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The calls to the White House come at least once a week. “Murdoch here,” the blunt, accented voice on the other end of the line says.

For decades, Rupert Murdoch has used his media properties to establish a direct line to Australian and British leaders. But in the 44 years since he bought his first newspaper in the US, he has largely failed to cultivate close ties to an American president. Until now.

Murdoch and President Donald Trump – both forged in New York’s tabloid culture, one as the owner of The New York Post, the other as its perfect subject – have travelled in the same circles since the 1970s, but they did not become close until recently, when their interests began to align more than ever before.

Since Inauguration Day, Murdoch has talked regularly with Trump, often bypassing the White House chief of staff, General John F. Kelly, who screens incoming calls. Murdoch has felt comfortable enough to offer counsel that others may shy away from, such as urging the president to stop tweeting and advising him to improve his relationship with Secretary of State Rex Tillerson. Murdoch also has weekly conversations with Trump’s son-in-law and senior adviser, Jared Kushner.

Before the news broke that Murdoch had agreed to sell vast parts of his 21st Century Fox to the Walt Disney Co. for US$52.4 billion ($67.8 billion), Trump called him to get his assurance that the Fox News Channel, the highly rated cable network and frequent bullhorn of the Trump agenda, would not be affected.

On December 14, the day the agreement was announced, Trump let the world know that he had made a congratulatory call to Murdoch. Sarah Huckabee Sanders, the White House press secretary, also passed along the president’s belief that the deal would be “a great thing” for jobs – a claim disputed by Wall Street analysts.

After decades of ups and downs, Trump now counts Murdoch as one of his closest confidants. The two titans made a show of their improved relationship in June 2016, when Murdoch visited Trump at the Trump International Golf Links Scotland before a group of reporters. They appeared together again at a black-tie dinner in May in honour of American and Australian veterans who fought side by side in World War II. Murdoch introduced the president as “my friend Donald J. Trump” before they engaged in a brief hug.

They are opposites in personal style, with Murdoch gruff and low-key, preferring schlubby newsrooms to Trump’s gilded towers and glitz. But they have much in common.

Both were born to wealth, but at a distance from the centres of power. Trump grew up in Jamaica, Queens, the son of a real estate developer content to earn his fortune in the boroughs outside Manhattan –  so close but so far from glittering Midtown, where the son would make his name and his home. Murdoch, the son of a journalist who became the owner of a newspaper chain, spent his childhood in Melbourne. Murdoch, 86, and Trump, 71, are also alike in that they were both sent to exclusive schools as boys before going on to outdo their fathers in the family businesses.

Although both men parlayed their inheritances into global power, they have stubbornly viewed themselves as outsiders at odds with the establishment. When Murdoch entered the British newspaper market in 1968, London society shunned him and his vulgar tabloids, The Sun and The News of the World, which he used to wound his enemies and advance his political interests. Trump withstood a similar wariness among the elite after he made himself a Manhattan player through his brazen deal making and hucksterism.

To make their way upward in New York, both men relied on a powerful friend, lawyer Roy M. Cohn, a ruthless fixer who made his name in the 1950s as the chief counsel to Joseph McCarthy, the Red-baiting senator, before representing some of the city’s most powerful figures, including the mobster John Gotti and the New York Yankees owner George Steinbrenner.

Cohn connected Trump to Murdoch and the tabloid he bought in 1976, The New York Post. The upstart developer saw that he could benefit from the brash daily – especially its Page Six gossip column, which started a year after Murdoch became the paper’s owner.

“Trump was interested in specifically Rupert’s ownership of The Post, because Page Six is very important to his rising stature in New York City and branding efforts,” said Roger Stone, a Republican operative who has known both men for decades.

Trump seemed to revel in the tabloid’s saucy coverage of his personal life. In 1989 and 1990, The Post turned out a series of front pages on Trump’s split from his first wife, Ivana Trump, and his affair with Marla Maples. The stream of headlines in bold block letters culminated in a quote attributed to Maples: “Best Sex I’ve Ever Had.”

