Partner is offering discounts on the company's jet cards, which start at $4,700 an hour, for light jets like a Citation 5, Lear 35, or Beech 400. The cards are available in increments of 10 hours and up. Now, because of softening demand from clients and a recent drop in fuel prices, those hourly rates are being discounted as much as 10 percent.
"The economic crisis has directly affected demand, especially from the financial industry," says McCown. "Hedge funds, investment banks, private-equity firms, venture capitalists: When we go talk to them as our clients, they're walking cautiously."
Still, he has no plans to broadcast the new prices aggressively, preferring instead to get the word out through his sales force when the topic comes up. After all, he says, what if Air Partner committed to the new low pricing, and the economy turned around?
Hence, sizeable discounts on luxury goods are being doled out discreetly. Canyon Ranch, the chain of spa retreats, personally phoned clients in the past few weeks to offer 25 percent off a stay if they brought a guest. Cornelia Day Resort, a spa on Fifth Avenue in Manhattan, is slipping $30 credits toward gift-card purchases into clients' lockers. And 3Lab, the exclusive skin-care company whose standard face cream sells in Saks and Barneys for $400, is offering free facials with any purchase at Barneys across the U.S.
Retailers like Elie Tahari and Bergdorf Goodman are offering free shipping, "private" discounts, and earlier-than-usual sales. This week, Women’s Wear Daily reported that department stores were asking designers to launch collections with lower price points. Tori Burch said she was hoping to start creating more “affordable” evening wear.
Over the next few months, Dana Telsey, the chief research officer at the Telsey Advisory Group, an equity research and consulting firm specializing in retail in New York, predicts that consumers will see an unprecedented barrage of sales and special offers.
"This holiday season is poised to be more promotional than others, given the volatility of the financial markets, which is having an impact on all consumers, both high-end and low-end," Telsey says.
On Manhattan's Upper West Side, Ed Brown, the chef and owner of new restaurant Eighty One, has extended and modified the prix-fixe menu he created over the summer to accommodate clients hurt by the financial crisis. The menu offers two courses for $42 dollars, allowing customers to save about $20 per person on the average check.
Brown's clients, who mostly come from the moneyed stretch of Central Park West that encompasses luxury buildings like the Beresford, have displayed a range of reactions to the financial crisis.
"The 30- to 45-year-olds that still have young families, they take the hit much harder," says Brown. "Their retirement and kids' education plans got a whack. The guys who make $1 million a year may make nothing this year. People just aren't sure what to do yet. Do we stop going out?"
If they don't, at least they just might get a deal.
The Wall Street stockbroker had used FlatRate Moving, a high-end moving service, a half-dozen times over the years. They moved him from a modest apartment on the Upper East Side to a grander one on the Upper West. He called when he moved to an even better building in Midtown. Most recently, FlatRate helped settle him and his wife and child into a 3,000-square-foot loft in Soho, one of Manhattan's priciest neighborhoods.
FlatRate got another call two months ago. The client was packing up his family for a two-bedroom apartment in the less expensive Park Slope, Brooklyn. He had lost his job and was no longer in a position to pay the $3,000 to $5,000 a month he'd shelled out before.
"We did the move almost at cost"—for under $1,200, says Michael Kessler, FlatRate's vice president of marketing and sales.
Now, FlatRate gets calls for "downgrade" moves about once a day, Kessler says, mostly from clients in the financial world, many of whom are leaving Manhattan for Brooklyn or Queens. The company just introduced an "economy" moving package that leaves out extras like an on-site liaison to supervise the move; photographed inventory of the apartment; and complete packing and unpacking service. With the new package, FlatRate hands off some used boxes and clients—like the client who lost his job at Lehman Brothers and moved from the Upper East Side to Astoria, Queens—pack up themselves.
The economic downturn isn't just hitting the middle class; the wealthiest layer of consumers is also getting pummeled. More than 110,000 Wall Street jobs have been lost this year. and bonuses are expected to plummet Many C.E.O.'s have seen their net worths tank along with stock prices. Hedge funds, those secretive bastions of wealth, aren't doing much better, having lost $130 billion in the past three months.
In response, providers of luxury goods and services—elite movers, exclusive spas, exclusive restaurants, and even private-jet charter companies—are introducing promotions and deals, often for the first time ( view slideshow of luxury deals). These are the types of wares that don't normally go on sale, since they fall into the "If you have to ask…" category. Still, businesses are quietly reaching out to consumers battered by the economy but not ready—yet—to give up their high-flying lifestyles. (See a slideshow of discounts here.)
"We don't want to give something away if we don't have to," says David McCown, senior vice president of Air Partner, a jet charter company that is based in New York. "But we're willing to do it."
Air Partner is offering discounts on the company's jet cards, which start at $4,700 an hour, for light jets like a Citation 5, Lear 35, or Beech 400. The cards are available in increments of 10 hours and up. Now, because of softening demand from clients and a recent drop in fuel prices, those hourly rates are being discounted as much as 10 percent.
"The economic crisis has directly affected demand, especially from the financial industry," says McCown. "Hedge funds, investment banks, private-equity firms, venture capitalists: When we go talk to them as our clients, they're walking cautiously."
Still, he has no plans to broadcast the new prices aggressively, preferring instead to get the word out through his sales force when the topic comes up. After all, he says, what if Air Partner committed to the new low pricing, and the economy turned around?
Hence, sizeable discounts on luxury goods are being doled out discreetly. Canyon Ranch, the chain of spa retreats, personally phoned clients in the past few weeks to offer 25 percent off a stay if they brought a guest. Cornelia Day Resort, a spa on Fifth Avenue in Manhattan, is slipping $30 credits toward gift-card purchases into clients' lockers. And 3Lab, the exclusive skin-care company whose standard face cream sells in Saks and Barneys for $400, is offering free facials with any purchase at Barneys across the U.S.
Retailers like Elie Tahari and Bergdorf Goodman are offering free shipping, "private" discounts, and earlier-than-usual sales. This week, Women’s Wear Daily reported that department stores were asking designers to launch collections with lower price points. Tori Burch said she was hoping to start creating more “affordable” evening wear.
Over the next few months, Dana Telsey, the chief research officer at the Telsey Advisory Group, an equity research and consulting firm specializing in retail in New York, predicts that consumers will see an unprecedented barrage of sales and special offers.
"This holiday season is poised to be more promotional than others, given the volatility of the financial markets, which is having an impact on all consumers, both high-end and low-end," Telsey says.
On Manhattan's Upper West Side, Ed Brown, the chef and owner of new restaurant Eighty One, has extended and modified the prix-fixe menu he created over the summer to accommodate clients hurt by the financial crisis. The menu offers two courses for $42 dollars, allowing customers to save about $20 per person on the average check.
Brown's clients, who mostly come from the moneyed stretch of Central Park West that encompasses luxury buildings like the Beresford, have displayed a range of reactions to the financial crisis.
"The 30- to 45-year-olds that still have young families, they take the hit much harder," says Brown. "Their retirement and kids' education plans got a whack. The guys who make $1 million a year may make nothing this year. People just aren't sure what to do yet. Do we stop going out?"
If they don't, at least they just might get a deal.
Business - The BOND (James Bond) Market
Miriam Datskovsky and Duff McDonald
Writer Ian Fleming never wanted James Bond to be an especially likable character. In the first 007 novel, Casino Royale, he describes Bond as “ironical, brutal, and cold” and once said that he’d given him the “dullest, plainest-sounding name I could find.” Yet the character has proven to be extremely lucrative for two families—the Flemings and their Hollywood partners, the Broccolis. With the latest Bond movie, Quantum of Solace, out this month, Condé Nast Portfolio takes aim at determining how much 007 has generated over the years.
Movies
In 1961, Fleming sold the film rights to all published and future novels to Harry Saltzman and Albert R. Broccoli, co-producers of the first Bond film, Dr. No. Today, Broccoli’s daughter and stepson oversee EON Productions, which makes the Bond films in tandem with MGM and Sony. The 21 films released so far have generated $11.6 billion in sales at the box office. (The most successful was 1965’s Thunderball, earning $986 million, adjusted for inflation; the least successful was 1989’s License to Kill, which brought in $277 million.) DVD and VHS sales have probably added an extra $400 million.
Subtotal: $12 billion
Videogames
Developers have released more than two dozen Bond games, including several from Electronic Arts—like 2001’s Agent Under Fire—that aren’t based on specific movies or books. According to NPD Group, a market research firm, Bond games have generated about $662 million in U.S. revenue since 1995. One title alone—1997’s Goldeneye 007, for the Nintendo 64—racked up $251 million. Throw in an additional $150 million or so for the prior decade.
Subtotal: $812 million
Books
In addition to the 14 Bond books Fleming wrote between 1953 and 1966, Ian Fleming Publications (owned by his descendants) has commissioned 30 Bond sequels, a Young Bond series for teens, and The Moneypenny Diaries, a trilogy that follows the life of the personal secretary of Bond’s boss, M. The books have been translated into 45 languages and sold more than 100 million copies in 25 countries. The recently released Devil May Care, by Sebastian Faulks, became the fastest-selling hardcover fiction title in Penguin’s history.
Subtotal: $1 billion
The Bottom Line
The master spy is one of the most lucrative fictional characters in history, leading a pack that includes Harry Potter, Frodo Baggins, and Batman.
Total: $13.8 billion
Most Popular Theme Songs
Goldfinger, Anthony Newley1
Played 196,035 times on radio
Die Another Day, Madonna
Played 85,073 times on radio
Live and Let Die, Paul McCartney and Wings
Played 72,498 times on radio
A View to a Kill, Duran Duran
Played 22,774 times on radio
SOURCE: Nielsen BDS.
NOTE: 1 Released on a 30th anniversary compilation album, The Best of Bond ... James Bond; Shirley Bassey recorded the original
Writer Ian Fleming never wanted James Bond to be an especially likable character. In the first 007 novel, Casino Royale, he describes Bond as “ironical, brutal, and cold” and once said that he’d given him the “dullest, plainest-sounding name I could find.” Yet the character has proven to be extremely lucrative for two families—the Flemings and their Hollywood partners, the Broccolis. With the latest Bond movie, Quantum of Solace, out this month, Condé Nast Portfolio takes aim at determining how much 007 has generated over the years.
Movies
In 1961, Fleming sold the film rights to all published and future novels to Harry Saltzman and Albert R. Broccoli, co-producers of the first Bond film, Dr. No. Today, Broccoli’s daughter and stepson oversee EON Productions, which makes the Bond films in tandem with MGM and Sony. The 21 films released so far have generated $11.6 billion in sales at the box office. (The most successful was 1965’s Thunderball, earning $986 million, adjusted for inflation; the least successful was 1989’s License to Kill, which brought in $277 million.) DVD and VHS sales have probably added an extra $400 million.
Subtotal: $12 billion
Videogames
Developers have released more than two dozen Bond games, including several from Electronic Arts—like 2001’s Agent Under Fire—that aren’t based on specific movies or books. According to NPD Group, a market research firm, Bond games have generated about $662 million in U.S. revenue since 1995. One title alone—1997’s Goldeneye 007, for the Nintendo 64—racked up $251 million. Throw in an additional $150 million or so for the prior decade.
Subtotal: $812 million
Books
In addition to the 14 Bond books Fleming wrote between 1953 and 1966, Ian Fleming Publications (owned by his descendants) has commissioned 30 Bond sequels, a Young Bond series for teens, and The Moneypenny Diaries, a trilogy that follows the life of the personal secretary of Bond’s boss, M. The books have been translated into 45 languages and sold more than 100 million copies in 25 countries. The recently released Devil May Care, by Sebastian Faulks, became the fastest-selling hardcover fiction title in Penguin’s history.
Subtotal: $1 billion
The Bottom Line
The master spy is one of the most lucrative fictional characters in history, leading a pack that includes Harry Potter, Frodo Baggins, and Batman.
Total: $13.8 billion
Most Popular Theme Songs
Goldfinger, Anthony Newley1
Played 196,035 times on radio
Die Another Day, Madonna
Played 85,073 times on radio
Live and Let Die, Paul McCartney and Wings
Played 72,498 times on radio
A View to a Kill, Duran Duran
Played 22,774 times on radio
SOURCE: Nielsen BDS.
NOTE: 1 Released on a 30th anniversary compilation album, The Best of Bond ... James Bond; Shirley Bassey recorded the original
Entertainment - NBC;Stars Misaligned
Sophia Banay
The formula that NBC has been leaning on to jump-start its ailing lineup—putting big stars on the small screen—is looking more like olestra than Pinkberry.
Both My Own Worst Enemy, a new Christian Slater drama that was introduced with much fanfare at NBC's preciously-titled "in front" presentation to advertisers last spring, and Lipstick Jungle have been cancelled.
When Ben Silverman introduced My Own Worst Enemy last spring, he touted NBC's ability to bring movie-caliber stars to network shows as evidence of the network's strength. As part of his campaign to woo Slater to the show, it was reported, Silverman had even taken the actor's mother out to lunch.
Enemy was one of the central shows in NBC's fall lineup, which has turned out to be full of stinkers such as Knight Rider, Kath & Kim, and Crusoe—but the show never gained traction. It debuted to a smaller-than-anticipated audience of 7.3 million and dropped from there—to a low of 4.3 million this past week. The steep decline was especially galling given the show's lead-in from Heroes, NBC's tent-pole drama but one that's suffering its own ratings woes this fall.
A lesser, but still notable, coup for the network was bringing Brooke Shields to Lipstick Jungle when that show premiered last February.
Competition for female viewers, in the form of ABC's Cashmere Mafia, and a season-one interruption because of the writers' strike, slowed its development.
After a rough fall, the show's audience of 3.3 million last Friday was evidently not enough to justify keeping it on the air.
Still, despite the network's newly snuffed-out star-centric shows, NBC executives seem to remain convinced that bold-faced names are the key to propping up ratings.
The network has even lined up a slew of guest stars for Tina Fey's critically beloved but ratings-challenged sitcom 30 Rock, including Jennifer Aniston, Steve Martin, and Oprah Winfrey, who appeared in the season premiere. That episode, which aired October 30, brought in 8.5 million viewers, a 21 percent increase over last season's premiere.
But was it the Oprah effect, or just heightened awareness of the show, and of Fey, after her recent appearances on Saturday Night Live this election season?
Because of Fey's recent notoriety, 30 Rock’s next cameo choice seems obvious to Shari Anne Brill, senior vice president and director of programming at Carat in New York City.
"I would like to see Sarah Palin guest star," says Brill. "You know she wants to be in the spotlight."
And given Palin's recent bold-faced-name status, it wouldn't surprise us at all if NBC put her there.
The formula that NBC has been leaning on to jump-start its ailing lineup—putting big stars on the small screen—is looking more like olestra than Pinkberry.
Both My Own Worst Enemy, a new Christian Slater drama that was introduced with much fanfare at NBC's preciously-titled "in front" presentation to advertisers last spring, and Lipstick Jungle have been cancelled.
When Ben Silverman introduced My Own Worst Enemy last spring, he touted NBC's ability to bring movie-caliber stars to network shows as evidence of the network's strength. As part of his campaign to woo Slater to the show, it was reported, Silverman had even taken the actor's mother out to lunch.
Enemy was one of the central shows in NBC's fall lineup, which has turned out to be full of stinkers such as Knight Rider, Kath & Kim, and Crusoe—but the show never gained traction. It debuted to a smaller-than-anticipated audience of 7.3 million and dropped from there—to a low of 4.3 million this past week. The steep decline was especially galling given the show's lead-in from Heroes, NBC's tent-pole drama but one that's suffering its own ratings woes this fall.
A lesser, but still notable, coup for the network was bringing Brooke Shields to Lipstick Jungle when that show premiered last February.
Competition for female viewers, in the form of ABC's Cashmere Mafia, and a season-one interruption because of the writers' strike, slowed its development.
After a rough fall, the show's audience of 3.3 million last Friday was evidently not enough to justify keeping it on the air.
Still, despite the network's newly snuffed-out star-centric shows, NBC executives seem to remain convinced that bold-faced names are the key to propping up ratings.
The network has even lined up a slew of guest stars for Tina Fey's critically beloved but ratings-challenged sitcom 30 Rock, including Jennifer Aniston, Steve Martin, and Oprah Winfrey, who appeared in the season premiere. That episode, which aired October 30, brought in 8.5 million viewers, a 21 percent increase over last season's premiere.
But was it the Oprah effect, or just heightened awareness of the show, and of Fey, after her recent appearances on Saturday Night Live this election season?
Because of Fey's recent notoriety, 30 Rock’s next cameo choice seems obvious to Shari Anne Brill, senior vice president and director of programming at Carat in New York City.
"I would like to see Sarah Palin guest star," says Brill. "You know she wants to be in the spotlight."
And given Palin's recent bold-faced-name status, it wouldn't surprise us at all if NBC put her there.
Personality - Erik Spoelstra;Youngest Head Coach in NBA
The Miami Heat's slogan this season is "Something to Prove" and it applies just as much to the team's baby-faced rookie coach, Erik Spoelstra, as to the Heat itself. Not only is the 38-year-old Spoelstra the youngest head coach currently in the N.B.A., he has the unenviable job of shepherding a team that had the league's worst record last year, just two years removed from a championship season.
But now it's time to look ahead, not back, says Spoelstra, a former assistant coach who was hand-picked by Heat coach and president Pat Riley to take over the team last year. "There are only four returning players, so other than the first day of training camp we don't talk about last year," Spoelstra says. "We're young. We're going into the season with a little bit of a chip on our shoulder. We do have something to prove, that we can create something special here in Miami." So far the team's off to a 4-4 start, having shown flashes of greatness as well as ineptitude.
Spoelstra initially joined the team as a part-time gofer and videotape assistant in 1994 after playing pro ball in Germany for two years. Before long he was running the team's videotape operations and then moved on to scouting, attending up to 120 games a year and creating a statistical database the team still uses to track the strengths and weaknesses of Heat players and their opponents. A self-described overachiever, Spoelstra treated every job he had with the Heat as if it were the most important on the team, so when Riley asked him to take over as head coach last year, he wasn't entirely surprised. "He got a pretty good audition," Spoelstra says of Riley.
Spoelstra, who watches anywhere from six to eight hours of videotape before each game, is part of a new breed of young N.B.A. coaches like the New Jersey Nets' Lawrence Frank who pore obsessively over statistics and video. "It's really gone to another level," says Spoelstra of the preparation N.B.A. teams routinely go through. "At the same time, you can get paralysis through over-analysis."
Growing up in Portland, Spoelstra idolized the Trailblazers and dreamed of becoming a pro, especially since his father served as general manager of the team for a while (his grandfather was a long-time beat writer covering the Detroit Tigers). At 6-foot-1, Spoelstra was good enough to star in high school and at the University of Portland, but he eventually realized he didn't have the physical assets to make it to the N.B.A. Coaching was the next best thing. "The first time I told my father I wanted to be a coach he asked, 'Where did I go wrong?'" Spoelstra laughs. "All the coaches he knew were in his mind some of the craziest people he'd known."
Indeed, N.B.A. head coaches have to be a little bit insane to want a job that can be so demanding. Including training camp, the pre-season, and the playoffs, the season can last as long as nine months, with much of that time spent on the road. On days the team plays at home, Spoelstra shows up at the American Airlines arena before the Heat's 10 a.m. shoot-around and doesn't leave until 12 or 13 hours later. On days off, he leads practices or travels to the next road game.
The grind has yet to add wrinkles to Spoelstra's youthful appearance, something he's been teased about since high school. "But wait a few months and I might look like I'm 48," he says.
But now it's time to look ahead, not back, says Spoelstra, a former assistant coach who was hand-picked by Heat coach and president Pat Riley to take over the team last year. "There are only four returning players, so other than the first day of training camp we don't talk about last year," Spoelstra says. "We're young. We're going into the season with a little bit of a chip on our shoulder. We do have something to prove, that we can create something special here in Miami." So far the team's off to a 4-4 start, having shown flashes of greatness as well as ineptitude.
Spoelstra initially joined the team as a part-time gofer and videotape assistant in 1994 after playing pro ball in Germany for two years. Before long he was running the team's videotape operations and then moved on to scouting, attending up to 120 games a year and creating a statistical database the team still uses to track the strengths and weaknesses of Heat players and their opponents. A self-described overachiever, Spoelstra treated every job he had with the Heat as if it were the most important on the team, so when Riley asked him to take over as head coach last year, he wasn't entirely surprised. "He got a pretty good audition," Spoelstra says of Riley.
Spoelstra, who watches anywhere from six to eight hours of videotape before each game, is part of a new breed of young N.B.A. coaches like the New Jersey Nets' Lawrence Frank who pore obsessively over statistics and video. "It's really gone to another level," says Spoelstra of the preparation N.B.A. teams routinely go through. "At the same time, you can get paralysis through over-analysis."
Growing up in Portland, Spoelstra idolized the Trailblazers and dreamed of becoming a pro, especially since his father served as general manager of the team for a while (his grandfather was a long-time beat writer covering the Detroit Tigers). At 6-foot-1, Spoelstra was good enough to star in high school and at the University of Portland, but he eventually realized he didn't have the physical assets to make it to the N.B.A. Coaching was the next best thing. "The first time I told my father I wanted to be a coach he asked, 'Where did I go wrong?'" Spoelstra laughs. "All the coaches he knew were in his mind some of the craziest people he'd known."
Indeed, N.B.A. head coaches have to be a little bit insane to want a job that can be so demanding. Including training camp, the pre-season, and the playoffs, the season can last as long as nine months, with much of that time spent on the road. On days the team plays at home, Spoelstra shows up at the American Airlines arena before the Heat's 10 a.m. shoot-around and doesn't leave until 12 or 13 hours later. On days off, he leads practices or travels to the next road game.
The grind has yet to add wrinkles to Spoelstra's youthful appearance, something he's been teased about since high school. "But wait a few months and I might look like I'm 48," he says.
Business - WSJ invades NY Times Ad Turf
Sarah Rabil
Nov. 21 (Bloomberg) -- The Wall Street Journal is invading the New York Times' advertising turf as competition intensifies in a souring U.S. economy.
Saks Inc., a Times advertiser since 1924, recently chose to promote a new Chanel boutique and made-to-measure men's suits in the Journal. Owner Rupert Murdoch's expansion of general news coverage and a new lifestyle magazine are starting to attract wealthy consumers and create ad space for retailers, said Milton Pedraza, chief executive officer of Luxury Institute LLC.
``They certainly have become a significant part of the advertising mix for luxury brands where they were not before,'' said Pedraza, whose New York research group tracks the market for the most expensive lines of consumer goods and services. ``They're definitely stealing advertising dollars.''
Italian fashion label Dolce & Gabbana SpA and LVMH Moet Hennessy Louis Vuitton SA have also started advertising in the Journal as Murdoch, 77, seeks to overtake the Times. Both newspapers are fighting for a piece of a shrinking U.S. ad market with spending set to contract 6.8 percent next year to $150 billion, according to a Sanford C. Bernstein & Co. estimate. Murdoch is also pressing the fight online.
New York Times Co. cut its dividend yesterday by almost three-fourths as revenue crumbles. The flagship newspaper will probably ``moderate'' ad rate increases for next year and is discussing discounts with advertisers, chief advertising officer Denise Warren said in an interview before the announcement.
``Given what's going on with the economy, we want to be careful,'' she said.
Close Watch
The Times is also expanding financial news coverage, executive editor Bill Keller said. While Keller says the newspapers aren't locked in a ``mano-a-mano death struggle,'' he can name more than 25 business stories where the Times beat its New York rival this year.
``When somebody says he's willing to spend the bank to become the new version of the New York Times, you watch them closely,'' Keller said in an interview. The Journal is the first newspaper he reads every morning after the Times.
Keller isn't the only one eyeing the competition. Michael Rooney, the Journal's chief revenue officer, said he flips through the Times everyday to see who's advertising and instructs sales people to contact potential clients.
News Corp. has the resources to keep investing in the Journal, said Wachovia Capital Markets analyst John Janedis. The Times hasn't been as aggressive, he said.
``If this becomes a prolonged recession, it becomes an advertising war, and it becomes who can tough it out longer,'' New York-based Janedis said.
Ad Plunge
Ad revenue at the New York Times, the International Herald Tribune and their Web sites fell 15 percent in October to $113.9 million, the company said yesterday. Luxury accounts for more than 10 percent of ad sales within that unit. News Corp. doesn't break out financial information for the Journal.
Class A shares of News Corp., which acquired Journal-owner Dow Jones & Co. last year for $5.2 billion, have lost 70 percent this year on the New York Stock Exchange and rose 13 percent to $6.19 at 4:15 p.m. today. New York Times, also down 70 percent for the year, slid 6.6 percent to $5.34.
The Journal is only offering set discounts for bulk, new advertiser or repeat-purchase deals, Rooney said. The publication plans to raise rates for 2009 because of expanded coverage, more subscribers and other investments, Rooney said.
``We will increase rates next year,'' he said. ``We'll do that because we're investing in our product.''
The average individually paid circulation of the Journal rose 2.4 percent to 1.4 million as of September from a year ago, according to the Audit Bureau of Circulations. The Times' slid 5.5 percent to 858,985 on that basis.
`Willing to Play'
``We are twice the size of the New York Times,'' Wall Street Journal managing editor Robert Thomson said in an interview last month. ``We are way ahead, and we are getting further ahead.''
Overall, media companies have been selling ad space at ``fire-sale'' prices for incremental revenue, said Paul Silverman, executive media director at the Team One ad agency. Silverman, who plans marketing and negotiates ad buying for Lexus and Ritz-Carlton, said he is pushing harder for price breaks for his clients after hearing more companies are willing to discount.
``They're still trying to make it appear as though things are quite healthy and they don't need to do deep discounts,'' Silverman said.
Magazines
The Journal's premiere issue of glossy magazine insert WSJ. in September and the upcoming December publication have attracted 28 new advertisers, Rooney said.
Luxury ad sales in the Times' magazines, ranging from style to real estate, haven't been hurt by the Journal's foray into magazines, Warren said. Financial ads have gained since early August, she said.
A non-contract full-page color ad in the Journal's national edition costs about $264,426. A full-page color ad for a bank that advertises in the Times' national edition costs about $193,800 at the published rate. That includes a built-in 8 percent discount for full pages.
The next key battleground may be the Internet. Nytimes.com offers stories for free, while WSJ.com charges a fee for premium business content. Murdoch said in September he plans to boost subscription revenue by more than $300 million a year.
Keller said he doesn't share the Journal's view of a head- to-head competition. The Times' reporting is also up against Conde Nast Portfolio, the Los Angeles Times, TV stations and Internet news sites, he said.
``Believe me, my life would be a lot easier if we were in a one-on-one battle with the Wall Street Journal,'' Keller said.
To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net
Nov. 21 (Bloomberg) -- The Wall Street Journal is invading the New York Times' advertising turf as competition intensifies in a souring U.S. economy.
Saks Inc., a Times advertiser since 1924, recently chose to promote a new Chanel boutique and made-to-measure men's suits in the Journal. Owner Rupert Murdoch's expansion of general news coverage and a new lifestyle magazine are starting to attract wealthy consumers and create ad space for retailers, said Milton Pedraza, chief executive officer of Luxury Institute LLC.
``They certainly have become a significant part of the advertising mix for luxury brands where they were not before,'' said Pedraza, whose New York research group tracks the market for the most expensive lines of consumer goods and services. ``They're definitely stealing advertising dollars.''
Italian fashion label Dolce & Gabbana SpA and LVMH Moet Hennessy Louis Vuitton SA have also started advertising in the Journal as Murdoch, 77, seeks to overtake the Times. Both newspapers are fighting for a piece of a shrinking U.S. ad market with spending set to contract 6.8 percent next year to $150 billion, according to a Sanford C. Bernstein & Co. estimate. Murdoch is also pressing the fight online.
New York Times Co. cut its dividend yesterday by almost three-fourths as revenue crumbles. The flagship newspaper will probably ``moderate'' ad rate increases for next year and is discussing discounts with advertisers, chief advertising officer Denise Warren said in an interview before the announcement.
``Given what's going on with the economy, we want to be careful,'' she said.
Close Watch
The Times is also expanding financial news coverage, executive editor Bill Keller said. While Keller says the newspapers aren't locked in a ``mano-a-mano death struggle,'' he can name more than 25 business stories where the Times beat its New York rival this year.
``When somebody says he's willing to spend the bank to become the new version of the New York Times, you watch them closely,'' Keller said in an interview. The Journal is the first newspaper he reads every morning after the Times.
Keller isn't the only one eyeing the competition. Michael Rooney, the Journal's chief revenue officer, said he flips through the Times everyday to see who's advertising and instructs sales people to contact potential clients.
News Corp. has the resources to keep investing in the Journal, said Wachovia Capital Markets analyst John Janedis. The Times hasn't been as aggressive, he said.
``If this becomes a prolonged recession, it becomes an advertising war, and it becomes who can tough it out longer,'' New York-based Janedis said.
Ad Plunge
Ad revenue at the New York Times, the International Herald Tribune and their Web sites fell 15 percent in October to $113.9 million, the company said yesterday. Luxury accounts for more than 10 percent of ad sales within that unit. News Corp. doesn't break out financial information for the Journal.
Class A shares of News Corp., which acquired Journal-owner Dow Jones & Co. last year for $5.2 billion, have lost 70 percent this year on the New York Stock Exchange and rose 13 percent to $6.19 at 4:15 p.m. today. New York Times, also down 70 percent for the year, slid 6.6 percent to $5.34.
The Journal is only offering set discounts for bulk, new advertiser or repeat-purchase deals, Rooney said. The publication plans to raise rates for 2009 because of expanded coverage, more subscribers and other investments, Rooney said.
``We will increase rates next year,'' he said. ``We'll do that because we're investing in our product.''
The average individually paid circulation of the Journal rose 2.4 percent to 1.4 million as of September from a year ago, according to the Audit Bureau of Circulations. The Times' slid 5.5 percent to 858,985 on that basis.
`Willing to Play'
``We are twice the size of the New York Times,'' Wall Street Journal managing editor Robert Thomson said in an interview last month. ``We are way ahead, and we are getting further ahead.''
Overall, media companies have been selling ad space at ``fire-sale'' prices for incremental revenue, said Paul Silverman, executive media director at the Team One ad agency. Silverman, who plans marketing and negotiates ad buying for Lexus and Ritz-Carlton, said he is pushing harder for price breaks for his clients after hearing more companies are willing to discount.
``They're still trying to make it appear as though things are quite healthy and they don't need to do deep discounts,'' Silverman said.
Magazines
The Journal's premiere issue of glossy magazine insert WSJ. in September and the upcoming December publication have attracted 28 new advertisers, Rooney said.
Luxury ad sales in the Times' magazines, ranging from style to real estate, haven't been hurt by the Journal's foray into magazines, Warren said. Financial ads have gained since early August, she said.
A non-contract full-page color ad in the Journal's national edition costs about $264,426. A full-page color ad for a bank that advertises in the Times' national edition costs about $193,800 at the published rate. That includes a built-in 8 percent discount for full pages.
The next key battleground may be the Internet. Nytimes.com offers stories for free, while WSJ.com charges a fee for premium business content. Murdoch said in September he plans to boost subscription revenue by more than $300 million a year.
Keller said he doesn't share the Journal's view of a head- to-head competition. The Times' reporting is also up against Conde Nast Portfolio, the Los Angeles Times, TV stations and Internet news sites, he said.
``Believe me, my life would be a lot easier if we were in a one-on-one battle with the Wall Street Journal,'' Keller said.
To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net
Lifestyle - Japan;Keidanren Tells Japan's Salarymen to Work Less, Have More Kids
Megumi Yamanaka
Nov. 21 (Bloomberg) -- Keidanren, Japan's biggest business organization, is worried the nation's workers aren't having enough sex.
The group urged its 1,632 member companies to start so- called family weeks that give employees more time for playing with the kids and having more children to reverse a declining birth rate. A survey by Japan's Family Planning Association of about 3,000 married people under age 49 shows couples are having less sex because long work days leave them with too little energy.
In a country where people over 65 will outnumber children two-to-one in five years, companies say they eventually won't have enough workers. Japan's birth rate has been falling since 1972 and threatens to shrink the labor force 16 percent by 2030 from 66.6 million workers in 2006, according to the health ministry.
``You must go home early,'' Nippon Oil Corp. President Shinji Nishio told staff in a speech for the company's two-week family campaign, which ends Nov. 22. ``The dwindling birthrate and the aging population, along with the responsibility of educating the next generation -- these aren't just somebody else's problem. We expect all workers' active participation.''
At Nippon Oil, Japan's largest refiner, staffers have been forbidden to work on weekends and must get permission to stay past 7 p.m. Textile maker Toray Industries Inc. and All Nippon Airways Co. also hold family weeks this month.
Each evening at 8 p.m. at Nippon Oil's Tokyo headquarters, the tune ``When You Wish Upon a Star'' blares from loudspeakers. The theme song from Walt Disney Co.'s 1940 movie ``Pinocchio,'' about a puppet that wanted to be human, is meant to pull at workers' heartstrings and remind them they should be home with the people they love, said Takefumi Koga, group manager of labor relations.
Drinking Sessions
Colleagues took advantage of the extra time off to arrange after-work drinking sessions, but Koga, 45, the father of two girls, said he managed to rebuff the invitations and go home to his family in the suburbs of Tokyo. When he unexpectedly turned up for dinner, his daughter asked him if he was unwell.
``My family and myself felt awkward at first, but it's nice to spend the time together,'' Koga said. ``But I can't go home earlier every day.''
Spending more time at home may make some white-collar workers, known as salarymen, uneasy in a country where long days and short holidays are the norm. Japan's average work week in 2006 was the third-longest among industrialized countries after South Korea and the U.S., according to the International Labor Organization, the United Nations agency based in Geneva.
Workers opted to take less than half of their paid vacation last year, averaging just 8.3 days, according to the labor ministry. The word `karoshi' has entered the vocabulary to describe the phenomenon of death from overwork.
Tired and Bored
``It's a tough challenge for workers, especially the middle- aged ones who have been taught industriousness is the most important virtue,'' said Dr. Kunio Kitamura, chairman of the Family Planning Association, who gave details of the survey on married couples at a conference last week. ``Going home earlier, if they can put it into action, is a way to fix the declining birthrate.''
Japanese couples are giving up on sex, according to the report, which will be submitted to the Ministry of Health and Welfare next year.
Of the married couples surveyed in 2008, 36.5 percent hadn't had sex in the previous month, up from 34.6 percent in 2006 and 31.9 percent in 2004, Kitamura said. The couples complained they were too tired from their jobs, or that sex is ``boring.''
``The advice for sexless couples is to spend more time together,'' Kitamura said. ``Just being around, even watching TV in the same room, would be a good start.''
Labor Pains
The country's birth rate, the average number of children a woman has during her lifetime, started falling in 1972, and stood at 1.34 in 2007, well below the 2.07 required for a stable population, according to the National Institute of Population and Social Security Research.
``People are the country's resource,'' said Rie Sako, deputy manager of the Tokyo-based National Quality of Life Group that promotes the family weeks at the Keidanren business lobby. ``To sustain our standard of living it's important to stem the contraction in population.''
Family weeks are only a first step, Sako said. Leaders of Japanese companies need to get behind efforts to reduce hours throughout the year.
At Nippon Oil, family weeks are just one of the measures the company has introduced to try to reduce overtime, in part to decrease costs and improve efficiency. In October last year the company started a ``Sayonara Overwork'' campaign, and posted signs in offices listing eight ways to go home earlier.
Like his colleague Koga, Risuke Shimizu, 37, a Nippon Oil spokesman, has had to resist the temptation to drop by a bar instead of going straight home during family weeks, he said. Normally he gets back so late his two young children are already asleep.
``They came to the front door to welcome me home when I came back earlier during the weeks,'' he said. ``It's quite good.''
To contact the reporter on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.
Nov. 21 (Bloomberg) -- Keidanren, Japan's biggest business organization, is worried the nation's workers aren't having enough sex.
The group urged its 1,632 member companies to start so- called family weeks that give employees more time for playing with the kids and having more children to reverse a declining birth rate. A survey by Japan's Family Planning Association of about 3,000 married people under age 49 shows couples are having less sex because long work days leave them with too little energy.
In a country where people over 65 will outnumber children two-to-one in five years, companies say they eventually won't have enough workers. Japan's birth rate has been falling since 1972 and threatens to shrink the labor force 16 percent by 2030 from 66.6 million workers in 2006, according to the health ministry.
``You must go home early,'' Nippon Oil Corp. President Shinji Nishio told staff in a speech for the company's two-week family campaign, which ends Nov. 22. ``The dwindling birthrate and the aging population, along with the responsibility of educating the next generation -- these aren't just somebody else's problem. We expect all workers' active participation.''
At Nippon Oil, Japan's largest refiner, staffers have been forbidden to work on weekends and must get permission to stay past 7 p.m. Textile maker Toray Industries Inc. and All Nippon Airways Co. also hold family weeks this month.
Each evening at 8 p.m. at Nippon Oil's Tokyo headquarters, the tune ``When You Wish Upon a Star'' blares from loudspeakers. The theme song from Walt Disney Co.'s 1940 movie ``Pinocchio,'' about a puppet that wanted to be human, is meant to pull at workers' heartstrings and remind them they should be home with the people they love, said Takefumi Koga, group manager of labor relations.
Drinking Sessions
Colleagues took advantage of the extra time off to arrange after-work drinking sessions, but Koga, 45, the father of two girls, said he managed to rebuff the invitations and go home to his family in the suburbs of Tokyo. When he unexpectedly turned up for dinner, his daughter asked him if he was unwell.
``My family and myself felt awkward at first, but it's nice to spend the time together,'' Koga said. ``But I can't go home earlier every day.''
Spending more time at home may make some white-collar workers, known as salarymen, uneasy in a country where long days and short holidays are the norm. Japan's average work week in 2006 was the third-longest among industrialized countries after South Korea and the U.S., according to the International Labor Organization, the United Nations agency based in Geneva.
Workers opted to take less than half of their paid vacation last year, averaging just 8.3 days, according to the labor ministry. The word `karoshi' has entered the vocabulary to describe the phenomenon of death from overwork.
Tired and Bored
``It's a tough challenge for workers, especially the middle- aged ones who have been taught industriousness is the most important virtue,'' said Dr. Kunio Kitamura, chairman of the Family Planning Association, who gave details of the survey on married couples at a conference last week. ``Going home earlier, if they can put it into action, is a way to fix the declining birthrate.''
Japanese couples are giving up on sex, according to the report, which will be submitted to the Ministry of Health and Welfare next year.
Of the married couples surveyed in 2008, 36.5 percent hadn't had sex in the previous month, up from 34.6 percent in 2006 and 31.9 percent in 2004, Kitamura said. The couples complained they were too tired from their jobs, or that sex is ``boring.''
``The advice for sexless couples is to spend more time together,'' Kitamura said. ``Just being around, even watching TV in the same room, would be a good start.''
Labor Pains
The country's birth rate, the average number of children a woman has during her lifetime, started falling in 1972, and stood at 1.34 in 2007, well below the 2.07 required for a stable population, according to the National Institute of Population and Social Security Research.
``People are the country's resource,'' said Rie Sako, deputy manager of the Tokyo-based National Quality of Life Group that promotes the family weeks at the Keidanren business lobby. ``To sustain our standard of living it's important to stem the contraction in population.''
Family weeks are only a first step, Sako said. Leaders of Japanese companies need to get behind efforts to reduce hours throughout the year.
At Nippon Oil, family weeks are just one of the measures the company has introduced to try to reduce overtime, in part to decrease costs and improve efficiency. In October last year the company started a ``Sayonara Overwork'' campaign, and posted signs in offices listing eight ways to go home earlier.
Like his colleague Koga, Risuke Shimizu, 37, a Nippon Oil spokesman, has had to resist the temptation to drop by a bar instead of going straight home during family weeks, he said. Normally he gets back so late his two young children are already asleep.
``They came to the front door to welcome me home when I came back earlier during the weeks,'' he said. ``It's quite good.''
To contact the reporter on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.
Business - Opinion;Jobs,Buffett,Gates as Automakers
Mark Gilbert
Nov. 20 (Bloomberg) -- I sat in the window of a cafe this month in Annapolis, Maryland, a sailing town near Washington, counting parked cars. “Honda, Honda, Nissan, Toyota, Honda, Lexus (made by Toyota), Mazda, and a battered 1970s Cadillac.”
No wonder the U.S. carmakers are in meltdown and begging to be plugged in to the Treasury’s life-support machines.
Don’t be misled, though -- the something that is rotten in the auto industry has nothing to do with the credit crunch, and everything to do with years of mismanagement, shoddy products and bad choices.
