In G.M. Strike, Both Sides See a Crossroads

By MICHELINE MAYNARD
Published: September 25, 2007

Members of the United Automobile

Workers union on a picket line at the

G.M. Flint Truck Assembly plant.

General Motors’ unyielding stance in its contract dispute with the United Automobile Workers reflects its decision to accept the short-term pain of a strike to achieve its goals: a lower cost structure and more flexible work force to better compete against surging Japanese automakers like Toyota and Honda.

“This really is a defining moment,” said James P. Womack, an expert on manufacturing and co-author of “The Machine That Changed the World,” which studied the plants of Japanese automakers in the United States. “G.M. has backed away from defining moments for generations. And now somebody there has finally said, ‘We have to do this because it’s a new era.’ ”

With the strike by 73,000 U.A.W. members in its second day, bargaining resumed today in Detroit as workers walked picket lines outside G.M. plants across the country.

“We want to get it done as quickly as we can,” the union’s president, Ron Gettelfinger, said in an interview this morning on WJR-AM radio in Detroit.

The strike, which caught many experts by surprise, came in part over the union’s demand for job security for workers still at G.M. after the company completes a restructuring plan.

Mr. Gettelfinger said today that the two sides had stopped discussing G.M.’s most important priority, a trust fund that would assume its liability for worker and retiree health care benefits.

“That’s off the table for now,” Mr. Gettelfinger said. But he said such a fund, called a voluntary employee benefit association, would be “in the best interests of our retirees.”

Mr. Gettelfinger said he disagreed with analysts who said a lengthy strike could spell the end of G.M. “I don’t believe that for a minute,” he said. “I realize there are some people who think we are crazy, and some people who think we will never settle.”

The duration of the walkout may hinge on the answers to two crucial questions: How long can the U.A.W. afford to stay out? And how long can G.M. endure a strike? While an indefinite strike would pose risk to both sides, each has decided that it has more to gain by standing tough.

G.M. is better positioned to handle a strike now than in earlier contract talks, though not for reasons that have to do with strength. With its operations shrinking in the United States, the majority of its sales and profits are now coming from abroad.

It is selling more vehicles built in Canada, Mexico, and Europe, the source of new models for its Saturn division. And it is rapidly expanding production overseas, especially in China, which is fast becoming one of the world’s major car markets.

The company’s problems at home, which resulted in losses of more than $12 billion in the last two years, have forced it to close all or parts of a dozen factories, cut tens of thousands of jobs and offer deals to workers to quit or retire. A smaller G.M. means there are far fewer workers involved in this strike, so a halt in production inflicts less pain on the company.

The U.A.W. membership at G.M. has shrunk by more than 80 percent since the 1970 strike, when 400,000 workers were off the job for 67 days.

In recent years, the U.A.W. has been more cooperative with Detroit automakers, working side by side with auto executives to fashion early retirement incentives to shrink the work force and better match Detroit’s diminished stature within the industry. It also agreed to concessions on health care at G.M. and Ford Motor.

But yesterday, U.A.W. officials sought to dispel any doubts among the membership that they could still stand up to management.

“A strike gives the union an opportunity to say we’re not completely acquiescent,” said David L. Gregory, a professor of labor law at St. John’s University in Queens.

Eldon Renaud, president of U.A.W. Local 2164 in Bowling Green, Ky., where workers make the Chevrolet Corvette and Cadillac XLR sports cars, said, “I think a lot of people are happy the strike happened, because they believe the company is walking over them.”

The strike occurred even though G.M. and the U.A.W. agreed to discuss a voluntary employee benefit association, or VEBA, that would have assumed G.M.’s $55 billion liability for medical benefits. G.M. considered the formation of a VEBA its major demand.

Investors and G.M. managers have pushed for a VEBA as a way to move the liability of generous health care benefits for current and retired G.M. workers, as well as their families, off the books of the automaker once and for all, even if that required a huge upfront payment.

G.M. has long said that such costs, representing hundreds of dollars for every car it builds, put it at a disadvantage with foreign competitors.

Mr. Gettelfinger, in fact, stressed that the strike was over other issues besides the VEBA, with job security topping the list.

He and other union leaders stressed the concessions granted to G.M. in recent years on cost-of-living allowances, health care and pensions, as well as cuts at the Delphi Corporation, G.M.’s former parts unit, which is operating in bankruptcy.

“Collectively, your efforts have saved General Motors billions of dollars, while at the same time your work in your facilities has helped the company set world-class standards of safety, quality and productivity,” Cal Rapson, a union vice president, said in a memo sent to union members. “All we asked for in return is simple fairness: the right to job security, commitments of future product investment, a fair economic settlement and adequate benefits.”

Mr. Rapson, whose memo was posted today on the Web site of U.A.W. Local 735 in Canton, Mich., said the enthusiasm on the picket lines had re-energized union negotiations. “We will remain at the bargaining table to fight for what is fair and equitable for our membership,” Mr. Rapson said.

Tom Wickham, a G.M. spokesman, said, “The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company.” He added that company officials would “continue focusing our efforts on reaching an agreement as soon as possible.”

But industry analysts said that given how far apart the two sides appear to be, the strike could last for weeks.

Jonathan Steinmetz, an analyst with Morgan Stanley, said the company could endure a strike lasting several weeks, but not more. After that, G.M. would begin to burn cash, and investors, who have encouraged G.M. to take a firm stand with the U.A.W., might eventually grow impatient in the face of a months-long strike.

Another analyst, Mark Oline of Fitch Ratings, cautioned that the damage caused by the walkout would have a ripple effect on suppliers that sell parts to G.M.

“The U.A.W. strike has the potential for far-reaching, crippling repercussions throughout the industry,” Mr. Oline said in a research report yesterday.