Trump’s enthusiastic response to the planned Disney-Fox megadeal may have been lost in the swirl of Washington news had it not been for his vehement opposition to another recent attempt at media consolidation – AT&T’s proposed US$85.4 billion ($110 billion) acquisition of Time Warner, the parent company of CNN, a frequent target of the president’s “fake news” complaints. While so far making no move on the Disney-Fox plan, the Justice Department has sued to block the AT&T-Time Warner deal on antitrust grounds in a rare instance of governmental interference in a merger of two companies that do not directly compete with each other.

Murdoch, whose ideology is more malleable than his critics realise, has long gained from his knack for placing himself close to power. In the 1980s, when he was cosy with Prime Minister Margaret Thatcher, his London tabloids took a pro-Tory stance. In 1997, his newspapers endorsed the Labor Party leader Tony Blair for prime minister.

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Lance Price, a former Blair spokesman, referred to Murdoch as “effectively a member of Blair’s Cabinet.” In turn, Murdoch faced little government scrutiny as he expanded his media empire to reach 40 percent of British newspaper readers and millions of television viewers through his stake in Sky, a pay TV service. But after a 2011 phone hacking scandal at the now-shuttered News of the World put a spotlight on his remarkable political influence, he found himself facing regulatory hurdles, and his $15 billion bid for a 61 percent stake of Sky came to nothing.

Even as Murdoch enjoyed an open invitation to 10 Downing Street, he found that his overtures to U.S. presidents mostly fell short. And before making their alliance, Murdoch and Trump had to put their old spats behind them.

Before the recent rapprochement, Murdoch privately called Trump “phony,” and accused him of exaggerating his net worth. For his part, Trump once threatened to sue Murdoch for libel after The Post reported that the storied Maidstone Club in East Hampton, New York, had denied him membership.

During much of the 2016 presidential campaign, Murdoch – who initially swooned over Jeb Bush – stood against Trump, declaring on Twitter that he was “embarrassing his friends” and “the whole country.” The Wall Street Journal, Murdoch’s crown jewel, ran an editorial calling the candidate a “catastrophe”.The Post led with the headline “Don Voyage” and declared, “Trump is toast”.

Trump shot back on Twitter: “Wow, I have always liked the @nypost but they have really lied when they covered me in Iowa.” He also went after the Journal: “Look how small the pages have become @WSJ,” he wrote. “Looks like a tabloid ??? saving money I assume!”

The Post ended up endorsing Trump, with reservations, in the New York primary, but refrained from endorsing either him or Hillary Clinton in the general election.

More recently, Murdoch expressed exasperation with Trump’s immigration policies. In response to the White House ban on travel of people from majority-Muslim nations, his company, 21st Century Fox, released a memo offering assistance to any employees hurt by the executive order and reminding them that “21CF is a global company, proudly headquartered in the U.S., founded by – and comprising at all levels of the business – immigrants.” In August, James Murdoch, the younger son of Murdoch and the chief executive of 21st Century Fox, condemned the president’s response to the riots in Charlottesville, Virginia.

The man partly responsible for the detente was another moneyed outsider who craved status and respect: Jared Kushner.

When Kushner bought The New York Observer in 2006, he wasted little time reaching out to Murdoch. “He wanted to be Murdoch,” said one person close to both men at the time. In early 2016, after a presidential debate during which Trump faced aggressive questioning from Megyn Kelly, then a Fox News anchor, the candidate sent Kushner to Murdoch on a media diplomacy mission.

Kushner’s wife, Ivanka Trump, is close friends with Murdoch’s third wife, Wendi Deng. Murdoch and Deng attended the Kushner-Trump wedding in 2009 at the Trump National Golf Club in Bedminster, New Jersey, and the Murdoch daughters, Grace and Chloe, served as flower girls.

Before Murdoch and Deng divorced in 2013, Kushner and Ivanka Trump vacationed on Rosehearty, Murdoch’s 184-foot sailing yacht. In a further sign of the two families’ closeness, Ivanka Trump took on the job of Murdoch trustee responsible for overseeing the two girls’ $300 million fortune – a role she gave up a month before her father took office.