Consider the credit-rating histories of General Motors Corp. and Ford Motor Co. For both companies, the rot started all the way back in August 2001, when Standard & Poor’s put the A grades they had enjoyed for a decade on review for downgrade. In October of that year, they each suffered a two-level cut to BBB+ that left them just three moves away from junk status.
So seven years ago, the car companies were already on the slide, after years of their Japanese rivals stealing market share with improved production methods and better reliability. That was well before the words “credit crunch” had become as ubiquitous as “would you like large fries with that?” or “the new Bond film isn’t as good as the previous one.”
80 Percent Loss
Further cuts followed, with S&P finally putting investors out of their misery by dropping Ford and General Motors to junk in May 2005. By then, GM’s $3 billion of 8.375 percent bonds sold two years earlier and repayable in 2033 had already declined by 26 percent; bondholders now are staring at a loss of more than 80 percent of their initial investment.
So when GM Chief Executive Officer Rick Wagoner said this week that allowing U.S. carmakers to fail would trigger a “catastrophic collapse” in the economy, he really should be typing up his own resignation letter. Calls for investment bankers to forgo their bonuses are both understandable and justifiable in the current climate; what about the $14.4 million Wagoner pocketed in total compensation for 2007, according to Bloomberg figures?
Moreover, the dire warnings used to persuade U.S. politicians that they should give the auto industry a blank check similar to the one Treasury Secretary Henry Paulson has signed for the finance guys smack of extortion.
“Such a level of economic devastation would far exceed the government support that our industry needs,” Wagoner said this week. “This is about much more than just Detroit. It’s about saving the U.S. economy.”
Pirates of Detroit
In other words, give us what we want or suffer the consequences. That sure sounds like blackmail to my ears, except even Somali oil-tanker pirates have so far stopped short of trying to pilfer $25 billion from their victims.
So, what to do? Nobody, least of all President-elect Barack Obama, wants to see the 250,000 people who work directly for the big three U.S. automakers tossed on the scrapheap, or the other 4 million workers whose job security is at risk somewhere along the supply chain from the drawing boards of Detroit to the car showrooms of America.
There seems to be a groundswell of support building for the concept of retraining and retooling auto workers away from churning out four-wheeled gas guzzlers to put them instead at the vanguard of the fight against climate change.
“Wouldn’t the benefits be greater if the U.S. government spent $25 billion to $75 billion -- the current dollars proposed to bail out the auto industry -- to train engineers, support infrastructure and work in the much-neglected alternative energy space?” wrote Tom Sowanick, who helps manage $20 billion as chief investment officer of Clearbrook Financial LLC in Princeton, New Jersey.
I Spy iCar
New York Times columnist Thomas Friedman suggested earlier this month that Apple Inc. CEO Steve Jobs should be persuaded to sign up for “national service” and run a car company for a year, long enough to invent the iCar.
I think Friedman is on to something. Sure, the iCar would be available in any color as long as it’s white (with a black model to be introduced as soon as all the early adopters have a pearlescent model in the driveway), and the windshield would be scratched to opacity within weeks. It would probably run on fresh air, though, and the packaging would be to die for.
First off, the U.S. government would need to absorb all those legacy pension and health-care costs that the automakers have used as an excuse for years to dodge getting their collective act together. Splitting the welfare issue from the business travails would deliver some much-needed clarity to the true financial position of the carmakers.
Then, turn the entire industry over to people who might make a difference. Give GM to Jobs, let Microsoft Corp. founder Bill Gates run Ford and allow billionaire Warren Buffett to try his hand at Chrysler. In five years, I bet that car counting in Annapolis would deliver a very different result.
(Mark Gilbert is a Bloomberg News columnist. The opinions expressed are his own.)
Nov. 20 (Bloomberg) -- I sat in the window of a cafe this month in Annapolis, Maryland, a sailing town near Washington, counting parked cars. “Honda, Honda, Nissan, Toyota, Honda, Lexus (made by Toyota), Mazda, and a battered 1970s Cadillac.”
No wonder the U.S. carmakers are in meltdown and begging to be plugged in to the Treasury’s life-support machines.
Don’t be misled, though -- the something that is rotten in the auto industry has nothing to do with the credit crunch, and everything to do with years of mismanagement, shoddy products and bad choices.
Consider the credit-rating histories of General Motors Corp. and Ford Motor Co. For both companies, the rot started all the way back in August 2001, when Standard & Poor’s put the A grades they had enjoyed for a decade on review for downgrade. In October of that year, they each suffered a two-level cut to BBB+ that left them just three moves away from junk status.
So seven years ago, the car companies were already on the slide, after years of their Japanese rivals stealing market share with improved production methods and better reliability. That was well before the words “credit crunch” had become as ubiquitous as “would you like large fries with that?” or “the new Bond film isn’t as good as the previous one.”
80 Percent Loss
Further cuts followed, with S&P finally putting investors out of their misery by dropping Ford and General Motors to junk in May 2005. By then, GM’s $3 billion of 8.375 percent bonds sold two years earlier and repayable in 2033 had already declined by 26 percent; bondholders now are staring at a loss of more than 80 percent of their initial investment.
So when GM Chief Executive Officer Rick Wagoner said this week that allowing U.S. carmakers to fail would trigger a “catastrophic collapse” in the economy, he really should be typing up his own resignation letter. Calls for investment bankers to forgo their bonuses are both understandable and justifiable in the current climate; what about the $14.4 million Wagoner pocketed in total compensation for 2007, according to Bloomberg figures?
Moreover, the dire warnings used to persuade U.S. politicians that they should give the auto industry a blank check similar to the one Treasury Secretary Henry Paulson has signed for the finance guys smack of extortion.
“Such a level of economic devastation would far exceed the government support that our industry needs,” Wagoner said this week. “This is about much more than just Detroit. It’s about saving the U.S. economy.”
Pirates of Detroit
In other words, give us what we want or suffer the consequences. That sure sounds like blackmail to my ears, except even Somali oil-tanker pirates have so far stopped short of trying to pilfer $25 billion from their victims.
So, what to do? Nobody, least of all President-elect Barack Obama, wants to see the 250,000 people who work directly for the big three U.S. automakers tossed on the scrapheap, or the other 4 million workers whose job security is at risk somewhere along the supply chain from the drawing boards of Detroit to the car showrooms of America.
There seems to be a groundswell of support building for the concept of retraining and retooling auto workers away from churning out four-wheeled gas guzzlers to put them instead at the vanguard of the fight against climate change.
“Wouldn’t the benefits be greater if the U.S. government spent $25 billion to $75 billion -- the current dollars proposed to bail out the auto industry -- to train engineers, support infrastructure and work in the much-neglected alternative energy space?” wrote Tom Sowanick, who helps manage $20 billion as chief investment officer of Clearbrook Financial LLC in Princeton, New Jersey.
I Spy iCar
New York Times columnist Thomas Friedman suggested earlier this month that Apple Inc. CEO Steve Jobs should be persuaded to sign up for “national service” and run a car company for a year, long enough to invent the iCar.
I think Friedman is on to something. Sure, the iCar would be available in any color as long as it’s white (with a black model to be introduced as soon as all the early adopters have a pearlescent model in the driveway), and the windshield would be scratched to opacity within weeks. It would probably run on fresh air, though, and the packaging would be to die for.
First off, the U.S. government would need to absorb all those legacy pension and health-care costs that the automakers have used as an excuse for years to dodge getting their collective act together. Splitting the welfare issue from the business travails would deliver some much-needed clarity to the true financial position of the carmakers.
Then, turn the entire industry over to people who might make a difference. Give GM to Jobs, let Microsoft Corp. founder Bill Gates run Ford and allow billionaire Warren Buffett to try his hand at Chrysler. In five years, I bet that car counting in Annapolis would deliver a very different result.
(Mark Gilbert is a Bloomberg News columnist. The opinions expressed are his own.)
World - Quickie Buffett Portrait Sells for $100,000 on EBay
Philip Boroff
Nov. 21 (Bloomberg) -- A portrait of Warren Buffett painted in 10 minutes sold for $100,000 to a Minneapolis executive in an eBay Inc. auction.
John L. Morgan, chief executive officer of Winmark Corp., spent $215,000 in 1999 for a stock tip from Buffett, listed as the richest American by Forbes magazine. Morgan made both purchases to benefit Girls Inc. of Omaha, a nonprofit co-founded by Buffett's first wife, Susan, who died in 2004.
Performance artist Michael Israel painted the portrait in May outside the Qwest Center in Omaha, Nebraska, before the annual meeting of Buffett's Berkshire Hathaway Inc. The artist later touched it up and signed it, as did Buffett himself.
``We're thrilled with the $100,000,'' said Roberta Wilhelm, executive director of Girls Inc. of Omaha. ``We debated not putting it up for auction. The economy is tanking and everyone is scrambling.''
Girls Inc. presents after-school and summer programs for girls 5 to 18 years old. Susan Buffett co-founded it in 1975 as Omaha Girls Club, in the basement of Clifton Hills Presbyterian Church. Susie A. Buffett, the daughter of Warren and Susan Buffett, today serves on the boards of both Girls Inc. and the local branch.
Stock Tip
Morgan, whose company sells franchises in businesses such as Play It Again Sports and Plato's Closet, describes himself as a longtime Berkshire shareholder who is an admirer of Buffett and Girls Inc.
Although Morgan declined to disclose the stock tip he bought from Buffett, the Wall Street Journal reported in 1999 that it was for First Industrial Realty Trust, a Chicago-based real- estate investment trust. Morgan said he sold the stock Buffett recommended for a profit.
``It was a very successful tip,'' he said.
Nov. 21 (Bloomberg) -- A portrait of Warren Buffett painted in 10 minutes sold for $100,000 to a Minneapolis executive in an eBay Inc. auction.
John L. Morgan, chief executive officer of Winmark Corp., spent $215,000 in 1999 for a stock tip from Buffett, listed as the richest American by Forbes magazine. Morgan made both purchases to benefit Girls Inc. of Omaha, a nonprofit co-founded by Buffett's first wife, Susan, who died in 2004.
Performance artist Michael Israel painted the portrait in May outside the Qwest Center in Omaha, Nebraska, before the annual meeting of Buffett's Berkshire Hathaway Inc. The artist later touched it up and signed it, as did Buffett himself.
``We're thrilled with the $100,000,'' said Roberta Wilhelm, executive director of Girls Inc. of Omaha. ``We debated not putting it up for auction. The economy is tanking and everyone is scrambling.''
Girls Inc. presents after-school and summer programs for girls 5 to 18 years old. Susan Buffett co-founded it in 1975 as Omaha Girls Club, in the basement of Clifton Hills Presbyterian Church. Susie A. Buffett, the daughter of Warren and Susan Buffett, today serves on the boards of both Girls Inc. and the local branch.
Stock Tip
Morgan, whose company sells franchises in businesses such as Play It Again Sports and Plato's Closet, describes himself as a longtime Berkshire shareholder who is an admirer of Buffett and Girls Inc.
Although Morgan declined to disclose the stock tip he bought from Buffett, the Wall Street Journal reported in 1999 that it was for First Industrial Realty Trust, a Chicago-based real- estate investment trust. Morgan said he sold the stock Buffett recommended for a profit.
``It was a very successful tip,'' he said.
Sport - In Conversation with Sachin Tendulkar
Joe Leahy
When I arrive at the Pride Hotel in Nagpur, in the dead centre of India, I wonder whether I’ve come to the right place. This slightly rundown but friendly establishment, opposite the airport, seems an odd place to be meeting one of cricket’s all-time great batsmen, Sachin Tendulkar, a former captain of his country and, since he overtook the West Indies’ Brian Lara last month, the man with the most runs in Test history – 12,273 and counting.
In India, where cricket is worshipped by people of every caste, colour and creed, Tendulkar is the symbol of something more than a game. Nine years ago in Mysore, southern India, one female fan was reportedly so distressed at the news that Tendulkar had a back injury and would not be able to play any more that she set herself on fire. “The way crowds respond to him, when he bats, when he scores, when he gets out – it’s close to deification,” says Indian historian and cricket writer Ramachandra Guha.
In fact, it is impossible for the 5ft 6in “Little Master” (aka “The Genius” and “Master Blaster”) to dine unmolested in public in India. Which is why, when he finishes training for India’s Test match against Australia in Nagpur the following day, I am ushered by two agents into the privacy of his hotel room.
Tendulkar greets me at the door looking tanned and fresh, wearing training shorts and a blue and white T-shirt with the name of the Indian team’s sponsor, Sahara, emblazoned on the chest. I step over the exercise ball and dumbbells on the floor and sit on a couch while he orders room service for us.
He asks for one portion of butter chicken and, as a vegetarian option, one dish of creamy corn and spinach, or “palak with some plain roti or naan bread and a portion of rice. Concerned that, as a foreigner, I might not share his taste for hot food, he reassures me that the chicken is “not that spicy”. “I ate this last night,” he explains.
Tendulkar’s familiar, slightly high-pitched voice is a constant presence on Indian television, endorsing everything from Royal Bank of Scotland to Aviva insurance. Some advertising industry insiders estimate he makes about $1.5m for each contract each year.
Yet despite this ubiquity and his status as a living deity, relatively little is known about this quiet 35-year-old from Mumbai, who, except when it involves standing on a cricket field, shuns the limelight. And, as he politely bats away my opening, rather gentle conversational deliveries, I can see why.
He becomes more animated when asked how it felt to become Test cricket’s greatest run scorer. The moment arrived after tea on a mid-October day during the first innings in Mohali, when he glided a ball off his bat to take three runs, then looked to the heavens and pumped his fists.
“It was a bit emotional,” he says, leaning forward, alluding to the fact that his father Ramesh Tendulkar, who died in 1999, was not there to see it. “I’m sure he would have been a proud man and the initial years of international cricket that I spent with my father were very important years for me. His support, his guidance, nothing to do with cricket but just in general the support and the direction that I got from him was extremely important.”
The late great Australian cricketer Don Bradman said that the modern player he most saw himself in was Tendulkar, like Bradman a methodical batsman. But cricket may be even more dominant in Tendulkar’s life than it was for Bradman, whom he met in 1998 on the occasion of “the Don’s” 90th birthday at his house in Adelaide. Outside, the world is absorbed in the news that Barack Obama has won the US presidential election but Tendulkar says he has been too busy preparing for tomorrow’s match and has not heard about it yet. Such focus goes with the territory for top-class sportsmen but with Tendulkar the immersion is possibly deeper.
He was born in Mumbai (then Bombay) on April 24 1973, the youngest of four children. His father, a novelist, aware that his son had prodigious talent as a cricketer, put him in a Mumbai high school known for its emphasis on cricket. It was also around this time that the boy met his coach and mentor Ramakant Achrekar, who believed that “match practice” – training by playing full games – was the best way to forge a young cricketer. He had the young Tendulkar play more than 200 matches a year. He would finish school then go to the Shivaji Park ground in central Mumbai in time to play the second innings of a match. After that he would move on to the nets to practise batting until he was ready to drop.
Sometimes, the coach would load the area with more than 30 fielders and then give Tendulkar one rupee if he could survive the session without being caught out. Once that was over, he had to run around Shivaji Park – about five times the size of the Melbourne Cricket Ground – in full gear with bat and pads. “I was always up for batting but I didn’t enjoy running in particular,” Tendulkar recalls.
The training paid off. He made his first appearance for India against Pakistan in Karachi in November 1989, aged 16, and the following summer struck his first Test century against England. He quickly became a hero round the world but particularly at home. According to Ramachandra Guha, Tendulkar’s extreme popularity was in part due to the fact that India was undergoing an internal crisis in the 1990s, with communal strife at home between Muslims and Hindus and enduring economic difficulties. “Tendulkar became a sort of one-man band aid for the Indian psyche,” Guha says. It was around this time that there was an explosion in the number of infant “Sachins” born in the country.
In today’s more confident India, Guha believes the player is more like an elder statesman. Though Tendulkar is typically rather more low-key when asked about his national status or celebrity. “If you do well people tend to put their hands together and appreciate what you’re doing whether that’s right or wrong or whatever,” he says, “so eventually you’ve got to judge for yourself what is right or wrong, then you [need to] have a solid team and in my case, my family’s played that role.”
The doorbell rings and lunch arrives on a wheeled table. One of the agents urges us to eat it straight away rather than letting it get cold. I load up my plate with the butter chicken and some naan, while Tendulkar scoops some rice, butter chicken and palak on to his plate. Despite training this morning, he doesn’t take a big helping. He talks more about the lessons he learnt from his father. These were not really about cricket but about the importance of being a decent person.
“People will obviously remember you as a cricketer but the ones who’ve actually interacted with you and spent some time with you, they will remember more about you as a person,” he says. “This is one thing that will be permanently with you – cricket at some stage is going to have to end.”
It is a rule he has tried to live by, keeping his personal life private and emerging with a clean name from troubles such as a match-fixing scandal that swept world cricket in the late 1990s (when he was Indian captain) and sullied the reputation of many other Indian players.
How has he managed to avoid more intense scrutiny? Partly by staying away from the parties and Bollywood lifestyle that attracts many younger Indian cricketers. “Wherever it’s noisy I don’t go there, it’s not my lifestyle,” he says, adding that he prefers to spend time with his wife Anjali and children Sara, 11 and Arjun, nine, who he says has already “picked up a bat and loves his cricket”. “I’m not a party person,” he adds rather needlessly.
It is a message he tries to pass on to junior members of the India team. In this celebrity-mad country, where people build shrines to their favourite actors, the pressure of fame is capable of quickly extinguishing a budding cricketing talent.
“It’s also up to an individual not to get carried away and not to forget why the rest of the things are happening,” he says, referring to the fame and glory. “They’re happening because of cricket. Once you start giving more importance to the other things, gradually cricket starts taking a back seat. That’s where the careers get stagnated.”
. . .
I suggest celebrity endorsements could also be distracting for players but unsurprisingly, given that he has eight contracts to endorse products, he disagrees, saying that these each only take a couple of days or even just a few hours of his time each year. “As long as it’s not affecting your game, I don’t see anything wrong in it,” he says, looking vaguely annoyed for the only time during lunch.
He also dismisses my suggestion that an innovation such as The Indian Premier League, a competition based on the shortened 20-over form of the game, which has attracted foreign stars, around $2bn in television rights, and provided a lucrative pay day for players – could erode cricketers’ enthusiasm for playing for their countries. He prefers to emphasise the opportunities the IPL has given young Indian players to play with greats such as Shane Warne, the Australian spin bowler who captained the Rajasthani Royals to victory in the inaugural IPL this year. Tendulkar himself leads the Mumbai Indians, the team of his home city.
We talk about returning to the table for second helpings but get distracted by the subject of his retirement. Or non-retirement. Tendulkar has had some trouble with injury this year. Does he think of retiring? “No I haven’t to be honest. I don’t need to think about that right now and if I start feeling like that I’d immediately know it’s time to move away from the game.”
Instead, he is ready to take part in another series, this time two Tests against England in December. Though the news that he will be rested from at least some of the seven preceding one-day internationals, which started on Friday, is a reminder that, at 35, it is wise for him to choose his battles a bit more selectively.
As we wrap up, I try to draw him one more time on issues outside sport. As the favourite son of the state of Maharashtra, what does he think of a growing political movement among rightwing Hindu activists there against immigrants from other parts of India settling in the state capital Mumbai?
He seems to start to answer the question before thinking better of it and retreating quickly back to familiar ground. “There are different people who’re actually based in Mumbai ... to be honest I’ve not followed politics much. It’s never been my interest. I’m more of a ... I follow different sports. I follow Formula One, tennis. I’ve always been a big fan of John McEnroe, after that Sampras and then Federer, Federer would probably top the list.”
Aware this is as far as he is ever likely to go, I have one final question. What, in his opinion, defines a great batsman?
Back on less tricky territory, he is a little more expansive. “I feel sometimes that calling someone great ... that terminology is used very loosely. According to me, when you call someone great, that guy should have spent more than 10 years at an international level,” he says.
“It’s natural to get excited,” he continues, “but I think there are two sides to a coin: on one side, somebody just showing promise and, on the other side, also delivering – and when they match, they can go hand in hand for a number of years. That’s when the player is remembered for years to come.”
The supreme modern batsman
There are more flamboyant batsmen. Batsmen with marginally higher batting averages, writes Ludovic HunterTilney. Batsmen who are more destructive or harder to dislodge. Yet Sachin Tendulkar stands alone as the supreme modern batsman.
Tendulkar is widely considered the heir to Don Bradman, the best ever batsman. The flame was handed down by Bradman himself who, observing the Indian in 1996, was struck by an uncanny similarity of styles. “His compactness, technique, stroke production, it all seemed to gel,” Bradman said.
Another Australian legend, the leg-spinner Shane Warne, confirmed Tendulkar’s coronation when he judged the “Little Master” to be the best batsman he had bowled against. The next best, Brian Lara, came a distant second in Warne’s view.
Tendulkar has less flair than Lara, whom he last month overhauled as the leading run scorer in Test history, but a stronger all-round game. Short and squat, he has extraordinary balance and is nimble on his feet – Warne joked that he suffered nightmares of Tendulkar skipping down the pitch towards him to clatter the ball back over the bowler’s head.
The Indian has scored runs against all forms of bowling on all types of pitches. He can bat aggressively or defensively as the situation demands; his range of strokeplay is unequalled.
He has scored more Test centuries (40) and more one-day international centuries (42) than anyone else.
He plays shots with surgical precision, not so much demolishing a bowling attack as dismantling it with deft flicks and powerful strikes. The calculated violence that gained him the nickname “Master Blaster” has faded as age and injuries take their toll.
Tendulkar is highly methodical – in 2003 he entered a Test match against Australia after a run of innings in which he had repeatedly been dismissed playing an off-side shot. He resolved to eradicate the shot from his repertoire and proceeded to score 241 not out, mostly on the legside, against one of the best bowling attacks ever assembled.
The sole criticism levelled against him as a cricketer is his supposed failure to play match-winning innings. Former Indian cricketer Kapil Dev complained last year: “Sachin has big records to his name but until he wins matches for India .... people will raise fingers at him.”
It is a contentious viewpoint, bitterly contested by Tendulkar’s hundreds of millions of fans. It also overlooks the extent to which he has transformed the identity of cricket in India, bringing professionalism and focus to a game still bearing the fusty stamp of amateurism. He channels a nation’s resurgent ambitions into a remorseless appetite for runs.
I congratulate him on India’s recent performances against world champions Australia (particularly a 320-run victory in the second test in Mohali) and he simply replies that “it’s been quite good”. He is unassuming in person and earnest, always keeping eye contact. “How you end is what matters, so we’d like to end on a high note,” he adds, referring to the fourth and final Test the following day (which India went on to win).
When I arrive at the Pride Hotel in Nagpur, in the dead centre of India, I wonder whether I’ve come to the right place. This slightly rundown but friendly establishment, opposite the airport, seems an odd place to be meeting one of cricket’s all-time great batsmen, Sachin Tendulkar, a former captain of his country and, since he overtook the West Indies’ Brian Lara last month, the man with the most runs in Test history – 12,273 and counting.
In India, where cricket is worshipped by people of every caste, colour and creed, Tendulkar is the symbol of something more than a game. Nine years ago in Mysore, southern India, one female fan was reportedly so distressed at the news that Tendulkar had a back injury and would not be able to play any more that she set herself on fire. “The way crowds respond to him, when he bats, when he scores, when he gets out – it’s close to deification,” says Indian historian and cricket writer Ramachandra Guha.
In fact, it is impossible for the 5ft 6in “Little Master” (aka “The Genius” and “Master Blaster”) to dine unmolested in public in India. Which is why, when he finishes training for India’s Test match against Australia in Nagpur the following day, I am ushered by two agents into the privacy of his hotel room.
Tendulkar greets me at the door looking tanned and fresh, wearing training shorts and a blue and white T-shirt with the name of the Indian team’s sponsor, Sahara, emblazoned on the chest. I step over the exercise ball and dumbbells on the floor and sit on a couch while he orders room service for us.
He asks for one portion of butter chicken and, as a vegetarian option, one dish of creamy corn and spinach, or “palak with some plain roti or naan bread and a portion of rice. Concerned that, as a foreigner, I might not share his taste for hot food, he reassures me that the chicken is “not that spicy”. “I ate this last night,” he explains.
Tendulkar’s familiar, slightly high-pitched voice is a constant presence on Indian television, endorsing everything from Royal Bank of Scotland to Aviva insurance. Some advertising industry insiders estimate he makes about $1.5m for each contract each year.
Yet despite this ubiquity and his status as a living deity, relatively little is known about this quiet 35-year-old from Mumbai, who, except when it involves standing on a cricket field, shuns the limelight. And, as he politely bats away my opening, rather gentle conversational deliveries, I can see why.
He becomes more animated when asked how it felt to become Test cricket’s greatest run scorer. The moment arrived after tea on a mid-October day during the first innings in Mohali, when he glided a ball off his bat to take three runs, then looked to the heavens and pumped his fists.
“It was a bit emotional,” he says, leaning forward, alluding to the fact that his father Ramesh Tendulkar, who died in 1999, was not there to see it. “I’m sure he would have been a proud man and the initial years of international cricket that I spent with my father were very important years for me. His support, his guidance, nothing to do with cricket but just in general the support and the direction that I got from him was extremely important.”
The late great Australian cricketer Don Bradman said that the modern player he most saw himself in was Tendulkar, like Bradman a methodical batsman. But cricket may be even more dominant in Tendulkar’s life than it was for Bradman, whom he met in 1998 on the occasion of “the Don’s” 90th birthday at his house in Adelaide. Outside, the world is absorbed in the news that Barack Obama has won the US presidential election but Tendulkar says he has been too busy preparing for tomorrow’s match and has not heard about it yet. Such focus goes with the territory for top-class sportsmen but with Tendulkar the immersion is possibly deeper.
He was born in Mumbai (then Bombay) on April 24 1973, the youngest of four children. His father, a novelist, aware that his son had prodigious talent as a cricketer, put him in a Mumbai high school known for its emphasis on cricket. It was also around this time that the boy met his coach and mentor Ramakant Achrekar, who believed that “match practice” – training by playing full games – was the best way to forge a young cricketer. He had the young Tendulkar play more than 200 matches a year. He would finish school then go to the Shivaji Park ground in central Mumbai in time to play the second innings of a match. After that he would move on to the nets to practise batting until he was ready to drop.
Sometimes, the coach would load the area with more than 30 fielders and then give Tendulkar one rupee if he could survive the session without being caught out. Once that was over, he had to run around Shivaji Park – about five times the size of the Melbourne Cricket Ground – in full gear with bat and pads. “I was always up for batting but I didn’t enjoy running in particular,” Tendulkar recalls.
The training paid off. He made his first appearance for India against Pakistan in Karachi in November 1989, aged 16, and the following summer struck his first Test century against England. He quickly became a hero round the world but particularly at home. According to Ramachandra Guha, Tendulkar’s extreme popularity was in part due to the fact that India was undergoing an internal crisis in the 1990s, with communal strife at home between Muslims and Hindus and enduring economic difficulties. “Tendulkar became a sort of one-man band aid for the Indian psyche,” Guha says. It was around this time that there was an explosion in the number of infant “Sachins” born in the country.
In today’s more confident India, Guha believes the player is more like an elder statesman. Though Tendulkar is typically rather more low-key when asked about his national status or celebrity. “If you do well people tend to put their hands together and appreciate what you’re doing whether that’s right or wrong or whatever,” he says, “so eventually you’ve got to judge for yourself what is right or wrong, then you [need to] have a solid team and in my case, my family’s played that role.”
The doorbell rings and lunch arrives on a wheeled table. One of the agents urges us to eat it straight away rather than letting it get cold. I load up my plate with the butter chicken and some naan, while Tendulkar scoops some rice, butter chicken and palak on to his plate. Despite training this morning, he doesn’t take a big helping. He talks more about the lessons he learnt from his father. These were not really about cricket but about the importance of being a decent person.
“People will obviously remember you as a cricketer but the ones who’ve actually interacted with you and spent some time with you, they will remember more about you as a person,” he says. “This is one thing that will be permanently with you – cricket at some stage is going to have to end.”
It is a rule he has tried to live by, keeping his personal life private and emerging with a clean name from troubles such as a match-fixing scandal that swept world cricket in the late 1990s (when he was Indian captain) and sullied the reputation of many other Indian players.
How has he managed to avoid more intense scrutiny? Partly by staying away from the parties and Bollywood lifestyle that attracts many younger Indian cricketers. “Wherever it’s noisy I don’t go there, it’s not my lifestyle,” he says, adding that he prefers to spend time with his wife Anjali and children Sara, 11 and Arjun, nine, who he says has already “picked up a bat and loves his cricket”. “I’m not a party person,” he adds rather needlessly.
It is a message he tries to pass on to junior members of the India team. In this celebrity-mad country, where people build shrines to their favourite actors, the pressure of fame is capable of quickly extinguishing a budding cricketing talent.
“It’s also up to an individual not to get carried away and not to forget why the rest of the things are happening,” he says, referring to the fame and glory. “They’re happening because of cricket. Once you start giving more importance to the other things, gradually cricket starts taking a back seat. That’s where the careers get stagnated.”
. . .
I suggest celebrity endorsements could also be distracting for players but unsurprisingly, given that he has eight contracts to endorse products, he disagrees, saying that these each only take a couple of days or even just a few hours of his time each year. “As long as it’s not affecting your game, I don’t see anything wrong in it,” he says, looking vaguely annoyed for the only time during lunch.
He also dismisses my suggestion that an innovation such as The Indian Premier League, a competition based on the shortened 20-over form of the game, which has attracted foreign stars, around $2bn in television rights, and provided a lucrative pay day for players – could erode cricketers’ enthusiasm for playing for their countries. He prefers to emphasise the opportunities the IPL has given young Indian players to play with greats such as Shane Warne, the Australian spin bowler who captained the Rajasthani Royals to victory in the inaugural IPL this year. Tendulkar himself leads the Mumbai Indians, the team of his home city.
We talk about returning to the table for second helpings but get distracted by the subject of his retirement. Or non-retirement. Tendulkar has had some trouble with injury this year. Does he think of retiring? “No I haven’t to be honest. I don’t need to think about that right now and if I start feeling like that I’d immediately know it’s time to move away from the game.”
Instead, he is ready to take part in another series, this time two Tests against England in December. Though the news that he will be rested from at least some of the seven preceding one-day internationals, which started on Friday, is a reminder that, at 35, it is wise for him to choose his battles a bit more selectively.
As we wrap up, I try to draw him one more time on issues outside sport. As the favourite son of the state of Maharashtra, what does he think of a growing political movement among rightwing Hindu activists there against immigrants from other parts of India settling in the state capital Mumbai?
He seems to start to answer the question before thinking better of it and retreating quickly back to familiar ground. “There are different people who’re actually based in Mumbai ... to be honest I’ve not followed politics much. It’s never been my interest. I’m more of a ... I follow different sports. I follow Formula One, tennis. I’ve always been a big fan of John McEnroe, after that Sampras and then Federer, Federer would probably top the list.”
Aware this is as far as he is ever likely to go, I have one final question. What, in his opinion, defines a great batsman?
Back on less tricky territory, he is a little more expansive. “I feel sometimes that calling someone great ... that terminology is used very loosely. According to me, when you call someone great, that guy should have spent more than 10 years at an international level,” he says.
“It’s natural to get excited,” he continues, “but I think there are two sides to a coin: on one side, somebody just showing promise and, on the other side, also delivering – and when they match, they can go hand in hand for a number of years. That’s when the player is remembered for years to come.”
The supreme modern batsman
There are more flamboyant batsmen. Batsmen with marginally higher batting averages, writes Ludovic HunterTilney. Batsmen who are more destructive or harder to dislodge. Yet Sachin Tendulkar stands alone as the supreme modern batsman.
Tendulkar is widely considered the heir to Don Bradman, the best ever batsman. The flame was handed down by Bradman himself who, observing the Indian in 1996, was struck by an uncanny similarity of styles. “His compactness, technique, stroke production, it all seemed to gel,” Bradman said.
Another Australian legend, the leg-spinner Shane Warne, confirmed Tendulkar’s coronation when he judged the “Little Master” to be the best batsman he had bowled against. The next best, Brian Lara, came a distant second in Warne’s view.
Tendulkar has less flair than Lara, whom he last month overhauled as the leading run scorer in Test history, but a stronger all-round game. Short and squat, he has extraordinary balance and is nimble on his feet – Warne joked that he suffered nightmares of Tendulkar skipping down the pitch towards him to clatter the ball back over the bowler’s head.
The Indian has scored runs against all forms of bowling on all types of pitches. He can bat aggressively or defensively as the situation demands; his range of strokeplay is unequalled.
He has scored more Test centuries (40) and more one-day international centuries (42) than anyone else.
He plays shots with surgical precision, not so much demolishing a bowling attack as dismantling it with deft flicks and powerful strikes. The calculated violence that gained him the nickname “Master Blaster” has faded as age and injuries take their toll.
Tendulkar is highly methodical – in 2003 he entered a Test match against Australia after a run of innings in which he had repeatedly been dismissed playing an off-side shot. He resolved to eradicate the shot from his repertoire and proceeded to score 241 not out, mostly on the legside, against one of the best bowling attacks ever assembled.
The sole criticism levelled against him as a cricketer is his supposed failure to play match-winning innings. Former Indian cricketer Kapil Dev complained last year: “Sachin has big records to his name but until he wins matches for India .... people will raise fingers at him.”
It is a contentious viewpoint, bitterly contested by Tendulkar’s hundreds of millions of fans. It also overlooks the extent to which he has transformed the identity of cricket in India, bringing professionalism and focus to a game still bearing the fusty stamp of amateurism. He channels a nation’s resurgent ambitions into a remorseless appetite for runs.
I congratulate him on India’s recent performances against world champions Australia (particularly a 320-run victory in the second test in Mohali) and he simply replies that “it’s been quite good”. He is unassuming in person and earnest, always keeping eye contact. “How you end is what matters, so we’d like to end on a high note,” he adds, referring to the fourth and final Test the following day (which India went on to win).
Mktg - In Conversation with Tom Peters
Stefan Stern
Outside the markets were tumbling, traders were panicking, and the end of the world seemed nigh. But inside, seated quietly in his favourite French restaurant, Tom Peters was calmness itself. This is not how most people would picture the world’s most famous management guru. Mention Peters to business types and they will recall spectacular (and noisy) stage presentations, filled with loud assertions, garish PowerPoint slides and rarely a pause for breath.
Roussillon in Pimlico, central London – Peters’ choice – provided a weirdly tranquil setting for a discussion about management and the meaning of life when disaster appeared imminent. When he is in London, the 66-year-old likes to eat here. Not only is the food good but – full disclosure – the owner is a distant relative of his wife’s. We were certainly well looked after, given a large table that sat proudly in the restaurant’s attractive bay window.
Peters looked at home in this elegant setting. He was wearing a tweedy jacket, blue shirt, yellow tie and charcoal slacks. His hair was greyer than it was the last time I had seen him but, then, so was mine. The only obvious concession to age was a pair of spectacles that remained perched on his nose throughout our chat.
He was in London for a rare non-work trip – a family reunion. His mother-in-law had been born in England but had emigrated with her new American serviceman husband after the war. Sixty years on, various siblings had gathered on the Isle of Wight off the south coast over the preceding weekend but now the scene had moved on to London.
We had been studying the menu for only a few moments when the first amuse-bouche arrived: a dainty construction involving smoked eel and beetroot with a mustard sauce. Peters, of course, possesses one of the most amusing bouches there is, and my battle this lunchtime was to try and elicit answers to a few specific questions without getting sidetracked by too many of the nice old stories.
The mad days of rampant globetrotting are now behind him but Peters is still in demand at home and abroad. Overall he is a bit less busy – by choice, he says – than he used to be. There is now more time to be spent with his artist wife on his farm in Vermont, clearing brush, blogging, and marvelling at the continuing idiocies of management around the world.
Twenty-six years have passed since the publication of In Search of Excellence, the book he wrote with his fellow former McKinsey consultant Robert Waterman. When people think about the great management blockbusters, this is the text they have in mind. Search made the business book news. It has sold more than 10m copies and is still the model to which many business authors – whether they realise it or not – aspire. It also launched Peters on the path to global, jet-setting guru-dom, a status that has left him open to mockery and criticism.
Few,however, have criticised what he does for a living as ferociously as Peters himself. “I say to people, ‘You got a bad deal, paying money to see me,’” he tells me. “I have utterly nothing new to say. I am simply going to remind you of what you’ve known since the age of 22 and in the heat of battle you forgot. You’d have to be one of those television preachers to believe that you’re going to work with a group of 500 people and change their lives. First of all, most of them agree with you. You’re not going to pay £1,000 [a head] to go and see someone if you think the guy’s a jerk.
“In a room of 500 managers, there are going to be four who are on the verge of doing something really interesting, whether inside or outside the company, and you simply give them the will. In American football terms, they are five yards short and you push them over the line. To claim anything more than that is grotesque egocentrism,” he says.
Time to order. There may be a crisis in the outside world but there’s a crisis at Roussillon too: no foie gras. But it has been replaced by equally delicious sweetbreads, so I take that as my starter, followed by pigeon. Peters opts for delicate ricotta gnocchi first, with red mullet as a main.
And to drink? Just water for Mr P. “I don’t drink now. It’s not an AA thing, it’s a getting old thing,” he says. “Being on the road a lot – there’s nothing worse than drinking by yourself. I didn’t always have the willpower I should have had. I was sitting in too many hotels and raiding the mini-bars. I stopped about four to five years ago and I’ve never looked back.” So, just me then: a glass of pinot grigio.
Fortified, I give him my best shot. Is management getting harder? “No,” he replies firmly – and in defiance of the conventional wisdom. But what about all that new technology, the end of deference, the increased pace of life, and the heightened expectations of employees? Doesn’t that all make management harder?
On the whole, Peters thinks not. We exaggerate the extent of change, he feels. It is the arrogance of modernity to believe that we face unique and unprecedented challenges. What people say now about the internet they used to say about the railways, the telegraph, the radio ...
“You know, I get paid large sums of money for running around and saying that the past was simple and the current generation faces immeasurable difficulties,” Peters says. “But my mom died two years ago a month short of her 96th birthday, which means that she lived through the arrival of long-distance telephones, automobiles, airplanes, jet airplanes, a man on the Moon, the great Depression, world war one, world war two, the cold war, Vietnam, Iraq one, Iraq two, and I have the nerve to stand in front of people and say, ‘Life is tough!’ So, yes, I think we way overdo it.”
The reference to warfare is significant because Peters himself saw active service in Vietnam. He talks about it reluctantly – it takes several (impertinent? distasteful?) nudges and a degree of patience on my part to get him to describe it.
“I was there as a combat engineer – so we weren’t trying to kill Vietnamese,” he says. “We were trying to build bridges for the Marine Corps who would go out to kill Vietnamese. I’m not saying it wasn’t a bloody affair, I’m just saying I was one step removed.”
I ask if he ever came under fire. This question produces a slightly disappointed look. Perhaps you just never ask war veterans about what they have seen and done? “Never confuse us with a marine infantry battalion but, yes, we routinely came under fire. People shot mortars at us, we had some people killed in our battalion – it was a war zone, and there was no doubt about that,” Peters explains.
Vietnam gave Peters something else: a crucial insight into man management. “I had two tours of duty, two commanding officers. I’m not exaggerating but I really spent the next 40 years of my life writing about Dick Anderson. He was a guy who believed that young men aged 23 needed a chance to express themselves. He believed that [writing] reports was incidental but that building stuff for your customers, typically the Marine Corps, was what you were there for.
“On tour two I had a naval academy graduate who would rather have produced an excellent report about things we hadn’t built than a lousy report about things we had. One guy wanted you to do something, the other guy wanted you to write reports. It was the best management training that one could possibly have had. Do what Dick did and avoid what Dan did – there’s the book ... it’s a very short book!”
The US Navy funded Peters through his postgraduate years at Stanford in California. He returned there after Vietnam to complete an MBA and PhD in decision science and organisational behaviour, leaving his home city (Baltimore) far behind. He only came back east to settle in Vermont after two decades on the west coast.
After Stanford, Peters spent several years working in McKinsey’s San Francisco office in the 1970s, developing the ideas that were to form the guts of In Search of Excellence. But the book did not have an easy birth. Its breezy tone did not play well with earnest colleagues at The Firm, as its authors were to find out. “There’s no way to describe the viciousness with which Bob and I were attacked within McKinsey,” Peters says. “This was not the Holy Writ. It was the intellectual challenge to what McKinsey stood for at the time.