The union, which pays workers $200 a week in strike pay if they take shifts on the picket line, has nearly $900 million in its strike fund, enough to cover a two-month walkout.

G.M., meanwhile, had a 65-day supply of vehicles at the end of August, about normal for summer, and it had already announced plans to reduce production in the final three months of the year because of slowing sales.

Beyond that, however, each side risks damage to its image. In recent years, the U.A.W. had fostered an image of being more of a partner than a foe in Detroit’s efforts to restructure.

Even last week, Mr. Gettelfinger said in an e-mail message to union members that the U.A.W. was committed to avoiding a walkout, although he acknowledged yesterday that he suspected last week that a strike was likely.

Likewise, G.M. has spent years trying to convince consumers that its vehicles are the equivalent of high-quality Japanese models, and that its brands are every bit as appealing as Toyotas, Hondas and Nissans. An angry work force, or one worried about its future, may scare off some buyers.

Before yesterday’s strike, experts had widely predicted that the two sides would reach an agreement, noting that it was in their interest to find common ground to better ensure their survival.

Even Mr. Gettelfinger seemed disappointed at the outcome. “This is nothing we wanted,” he said at the news conference. “Nobody wins in a strike.”

G.M. has an unsuccessful track record of facing down the U.A.W. In the past, its response, by and large, was to cave in to the union’s demands. That happened during the last big walkout, at two parts plants in Flint, Mich., in 1998. That seven-week standoff occurred when Rick Wagoner, the current chief executive of G.M., was president of its North American operations.

G.M. never recovered the 31 percent market share it held before the strike and was forced to offer rebates to get customers back into showrooms.

“G.M. has made deal after deal that didn’t deal with fundamental problems,” Mr. Womack said. “This time they have to hold the line on a contract.”

Nick Bunkley and Mary M. Chapman contributed reporting.

Source: The New York Times

U.A.W. Message to Members on Strike Deadline

Published: September 24, 2007


Following is the text of a message sent Sunday by the United Automobile Workers to union leaders at General Motors:

September 23, 2007 (E-mail)

To: UAW General Motors Local Union Presidents and Chairpersons

Subject: National Negotiations Update #5

Greetings:

We have worked very hard and put in numerous hours to bring back a tentative agreement that you would be proud to ratify. We thought we would be able to accomplish this no later than this weekend but our efforts have been to no avail. While we have made progress in many areas, GM has failed to address major concerns involving job security and other mandatory issues of bargaining and as such we have reached a point where we must issue the company a notice that we are going to cancel the hour-by-hour extension and set a deadline.

Your patience has carried us to this point and we appreciate all the support we have received from our membership. We told you earlier that we did not take your patience for granted and we will not abuse your trust.

If an agreement is not reached by 11:00 am EDT on Monday, September 24, 2007, we will call a national strike against General Motors. Unless you hear otherwise from your International Union and Local Union leadership you should consider yourself on strike at 11:00 am EDT on Monday, September 24, 2007.

In Solidarity,

Ron Gettelfinger / Cal Rapson

President Vice President and Director

International Union, UAW

UAW General Motors Department


Source: The New York Times

Outsourcing Works, So India Is Exporting Jobs

By ANAND GIRIDHARADAS
Published: September 25, 2007


Infosys employs workers in Brno,
Czech Republic.

MYSORE, India — Thousands of Indians report to Infosys Technologies’ campus here to learn the finer points of programming. Lately, though, packs of foreigners have been roaming the manicured lawns, too.

Many of them are recent American college graduates, and some have even turned down job offers from coveted employers like Google. Instead, they accepted a novel assignment from Infosys, the Indian technology giant: fly here for six months of training, then return home to work in the company’s American back offices.

India is outsourcing outsourcing.

One of the constants of the global economy has been companies moving their tasks — and jobs — to India. But rising wages and a stronger currency here, demands for workers who speak languages other than English, and competition from countries looking to emulate India’s success as a back office — including China, Morocco and Mexico — are challenging that model.

Many executives here acknowledge that outsourcing, having rained most heavily on India, will increasingly sprinkle tasks around the globe. Or, as Ashok Vemuri, an Infosys senior vice president, put it, the future of outsourcing is “to take the work from any part of the world and do it in any part of the world.”

To fight on the shifting terrain, and to beat back emerging rivals, Indian companies are hiring workers and opening offices in developing countries themselves, before their clients do.

In May, Tata Consultancy Service, Infosys’s Indian rival, announced a new back office in Guadalajara, Mexico; Tata already has 5,000 workers in Brazil, Chile and Uruguay. Cognizant Technology Solutions, with most of its operations in India, has now opened back offices in Phoenix and Shanghai.

Wipro, another Indian technology services company, has outsourcing offices in Canada, China, Portugal, Romania and Saudi Arabia, among other locations.

And last month, Wipro said it was opening a software development center in Atlanta that would hire 500 programmers in three years.

In a poetic reflection of outsourcing’s new face, Wipro’s chairman, Azim Premji, told Wall Street analysts this year that he was considering hubs in Idaho and Virginia, in addition to Georgia, to take advantage of American “states which are less developed.” (India’s per capita income is less than $1,000 a year.)

For its part, Infosys is building a whole archipelago of back offices — in Mexico, the Czech Republic, Thailand and China, as well as low-cost regions of the United States.

The company seeks to become a global matchmaker for outsourcing: any time a company wants work done somewhere else, even just down the street, Infosys wants to get the call.

It is a peculiar ambition for a company that symbolizes the flow of tasks from the West to India.

Most of Infosys’s 75,000 employees are Indians, in India. They account for most of the company’s $3.1 billion in sales in the year that ended March 31, from work for clients like Bank of America and Goldman Sachs.