In June 2016, when Donald Trump appeared to be the inevitable Republican nominee, Murdoch made the visit to Trump International Golf Links Scotland. Completed in 2012 over the objections of nearby residents, the course lies 35 miles from the herring-fishing port of Rosehearty, the town left behind by the Murdoch clan when it emigrated to Australia in 1884.

Murdoch arrived with former model Jerry Hall, his fourth wife, whom he married in March. Under cloudy skies, the newlyweds toured the property in a golf cart large enough for four. Trump was at the wheel, with Hall seated beside him. Murdoch, wearing sunglasses, sat on a backward-facing rumble seat as they made their way to the Trump-refurbished Macleod House, a 15th-century mansion, where they had dinner.

Trump’s mended relationship with Murdoch has not gone unnoticed by Time Warner executives, who wonder why AT&T’s attempt to buy the company has run into regulatory trouble at a time when the president has smiled on the Disney-Fox deal.

“If you look at the facts of our case, even before you heard the administration’s endorsement of the Disney-Fox deal, it was hard to understand how the Justice Department could reach a decision to block our deal,” Jeffrey L. Bewkes, the chief executive of Time Warner, said.

A spokesman for the White House, Raj Shah, said that Trump hadn’t spoken to Attorney General Jeff Sessions about the AT&T-Time Warner deal and that “no White House official was authorised to speak with the Department of Justice on this matter.”

The way CNN’s parent company views it, Fox News has adopted a role similar to the one played by Murdoch’s British tabloids when they helped advance the agendas of British leaders. As Blair learned, however, even a special relationship with the media baron can sour quickly. He and Murdoch – once so close that Blair was the godfather to Grace Murdoch – are no longer on speaking terms.

During the British government’s 2012 inquiry into the mogul’s political influence, the former prime minister described what it was like when a story subject falls out of favor with a Murdoch-controlled tabloid.

“Once they’re against you, that’s it,” Blair said. “It’s full on, full frontal, day in, day out, basically a lifetime commitment.”

Henry Sapiecha

 

How Penny Stocks Are Creating

Millionaires Every Day

How Penny Stocks Are Creating Millionaires Every Day

You may have noticed a lot of buzz lately about penny stocks.

Penny stocks refer to the common stock of smaller public companies that trades for less than a dollar per share.  Like other shares of stock, they are regulated by the SEC and other authorities, but instead of trading on the major markets like the NYSE, they trade on “over-the-counter” markets.

Today, penny stocks are offering smaller investors a great opportunity to earn significant up-side on their investments. The benefits occur for two reasons:

1. It doesn’t take a lot of money to invest in penny stocks.
For the price of just one share in large companies such as Apple or Google, you could buy thousands of shares in many penny stock companies.

2. Penny stocks have the potential for huge returns.
Because the price per share is so low, they can experience huge price increases – sometimes even doubling or tripling in just one day.  Price jumps like this do not often occur with larger companies, but are much more common with penny stocks.

Another great thing about penny stocks is that they trade in exactly the same way as shares of larger companies. You can easily track price movements and buy and sell online, or through a traditional broker.

While there is always risk in owning shares of publicly traded companies, the amount people tend to invest in penny stocks is relatively small, so in those instances, if the price of the stock drops, investors do not lose significant amounts of money.

But, with thousands of different penny stocks to choose from, how should you go about finding the right ones to invest in?

One website that is exclusively devoted to tracking and recommending penny stocks is Billionaire Stocks. The site tracks the market for these high potential companies, and then alerts its subscribers with the latest picks.

Much of the ability to recognize a return depends upon when you purchase or sell the penny stocks, and these results are not typical or guaranteed. In some cases, where a promotion ends, the stock prices can go back down to their original amounts – so you have to be diligent with your investment and monitor your trading activity closely.

Henry Sapiecha

Is Branson abandoning Virgin Australia Airlines to buy Sky west-Selling shares.

Richard Branson jetted into Perth this week

To wave his publicity wand over Virgin Australia’s latest announcement. Between poking his head out of the cockpit window, standing next to glamorous flight attendants in Virgin red uniforms and waving flags he presided over the launching of Virgin Australia’s new acquisition, SkyWest.