“To some extent what Waterman and I were looking at was the business of ‘execution’, and execution is fundamentally a management thing. We were saying, ‘If you can execute well, it doesn’t matter what the hell the strategy is. The doing is what counts.’ But this was when ‘strategy’ was at its apex. We were pushing back. We were just royally pissed off by it all.”
Peters has been criticised for the way he assembled data for the book. He even fuelled the controversy himself a few years ago in a free-wheeling interview for a business magazine. But today he is clear and concise. “We were looking for companies that worked,” he says. “We went to Chris Lorenz [the FT’s management writer of the time] and McKinsey partners, collected 100, sieved it, and 20 came out.”
It was not hard science. But what in management is? “It’s mostly luck, for God’s sakes!” Peters says. He feels the same way about this mega blockbuster that made his name: “A decent book with perfect timing” is his verdict. “There’s not an ounce of false humility in that.”
We both round off the meal with peach parfait and coffee. It is now nearly 3pm. Time for complete candour about the secret of his success. “Look,” Peters confesses, “I was born in 1942, in the US. I was protestant. I had relatively intelligent parents and I was white – that’s the first 99.9 per cent of it. Hard work may have done the rest.”
There is no secret: try hard, then try again. “Are you throwing enough spaghetti at the wall so that some of it will stick? Whoever does the most stuff has the highest chance of doing well. It’s about getting stuff done.
“I had a neighbour who won a Nobel prize for his work on kidneys – he carried out the first effective transplant. I once asked him how he’d done it. ‘We did the most operations,’ he told me. At any point in time there are 10 people up there – one of them does the most.”
You see, if you just keep at it for long enough something good is bound to emerge. It’s a bit like having a long, amiable chat over lunch with Tom Peters.
A few other 20th century management gurus worth knowing about
Peter Drucker (1909-2005): the original and best. He said most of it, really, over seven productive decades. He also said people only called him a guru because they weren’t sure how to spell “charlatan”.
Russ Ackoff (born 1919): former Wharton professor who rejects much business school orthodoxy with his advocacy of “systems thinking”. Worries that managers waste too much time “trying to do the wrong thing righter”.
Charles Handy (1932): Irish-born former Shell trainee, Handy is the most significant management thinker to have emerged from the British Isles in the postwar years. Co-founder of London Business School and author of more than a dozen books.
CK Prahalad (1941): professor at the University of Michigan, continues to be one of the most original and clear-thinking of all management commentators. His analysis of “the fortune at the bottom of the pyramid” (ie in the developing world) has been hugely influential.
Gary Hamel (1954): fighting the good fight for innovation and for management that is fit for the 21st century, Hamel is a maverick figure and a risk-taker. His “management innovation lab”, based at London Business School, is an attempt to help businesses find new ways of working.
Outside the markets were tumbling, traders were panicking, and the end of the world seemed nigh. But inside, seated quietly in his favourite French restaurant, Tom Peters was calmness itself. This is not how most people would picture the world’s most famous management guru. Mention Peters to business types and they will recall spectacular (and noisy) stage presentations, filled with loud assertions, garish PowerPoint slides and rarely a pause for breath.
Roussillon in Pimlico, central London – Peters’ choice – provided a weirdly tranquil setting for a discussion about management and the meaning of life when disaster appeared imminent. When he is in London, the 66-year-old likes to eat here. Not only is the food good but – full disclosure – the owner is a distant relative of his wife’s. We were certainly well looked after, given a large table that sat proudly in the restaurant’s attractive bay window.
Peters looked at home in this elegant setting. He was wearing a tweedy jacket, blue shirt, yellow tie and charcoal slacks. His hair was greyer than it was the last time I had seen him but, then, so was mine. The only obvious concession to age was a pair of spectacles that remained perched on his nose throughout our chat.
He was in London for a rare non-work trip – a family reunion. His mother-in-law had been born in England but had emigrated with her new American serviceman husband after the war. Sixty years on, various siblings had gathered on the Isle of Wight off the south coast over the preceding weekend but now the scene had moved on to London.
We had been studying the menu for only a few moments when the first amuse-bouche arrived: a dainty construction involving smoked eel and beetroot with a mustard sauce. Peters, of course, possesses one of the most amusing bouches there is, and my battle this lunchtime was to try and elicit answers to a few specific questions without getting sidetracked by too many of the nice old stories.
The mad days of rampant globetrotting are now behind him but Peters is still in demand at home and abroad. Overall he is a bit less busy – by choice, he says – than he used to be. There is now more time to be spent with his artist wife on his farm in Vermont, clearing brush, blogging, and marvelling at the continuing idiocies of management around the world.
Twenty-six years have passed since the publication of In Search of Excellence, the book he wrote with his fellow former McKinsey consultant Robert Waterman. When people think about the great management blockbusters, this is the text they have in mind. Search made the business book news. It has sold more than 10m copies and is still the model to which many business authors – whether they realise it or not – aspire. It also launched Peters on the path to global, jet-setting guru-dom, a status that has left him open to mockery and criticism.
Few,however, have criticised what he does for a living as ferociously as Peters himself. “I say to people, ‘You got a bad deal, paying money to see me,’” he tells me. “I have utterly nothing new to say. I am simply going to remind you of what you’ve known since the age of 22 and in the heat of battle you forgot. You’d have to be one of those television preachers to believe that you’re going to work with a group of 500 people and change their lives. First of all, most of them agree with you. You’re not going to pay £1,000 [a head] to go and see someone if you think the guy’s a jerk.
“In a room of 500 managers, there are going to be four who are on the verge of doing something really interesting, whether inside or outside the company, and you simply give them the will. In American football terms, they are five yards short and you push them over the line. To claim anything more than that is grotesque egocentrism,” he says.
Time to order. There may be a crisis in the outside world but there’s a crisis at Roussillon too: no foie gras. But it has been replaced by equally delicious sweetbreads, so I take that as my starter, followed by pigeon. Peters opts for delicate ricotta gnocchi first, with red mullet as a main.
And to drink? Just water for Mr P. “I don’t drink now. It’s not an AA thing, it’s a getting old thing,” he says. “Being on the road a lot – there’s nothing worse than drinking by yourself. I didn’t always have the willpower I should have had. I was sitting in too many hotels and raiding the mini-bars. I stopped about four to five years ago and I’ve never looked back.” So, just me then: a glass of pinot grigio.
Fortified, I give him my best shot. Is management getting harder? “No,” he replies firmly – and in defiance of the conventional wisdom. But what about all that new technology, the end of deference, the increased pace of life, and the heightened expectations of employees? Doesn’t that all make management harder?
On the whole, Peters thinks not. We exaggerate the extent of change, he feels. It is the arrogance of modernity to believe that we face unique and unprecedented challenges. What people say now about the internet they used to say about the railways, the telegraph, the radio ...
“You know, I get paid large sums of money for running around and saying that the past was simple and the current generation faces immeasurable difficulties,” Peters says. “But my mom died two years ago a month short of her 96th birthday, which means that she lived through the arrival of long-distance telephones, automobiles, airplanes, jet airplanes, a man on the Moon, the great Depression, world war one, world war two, the cold war, Vietnam, Iraq one, Iraq two, and I have the nerve to stand in front of people and say, ‘Life is tough!’ So, yes, I think we way overdo it.”
The reference to warfare is significant because Peters himself saw active service in Vietnam. He talks about it reluctantly – it takes several (impertinent? distasteful?) nudges and a degree of patience on my part to get him to describe it.
“I was there as a combat engineer – so we weren’t trying to kill Vietnamese,” he says. “We were trying to build bridges for the Marine Corps who would go out to kill Vietnamese. I’m not saying it wasn’t a bloody affair, I’m just saying I was one step removed.”
I ask if he ever came under fire. This question produces a slightly disappointed look. Perhaps you just never ask war veterans about what they have seen and done? “Never confuse us with a marine infantry battalion but, yes, we routinely came under fire. People shot mortars at us, we had some people killed in our battalion – it was a war zone, and there was no doubt about that,” Peters explains.
Vietnam gave Peters something else: a crucial insight into man management. “I had two tours of duty, two commanding officers. I’m not exaggerating but I really spent the next 40 years of my life writing about Dick Anderson. He was a guy who believed that young men aged 23 needed a chance to express themselves. He believed that [writing] reports was incidental but that building stuff for your customers, typically the Marine Corps, was what you were there for.
“On tour two I had a naval academy graduate who would rather have produced an excellent report about things we hadn’t built than a lousy report about things we had. One guy wanted you to do something, the other guy wanted you to write reports. It was the best management training that one could possibly have had. Do what Dick did and avoid what Dan did – there’s the book ... it’s a very short book!”
The US Navy funded Peters through his postgraduate years at Stanford in California. He returned there after Vietnam to complete an MBA and PhD in decision science and organisational behaviour, leaving his home city (Baltimore) far behind. He only came back east to settle in Vermont after two decades on the west coast.
After Stanford, Peters spent several years working in McKinsey’s San Francisco office in the 1970s, developing the ideas that were to form the guts of In Search of Excellence. But the book did not have an easy birth. Its breezy tone did not play well with earnest colleagues at The Firm, as its authors were to find out. “There’s no way to describe the viciousness with which Bob and I were attacked within McKinsey,” Peters says. “This was not the Holy Writ. It was the intellectual challenge to what McKinsey stood for at the time.
“To some extent what Waterman and I were looking at was the business of ‘execution’, and execution is fundamentally a management thing. We were saying, ‘If you can execute well, it doesn’t matter what the hell the strategy is. The doing is what counts.’ But this was when ‘strategy’ was at its apex. We were pushing back. We were just royally pissed off by it all.”
Peters has been criticised for the way he assembled data for the book. He even fuelled the controversy himself a few years ago in a free-wheeling interview for a business magazine. But today he is clear and concise. “We were looking for companies that worked,” he says. “We went to Chris Lorenz [the FT’s management writer of the time] and McKinsey partners, collected 100, sieved it, and 20 came out.”
It was not hard science. But what in management is? “It’s mostly luck, for God’s sakes!” Peters says. He feels the same way about this mega blockbuster that made his name: “A decent book with perfect timing” is his verdict. “There’s not an ounce of false humility in that.”
We both round off the meal with peach parfait and coffee. It is now nearly 3pm. Time for complete candour about the secret of his success. “Look,” Peters confesses, “I was born in 1942, in the US. I was protestant. I had relatively intelligent parents and I was white – that’s the first 99.9 per cent of it. Hard work may have done the rest.”
There is no secret: try hard, then try again. “Are you throwing enough spaghetti at the wall so that some of it will stick? Whoever does the most stuff has the highest chance of doing well. It’s about getting stuff done.
“I had a neighbour who won a Nobel prize for his work on kidneys – he carried out the first effective transplant. I once asked him how he’d done it. ‘We did the most operations,’ he told me. At any point in time there are 10 people up there – one of them does the most.”
You see, if you just keep at it for long enough something good is bound to emerge. It’s a bit like having a long, amiable chat over lunch with Tom Peters.
A few other 20th century management gurus worth knowing about
Peter Drucker (1909-2005): the original and best. He said most of it, really, over seven productive decades. He also said people only called him a guru because they weren’t sure how to spell “charlatan”.
Russ Ackoff (born 1919): former Wharton professor who rejects much business school orthodoxy with his advocacy of “systems thinking”. Worries that managers waste too much time “trying to do the wrong thing righter”.
Charles Handy (1932): Irish-born former Shell trainee, Handy is the most significant management thinker to have emerged from the British Isles in the postwar years. Co-founder of London Business School and author of more than a dozen books.
CK Prahalad (1941): professor at the University of Michigan, continues to be one of the most original and clear-thinking of all management commentators. His analysis of “the fortune at the bottom of the pyramid” (ie in the developing world) has been hugely influential.
Gary Hamel (1954): fighting the good fight for innovation and for management that is fit for the 21st century, Hamel is a maverick figure and a risk-taker. His “management innovation lab”, based at London Business School, is an attempt to help businesses find new ways of working.
Tech - MS adds sweetener to its ZunePass Music Subscription service
Peter Burrows
Just when it was starting to look really dire for music subscriptions, Microsoft is making some really smart tweaks to its ZunePass offering that just might get more people to give this model a shot. Starting today, Zune customers who fork over the $15 a month for unlimited streaming of music will also be able to download ten DRM-free songs at no extra charge. In effect, Microsoft and the major labels are throwing in an extra $10 in downloads, so the cost of streaming the other four million or so songs available costs just $5 a month. Not bad, and a decent insurance policy if you decide to drop the subscription in the future. This should make some of you penny-foolish music fans out there (or guilt-ridden illegal file-sharers) at least give a serious thought to trying an all-you-can-eat subscription.
The backdrop here, of course, is that subscriptions have been a commercial failure. With little subscriber growth, Napster sold out to Best Buy and it may be time to put Rhapsody on deathwatch. It’s not that the service is such an economic dog, but it’s owned by Real—whose once-powerful digital format has clearly lost the war. As a result, Real has a market cap of just $460 million. This for a company with $406 million in cash. The fact that someone hasn’t already snapped up the company for the $60 to $80 million it might cost, suggests that no one is interested.
And yet, I have no doubt that in a decade, most of you will one way or another be paying a monthly fee to tap into the great jukebox in the sky. Maybe it will be via your smart phone service plan. Maybe it will because Apple has decided to bake it into the price of its latest iPod or iPhone or iWhatever, or maybe just offer a $30 a month option for those who want free rein within iTunes. But it’ll happen. There is simply no doubt that if you love music—not listening to the same old tracks in your CD collection, but listening to and discovering whatever you want whenever you want it—that this is the way to go. At the right price, there’d be no reason to mess with maintaining thousands of downloads, or putting up with ads on free ad-supported sites.
More after the break.
What’s nice is that Microsoft and the labels are no longer just hoping folks will figure this out. Zune general manager of marketing Chris Stephenson says the company did extensive market research a year ago. While consumers were fine with the idea of paying a monthly fee to rent music, just as they do with cable TV or Netflix, they just couldn’t get past the idea that they would no longer own anything. Of 32 potential features they tested, the idea of giving away free ten free downloads to put in that library came in 2nd (behind only free TV). “The majority of people are still focused on the idea of ownership. The ten tracks is an effort to shift the value equation to get them into the subscription model,” says Stephenson.
The labels haven’t totally lost faith in music subscriptions, but realize the model needs some CPR. All four of the majors are participating in Microsoft's giveaway program (the labels and Microsoft are sharing the cost). Having seen subscription growth rates plateau, “we realized that this model just wasn’t on track to go mass market. So we’re trying to realign the model to give music fans what they want,” says Rio Caraeff, head of digital music for Universal Music Group. That means giving them some ownership, along with the streaming. “We’re not yet in a place where music fans value access more than possession…We need to bring more ownership of music into the subscription model.”
At least for now. Over the long haul, both Stephenson and Caraeff think consumers will come to see that ownership is over-rated. Once they get used to listening to songs whenever they want to, they'll stop worrying about actually owning the bits. But Caraeff says the transition will only happen if subscriptions get subsumed inside other contracts that millions of consumers are willing to pay for. It would be as unnoticed and unexamined as the voicemail charge on your phone bill, or the roaming charge or photo-sharing charge on your cellular service deal. With deals that bring in that kind of distribution—say, five to ten million potential customers--the labels might accept just $5 or $6 a month per consumer, a third of the $15 going rate. Caraeff won't give specific numbers, but says that "We’re very motivated to bring the price down, as we get volume commitments.”
Getting the deals is only part of the problem. There's also that little problem of execution. A year ago, I wrote a story about how subscriptions might be ready for prime-time. Rhapsody, significantly, had inked a deal with Verizon. So far, not much progress there. And Microsoft will need to do a much better job of marketing the ZunePass service than it has so far; even its new ads make no mention of it (though future spots will, I'm told).
Even then, it will be hard to make much headway so long as iPods and iPhones dominate the portable music device business. “We’re very happy with Microsoft as a partner,” says Caraeff. “They’re taking the long view. The competitor they’re up against is so entrenched. Rather than try to go head to head, they’ve tried to innovate on all the things that [Apple] is not necessarily doing. Ultimately, we want there to be choice for consumers and lots of competition.”
As such, it’s time for my frequent plea for Apple to end its download myopia, and add a section to iTunes for people who are happy to pay a flat rate for full access to its library of music. Call it a subscription service, or an iMusicPass or whatever you want. But it’s going to happen one of these MacWorlds. Why not this one?
Just when it was starting to look really dire for music subscriptions, Microsoft is making some really smart tweaks to its ZunePass offering that just might get more people to give this model a shot. Starting today, Zune customers who fork over the $15 a month for unlimited streaming of music will also be able to download ten DRM-free songs at no extra charge. In effect, Microsoft and the major labels are throwing in an extra $10 in downloads, so the cost of streaming the other four million or so songs available costs just $5 a month. Not bad, and a decent insurance policy if you decide to drop the subscription in the future. This should make some of you penny-foolish music fans out there (or guilt-ridden illegal file-sharers) at least give a serious thought to trying an all-you-can-eat subscription.
The backdrop here, of course, is that subscriptions have been a commercial failure. With little subscriber growth, Napster sold out to Best Buy and it may be time to put Rhapsody on deathwatch. It’s not that the service is such an economic dog, but it’s owned by Real—whose once-powerful digital format has clearly lost the war. As a result, Real has a market cap of just $460 million. This for a company with $406 million in cash. The fact that someone hasn’t already snapped up the company for the $60 to $80 million it might cost, suggests that no one is interested.
And yet, I have no doubt that in a decade, most of you will one way or another be paying a monthly fee to tap into the great jukebox in the sky. Maybe it will be via your smart phone service plan. Maybe it will because Apple has decided to bake it into the price of its latest iPod or iPhone or iWhatever, or maybe just offer a $30 a month option for those who want free rein within iTunes. But it’ll happen. There is simply no doubt that if you love music—not listening to the same old tracks in your CD collection, but listening to and discovering whatever you want whenever you want it—that this is the way to go. At the right price, there’d be no reason to mess with maintaining thousands of downloads, or putting up with ads on free ad-supported sites.
More after the break.
What’s nice is that Microsoft and the labels are no longer just hoping folks will figure this out. Zune general manager of marketing Chris Stephenson says the company did extensive market research a year ago. While consumers were fine with the idea of paying a monthly fee to rent music, just as they do with cable TV or Netflix, they just couldn’t get past the idea that they would no longer own anything. Of 32 potential features they tested, the idea of giving away free ten free downloads to put in that library came in 2nd (behind only free TV). “The majority of people are still focused on the idea of ownership. The ten tracks is an effort to shift the value equation to get them into the subscription model,” says Stephenson.
The labels haven’t totally lost faith in music subscriptions, but realize the model needs some CPR. All four of the majors are participating in Microsoft's giveaway program (the labels and Microsoft are sharing the cost). Having seen subscription growth rates plateau, “we realized that this model just wasn’t on track to go mass market. So we’re trying to realign the model to give music fans what they want,” says Rio Caraeff, head of digital music for Universal Music Group. That means giving them some ownership, along with the streaming. “We’re not yet in a place where music fans value access more than possession…We need to bring more ownership of music into the subscription model.”
At least for now. Over the long haul, both Stephenson and Caraeff think consumers will come to see that ownership is over-rated. Once they get used to listening to songs whenever they want to, they'll stop worrying about actually owning the bits. But Caraeff says the transition will only happen if subscriptions get subsumed inside other contracts that millions of consumers are willing to pay for. It would be as unnoticed and unexamined as the voicemail charge on your phone bill, or the roaming charge or photo-sharing charge on your cellular service deal. With deals that bring in that kind of distribution—say, five to ten million potential customers--the labels might accept just $5 or $6 a month per consumer, a third of the $15 going rate. Caraeff won't give specific numbers, but says that "We’re very motivated to bring the price down, as we get volume commitments.”
Getting the deals is only part of the problem. There's also that little problem of execution. A year ago, I wrote a story about how subscriptions might be ready for prime-time. Rhapsody, significantly, had inked a deal with Verizon. So far, not much progress there. And Microsoft will need to do a much better job of marketing the ZunePass service than it has so far; even its new ads make no mention of it (though future spots will, I'm told).
Even then, it will be hard to make much headway so long as iPods and iPhones dominate the portable music device business. “We’re very happy with Microsoft as a partner,” says Caraeff. “They’re taking the long view. The competitor they’re up against is so entrenched. Rather than try to go head to head, they’ve tried to innovate on all the things that [Apple] is not necessarily doing. Ultimately, we want there to be choice for consumers and lots of competition.”
As such, it’s time for my frequent plea for Apple to end its download myopia, and add a section to iTunes for people who are happy to pay a flat rate for full access to its library of music. Call it a subscription service, or an iMusicPass or whatever you want. But it’s going to happen one of these MacWorlds. Why not this one?
Tech - MS,Google & Cloud Computing
Peter Burrows
Corporate America is increasingly leaving computing to the experts. Why go to the trouble and expense of building and managing complex systems to handle your spiraling data-crunching needs when another company can do it for you? And who better, faster, or cheaper than Google (GOOG)?
That's just the kind of conventional wisdom Debra Chrapaty wants to change. As Microsoft's (MSFT) vice-president for Global Foundation Services, Chrapaty wants to prove that her company is capable of running the sprawling data centers to offer software doled out via the Internet. The company is especially keen to handle the ubiquitous Microsoft software that consumers and corporations have been running for themselves for the past few decades. "Google has done a great job of hyping" its prowess, Chrapaty says. "But we're neck and neck with them."
And if Microsoft isn't there yet, it may be soon. Chrapaty, who's in charge of Microsoft's data centers, is stepping up a multibillion-dollar building binge, BusinessWeek has learned. Her group is embarking on a plan to build in the coming years some 20 supersize data centers that can cost as much as $1 billion apiece, according to a person familiar with Microsoft's plans. "We're going to reinvent the infrastructure of our industry," Chrapaty says. She declines to discuss specifics of the plan.
Google's Got a Head Start
The moves are designed to support what Microsoft describes as the biggest strategic shift since it first targeted the Internet in the mid-1990s. The company has unveiled a range of offerings in recent weeks that embrace what's come to be known as "cloud computing." There's Azure, a new operating system that lets companies run software either on their own computers or as a service delivered via the Internet by Microsoft. There's a new Windows Live offering that lets consumers store, retrieve, and share photos, blogs, and other Web content with friends. And Microsoft has announced an Internet version of its Exchange corporate e-mail, and plans to do the same with its Office software. If Chrapaty's group can't handle the load, many customers may decide to forgo Microsoft's products in favor of rival cloud computing services.
Traditionally, Google has positioned itself as the leader. "We've been designing infrastructure for the cloud for years," says Matt Glotzbach, a manager who works on Google Apps for corporations. "We've got a pretty big head start vs. a company like Microsoft."
Tapping into Cheap Energy
Still, Microsoft can hold its own, says Gartner (IT) analyst David Cappuccio. "Microsoft may certainly be just as good" in areas such as energy efficiency, Cappuccio says. And amid the global economic malaise, cash-rich Microsoft and Google are alone in being able to "throw several billion dollars into something like this," says Matt Rosoff, an analyst at Directions on Microsoft.
Microsoft's bold data center strategy dates back at least five years. Before that, the company relied heavily on other hosting companies to do the work. Soon after the arrival of Chrapaty, a former chief technology officer for the NBA, Microsoft decided to bring the job in-house. When in 2005 Ray Ozzie persuaded Microsoft founder Bill Gates and CEO Steve Ballmer to make the move to online delivery of software in 2005, running data centers became even more important. Chrapaty began bringing in industry luminaries from companies including Hewlett-Packard (HPQ) and Intel (INTC).
Chrapaty's group has been in overdrive ever since. In 2007 it opened a massive facility in the rural town of Quincy, Wash., to tap into cheap energy courtesy of the nearby Grand Coulee Dam, right around the time Google did the same thing. Later, it opened a facility in San Antonio, completing much of the work in just nine months, achieving Chrapaty's goal of opening the center in less time than it took a local cowboy boot company to deliver the custom-made boots ordered for her by city officials.
Shipping Containers Full of Servers
Microsoft's newest facility is drawing lots of oohs and ahs from experts in this specialized field. Most data centers are open, warehouse-style buildings filled with racks of gear. But the first floor of this vast 700,000-square-foot facility looks more like an indoor parking lot, with gear packed into preconfigured shipping containers. Suppliers such as Sun Microsystems (JAVA) and Rackable Systems (RACK) have been advocating similar approaches for years, but this is by far the most ambitious implementation. Each of the containers can hold 2,500 servers, and the floor can hold up to 224 containers. That's a potential maximum of 560,000 servers. "They're pushing the concept to the extreme," Cappuccio says.
There's a method to Microsoft's modular approach. Rather than spend hundreds of hours opening server boxes, and connecting them with cables and loading them with software, Microsoft can roll in a container in just a couple of days. The hope is to run the facility with half as many people as at its previous sites. Even better, it's easier to monitor and whisk away heat generated in these confined modules than cooling an entire building. One source says Microsoft hopes the design will help cut by one-third the power bills that typically take up some 40% of a site's operating cost.
Theoretically, Microsoft should have an advantage over Google in doling out cloud services for corporations, given its long history of developing reliable, feature-rich software. "Microsoft understands the issues with serving corporations a lot better than Google does," Cappuccio says.
Microsoft Shares with Dell
By the same token, it often takes Microsoft multiple tries to achieve its strategic goals, including its assault on corporate server sales in the early 1990s. And despite years of trying, Microsoft has yet to come anywhere near replicating Google's successes in the lucrative field of Internet advertising.
In data centers, Microsoft hopes to succeed by taking a different tack from its archrival. Google maintains secrecy about its data center methods, working with only a handful of suppliers. It also does the majority of the engineering itself, possibly even creating its own servers. But 18 months ago, Microsoft decided to go in the opposite direction. It began sharing details about many of its innovations and plans. Says Forrest Norrod, general manager of Dell's (DELL) Data Center Solutions (DCS) Div., "Microsoft is…collaborating with the industry to drive innovation forward, to get great minds engaged."
Burrows is a senior writer for BusinessWeek, based in Silicon Valley .
Corporate America is increasingly leaving computing to the experts. Why go to the trouble and expense of building and managing complex systems to handle your spiraling data-crunching needs when another company can do it for you? And who better, faster, or cheaper than Google (GOOG)?
That's just the kind of conventional wisdom Debra Chrapaty wants to change. As Microsoft's (MSFT) vice-president for Global Foundation Services, Chrapaty wants to prove that her company is capable of running the sprawling data centers to offer software doled out via the Internet. The company is especially keen to handle the ubiquitous Microsoft software that consumers and corporations have been running for themselves for the past few decades. "Google has done a great job of hyping" its prowess, Chrapaty says. "But we're neck and neck with them."
And if Microsoft isn't there yet, it may be soon. Chrapaty, who's in charge of Microsoft's data centers, is stepping up a multibillion-dollar building binge, BusinessWeek has learned. Her group is embarking on a plan to build in the coming years some 20 supersize data centers that can cost as much as $1 billion apiece, according to a person familiar with Microsoft's plans. "We're going to reinvent the infrastructure of our industry," Chrapaty says. She declines to discuss specifics of the plan.
Google's Got a Head Start
The moves are designed to support what Microsoft describes as the biggest strategic shift since it first targeted the Internet in the mid-1990s. The company has unveiled a range of offerings in recent weeks that embrace what's come to be known as "cloud computing." There's Azure, a new operating system that lets companies run software either on their own computers or as a service delivered via the Internet by Microsoft. There's a new Windows Live offering that lets consumers store, retrieve, and share photos, blogs, and other Web content with friends. And Microsoft has announced an Internet version of its Exchange corporate e-mail, and plans to do the same with its Office software. If Chrapaty's group can't handle the load, many customers may decide to forgo Microsoft's products in favor of rival cloud computing services.
Traditionally, Google has positioned itself as the leader. "We've been designing infrastructure for the cloud for years," says Matt Glotzbach, a manager who works on Google Apps for corporations. "We've got a pretty big head start vs. a company like Microsoft."
Tapping into Cheap Energy
Still, Microsoft can hold its own, says Gartner (IT) analyst David Cappuccio. "Microsoft may certainly be just as good" in areas such as energy efficiency, Cappuccio says. And amid the global economic malaise, cash-rich Microsoft and Google are alone in being able to "throw several billion dollars into something like this," says Matt Rosoff, an analyst at Directions on Microsoft.
Microsoft's bold data center strategy dates back at least five years. Before that, the company relied heavily on other hosting companies to do the work. Soon after the arrival of Chrapaty, a former chief technology officer for the NBA, Microsoft decided to bring the job in-house. When in 2005 Ray Ozzie persuaded Microsoft founder Bill Gates and CEO Steve Ballmer to make the move to online delivery of software in 2005, running data centers became even more important. Chrapaty began bringing in industry luminaries from companies including Hewlett-Packard (HPQ) and Intel (INTC).
Chrapaty's group has been in overdrive ever since. In 2007 it opened a massive facility in the rural town of Quincy, Wash., to tap into cheap energy courtesy of the nearby Grand Coulee Dam, right around the time Google did the same thing. Later, it opened a facility in San Antonio, completing much of the work in just nine months, achieving Chrapaty's goal of opening the center in less time than it took a local cowboy boot company to deliver the custom-made boots ordered for her by city officials.
Shipping Containers Full of Servers
Microsoft's newest facility is drawing lots of oohs and ahs from experts in this specialized field. Most data centers are open, warehouse-style buildings filled with racks of gear. But the first floor of this vast 700,000-square-foot facility looks more like an indoor parking lot, with gear packed into preconfigured shipping containers. Suppliers such as Sun Microsystems (JAVA) and Rackable Systems (RACK) have been advocating similar approaches for years, but this is by far the most ambitious implementation. Each of the containers can hold 2,500 servers, and the floor can hold up to 224 containers. That's a potential maximum of 560,000 servers. "They're pushing the concept to the extreme," Cappuccio says.
There's a method to Microsoft's modular approach. Rather than spend hundreds of hours opening server boxes, and connecting them with cables and loading them with software, Microsoft can roll in a container in just a couple of days. The hope is to run the facility with half as many people as at its previous sites. Even better, it's easier to monitor and whisk away heat generated in these confined modules than cooling an entire building. One source says Microsoft hopes the design will help cut by one-third the power bills that typically take up some 40% of a site's operating cost.
Theoretically, Microsoft should have an advantage over Google in doling out cloud services for corporations, given its long history of developing reliable, feature-rich software. "Microsoft understands the issues with serving corporations a lot better than Google does," Cappuccio says.
Microsoft Shares with Dell
By the same token, it often takes Microsoft multiple tries to achieve its strategic goals, including its assault on corporate server sales in the early 1990s. And despite years of trying, Microsoft has yet to come anywhere near replicating Google's successes in the lucrative field of Internet advertising.
In data centers, Microsoft hopes to succeed by taking a different tack from its archrival. Google maintains secrecy about its data center methods, working with only a handful of suppliers. It also does the majority of the engineering itself, possibly even creating its own servers. But 18 months ago, Microsoft decided to go in the opposite direction. It began sharing details about many of its innovations and plans. Says Forrest Norrod, general manager of Dell's (DELL) Data Center Solutions (DCS) Div., "Microsoft is…collaborating with the industry to drive innovation forward, to get great minds engaged."
Burrows is a senior writer for BusinessWeek, based in Silicon Valley .
Tech - Network security breaches & NASA (V.G.Read)
Keith Epstein and Ben Elgin
America's military and scientific institutions—along with the defense industry that serves them—are being robbed of secret information on satellites, rocket engines, launch systems, and even the Space Shuttle. The thieves operate via the Internet from Asia and Europe, penetrating U.S. computer networks. Some of the intruders are suspected of having ties to the governments of China and Russia, interviews and documents show. Of all the arms of the U.S. government, few are more vulnerable than NASA, the civilian space agency, which also works closely with the Pentagon and American intelligence services.
In April 2005, cyber-burglars slipped into the digital network of NASA's supposedly super-secure Kennedy Space Center east of Orlando, according to internal NASA documents reviewed by BusinessWeek and never before disclosed. While hundreds of government workers were preparing for a launch of the Space Shuttle Discovery that July, a malignant software program surreptitiously gathered data from computers in the vast Vehicle Assembly Building, where the Shuttle is maintained. The violated network is managed by a joint venture owned by NASA contractors Boeing (BA) and Lockheed Martin (LMT).
Undetected by the space agency or the companies, the program, called stame.exe, sent a still-undetermined amount of information about the Shuttle to a computer system in Taiwan. That nation is often used by the Chinese government as a digital way station, according to U.S. security specialists.
By December 2005, the rupture had spread to a NASA satellite control complex in suburban Maryland and to the Johnson Space Center in Houston, home of Mission Control. At least 20 gigabytes of compressed data—the equivalent of 30 million pages—were routed from the Johnson center to the system in Taiwan, NASA documents show. Much of the data came from a computer server connected to a network that tracks malfunctions that could threaten the International Space Station.
BEYOND HACKERS
Seven months after the initial April intrusion, NASA officials and employees at the Boeing-Lockheed venture finally discovered the flow of information to Taiwan. Investigators halted all work at the Vehicle Assembly Building for several days, combed hundreds of computer systems, and tallied the damage. NASA documents reviewed by BusinessWeek do not refer to any specific interference with operations of the Shuttle, which was aloft from July 26 to Aug. 9, or the Space Station, which orbits 250 miles above the earth.
The startling episode in 2005 added to a pattern of significant electronic intrusions dating at least to the late 1990s. These invasions went far beyond the vandalism of hackers who periodically deface government Web sites or sneak into computer systems just to show they can do it. One reason NASA is so vulnerable is that many of its thousands of computers and Web sites are built to be accessible to outside researchers and contractors. Another reason is that the agency at times seems more concerned about minimizing public embarrassment over data theft than preventing breaches in the first place.
In 1998 a U.S.-German satellite known as ROSAT, used for peering into deep space, was rendered useless after it turned suddenly toward the sun. NASA investigators later determined that the accident was linked to a cyber-intrusion at the Goddard Space Flight Center in the Maryland suburbs of Washington. The interloper sent information to computers in Moscow, NASA documents show. U.S. investigators fear the data ended up in the hands of a Russian spy agency.
Four years later, in 2002, an online intruder penetrated the computer network at the Marshall Space Flight Center in Huntsville, Ala., stealing secret data on rocket engine designs—information believed to have made its way to China, according to interviews and NASA documents. At about the same time a British hacker, whom the U.S. is now trying to extradite, allegedly prowled through the digital innards of no fewer than five NASA installations.
In 2004 a cyber-trespasser who poked around NASA's Ames Research Center in Silicon Valley caused a panicked technician to pull the plug on the facility's supercomputers to limit the loss of secure data. Two years later, and well after the protracted incident at the Kennedy Space Center, top NASA officials were tricked into opening a fake e-mail and clicking on an infected link that compromised computers at the agency's Washington headquarters.
The headquarters fiasco in 2006 led to the drafting of an internal memo by NASA's Inspector General, Robert W. Cobb, in which he said the perpetrators appeared to have ties to those who earlier had gotten into other agency facilities. "The scope, sophistication, timing, and hostile characteristics of some of the intrusions indicate they are coordinated or centrally managed," Cobb said in the previously undisclosed Nov. 3, 2006, memo.
The intrusions haven't ceased. In 2007 the Goddard center was again compromised. This time the penetration affected networks that process data from the Earth Observing System, a series of satellites that enable studies of the oceans, land masses, and atmosphere. Inspector General Cobb issued another report, this one public, on Nov. 13, 2007: "Our criminal investigative efforts over the last five years confirm that the threats to NASA's information are broad in scope, sophisticated, and sustained."
The agency refers internally to its efforts to stop intrusions linked to China under the code name "Avocado," according to interviews. Despite this formal recognition of the problem, at least some senior NASA officials have seemed determined publicly to minimize the seriousness of the security threat.
Cobb and other top officials declined to comment in any detail for this article. NASA Deputy Administrator Shana L. Dale said in a statement to BusinessWeek that discussing cyber-threats "could potentially jeopardize the agency's information technology security and, in some cases, violate federal law....NASA aggressively works to protect its information assets with measures that include installing new technology, increasing investigative resources, heightening employee awareness, and working with other federal agencies."
Former government officials are more forthcoming. "The space race is back," says John W. McManus, referring to alleged foreign efforts to hijack American knowhow. McManus, chief technology officer at NASA from 2003 through 2006, adds: "If another country can break in and steal information about rocket motors or fuel systems, well, that's billions of dollars that can be spent elsewhere" by the other nation. Howard A. Schmidt, a technology consultant who served as a White House special adviser on cyber-security from 2001 to 2003, concurs. "All indications are that the attacks are coming in from China," he says, "and the data is being exfiltrated out to China." Suspicions of a trail of stolen digital information leading to Taiwan and possibly on to China so far haven't translated into criminal charges, however.
Philip Shih, a Washington-based spokesman for Taiwan, says that in response to questions from BusinessWeek, Taipei has launched an investigation into whether the rogue stame.exe program that penetrated the Kennedy Space Center was controlled from computers of a Taiwan plastics company. Taiwan suspects its nemesis, China, is behind the intrusions, Shih adds. "We can't yet say it's definitely from China, but it's probably them. They use us for cover for their activities."
The Chinese government disavows any such cyber-espionage. "China will never do anything to harm the sovereignty or security of other countries," says Wang Baodong, a spokesman for the Chinese Embassy in Washington. "The Chinese government has never employed, nor will it employ, so-called civilian hackers in collecting information or intelligence of other countries."
The Russian Embassy similarly says Moscow has had nothing to do with online spying. "Russia denies any involvement in the intrusions [at NASA]," says Yevgeniy Khorishko, a Russian Embassy spokesman.
Boeing and Lockheed declined to comment.
As part of a yearlong look at high-tech security threats to U.S. weapon systems and government and defense industry computer networks, BusinessWeek interviewed more than 100 current and former government employees, defense industry executives, and people with ties to U.S. military and intelligence agencies. (See "E-spionage," Cover Story, Apr. 21, 2008, and "Dangerous Fakes," Cover Story, Oct. 13, 2008.) NASA was frequently identified as susceptible to attack.
"We've been repeatedly compromised," says a former NASA official who describes an ongoing attempt by the government and major security contractors such as Boeing, Lockheed, SAIC, (SAI) and Booz Allen Hamilton to defend the space agency's networks. Sophisticated digital thieves routinely creep past traditional defenses such as electronic firewalls and antivirus software. Cloaking their identities, they can remotely install code—the instructions telling computers what to do—on a seemingly protected machine. The code might maintain a tunnel into a system for later exploitation or replicate malicious instructions that open additional pathways for unauthorized access. These programs also can send streams of sensitive data to destinations thousands of miles away. "We've lost information related to some of our missions, engineering designs, and research," says the former NASA official. "Every time we shift what we're doing, [the intruders] shift what they're doing."
NASA has known it has a security problem for more than a decade. In an October 1998 internal memo, the agency's administrator at the time, Daniel S. Goldin, warned subordinates that "the threat to NASA's information technology assets is increasing, and the number of attacks is growing along with the sophistication of the perpetrators and their tools." Goldin pleaded with the agency's semi-autonomous research and operational units to report all IT security incidents to headquarters. Many units still keep the information to themselves, according to other documents and interviews.
EARLY WARNING
By early 1999 the volume of intrusions had grown so worrisome that Thomas J. Talleur, the most senior investigator specializing in cyber-security in the Inspector General's office at NASA, wrote a detailed "network intrusion threat advisory." Talleur described the sly tactics behind a particularly virulent series of attacks on agency networks, which he said had been perpetrated by Russians. Titled "Russian Domain Attacks Against NASA Network Systems" and marked "For Official Use Only—No Foreign Dissemination," Talleur's Jan. 18, 1999, advisory was sent to the U.S. Army, the Secret Service, the FBI, the CIA, and the National Security Agency.
The 26-page advisory explained how, starting in May 1997, virtual intruders masking themselves and their IP addresses slipped undetected into networks at the Goddard center, a hub of space science activity. The trespassers penetrated computers in the X-ray Astrophysics Section of a building on Goddard's campus, where they commandeered computers delivering data and instructions to satellites. Before being discovered, the intruders transferred huge amounts of information, including e-mails, through a series of stops on the Internet to computers overseas. The advisory stated: "Hostile activities compromised [NASA] computer systems that directly and indirectly deal with the design, testing, and transferring of satellite package command-and-control codes"—in other words, computerized instructions transmitted to spacecraft.
In July 1998, a month after the discovery of the breach at Goddard, the U.S. Justice Dept. approved electronic monitoring of the illicit transmissions. That allowed a team of agents from NASA, the FBI, and the U.S. Air Force Office of Special Investigations to follow the trail of what they concluded was a criminal hacking ring with dozens of Internet addresses associated with computers near Moscow. The investigators made an even more alarming discovery, according to people familiar with the probe: The cyber-crime ring had connections to a Russian electronic spy agency known by the initials FAPSI. None of this has ever been made public, and BusinessWeek could not independently corroborate the Russian ties.