“India continues to be the No. 1 location for outsourcing,” S. Gopalakrishnan, the company’s chief executive, said in a telephone interview.

And yet the company opened a Philippines office in August and, a month earlier, bought back offices in Thailand and Poland from Royal Philips Electronics, the Dutch company. In each outsourcing hub, local employees work with little help from Indian managers.

Infosys says its outsourcing experience in India has taught it to carve up a project, apportion each slice to suitable workers, double-check quality and then export a final, reassembled product to clients. The company argues it can clone its Indian back offices in other nations and groom Chinese, Mexican or Czech employees to be more productive than local outsourcing companies could make them.

“We have pioneered this movement of work,” Mr. Gopalakrishnan said. “These new countries don’t have experience and maturity in doing that, and that’s what we’re taking to these countries.”

Some analysts compare the strategy to Japanese penetration of auto manufacturing in the United States in the 1970s. Just as the Japanese learned to make cars in America without Japanese workers, Indian vendors are learning to outsource without Indians, said Dennis McGuire, chairman of TPI, a Texas-based outsourcing consultancy.

Though work that bypasses India remains a small part of the Infosys business, it is growing. The company can be highly secretive, but executives agreed to describe some of the new projects on the condition that clients not be identified.

In one project, an American bank wanted a computer system to handle a loan program for Hispanic customers. The system had to work in Spanish. It also had to take into account variables particular to Hispanic clients: many, for instance, remit money to families abroad, which can affect their bank balances. The bank thought a Mexican team would have the right language skills and grasp of cultural nuances.

But instead of going to a Mexican vendor, or to an American vendor with Mexican operations, the bank retained three dozen engineers at Infosys, which had recently opened shop in Monterrey, Mexico.

Such is the new outsourcing: A company in the United States pays an Indian vendor 7,000 miles away to supply it with Mexican engineers working 150 miles south of the United States border.

In Europe, too, companies now hire Infosys to manage back offices in their own backyards. When an American manufacturer, for instance, needed a system to handle bills from multiple vendors supplying its factories in different European countries, it turned to the Indian company. The manufacturer’s different locations scan the invoices and send them to an office of Infosys, where each bill is passed to the right language team. The teams verify the orders and send the payment to the suppliers while logged in to the client’s computer system.

More than a dozen languages are spoken at the Infosys office, which is in Brno, Czech Republic.

The American program here in Mysore is meant to keep open that pipeline of diversity.

Most trainees here have no software knowledge. By teaching novices, Infosys saves money and hopes to attract workers who will turn down better-known companies for the chance to learn a new skill.

“It’s the equivalent of a bachelor’s in computer science in six months,” said Melissa Adams, a 22-year-old trainee. Ms. Adams graduated last spring from the University of Washington with a business degree, and rejected Google for Infosys.

And yet, even as outsourcing takes on new directions, old perceptions linger.

For instance, when Jeff Rand, a 23-year-old American trainee, told his grandmother he was moving to India to work as a software engineer for six months, “she said, ‘Maybe I’ll get to talk to you when I have a problem with my credit card.’ ”

Said Mr. Rand with a rueful chuckle, “It took me about two or three weeks to explain to my grandma that I was not going to be working in a call center.”


Source: The New York Times

Laptop Charity Seeks Help From Home Market

Foundation to Sell

Two PCs for $399;

One Gets Donated

By JESSICA E. VASCELLARO

September 24, 2007; Page B9

Tough, cheap, sold in pairs: The XO

The high-profile "One Laptop Per Child" effort to bridge the digital divide between the developed and developing worlds is setting its sights closer to home.

After months of debate, the program is set to announce today that it will sell its affordable "XO" laptops, custom-built for the developing world, in North America. But there is a twist: Buyers here must purchase two computers -- one for themselves and one for a child in the developing world, for a combined cost of $399, some of which is tax-deductible.

The nonprofit program also is talking to more than a dozen governors and numerous school districts about bulk orders, according to Walter Bender, president for software and content for the One Laptop per Child Foundation, of Cambridge, Mass. Offering the computers in the U.S., he says, will help finance overseas deployments and raise awareness about the project among U.S. students and teachers.

Launched in 2005 by Nicholas Negroponte, the founding chairman of the Massachusetts Institute of Technology's Media Lab, the One Laptop per Child Program seeks to distribute affordable laptops to millions of schoolchildren in the developing world. The original aim was to eventually sell them in bulk to governments and foundations for $100 each to give to schoolchildren, but the price goal has proved tough as costs have risen.

Approximately 7,000 prototype laptops, whose distinctive design includes a solar-panel charger and a thick handle, are already in schools in countries including Cambodia, Rwanda and Brazil.

The first official batch of 40,000 computers is slated for production in October, with the group hoping to have two or three times that number made by year end. The laptops will begin shipping to countries in South America and Africa by early November. Ramping up production swiftly will be necessary for the program to drive down its price toward the $100 goal.

A number of other efforts continue to gain steam. NComputing Inc. aims to widen computer access by selling low-cost access terminals that allow a number of users to leverage the power of one PC. Advanced Micro Devices Inc., which is supporting the One Laptop effort, is also promoting various others through its "50x15" initiative, which aims to connect 50% of the world's population to the Internet by 2015.

The One Laptop per Child Foundation weighed its U.S. strategy carefully. Some in the organization worried that selling in the U.S. market might distract the group from its developing-world focus. But others felt it would build momentum for the XO laptop, so named because the letters, stacked on their side, look like a child. In the end, the group decided to sell it here, but scrapped plans to modify the U.S. devices with additional software to appeal to U.S. consumers.

It isn't clear how strong demand for the product will be in the U.S., where leading laptop manufacturers continue to lower prices on more fully featured devices. The requirement to purchase two might be a barrier to some buyers.