But this time around the presence of Branson seemed a little strange. Less than two weeks ago he sold down his shareholding in Virgin Australia from 23 per cent to 13 per cent. And after speaking with him yesterday one thing clear, between the lines, was that he is not a long-term holder of his remaining stake. This poses the important question of who he will sell it to and how this can be done.

The Virgin Australia share register is tightly held between its three alliance airline partners, Singapore Airlines (which, thanks to Branson, now has 19.9 per cent), Air New Zealand with roughly the same, and Etihad with 8.5 per cent. Etihad had been in talks with Branson for more than a year to buy part of his shareholding but it appears to have been a case of tyre kicking.

So it is not surprising that Branson was open to the overtures from Singapore Airlines. Branson said: ”It’s always nice to have big airlines lining up for your shares.”

It’s an open secret in the airline industry that Etihad boss James Hogan was less than impressed that Branson sold 10 per cent of Virgin to Singapore.

Branson’s decision will be pivotal to how the share structure plays out and in this sense he becomes the kingmaker.

He is already working on how to spend the proceeds. One plan under investigation is a number of upmarket (and cool) boutique hotels in Australia. But he confesses it’s early days.

If Branson sells the remainder to any of these three players they would need to make a takeover bid and get Foreign Investment Review Board approval.

And even if the other airline shareholders did not accept the offer, the bidder could capture the 36 per cent held by retail and institutional shareholders. (And the fact remains that Etihad and Singapore operate in competition out of Australia beyond their hubs.)

Another possibility is a private equity play that takes out the minorities and negotiates the purchase of the majority of Virgin’s frequent-flyer program. This asset is becoming increasingly valuable, thanks to the involvement of Virgin Australia’s various alliance partners and its capture of a larger portion of the business-traveller market.

The valuation differs depending on which analyst one speaks to. Some analysts have called it as low as $250 million but at the upper end it has been valued at closer to $1.5 billion on a two-year prospective basis.

Unlike airlines whose cyclical earnings can be volatile, frequent-flyer programs churn out a more solid profit stream. And the value of this business tends to improve over time as membership builds.

At one point in Qantas’ recent history its frequent-flyer program was its most profitable division.

Virgin Australia boss John Borghetti will be acutely aware that the ownership tectonic plates are unstable. Until something happens he has to manage these shareholders under the Virgin alliance umbrella. To have any of the three on the board would result in howls of protest from the others, who would want equal treatment.

AAA

But Virgin’s purchase of SkyWest and more recently the ailing no-frills domestic minnow Tiger suggests that he is not waiting for things to happen.

While SkyWest is viewed as a West Australian regional carrier, Borghetti has plans to expand its routes. It already has one-third of its business in Queensland and operates some services in NSW. The fly-in-fly-out mining industry part of the market is worth about half a billion dollars a year and Virgin wants some of this action.

Australian Competition and Consumer Commission documents, part of its dossier on the aviation industry this year, suggested Qantas’ hard and fast line in the sand to retain 65 per cent of the domestic market has already slipped a little.

From an operational perspective this is probably not particularly significant. Indeed, investors are more likely to be relieved that Qantas would prefer to manage yield rather than adhere too closely to self-imposed metrics.

There are plenty of other challenges. Both Virgin and Qantas are just coming out of a savage capacity war that has taken its toll on domestic earnings.

There is an expectation that this pressure is already easing but Borghetti concedes that only in the past couple of weeks the aviation market has become a little softer.

So even if the two airlines have started a ceasefire they will still need to contend with the broader economic conditions.

They are not alone. There have been several economic indicators over the past couple of months suggesting any tentative improvements in economic data are now stalling and business investment is about to hit a wall.

It will be a great relief to many that the Reserve Bank of Australia on Tuesday reduced the cash rate by 25 basis points.

Henry Sapiecha

Is Branson abandoning Virgin Australia Airlines to buy Sky west-Selling shares.

Richard Branson jetted into Perth this week

To wave his publicity wand over Virgin Australia’s latest announcement. Between poking his head out of the cockpit window, standing next to glamorous flight attendants in Virgin red uniforms and waving flags he presided over the launching of Virgin Australia’s new acquisition, SkyWest.