The investigators' findings became of far greater concern in September 1998. Without warning one day, the ROSAT satellite turned, seemingly inexplicably, toward the sun. The move damaged a critical optical sensor, rendering the satellite useless in its mission of making X-ray and ultraviolet images of deep space. NASA announced in a press release that ROSAT had been "accidentally scanning too closely to the sun." Talleur's report concluded otherwise.
The "accident," he noted, had been "coincident with the intrusion" into the Goddard system controlling it. Why would Russians want to cripple a satellite beloved worldwide by students of pulsars and supernovas? "Operational characteristics and commanding of the ROSAT were sufficiently similar to other space assets to provide intruders with valuable information about how such platforms are commanded," Talleur's advisory said. Put differently, manipulating ROSAT could teach an adversary how to toy with just about anything the U.S. put into the sky.
Talleur, now 59, retired in December 1999, frustrated that his warnings weren't taken more seriously. Five months after his advisory was circulated internally, the Government Accountability Office, the investigative arm of Congress, released a public report reiterating in general terms Talleur's concerns about NASA security. But little changed, he says in an interview. "There were so many intrusions and hackers taking things we had on servers, I felt like the Dutch boy with his finger in the dike," he explains, sitting on the porch of his home near Savannah, Ga. On whether other countries are behind the intrusions, he says: "State-sponsored? God, it's been state-sponsored for 15 years!"
Huntsville, Ala., known as Rocket City, is home to the Marshall Space Flight Center, where the famous "rocket boys"—former Nazis led by Wernher von Braun—helped U.S. engineers design ballistic missiles. Today, data stored on computers at the Marshall campus constitute one of the richest lodes of high-tech secrets anywhere in the world.
Around the clock for four days in June 2002, a prowler methodically probed enormous volumes of proprietary information at Marshall, according to NASA documents. The electronic intruder, without setting foot anywhere near Rocket City, gained access to servers handling sensitive work on new versions of the Delta and Atlas rockets that power intercontinental missiles, enhancements of the Shuttle's main engines, and Lockheed's F-35 Joint Strike Fighter, an advanced fighter jet that remains in development.
Had anyone been monitoring the Marshall computer networks in real time, the suspicious activity, automatically recorded on logs, would have been "immediately evident," NASA investigators concluded, according to a Dec. 11, 2002, report to top NASA executives. "In essence," said another internal report to NASA management on Mar. 26, 2003, "Marshall had locked up the card catalog, but left the library doors wide open."
Special agents from NASA's Office of Security, the Inspector General's office, and the Pentagon's Defense Criminal Investigative Service investigated the Marshall incident, but charges were never filed. NASA documents show that suspicion focused on Rafael Nuñez Aponte, a self-described former member of an international hacker gang known as World of Hell. Nuñez, a Venezuelan national, called himself "RaFa" in online postings. He spent seven months in U.S. prison in 2005 as punishment for defacing an Air Force training Web site in 2001. He headed home to Caracas in 2005.
According to documents from NASA's investigation of the Marshall intrusion, Nuñez in 2002 initially confessed to being directly involved in the incident. But then he changed his story two weeks later. Trying to distance himself from the crime, he told investigators he had obtained NASA files from hackers in France, an assertion he repeated during a phone interview with BusinessWeek this October. Nuñez, now 29, says rival hacking gang members in France had impersonated him while breaking into NASA's computer system. "I was involved with the Air Force attack, but some French hackers were behind the NASA one," he said. "The French were trying to pin it on me. That's very common in the hacker world."
U.S. authorities refused to discuss the case, saying it involves an ongoing investigation and, possibly, other suspects. Two people familiar with the probe said it focuses on the delivery of material to the Chinese government, perhaps by intermediaries in Europe, but they declined to be specific.
The secrets from Marshall could have helped the Chinese design engines and fuel to lift heavier loads beyond the atmosphere, according to NASA documents. Investigative case files prepared for a federal grand jury following the Marshall intrusion, and reviewed by BusinessWeek, include information from the statement of an unidentified witness under the heading "Allegations of Sale to a Foreign Government." But BusinessWeek couldn't corroborate the alleged Chinese ties or determine whether a grand jury was convened.
CONCERNS ABOUT A "COVERUP"
An undated internal NASA memorandum assessed the damage from the Marshall break-in: "Assuming the worst, foreign countries now have detailed drawings and specifications for high-performance liquid rocket engines that are almost at a critical design review readiness level." The memo added: "That means that a foreign country could begin development of a rocket engine right away and power some vehicle or missile within two or three years." All told, the lost technology cost U.S. taxpayers an estimated $1.9 billion to develop, not taking into account "all of the lessons learned and corporate knowledge gleaned from the last 50 years of rocket engine development in the U.S.," the memo continued. The actual "value of the intellectual property that has been lost is priceless."
Some NASA investigators believed top officials tried to keep a lid on what had happened at the Marshall Center so the agency wouldn't suffer criticism from Congress or the public. Internal e-mails and statements written by Michael G. Ball, a Huntsville-based NASA special agent, and several of his colleagues describe an investigation repeatedly stalled by superiors who sought to play down any impression that the incident had compromised national security. "I felt that we were covering up the loss to save embarrassment to NASA," Ball wrote in one document dated Oct. 24, 2005. In a June 2003 memo labeled "Law Enforcement Sensitive," Ball used the subject heading "Potential Concealment of Facts Pertaining to Case # C-MA-0200526-0"—the investigation of the breach at Marshall. He described attempts to impede the investigation and signaled a desire for whistleblower protection under federal law. Reached by phone at Marshall, where he still works as an agent for NASA, Ball declined to be interviewed.
Congress never heard any of the details of the Marshall affair, at least not publicly. In June 2003, NASA Inspector General Cobb, a former ethics counsel to President George W. Bush, referred only vaguely to the incident in testimony before the House Government Reform Committee's technology subcommittee. His prepared one-paragraph account made no mention of the specific incident or its $1.9 billion impact. He told the committee that "there are examples from our ongoing investigations where inadequate IT security, such as weak password controls, resulted in unauthorized access to significant amounts of NASA data that was sensitive but unclassified." NASA "is aware of cases and acknowledges that serious compromises have occurred," he added, but "it would not be appropriate to share the details in any open forum."
YANKING CABLES
Cobb's handling of the case later became part of the focus of an investigation by a watchdog agency known as the President's Council on Integrity & Efficiency. The investigation concerned 78 allegations that Cobb had retaliated against whistleblowers and failed to investigate incidents that could potentially embarrass NASA. That probe, conducted by a panel of inspectors general from other federal agencies, found that he had broken no laws but that his failure to ensure timely reporting of the compromise at Marshall "created the appearance of lack of independence" from NASA's management. Cobb, who remains in his job, told the IG committee that any delays stemmed from his insistence on accuracy. He declined BusinessWeek's interview requests.
At 6 a.m. on a May morning in 2004, an urgent phone call woke Richard Dunn, then a NASA engineer. "Disconnect us!" said the caller. "Disconnect us from the Internet!"
The agitated man on the line was David L. Tweten, then head of IT security for the Ames Research Center, a NASA laboratory in Silicon Valley. Ames' supercomputers enable scientists, government agencies, and spaceflight planners to model everything from ocean currents to the trajectory of interplanetary probes. At the time of Dunn's abrupt awakening, analysts had been using the computers to scrutinize the 2003 Columbia Shuttle disaster.
"Disconnect us?" asked Dunn, astonished.
"I mean, physically remove us from the Internet," Tweten answered, according to Dunn.
Dunn sped 14 miles from his home in San Jose to an Internet hub in Mountain View, where Ames' supercomputers are connected to the Web. He yanked out thick fiber-optic cables one by one, rendering the machines inaccessible to the rest of the world.
It turned out that a cyber-intruder had gotten into Ames, and officials couldn't figure out a better short-term solution than pulling the plug. The prowler apparently cracked a researcher's password at the Goddard center in Maryland and used it to hack into Ames. The cleanup required the scanning of thousands of hard drives for potential breaches. The Ames supercomputers were offline for more than four weeks.
For three years before the 2004 incident, internal security auditors at Ames had tried to get managers to make improvements, NASA records show. The center's supercomputers had been shut down multiple times in the past because of incursions. In one earlier incident, an unemployed computer administrator in London named Gary McKinnon allegedly gained access to 92 computers belonging to Ames and four other NASA centers, as well as several U.S. military bases, causing $900,000 in damage. This occurred from September 2001 to March 2002, according to a November 2002 federal indictment of McKinnon, who is now 42.
The U.S. has been seeking McKinnon's extradition from Britain to face criminal computer fraud charges. "There were no lines of defense," McKinnon told a BBC interviewer in May 2006, seeming to acknowledge his involvement. In response to a BusinessWeek e-mail, a person identifying himself as a friend of McKinnon said the accused hacker had gained access to NASA by using obvious passwords such as "administrator."
Of all the cyber-calamities of recent years, NASA officials appear to have been most severely shaken by the extended theft of digital information from the Kennedy Space Center in 2005. A Mar. 3, 2006, draft report on the internal investigation of the extensive infringement found that the intruder could have learned operational details about the Shuttle by monitoring the stream of data from the launch pad at Kennedy to the massive assembly building where the Shuttle is housed.
Specifically, this information could have included "data concerning Space Shuttle engine flow levels, maximum temperature levels, and other live performance data," the investigative report stated. Not only could a distant adversary learn a lot about building and flying a Shuttle that way, the rival could also figure out how to sabotage a Shuttle mission, investigators concluded.
As investigators eventually learned, the rogue program stame.exe slipped into the assembly building's data center, helping to cause transfers of data from both Kennedy and Johnson to IP addresses in Taiwan. One incursion at Johnson began with a breach at the contractor Lockheed, illustrating how corporations face similar threats. In the subsequent December 2005 Goddard intrusion, investigators followed the trail to IP addresses in China, the investigative report shows.
China has not made a secret of its thirst for advanced missile and rocket technology. "Seizing space dominance is the root for winning war in the Information Age," Li Daguang, a researcher at the government-backed Chinese Academy of Sciences, wrote in 2004 in a publication of the People's Liberation Army, Zhongguo Guofang Bao.
During September and October 2006, intruders mounted a direct assault on NASA's headquarters in Southwest Washington, only blocks from Capitol Hill. A fake e-mail, known as a spearphish, duped several members of the agency's top brass and their assistants into clicking on the link of a seemingly authentic Web site, according to documents and interviews. The site unleashed malicious software code that exploited a previously unknown vulnerability in programs used by NASA. The intruders downloaded, from the hard drive of NASA's then-Chief Financial Officer Gwen Sykes, all of the agency's budget and financial information. Those files contained clues about the size and scope of every NASA research project, space vehicle deployment, and cutting-edge satellite technology. Again the path of the pilfered information led to IP addresses in Taiwan, sparking concern that it ultimately found its way to government offices in Beijing, according to a former NASA employee. Nearly a dozen PCs at NASA headquarters were taken out of commission.
Electronic incursions of NASA facilities have continued. In the days before a Shuttle launch in December 2006, the agency was so rattled it barred all incoming Word attachments from its computer systems. McManus, the former NASA chief technology officer, says the hackers have "very sophisticated knowledge of the organizational structure" of the agency. He laments that for all of the costly cleanups following breaches, NASA hasn't found a comprehensive solution. "It's as if somebody pulls your pants down, and you just pull them back up," says McManus. "How many times do you want to be standing on the street corner with your pants at your feet?"
With Brian Grow, Chi-Chu Tschang, and David Polek
America's military and scientific institutions—along with the defense industry that serves them—are being robbed of secret information on satellites, rocket engines, launch systems, and even the Space Shuttle. The thieves operate via the Internet from Asia and Europe, penetrating U.S. computer networks. Some of the intruders are suspected of having ties to the governments of China and Russia, interviews and documents show. Of all the arms of the U.S. government, few are more vulnerable than NASA, the civilian space agency, which also works closely with the Pentagon and American intelligence services.
In April 2005, cyber-burglars slipped into the digital network of NASA's supposedly super-secure Kennedy Space Center east of Orlando, according to internal NASA documents reviewed by BusinessWeek and never before disclosed. While hundreds of government workers were preparing for a launch of the Space Shuttle Discovery that July, a malignant software program surreptitiously gathered data from computers in the vast Vehicle Assembly Building, where the Shuttle is maintained. The violated network is managed by a joint venture owned by NASA contractors Boeing (BA) and Lockheed Martin (LMT).
Undetected by the space agency or the companies, the program, called stame.exe, sent a still-undetermined amount of information about the Shuttle to a computer system in Taiwan. That nation is often used by the Chinese government as a digital way station, according to U.S. security specialists.
By December 2005, the rupture had spread to a NASA satellite control complex in suburban Maryland and to the Johnson Space Center in Houston, home of Mission Control. At least 20 gigabytes of compressed data—the equivalent of 30 million pages—were routed from the Johnson center to the system in Taiwan, NASA documents show. Much of the data came from a computer server connected to a network that tracks malfunctions that could threaten the International Space Station.
BEYOND HACKERS
Seven months after the initial April intrusion, NASA officials and employees at the Boeing-Lockheed venture finally discovered the flow of information to Taiwan. Investigators halted all work at the Vehicle Assembly Building for several days, combed hundreds of computer systems, and tallied the damage. NASA documents reviewed by BusinessWeek do not refer to any specific interference with operations of the Shuttle, which was aloft from July 26 to Aug. 9, or the Space Station, which orbits 250 miles above the earth.
The startling episode in 2005 added to a pattern of significant electronic intrusions dating at least to the late 1990s. These invasions went far beyond the vandalism of hackers who periodically deface government Web sites or sneak into computer systems just to show they can do it. One reason NASA is so vulnerable is that many of its thousands of computers and Web sites are built to be accessible to outside researchers and contractors. Another reason is that the agency at times seems more concerned about minimizing public embarrassment over data theft than preventing breaches in the first place.
In 1998 a U.S.-German satellite known as ROSAT, used for peering into deep space, was rendered useless after it turned suddenly toward the sun. NASA investigators later determined that the accident was linked to a cyber-intrusion at the Goddard Space Flight Center in the Maryland suburbs of Washington. The interloper sent information to computers in Moscow, NASA documents show. U.S. investigators fear the data ended up in the hands of a Russian spy agency.
Four years later, in 2002, an online intruder penetrated the computer network at the Marshall Space Flight Center in Huntsville, Ala., stealing secret data on rocket engine designs—information believed to have made its way to China, according to interviews and NASA documents. At about the same time a British hacker, whom the U.S. is now trying to extradite, allegedly prowled through the digital innards of no fewer than five NASA installations.
In 2004 a cyber-trespasser who poked around NASA's Ames Research Center in Silicon Valley caused a panicked technician to pull the plug on the facility's supercomputers to limit the loss of secure data. Two years later, and well after the protracted incident at the Kennedy Space Center, top NASA officials were tricked into opening a fake e-mail and clicking on an infected link that compromised computers at the agency's Washington headquarters.
The headquarters fiasco in 2006 led to the drafting of an internal memo by NASA's Inspector General, Robert W. Cobb, in which he said the perpetrators appeared to have ties to those who earlier had gotten into other agency facilities. "The scope, sophistication, timing, and hostile characteristics of some of the intrusions indicate they are coordinated or centrally managed," Cobb said in the previously undisclosed Nov. 3, 2006, memo.
The intrusions haven't ceased. In 2007 the Goddard center was again compromised. This time the penetration affected networks that process data from the Earth Observing System, a series of satellites that enable studies of the oceans, land masses, and atmosphere. Inspector General Cobb issued another report, this one public, on Nov. 13, 2007: "Our criminal investigative efforts over the last five years confirm that the threats to NASA's information are broad in scope, sophisticated, and sustained."
The agency refers internally to its efforts to stop intrusions linked to China under the code name "Avocado," according to interviews. Despite this formal recognition of the problem, at least some senior NASA officials have seemed determined publicly to minimize the seriousness of the security threat.
Cobb and other top officials declined to comment in any detail for this article. NASA Deputy Administrator Shana L. Dale said in a statement to BusinessWeek that discussing cyber-threats "could potentially jeopardize the agency's information technology security and, in some cases, violate federal law....NASA aggressively works to protect its information assets with measures that include installing new technology, increasing investigative resources, heightening employee awareness, and working with other federal agencies."
Former government officials are more forthcoming. "The space race is back," says John W. McManus, referring to alleged foreign efforts to hijack American knowhow. McManus, chief technology officer at NASA from 2003 through 2006, adds: "If another country can break in and steal information about rocket motors or fuel systems, well, that's billions of dollars that can be spent elsewhere" by the other nation. Howard A. Schmidt, a technology consultant who served as a White House special adviser on cyber-security from 2001 to 2003, concurs. "All indications are that the attacks are coming in from China," he says, "and the data is being exfiltrated out to China." Suspicions of a trail of stolen digital information leading to Taiwan and possibly on to China so far haven't translated into criminal charges, however.
Philip Shih, a Washington-based spokesman for Taiwan, says that in response to questions from BusinessWeek, Taipei has launched an investigation into whether the rogue stame.exe program that penetrated the Kennedy Space Center was controlled from computers of a Taiwan plastics company. Taiwan suspects its nemesis, China, is behind the intrusions, Shih adds. "We can't yet say it's definitely from China, but it's probably them. They use us for cover for their activities."
The Chinese government disavows any such cyber-espionage. "China will never do anything to harm the sovereignty or security of other countries," says Wang Baodong, a spokesman for the Chinese Embassy in Washington. "The Chinese government has never employed, nor will it employ, so-called civilian hackers in collecting information or intelligence of other countries."
The Russian Embassy similarly says Moscow has had nothing to do with online spying. "Russia denies any involvement in the intrusions [at NASA]," says Yevgeniy Khorishko, a Russian Embassy spokesman.
Boeing and Lockheed declined to comment.
As part of a yearlong look at high-tech security threats to U.S. weapon systems and government and defense industry computer networks, BusinessWeek interviewed more than 100 current and former government employees, defense industry executives, and people with ties to U.S. military and intelligence agencies. (See "E-spionage," Cover Story, Apr. 21, 2008, and "Dangerous Fakes," Cover Story, Oct. 13, 2008.) NASA was frequently identified as susceptible to attack.
"We've been repeatedly compromised," says a former NASA official who describes an ongoing attempt by the government and major security contractors such as Boeing, Lockheed, SAIC, (SAI) and Booz Allen Hamilton to defend the space agency's networks. Sophisticated digital thieves routinely creep past traditional defenses such as electronic firewalls and antivirus software. Cloaking their identities, they can remotely install code—the instructions telling computers what to do—on a seemingly protected machine. The code might maintain a tunnel into a system for later exploitation or replicate malicious instructions that open additional pathways for unauthorized access. These programs also can send streams of sensitive data to destinations thousands of miles away. "We've lost information related to some of our missions, engineering designs, and research," says the former NASA official. "Every time we shift what we're doing, [the intruders] shift what they're doing."
NASA has known it has a security problem for more than a decade. In an October 1998 internal memo, the agency's administrator at the time, Daniel S. Goldin, warned subordinates that "the threat to NASA's information technology assets is increasing, and the number of attacks is growing along with the sophistication of the perpetrators and their tools." Goldin pleaded with the agency's semi-autonomous research and operational units to report all IT security incidents to headquarters. Many units still keep the information to themselves, according to other documents and interviews.
EARLY WARNING
By early 1999 the volume of intrusions had grown so worrisome that Thomas J. Talleur, the most senior investigator specializing in cyber-security in the Inspector General's office at NASA, wrote a detailed "network intrusion threat advisory." Talleur described the sly tactics behind a particularly virulent series of attacks on agency networks, which he said had been perpetrated by Russians. Titled "Russian Domain Attacks Against NASA Network Systems" and marked "For Official Use Only—No Foreign Dissemination," Talleur's Jan. 18, 1999, advisory was sent to the U.S. Army, the Secret Service, the FBI, the CIA, and the National Security Agency.
The 26-page advisory explained how, starting in May 1997, virtual intruders masking themselves and their IP addresses slipped undetected into networks at the Goddard center, a hub of space science activity. The trespassers penetrated computers in the X-ray Astrophysics Section of a building on Goddard's campus, where they commandeered computers delivering data and instructions to satellites. Before being discovered, the intruders transferred huge amounts of information, including e-mails, through a series of stops on the Internet to computers overseas. The advisory stated: "Hostile activities compromised [NASA] computer systems that directly and indirectly deal with the design, testing, and transferring of satellite package command-and-control codes"—in other words, computerized instructions transmitted to spacecraft.
In July 1998, a month after the discovery of the breach at Goddard, the U.S. Justice Dept. approved electronic monitoring of the illicit transmissions. That allowed a team of agents from NASA, the FBI, and the U.S. Air Force Office of Special Investigations to follow the trail of what they concluded was a criminal hacking ring with dozens of Internet addresses associated with computers near Moscow. The investigators made an even more alarming discovery, according to people familiar with the probe: The cyber-crime ring had connections to a Russian electronic spy agency known by the initials FAPSI. None of this has ever been made public, and BusinessWeek could not independently corroborate the Russian ties.
The investigators' findings became of far greater concern in September 1998. Without warning one day, the ROSAT satellite turned, seemingly inexplicably, toward the sun. The move damaged a critical optical sensor, rendering the satellite useless in its mission of making X-ray and ultraviolet images of deep space. NASA announced in a press release that ROSAT had been "accidentally scanning too closely to the sun." Talleur's report concluded otherwise.
The "accident," he noted, had been "coincident with the intrusion" into the Goddard system controlling it. Why would Russians want to cripple a satellite beloved worldwide by students of pulsars and supernovas? "Operational characteristics and commanding of the ROSAT were sufficiently similar to other space assets to provide intruders with valuable information about how such platforms are commanded," Talleur's advisory said. Put differently, manipulating ROSAT could teach an adversary how to toy with just about anything the U.S. put into the sky.
Talleur, now 59, retired in December 1999, frustrated that his warnings weren't taken more seriously. Five months after his advisory was circulated internally, the Government Accountability Office, the investigative arm of Congress, released a public report reiterating in general terms Talleur's concerns about NASA security. But little changed, he says in an interview. "There were so many intrusions and hackers taking things we had on servers, I felt like the Dutch boy with his finger in the dike," he explains, sitting on the porch of his home near Savannah, Ga. On whether other countries are behind the intrusions, he says: "State-sponsored? God, it's been state-sponsored for 15 years!"
Huntsville, Ala., known as Rocket City, is home to the Marshall Space Flight Center, where the famous "rocket boys"—former Nazis led by Wernher von Braun—helped U.S. engineers design ballistic missiles. Today, data stored on computers at the Marshall campus constitute one of the richest lodes of high-tech secrets anywhere in the world.
Around the clock for four days in June 2002, a prowler methodically probed enormous volumes of proprietary information at Marshall, according to NASA documents. The electronic intruder, without setting foot anywhere near Rocket City, gained access to servers handling sensitive work on new versions of the Delta and Atlas rockets that power intercontinental missiles, enhancements of the Shuttle's main engines, and Lockheed's F-35 Joint Strike Fighter, an advanced fighter jet that remains in development.
Had anyone been monitoring the Marshall computer networks in real time, the suspicious activity, automatically recorded on logs, would have been "immediately evident," NASA investigators concluded, according to a Dec. 11, 2002, report to top NASA executives. "In essence," said another internal report to NASA management on Mar. 26, 2003, "Marshall had locked up the card catalog, but left the library doors wide open."
Special agents from NASA's Office of Security, the Inspector General's office, and the Pentagon's Defense Criminal Investigative Service investigated the Marshall incident, but charges were never filed. NASA documents show that suspicion focused on Rafael Nuñez Aponte, a self-described former member of an international hacker gang known as World of Hell. Nuñez, a Venezuelan national, called himself "RaFa" in online postings. He spent seven months in U.S. prison in 2005 as punishment for defacing an Air Force training Web site in 2001. He headed home to Caracas in 2005.
According to documents from NASA's investigation of the Marshall intrusion, Nuñez in 2002 initially confessed to being directly involved in the incident. But then he changed his story two weeks later. Trying to distance himself from the crime, he told investigators he had obtained NASA files from hackers in France, an assertion he repeated during a phone interview with BusinessWeek this October. Nuñez, now 29, says rival hacking gang members in France had impersonated him while breaking into NASA's computer system. "I was involved with the Air Force attack, but some French hackers were behind the NASA one," he said. "The French were trying to pin it on me. That's very common in the hacker world."
U.S. authorities refused to discuss the case, saying it involves an ongoing investigation and, possibly, other suspects. Two people familiar with the probe said it focuses on the delivery of material to the Chinese government, perhaps by intermediaries in Europe, but they declined to be specific.
The secrets from Marshall could have helped the Chinese design engines and fuel to lift heavier loads beyond the atmosphere, according to NASA documents. Investigative case files prepared for a federal grand jury following the Marshall intrusion, and reviewed by BusinessWeek, include information from the statement of an unidentified witness under the heading "Allegations of Sale to a Foreign Government." But BusinessWeek couldn't corroborate the alleged Chinese ties or determine whether a grand jury was convened.
CONCERNS ABOUT A "COVERUP"
An undated internal NASA memorandum assessed the damage from the Marshall break-in: "Assuming the worst, foreign countries now have detailed drawings and specifications for high-performance liquid rocket engines that are almost at a critical design review readiness level." The memo added: "That means that a foreign country could begin development of a rocket engine right away and power some vehicle or missile within two or three years." All told, the lost technology cost U.S. taxpayers an estimated $1.9 billion to develop, not taking into account "all of the lessons learned and corporate knowledge gleaned from the last 50 years of rocket engine development in the U.S.," the memo continued. The actual "value of the intellectual property that has been lost is priceless."
Some NASA investigators believed top officials tried to keep a lid on what had happened at the Marshall Center so the agency wouldn't suffer criticism from Congress or the public. Internal e-mails and statements written by Michael G. Ball, a Huntsville-based NASA special agent, and several of his colleagues describe an investigation repeatedly stalled by superiors who sought to play down any impression that the incident had compromised national security. "I felt that we were covering up the loss to save embarrassment to NASA," Ball wrote in one document dated Oct. 24, 2005. In a June 2003 memo labeled "Law Enforcement Sensitive," Ball used the subject heading "Potential Concealment of Facts Pertaining to Case # C-MA-0200526-0"—the investigation of the breach at Marshall. He described attempts to impede the investigation and signaled a desire for whistleblower protection under federal law. Reached by phone at Marshall, where he still works as an agent for NASA, Ball declined to be interviewed.
Congress never heard any of the details of the Marshall affair, at least not publicly. In June 2003, NASA Inspector General Cobb, a former ethics counsel to President George W. Bush, referred only vaguely to the incident in testimony before the House Government Reform Committee's technology subcommittee. His prepared one-paragraph account made no mention of the specific incident or its $1.9 billion impact. He told the committee that "there are examples from our ongoing investigations where inadequate IT security, such as weak password controls, resulted in unauthorized access to significant amounts of NASA data that was sensitive but unclassified." NASA "is aware of cases and acknowledges that serious compromises have occurred," he added, but "it would not be appropriate to share the details in any open forum."
YANKING CABLES
Cobb's handling of the case later became part of the focus of an investigation by a watchdog agency known as the President's Council on Integrity & Efficiency. The investigation concerned 78 allegations that Cobb had retaliated against whistleblowers and failed to investigate incidents that could potentially embarrass NASA. That probe, conducted by a panel of inspectors general from other federal agencies, found that he had broken no laws but that his failure to ensure timely reporting of the compromise at Marshall "created the appearance of lack of independence" from NASA's management. Cobb, who remains in his job, told the IG committee that any delays stemmed from his insistence on accuracy. He declined BusinessWeek's interview requests.
At 6 a.m. on a May morning in 2004, an urgent phone call woke Richard Dunn, then a NASA engineer. "Disconnect us!" said the caller. "Disconnect us from the Internet!"
The agitated man on the line was David L. Tweten, then head of IT security for the Ames Research Center, a NASA laboratory in Silicon Valley. Ames' supercomputers enable scientists, government agencies, and spaceflight planners to model everything from ocean currents to the trajectory of interplanetary probes. At the time of Dunn's abrupt awakening, analysts had been using the computers to scrutinize the 2003 Columbia Shuttle disaster.
"Disconnect us?" asked Dunn, astonished.
"I mean, physically remove us from the Internet," Tweten answered, according to Dunn.
Dunn sped 14 miles from his home in San Jose to an Internet hub in Mountain View, where Ames' supercomputers are connected to the Web. He yanked out thick fiber-optic cables one by one, rendering the machines inaccessible to the rest of the world.
It turned out that a cyber-intruder had gotten into Ames, and officials couldn't figure out a better short-term solution than pulling the plug. The prowler apparently cracked a researcher's password at the Goddard center in Maryland and used it to hack into Ames. The cleanup required the scanning of thousands of hard drives for potential breaches. The Ames supercomputers were offline for more than four weeks.
For three years before the 2004 incident, internal security auditors at Ames had tried to get managers to make improvements, NASA records show. The center's supercomputers had been shut down multiple times in the past because of incursions. In one earlier incident, an unemployed computer administrator in London named Gary McKinnon allegedly gained access to 92 computers belonging to Ames and four other NASA centers, as well as several U.S. military bases, causing $900,000 in damage. This occurred from September 2001 to March 2002, according to a November 2002 federal indictment of McKinnon, who is now 42.
The U.S. has been seeking McKinnon's extradition from Britain to face criminal computer fraud charges. "There were no lines of defense," McKinnon told a BBC interviewer in May 2006, seeming to acknowledge his involvement. In response to a BusinessWeek e-mail, a person identifying himself as a friend of McKinnon said the accused hacker had gained access to NASA by using obvious passwords such as "administrator."
Of all the cyber-calamities of recent years, NASA officials appear to have been most severely shaken by the extended theft of digital information from the Kennedy Space Center in 2005. A Mar. 3, 2006, draft report on the internal investigation of the extensive infringement found that the intruder could have learned operational details about the Shuttle by monitoring the stream of data from the launch pad at Kennedy to the massive assembly building where the Shuttle is housed.
Specifically, this information could have included "data concerning Space Shuttle engine flow levels, maximum temperature levels, and other live performance data," the investigative report stated. Not only could a distant adversary learn a lot about building and flying a Shuttle that way, the rival could also figure out how to sabotage a Shuttle mission, investigators concluded.
As investigators eventually learned, the rogue program stame.exe slipped into the assembly building's data center, helping to cause transfers of data from both Kennedy and Johnson to IP addresses in Taiwan. One incursion at Johnson began with a breach at the contractor Lockheed, illustrating how corporations face similar threats. In the subsequent December 2005 Goddard intrusion, investigators followed the trail to IP addresses in China, the investigative report shows.
China has not made a secret of its thirst for advanced missile and rocket technology. "Seizing space dominance is the root for winning war in the Information Age," Li Daguang, a researcher at the government-backed Chinese Academy of Sciences, wrote in 2004 in a publication of the People's Liberation Army, Zhongguo Guofang Bao.
During September and October 2006, intruders mounted a direct assault on NASA's headquarters in Southwest Washington, only blocks from Capitol Hill. A fake e-mail, known as a spearphish, duped several members of the agency's top brass and their assistants into clicking on the link of a seemingly authentic Web site, according to documents and interviews. The site unleashed malicious software code that exploited a previously unknown vulnerability in programs used by NASA. The intruders downloaded, from the hard drive of NASA's then-Chief Financial Officer Gwen Sykes, all of the agency's budget and financial information. Those files contained clues about the size and scope of every NASA research project, space vehicle deployment, and cutting-edge satellite technology. Again the path of the pilfered information led to IP addresses in Taiwan, sparking concern that it ultimately found its way to government offices in Beijing, according to a former NASA employee. Nearly a dozen PCs at NASA headquarters were taken out of commission.
Electronic incursions of NASA facilities have continued. In the days before a Shuttle launch in December 2006, the agency was so rattled it barred all incoming Word attachments from its computer systems. McManus, the former NASA chief technology officer, says the hackers have "very sophisticated knowledge of the organizational structure" of the agency. He laments that for all of the costly cleanups following breaches, NASA hasn't found a comprehensive solution. "It's as if somebody pulls your pants down, and you just pull them back up," says McManus. "How many times do you want to be standing on the street corner with your pants at your feet?"
With Brian Grow, Chi-Chu Tschang, and David Polek
Business - India In. battered by Credit Crisis
Nandini Lakshman
These days when KPMG's Mumbai corporate finance head Rohit Kapur meets Indian chief executives, he finds a marked difference in the corner suite talk. Until recently, Indian bosses were still firming up their mergers-and-acquisition shopping itinerary. No longer. "Now they talk of rationalizing their business portfolio and monetizing assets to expand their core businesses," he says.
Until a few months ago, India's conglomerates had been scouring the world for M&A targets. Thanks to a long bull run in the Indian stock market and easy availability of finance, cash-flush companies were on an acquisition rampage (BusinessWeek.com, 5/15/08) from the U.S. to Australia, scooping up everything from cinemas to design houses to consumer-products companies. Indian companies spent $90 billion on M&A since 2007, according to Hong Kong research firm Dealogic. Among the most prominent was Reliance—Anil Dhirubhai Ambani Group (Reliance—ADAG), which invested $500 million in DreamWorks Studio in June and in the past two years made acquisitions ranging from cinemas in the U.S. to social networking sites in India.
But as the credit crunch deepens, Indian companies that shopped around the world are feeling the strain. Tata Motors (TTM), aluminum maker Hindalco, and turbine maker Suzlon Energy saw recent rights issues flop. Suzlon Energy withdrew a $360 million rights offering on Oct. 27, citing an adverse market response. The company also shelved plans to set up a tower manufacturing facility in India.
Buying Sprees
The companies had been raising the money to pay off loans for big-ticket global purchases. Tata Motors acquired Jaguar and Land Rover (BusinessWeek.com, 3/26/08) from Ford (F) in March for $2.3 billion. Sister company Tata Steel had acquired Anglo-Dutch steelmaker Corus for $12.1 billion in January 2007. Hindalco spent $6.3 billion for Atlanta aluminum rolled products maker Novelis early last year. Suzlon had been on a buying spree too, buying Belgium's Hansen Transmissions in 2006 and Germany's REPower Systems in May 2007 for $1.6 billion. Suzlon had been trying to raise $360 million to buy out the minority shareholders in REPower.
Now companies are struggling to come up with the cash to pay for these deals. India Inc. has $45 billion in foreign-currency borrowings used for expansion and acquisitions when rocketing stock valuations in the domestic market made external borrowing more appealing. But in today's tough financial environment, the buying sprees and expansion plans have come to haunt companies. The Indian market is down 54% since January, and many of the companies' shares have plunged below the prices offered by their rights issues.
"Over 80% of Indian companies' foreign-currency convertible bonds are under water, and nowhere close to conversion prices" says Devina Mehra, managing director of First Global Securities in Mumbai.
Companies that didn't follow through on deals are now counting their blessings. For instance, telecom operators Bharti Airtel and Reliance-ADAG, two ardent suitors (BusinessWeek.com, 5/27/08) that had been wooing South African telecom company MTN Group in May, must be relieved they didn't see the deals through. On Oct. 10, cash-rich Infosys Technologies (INFY) tamely gave up its hold on British consulting company Axon when local competitor HCL outbid it for $789 million, saving Infosys $719 million.
Scrambling to Renegotiate Deals
Hit by a credit squeeze at home, companies that succeeded in making deals are looking at alternate routes for financing. Tata Motors and Hindalco, for instance, are raising money by selling some family jewels and unlocking the cross-holdings within group companies. Tata Motors, which owns stakes in subsidiaries like Tata Daewoo and Tata Technologies, has said it would unravel some of its investments. Hindalco, which has a stake in mobile operator Idea Cellular, has said it also will unlock cross-holdings.
Suzlon, according to the company's chief operating officer, Sumant Sinha, is hopeful the company will be able to get bank financing. Like most central banks, the Reserve Bank of India has slashed banks' reserve requirements, lowered lending rates, eased curbs on external commercial borrowings, and asked domestic banks to spruce up their lending to boost the markets and economic activity. Although few banks are making loans to companies, "borrowing from the market should be more comfortable now," says Sinha.
Did India Inc. go overboard on M&As? "Many of the companies' decisions might have been right six months ago. Today it's a humbling experience for them, as nobody saw the crisis coming" says Rohit Kapur, corporate finance head of advisory firm KPMG India. However, others say India ignored the writing on the wall. Ashu Dutt, the Asia M&A head of Northbridge Capital, says the long bull run in India "spoiled" companies. "In a bull market, rational views get smothered by the easy availability of liquidity," he adds.
Companies that got into debt traps are now scrambling to renegotiate their deals and debts. Sterlite Industries, the Indian arm of Vedanta Resources, the London-listed metals corporation, won the $2.6 billion bid for bankrupt American copper miner Asarco in June. With copper prices tumbling since then, a Sterlite manager says the company is close to wrapping up the deal at a renegotiated price which is lower.
And there's plenty of renegotiating that'll happen now. The way out, say analysts, is simple: Keep your wallet shut. Indian companies need to reduce costs and become innovative in their product development, marketing, and operational costs, say analysts. But can they? Or will India's companies fumble and lose their way into global oblivion? Bankers have a solution: It's time for some serious business rationalization, says J.M. Financial's Kampani. "If Indian companies have global ambitions," he says, "then they better face and rough out the global crisis, too."
Lakshman covers India business for BusinessWeek
These days when KPMG's Mumbai corporate finance head Rohit Kapur meets Indian chief executives, he finds a marked difference in the corner suite talk. Until recently, Indian bosses were still firming up their mergers-and-acquisition shopping itinerary. No longer. "Now they talk of rationalizing their business portfolio and monetizing assets to expand their core businesses," he says.
Until a few months ago, India's conglomerates had been scouring the world for M&A targets. Thanks to a long bull run in the Indian stock market and easy availability of finance, cash-flush companies were on an acquisition rampage (BusinessWeek.com, 5/15/08) from the U.S. to Australia, scooping up everything from cinemas to design houses to consumer-products companies. Indian companies spent $90 billion on M&A since 2007, according to Hong Kong research firm Dealogic. Among the most prominent was Reliance—Anil Dhirubhai Ambani Group (Reliance—ADAG), which invested $500 million in DreamWorks Studio in June and in the past two years made acquisitions ranging from cinemas in the U.S. to social networking sites in India.
But as the credit crunch deepens, Indian companies that shopped around the world are feeling the strain. Tata Motors (TTM), aluminum maker Hindalco, and turbine maker Suzlon Energy saw recent rights issues flop. Suzlon Energy withdrew a $360 million rights offering on Oct. 27, citing an adverse market response. The company also shelved plans to set up a tower manufacturing facility in India.
Buying Sprees
The companies had been raising the money to pay off loans for big-ticket global purchases. Tata Motors acquired Jaguar and Land Rover (BusinessWeek.com, 3/26/08) from Ford (F) in March for $2.3 billion. Sister company Tata Steel had acquired Anglo-Dutch steelmaker Corus for $12.1 billion in January 2007. Hindalco spent $6.3 billion for Atlanta aluminum rolled products maker Novelis early last year. Suzlon had been on a buying spree too, buying Belgium's Hansen Transmissions in 2006 and Germany's REPower Systems in May 2007 for $1.6 billion. Suzlon had been trying to raise $360 million to buy out the minority shareholders in REPower.
Now companies are struggling to come up with the cash to pay for these deals. India Inc. has $45 billion in foreign-currency borrowings used for expansion and acquisitions when rocketing stock valuations in the domestic market made external borrowing more appealing. But in today's tough financial environment, the buying sprees and expansion plans have come to haunt companies. The Indian market is down 54% since January, and many of the companies' shares have plunged below the prices offered by their rights issues.
"Over 80% of Indian companies' foreign-currency convertible bonds are under water, and nowhere close to conversion prices" says Devina Mehra, managing director of First Global Securities in Mumbai.
Companies that didn't follow through on deals are now counting their blessings. For instance, telecom operators Bharti Airtel and Reliance-ADAG, two ardent suitors (BusinessWeek.com, 5/27/08) that had been wooing South African telecom company MTN Group in May, must be relieved they didn't see the deals through. On Oct. 10, cash-rich Infosys Technologies (INFY) tamely gave up its hold on British consulting company Axon when local competitor HCL outbid it for $789 million, saving Infosys $719 million.