Mr. Bender says that despite being designed to survive for years in third-world climates, the devices sport many features -- like an eBook reader and easy Internet access -- that will resonate with kids world-wide. "There is a level of simplicity in what we have done that people are looking for," he says.

Laptops from the first batch will be available to North American consumers for two weeks, starting Nov. 12 by phone or at the Web site XOgiving.org.

Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com

Source: The Wall Street Journal

The $100 laptop: What went wrong

Assessing the true cost of a futile effort to equip the Third World.

Over the past few years, various initiatives have been proposed to equip Third World countries -- especially those in Africa -- with cheap computers. Believers in the concept that computers will solve all the world's ills are behind much of this.

So Africa, South Asia and other targeted regions of the world find themselves the focus of all sorts of initiatives to provide hand-me-down, special purpose and even junked computers.

Then along comes the latest scheme to actually provide a unique hand-cranked laptop utilizing a small generator to power the thing.

The idea was developed by the charming Nicolas Negroponte, former head of the MIT Media Lab and organizer of One Laptop Per Child, an initiative to produce a $100 laptop and distribute it to the poorest children in the world.

Negroponte, who was unavailable to comment for this column, knows how to draw attention to things, and this one has received a double portion.

Slick looks, but high prices

That said, actual machines have been designed, and they look pretty slick. Unfortunately it doesn't appear that the manufacturing cost of these machines has come anywhere close to $100. Nobody actually wants to discuss that aspect yet.

It's also iffy whether these machines are going to do anyone any good. In fact the entire idea may be misguided and counterproductive. At least that's what Stanford journalism lecturer and Africa watcher G. Pascal Zachary thinks.

Besides incredible difficulties with the distribution networks in Africa, Zachary wonders who will maintain these machines. Generally speaking, a societal infrastructure with a lot of computers needs a lot of support mechanisms.

"And in today's world the real value of a computer is it being networked," says Zachary. Finding a network in the poor areas is either impossible or very expensive."

Electricity first, laptops second?

But I myself have moaned about the details of this One Laptop Per Child scheme as folly or idealistic. The basic argument is that with $100 you could almost feed a village for a year, so why waste that sum on a laptop? What are they thinking?

But Zachary has a more profound point: "The fact that these people need electricity more than they need a laptop is only part of the problem," he says. "The real problem is lost mind share. The people are harmed because these sorts of schemes are sopping up mind-share time of the people who might be doing something actually useful."

To summarize, there are only so many hours in the day, and we should not be wasting them on this kind of naïve feel-good showboating. Let's face it: These high-tech gems are a laughable addition to a mud hut.

Even on the One Laptop Per Child site there is a creepy anecdote -- related as if it exemplified a positive benefit -- about how some poor family in Cambodia used the hand-cranked laptop's screen as a source of light for their abode.

Perhaps the organization should be thinking of the hand-cranked generator as serving that purpose alone and not computing. Lights, along with cellular phones and radios, seem more important than laptops.

We should be spending our energy trying to figure out what to do with the hundreds of millions of computers that are junked rather than making more junk.

Dangerous distraction

But let's get back to the mind-share issue. This sort of thing not only takes us away from useful projects in developing nations, but it distracts the high-tech scene in the U.S., too. Advanced Micro Devices (AMD, news, msgs), for example, has been spending time on this.

In fact AMD has a slew of low-end parts in the $100 laptop. But the company, at the same time, is discontinuing its own initiative to make cheap machines for the Third World, citing government interference and other problems.

I personally would love to see these laptops save the world, as some people have suggested they might. But those holding that opinion tend to view the world from the window of a five-star hotel.

In fact, this is a massive exercise in futility. And it's a shame.


This article was reported and written by John C. Dvorak for MarketWatch.

More taking CAIA exams as alternative investment industry grows

By Yvonne Cheong, Channel NewsAsia Posted: 12 September 2007 0002 hrs



















SINGAPORE : As a growing number of hedge funds set up base in Singapore, there is increasing demand for talent in the financial services industry.

And a new finance qualification, the Chartered Alternative Investment Analyst (CAIA), is gaining popularity among Singaporeans hoping to make their mark in the sector.

For 26-year-old Chua Yingwen, it wasn't enough to have a business degree majoring in finance.

She sat for further exams to qualify as a Chartered Alternative Investment Analyst to boost her expertise in alternative investments.

"People who want to do CAIA are those who want to go into alternative investments but if you're not sure where to start, I think CAIA is a good starting ground. We see a lot of private bankers, wealth management people starting to do CAIA because there's been a growing trend amongst rich individuals who want to put money into alternative investments. These are not necessarily hedge funds; they could be private equity, real estate, commodities or futures," said Chua, senior analyst at GFIA.

So far, only 42 individuals in Singapore have the CAIA qualification.

But the demand is expected to increase with the private banking sector in Asia set to grow at 8-9 percent annually.

"It includes the big investment banks which need alternative specialists such as traders, point brokers and sales people. You need analysts who can understand hedge funds, including private bankers who need to understand the product that they are selling to their clients. So it's a pretty broad spectrum of financial services business," said Peter Douglas, CAIA, Chairman of Singapore Chapter, Alternative Investment Management Association.

The CAIA is a new qualification introduced in Singapore just eight years ago.

Most people are more familiar with the Chartered Financial Analyst (CFA).

"As a general base for a financial services career, CFA is exactly what you need. But if you need to be in the alternative investment industry, where you're trying to make a switch from another part of the financial services world into alternatives, then CAIA is absolutely the right qualification," said Douglas.

The CFA qualification is still in demand and there some 2,300 Chartered Financial Analysts in Singapore.

Experts in the equity research field said the CFA qualification has increasingly become the passport of entry into the industry. - CNA /ls



Source: Channel NewsAsia

Barclays plans to launch Islamic hedge funds

Barclays Capital plans to launch hedge funds that comply with Muslim law, the latest attempt to marry huge demand for Islamic investments with the returns of hedge funds. The British bank and its partner, US-based Shariah Capital, on Monday said they would offer investors a group of hedge funds that will be managed according to Islamic law, or sharia - rules which many bankers and investors say forbid common hedge fund strategies such as short-selling.

"The end-investor will buy a fund which has the exposure of six or seven long-short hedge funds. Those funds will be managed in accordance with sharia rules," said Harry Martin, co-head of Barclays Capital's Middle East market solutions group.

Unlike a fund of hedge funds, investors will be able to choose which hedge fund they have exposure to.

Islam forbids lending on interest and gambling, which many bankers say precludes short-selling, or selling an asset on the expectation that its price will fall, and other bets on currency and stock movements commonly used by hedge funds.

Martin declined to say how the hedge funds would comply with sharia, saying that was proprietary information.

Barclays and Shariah Capital plan to raise up to $500 million for the fund within a year in the United States, Martin said.



source: ArabianBusiness.com

Iran may knock off zeroes from banknotes

The Iranian 50,000 rial note (pictured) is the country’s highest-denominated banknote and was launched earlier this year. (STR/AFP/Getty Images)


Iran's central bank has been instructed to study the possibility of knocking three zeroes off the country's banknotes, whose value has been eroded by double-digit inflation, Iranian media reported on Monday.

The oil-rich Islamic Republic early this year launched its highest-denominated banknote yet, 50,000 rials or the equivalent of around $5.40. Previously, the largest note in circulation was worth 20,000 rials.

Gholamreza Mesbahi-Moqadam, a member of parliament and a member of the policy-setting Money and Credit Council, was quoted as saying President Mahmoud Ahmadinejad had ordered the central bank to look into the issue.

"Our biggest banknote is very weak against other countries' currencies and this brought a bad feeling among our people in psychological terms," Mesbahi-Moqadam told Fars News Agency.

"Iranian pilgrims who used to go to Mecca for the Haj could exchange 10,000 rials for 500 Saudi rials but now they only receive four Saudi rials," he said.

He said the present situation also wasted time both for banks and their clients in handling and counting wads of money, as well as increased the cost of printing new banknotes.

Iranian media said the issue had been on the agenda in 2005 but was opposed by then Central Bank Governor Ebrahim Sheibani, who was replaced by Ahmadinejad last month.

The Central Bank was not available for comment.

Another Iranian news agency, Mehr, said it could take two years to implement the change, if it was approved.

Economists say profligate spending of Iran's oil revenue is helping to stoke inflation, now running at a year-on-year rate of over 17% but the government says the problem has been exaggerated and that price rises are under control.

Ahmadinejad came to power in 2005 on a pledge to distribute Iran's oil wealth more fairly, but his economic policies face growing criticism from the public, the media and economists for failing to cut double-digit inflation and jobless rates.





Source: ArabianBusiness.com

Software via the Internet: Microsoft in ‘Cloud’ Computing

SAN FRANCISCO, Sept. 2 — The empire is preparing to strike back — again.

In 1995, Microsoft added a free Web browser to its operating system in an attempt to fend off new rivals, an effort ultimately blocked by the courts.

This week, it plans to turn that strategy upside down, making available free software that connects its Windows operating system to software services delivered on the Internet, a practice increasingly referred to as “cloud” computing. The initiative is part of an effort to connect Windows more seamlessly to a growing array of Internet services.

The strategy is a major departure for Microsoft, which primarily sells packaged software for personal computers. With this new approach, Microsoft hopes to shield its hundreds of millions of software customers from competitors like Google and Salesforce.com, which already offer software applications through the Internet.

Microsoft’s new Windows Live software suite includes an updated electronic mail program, a photo-sharing application and a writing tool designed for people who keep Web logs.

The new service is an indication that Microsoft plans to compete head-on against archrival Google and others, and not only in the search-engine business where it is at a significant disadvantage. Instead, Microsoft will try to outmaneuver its challengers by becoming the dominant digital curator of all a user’s information, whether it is stored on a PC, a mobile device or on the Internet, industry executives and analysts said.

Millions of PC users already rely on Web applications that either provide a service or store data. For instance, Yahoo and Google do their own forms of cloud computing, offering popular e-mail programs and photo-sharing sites that are accessible through a Web browser. The photos or the e-mail messages are stored on those companies’ servers. The data is accessible from any PC anywhere.

Hundreds of companies in Silicon Valley are offering every imaginable service, from writing tools to elaborate dating and social networking systems, all of which require only a Web browser and each potentially undermining Microsoft’s desktop monopoly.

Google, the most visible example, took cloud computing a step further last October and directly challenged Microsoft by offering a suite of free word-processing and spreadsheet software over a browser.

“To the extent that the industry is moving toward an on-demand business model, it poses a threat to Microsoft,” said Kenneth Wasch, president of the Software and Information Industry Association and a longtime Microsoft adversary.

Microsoft is a late entrant to a set of businesses that are largely defined as Web 2.0, but the company is counting on its ability to exploit its vast installed base of more than one billion Windows-based personal computers. It plans to give away some of its services, like photo-sharing and disk storage, while charging for others like its computer security service and a series of business-oriented services aimed at small and medium-size organizations.

“I think Microsoft is going beyond search to a more sophisticated set of services,” said Shane Robison, executive vice president and chief strategy and technology officer at Hewlett-Packard. “It will be a race, and who knows who will get there first?”