Scrambling to Renegotiate Deals
Hit by a credit squeeze at home, companies that succeeded in making deals are looking at alternate routes for financing. Tata Motors and Hindalco, for instance, are raising money by selling some family jewels and unlocking the cross-holdings within group companies. Tata Motors, which owns stakes in subsidiaries like Tata Daewoo and Tata Technologies, has said it would unravel some of its investments. Hindalco, which has a stake in mobile operator Idea Cellular, has said it also will unlock cross-holdings.
Suzlon, according to the company's chief operating officer, Sumant Sinha, is hopeful the company will be able to get bank financing. Like most central banks, the Reserve Bank of India has slashed banks' reserve requirements, lowered lending rates, eased curbs on external commercial borrowings, and asked domestic banks to spruce up their lending to boost the markets and economic activity. Although few banks are making loans to companies, "borrowing from the market should be more comfortable now," says Sinha.
Did India Inc. go overboard on M&As? "Many of the companies' decisions might have been right six months ago. Today it's a humbling experience for them, as nobody saw the crisis coming" says Rohit Kapur, corporate finance head of advisory firm KPMG India. However, others say India ignored the writing on the wall. Ashu Dutt, the Asia M&A head of Northbridge Capital, says the long bull run in India "spoiled" companies. "In a bull market, rational views get smothered by the easy availability of liquidity," he adds.
Companies that got into debt traps are now scrambling to renegotiate their deals and debts. Sterlite Industries, the Indian arm of Vedanta Resources, the London-listed metals corporation, won the $2.6 billion bid for bankrupt American copper miner Asarco in June. With copper prices tumbling since then, a Sterlite manager says the company is close to wrapping up the deal at a renegotiated price which is lower.
And there's plenty of renegotiating that'll happen now. The way out, say analysts, is simple: Keep your wallet shut. Indian companies need to reduce costs and become innovative in their product development, marketing, and operational costs, say analysts. But can they? Or will India's companies fumble and lose their way into global oblivion? Bankers have a solution: It's time for some serious business rationalization, says J.M. Financial's Kampani. "If Indian companies have global ambitions," he says, "then they better face and rough out the global crisis, too."
Lakshman covers India business for BusinessWeek
Tech - End of Instant Messaging as we know it
Douglas MacMillan
It's the end of instant messaging as we know it. Those chat boxes once commonplace on a computer desktop amid documents, Web browsers, and spreadsheets are giving way to a new breed of user-friendly, real-time conversation tools that Internet companies hope will keep users engaged with their content—and the advertising that appears alongside it.
Case in point: Microsoft's (MSFT) Nov. 13 announcement that it will integrate its instant message service, Messenger, used by 300 million people, more closely with its Windows Live e-mail and social networking sites. So instead of having to toggle to a separate window, downloaded to a desktop, users can strike up a real-time conversation with someone else right from an application they're already using—say, Hotmail.
Like other companies hoping to make money from the Internet, Microsoft is responding to consumers' waning interest in standalone IM tools and their desire for chat features closely connected to their favorite sites. Like e-mail, games, and other categories that have gradually migrated away from downloaded and off-the-shelf software, instant messaging is shifting toward the Web, where it can be accessed from any computer while taking up no space on a hard drive.
Embedded IM
AOL (TWX) Instant Messenger, the desktop chat program that was once the gold standard in the category, saw unique visitors decline 4% in the year ending September 2008, according to comScore (SCOR). During the same period, two of the top four standalone programs—AOL's ICQ and Chinese-language Tencent QQ—had declines in minutes used.
Instead of spending time with these old-fashioned chat windows, Web users are flocking to sites like Facebook and Google's (GOOG) Gmail, where instant messaging tools are more closely embedded in what they are doing. For Web operators that get it right, embedded IM could increase the amount of time users spend on their sites, engaging with content while chatting with pals. Embedded Web-based IM tools may also appeal more to advertisers.
Most web users over 20 years old were introduced to instant messaging by AOL's pioneering service. But the wide range of chat options is making it harder to compete for instant messages, says David Liu, senior vice-president of AOL People Networks. "Activity [in AIM] is going down because of all the different sites available," Liu says. "So we're working on making AIM more social and viral."
Facebook's Chatting Toolbar
One way AOL hopes to do that is by linking AIM to the company's social networking site, Bebo. In early 2009, AOL plans to unveil an IM dashboard that travels with Bebo users from page to page. The selling point: Every one of AIM's 30 million users will get instant access to a Bebo profile page that's already set up with their "buddy list."
Instant messaging is also top-of-mind at the world's fastest-growing social network, Facebook. Earlier this year, the site installed a toolbar that lets friends chat one-on-one while they browse the site. According to product manager Peter Deng, some 75 million people—a little more than 60% of active users—have tried out the toolbar. "We had messaging, we had wall-to-wall [posting], and we thought having that private conversation was necessary," Deng says. "It enables a channel of constant communication between you and your friends."
Some smaller social networks are catching on to chat's appeal, too. Earlier this year, Joe Greenstein, chief executive of Flixster, an online social network for film buffs, noticed that users were interacting with each other in real time, discussing and suggesting movies, rather than posting a review and coming back to check for responses later. Some days, users would leave tens of thousands of short messages. So in October, Greenstein introduced a new feature, a Web-based instant messaging toolbar that lets Flixster users see which friends are online and chat with them one-on-one.
Next: Embedded Advertising
Flixster's toolbar was created by Meebo, a Silicon Valley startup launched in 2005. Over the next six months, Meebo will roll out similar Web-based IM toolbars for 19 other sites looking to increase community engagement. Meebo Chief Executive Seth Sternberg says the pitch is easy for Web publishers looking to keep users on their sites longer: "The interesting thing about live chat is that it forces the user to focus persistently," he says. "If a site's [average engagement time] is three minutes, we can move it to six."
Eventually, Flixster and other Meebo partner sites will embed advertising inside the IM toolbar, or in text conversations themselves. Sternberg says this will present a new opportunity to advertise in IM via a new target. A Flixster user, for example, might be able to view a trailer for a movie inside the chat window itself, all the while exchanging short messages about it with a pal.
It's about time Web companies breathe new life into IM, says Eric Druckenmiller, vice-president of media at interactive marketing agency Deep Focus. "If you look at the distribution of IM, it dwarfs [many other channels of online advertising], but marketers haven't paid attention to it since the late '90s," he says. But a recent project where Deep Focus placed ads for Havaianas sandals on Meebo's own IM site convinced him that the channel has more potential for advertising.
When Microsoft unveiled the new chat functions on its Windows Live pages, it was in some ways playing catch-up to its biggest rivals, Google and Yahoo! (YHOO). In the past two years, as those sites have vied to become one-stop destinations for online communities, they have included IM tools throughout their pages. The idea is to make everything from e-mail to spreadsheets more collaborative and open—and ultimately, more addictive and profitable.
Yahoo's Aggressive IM Branding
Google offers chat capability in its Google Talk desktop application, in Gmail Chat, within such collaborative Google Docs like the word processor, and in widgets that users can install on their custom iGoogle home pages. "Talk is about choice and we want people to have instant messaging with them where they need it," says Seth Demsey, product manager for Google Talk. On Nov. 12 the company announced a new feature for Gmail Chat: free videoconferencing.
Yahoo has 116 million users of its standalone IM application, compared with Google Talk's 6 million. Yahoo has been more aggressive at introducing advertising to IM. It uses display ads and contextual ads, such as offering links to a Yahoo map if users enter an address. Yahoo also employs branded entertainment—a mini-Coca-Cola (KO) soccer game is embedded in the IM window—and branded virtual goods, such as a customized background theme around a musical act or sports team.
Is there room for so many different IM services on the Web? Possibly. According to Palo Alto-based technology researcher The Radicati Group, consumer IM traffic will grow to 711 million users worldwide in 2011, a 43% increase from 2008.
But still others are predicting that IM users will increasingly want to tear down the walls between platforms and find their entire community of friends in one place—whether it looks like a toolbar, an e-mail folder, or a desktop application.
Douglas MacMillan is a staff writer for BusinessWeek.com in New York.
It's the end of instant messaging as we know it. Those chat boxes once commonplace on a computer desktop amid documents, Web browsers, and spreadsheets are giving way to a new breed of user-friendly, real-time conversation tools that Internet companies hope will keep users engaged with their content—and the advertising that appears alongside it.
Case in point: Microsoft's (MSFT) Nov. 13 announcement that it will integrate its instant message service, Messenger, used by 300 million people, more closely with its Windows Live e-mail and social networking sites. So instead of having to toggle to a separate window, downloaded to a desktop, users can strike up a real-time conversation with someone else right from an application they're already using—say, Hotmail.
Like other companies hoping to make money from the Internet, Microsoft is responding to consumers' waning interest in standalone IM tools and their desire for chat features closely connected to their favorite sites. Like e-mail, games, and other categories that have gradually migrated away from downloaded and off-the-shelf software, instant messaging is shifting toward the Web, where it can be accessed from any computer while taking up no space on a hard drive.
Embedded IM
AOL (TWX) Instant Messenger, the desktop chat program that was once the gold standard in the category, saw unique visitors decline 4% in the year ending September 2008, according to comScore (SCOR). During the same period, two of the top four standalone programs—AOL's ICQ and Chinese-language Tencent QQ—had declines in minutes used.
Instead of spending time with these old-fashioned chat windows, Web users are flocking to sites like Facebook and Google's (GOOG) Gmail, where instant messaging tools are more closely embedded in what they are doing. For Web operators that get it right, embedded IM could increase the amount of time users spend on their sites, engaging with content while chatting with pals. Embedded Web-based IM tools may also appeal more to advertisers.
Most web users over 20 years old were introduced to instant messaging by AOL's pioneering service. But the wide range of chat options is making it harder to compete for instant messages, says David Liu, senior vice-president of AOL People Networks. "Activity [in AIM] is going down because of all the different sites available," Liu says. "So we're working on making AIM more social and viral."
Facebook's Chatting Toolbar
One way AOL hopes to do that is by linking AIM to the company's social networking site, Bebo. In early 2009, AOL plans to unveil an IM dashboard that travels with Bebo users from page to page. The selling point: Every one of AIM's 30 million users will get instant access to a Bebo profile page that's already set up with their "buddy list."
Instant messaging is also top-of-mind at the world's fastest-growing social network, Facebook. Earlier this year, the site installed a toolbar that lets friends chat one-on-one while they browse the site. According to product manager Peter Deng, some 75 million people—a little more than 60% of active users—have tried out the toolbar. "We had messaging, we had wall-to-wall [posting], and we thought having that private conversation was necessary," Deng says. "It enables a channel of constant communication between you and your friends."
Some smaller social networks are catching on to chat's appeal, too. Earlier this year, Joe Greenstein, chief executive of Flixster, an online social network for film buffs, noticed that users were interacting with each other in real time, discussing and suggesting movies, rather than posting a review and coming back to check for responses later. Some days, users would leave tens of thousands of short messages. So in October, Greenstein introduced a new feature, a Web-based instant messaging toolbar that lets Flixster users see which friends are online and chat with them one-on-one.
Next: Embedded Advertising
Flixster's toolbar was created by Meebo, a Silicon Valley startup launched in 2005. Over the next six months, Meebo will roll out similar Web-based IM toolbars for 19 other sites looking to increase community engagement. Meebo Chief Executive Seth Sternberg says the pitch is easy for Web publishers looking to keep users on their sites longer: "The interesting thing about live chat is that it forces the user to focus persistently," he says. "If a site's [average engagement time] is three minutes, we can move it to six."
Eventually, Flixster and other Meebo partner sites will embed advertising inside the IM toolbar, or in text conversations themselves. Sternberg says this will present a new opportunity to advertise in IM via a new target. A Flixster user, for example, might be able to view a trailer for a movie inside the chat window itself, all the while exchanging short messages about it with a pal.
It's about time Web companies breathe new life into IM, says Eric Druckenmiller, vice-president of media at interactive marketing agency Deep Focus. "If you look at the distribution of IM, it dwarfs [many other channels of online advertising], but marketers haven't paid attention to it since the late '90s," he says. But a recent project where Deep Focus placed ads for Havaianas sandals on Meebo's own IM site convinced him that the channel has more potential for advertising.
When Microsoft unveiled the new chat functions on its Windows Live pages, it was in some ways playing catch-up to its biggest rivals, Google and Yahoo! (YHOO). In the past two years, as those sites have vied to become one-stop destinations for online communities, they have included IM tools throughout their pages. The idea is to make everything from e-mail to spreadsheets more collaborative and open—and ultimately, more addictive and profitable.
Yahoo's Aggressive IM Branding
Google offers chat capability in its Google Talk desktop application, in Gmail Chat, within such collaborative Google Docs like the word processor, and in widgets that users can install on their custom iGoogle home pages. "Talk is about choice and we want people to have instant messaging with them where they need it," says Seth Demsey, product manager for Google Talk. On Nov. 12 the company announced a new feature for Gmail Chat: free videoconferencing.
Yahoo has 116 million users of its standalone IM application, compared with Google Talk's 6 million. Yahoo has been more aggressive at introducing advertising to IM. It uses display ads and contextual ads, such as offering links to a Yahoo map if users enter an address. Yahoo also employs branded entertainment—a mini-Coca-Cola (KO) soccer game is embedded in the IM window—and branded virtual goods, such as a customized background theme around a musical act or sports team.
Is there room for so many different IM services on the Web? Possibly. According to Palo Alto-based technology researcher The Radicati Group, consumer IM traffic will grow to 711 million users worldwide in 2011, a 43% increase from 2008.
But still others are predicting that IM users will increasingly want to tear down the walls between platforms and find their entire community of friends in one place—whether it looks like a toolbar, an e-mail folder, or a desktop application.
Douglas MacMillan is a staff writer for BusinessWeek.com in New York.
Lifestyle - US;Engineering - Suddenly sexy for College Grads
Vivek Wadhwa
Early in his college career, Tyler Bosmeny assumed that after graduating, he would do what hundreds of other self-respecting Harvard University engineering, math, and science students do: take a job on Wall Street. "I had done a summer internship in investment banking, and part of me always figured that I'd be working in finance after Harvard," says Bosmeny, an applied mathematics major. But on graduation in June 2009, Bosmeny will work instead for an Internet startup he founded with five undergraduates from top schools who, like him, were on student newspapers. Called PaperG, the startup sells online advertising to local businesses.
Only three years ago Bosmeny could have written his ticket for an entry-level job in the financial sector with a starting salary north of six figures. Those days are over, at least for now. The global market crash and the contraction of the financial sector has dramatically changed the decision matrix for tens of thousands of promising math, science, and engineering graduates such as Tyler. Students who in years past would have flocked to Wall Street are considering careers in engineering and technology. Suddenly, science is sexy.
Ranjitha Kurra, a student at the Masters of Engineering Management program at Duke University, says she interned as a business analyst at Barclays Capital (BARC) this summer and had an offer for a full-time job. But following Barclays' recent acquisition of Lehman Brothers, Kurra was told she may not have a job when she graduates in December. She worries that even if Barclays were to meet its commitment, she might be laid off within months. She doesn't want to return to her home in India yet, so she is looking for a job in engineering, an area she thinks will be safer than anything in financial services.
Safety is Relative
Sure, the tech sector is shaky, too. Witness Intel's (INTC) Nov. 12 announcement that fourth-quarter sales will fall short of previous forecasts (BusinessWeek.com, 11/13/08) and Cisco's recent disclosure that sales in the period that ends in January will decline. But few expect Silicon Valley to undergo the carnage suffered by Wall Street.
Another Duke student, Vinay Lekharaju, says his dream since childhood has been to become an investment banker. He believed that a solid education in engineering and mathematics, combined with courses in financial management, would position him well for this career. He says he has been applying to every financial service company he can, but unlike previous semesters, when peers would get multiple job offers, he hasn't even been called for an interview. So Lekharaju is looking for a job in information technology.
It stands to reason that when even the best Wall Street firms, such as Goldman Sachs (GS), are laying off staff, students aren't getting job offers and are having to rethink their options. Indeed, even sectors once considered fallbacks, such as regional banks, boutique investment banking, or insurance, are busily handing out pink slips. Investment banking isn't the holy grail of professions anymore. Duke's engineers are increasingly looking at such companies as IBM (IBM), Microsoft (MSFT), Medtronic (MDT), and The Parsons Corp.
Preferring Startups
When I joined the Pratt School of Engineering at Duke University in August 2005, more than one-third of the masters of engineering management students from the outgoing class told me they were taking jobs in financial services. From the class of 2007, 22% went into finance. In 2008, the percentage slid to 17%. I sent an e-mail last week asking the 112-strong class of 2009 how many were interested in financial service jobs. Only three, including Kurra and Lekharaju, responded in the affirmative. Nearly all of the others said they wanted to become engineers.
Shijie Deng, director of quantitative and computational finance masters at Georgia Tech, says some of his students are getting job offers outside the U.S., from such operations as the Hong Kong outpost of Merrill Lynch, which was recently acquired by Bank of America (BAC). Still, the job market is tough, and demand for his program is down. Its graduates increasingly are looking for jobs in consulting, energy, and traditional engineering that have an interface with finance but aren't in the thick of the industry. Others are applying for PhDs.
There also may be many others like Tyler. "Over the last few years, many students who have had innovative ideas ultimately chose to take a more risk-averse career in investment banking or consulting," says Travis May, another Harvard undergrad who put off finishing school to relaunch StudentBusinesses.com, an online service designed to match student-founded companies with angel funding. "Now, there is less of a pull to go in a traditional route, and the upside of that is it makes startups more compelling as a career path," May says.
The venture capital community appears to have taken note of the newfound disillusionment with finance. First Round Capital, an early-stage VC firm based in New York City, launched "Leave Wall Street, Join a Startup," a Web site that lists job openings at its portfolio companies and encourages financiers to jump to tech startups. The campaign got heavy play—and approving mentions—in the blogosphere.
The societal benefit of developing a new type of credit default swap has always been dubious. In an era when thousands of amateur stock analysts post their thoughts online, expert opinions from Wall Street analysts may also provide less value. On the other hand, we need our best and brightest engineers developing new types of medical devices, renewable energy sources, solutions for global warming, and ways for sustaining the environment and purifying water. And we need them to start companies that help America keep its innovative edge. So maybe the dark cloud over finance has a silver lining, and investment banking's loss will be engineering's gain.
Wadhwa is Wertheim Fellow at the Harvard Law School and executive in residence at Duke University. He is a tech entrepreneur who founded two technology companies. His research can be found at www.globalizationresearch.com. .
Early in his college career, Tyler Bosmeny assumed that after graduating, he would do what hundreds of other self-respecting Harvard University engineering, math, and science students do: take a job on Wall Street. "I had done a summer internship in investment banking, and part of me always figured that I'd be working in finance after Harvard," says Bosmeny, an applied mathematics major. But on graduation in June 2009, Bosmeny will work instead for an Internet startup he founded with five undergraduates from top schools who, like him, were on student newspapers. Called PaperG, the startup sells online advertising to local businesses.
Only three years ago Bosmeny could have written his ticket for an entry-level job in the financial sector with a starting salary north of six figures. Those days are over, at least for now. The global market crash and the contraction of the financial sector has dramatically changed the decision matrix for tens of thousands of promising math, science, and engineering graduates such as Tyler. Students who in years past would have flocked to Wall Street are considering careers in engineering and technology. Suddenly, science is sexy.
Ranjitha Kurra, a student at the Masters of Engineering Management program at Duke University, says she interned as a business analyst at Barclays Capital (BARC) this summer and had an offer for a full-time job. But following Barclays' recent acquisition of Lehman Brothers, Kurra was told she may not have a job when she graduates in December. She worries that even if Barclays were to meet its commitment, she might be laid off within months. She doesn't want to return to her home in India yet, so she is looking for a job in engineering, an area she thinks will be safer than anything in financial services.
Safety is Relative
Sure, the tech sector is shaky, too. Witness Intel's (INTC) Nov. 12 announcement that fourth-quarter sales will fall short of previous forecasts (BusinessWeek.com, 11/13/08) and Cisco's recent disclosure that sales in the period that ends in January will decline. But few expect Silicon Valley to undergo the carnage suffered by Wall Street.
Another Duke student, Vinay Lekharaju, says his dream since childhood has been to become an investment banker. He believed that a solid education in engineering and mathematics, combined with courses in financial management, would position him well for this career. He says he has been applying to every financial service company he can, but unlike previous semesters, when peers would get multiple job offers, he hasn't even been called for an interview. So Lekharaju is looking for a job in information technology.
It stands to reason that when even the best Wall Street firms, such as Goldman Sachs (GS), are laying off staff, students aren't getting job offers and are having to rethink their options. Indeed, even sectors once considered fallbacks, such as regional banks, boutique investment banking, or insurance, are busily handing out pink slips. Investment banking isn't the holy grail of professions anymore. Duke's engineers are increasingly looking at such companies as IBM (IBM), Microsoft (MSFT), Medtronic (MDT), and The Parsons Corp.
Preferring Startups
When I joined the Pratt School of Engineering at Duke University in August 2005, more than one-third of the masters of engineering management students from the outgoing class told me they were taking jobs in financial services. From the class of 2007, 22% went into finance. In 2008, the percentage slid to 17%. I sent an e-mail last week asking the 112-strong class of 2009 how many were interested in financial service jobs. Only three, including Kurra and Lekharaju, responded in the affirmative. Nearly all of the others said they wanted to become engineers.
Shijie Deng, director of quantitative and computational finance masters at Georgia Tech, says some of his students are getting job offers outside the U.S., from such operations as the Hong Kong outpost of Merrill Lynch, which was recently acquired by Bank of America (BAC). Still, the job market is tough, and demand for his program is down. Its graduates increasingly are looking for jobs in consulting, energy, and traditional engineering that have an interface with finance but aren't in the thick of the industry. Others are applying for PhDs.
There also may be many others like Tyler. "Over the last few years, many students who have had innovative ideas ultimately chose to take a more risk-averse career in investment banking or consulting," says Travis May, another Harvard undergrad who put off finishing school to relaunch StudentBusinesses.com, an online service designed to match student-founded companies with angel funding. "Now, there is less of a pull to go in a traditional route, and the upside of that is it makes startups more compelling as a career path," May says.
The venture capital community appears to have taken note of the newfound disillusionment with finance. First Round Capital, an early-stage VC firm based in New York City, launched "Leave Wall Street, Join a Startup," a Web site that lists job openings at its portfolio companies and encourages financiers to jump to tech startups. The campaign got heavy play—and approving mentions—in the blogosphere.
The societal benefit of developing a new type of credit default swap has always been dubious. In an era when thousands of amateur stock analysts post their thoughts online, expert opinions from Wall Street analysts may also provide less value. On the other hand, we need our best and brightest engineers developing new types of medical devices, renewable energy sources, solutions for global warming, and ways for sustaining the environment and purifying water. And we need them to start companies that help America keep its innovative edge. So maybe the dark cloud over finance has a silver lining, and investment banking's loss will be engineering's gain.
Wadhwa is Wertheim Fellow at the Harvard Law School and executive in residence at Duke University. He is a tech entrepreneur who founded two technology companies. His research can be found at www.globalizationresearch.com. .
Business -QlikTech named European High-Tech Entrepreneur of the Year
Jennifer L. Schenker
The winner of this year’s Audemars Piguet Changing Times Award is QlikTech, a company I wrote about earlier this year when BusinessWeek profiled Europe’s billion dollar babies. The award goes to the best young high-tech company originating in Europe that has demonstrated hyper-growth and a disruptive business model.
QlikTech, which was founded in Sweden in 1993 and had sales last year of $80 million, makes business intelligence software tools to help companies analyze and interpret information stored in corporate databases.
Now headquartered in Radnor, Penn., it has over 10,000 clients in 90 countries. When I wrote about it last February Joe Golden, a partner at Accel, one of QlikTech’s investors, referred to it as “the hottest software company to come out of Europe since SAP and Business Objects.” At the time QlikTech had hired Morgan Stanley as its investment banker in preparation for an initial public offering, and industry sources expected the valuation to be at least $1 billion. The company is still gaining traction—it’s growing at a rate of 75% annually—but an IPO is not a realistic exit near term for any company in the current economic environment.
A special Audemars Piguet award was additionally given for the first time this year to the best European med-tech company. The winner is CoreValve, which was founded in Paris in 2001 and later funded by venture capital firm Sofinnova Partners. CoreValve's technology allows diseased aortic heart valves to be replaced without the need to crack open patients' chests and perform open heart surgery. Its technology permits aortic valve replacement to be performed via cardiac catheterization. The company, which is now headquartered in Irvine, Calif., racked up $50 million in sales this year and is expected to do triple that amount next year. Some 2,000 patients in Europe already have benefited from its technology
The winner of the Next Gem award, an award given each year by Audemars Piguet to the best young company, is Britain's Alfresco. The company, which makes open-source content management software, was founded by two veterans in the software sector: John Powell, the former chief operating officer of Business Objects, and John Newton, the co-founder of Documentum, a traditional content management company. Before Alfresco came along only 25% of companies could afford content management software. Some 60,000 organizations use Alfresco's software for free, and around 700 pay to subscribe to use the service more effectively. The company aims to be profitable by next year.
Audemars Piguet's Changing Times awards are the initiative of the European Tech Tour Association, a 10-year-old not-for-profit association that connects Europe's best start-ups with investors. The winner of the 2006 Changing Times award was MySQL, which was sold to Sun Microsystems for $1 billion in January of this year.
The winner of this year’s Audemars Piguet Changing Times Award is QlikTech, a company I wrote about earlier this year when BusinessWeek profiled Europe’s billion dollar babies. The award goes to the best young high-tech company originating in Europe that has demonstrated hyper-growth and a disruptive business model.
QlikTech, which was founded in Sweden in 1993 and had sales last year of $80 million, makes business intelligence software tools to help companies analyze and interpret information stored in corporate databases.
Now headquartered in Radnor, Penn., it has over 10,000 clients in 90 countries. When I wrote about it last February Joe Golden, a partner at Accel, one of QlikTech’s investors, referred to it as “the hottest software company to come out of Europe since SAP and Business Objects.” At the time QlikTech had hired Morgan Stanley as its investment banker in preparation for an initial public offering, and industry sources expected the valuation to be at least $1 billion. The company is still gaining traction—it’s growing at a rate of 75% annually—but an IPO is not a realistic exit near term for any company in the current economic environment.
A special Audemars Piguet award was additionally given for the first time this year to the best European med-tech company. The winner is CoreValve, which was founded in Paris in 2001 and later funded by venture capital firm Sofinnova Partners. CoreValve's technology allows diseased aortic heart valves to be replaced without the need to crack open patients' chests and perform open heart surgery. Its technology permits aortic valve replacement to be performed via cardiac catheterization. The company, which is now headquartered in Irvine, Calif., racked up $50 million in sales this year and is expected to do triple that amount next year. Some 2,000 patients in Europe already have benefited from its technology
The winner of the Next Gem award, an award given each year by Audemars Piguet to the best young company, is Britain's Alfresco. The company, which makes open-source content management software, was founded by two veterans in the software sector: John Powell, the former chief operating officer of Business Objects, and John Newton, the co-founder of Documentum, a traditional content management company. Before Alfresco came along only 25% of companies could afford content management software. Some 60,000 organizations use Alfresco's software for free, and around 700 pay to subscribe to use the service more effectively. The company aims to be profitable by next year.
Audemars Piguet's Changing Times awards are the initiative of the European Tech Tour Association, a 10-year-old not-for-profit association that connects Europe's best start-ups with investors. The winner of the 2006 Changing Times award was MySQL, which was sold to Sun Microsystems for $1 billion in January of this year.
Tech - Review;New iPod Touch
Cliff Edwards
The Good: Built-in Wi-Fi for music downloads and Web access, large screen, a wealth of applications
The Bad: Slightly underpowered external speakers
The Bottom Line: A poor man's iPhone, the Touch offers wireless music downloads, mobile Web access, and hundreds of applications while on the go
They say sequels often fail to live up to the original. That's not so with the second generation of Apple's (AAPL) iPod Touch. Apple has managed to make the Touch look better, work better, and deliver more features—all for a $229 starting price, significantly cheaper than the previous $299 entry-level version. The changes, while subtle, are so significant that I give the second-generation Touch a rare perfect score.
The Touch, while an iPod, is close to the iPhone in lineage. It has the same touchscreen, plays music and videos the same way, and includes a wireless Internet connection that lets you access the Web from your home network and wireless hotspots, such as those set up by AT&T (T) in Starbucks (SBUX).
Apple tweaked the look of the Touch, too. It's a lot thinner than the previous Touch, measuring 4.1 inches by 2.4 inches by 0.33 inches, and weighs a scant 4.05 ounces. The back sports a contoured stainless-steel casing, whereas the updated iPhone switches to glossy black or white plastic.
New Speakers
A year ago, when I reviewed (BusinessWeek.com, 10/19/07) the original Touch, many readers took me to task for complaining that there was no dedicated volume button for music and no built-in speaker for listening to music without headphones. In the new generation, Apple's engineers addressed both complaints by adding a rocker volume button on the left side and speakers on the bottom. They also added software to let you fetch e-mail and use other applications previously limited to the iPhone.
Perhaps the biggest shocker is Apple's decision to sell $29 headphones with a built-in microphone. The upshot? Users can download third-party applications from iTunes that will turn a Web-connected Touch into a Skype (EBAY) phone. In effect, the combination of features turns your Touch into a poor man's iPhone, letting you make cheap calls anywhere around the world without signing up for AT&T's expensive two-year service contract.
I've always felt the Touch ($229 to start) has stood in the shadow of the iPhone. But Apple's decision to let developers deliver software to both the Touch and the iPhone actually makes the Touch a more important product for Apple in my mind.
Blackjack, Too
The devices' versatility is a key consideration. Not only is it a great high-end iPod but it's also fast becoming a neat handheld game machine for casual users. In the few weeks I've been using it, I've found myself launching a quick game of blackjack or slots while standing in a line or waiting in an airport.
And because of its great processing power, accelerometer, wireless access, and surprisingly decent battery life, the Touch is limited only by the imaginations of a growing stable of developers. One example: Wireless-music company Sonos in late October offered users a free application that turns the Touch into an additional wireless controller for accessing music from a PC, Mac, or online music-subscription service.
Another great new piece of software on the Touch is called Genius. With it, you select a song and press an icon that looks like an atom on the top of the screen. The software creates a playlist of tracks in your music library, based in part on Gracenote's digital music-database technology, that are similar.
Fatter Margins
The iPhone can do all this, too. Because the Touch does not include a 3G radio, though, the company likely gets slightly better margins with each Touch sold.
The Touch now sits in a class by itself. No longer simply a high-end iPod, it has become the foundation of what's sure to be an increasingly important handheld computing platform for Apple. Rivals should take note: This is one Apple product that could seriously take a bite out of the competition.
Edwards is a correspondent in BusinessWeek's Silicon Valley bureau.
The Good: Built-in Wi-Fi for music downloads and Web access, large screen, a wealth of applications
The Bad: Slightly underpowered external speakers
The Bottom Line: A poor man's iPhone, the Touch offers wireless music downloads, mobile Web access, and hundreds of applications while on the go
They say sequels often fail to live up to the original. That's not so with the second generation of Apple's (AAPL) iPod Touch. Apple has managed to make the Touch look better, work better, and deliver more features—all for a $229 starting price, significantly cheaper than the previous $299 entry-level version. The changes, while subtle, are so significant that I give the second-generation Touch a rare perfect score.
The Touch, while an iPod, is close to the iPhone in lineage. It has the same touchscreen, plays music and videos the same way, and includes a wireless Internet connection that lets you access the Web from your home network and wireless hotspots, such as those set up by AT&T (T) in Starbucks (SBUX).
Apple tweaked the look of the Touch, too. It's a lot thinner than the previous Touch, measuring 4.1 inches by 2.4 inches by 0.33 inches, and weighs a scant 4.05 ounces. The back sports a contoured stainless-steel casing, whereas the updated iPhone switches to glossy black or white plastic.
New Speakers
A year ago, when I reviewed (BusinessWeek.com, 10/19/07) the original Touch, many readers took me to task for complaining that there was no dedicated volume button for music and no built-in speaker for listening to music without headphones. In the new generation, Apple's engineers addressed both complaints by adding a rocker volume button on the left side and speakers on the bottom. They also added software to let you fetch e-mail and use other applications previously limited to the iPhone.
Perhaps the biggest shocker is Apple's decision to sell $29 headphones with a built-in microphone. The upshot? Users can download third-party applications from iTunes that will turn a Web-connected Touch into a Skype (EBAY) phone. In effect, the combination of features turns your Touch into a poor man's iPhone, letting you make cheap calls anywhere around the world without signing up for AT&T's expensive two-year service contract.
I've always felt the Touch ($229 to start) has stood in the shadow of the iPhone. But Apple's decision to let developers deliver software to both the Touch and the iPhone actually makes the Touch a more important product for Apple in my mind.
Blackjack, Too
The devices' versatility is a key consideration. Not only is it a great high-end iPod but it's also fast becoming a neat handheld game machine for casual users. In the few weeks I've been using it, I've found myself launching a quick game of blackjack or slots while standing in a line or waiting in an airport.
And because of its great processing power, accelerometer, wireless access, and surprisingly decent battery life, the Touch is limited only by the imaginations of a growing stable of developers. One example: Wireless-music company Sonos in late October offered users a free application that turns the Touch into an additional wireless controller for accessing music from a PC, Mac, or online music-subscription service.
Another great new piece of software on the Touch is called Genius. With it, you select a song and press an icon that looks like an atom on the top of the screen. The software creates a playlist of tracks in your music library, based in part on Gracenote's digital music-database technology, that are similar.
Fatter Margins
The iPhone can do all this, too. Because the Touch does not include a 3G radio, though, the company likely gets slightly better margins with each Touch sold.
The Touch now sits in a class by itself. No longer simply a high-end iPod, it has become the foundation of what's sure to be an increasingly important handheld computing platform for Apple. Rivals should take note: This is one Apple product that could seriously take a bite out of the competition.
Edwards is a correspondent in BusinessWeek's Silicon Valley bureau.
Business - Facebook's Land grab in face of a downturn (G.Read)
Spencer E. Ante
As gloom descends on Silicon Valley, most startups and giants are growing cautious and cutting back. But not Facebook. The social-networking Web site sees a bleak economy as all the more reason to press ahead with aggressive plans for growth. "This is not the time for tech companies to be cutting back; this is the time to be hitting the accelerator," says Peter Thiel, a Facebook board member and investor.
Facebook executives think they can use the economic downturn to gain ground on the competition. So they're going to great lengths to keep user growth on track in these rough times. The company is gearing up for more acquisitions, hiring rapidly, and rolling out new advertising programs. Rather than trim the site's development costs, Facebook has engineers cooking up versions in languages such as Xhosa, Tagalog, and French Canadian to go after niche audiences around the world. "We're in this game not just for five or 10 years," says Sheryl Sandberg, Facebook's chief operating officer. "We're in it for 20 to 30 years."
To fuel growth, the company asked the Securities & Exchange Commission earlier this year for an unusual exemption. Typically, private companies that exceed 500 shareholders must start disclosing their financial results publicly. (This is the law that helped push Google to go public in 2004.) Facebook is approaching that threshold, so the company asked the SEC for a waiver that will allow it to keep hiring and handing out restricted stock without public disclosure. The SEC granted the request on Oct. 14. That will help the company reach 800 employees by the end of the year, up from 400 at the close of 2007.
The company is even reducing its revenue goals to pull in more users. In January, founder and CEO Mark Zuckerberg said Facebook was shooting for revenues of $300 million to $350 million this year. But this spring, Zuckerberg and his board lowered the revenue target to $250 million to $300 million, say sources familiar with company finances. Thiel says engineers were shifted away from ad programs to concentrate on fresh features, languages, and other projects that will boost user growth. Even as the economy has weakened in recent months, Facebook has decided to stick with its spend-now, profit-later approach. "We still think it's a land grab where we have to try to get to scale first," says Thiel.
It's a gutsy strategy, increasingly rare in Silicon Valley. Last month, prominent venture firm Sequoia Capital gave a presentation to its startups titled "R.I.P. Good Times," which argued that companies must cut costs fast to survive. One Power Point slide included a skull-and-crossbones and the words "death spiral" to show the likely fate of startups that fail to come to grips with the new reality. The Sequoia view has become accepted wisdom among Valley venture capitalists, leading to layoffs at scores of companies.
Facebook isn't yet profitable. But Thiel says the company can afford to be aggressive. It has raised about $500 million and is "slightly cash-flow negative," Thiel says. At its current burn rate, he says, the company has enough cash for three or four years. "If we stopped growing, we could make money, but it makes no sense for us to stop growing," he says.
Facebook's strategy stands in contrast to that of rival MySpace (NWS). Part of Rupert Murdoch's publicly traded News Corp. (NWS), MySpace has dialed back on growth to focus on profits. Over the past year the site has expanded modestly, to 118 million users, while Facebook has more than doubled in size, to 161 million users, according to research firm comScore (SCOR).
MySpace argues that the horse race isn't that important. Travis Katz, head of international operations, says about 85% of the world's online ad spending is concentrated in five markets—the U.S., Britain, Japan, Germany, and France—and in those markets, MySpace is 30% larger than any competitor. That's one reason MySpace, though smaller in number of users, will generate an estimated $606 million in revenues this year, according to Goldman Sachs, (GS) more than twice Facebook's revenues. "We're not worried about rolling out in every single country," says Katz.
Facebook may not reach every country, but top executives like Zuckerberg give the impression they would like to. A social-networking site that can connect people with friends in Saudi Arabia or the Philippines or Tonga, they say, is simply more valuable than one that can't. Chief Financial Officer Gideon Yu says he is actively looking for deals to expand the company's reach. Top options could include sites in Brazil, Germany, India, or Japan, where Facebook does not have a strong presence. "If there's a way for us to acquire a geography or a demographic, it may be prudent to go off and buy it," says Yu.
At the same time, Facebook needs to figure out a sustainable business model. All the focus on expansion means Zuckerberg and Sandberg will have to do so in the face of a nasty downturn. Companies typically cut ad spending during recessions, especially for newer forms of ads, such as those on social-networking Web sites. "The first things to go are experimental ads," says Debra Aho Williamson, an analyst at research firm eMarketer.
VIRTUAL GIFTS
Facebook hopes to make money in three ways. Online advertising is far and away the most important, accounting for an estimated $200 million to $225 million in revenues this year. The company is also selling digital goods—electronic versions of guitars, flowers, and the like that Facebook friends give each other. Charging $1 apiece for these goods will generate $30 million to $40 million this year, estimates venture capitalist Jeremy Liew.
The third leg of Facebook's business may be the most controversial. The company is seriously considering a plan to take a cut of money from the software developers who create applications for the site. These startups make software people use on Facebook to discover new music, play games, or share slide shows. Vice-President Chamath Palihapitiya, disclosing the initiative for the first time, says the company may be able to help these startups generate more cash from advertising or e-commerce and then take a slice of that revenue. "Over the next few years, I bet we will create a very meaningful revenue model," he says. Developers already have a delicate relationship with Facebook, though, so any grab for a piece of their revenues could prove contentious.
Facebook is counting on Sandberg to make all this work. The former Google (GOOG) sales executive played a key role in turning the search giant into one of the most profitable companies in the world. Adam Freed, who used to work at Google for Sandberg, says she's both demanding and supportive. He recalls working on a presentation to set up a Google office in Dublin and having Sandberg tell him it wasn't good enough. After making suggestions, she ultimately took over Freed's computer keyboard to help him find the right words. "She was tough on me to allow me to grow," he says.
INTERACTIVE ADS
Facebook and Sandberg are working on ways to move beyond traditional online ads—the text and pictorial banners that show up on most Web sites. They believe that only by offering something truly different, as Google did, can Facebook stand out among the many sites on the Web. One example came in August when Facebook began rolling out what it calls "engagement ads." Whereas most online ads are like billboards trumpeting a slogan, engagement ads are more like digital bulletin boards, encouraging users to respond to the pitches by commenting, sharing virtual gifts, or becoming fans of the ads themselves. Some of the trial efforts have taken off. An engagement ad for Paramount Pictures' Tropic Thunder, including a trailer for the movie, generated 30,000 comments from Facebook users. "I laughed so hard I couldn't breathe," wrote one fan.
A service set to launch this winter, called Facebook Connect, will bring social-networking capabilities to CNN, CBS, and other Web sites and could make advertising more relevant to Web surfers. The service tracks what people search for on the Net and what kinds of sites they visit. If Facebook learns that you frequent food sites, for instance, it could serve up an ad for a subscription to Gourmet magazine. To support these efforts, Facebook is more than doubling its salesforce, to 130. The team will complement the 400 salespeople at Microsoft (MSFT) responsible for selling Facebook's traditional display ads.