Brian Hall, general manager for Microsoft’s Windows Live services, said, “We’re taking the communications and sharing components and creating a set of services that become what we believe is the one suite of services and applications for personal and community use across the PC, the Web and the phone.”

He said the software would be the first full release of Windows Live that is intended to produce a “relatively seamless” experience between the different services and applications.

The Windows Live service — which will be found at www.live.com — includes new versions of the company’s Hotmail and Messenger communications services as well as Internet storage components. Microsoft executives said there were roughly 300 million active users each on the Hotmail and Messenger services, with some overlap.

The software release will offer PC users the option of downloading a set of the services with a single Unified Installer program, or as separate components. The individual services are Windows Live Photo Gallery, Windows Live Mail, Windows Live Messenger 8.5 and Windows Live OneCare Family Safety, a computer security program.

The release, though it includes the Windows Live Writer blogging application, carefully avoids cannibalizing two of Microsoft’s mainstays, the Word and Excel programs.

Windows Live services also underscore Microsoft’s desire to become the manager for a user’s data wherever it is located. Although they will not be included in the initial test release, the company’s recently announced SkyDrive online data storage service and its FolderShare service are being folded into Windows Live. SkyDrive currently gives test users 500 megabytes of free Internet storage, while FolderShare makes it possible to synchronize between multiple computers — including Apple’s Macintosh computers.

“When you think storage, think Windows Live,” Bill Gates said in an interview this summer. Microsoft is moving to create an experience that will divorce a user’s information from the particular device the person is working with at any moment, he said.

Microsoft’s new approach is in many ways a mirror image of the strategy used during the 1990s in defeating Netscape Communications when the start-up threatened Microsoft’s desktop dominance. Microsoft tried to tie the Internet to Windows by bundling its Internet Explorer Web browser as an integral part of its desktop operating system. The company lost an antitrust lawsuit in 2000 brought by the Justice Department in response to this bundling strategy.

Today, that strategy has been flipped with the growing array of Web services that are connected to Windows. But the new approach, which the company refers to as “software plus services,” is once again beginning to draw industry charges of unfair competition from competitors.

To head off that challenge, Microsoft has been participating in various international organizations that are setting standards over a wide range of services: from those aimed at consumers, like blog-editing and photo-sharing applications, to automated business processes like Web-based customer relationship management systems for sales staff and automatic ordering and logistics applications.

Last week, for example, Microsoft executives were put on the defensive after the company’s efforts to gain international adoption for a Microsoft-designed document format known as Office Open XML, led to charges of vote-buying in an international standards vote in Sweden.

After the charges received international publicity during the week, the Swedish Standards Institute reversed its position and decided to abstain on the issue, and a Microsoft executive apologized publicly for the gaffe.

On Wednesday, Jason Matusow, Microsoft’s senior director for intellectual property and interoperability, wrote on his Web site: “I understand the concern raised by this error in judgment by an MS employee. The only thing I can say is that the right things were done as the issue was identified. The process and vote at S.I.S. were not affected.” Microsoft did not specify what actually had transpired.

While the industry dispute over document formats was visible last week, several Microsoft competitors were quietly pointing to another standards issue that may prove to be a significant advantage for software giant in the future.

A set of Web services standards that have emerged from the World Wide Web Consortium might give Microsoft a performance advantage, according to industry executives at three companies, who declined to be identified because they are Microsoft business partners.

Microsoft’s standards efforts have angered its competitors because four years ago the software publisher argued publicly against adding compression features that are designed to improve performance to industry Web services standards. Now, however, Microsoft has developed its own compression standards that will potentially make its versions of Web services perform better than those of their competitors.

“They’re playing the game right,” said a rival. “The idea is to offer a solution that works better in an all-Microsoft environment.”

On Friday, a spokesman for Microsoft said that services that take advantage of the Web standards effort like Silverlight, a new system for displaying multimedia content via a Web browser that competes with Adobe’s Flash media player, would not be included in the first release of Windows Live, but would be added in the future.


source: The New York Times

IPhone Owners Crying Foul Over Price Cut

By KATIE HAFNER and BRAD STONE

SAN FRANCISCO, Sept. 6 — In June, they were calling it the God Phone. On Thursday, it was the Chump Phone.

People who had rushed to buy the Apple iPhone over the last two months suddenly and embarrassingly found that they had overpaid by $200 for the year’s most coveted gadget.

Apple, based in Cupertino, Calif., has made few missteps over the last decade, but it angered many of its most loyal customers by dropping the price of its iPhone to $400 from $600 only two months after it first went on sale. They let the company know on blogs, through e-mail messages and with phone calls.

On Thursday, in a remarkable concession, Steven P. Jobs acknowledged that the company had abused its core customers’ trust and extended a $100 store credit to the early iPhone buyers.

“Our early customers trusted us, and we must live up to that trust with our actions in moments like these,” Mr. Jobs wrote in a letter posted to Apple’s Web site.

The rebate, at least, was enough to mollify some early iPhone customers like Kevin Tofel, a blogger in Telford, Pa., who writes about mobile phones at a blog called jkOnTheRun. Mr. Tofel was so annoyed with the surprising iPhone price drop that he was planning to make T-shirts that read, “I was a $200 iPhone beta tester for Apple.”

“I just felt so used as a consumer,” he said. “They hyped up the iPhone for six months and built up our expectations, and then they grabbed our extra $200 and ran.”

But Mr. Tofel was pleased to hear about the store credit. “I think it was probably the best compromise from a P.R. standpoint and the right thing to do for consumers,” he said. “I’m sure they are taking a lot of heat but they are listening to their customers.”

Mr. Jobs defended the price cut as the right thing to do and, referring to his 30-year history in the high-tech business, lectured his readers about the risks and rewards of buying into a fast-changing and volatile market for consumer technology products. “This is life in the technology lane,” he wrote.