The company is making progress in attracting deep-pocketed advertisers—one reason revenues will as much as double from last year's $150 million. Clients include Blockbuster, Mazda, and Ben & Jerry's. Katie O'Brien, digital marketing manager for the Vermont ice cream maker, says her ad campaign this spring went better than expected. When the company let Facebook users give each other virtual ice cream cones, it anticipated hitting 250,000 cones. Instead, it gave away twice that number of icons. "It created good brand awareness and buzz," she says.
Still, O'Brien says social networks have yet to become a core part of Ben & Jerry's marketing. The company spends most of its digital ad budget on search-engine marketing and its own Web site. Social-network ads don't have the same track record, she says, and are time-consuming to create. For Facebook to become more successful on Madison Avenue, O'Brien and other marketers say, the company needs to make it easier to develop, automate, and manage ad campaigns. "Social networking has been fun," she says. But it will "probably take another successful year" for it to become essential.
Such skepticism doesn't faze Sandberg. Facebook, she says, is in this for the long haul. That's why it's so determined to forge ahead, even as others succumb to the slowing economy. "We are in a new industry," she says. "We are figuring it out."
As gloom descends on Silicon Valley, most startups and giants are growing cautious and cutting back. But not Facebook. The social-networking Web site sees a bleak economy as all the more reason to press ahead with aggressive plans for growth. "This is not the time for tech companies to be cutting back; this is the time to be hitting the accelerator," says Peter Thiel, a Facebook board member and investor.
Facebook executives think they can use the economic downturn to gain ground on the competition. So they're going to great lengths to keep user growth on track in these rough times. The company is gearing up for more acquisitions, hiring rapidly, and rolling out new advertising programs. Rather than trim the site's development costs, Facebook has engineers cooking up versions in languages such as Xhosa, Tagalog, and French Canadian to go after niche audiences around the world. "We're in this game not just for five or 10 years," says Sheryl Sandberg, Facebook's chief operating officer. "We're in it for 20 to 30 years."
To fuel growth, the company asked the Securities & Exchange Commission earlier this year for an unusual exemption. Typically, private companies that exceed 500 shareholders must start disclosing their financial results publicly. (This is the law that helped push Google to go public in 2004.) Facebook is approaching that threshold, so the company asked the SEC for a waiver that will allow it to keep hiring and handing out restricted stock without public disclosure. The SEC granted the request on Oct. 14. That will help the company reach 800 employees by the end of the year, up from 400 at the close of 2007.
The company is even reducing its revenue goals to pull in more users. In January, founder and CEO Mark Zuckerberg said Facebook was shooting for revenues of $300 million to $350 million this year. But this spring, Zuckerberg and his board lowered the revenue target to $250 million to $300 million, say sources familiar with company finances. Thiel says engineers were shifted away from ad programs to concentrate on fresh features, languages, and other projects that will boost user growth. Even as the economy has weakened in recent months, Facebook has decided to stick with its spend-now, profit-later approach. "We still think it's a land grab where we have to try to get to scale first," says Thiel.
It's a gutsy strategy, increasingly rare in Silicon Valley. Last month, prominent venture firm Sequoia Capital gave a presentation to its startups titled "R.I.P. Good Times," which argued that companies must cut costs fast to survive. One Power Point slide included a skull-and-crossbones and the words "death spiral" to show the likely fate of startups that fail to come to grips with the new reality. The Sequoia view has become accepted wisdom among Valley venture capitalists, leading to layoffs at scores of companies.
Facebook isn't yet profitable. But Thiel says the company can afford to be aggressive. It has raised about $500 million and is "slightly cash-flow negative," Thiel says. At its current burn rate, he says, the company has enough cash for three or four years. "If we stopped growing, we could make money, but it makes no sense for us to stop growing," he says.
Facebook's strategy stands in contrast to that of rival MySpace (NWS). Part of Rupert Murdoch's publicly traded News Corp. (NWS), MySpace has dialed back on growth to focus on profits. Over the past year the site has expanded modestly, to 118 million users, while Facebook has more than doubled in size, to 161 million users, according to research firm comScore (SCOR).
MySpace argues that the horse race isn't that important. Travis Katz, head of international operations, says about 85% of the world's online ad spending is concentrated in five markets—the U.S., Britain, Japan, Germany, and France—and in those markets, MySpace is 30% larger than any competitor. That's one reason MySpace, though smaller in number of users, will generate an estimated $606 million in revenues this year, according to Goldman Sachs, (GS) more than twice Facebook's revenues. "We're not worried about rolling out in every single country," says Katz.
Facebook may not reach every country, but top executives like Zuckerberg give the impression they would like to. A social-networking site that can connect people with friends in Saudi Arabia or the Philippines or Tonga, they say, is simply more valuable than one that can't. Chief Financial Officer Gideon Yu says he is actively looking for deals to expand the company's reach. Top options could include sites in Brazil, Germany, India, or Japan, where Facebook does not have a strong presence. "If there's a way for us to acquire a geography or a demographic, it may be prudent to go off and buy it," says Yu.
At the same time, Facebook needs to figure out a sustainable business model. All the focus on expansion means Zuckerberg and Sandberg will have to do so in the face of a nasty downturn. Companies typically cut ad spending during recessions, especially for newer forms of ads, such as those on social-networking Web sites. "The first things to go are experimental ads," says Debra Aho Williamson, an analyst at research firm eMarketer.
VIRTUAL GIFTS
Facebook hopes to make money in three ways. Online advertising is far and away the most important, accounting for an estimated $200 million to $225 million in revenues this year. The company is also selling digital goods—electronic versions of guitars, flowers, and the like that Facebook friends give each other. Charging $1 apiece for these goods will generate $30 million to $40 million this year, estimates venture capitalist Jeremy Liew.
The third leg of Facebook's business may be the most controversial. The company is seriously considering a plan to take a cut of money from the software developers who create applications for the site. These startups make software people use on Facebook to discover new music, play games, or share slide shows. Vice-President Chamath Palihapitiya, disclosing the initiative for the first time, says the company may be able to help these startups generate more cash from advertising or e-commerce and then take a slice of that revenue. "Over the next few years, I bet we will create a very meaningful revenue model," he says. Developers already have a delicate relationship with Facebook, though, so any grab for a piece of their revenues could prove contentious.
Facebook is counting on Sandberg to make all this work. The former Google (GOOG) sales executive played a key role in turning the search giant into one of the most profitable companies in the world. Adam Freed, who used to work at Google for Sandberg, says she's both demanding and supportive. He recalls working on a presentation to set up a Google office in Dublin and having Sandberg tell him it wasn't good enough. After making suggestions, she ultimately took over Freed's computer keyboard to help him find the right words. "She was tough on me to allow me to grow," he says.
INTERACTIVE ADS
Facebook and Sandberg are working on ways to move beyond traditional online ads—the text and pictorial banners that show up on most Web sites. They believe that only by offering something truly different, as Google did, can Facebook stand out among the many sites on the Web. One example came in August when Facebook began rolling out what it calls "engagement ads." Whereas most online ads are like billboards trumpeting a slogan, engagement ads are more like digital bulletin boards, encouraging users to respond to the pitches by commenting, sharing virtual gifts, or becoming fans of the ads themselves. Some of the trial efforts have taken off. An engagement ad for Paramount Pictures' Tropic Thunder, including a trailer for the movie, generated 30,000 comments from Facebook users. "I laughed so hard I couldn't breathe," wrote one fan.
A service set to launch this winter, called Facebook Connect, will bring social-networking capabilities to CNN, CBS, and other Web sites and could make advertising more relevant to Web surfers. The service tracks what people search for on the Net and what kinds of sites they visit. If Facebook learns that you frequent food sites, for instance, it could serve up an ad for a subscription to Gourmet magazine. To support these efforts, Facebook is more than doubling its salesforce, to 130. The team will complement the 400 salespeople at Microsoft (MSFT) responsible for selling Facebook's traditional display ads.
The company is making progress in attracting deep-pocketed advertisers—one reason revenues will as much as double from last year's $150 million. Clients include Blockbuster, Mazda, and Ben & Jerry's. Katie O'Brien, digital marketing manager for the Vermont ice cream maker, says her ad campaign this spring went better than expected. When the company let Facebook users give each other virtual ice cream cones, it anticipated hitting 250,000 cones. Instead, it gave away twice that number of icons. "It created good brand awareness and buzz," she says.
Still, O'Brien says social networks have yet to become a core part of Ben & Jerry's marketing. The company spends most of its digital ad budget on search-engine marketing and its own Web site. Social-network ads don't have the same track record, she says, and are time-consuming to create. For Facebook to become more successful on Madison Avenue, O'Brien and other marketers say, the company needs to make it easier to develop, automate, and manage ad campaigns. "Social networking has been fun," she says. But it will "probably take another successful year" for it to become essential.
Such skepticism doesn't faze Sandberg. Facebook, she says, is in this for the long haul. That's why it's so determined to forge ahead, even as others succumb to the slowing economy. "We are in a new industry," she says. "We are figuring it out."
HR - How to hire the Net Generation
Don Tapscott
As companies restructure to survive this recession, they have an opportunity that could make them significantly stronger in the future. Managers now have a chance to lower the age of their workforce by hiring the best young people they can find. Once the recession is over, the smart companies that have hired top young talent will be in a prime position to survive the next war: the war for talent. As one of my clients said to me, "A recession is a terrible thing to waste."
The question now is: How do you find the best young people, and how do you keep them?
The War for Talent
The Net Generation, as I describe the young people under 30 who've grown up digital, are challenging for traditional companies to hire and retain. They have different expectations, attitudes, and skills from boomers like me. They want to have fun at work, and work off-site or at odd hours, if possible. They are more likely than their parents were to balance work and family life, or to demand that their job be reconfigured to fit their needs. They like to collaborate, and won't necessarily respect the lines of authority to do so. And they won't necessarily be loyal to their employer. If another firm offers more money or a better deal, they'll go.
Although some employers complain that Net Geners are spoiled brats who want all the perks without the effort (an opinion I do not share), employers need them. It's a straight issue of demographics that a recession cannot alter. In the next 10 years, as baby boomers retire, there won't be enough young people to fill up the management spots recently vacated. The war for talent may be temporarily eased by this recession, but it won't last forever, and when it ends, the competition for the best young people will be fiercer than ever.
Hiring the Net Gen Way
To hire them successfully, employers need to abandon the old human resources model—recruit, train, supervise, and retain. Young people who've been conditioned to expect a two-way conversation won't stay for long in a world run this way. Instead, employers need a new modus operandi. I sum it up this way: initiate, engage, collaborate, and evolve.
If you consider just the business of hiring, you'll see it's a whole new ball game. To find new people, companies used to place a classified ad or turn up at a college career day. Yet traditional advertising to attract young people is a complete waste of time. The smarter way is find young recruits online—with engaging and informative Web sites, with blogs and podcasts, plus some attractive multimedia material to distribute on Google's (GOOG) YouTube and/or the social network Facebook.
Studies show that online sites now hold 110 million jobs and 20 million unique résumés—10 million of them on Monster.com (MWW) alone. Some entire job search engines, such as www.hirediversity.com and http://naacp.monster.com, are devoted solely to diversity job recruitment. Savvy organizations will position themselves as an attractive Net Gen employer by providing authentic, uncensored blogs by Net Gen employees, a Hiring FAQ page in the form of a wiki, and a customer-service-like mechanism for answering candidates' questions in real-time chat.
No one is suggesting that social networking sites like Facebook and LinkedIn will replace your HR departments. But as my nGenera colleague Mike Dover puts it, "Any firm that does not deploy them as a recruiting tool, especially in the initial tracking stage, will find itself at a serious disadvantage."
Start Engaging Early
What happens when you get a prospect in the door? Old-style job interviews need to be replaced by a two-way dialogue. The Net Generation wants to make sure company values and corporate culture align with their own values and style. They've probably checked out the company online before the interview.
To keep Net Geners in your company, you have to see employment as a two-way engagement between employee and employer. It starts right away, during the traditional 90-day probationary period during which new recruits are assessed for their suitability. Nowadays, the company is on probation, too. Young employees regularly use this period to decide whether the employer is worth working for. Employers need to expose the new recruit to various leaders, work situations, and work content. Companies that make the effort will benefit from less turnover, shorter ramp-up periods, higher levels of engagement, and earlier and greater returns on their investments in young employees.
Supervision may be on the way out, too. Brad Anderson , chief executive of Best Buy (BBY), puts it this way: "The Net Geners we hire have enormous knowledge, unprecedented information, and facility with tools that in some areas is superior to their seniors." So the job of management is more to create the context whereby they can be successful, rather than to supervise them.
Let Them Go—and Hire Them Back
Retention over the long term may not be realistic either. You can't expect a Net Gener to stay with you forever. In one Canadian study of 18- to 34-year-olds, the average young person held five full-time (nonsummer) jobs by age 27. Yet these Net Geners can help you after they leave—as the alumni of great universities do. If you rehire them, you'll save money. Rehiring them costs half as much as it does to hire a brand-new person, and rehires are 40% more productive in their first quarter at work, according to the Harvard Business Review.
Net Geners can be challenging and even infuriating as employees (when they repeatedly ask you for feedback, for example). But the companies that hire them and adapt to their new ways will be able to learn from them the collaborative styles of working that could help them to survive now and in the future.
Don Tapscott recently led a survey of 11,000 young people around the world. He has written 12 widely read books on the impact of the Internet on society. His 1996 book Growing Up Digital defined the Net Generation and the sequel, Grown Up Digital: How the Net Generation Is Changing Your World, was recently published in Britain.
Don Tapscott, author of Grown Up Digital: How the Net Generation Is Changing Your World, is the founder and chairman of nGenera Insight. Other books he has authored or co-authored include Wikinomics, Paradigm Shift, The Digital Economy, and Growing Up Digital.
As companies restructure to survive this recession, they have an opportunity that could make them significantly stronger in the future. Managers now have a chance to lower the age of their workforce by hiring the best young people they can find. Once the recession is over, the smart companies that have hired top young talent will be in a prime position to survive the next war: the war for talent. As one of my clients said to me, "A recession is a terrible thing to waste."
The question now is: How do you find the best young people, and how do you keep them?
The War for Talent
The Net Generation, as I describe the young people under 30 who've grown up digital, are challenging for traditional companies to hire and retain. They have different expectations, attitudes, and skills from boomers like me. They want to have fun at work, and work off-site or at odd hours, if possible. They are more likely than their parents were to balance work and family life, or to demand that their job be reconfigured to fit their needs. They like to collaborate, and won't necessarily respect the lines of authority to do so. And they won't necessarily be loyal to their employer. If another firm offers more money or a better deal, they'll go.
Although some employers complain that Net Geners are spoiled brats who want all the perks without the effort (an opinion I do not share), employers need them. It's a straight issue of demographics that a recession cannot alter. In the next 10 years, as baby boomers retire, there won't be enough young people to fill up the management spots recently vacated. The war for talent may be temporarily eased by this recession, but it won't last forever, and when it ends, the competition for the best young people will be fiercer than ever.
Hiring the Net Gen Way
To hire them successfully, employers need to abandon the old human resources model—recruit, train, supervise, and retain. Young people who've been conditioned to expect a two-way conversation won't stay for long in a world run this way. Instead, employers need a new modus operandi. I sum it up this way: initiate, engage, collaborate, and evolve.
If you consider just the business of hiring, you'll see it's a whole new ball game. To find new people, companies used to place a classified ad or turn up at a college career day. Yet traditional advertising to attract young people is a complete waste of time. The smarter way is find young recruits online—with engaging and informative Web sites, with blogs and podcasts, plus some attractive multimedia material to distribute on Google's (GOOG) YouTube and/or the social network Facebook.
Studies show that online sites now hold 110 million jobs and 20 million unique résumés—10 million of them on Monster.com (MWW) alone. Some entire job search engines, such as www.hirediversity.com and http://naacp.monster.com, are devoted solely to diversity job recruitment. Savvy organizations will position themselves as an attractive Net Gen employer by providing authentic, uncensored blogs by Net Gen employees, a Hiring FAQ page in the form of a wiki, and a customer-service-like mechanism for answering candidates' questions in real-time chat.
No one is suggesting that social networking sites like Facebook and LinkedIn will replace your HR departments. But as my nGenera colleague Mike Dover puts it, "Any firm that does not deploy them as a recruiting tool, especially in the initial tracking stage, will find itself at a serious disadvantage."
Start Engaging Early
What happens when you get a prospect in the door? Old-style job interviews need to be replaced by a two-way dialogue. The Net Generation wants to make sure company values and corporate culture align with their own values and style. They've probably checked out the company online before the interview.
To keep Net Geners in your company, you have to see employment as a two-way engagement between employee and employer. It starts right away, during the traditional 90-day probationary period during which new recruits are assessed for their suitability. Nowadays, the company is on probation, too. Young employees regularly use this period to decide whether the employer is worth working for. Employers need to expose the new recruit to various leaders, work situations, and work content. Companies that make the effort will benefit from less turnover, shorter ramp-up periods, higher levels of engagement, and earlier and greater returns on their investments in young employees.
Supervision may be on the way out, too. Brad Anderson , chief executive of Best Buy (BBY), puts it this way: "The Net Geners we hire have enormous knowledge, unprecedented information, and facility with tools that in some areas is superior to their seniors." So the job of management is more to create the context whereby they can be successful, rather than to supervise them.
Let Them Go—and Hire Them Back
Retention over the long term may not be realistic either. You can't expect a Net Gener to stay with you forever. In one Canadian study of 18- to 34-year-olds, the average young person held five full-time (nonsummer) jobs by age 27. Yet these Net Geners can help you after they leave—as the alumni of great universities do. If you rehire them, you'll save money. Rehiring them costs half as much as it does to hire a brand-new person, and rehires are 40% more productive in their first quarter at work, according to the Harvard Business Review.
Net Geners can be challenging and even infuriating as employees (when they repeatedly ask you for feedback, for example). But the companies that hire them and adapt to their new ways will be able to learn from them the collaborative styles of working that could help them to survive now and in the future.
Don Tapscott recently led a survey of 11,000 young people around the world. He has written 12 widely read books on the impact of the Internet on society. His 1996 book Growing Up Digital defined the Net Generation and the sequel, Grown Up Digital: How the Net Generation Is Changing Your World, was recently published in Britain.
Don Tapscott, author of Grown Up Digital: How the Net Generation Is Changing Your World, is the founder and chairman of nGenera Insight. Other books he has authored or co-authored include Wikinomics, Paradigm Shift, The Digital Economy, and Growing Up Digital.
Business - US;Toy shopping in tough times
Reena Jana
American consumers may be curbing their discretionary spending, but toy manufacturers are hoping that thrifty shoppers will bargain-hunt and discover that there are affordable holiday gift options available.
"There really is something for everyone this year. The hottest toy on the market, Bakugan Battle Brawlers, is only $5," says Jim Silver, editor-in-chief of the Web site timetoplay.com, which covers the toy industry. He's referring to a series of innovative plastic, magnetized balls that, when rolled over metallic cards, pop open to reveal a small action figure. The figures are based on a popular TV show on the Cartoon Network, and their Toronto manufacturer, Spin Master, says that retailers such as Toys 'R' Us are fast selling out.
Silver, the father of three teenage daughters, adds that the toy industry is generally "recession resistant," if not recession-proof. Anecdotally, he says this is because while parents might cut back on discretionary items such as trendy electronic gadgets for themselves during tough economic times, they tend not to skimp on toys for their children. "For us, it's all about our children," says Silver. "And our relatives are the same; everyone's buying for the kids only."
$50 and Under
A new survey of 13,276 consumers conducted by global consultancy Deloitte suggests that Silver has a point. The study, released on Nov. 10, shows that while shoppers intend to cut back on clothing as gifts this year, toys and games remain a steady choice. The poll was conducted online between Sept. 26 and Oct. 7, 2008—when the economic slowdown was well under way.
Savvy shoppers who pay attention to the numerous awards for educational and inventive toys will find that many lauded items are available for less than $50. Snap Circuits Jr., for instance, which won the Toy Industry Assn.'s 2008 award for Specialty Toy of the Year, is available for only $29.95. The kit, made by Elenco of Wheeling, Ill., features electronic components that boys and girls can snap together without tools to create functioning objects such as an AM radio.
Manufacturers of popular franchises are also aiming to keep toy costs low in order to attract more buyers to their brands who might stick around post-recession.
In late October, Disney (DIS) released a series of stuffed animals based on digital characters from the company's popular online virtual world Club Penguin. The plush penguins cost less than $10. "We wanted to keep the price down," says Lane Merrifield, executive vice-president of Disney's Interactive Media Group and the co-founder and general manager of Club Penguin. "We decided this before the downturn, actually. The low prices will help [consumers]. But we also thought that making the toys affordable will allow the brand to be more accessible to more people."
Here, take a look at 25 of the coolest toys under $50. Some selections, like a 49¢ miniature stuffed animal from Swedish budget housewares chain Ikea, are even under $5. The toys reflect a number of current market trends: eco-friendly items made with recycled materials, brand extensions of classic franchises such as HotWheels and Star Wars, and even educational gadgets that involve digital and interactive technology. We've also thrown in some elegant options that look like modern sculptures—yet are still easy on the wallet. Our list suggests that even during a holiday season clouded by grim economic realities, there is something available to help both parents and kids smile.
Jana is the Innovation Dept. editor for BusinessWeek.
American consumers may be curbing their discretionary spending, but toy manufacturers are hoping that thrifty shoppers will bargain-hunt and discover that there are affordable holiday gift options available.
"There really is something for everyone this year. The hottest toy on the market, Bakugan Battle Brawlers, is only $5," says Jim Silver, editor-in-chief of the Web site timetoplay.com, which covers the toy industry. He's referring to a series of innovative plastic, magnetized balls that, when rolled over metallic cards, pop open to reveal a small action figure. The figures are based on a popular TV show on the Cartoon Network, and their Toronto manufacturer, Spin Master, says that retailers such as Toys 'R' Us are fast selling out.
Silver, the father of three teenage daughters, adds that the toy industry is generally "recession resistant," if not recession-proof. Anecdotally, he says this is because while parents might cut back on discretionary items such as trendy electronic gadgets for themselves during tough economic times, they tend not to skimp on toys for their children. "For us, it's all about our children," says Silver. "And our relatives are the same; everyone's buying for the kids only."
$50 and Under
A new survey of 13,276 consumers conducted by global consultancy Deloitte suggests that Silver has a point. The study, released on Nov. 10, shows that while shoppers intend to cut back on clothing as gifts this year, toys and games remain a steady choice. The poll was conducted online between Sept. 26 and Oct. 7, 2008—when the economic slowdown was well under way.
Savvy shoppers who pay attention to the numerous awards for educational and inventive toys will find that many lauded items are available for less than $50. Snap Circuits Jr., for instance, which won the Toy Industry Assn.'s 2008 award for Specialty Toy of the Year, is available for only $29.95. The kit, made by Elenco of Wheeling, Ill., features electronic components that boys and girls can snap together without tools to create functioning objects such as an AM radio.
Manufacturers of popular franchises are also aiming to keep toy costs low in order to attract more buyers to their brands who might stick around post-recession.
In late October, Disney (DIS) released a series of stuffed animals based on digital characters from the company's popular online virtual world Club Penguin. The plush penguins cost less than $10. "We wanted to keep the price down," says Lane Merrifield, executive vice-president of Disney's Interactive Media Group and the co-founder and general manager of Club Penguin. "We decided this before the downturn, actually. The low prices will help [consumers]. But we also thought that making the toys affordable will allow the brand to be more accessible to more people."
Here, take a look at 25 of the coolest toys under $50. Some selections, like a 49¢ miniature stuffed animal from Swedish budget housewares chain Ikea, are even under $5. The toys reflect a number of current market trends: eco-friendly items made with recycled materials, brand extensions of classic franchises such as HotWheels and Star Wars, and even educational gadgets that involve digital and interactive technology. We've also thrown in some elegant options that look like modern sculptures—yet are still easy on the wallet. Our list suggests that even during a holiday season clouded by grim economic realities, there is something available to help both parents and kids smile.
Jana is the Innovation Dept. editor for BusinessWeek.
Columnists - Jack & Suzy Welch;How to save Detroit
How to Save Detroit
Should the government bail out the U.S. auto industry to keep the players from going into bankruptcy?
—Bill VanderMolen, Pittsfield Township, Mich.
How about this instead: The boards of Chrysler and General Motors (GM) put their companies into bankruptcy with the clear intent of reorganization and merger. As radical as that sounds, it's the best road we can see to a viable future for the industry.
And yes, the U.S. car industry does belong in the future. Free-market proponents have a point about the industry's "natural demise." Despite huge progress in American quality and design, well-run German, Japanese, and Korean companies have taken about half the U.S. market, and the competition—which will include China and India—is only getting tougher. But like many others, we believe that for the sake of jobs, national defense, and self-respect, America needs to keep its "true" domestic auto industry alive.
A government handout, however, isn't the way to make that happen. Washington would impose conditions and promise strict oversight, but it simply can't push through the kind of transformative change the industry needs. There would be too much political opposition, and regardless, the bailout sums being bandied about—$25 billion of taxpayer dollars, for starters—would only keep the Big Three heaving along, basically as they are. It's a life-support solution, not a cure.
Time for a Bold Move
That's why the boards of the automakers should take the courageous step of putting their companies into bankruptcy. Some creditors might make the case for liquidation, but given the diminished worth of the automakers' assets, that's an unattractive scenario. Instead, creditors would most likely opt for the government stepping in as the debtor-in-possession financier supporting the reorganization.
Talk about a fresh start. For more than a decade, U.S. carmakers have chipped away incrementally at massive legacy costs. But reorganization would open the doors to meaningful structural change through the renegotiation of contracts with creditors, dealers, and unions. And it would offer better odds of paying back taxpayers.
Once in Chapter 11, a merger would further galvanize real change. Three companies are too cumbersome to unite, and Ford has a two-tiered, family-owned structure, so we'll leave them out of this for now and propose GM and Chrysler join forces. Such a merger could create $15 billion in synergies from reduced capacity and overhead, money that could lower production costs and boost R&D spending. Granted, GM and Chrysler could lose share during the transition, but a merged entity would still end up with more than a quarter of the U.S. market.
Worth the Long, Bumpy Ride
We don't want to make this sound easy. Mergers are challenging under any circumstances, and a merger of two companies in bankruptcy would be at the outer limits of difficulty, requiring the commitment of constituencies steeped in old, adversarial ways. And there will be real pain before a turnaround begins. Shareholders will see their investment evaporate. Thousands of jobs will be lost. Many employee benefits will shrink. And banks will see much of their debt converted to equity.
We also realize there are dozens of reasons to shoot at such a drastic solution. Some argue that American consumers won't "invest" $30,000 or more by buying a car from a bankrupt company. But Americans regularly invest their most precious asset—their lives—in bankrupt airlines when they fly. That said, if the government wants to see Chrysler and GM emerge from bankruptcy sooner rather than later, it could show its long-term support, perhaps by backing new-car warranties.
Others will argue that the mechanics of two bankruptcies and a merger are impossible to execute, and still others will say too many contractual concessions have already been made. Leaders, too, may balk at championing painful change. That's a brutal task in normal times—and it will be Herculean in this highly politicized environment.
But for the U.S. industry to get from here to there—"there" being a globally competitive future—it has to get off the beaten path of incrementalism. With reorganization and a merger, a long and bumpy trip awaits, but the destination should make it worth the ride.
Should the government bail out the U.S. auto industry to keep the players from going into bankruptcy?
—Bill VanderMolen, Pittsfield Township, Mich.
How about this instead: The boards of Chrysler and General Motors (GM) put their companies into bankruptcy with the clear intent of reorganization and merger. As radical as that sounds, it's the best road we can see to a viable future for the industry.
And yes, the U.S. car industry does belong in the future. Free-market proponents have a point about the industry's "natural demise." Despite huge progress in American quality and design, well-run German, Japanese, and Korean companies have taken about half the U.S. market, and the competition—which will include China and India—is only getting tougher. But like many others, we believe that for the sake of jobs, national defense, and self-respect, America needs to keep its "true" domestic auto industry alive.
A government handout, however, isn't the way to make that happen. Washington would impose conditions and promise strict oversight, but it simply can't push through the kind of transformative change the industry needs. There would be too much political opposition, and regardless, the bailout sums being bandied about—$25 billion of taxpayer dollars, for starters—would only keep the Big Three heaving along, basically as they are. It's a life-support solution, not a cure.
Time for a Bold Move
That's why the boards of the automakers should take the courageous step of putting their companies into bankruptcy. Some creditors might make the case for liquidation, but given the diminished worth of the automakers' assets, that's an unattractive scenario. Instead, creditors would most likely opt for the government stepping in as the debtor-in-possession financier supporting the reorganization.
Talk about a fresh start. For more than a decade, U.S. carmakers have chipped away incrementally at massive legacy costs. But reorganization would open the doors to meaningful structural change through the renegotiation of contracts with creditors, dealers, and unions. And it would offer better odds of paying back taxpayers.
Once in Chapter 11, a merger would further galvanize real change. Three companies are too cumbersome to unite, and Ford has a two-tiered, family-owned structure, so we'll leave them out of this for now and propose GM and Chrysler join forces. Such a merger could create $15 billion in synergies from reduced capacity and overhead, money that could lower production costs and boost R&D spending. Granted, GM and Chrysler could lose share during the transition, but a merged entity would still end up with more than a quarter of the U.S. market.
Worth the Long, Bumpy Ride
We don't want to make this sound easy. Mergers are challenging under any circumstances, and a merger of two companies in bankruptcy would be at the outer limits of difficulty, requiring the commitment of constituencies steeped in old, adversarial ways. And there will be real pain before a turnaround begins. Shareholders will see their investment evaporate. Thousands of jobs will be lost. Many employee benefits will shrink. And banks will see much of their debt converted to equity.
We also realize there are dozens of reasons to shoot at such a drastic solution. Some argue that American consumers won't "invest" $30,000 or more by buying a car from a bankrupt company. But Americans regularly invest their most precious asset—their lives—in bankrupt airlines when they fly. That said, if the government wants to see Chrysler and GM emerge from bankruptcy sooner rather than later, it could show its long-term support, perhaps by backing new-car warranties.
Others will argue that the mechanics of two bankruptcies and a merger are impossible to execute, and still others will say too many contractual concessions have already been made. Leaders, too, may balk at championing painful change. That's a brutal task in normal times—and it will be Herculean in this highly politicized environment.
But for the U.S. industry to get from here to there—"there" being a globally competitive future—it has to get off the beaten path of incrementalism. With reorganization and a merger, a long and bumpy trip awaits, but the destination should make it worth the ride.
World - US;Obama Team - Choices likely to reflect pragmatic approach
Daniel Dombey and Andrew Ward
As president-elect Barack Obama’s likely choices for his cabinet took shape on Friday, his most fervent supporters could be excused a touch of disappointment.
Rather than prizing past allegiance to Mr Obama, the incoming president’s transition team gives every impression of having opted for names that are familiar and respected on the world stage
Mr Obama’s likely appointment of Hillary Clinton, the former Democratic presidential candidate, reflects an emerging pattern of pragmatic and centrist choices for the new administration’s top slots. The president-elect has also shown an appetite for stocking his cabinet with some of the most high-profile figures in US politics – several of them former rivals.
There are few modern parallels for Mr Obama’s push to appoint Mrs Clinton, his opponent during one of the most bitter primary fights of recent times.
Such a move would pass over Bill Richardson, the former energy secretary and ambassador to the United Nations, who was labelled a “Judas” by the Clinton camp after he endorsed Mr Obama during the primaries.
However, Mr Richardson may yet win another, lesser post in the administration, such as commerce secretary.
“Having been around the world in the UN, he [Mr Richardson] has a sense for how important trade is, how much trade is part of a foreign policy strategy, the fact that it does lead to better relations with countries all over the world,” Carlos Gutierrez, the current commerce secretary, told Fox News on Friday.
As if to underline that he is looking for more than loyalty, Mr Obama is reportedly considering giving the national security adviser job to James Jones, a former top Nato military commander and friend of John McCain, who went so far as to travel with Mr Obama’s then Republican rival during the presidential campaign.
Even while at Nato, the 6ft 4in former marine took a particular interest in energy security. Just this week he unveiled an energy strategy for the new president – an approach that fits in with the Obama team’s interest in updating national security policy to incorporate financial, economic and energy issues.
Another top contender for the national security adviser post is James Steinberg, who served as deputy adviser during Bill Clinton’s presidency, and is considered to be a more likely choice than Susan Rice, the foreign policy adviser who was at Mr Obama’s side throughout his 22-month campaign.
Since Mr Obama has already begun negotiating terms for retaining Robert Gates, George W. Bush’s defence secretary, such appointments would mean that all three top national security appointments in his administration would go to figures who had little or nothing to do with his presidential bid – and still less with his call for change.
As a result, a whole host of Obama foreign policy advisers – particularly those who sided with him early in the campaign – face uncertain prospects as they jostle for appointments in the new administration.
They are neither “owed” jobs by the most likely occupants of the state, defence and national security posts, nor can they be sure that, even if they are selected, they will have a harmonious existence with the new appointees.
Mr Obama’s apparent decision to brush aside such concerns reflects his desire to choose the strongest team available.
It also comes amid expectations that the president-elect will devote most of his attention to the US’s struggling economy – at least at the start of his administration – so giving many of his appointees broad authority in the national security domain.
His likely choices have already garnered widespread bipartisan praise – with Mrs Clinton being lauded by the likes of Henry Kissinger, the former secretary of state – as the Obama transition team has also made overtures to Republicans in Congress and beyond.
“You have to say it: these guys are reaching out more than the Bush administration ever did,” said a Republican aide on Capitol Hill.
As president-elect Barack Obama’s likely choices for his cabinet took shape on Friday, his most fervent supporters could be excused a touch of disappointment.
Rather than prizing past allegiance to Mr Obama, the incoming president’s transition team gives every impression of having opted for names that are familiar and respected on the world stage
Mr Obama’s likely appointment of Hillary Clinton, the former Democratic presidential candidate, reflects an emerging pattern of pragmatic and centrist choices for the new administration’s top slots. The president-elect has also shown an appetite for stocking his cabinet with some of the most high-profile figures in US politics – several of them former rivals.
There are few modern parallels for Mr Obama’s push to appoint Mrs Clinton, his opponent during one of the most bitter primary fights of recent times.
Such a move would pass over Bill Richardson, the former energy secretary and ambassador to the United Nations, who was labelled a “Judas” by the Clinton camp after he endorsed Mr Obama during the primaries.
However, Mr Richardson may yet win another, lesser post in the administration, such as commerce secretary.
“Having been around the world in the UN, he [Mr Richardson] has a sense for how important trade is, how much trade is part of a foreign policy strategy, the fact that it does lead to better relations with countries all over the world,” Carlos Gutierrez, the current commerce secretary, told Fox News on Friday.
As if to underline that he is looking for more than loyalty, Mr Obama is reportedly considering giving the national security adviser job to James Jones, a former top Nato military commander and friend of John McCain, who went so far as to travel with Mr Obama’s then Republican rival during the presidential campaign.
Even while at Nato, the 6ft 4in former marine took a particular interest in energy security. Just this week he unveiled an energy strategy for the new president – an approach that fits in with the Obama team’s interest in updating national security policy to incorporate financial, economic and energy issues.
Another top contender for the national security adviser post is James Steinberg, who served as deputy adviser during Bill Clinton’s presidency, and is considered to be a more likely choice than Susan Rice, the foreign policy adviser who was at Mr Obama’s side throughout his 22-month campaign.
Since Mr Obama has already begun negotiating terms for retaining Robert Gates, George W. Bush’s defence secretary, such appointments would mean that all three top national security appointments in his administration would go to figures who had little or nothing to do with his presidential bid – and still less with his call for change.
As a result, a whole host of Obama foreign policy advisers – particularly those who sided with him early in the campaign – face uncertain prospects as they jostle for appointments in the new administration.
They are neither “owed” jobs by the most likely occupants of the state, defence and national security posts, nor can they be sure that, even if they are selected, they will have a harmonious existence with the new appointees.
Mr Obama’s apparent decision to brush aside such concerns reflects his desire to choose the strongest team available.
It also comes amid expectations that the president-elect will devote most of his attention to the US’s struggling economy – at least at the start of his administration – so giving many of his appointees broad authority in the national security domain.
His likely choices have already garnered widespread bipartisan praise – with Mrs Clinton being lauded by the likes of Henry Kissinger, the former secretary of state – as the Obama transition team has also made overtures to Republicans in Congress and beyond.
“You have to say it: these guys are reaching out more than the Bush administration ever did,” said a Republican aide on Capitol Hill.
World - U.S. eyes "surge" of over 20,000 for Afghanistan
David Morgan
CORNWALLIS, Nova Scotia (Reuters) - The Pentagon is considering a plan to send more than 20,000 troops to Afghanistan over the next 12 to 18 months to help safeguard elections and quell rising Taliban violence, officials said on Friday.
U.S. Defense Secretary Robert Gates said he and top commanders had discussed sending five brigades to Afghanistan, including four brigades of combat ground forces as well as an aviation brigade, which a defense official said would consist mainly of support troops. An Army combat brigade has about 3,500 soldiers.
Gates said much of the infusion could take place before Afghanistan holds elections by next autumn.
"I think it's important that we have a surge of forces before the election," said Gates, who stressed no decision on troop deployments had been taken.
"We've had some very preliminary discussions," he told reporters after meeting to discuss southern Afghanistan with his counterparts from NATO countries with troops deployed in the region.
Pentagon press secretary Geoff Morrell said more support troops, also known as "enablers," could also head to Afghanistan as Gates considers a request by U.S. Army Gen. David McKiernan, the top commander of NATO and U.S. forces in the country.
"The commanders are looking for well north of 20,000 forces. Gates wishes to fulfill the commanders' request," Morrell told reporters as the U.S. defense chief returned from Cornwallis.
Violence in Afghanistan has surged to the highest levels since the 2001 U.S.-led invasion toppled the country's Taliban government.
An Army combat brigade is already scheduled to arrive in eastern Afghanistan in January to begin training Afghan forces.
Most of the remaining forces, which could begin deploying as early as next spring, would likely head to poppy-growing southern Afghanistan where commanders say the NATO force of 18,000 troops is too small to contend with an increasingly confident Taliban insurgency.
There are now some 70,000 Western forces in Afghanistan, including 32,000 U.S. forces -- 14,500 under NATO command and 17,500 under a U.S. command.
'SURGE'
Gates' use of the term "surge" to describe the influx drew parallels with the 2007 U.S. force build-up that placed an extra 30,000 U.S. troops in Iraq and contributed to a sharp decline in violence there.
"The key is how do we reverse the trends of the last couple of years or so in terms of rising violence and create a better security environment in which economic and civic development can go ahead and take place," Gates said.
"We are clearly going to be putting more troops in and I think that the prospects for being able to have these elections successfully are good," he said.
"We all recognize the need for the Afghan government -- with our help -- to demonstrate some progress over the course of 2009," he said.
Gates rejected speculation Afghanistan could be heading for a dire situation.
"The notion that things are out of control in Afghanistan or that we're sliding toward a disaster I think is far too pessimistic," he said.
U.S. President-elect Barack Obama says he wants to focus more on the Afghan war and plans to persuade other nations to send more soldiers.
But Canadian Defense Minister Peter MacKay said Obama should look to other NATO members first, rather than turning to the other seven states that took part in the Cornwallis meeting: Canada, Denmark, Britain, the Netherlands, Australia, Estonia and Romania.
"The reality is there are other NATO doors that President-elect Obama should be knocking on first," he told the news conference. Canada has long complained that the nations with troops in southern Afghanistan are bearing a disproportionate share of the military burden.
"There is an enormous amount of goodwill that has been engendered by President-elect Obama that he might be willing to spend for a cause that he clearly believes in," said MacKay.
Many NATO countries insist on stationing their troops in quieter parts of Afghanistan and strictly limit what kind of combat activities they can carry out.
(Editing by Peter Cooney)
CORNWALLIS, Nova Scotia (Reuters) - The Pentagon is considering a plan to send more than 20,000 troops to Afghanistan over the next 12 to 18 months to help safeguard elections and quell rising Taliban violence, officials said on Friday.
U.S. Defense Secretary Robert Gates said he and top commanders had discussed sending five brigades to Afghanistan, including four brigades of combat ground forces as well as an aviation brigade, which a defense official said would consist mainly of support troops. An Army combat brigade has about 3,500 soldiers.
Gates said much of the infusion could take place before Afghanistan holds elections by next autumn.
"I think it's important that we have a surge of forces before the election," said Gates, who stressed no decision on troop deployments had been taken.