While the iPhone price cut follows the general pattern of falling prices, quickly knocking a third off the price of a high-profile product is unusual for any consumer electronics company, let alone Apple.

The price of consumer electronics is always going down thanks to intense competition and the steady decrease of the cost of electronic parts. The pricing is largely determined by Moore’s Law, the observation made by Intel’s co-founder Gordon Moore that the number of transistors on a silicon chip doubles roughly every 18 months. Because this rate of change is described by an exponential curve, it dictates not only that prices fall, but also that they fall at an increasing rate.
For example, the average price of a 42-inch high-definition television has declined to $1,522 from $1,844 so far this year, an 18 percent drop, according to the research firm iSuppli. Analysts said they expected a 25 percent drop for the year, but it has been more in years past.

Mobile phones tend to be more prone to price declines because the pace of product introductions is faster than for televisions or DVD players. Motorola, for instance, introduced the ultrathin Razr phone for $499 with a two-year service contract in early 2005. Six months later, Motorola realized it had a hit on its hands and dropped the price to $199 in an effort to aim at more mainstream buyers. By the end of 2005, the price was $99.

Ken Dulaney, a vice president at Gartner Research, said that in general starting high and dropping the price slowly was a smart strategy. By starting the price high, manufacturers can gauge early demand and reap greater profit from early adopters who are willing to pay any amount to be the first with a particular device. “It’s probably a formula taught in business school,” Mr. Dulaney said.

That must have been what Apple was counting on. But the size and speed of the price cut alienated some of Apple’s most loyal supporters.
“My love affair with Apple is officially over,” wrote one iPhone owner on the Unofficial Apple Weblog site.

Mr. Jobs said the cuts were precipitated by a desire to build demand aggressively for the product in the coming holiday shopping season. Analysts, however, wondered if it was indicative of sagging demand for the expensive phone.

“I don’t think it’s a stretch to deduce from this that maybe the rate of sales weren’t meeting expectations, so they decided to drop the price,” said Charles Golvin, an analyst at Forrester Research. “Bear in mind that Steve Jobs said at the last earnings call that they expected to sell a million devices in the following quarter. Maybe they recognized the trajectory wasn’t going to get them there at that price.”

For many customers, though, all was forgiven after learning of the $100 store credit. “My first reaction was ‘Grrrr,’ ” said Lou Hawthorne, an early iPhone buyer in Mill Valley, Calif. “Then again, I want Apple to be successful. I’m also tempted to say I’ve gotten $200 in value since the release.”

Rob Enderle, president of the Enderle Group, a market research firm in San Jose, Calif., was skeptical of the store credit.

“A $100 credit could be perceived as adding insult to injury,” said Mr. Enderle, noting that store credits are seldom well received. “It’s a way to make you go buy something else, and gives the company a chance to make more money.”

But Mr. Enderle might be underestimating the sheer power of Apple loyalty. The company’s fans have in the past overlooked overheating computers, iPods that are easily scratched and batteries that cannot be replaced easily or inexpensively.

“I’ll forget about the unexpected credit long before I forget Jobs’s letter, which I found thoughtful in both senses of the word,” Mr. Hawthorne said. “Gestures like this remind me that Apple’s success is not an accident.”


source: The New York Times

Guilty Plea for Couple in Insider Trading Case

A former Morgan Stanley finance vice president and her husband, a former hedge fund analyst at ING Investment Management, pleaded guilty yesterday to conspiracy and insider trading as part of a federal crackdown.

The couple, Jennifer Wang and Ruben Chen of Englishtown, N.J., each pleaded guilty to one count of conspiracy and three counts of insider trading in Federal District Court in Manhattan.

“I feel deeply sorry for my conduct,” Ms. Wang said in court. “I understood what I did was wrong.”

Prosecutors this year have stepped up efforts to combat insider trading. In May, a former Morgan Stanley compliance officer, Randi Collotta, and her husband pleaded guilty to insider-trading charges in an unrelated case. And last month, a former Goldman Sachs associate pleaded guilty to making more than $6.7 million through insider trades.

Ms. Wang, 31, and Mr. Chen, 34, were arrested on May 10 for trading in the securities of Town and Country Trust, Glenborough Realty Trust and Genesis HealthCare, based on information that Ms. Wang had learned from Morgan Stanley. They earned more than $600,000 from December 2005 to March 2007, prosecutors said.

According to the complaint, Morgan Stanley was advising its subsidiary, Morgan Stanley Real Estate, on the acquisition of Town and Country and Glenborough. Ms. Wang learned about the firm’s failure to acquire Town and Country and the successful purchase of Glenborough before the news became public.

Representatives of ING Groep and Morgan Stanley have said their firms had cooperated with federal investigators.


source: Bloomberg News via The New York Times

Murdoch and Dow Jones: How The Deal Got Done

While Rupert Murdoch finally won his long-coveted prize — gaining enough support from the deeply divided Bancroft family to buy Dow Jones & Company, publisher of The Wall Street Journal — closing the $5 billion deal was a marathon of conference calls and all-nighters for those involved in the deal-making process.

Following four months of back-and-forth, during which some three dozen members of the family engaged in an intense, sometimes tearful debate about The Journal’s future, the boards of both Dow Jones and Mr. Murdoch’s News Corporation voted Tuesday night to approve the deal.

In a press release early Wednesday, Dow Jones said it had signed a “definitive merger agreement” under which it would be acquired by News Corp.

Speaking to The Times, James B. Lee of J.P. Morgan Chase & Company, who has represented clients in some of the biggest deals in history, said of Mr. Murdoch: “Nobody else I have ever banked could have pulled it off.”