"We've had some very preliminary discussions," he told reporters after meeting to discuss southern Afghanistan with his counterparts from NATO countries with troops deployed in the region.
Pentagon press secretary Geoff Morrell said more support troops, also known as "enablers," could also head to Afghanistan as Gates considers a request by U.S. Army Gen. David McKiernan, the top commander of NATO and U.S. forces in the country.
"The commanders are looking for well north of 20,000 forces. Gates wishes to fulfill the commanders' request," Morrell told reporters as the U.S. defense chief returned from Cornwallis.
Violence in Afghanistan has surged to the highest levels since the 2001 U.S.-led invasion toppled the country's Taliban government.
An Army combat brigade is already scheduled to arrive in eastern Afghanistan in January to begin training Afghan forces.
Most of the remaining forces, which could begin deploying as early as next spring, would likely head to poppy-growing southern Afghanistan where commanders say the NATO force of 18,000 troops is too small to contend with an increasingly confident Taliban insurgency.
There are now some 70,000 Western forces in Afghanistan, including 32,000 U.S. forces -- 14,500 under NATO command and 17,500 under a U.S. command.
'SURGE'
Gates' use of the term "surge" to describe the influx drew parallels with the 2007 U.S. force build-up that placed an extra 30,000 U.S. troops in Iraq and contributed to a sharp decline in violence there.
"The key is how do we reverse the trends of the last couple of years or so in terms of rising violence and create a better security environment in which economic and civic development can go ahead and take place," Gates said.
"We are clearly going to be putting more troops in and I think that the prospects for being able to have these elections successfully are good," he said.
"We all recognize the need for the Afghan government -- with our help -- to demonstrate some progress over the course of 2009," he said.
Gates rejected speculation Afghanistan could be heading for a dire situation.
"The notion that things are out of control in Afghanistan or that we're sliding toward a disaster I think is far too pessimistic," he said.
U.S. President-elect Barack Obama says he wants to focus more on the Afghan war and plans to persuade other nations to send more soldiers.
But Canadian Defense Minister Peter MacKay said Obama should look to other NATO members first, rather than turning to the other seven states that took part in the Cornwallis meeting: Canada, Denmark, Britain, the Netherlands, Australia, Estonia and Romania.
"The reality is there are other NATO doors that President-elect Obama should be knocking on first," he told the news conference. Canada has long complained that the nations with troops in southern Afghanistan are bearing a disproportionate share of the military burden.
"There is an enormous amount of goodwill that has been engendered by President-elect Obama that he might be willing to spend for a cause that he clearly believes in," said MacKay.
Many NATO countries insist on stationing their troops in quieter parts of Afghanistan and strictly limit what kind of combat activities they can carry out.
(Editing by Peter Cooney)
Business - US;Households to cut Xmas spending;survey
NEW YORK (Reuters) - U.S. households could cut spending on Christmas gifts by about 11.3 percent this year, the Conference Board said on Friday, as the worst economic crisis since the Great Depression erodes consumer wealth.
The Conference Board's Christmas gift spending intentions survey covering 5,000 households found that consumers were in a less-generous mood, planning to spend an average of $418 on presents, compared with last year's estimate of $471. The survey was conducted in November.
"This is shaping up to be one of the most challenging holiday seasons in years and it's going to take more than the usual discounts and incentives from retailers to get consumers to spend more freely," said Lynn Franco, director of the Conference Board Consumer research center.
The U.S. housing market's collapse has contaminated both the domestic and overseas economies, triggering the worst financial crisis since the Great Depression of the 1930s.
The crisis has manifested itself in tight credit conditions globally that have constrained both corporations and individuals' ability to obtain loans, leading to massive job losses.
The U.S. unemployment rate surged to 6.5 percent in October, the highest in 14 years. A Reuters/University of Michigan Surveys of Consumers released on Friday found that consumers expect the jobless rate to top 8.5 percent by the end of 2009.
(Reporting by Lucia Mutikani; Editing by Dan Grebler)
The Conference Board's Christmas gift spending intentions survey covering 5,000 households found that consumers were in a less-generous mood, planning to spend an average of $418 on presents, compared with last year's estimate of $471. The survey was conducted in November.
"This is shaping up to be one of the most challenging holiday seasons in years and it's going to take more than the usual discounts and incentives from retailers to get consumers to spend more freely," said Lynn Franco, director of the Conference Board Consumer research center.
The U.S. housing market's collapse has contaminated both the domestic and overseas economies, triggering the worst financial crisis since the Great Depression of the 1930s.
The crisis has manifested itself in tight credit conditions globally that have constrained both corporations and individuals' ability to obtain loans, leading to massive job losses.
The U.S. unemployment rate surged to 6.5 percent in October, the highest in 14 years. A Reuters/University of Michigan Surveys of Consumers released on Friday found that consumers expect the jobless rate to top 8.5 percent by the end of 2009.
(Reporting by Lucia Mutikani; Editing by Dan Grebler)
World - Australia drops cricket from citizenship test
SYDNEY (Reuters) - Australia is to modify a test for prospective new citizens to exclude questions on history and culture, and specifically cricket legend Sir Donald Bradman, a government minister said on Saturday.
Immigration Minister Chris Evans said that following a review by seven eminent Australians, the Labor government had decided to modify the test, saying it should not be a "general knowledge quiz."
The test was introduced under conservative former prime minister John Howard, and originally included a controversial section on Australian history and culture.
This has now been relegated to a non-testable section of a book for prospective citizens, Evans said in a statement.
Evans said the focus of the new test would be on a pledge of commitment that new citizens are required to make.
"The pledge is about our democratic beliefs, our laws and the rights, responsibilities and privileges of Australian citizenship," Evans said.
"It is crucial that prospective citizens understand these concepts so the questions on the new test will focus on the commitments to the pledge rather than being a general knowledge quiz about Australia."
In other changes, the book for prospective citizens is to be rewritten in plain English and the pass mark for the test will be increased from 60 to 75 percent, with no mandatory questions.
Bradman, who still has the highest career Test batting average of 99.94 more than half a century after he retired from Test cricket, is a national icon and legend in Australia. He died in 2001.
Shortly before Bradman's death at the age of 92, then prime minister Howard named as the "greatest living Australian."
(Editing by David Fox)
Immigration Minister Chris Evans said that following a review by seven eminent Australians, the Labor government had decided to modify the test, saying it should not be a "general knowledge quiz."
The test was introduced under conservative former prime minister John Howard, and originally included a controversial section on Australian history and culture.
This has now been relegated to a non-testable section of a book for prospective citizens, Evans said in a statement.
Evans said the focus of the new test would be on a pledge of commitment that new citizens are required to make.
"The pledge is about our democratic beliefs, our laws and the rights, responsibilities and privileges of Australian citizenship," Evans said.
"It is crucial that prospective citizens understand these concepts so the questions on the new test will focus on the commitments to the pledge rather than being a general knowledge quiz about Australia."
In other changes, the book for prospective citizens is to be rewritten in plain English and the pass mark for the test will be increased from 60 to 75 percent, with no mandatory questions.
Bradman, who still has the highest career Test batting average of 99.94 more than half a century after he retired from Test cricket, is a national icon and legend in Australia. He died in 2001.
Shortly before Bradman's death at the age of 92, then prime minister Howard named as the "greatest living Australian."
(Editing by David Fox)
Lifestyle - US;Retirees hit by longevity risk
Tom Brown
MIAMI (Reuters) - Like many other elderly Americans, Edie Stark has been hard hit by the meltdown in U.S. financial markets. She is 84 and has been worried a lot lately about outliving her savings.
A retired nurse, Stark is a prime example of what financial planners coldly call "longevity risk," a reference to the need for a secure income and lasting savings at a time when growing numbers of Americans can live for 30 years in retirement.
Life expectancy in the United States has already reached a record high of 77.8 years, up from 70.8 in 1970, according to the U.S. National Center for Health Statistics. Fueled by continuing health gains, the U.S. Census Bureau projects life expectancy in the world's wealthiest country will reach 79.2 years by 2015.
Stark said she and her husband had seen more than 50 percent of their retirement assets wiped out since the stock market started tanking several months ago.
She still plans to see out the end of her days with her 88-year-old husband at the Palace, an upscale retirement complex where they live on the palm-fringed southern outskirts of Miami.
She acknowledges that may not be possible, however, as her life savings vanish.
"I have fixed expenses so I can add it up and tell you how many years we can live unless the market comes up," said Stark.
"We wanted to have money to leave our children. That's not possible anymore," said Stark, whose husband suffers from dementia and is cared for in an assisted living facility at the Palace.
Dorie Ryder, 89, a retired school teacher and neighbor of Stark's at the Palace, said she had lost about 25 percent of her assets to the recent stock market downturn.
She has fond memories of better times when she and her husband lived just a block away from the home of former President Richard Nixon on nearby Key Biscayne.
But Ryder said she is now contemplating a move into a Miami-area apartment, where she'd live alone but pay less rent than the $3,500 she forks out monthly at the Palace.
"I just do the best I can and I'm worried," said Ryder, who has a small pension. "I don't know how long I'll be able to stay here."
Coping with financial fears is not unique to the elderly, especially at a time of record home foreclosure filings, crumbling real estate values and rising unemployment.
It can be especially painful for the elderly, however, even for those who are still a long way from being destitute.
"Money anxiety when you're older is just different than when you are young. You don't have a chance to recover," said Teresa Ghilarducci, a retirement expert and professor of economic policy analysis at New York's New School for Social Research.
DYING OF WORRY
"I predict that this spike in anxiety around the security of money is actually going to lead to more sickness," she added. "People are going to die of worry."
Experts say millions of middle- and upper-class retirees across the country face mounting insecurity due to exposure to stocks instead of "safe money" investments like short-term bonds and fixed annuities.
Many were lured into the equities because they offered a chance to double their money from 2003 to 2008. Others face foreclosures because they over-borrowed against their homes before the U.S. housing meltdown.
"Probably half our clients are retired and yes, we have a lot of very worried, concerned clients," said Peggy Cabaniss, president of HC Financial Advisors in Lafayette, California.
"Their leading concerns are, No. 1, that they're going to run out of money," she said.
Like the American Psychological Association, Cabaniss said she tells her clients not to get caught up in blow-by-blow media reports about swooning markets and dour economic news.
"The way things are presented it sort of sounds like and feels like the end of the world," she said.
But avoiding bad news is tough when it affects life savings and people's retirement security hangs in the balance.
Ghilarducci and Alicia Munnell, director of the Center for Retirement Research at Boston College, say the erosion of retirement savings due to stock declines is something that should be triggering alarm bells.
The United States is the only developed, industrialized and democratic country in the world where traditional pension plans with a nearly guaranteed stream of income are being replaced by 401k plans, in which retirees bear many risks from volatile market investments, Ghilarducci said.
"It's disastrous," she said, referring to the outlook for retiring or soon-to-be retired "baby boomers."
"Late boomers will fare far worse than their parents and grandparents in terms of replacing their income in retirement, mainly because of the erosion in the employer pension system," Ghilarducci said.
"It highlights the flaws in our retirement income system," said Munnell.
"The idea that we have people increasingly and solely dependent on accounts which vary with the ups and downs of the stock market just doesn't make for a very sensible retirement arrangement," she added.
"My view is that it was always going to take the real suffering of a whole cohort before anybody was going to be willing to do anything to improve the retirement system. And I think the financial crisis may have accelerated that process."
(Reporting by Tom Brown; Editing by Eddie Evans)
MIAMI (Reuters) - Like many other elderly Americans, Edie Stark has been hard hit by the meltdown in U.S. financial markets. She is 84 and has been worried a lot lately about outliving her savings.
A retired nurse, Stark is a prime example of what financial planners coldly call "longevity risk," a reference to the need for a secure income and lasting savings at a time when growing numbers of Americans can live for 30 years in retirement.
Life expectancy in the United States has already reached a record high of 77.8 years, up from 70.8 in 1970, according to the U.S. National Center for Health Statistics. Fueled by continuing health gains, the U.S. Census Bureau projects life expectancy in the world's wealthiest country will reach 79.2 years by 2015.
Stark said she and her husband had seen more than 50 percent of their retirement assets wiped out since the stock market started tanking several months ago.
She still plans to see out the end of her days with her 88-year-old husband at the Palace, an upscale retirement complex where they live on the palm-fringed southern outskirts of Miami.
She acknowledges that may not be possible, however, as her life savings vanish.
"I have fixed expenses so I can add it up and tell you how many years we can live unless the market comes up," said Stark.
"We wanted to have money to leave our children. That's not possible anymore," said Stark, whose husband suffers from dementia and is cared for in an assisted living facility at the Palace.
Dorie Ryder, 89, a retired school teacher and neighbor of Stark's at the Palace, said she had lost about 25 percent of her assets to the recent stock market downturn.
She has fond memories of better times when she and her husband lived just a block away from the home of former President Richard Nixon on nearby Key Biscayne.
But Ryder said she is now contemplating a move into a Miami-area apartment, where she'd live alone but pay less rent than the $3,500 she forks out monthly at the Palace.
"I just do the best I can and I'm worried," said Ryder, who has a small pension. "I don't know how long I'll be able to stay here."
Coping with financial fears is not unique to the elderly, especially at a time of record home foreclosure filings, crumbling real estate values and rising unemployment.
It can be especially painful for the elderly, however, even for those who are still a long way from being destitute.
"Money anxiety when you're older is just different than when you are young. You don't have a chance to recover," said Teresa Ghilarducci, a retirement expert and professor of economic policy analysis at New York's New School for Social Research.
DYING OF WORRY
"I predict that this spike in anxiety around the security of money is actually going to lead to more sickness," she added. "People are going to die of worry."
Experts say millions of middle- and upper-class retirees across the country face mounting insecurity due to exposure to stocks instead of "safe money" investments like short-term bonds and fixed annuities.
Many were lured into the equities because they offered a chance to double their money from 2003 to 2008. Others face foreclosures because they over-borrowed against their homes before the U.S. housing meltdown.
"Probably half our clients are retired and yes, we have a lot of very worried, concerned clients," said Peggy Cabaniss, president of HC Financial Advisors in Lafayette, California.
"Their leading concerns are, No. 1, that they're going to run out of money," she said.
Like the American Psychological Association, Cabaniss said she tells her clients not to get caught up in blow-by-blow media reports about swooning markets and dour economic news.
"The way things are presented it sort of sounds like and feels like the end of the world," she said.
But avoiding bad news is tough when it affects life savings and people's retirement security hangs in the balance.
Ghilarducci and Alicia Munnell, director of the Center for Retirement Research at Boston College, say the erosion of retirement savings due to stock declines is something that should be triggering alarm bells.
The United States is the only developed, industrialized and democratic country in the world where traditional pension plans with a nearly guaranteed stream of income are being replaced by 401k plans, in which retirees bear many risks from volatile market investments, Ghilarducci said.
"It's disastrous," she said, referring to the outlook for retiring or soon-to-be retired "baby boomers."
"Late boomers will fare far worse than their parents and grandparents in terms of replacing their income in retirement, mainly because of the erosion in the employer pension system," Ghilarducci said.
"It highlights the flaws in our retirement income system," said Munnell.
"The idea that we have people increasingly and solely dependent on accounts which vary with the ups and downs of the stock market just doesn't make for a very sensible retirement arrangement," she added.
"My view is that it was always going to take the real suffering of a whole cohort before anybody was going to be willing to do anything to improve the retirement system. And I think the financial crisis may have accelerated that process."
(Reporting by Tom Brown; Editing by Eddie Evans)
Business - India;Textile Cos may cut 500,000 more jobs
NEW DELHI (Reuters) - India's textile sector could shed 500,000 jobs in the next five months, federal Trade Secretary G.K. Pillai said on Friday, quoting textile ministry estimates.
Sport - Tennis;Spain pulls level - Lopez stuns Del Petro
Brian Homewood
MAR DEL PLATA, Argentina (Reuters) - Spain pulled level with Argentina in the Davis Cup final on Friday when Feliciano Lopez stunned an ailing Juan Martin del Potro in four sets.
Lopez, 31st in the world rankings, won 4-6 7-6 7-6 6-3 in three hours 19 minutes to wipe out David Nalbandian's straight sets win over David Ferrer in the opening rubber.
Del Potro, already troubled by a toe injury, appeared to pull a muscle in his right leg in the sixth game of the fourth set and needed about 10 minutes of treatment.
"Tennis matches are like that," said Lopez, who was chosen by captain Emilio Sanchez Vicario ahead of the higher-ranked Fernando Verdasco.
"I was a bit nervous at the start, I got over it in the second set and began to believe in myself more. It was a victory over myself."
"To beat a top ten player this way, in a Davis Cup final away from home, is the happiest moment in my career."
"There were moments in the second and third sets where I felt I could not have played any better."
Del Potro said it was too early to say whether his injury would keep him out of Sunday's reverse singles.
"He played really well, above himself," said the 20-year-old of his opponent.
"I'm a bit surprised by the standard he played. He didn't commit double faults, his second serve was almost as good as his first and I couldn't find a way past him."
LOPEZ DOMINATES
Del Potro, ranked ninth, swept through the first set in 38 minutes and appeared set to carry on where Nalbandian had left off.
Lopez had other ideas and hit back to win the next two sets in tiebreaks after all games went with serve.
He reeled off the first tiebreak 7-2 and, in the second, came back from 4-2 behind to win four points in a row and clinch the breaker 7-4 with an ace.
With the crowd at the Polideportivo Malvinas arena increasingly quiet, Lopez continued his dominance by breaking in the fourth game of the fourth set, helped by two Del Potro double faults, to take control.
Already looking fatigued after a long season that has seen him leap from obscurity into the top 10, Del Potro managed to break back immediately but then suffered his injury in the next game.
He soldiered on but Lopez wrapped up the match comfortably.
Argentina, unbeaten at home in 10 years, went into the final as firm favourites to win the competition for the first time against opponents missing injured world number one Rafael Nadal.
The first match went according to the script as Nalbandian thumped Ferrer 6-3 6-2 6-3 in one hour 59 minutes to give the hosts the perfect start.
"I played well from start to finish, I was always in control of the situation and the public was incredible," said Nalbandian. Ferrer was dejected.
"I felt inferior," he said. "David was far superior and there's nothing more to say."
Sanchez supported his number one player. "He was up against one of the best in the world on this surface and I don't think he was so bad."
MAR DEL PLATA, Argentina (Reuters) - Spain pulled level with Argentina in the Davis Cup final on Friday when Feliciano Lopez stunned an ailing Juan Martin del Potro in four sets.
Lopez, 31st in the world rankings, won 4-6 7-6 7-6 6-3 in three hours 19 minutes to wipe out David Nalbandian's straight sets win over David Ferrer in the opening rubber.
Del Potro, already troubled by a toe injury, appeared to pull a muscle in his right leg in the sixth game of the fourth set and needed about 10 minutes of treatment.
"Tennis matches are like that," said Lopez, who was chosen by captain Emilio Sanchez Vicario ahead of the higher-ranked Fernando Verdasco.
"I was a bit nervous at the start, I got over it in the second set and began to believe in myself more. It was a victory over myself."
"To beat a top ten player this way, in a Davis Cup final away from home, is the happiest moment in my career."
"There were moments in the second and third sets where I felt I could not have played any better."
Del Potro said it was too early to say whether his injury would keep him out of Sunday's reverse singles.
"He played really well, above himself," said the 20-year-old of his opponent.
"I'm a bit surprised by the standard he played. He didn't commit double faults, his second serve was almost as good as his first and I couldn't find a way past him."
LOPEZ DOMINATES
Del Potro, ranked ninth, swept through the first set in 38 minutes and appeared set to carry on where Nalbandian had left off.
Lopez had other ideas and hit back to win the next two sets in tiebreaks after all games went with serve.
He reeled off the first tiebreak 7-2 and, in the second, came back from 4-2 behind to win four points in a row and clinch the breaker 7-4 with an ace.
With the crowd at the Polideportivo Malvinas arena increasingly quiet, Lopez continued his dominance by breaking in the fourth game of the fourth set, helped by two Del Potro double faults, to take control.
Already looking fatigued after a long season that has seen him leap from obscurity into the top 10, Del Potro managed to break back immediately but then suffered his injury in the next game.
He soldiered on but Lopez wrapped up the match comfortably.
Argentina, unbeaten at home in 10 years, went into the final as firm favourites to win the competition for the first time against opponents missing injured world number one Rafael Nadal.
The first match went according to the script as Nalbandian thumped Ferrer 6-3 6-2 6-3 in one hour 59 minutes to give the hosts the perfect start.
"I played well from start to finish, I was always in control of the situation and the public was incredible," said Nalbandian. Ferrer was dejected.
"I felt inferior," he said. "David was far superior and there's nothing more to say."
Sanchez supported his number one player. "He was up against one of the best in the world on this surface and I don't think he was so bad."
World - US;Bush's last rule-making hurrah
With just 60 days left in his tenure, you might think that W.'s lame-duck administration was sitting around relieved that another guy was taking over, and Bush was counting the minutes until his flight leaves for Crawford.
Not quite.
Based on the flurry of quiet directives coming from the White House as the end of the term nears, it looks like the Bush goose (or is it turducken?) isn't quite cooked yet.
In what has become a kind of presidential right-of-passage, the president (or really, the federal agencies that answer to him) has been pushing through a series of last-minute regulations that have the force of law. Everything from pollution controls to family-leave standards can be set by these rules.
And you thought your high school government teacher said that Congress made all the laws.
These de-facto laws are called "midnight rules" or "midnight regulations" because they happen at the end -- or midnight period -- of an administration. If the rules are published in the Federal Register by Friday, Nov. 21, they'll be very hard for President-elect Obama to reverse when he gets into office.
And that's the point. Sure, the administration had eight years to get a lot of this stuff accomplished. But according to senior research fellow at George Mason University, Veronique de Rugy, most midnight regulations "cater to special interests" and "that is why they are hurried into effect without the usual checks and balances."
George Bush isn't the first president to push through rules before the next guy can get in. Jimmy Carter gets that award. In fact, the New Yorker's Elizabeth Kolbert says Carter's whirlwind of last-minute activity before Ronald Reagan took office is when the practice got named. "They became known as 'midnight regulations,' after the 'midnight judges' appointed by John Adams in the final hours of his presidency."
George Bush doesn't get the award for the most rules shoved through after the two-minute warning either. That goes to Bill Clinton who, according to de Rugy, set the record for number of last-minute pages published in the Federal Register at "more than 26,000."
So, what rules are the White House and all its federal agencies trying to get through this season?
The Wall Street Journal reports that the new rules, "open the way for commercial development of oil shale on federal land, allow truckers to drive for longer periods, and add certain restrictions on employee time off under the Family and Medical Leave Act."
Those run the gamut, but the ones getting the most press are environmentally focused. The Los Angeles Times says environmentalists are angry by a host of loosened safeguards:
In recent days, the Bush administration announced new rules to speed oil shale development across 2 million rocky acres in the West. It scheduled an auction for drilling rights alongside three national parks. It has also set in motion processes to finalize major changes in endangered species protection, allow more mining waste to flow into rivers and streams, and exempt factory farms from air pollution reporting.
The Chicago Tribune did a special report saying the administration undercut a clean-air rule aimed at curbing childhood lead poisoning:
...the EPA had planned to require lead monitors next to any factory emitting at least a half-ton of lead a year. But after the White House intervened, the agency raised the threshold to a ton of lead or more, according to e-mails and other documents exchanged between the EPA and the Office of Management and Budget.
In an Oct. 31 press briefing, Deputy Press Secretary Tony Fratto was asked about environmental groups saying the White House was easing limits on pollution. First Fratto responded that the White House is "constrained" about discussing regulations under review, but then said, "I would be highly doubtful that there's any specific increase in environmental-related regulations."
Navigating the rule-making process can be laborious for the non-wonk type, but the non-profit, investigative journalism group ProPublica has tried to make it easy for people who want to investigate for themselves. ProPublica has a master list of Bush's midnight regulations here, and the group posted a guide on "How to Ferret Out Midnight Regs Yourself." If you've got the time and inclination, a lot of this process is public record and online.
Not quite.
Based on the flurry of quiet directives coming from the White House as the end of the term nears, it looks like the Bush goose (or is it turducken?) isn't quite cooked yet.
In what has become a kind of presidential right-of-passage, the president (or really, the federal agencies that answer to him) has been pushing through a series of last-minute regulations that have the force of law. Everything from pollution controls to family-leave standards can be set by these rules.
And you thought your high school government teacher said that Congress made all the laws.
These de-facto laws are called "midnight rules" or "midnight regulations" because they happen at the end -- or midnight period -- of an administration. If the rules are published in the Federal Register by Friday, Nov. 21, they'll be very hard for President-elect Obama to reverse when he gets into office.
And that's the point. Sure, the administration had eight years to get a lot of this stuff accomplished. But according to senior research fellow at George Mason University, Veronique de Rugy, most midnight regulations "cater to special interests" and "that is why they are hurried into effect without the usual checks and balances."
George Bush isn't the first president to push through rules before the next guy can get in. Jimmy Carter gets that award. In fact, the New Yorker's Elizabeth Kolbert says Carter's whirlwind of last-minute activity before Ronald Reagan took office is when the practice got named. "They became known as 'midnight regulations,' after the 'midnight judges' appointed by John Adams in the final hours of his presidency."
George Bush doesn't get the award for the most rules shoved through after the two-minute warning either. That goes to Bill Clinton who, according to de Rugy, set the record for number of last-minute pages published in the Federal Register at "more than 26,000."
So, what rules are the White House and all its federal agencies trying to get through this season?
The Wall Street Journal reports that the new rules, "open the way for commercial development of oil shale on federal land, allow truckers to drive for longer periods, and add certain restrictions on employee time off under the Family and Medical Leave Act."
Those run the gamut, but the ones getting the most press are environmentally focused. The Los Angeles Times says environmentalists are angry by a host of loosened safeguards:
In recent days, the Bush administration announced new rules to speed oil shale development across 2 million rocky acres in the West. It scheduled an auction for drilling rights alongside three national parks. It has also set in motion processes to finalize major changes in endangered species protection, allow more mining waste to flow into rivers and streams, and exempt factory farms from air pollution reporting.
The Chicago Tribune did a special report saying the administration undercut a clean-air rule aimed at curbing childhood lead poisoning:
...the EPA had planned to require lead monitors next to any factory emitting at least a half-ton of lead a year. But after the White House intervened, the agency raised the threshold to a ton of lead or more, according to e-mails and other documents exchanged between the EPA and the Office of Management and Budget.
In an Oct. 31 press briefing, Deputy Press Secretary Tony Fratto was asked about environmental groups saying the White House was easing limits on pollution. First Fratto responded that the White House is "constrained" about discussing regulations under review, but then said, "I would be highly doubtful that there's any specific increase in environmental-related regulations."
Navigating the rule-making process can be laborious for the non-wonk type, but the non-profit, investigative journalism group ProPublica has tried to make it easy for people who want to investigate for themselves. ProPublica has a master list of Bush's midnight regulations here, and the group posted a guide on "How to Ferret Out Midnight Regs Yourself." If you've got the time and inclination, a lot of this process is public record and online.
World - Amsterdam moves to close a fifth of 'coffee shops'
Toby Sterling
AMSTERDAM, Netherlands – Amsterdam will close almost a fifth of its marijuana cafes to comply with a national ban on having them near schools, the mayor said Friday.
Another city, Eindhoven, said it would start issuing permits to marijuana growers in order to better regulate the trade — if the national government approves.
The plans were announced as 33 major Dutch cities held a "weed summit" to discuss the nation's long-standing policy of tolerating marijuana use while routinely arresting growers.
Marijuana is technically illegal in the Netherlands, but can be sold in small amounts in designated cafes — euphemistically known as "coffee shops" — without fear of prosecution. More than a quarter of the country's cafes are in Amsterdam, where they are a major tourist attraction.
But Mayor Job Cohen said the city would close about 20 percent of its cafes.
Those included some landmarks, such as The Bulldog — a high-traffic shop operating since 1985 in a former police station on one of the city's main squares.
Letters have been sent to 43 shops located within 250 meters (yards) of a high school informing them they will have to close by the end of 2011 if they cannot successfully appeal the decision, Amsterdam spokeswoman Iris Reshef said. Though she added that the city did not have any major problems with the cafes.
But other cities closer to the Netherlands' borders have expressed frustration at being bombarded by "drug tourists" from Germany, France or Belgium seeking to stock up on marijuana — an often finding ways to bypass a 5 gram (1/5 ounce) purchase limit.
"If the border areas shut down tomorrow, then (inland cities) Den Helder and Almere will soon be suffering," said Mayor Geert Leers of the southern border city Maastricht.
Representatives at the summit Friday in Almere, 20 kilometers (12 miles) east of Amsterdam, also discussed the policy of arresting growers, which left cafes with no way to legally source their most lucrative product.
Eindhoven Mayor Rob van Gijzel said his city wanted to set up a pilot scheme of issuing permits to growers.
"People will be able to ask for a permit to grow for fixed prices," he said after the summit. "It'll be regulated in terms of produce and revenues, but also movement, in transports to the coffee shops."
Amsterdam backed the idea of expanding the tolerance policy to growers, the city spokeswoman said, noting it could help keep organized crime out.
"We don't have any insight to what goes on behind the back door," Reshef said. "What we need is a closed supply chain."
But the national government must approve the scheme, and it was unclear how long that could take or if it was even likely. Polls suggest most voters support decriminalizing marijuana cultivation, but the coalition government is led by the conservative Christian Democrats, which opposes it.
Justice Minister Ernst Hirsch Ballin said Thursday he had "no intention" of changing national marijuana policy.
The Dutch Parliament voted to regulate growers once before in 2005, but the government refused, saying it would lead to a confrontation with the European Union.
According to data compiled by the Netherlands' Trimbos Institute for Mental Health and Addiction, after 30 years of the Dutch tolerance policy, usage rates here are somewhere in the middle of international norms — above those in Germany and the Scandinavian countries, but below those of France, Britain and the United States.
AMSTERDAM, Netherlands – Amsterdam will close almost a fifth of its marijuana cafes to comply with a national ban on having them near schools, the mayor said Friday.
Another city, Eindhoven, said it would start issuing permits to marijuana growers in order to better regulate the trade — if the national government approves.
The plans were announced as 33 major Dutch cities held a "weed summit" to discuss the nation's long-standing policy of tolerating marijuana use while routinely arresting growers.
Marijuana is technically illegal in the Netherlands, but can be sold in small amounts in designated cafes — euphemistically known as "coffee shops" — without fear of prosecution. More than a quarter of the country's cafes are in Amsterdam, where they are a major tourist attraction.
But Mayor Job Cohen said the city would close about 20 percent of its cafes.
Those included some landmarks, such as The Bulldog — a high-traffic shop operating since 1985 in a former police station on one of the city's main squares.
Letters have been sent to 43 shops located within 250 meters (yards) of a high school informing them they will have to close by the end of 2011 if they cannot successfully appeal the decision, Amsterdam spokeswoman Iris Reshef said. Though she added that the city did not have any major problems with the cafes.
But other cities closer to the Netherlands' borders have expressed frustration at being bombarded by "drug tourists" from Germany, France or Belgium seeking to stock up on marijuana — an often finding ways to bypass a 5 gram (1/5 ounce) purchase limit.
"If the border areas shut down tomorrow, then (inland cities) Den Helder and Almere will soon be suffering," said Mayor Geert Leers of the southern border city Maastricht.
Representatives at the summit Friday in Almere, 20 kilometers (12 miles) east of Amsterdam, also discussed the policy of arresting growers, which left cafes with no way to legally source their most lucrative product.
Eindhoven Mayor Rob van Gijzel said his city wanted to set up a pilot scheme of issuing permits to growers.
"People will be able to ask for a permit to grow for fixed prices," he said after the summit. "It'll be regulated in terms of produce and revenues, but also movement, in transports to the coffee shops."
Amsterdam backed the idea of expanding the tolerance policy to growers, the city spokeswoman said, noting it could help keep organized crime out.
"We don't have any insight to what goes on behind the back door," Reshef said. "What we need is a closed supply chain."
But the national government must approve the scheme, and it was unclear how long that could take or if it was even likely. Polls suggest most voters support decriminalizing marijuana cultivation, but the coalition government is led by the conservative Christian Democrats, which opposes it.
Justice Minister Ernst Hirsch Ballin said Thursday he had "no intention" of changing national marijuana policy.
The Dutch Parliament voted to regulate growers once before in 2005, but the government refused, saying it would lead to a confrontation with the European Union.
According to data compiled by the Netherlands' Trimbos Institute for Mental Health and Addiction, after 30 years of the Dutch tolerance policy, usage rates here are somewhere in the middle of international norms — above those in Germany and the Scandinavian countries, but below those of France, Britain and the United States.
Lifestyle - Fla.teen commits suicide with live web audience
Rasha Madkour
MIAMI – A college student committed suicide by taking a drug overdose in front of a live webcam as some computer users egged him on, others tried to talk him out of it, and another messaged OMG in horror when it became clear it was no joke. Some watchers contacted the Web site to notify police, but by the time officers entered Abraham Biggs' home — a scene also captured on the Internet — it was too late.
Biggs, a 19-year-old Broward College student who suffered from what his family said was bipolar disorder, or manic depression, lay dead on his bed in his father's Pembroke Pines house Wednesday afternoon, the camera still running 12 hours after Biggs announced his intentions online around 3 a.m.
It was unclear how many people watched it unfold.
Biggs was not the first person to commit suicide with a webcam rolling. But the drawn-out drama — and the reaction of those watching — was seen as an extreme example of young people's penchant for sharing intimate details about themselves over the Internet.
Biggs' family was infuriated that no one acted sooner to save him, neither the viewers nor the Web site that hosted the live video, Justin.tv. The Web site shows a video image, with a space alongside where computer users can instantly post comments.
Only when police arrived did the Web feed stop, "so that's 12 hours of watching," said the victim's sister, Rosalind Bigg. "They got hits, they got viewers, nothing happened for hours."
She added: "It didn't have to be."
An autopsy concluded Biggs died from a combination of opiates and benzodiazepine, which his family said was prescribed for his bipolar disorder.
Biggs announced his plans to kill himself over a Web site for bodybuilders, authorities said. But some users told investigators they did not take him seriously because he had threatened suicide on the site before.
Some members of his virtual audience encouraged him to do it, others tried to talk him out of it, and some discussed whether he was taking a dose big enough to kill himself, said Wendy Crane, an investigator with the Broward County medical examiner's office.
A computer user who claimed to have watched said that after swallowing some pills, Biggs went to sleep and appeared to be breathing for a few hours while others cracked jokes.
Someone notified the moderator of the bodybuilding site, who traced Biggs' location and called police, Crane said.
As police entered the room, the audience's reaction was filled with Internet shorthand: "OMFG," one wrote, meaning "Oh, my God." Others, either not knowing what they were seeing, or not caring, wrote "lol," which means "laughing out loud," and "hahahah."
An online video purportedly from Biggs' webcam shows a gun-wielding officer entering a bedroom, where a man is lying on a bed, his face turned away from the camera. The officer begins to examine him, as the camera lens is covered. Authorities could not immediately verify the authenticity of the video, though it matched their description of what occurred.
Montana Miller, an assistant professor of popular culture at Bowling Green State University in Ohio, said Biggs' very public suicide was not shocking, given the way teenagers chronicle every facet of their lives on sites like Facebook and MySpace.
"If it's not recorded or documented then it doesn't even seem worthwhile," she said. "For today's generation it might seem, `What's the point of doing it if everyone isn't going to see it?'"
She likened Biggs' death to other public ways of committing suicide, like jumping off a bridge.
Crane said she knows of a case in which a Florida man shot himself in the head in front of an online audience, though she didn't know how much viewers saw. In Britain last year, a man hanged himself while chatting online.
In a statement, Justin.tv CEO Michael Seibel said: "We regret that this has occurred and want to respect the privacy of the broadcaster and his family during this time."
The Web site would not say how many people were watching the broadcast. The site as a whole had 672,000 unique visitors in October, according to Nielsen.
Miami lawyer William Hill said there is probably nothing that could be done legally to those who watched and did not act. As for whether the Web site could be held liable, Hill said there doesn't seem to be much of a case for negligence.
"There could conceivably be some liability if they knew this was happening and they had some ability to intervene and didn't take action," said Hill, who does business litigation and has represented a number of Internet-based clients. But "I think it would be a stretch."
Condolences poured into Biggs' MySpace page, where the mostly unsmiling teen is seen posing in a series of pictures with various young women. On the bodybuilding Web site, Biggs used the screen name CandyJunkie. His Justin.tv alias was "feels_like_ecstacy."
Rosalind Bigg described her brother as an outgoing person who struck up conversations with Starbucks baristas and enjoyed taking his young nieces to Chuck E. Cheese. He was health-conscious and exercised but was not a bodybuilder, she said.
"This is very, very sudden and unexpected for us," the sister said. "It boggles the mind. We don't understand."
Associated Press Writers Jessica Gresko and Lisa Orkin Emmanuel and the AP News Research Center in New York contributed to this report.
(This version CORRECTS sister's last name in next-to-last graf.)
MIAMI – A college student committed suicide by taking a drug overdose in front of a live webcam as some computer users egged him on, others tried to talk him out of it, and another messaged OMG in horror when it became clear it was no joke. Some watchers contacted the Web site to notify police, but by the time officers entered Abraham Biggs' home — a scene also captured on the Internet — it was too late.
Biggs, a 19-year-old Broward College student who suffered from what his family said was bipolar disorder, or manic depression, lay dead on his bed in his father's Pembroke Pines house Wednesday afternoon, the camera still running 12 hours after Biggs announced his intentions online around 3 a.m.
It was unclear how many people watched it unfold.
Biggs was not the first person to commit suicide with a webcam rolling. But the drawn-out drama — and the reaction of those watching — was seen as an extreme example of young people's penchant for sharing intimate details about themselves over the Internet.
Biggs' family was infuriated that no one acted sooner to save him, neither the viewers nor the Web site that hosted the live video, Justin.tv. The Web site shows a video image, with a space alongside where computer users can instantly post comments.
Only when police arrived did the Web feed stop, "so that's 12 hours of watching," said the victim's sister, Rosalind Bigg. "They got hits, they got viewers, nothing happened for hours."
She added: "It didn't have to be."
An autopsy concluded Biggs died from a combination of opiates and benzodiazepine, which his family said was prescribed for his bipolar disorder.
Biggs announced his plans to kill himself over a Web site for bodybuilders, authorities said. But some users told investigators they did not take him seriously because he had threatened suicide on the site before.
Some members of his virtual audience encouraged him to do it, others tried to talk him out of it, and some discussed whether he was taking a dose big enough to kill himself, said Wendy Crane, an investigator with the Broward County medical examiner's office.
A computer user who claimed to have watched said that after swallowing some pills, Biggs went to sleep and appeared to be breathing for a few hours while others cracked jokes.
Someone notified the moderator of the bodybuilding site, who traced Biggs' location and called police, Crane said.
As police entered the room, the audience's reaction was filled with Internet shorthand: "OMFG," one wrote, meaning "Oh, my God." Others, either not knowing what they were seeing, or not caring, wrote "lol," which means "laughing out loud," and "hahahah."
An online video purportedly from Biggs' webcam shows a gun-wielding officer entering a bedroom, where a man is lying on a bed, his face turned away from the camera. The officer begins to examine him, as the camera lens is covered. Authorities could not immediately verify the authenticity of the video, though it matched their description of what occurred.
Montana Miller, an assistant professor of popular culture at Bowling Green State University in Ohio, said Biggs' very public suicide was not shocking, given the way teenagers chronicle every facet of their lives on sites like Facebook and MySpace.
"If it's not recorded or documented then it doesn't even seem worthwhile," she said. "For today's generation it might seem, `What's the point of doing it if everyone isn't going to see it?'"
She likened Biggs' death to other public ways of committing suicide, like jumping off a bridge.
Crane said she knows of a case in which a Florida man shot himself in the head in front of an online audience, though she didn't know how much viewers saw. In Britain last year, a man hanged himself while chatting online.
In a statement, Justin.tv CEO Michael Seibel said: "We regret that this has occurred and want to respect the privacy of the broadcaster and his family during this time."
The Web site would not say how many people were watching the broadcast. The site as a whole had 672,000 unique visitors in October, according to Nielsen.
Miami lawyer William Hill said there is probably nothing that could be done legally to those who watched and did not act. As for whether the Web site could be held liable, Hill said there doesn't seem to be much of a case for negligence.
"There could conceivably be some liability if they knew this was happening and they had some ability to intervene and didn't take action," said Hill, who does business litigation and has represented a number of Internet-based clients. But "I think it would be a stretch."