With 64 percent of Dow Jones’s voting power in their hands, the Bancroft family seemed to be in a powerful position early in the process. But The Financial Times’s Lex column suggests they were vastly outgunned by Mr. Murdoch from the start. “It was a mismatch of arch-dealmaker against a group of amateurs,” Lex wrote.

The New York Times’s David Carr, writing in his Media Equation column, describes Mr. Murdoch’s success as “a reminder that the unthinkable is often doable, given the loot and the will.”

The merger dance began in earnest in April, when, after some early reconnaissance, Mr. Murdoch decided the time was right to make his move on Dow Jones. On April 17, a messenger delivered to Dow Jones his offer to buy the company for $60 per share.

Martin Lipton, the veteran takeover lawyer, advised the Bancroft family in the often contentious negotiations, frequently “threading the needle to get to a compromise,” a person who worked with him told The Journal. Some were concerned, though, that he was pushing too hard to get a deal done despite the family’s reservations, The Journal wrote.

The Times notes that the final decision was in doubt well past the 5 p.m. Monday deadline set for the family. In a twist in the already tortured negotiations, some family trustees apparently demanded that the News Corporation pay the fees for the family’s bankers and lawyers — which could reach $40 million — in return for their support. After an exhausting night of conferences calls, the deal was made.

Late last week, it appeared that the family might reject the deal, but then two pivotal family elders who had argued against the deal, Jane Cox MacElree and her brother, William C. Cox Jr., shifted positions; she relinquished voting control of some shares, and he switched sides and decided to support the sale, people close to the family said. That left things too close to call.

While the weeks after May 2 had been spent arguing over principles, the last few days were spent haggling over money. Before the deal had a clear majority in support, a lawyer for the family, Lynn Hendrix, based in Denver, who controlled trusts with 9 percent of the overall vote, insisted that those trusts would oppose the deal unless the News Corporation agreed to pay a premium for the supervoting shares that are mostly owned by the Bancrofts.

On Sunday night, David F. DeVoe, the News Corporation’s chief financial officer and a board member, called Mr. Hendrix, a partner at the firm Holme, Roberts & Owen, to draw a line in the sand.

Referring to the $60 price, Mr. DeVoe said, “I can do six-zero-point-zero-zero,” a person briefed on the conversation told The Times, “not six-zero-point-zero-one.”

When Mr. Hendrix kept pushing for more money, Mr. DeVoe made an unusual offer: the News Corporation would consider paying the fees and expenses of the bankers and lawyers advising the trusts. That amounted to an indirect way of sweetening the offer for the supervoting shares without adding much to the cost of the deal. Dow Jones, after consulting with the News Corporation, had already agreed to cover some of the costs of paying Merrill Lynch, the family’s primary financial advisers.

After a marathon series of conference calls that night that ran through Monday, involving Mr. Devoe; Mr. Hendrix; Michael B. Elefante, the family’s primary lawyer and trustee; and Richard Beattie, a lawyer advising the Dow Jones board, a deal was brokered that would allow the Denver trust to vote in favor. The News Corporation agreed to pay advisory expenses for all of the family trusts, a figure that people involved in the talks told The Times could reach $40 million, which translates to about an additional $2 a share for the Bancrofts.

The largest share, perhaps as much as $18.5 million, will be paid to Merrill Lynch, according to the Times. Another payment of as much as $10 million is expected to be paid to Wachtell, Lipton, Rosen & Katz, a law firm representing the family. Morgan Stanley, which advised the Denver trusts, and a series of law firms are expected to split the rest.

The issue of the News Corporation and Dow Jones paying the family’s advisers has raised questions in some circles — including among some family members, The Times said — about the advice’s impartiality. Merrill Lynch, in particular, was viewed as an early supporter of the deal and was responsible in large part for making presentations to the family about the current and future health of Dow Jones.

The deal is also a windfall for an army of Mr. Murdoch’s bankers and lawyers. Mr. Murdoch was advised by Mr. Lee, who had helped Mr. Murdoch when he explored a bid for Dow Jones in 2001 and had set up Mr. Murdoch’s first introduction to Dow Jones’s chief executive, Richard F. Zannino.

Blair Effron, a former banker at UBS who started his own boutique firm, Centerview Partners, spent many nights holed up at Mr. Murdoch’s headquarters, as did Stanley S. Shuman of Allen & Co., the media investment bank.

By late yesterday, according to the Times, family trusts and family members representing about 40 percent of the total shareholder vote had committed, at least verbally, to support the deal, more than enough to put it over the top in a shareholder vote. Neither Dow Jones nor the News Corporation would officially confirm that, heading into a 7 p.m. Dow Jones board meeting.

To the last, people inside and outside Dow Jones who opposed the sale were trying to arrange alternative deals that would allow some Bancroft family members to sell and others to keep control of the company.

And Tuesday, those who opposed the deal were left with a sour taste in their mouth.

“It’s a bad thing for Dow Jones and American journalism that the Bancroft family could not resist Rupert Murdoch’s generous offer,” James H. Ottaway Jr., a former Dow Jones executive and a major shareholder, told The Times. “I hope Rupert Murdoch, and whoever follows him at News Corporation, will keep his promises to protect and invest in the unique quality and integrity of The Wall Street Journal, Barron’s and all the Dow Jones electronic news services.”

Leslie Hill, a family member and trustee who became something of a patron saint within the Journal’s newsroom for her opposition to the deal, resigned from the company’s board late Tuesday.

News Corp.’s board signed off on the deal at a late-afternoon meeting, The Journal said — and then top executives and advisers toasted their coup with an Australian Shiraz.


source: The New York Times

First time on Blogger

This is the first time I visited blogger and here I am posting a blog in my profile.

So wish me good luck in making my blog up-to-date