Condolences poured into Biggs' MySpace page, where the mostly unsmiling teen is seen posing in a series of pictures with various young women. On the bodybuilding Web site, Biggs used the screen name CandyJunkie. His Justin.tv alias was "feels_like_ecstacy."
Rosalind Bigg described her brother as an outgoing person who struck up conversations with Starbucks baristas and enjoyed taking his young nieces to Chuck E. Cheese. He was health-conscious and exercised but was not a bodybuilder, she said.
"This is very, very sudden and unexpected for us," the sister said. "It boggles the mind. We don't understand."
Associated Press Writers Jessica Gresko and Lisa Orkin Emmanuel and the AP News Research Center in New York contributed to this report.
(This version CORRECTS sister's last name in next-to-last graf.)
World - US;Obama moves to pick Timothy Geithner for Treasury
Jeff Mason and Caren Bohan
CHICAGO (Reuters) – President-elect Barack Obama on Friday moved toward nominating Timothy Geithner as Treasury secretary and charging the respected head of the New York Federal Reserve with helping pull the United States out of an economic nosedive.
New York Sen. Hillary Clinton appeared headed to be nominated as Obama's secretary of state, bringing his one-time main Democratic rival into the fold in a pivotal role in his new administration.
Geithner, 47, had been seen as one of two main candidates for the Treasury job along with former Clinton administration Treasury chief Lawrence Summers.
U.S. stocks soared on the Geithner news, first reported by NBC News, pushing major indices up more than 6 percent. The Dow Jones industrial average closed above 8,000.
Obama may consider Summers as a possible successor to Federal Reserve Chairman Ben Bernanke, whose term ends in January 2010, a Democratic source said.
Clinton, wife of former President Bill Clinton, appeared set to take the top U.S. diplomatic post after wrestling with whether she wanted to give up her Senate seat.
"We're still in discussions, which are very much on track. Any reports beyond that are premature," Clinton senior adviser Philippe Reines told Reuters.
The New York Times said it was a done deal. "She's ready," The Times quoted one of two Clinton associates who confirmed the deal as saying.
MARKET BOOST
A senior Democrat told Reuters in Washington that Obama wanted Geithner for the Treasury job, but had yet to make an offer. He did confirm that Summers was no longer under consideration. "Summers is off the list," he said.
Obama, who beat Republican John McCain in the November 4 election, takes over from George W. Bush on January 20. He has been largely hunkered down in Chicago since the election working on his administration team.
NBC News said Obama was expected to announce Geithner and other members of his economic team on Monday to try to calm U.S. financial markets that have sunk like a stone all week before Friday's surge.
"A fantastic choice to help lead the financial markets out of the wilderness," said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi in New York. He called Geithner a "crisis manager par excellence" who would hit the ground running.
If confirmed by the Senate, Geithner would be at the helm of efforts to stem the worst financial crisis since the Great Depression.
NBC also said New Mexico Gov. Bill Richardson could get Obama's nod to become commerce secretary.
Richardson's elevation to the Cabinet would give the Obama administration its first high-profile Hispanic member as its main liaison to the business community. Richardson was a United Nations ambassador and energy secretary under former President Bill Clinton.
APPOINTMENTS SIGNAL A CENTRIST BENT
Set to become the first black U.S. president, Obama will inherit a deeply unpopular war in Iraq and another war in Afghanistan, where violence has soared, and will seek to rebuild relationships with allies, particularly in Europe.
Retired Marine Gen. James Jones has emerged as a leading contender for White House national security adviser, according to Democratic sources. Jones is a former top operational commander of NATO.
Obama is also leaning toward keeping Defense Secretary Robert Gates. Gates, who replaced the combative Donald Rumsfeld in 2006, is praised by both Republicans and Democrats in Congress for overseeing a military strategy shift in Iraq that helped bring the country back from the brink of civil war.
Analysts said the foreign policy team Obama was assembling seemed to signal a centrist bent for a president-elect who launched his campaign emphasizing liberal, anti-war message.
Obama and Clinton differed on some issues during the campaign, with the former first lady taking a tougher line on issues such as the Iraq war and Iran.
The two had contrasting styles on the campaign trail, with the calm Obama earning the nickname "No Drama Obama" as the leader of a disciplined team adept at staying on message.
Clinton's campaign, by contrast, was marked by infighting among aides, more turbulence and numerous leaks to the media.
But as the wife of a former president, she has name recognition and clout that Obama views as an asset.
"Obama believes Clinton would bring immediate respect and stature to the role at a time when the country is in need of strong relationships around the world," said on Obama aide, who spoke on condition of anonymity. "Throughout the campaign he always had a great deal of respect for her intellect, work ethic and thinks the advantages of Clinton serving far outweigh the downsides."
(Editing by Kristin Roberts and Frances Kerry)
CHICAGO (Reuters) – President-elect Barack Obama on Friday moved toward nominating Timothy Geithner as Treasury secretary and charging the respected head of the New York Federal Reserve with helping pull the United States out of an economic nosedive.
New York Sen. Hillary Clinton appeared headed to be nominated as Obama's secretary of state, bringing his one-time main Democratic rival into the fold in a pivotal role in his new administration.
Geithner, 47, had been seen as one of two main candidates for the Treasury job along with former Clinton administration Treasury chief Lawrence Summers.
U.S. stocks soared on the Geithner news, first reported by NBC News, pushing major indices up more than 6 percent. The Dow Jones industrial average closed above 8,000.
Obama may consider Summers as a possible successor to Federal Reserve Chairman Ben Bernanke, whose term ends in January 2010, a Democratic source said.
Clinton, wife of former President Bill Clinton, appeared set to take the top U.S. diplomatic post after wrestling with whether she wanted to give up her Senate seat.
"We're still in discussions, which are very much on track. Any reports beyond that are premature," Clinton senior adviser Philippe Reines told Reuters.
The New York Times said it was a done deal. "She's ready," The Times quoted one of two Clinton associates who confirmed the deal as saying.
MARKET BOOST
A senior Democrat told Reuters in Washington that Obama wanted Geithner for the Treasury job, but had yet to make an offer. He did confirm that Summers was no longer under consideration. "Summers is off the list," he said.
Obama, who beat Republican John McCain in the November 4 election, takes over from George W. Bush on January 20. He has been largely hunkered down in Chicago since the election working on his administration team.
NBC News said Obama was expected to announce Geithner and other members of his economic team on Monday to try to calm U.S. financial markets that have sunk like a stone all week before Friday's surge.
"A fantastic choice to help lead the financial markets out of the wilderness," said Chris Rupkey, economist at Bank of Tokyo-Mitsubishi in New York. He called Geithner a "crisis manager par excellence" who would hit the ground running.
If confirmed by the Senate, Geithner would be at the helm of efforts to stem the worst financial crisis since the Great Depression.
NBC also said New Mexico Gov. Bill Richardson could get Obama's nod to become commerce secretary.
Richardson's elevation to the Cabinet would give the Obama administration its first high-profile Hispanic member as its main liaison to the business community. Richardson was a United Nations ambassador and energy secretary under former President Bill Clinton.
APPOINTMENTS SIGNAL A CENTRIST BENT
Set to become the first black U.S. president, Obama will inherit a deeply unpopular war in Iraq and another war in Afghanistan, where violence has soared, and will seek to rebuild relationships with allies, particularly in Europe.
Retired Marine Gen. James Jones has emerged as a leading contender for White House national security adviser, according to Democratic sources. Jones is a former top operational commander of NATO.
Obama is also leaning toward keeping Defense Secretary Robert Gates. Gates, who replaced the combative Donald Rumsfeld in 2006, is praised by both Republicans and Democrats in Congress for overseeing a military strategy shift in Iraq that helped bring the country back from the brink of civil war.
Analysts said the foreign policy team Obama was assembling seemed to signal a centrist bent for a president-elect who launched his campaign emphasizing liberal, anti-war message.
Obama and Clinton differed on some issues during the campaign, with the former first lady taking a tougher line on issues such as the Iraq war and Iran.
The two had contrasting styles on the campaign trail, with the calm Obama earning the nickname "No Drama Obama" as the leader of a disciplined team adept at staying on message.
Clinton's campaign, by contrast, was marked by infighting among aides, more turbulence and numerous leaks to the media.
But as the wife of a former president, she has name recognition and clout that Obama views as an asset.
"Obama believes Clinton would bring immediate respect and stature to the role at a time when the country is in need of strong relationships around the world," said on Obama aide, who spoke on condition of anonymity. "Throughout the campaign he always had a great deal of respect for her intellect, work ethic and thinks the advantages of Clinton serving far outweigh the downsides."
(Editing by Kristin Roberts and Frances Kerry)
World - Is Kashmir key to Afghan peace ?
Mark Sappenfield and Shahan Mufti
NEW DELHI; and ISLAMABAD, PAKISTAN – As part of his push to find new solutions to the war in Afghanistan, President-elect Barack Obama is considering a new diplomatic push on Kashmir, reversing eight years of American silence on the issue.
Mr. Obama has argued that Pakistan will not fully commit to fighting the insurgency it shares with Afghanistan until it sheds historic insecurities toward India. Talks about Kashmir, the central point of contention between the two nuclear rivals, are among the "critical tasks for the next administration," Obama said in an interview last month with Time magazine.
It is a strategy that worries Indians, who suggest the Pakistani Army is blackmailing Obama to support its claims. Yet security analysts say the Afghan insurgency has roots in the power struggle between India and Pakistan and cannot be solved without a regional approach.
"It will be very hard to put Afghanistan on a long-term positive path without alleviating some of the Indo-Pakistan tensions," says Xenia Dormandy of the Belfer Center for Science and International Affairs at Harvard University in Cambridge, Mass.
Such ideas would appear to fit well with the doctrines of Gen. David Petraeus, who oversaw a significant improvement in law and order in Iraq. He is now the commander of American forces in the entire region, which includes Afghanistan.
General Petraeus has been an open advocate of regional diplomacy as a key counterinsurgency tactic. On Oct. 15, he told a round table of Washington Post reporters that in seeking solutions to Afghanistan, "there may be opportunities with respect to India."
The goal would be to build a level of trust between India and Pakistan, freeing Pakistan from its historic fear of India, with which it has fought three wars. The surest way to do this, Obama has said, is to find a solution to Kashmir – the state split between each but claimed in full by both.
"We should try to resolve the Kashmir crisis so that [Pakistan] can stay focused – not on India, but on the situation with those militants," he told MSNBC on Oct. 31.
Obama went further in the Time interview, mentioning he has spoken with former President Bill Clinton about becoming a special envoy to the region – a comment that has been front-page news in India and Pakistan.
Nothing could be more damaging to American interests in the region, says Raja Mohan, a member of India's National Security Advisory Board. He claims Indo-Pakistan relations are better than they have ever been, citing the recent opening of trade between Pakistan - and-Indian-controlled Kashmir as something that would have been unthinkable in the past.
Moreover, he suggests India and Pakistan have behind the scenes made significant progress on the issue of Kashmir, to the point that the two nations have a tentative road map for how to resolve the crisis. It was scuppered only by the collapse of former Pakistani President Pervez Musharraf's regime in August.
Bush steered clear of Kashmir
The progress was partly the result of the Bush administration's decision to steer clear of Kashmir, says Mr. Mohan. Entering the fray now would only disrupt the delicate balance, making it appear as if the US was merely trying to placate Pakistan in return for its support in the war against terror.
In such a case, Mohan says, India might have a hard time winning concessions for a fair deal: "So long as the Pakistani Army thinks that the Americans are on their side, they're not going to deal with India."
Both Obama and his top South Asia adviser, Bruce Riedel, have spoken of the need to be discreet. In a 2007 teleconference for the journal Foreign Affairs, Mr. Riedel said: "I would urge the administration to seize the opportunity to quietly, but forcefully, push for a resolution there."
In the interview he called Kashmir "the itch that has driven Pakistan towards supporting terrorism for the last 20 years." Indeed, many experts say the enmity – for which Kashmir is the most potent symbol – has shaped security in the region, including Afghanistan.
Rivalry plays out in Afghanistan
For years, the mutual mistrust has led India and Pakistan to play their own version of the Great Game in Afghanistan. India has consistently been Afghanistan's main ally in the region. But Pakistan sees Afghanistan as its strategic backyard, which under no circumstances can be yielded to Indian influence.
Fears are stoked by the memories of 1971, when the Indian Army helped Bengalis secede from Pakistan to form Bangladesh. With Afghanistan historically claiming a significant chunk of Pakistan as its own, Pakistanis worry that an Indian-backed Afghanistan could dismember Pakistan further.
"Pakistan is the only country in South Asia that stands between India's complete hegemony in this region," says Fahmida Ashraf, an analyst at the Institute for Strategic Studies in Islamabad, a thinktank funded by the Pakistan government.
Repeatedly, Pakistan's Army has acted to prevent this from happening. It has done this by cultivating networks of militants as a proxy army. In Afghanistan, the Pakistan-backed mujahideen chased out the Soviet Union, India's ally. Then the Pakistan-backed Taliban took control of the country, preventing it from falling into the hands of pro-India Northern Alliance warlords.
This proxy war continues. India has invested $750 million and pledged $450 million more to the government of President Hamid Karzai, who is strongly pro-India. India is Afghanistan's largest trade partner. And it has taken the provocative step of opening consulates in two cities sitting on the border with Pakistan – Jalalabad and Kandahar.
Pakistan claims Indian intelligence agencies are using these consulates as bases, though it has never made this evidence public. Generally speaking, the allegations are that India is funding separatist militants in the Pakistani province of Balochistan.
"India wants to destabilize [Pakistan's tribal areas] and Balochistan," said Rahman Malik, a Pakistani government security adviser during a trip to Washington.
Analysts say this might be true, but only to a small degree. Militants "might be getting some support from India, but it's not anywhere near what the Pakistanis like to suggest," says Marvin Weinbaum, an analyst at the Middle East Institute in Washington.
Privately, a Pakistani diplomat who spoke on condition of anonymity agrees. India's involvement in the unrest along Pakistan's western front "might be no more than 5 percent of all the trouble out there."
But publicly, Pakistan "is basing its Afghan and Indian policy on its perception," says Mr. Weinbaum.
In July, militants struck the Indian Embassy in Kabul with a bomb blast that killed 41 people. American intelligence agencies have said they have evidence that Pakistan's intelligence agency, the Inter-Services Intelligence (ISI) directorate, was involved.
"Even today, the Pakistani military sees India as the threat," says Ms. Dormandy, of Harvard. "Until that attitude changes, you're not going to see Pakistan step back from its historically strong use of militant assets to affect foreign policy."
There are signs that this attitude is beginning to change. Pakistan is now fighting many of the militants it once sheltered in Bajaur and Swat in northern Pakistan. Obama's intent would be to accelerate this process and send a clear message to Pakistan.
"Why do you want to keep on being bogged down with [India and Kashmir], particularly at a time where the biggest threat now is coming from the Afghan border?" he told Time. "I think there is a moment where potentially we could get their attention."
NEW DELHI; and ISLAMABAD, PAKISTAN – As part of his push to find new solutions to the war in Afghanistan, President-elect Barack Obama is considering a new diplomatic push on Kashmir, reversing eight years of American silence on the issue.
Mr. Obama has argued that Pakistan will not fully commit to fighting the insurgency it shares with Afghanistan until it sheds historic insecurities toward India. Talks about Kashmir, the central point of contention between the two nuclear rivals, are among the "critical tasks for the next administration," Obama said in an interview last month with Time magazine.
It is a strategy that worries Indians, who suggest the Pakistani Army is blackmailing Obama to support its claims. Yet security analysts say the Afghan insurgency has roots in the power struggle between India and Pakistan and cannot be solved without a regional approach.
"It will be very hard to put Afghanistan on a long-term positive path without alleviating some of the Indo-Pakistan tensions," says Xenia Dormandy of the Belfer Center for Science and International Affairs at Harvard University in Cambridge, Mass.
Such ideas would appear to fit well with the doctrines of Gen. David Petraeus, who oversaw a significant improvement in law and order in Iraq. He is now the commander of American forces in the entire region, which includes Afghanistan.
General Petraeus has been an open advocate of regional diplomacy as a key counterinsurgency tactic. On Oct. 15, he told a round table of Washington Post reporters that in seeking solutions to Afghanistan, "there may be opportunities with respect to India."
The goal would be to build a level of trust between India and Pakistan, freeing Pakistan from its historic fear of India, with which it has fought three wars. The surest way to do this, Obama has said, is to find a solution to Kashmir – the state split between each but claimed in full by both.
"We should try to resolve the Kashmir crisis so that [Pakistan] can stay focused – not on India, but on the situation with those militants," he told MSNBC on Oct. 31.
Obama went further in the Time interview, mentioning he has spoken with former President Bill Clinton about becoming a special envoy to the region – a comment that has been front-page news in India and Pakistan.
Nothing could be more damaging to American interests in the region, says Raja Mohan, a member of India's National Security Advisory Board. He claims Indo-Pakistan relations are better than they have ever been, citing the recent opening of trade between Pakistan - and-Indian-controlled Kashmir as something that would have been unthinkable in the past.
Moreover, he suggests India and Pakistan have behind the scenes made significant progress on the issue of Kashmir, to the point that the two nations have a tentative road map for how to resolve the crisis. It was scuppered only by the collapse of former Pakistani President Pervez Musharraf's regime in August.
Bush steered clear of Kashmir
The progress was partly the result of the Bush administration's decision to steer clear of Kashmir, says Mr. Mohan. Entering the fray now would only disrupt the delicate balance, making it appear as if the US was merely trying to placate Pakistan in return for its support in the war against terror.
In such a case, Mohan says, India might have a hard time winning concessions for a fair deal: "So long as the Pakistani Army thinks that the Americans are on their side, they're not going to deal with India."
Both Obama and his top South Asia adviser, Bruce Riedel, have spoken of the need to be discreet. In a 2007 teleconference for the journal Foreign Affairs, Mr. Riedel said: "I would urge the administration to seize the opportunity to quietly, but forcefully, push for a resolution there."
In the interview he called Kashmir "the itch that has driven Pakistan towards supporting terrorism for the last 20 years." Indeed, many experts say the enmity – for which Kashmir is the most potent symbol – has shaped security in the region, including Afghanistan.
Rivalry plays out in Afghanistan
For years, the mutual mistrust has led India and Pakistan to play their own version of the Great Game in Afghanistan. India has consistently been Afghanistan's main ally in the region. But Pakistan sees Afghanistan as its strategic backyard, which under no circumstances can be yielded to Indian influence.
Fears are stoked by the memories of 1971, when the Indian Army helped Bengalis secede from Pakistan to form Bangladesh. With Afghanistan historically claiming a significant chunk of Pakistan as its own, Pakistanis worry that an Indian-backed Afghanistan could dismember Pakistan further.
"Pakistan is the only country in South Asia that stands between India's complete hegemony in this region," says Fahmida Ashraf, an analyst at the Institute for Strategic Studies in Islamabad, a thinktank funded by the Pakistan government.
Repeatedly, Pakistan's Army has acted to prevent this from happening. It has done this by cultivating networks of militants as a proxy army. In Afghanistan, the Pakistan-backed mujahideen chased out the Soviet Union, India's ally. Then the Pakistan-backed Taliban took control of the country, preventing it from falling into the hands of pro-India Northern Alliance warlords.
This proxy war continues. India has invested $750 million and pledged $450 million more to the government of President Hamid Karzai, who is strongly pro-India. India is Afghanistan's largest trade partner. And it has taken the provocative step of opening consulates in two cities sitting on the border with Pakistan – Jalalabad and Kandahar.
Pakistan claims Indian intelligence agencies are using these consulates as bases, though it has never made this evidence public. Generally speaking, the allegations are that India is funding separatist militants in the Pakistani province of Balochistan.
"India wants to destabilize [Pakistan's tribal areas] and Balochistan," said Rahman Malik, a Pakistani government security adviser during a trip to Washington.
Analysts say this might be true, but only to a small degree. Militants "might be getting some support from India, but it's not anywhere near what the Pakistanis like to suggest," says Marvin Weinbaum, an analyst at the Middle East Institute in Washington.
Privately, a Pakistani diplomat who spoke on condition of anonymity agrees. India's involvement in the unrest along Pakistan's western front "might be no more than 5 percent of all the trouble out there."
But publicly, Pakistan "is basing its Afghan and Indian policy on its perception," says Mr. Weinbaum.
In July, militants struck the Indian Embassy in Kabul with a bomb blast that killed 41 people. American intelligence agencies have said they have evidence that Pakistan's intelligence agency, the Inter-Services Intelligence (ISI) directorate, was involved.
"Even today, the Pakistani military sees India as the threat," says Ms. Dormandy, of Harvard. "Until that attitude changes, you're not going to see Pakistan step back from its historically strong use of militant assets to affect foreign policy."
There are signs that this attitude is beginning to change. Pakistan is now fighting many of the militants it once sheltered in Bajaur and Swat in northern Pakistan. Obama's intent would be to accelerate this process and send a clear message to Pakistan.
"Why do you want to keep on being bogged down with [India and Kashmir], particularly at a time where the biggest threat now is coming from the Afghan border?" he told Time. "I think there is a moment where potentially we could get their attention."
World - Palestinian security & the feminine touch
Ilene R. Prusher
Hebron, West Bank – Palestinian police surround the house of suspected militants and knock, demanding to be let in. Normally, they'd kick in the door if it didn't open immediately, but today they have the thing that every home is said to need: a woman's touch.
As part of a new Palestinian Authority (PA) security initiative, this unit, like every Hebron unit that searches houses, has two female officers to bring a gentler side to long-stigmatized house raids.
Using female police officers in the field is part of the latest PA effort to help President Mahmoud Abbas better control the West Bank and Hamas. Although there's also been an overall expansion of the police force, security officials see women as key to a new, hearts-and-minds strategy.
"In the past, we never had women in the police [force], except maybe some working in the office," says Brig. Gen. Samaeeh el-Safy, who is the head of the new security campaign in the Hebron area.
He says that having women play a pivotal role in security is just one of many changes in approach since forces have received training in the past half-year by international experts, both in the West Bank and in Jordan.
Since Hamas took over the Gaza Strip in a coup nearly a year and a half ago, PA officials have begun strengthening the security forces to ensure that they will not manage to achieve a similar feat in West Bank cities.
While the PA is expanding the ranks of its security forces, the biggest changes may be taking place in the mentality of the forces.
Whether they've been conducted by Israelis or Palestinians, surprise house raids have become a commonplace occurrence here, but they have been known to do more harm than good. They can damage relations between security forces and the local population, particularly in conservative Muslim countries where the sudden arrival of strange men in the home – where women aren't covered in their outdoorwear – is considered deeply shameful.
"When our forces used to enter houses in the past, before this campaign, the women would hide the weapons in their underclothes, and then they were automatically off limits," says Khitam Farraj, a female police officer with a PhD in psychology. "Before, women were part of the security apparatus, but we didn't have the capability or the training we needed, and we weren't well organized."
But now women are taking a leading role in many security operations in the West Bank. When police enter a house, the female officers immediately take the women aside, usually to a separate room, and search them in a respectful way, while the men go to work on the men.
"We talk to them gently," says Ms. Farraj, a lean, muscular woman who wears an Islamic head scarf that matches her camouflage suit of green and brown. "We address them with the same terminology you would use for your mother, your sister, or your aunt."
Or, in the words of Capt. Mohammed Il-Jabari, who runs such raids several times a week: "As soon as we walk in, the women are in charge."
By using female police officers on housing searches, "we have preserved our customs and morals," says General Safy. "Every time we arrest, we take some policewomen with us."
Yet only so much can be done to camouflage the ultimate message. This is a surprise raid, and everyone – and everywhere – in the house is about to be searched.
"The security campaign has given our troops an opportunity to practice their training.
The most important change is the way our officers are respecting human rights," says Safy. "Today, when we take our men on house searches, we see how well behaved they are."
To be sure, not everybody agrees with this rosy review of the security campaign. A random survey of people in the street suggest that while some people think the law-and-order surge is a good thing, others are skeptical and say detainees are regularly mistreated and beaten.
"They haven't been treating those they arrest in the right way," says Rana Nasser, a university student here. "You hear stories of people who come out of their arrest and they hardly look like the same human being."
But Sali Radwan, her friend, adds that the crackdown is meant to keep the West Bank in the hands of Fatah, the secular and pro-Western offshoot of the Palestinian Liberation Organization that publicly entered into a peace process with Israel in 1993. "Their most important objective is to halt any situation here that would be similar to what happened in Gaza," Ms. Radwan says.
Meanwhile, Hamas boycotted an Egyptian-sponsored "national reconciliation" conference in Cairo earlier this month, saying that the PA's large-scale security crackdown was simply a campaign against Hamas supporters in the West Bank.
At a downtown luncheonette, most of the men are dismissive of the campaign and its supposed success.
That the troops are newly trained and especially sensitive to not trampling through a man's castle – his home – are lost on them. "It's unclear to me what the security campaign is," says Mohammed Salameh, who has a grocery store.
"Does it let me go to my shop in a safer way? There are still lots of thieves and criminals around. I see that they're just after men from one faction," he says, indicating Hamas. "And I saw them behaving like the Israelis do – breaking down the doors of houses with their feet."
Safy is perturbed at such criticism and says the reports of torture are just Hamas-generated rumors aimed at weakening the security campaign. "When it come to Hamas," he acknowledges, exasperated, "I'm intolerant."
Hebron, West Bank – Palestinian police surround the house of suspected militants and knock, demanding to be let in. Normally, they'd kick in the door if it didn't open immediately, but today they have the thing that every home is said to need: a woman's touch.
As part of a new Palestinian Authority (PA) security initiative, this unit, like every Hebron unit that searches houses, has two female officers to bring a gentler side to long-stigmatized house raids.
Using female police officers in the field is part of the latest PA effort to help President Mahmoud Abbas better control the West Bank and Hamas. Although there's also been an overall expansion of the police force, security officials see women as key to a new, hearts-and-minds strategy.
"In the past, we never had women in the police [force], except maybe some working in the office," says Brig. Gen. Samaeeh el-Safy, who is the head of the new security campaign in the Hebron area.
He says that having women play a pivotal role in security is just one of many changes in approach since forces have received training in the past half-year by international experts, both in the West Bank and in Jordan.
Since Hamas took over the Gaza Strip in a coup nearly a year and a half ago, PA officials have begun strengthening the security forces to ensure that they will not manage to achieve a similar feat in West Bank cities.
While the PA is expanding the ranks of its security forces, the biggest changes may be taking place in the mentality of the forces.
Whether they've been conducted by Israelis or Palestinians, surprise house raids have become a commonplace occurrence here, but they have been known to do more harm than good. They can damage relations between security forces and the local population, particularly in conservative Muslim countries where the sudden arrival of strange men in the home – where women aren't covered in their outdoorwear – is considered deeply shameful.
"When our forces used to enter houses in the past, before this campaign, the women would hide the weapons in their underclothes, and then they were automatically off limits," says Khitam Farraj, a female police officer with a PhD in psychology. "Before, women were part of the security apparatus, but we didn't have the capability or the training we needed, and we weren't well organized."
But now women are taking a leading role in many security operations in the West Bank. When police enter a house, the female officers immediately take the women aside, usually to a separate room, and search them in a respectful way, while the men go to work on the men.
"We talk to them gently," says Ms. Farraj, a lean, muscular woman who wears an Islamic head scarf that matches her camouflage suit of green and brown. "We address them with the same terminology you would use for your mother, your sister, or your aunt."
Or, in the words of Capt. Mohammed Il-Jabari, who runs such raids several times a week: "As soon as we walk in, the women are in charge."
By using female police officers on housing searches, "we have preserved our customs and morals," says General Safy. "Every time we arrest, we take some policewomen with us."
Yet only so much can be done to camouflage the ultimate message. This is a surprise raid, and everyone – and everywhere – in the house is about to be searched.
"The security campaign has given our troops an opportunity to practice their training.
The most important change is the way our officers are respecting human rights," says Safy. "Today, when we take our men on house searches, we see how well behaved they are."
To be sure, not everybody agrees with this rosy review of the security campaign. A random survey of people in the street suggest that while some people think the law-and-order surge is a good thing, others are skeptical and say detainees are regularly mistreated and beaten.
"They haven't been treating those they arrest in the right way," says Rana Nasser, a university student here. "You hear stories of people who come out of their arrest and they hardly look like the same human being."
But Sali Radwan, her friend, adds that the crackdown is meant to keep the West Bank in the hands of Fatah, the secular and pro-Western offshoot of the Palestinian Liberation Organization that publicly entered into a peace process with Israel in 1993. "Their most important objective is to halt any situation here that would be similar to what happened in Gaza," Ms. Radwan says.
Meanwhile, Hamas boycotted an Egyptian-sponsored "national reconciliation" conference in Cairo earlier this month, saying that the PA's large-scale security crackdown was simply a campaign against Hamas supporters in the West Bank.
At a downtown luncheonette, most of the men are dismissive of the campaign and its supposed success.
That the troops are newly trained and especially sensitive to not trampling through a man's castle – his home – are lost on them. "It's unclear to me what the security campaign is," says Mohammed Salameh, who has a grocery store.
"Does it let me go to my shop in a safer way? There are still lots of thieves and criminals around. I see that they're just after men from one faction," he says, indicating Hamas. "And I saw them behaving like the Israelis do – breaking down the doors of houses with their feet."
Safy is perturbed at such criticism and says the reports of torture are just Hamas-generated rumors aimed at weakening the security campaign. "When it come to Hamas," he acknowledges, exasperated, "I'm intolerant."
Lifestyle - US;Obama choose Sidwell Friends School for Kids
Lisa Tolin
WASHINGTON – President-elect Barack Obama and his wife have chosen Sidwell Friends School for their two daughters, opting for a private institution that another White House child, Chelsea Clinton, attended a decade ago.
"A number of great schools were considered," said Katie McCormick Lelyveld, a spokeswoman for Michelle Obama. "In the end, the Obamas selected the school that was the best fit for what their daughters need right now."
She said Sidwell can provide the security and privacy that Malia, 10, and Sasha, 7, will need as part of the new first family and Sidwell can help with that. She also said that Sasha and Malia had become good friends with Vice President-elect Joe Biden's grandchildren, who go to the school.
Sidwell is a private Quaker school with a campus in northwest Washington for grades 5-12 and another in suburban Bethesda, Md., for kindergarten through fourth grade. Malia is in fifth grade and Sasha is in second grade, suggesting that the girls would attend schools at different locations.
Michelle Obama and her daughters visited Sidwell and another elite private school, Georgetown Day, earlier this week. The soon-to-be first lady visited both schools last week, without her daughters.
Lelyveld said that while public schools were considered, the Obamas felt that a private school was in the best interest of their children. The two girls currently attend the private University of Chicago Laboratory Schools, where Michelle Obama is on the board.
Michelle Obama went to public schools on Chicago's South Side, and undestands the importance of strong public schools, Lelyveld said, and the administration plans to work hard on that issue.
Jimmy Carter's daughter, Amy, went to a public school, but Bill and Hillary Rodham Clinton chose Sidwell for Chelsea. Hillary Clinton later said she received "unfortunately, good advice" that the press would bother Chelsea if she attended public school.
Sidwell Friends has already proven protective of the Obamas' privacy, refusing earlier this week to say whether the girls had visited the school after a motorcade was seen outside.
Messages left with school administrators on Friday were not immediately returned. A woman who answered the phone at the home of Bruce Stewart, Sidwell's head of school, said he was not home. But she said the school would not release a statement before Monday.
Al Gore III, the son of former Vice President Al Gore, also attended Sidwell, where tuition is $28,442 at the lower school and $29,442 at the middle and upper schools.
The quality of the school and its extra security make Sidwell Friends a good choice, said Letitia Baldrige, who was Jackie Kennedy's social secretary and chief of staff during the Kennedy administration. Caroline Kennedy attended first grade in a makeshift third-floor classroom inside the White House.
"The children are under enormous pressure from the press and their fellow students and especially the mommies of their fellow students," who are eager for their children to attend sleepovers, Baldrige said.
"I'm sure they'll both be athletically inclined and play on all the sports teams, and they'll have a lot of fun," Baldrige said. "But it won't be easy."
Rob Lippincott, a member of the board of trustees at Sidwell, where his daughter is a high school senior, said he could not confirm whether the Obama girls had chosen the school. But he said if so, students and parents will be excited.
"We're obviously delighted if that is the case. I have not heard anything officially," said Lippincott, senior vice president for education at PBS. "I'm certainly aware they came and visited. From everything I understand, they'd be a great addition to the school."
Associated Press writer Nafeesa Syeed contributed to this report.
WASHINGTON – President-elect Barack Obama and his wife have chosen Sidwell Friends School for their two daughters, opting for a private institution that another White House child, Chelsea Clinton, attended a decade ago.
"A number of great schools were considered," said Katie McCormick Lelyveld, a spokeswoman for Michelle Obama. "In the end, the Obamas selected the school that was the best fit for what their daughters need right now."
She said Sidwell can provide the security and privacy that Malia, 10, and Sasha, 7, will need as part of the new first family and Sidwell can help with that. She also said that Sasha and Malia had become good friends with Vice President-elect Joe Biden's grandchildren, who go to the school.
Sidwell is a private Quaker school with a campus in northwest Washington for grades 5-12 and another in suburban Bethesda, Md., for kindergarten through fourth grade. Malia is in fifth grade and Sasha is in second grade, suggesting that the girls would attend schools at different locations.
Michelle Obama and her daughters visited Sidwell and another elite private school, Georgetown Day, earlier this week. The soon-to-be first lady visited both schools last week, without her daughters.
Lelyveld said that while public schools were considered, the Obamas felt that a private school was in the best interest of their children. The two girls currently attend the private University of Chicago Laboratory Schools, where Michelle Obama is on the board.
Michelle Obama went to public schools on Chicago's South Side, and undestands the importance of strong public schools, Lelyveld said, and the administration plans to work hard on that issue.
Jimmy Carter's daughter, Amy, went to a public school, but Bill and Hillary Rodham Clinton chose Sidwell for Chelsea. Hillary Clinton later said she received "unfortunately, good advice" that the press would bother Chelsea if she attended public school.
Sidwell Friends has already proven protective of the Obamas' privacy, refusing earlier this week to say whether the girls had visited the school after a motorcade was seen outside.
Messages left with school administrators on Friday were not immediately returned. A woman who answered the phone at the home of Bruce Stewart, Sidwell's head of school, said he was not home. But she said the school would not release a statement before Monday.
Al Gore III, the son of former Vice President Al Gore, also attended Sidwell, where tuition is $28,442 at the lower school and $29,442 at the middle and upper schools.
The quality of the school and its extra security make Sidwell Friends a good choice, said Letitia Baldrige, who was Jackie Kennedy's social secretary and chief of staff during the Kennedy administration. Caroline Kennedy attended first grade in a makeshift third-floor classroom inside the White House.
"The children are under enormous pressure from the press and their fellow students and especially the mommies of their fellow students," who are eager for their children to attend sleepovers, Baldrige said.
"I'm sure they'll both be athletically inclined and play on all the sports teams, and they'll have a lot of fun," Baldrige said. "But it won't be easy."
Rob Lippincott, a member of the board of trustees at Sidwell, where his daughter is a high school senior, said he could not confirm whether the Obama girls had chosen the school. But he said if so, students and parents will be excited.
"We're obviously delighted if that is the case. I have not heard anything officially," said Lippincott, senior vice president for education at PBS. "I'm certainly aware they came and visited. From everything I understand, they'd be a great addition to the school."
Associated Press writer Nafeesa Syeed contributed to this report.
Business - Wal-Mart names Mike Duke as CEO
NEW YORK (AFP) – Wal-Mart, the retail sector leader that has weathered the economic crisis better than most of its peers, announced Friday that Mike Duke will take over as chief executive to replace retiring Lee Scott.
Duke, 58, who has been a vice chairman heading the company's international operations, will take over February 1 as president and chief executive officer of the deep-discounting retail giant.
"This management change occurs at a time of strength and momentum for Wal-Mart," said Rob Walton, chairman of the board of directors.
"Mike Duke is a highly respected executive both domestically and internationally, with broad experience throughout the company, having successfully led Wal-Mart's Logistics Division, US operations, and international operations," said Walton.
"He understands retail and appreciates the complex global environment in which we operate. He is committed to the culture of Wal-Mart, its mission, and to our associates and customers. He has built strong teams wherever he has led."
Scott will continue serving as chairman of the executive committee of the board.
Duke has headed Wal-Mart's international operations, helping it grow to over 3,200 stores in 14 markets outside the continental United States.
As a stand alone business, Wal-Mart International would be one of the biggest global retailers, with annual sales projected to reach almost 100 billion dollars this year, according to Wal-Mart.
The division includes operations in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and Britain and, through a joint venture, in India.
"I am looking forward to leading this great company," Duke said in the statement.
"Wal-Mart is very well positioned in today's economy, growing market share and returns, and is more relevant to its customers than ever. Our strategy is sound and our management team is extremely capable. I am confident we will continue to deliver value to our shareholders, increase opportunity for our over two million associates, and help our 180 million customers around the world save money and live better."
Wal-Mart has weathered the recent economic turmoil better than most of its rivals. Its most recent quarterly profits rose 9.8 percent, although it warned of upcoming weakness in part due to a stronger dollar.
Analysts at Briefing.com said the company has held strong in Scott's nine-year tenure as CEO.
"Although there were some disgruntled shareholders during Scott's tenure, Wal-Mart's stock has outperformed the market since his appointment in January 2000 -- slipping 15.8 percent compared to the S&P 500's decline of 29.5 percent, both including dividends, as of November 14," they wrote.
John Ogg at 24/7 Wall Street said Scott's performance was lackluster.
"Wal-Mart Stores is doing what we believe they should have done two-years ago," he said.
"Lee Scott was one of our CEO's to go, but that was for 2007. He was essentially bailed out by the recession because the stock never performed well under him during the bull market."
Wal-Mart shares rose 1.2 percent to 51.27 dollars in early trade.
Prior to joining Wal-Mart in 1995, Duke had 23 years of experience in retailing with Federated Department Stores and May Department Stores.
Duke graduated from Georgia Tech with a bachelor's degree in industrial engineering. He serves on the board of the US-China Business Council.
The board also approved the promotion of Eduardo Ca
Duke, 58, who has been a vice chairman heading the company's international operations, will take over February 1 as president and chief executive officer of the deep-discounting retail giant.
"This management change occurs at a time of strength and momentum for Wal-Mart," said Rob Walton, chairman of the board of directors.
"Mike Duke is a highly respected executive both domestically and internationally, with broad experience throughout the company, having successfully led Wal-Mart's Logistics Division, US operations, and international operations," said Walton.
"He understands retail and appreciates the complex global environment in which we operate. He is committed to the culture of Wal-Mart, its mission, and to our associates and customers. He has built strong teams wherever he has led."
Scott will continue serving as chairman of the executive committee of the board.
Duke has headed Wal-Mart's international operations, helping it grow to over 3,200 stores in 14 markets outside the continental United States.
As a stand alone business, Wal-Mart International would be one of the biggest global retailers, with annual sales projected to reach almost 100 billion dollars this year, according to Wal-Mart.
The division includes operations in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and Britain and, through a joint venture, in India.
"I am looking forward to leading this great company," Duke said in the statement.
"Wal-Mart is very well positioned in today's economy, growing market share and returns, and is more relevant to its customers than ever. Our strategy is sound and our management team is extremely capable. I am confident we will continue to deliver value to our shareholders, increase opportunity for our over two million associates, and help our 180 million customers around the world save money and live better."
Wal-Mart has weathered the recent economic turmoil better than most of its rivals. Its most recent quarterly profits rose 9.8 percent, although it warned of upcoming weakness in part due to a stronger dollar.
Analysts at Briefing.com said the company has held strong in Scott's nine-year tenure as CEO.
"Although there were some disgruntled shareholders during Scott's tenure, Wal-Mart's stock has outperformed the market since his appointment in January 2000 -- slipping 15.8 percent compared to the S&P 500's decline of 29.5 percent, both including dividends, as of November 14," they wrote.
John Ogg at 24/7 Wall Street said Scott's performance was lackluster.
"Wal-Mart Stores is doing what we believe they should have done two-years ago," he said.
"Lee Scott was one of our CEO's to go, but that was for 2007. He was essentially bailed out by the recession because the stock never performed well under him during the bull market."
Wal-Mart shares rose 1.2 percent to 51.27 dollars in early trade.
Prior to joining Wal-Mart in 1995, Duke had 23 years of experience in retailing with Federated Department Stores and May Department Stores.
Duke graduated from Georgia Tech with a bachelor's degree in industrial engineering. He serves on the board of the US-China Business Council.
The board also approved the promotion of Eduardo Ca