But this time around the presence of Branson seemed a little strange. Less than two weeks ago he sold down his shareholding in Virgin Australia from 23 per cent to 13 per cent. And after speaking with him yesterday one thing clear, between the lines, was that he is not a long-term holder of his remaining stake. This poses the important question of who he will sell it to and how this can be done.

The Virgin Australia share register is tightly held between its three alliance airline partners, Singapore Airlines (which, thanks to Branson, now has 19.9 per cent), Air New Zealand with roughly the same, and Etihad with 8.5 per cent. Etihad had been in talks with Branson for more than a year to buy part of his shareholding but it appears to have been a case of tyre kicking.

So it is not surprising that Branson was open to the overtures from Singapore Airlines. Branson said: ”It’s always nice to have big airlines lining up for your shares.”

It’s an open secret in the airline industry that Etihad boss James Hogan was less than impressed that Branson sold 10 per cent of Virgin to Singapore.

Branson’s decision will be pivotal to how the share structure plays out and in this sense he becomes the kingmaker.

He is already working on how to spend the proceeds. One plan under investigation is a number of upmarket (and cool) boutique hotels in Australia. But he confesses it’s early days.

If Branson sells the remainder to any of these three players they would need to make a takeover bid and get Foreign Investment Review Board approval.

And even if the other airline shareholders did not accept the offer, the bidder could capture the 36 per cent held by retail and institutional shareholders. (And the fact remains that Etihad and Singapore operate in competition out of Australia beyond their hubs.)

Another possibility is a private equity play that takes out the minorities and negotiates the purchase of the majority of Virgin’s frequent-flyer program. This asset is becoming increasingly valuable, thanks to the involvement of Virgin Australia’s various alliance partners and its capture of a larger portion of the business-traveller market.

The valuation differs depending on which analyst one speaks to. Some analysts have called it as low as $250 million but at the upper end it has been valued at closer to $1.5 billion on a two-year prospective basis.

Unlike airlines whose cyclical earnings can be volatile, frequent-flyer programs churn out a more solid profit stream. And the value of this business tends to improve over time as membership builds.

At one point in Qantas’ recent history its frequent-flyer program was its most profitable division.

Virgin Australia boss John Borghetti will be acutely aware that the ownership tectonic plates are unstable. Until something happens he has to manage these shareholders under the Virgin alliance umbrella. To have any of the three on the board would result in howls of protest from the others, who would want equal treatment.

AAA

But Virgin’s purchase of SkyWest and more recently the ailing no-frills domestic minnow Tiger suggests that he is not waiting for things to happen.

While SkyWest is viewed as a West Australian regional carrier, Borghetti has plans to expand its routes. It already has one-third of its business in Queensland and operates some services in NSW. The fly-in-fly-out mining industry part of the market is worth about half a billion dollars a year and Virgin wants some of this action.

Australian Competition and Consumer Commission documents, part of its dossier on the aviation industry this year, suggested Qantas’ hard and fast line in the sand to retain 65 per cent of the domestic market has already slipped a little.

From an operational perspective this is probably not particularly significant. Indeed, investors are more likely to be relieved that Qantas would prefer to manage yield rather than adhere too closely to self-imposed metrics.

There are plenty of other challenges. Both Virgin and Qantas are just coming out of a savage capacity war that has taken its toll on domestic earnings.

There is an expectation that this pressure is already easing but Borghetti concedes that only in the past couple of weeks the aviation market has become a little softer.

So even if the two airlines have started a ceasefire they will still need to contend with the broader economic conditions.

They are not alone. There have been several economic indicators over the past couple of months suggesting any tentative improvements in economic data are now stalling and business investment is about to hit a wall.

It will be a great relief to many that the Reserve Bank of Australia on Tuesday reduced the cash rate by 25 basis points.

Henry Sapiecha

Newest Aussie high-tech

tycoon’s multimillion-dollar deal

Firemint founder Rob Murray.Firemint founder Rob Murray.

Asher Moses

May 4, 2011 – 5:52PM

Robert Murray made his popular Flight Control game for the iPhone and iPad in three weeks at a cost of $50,000. He’s now Australia’s newest high-tech millionaire after selling his company to US game giant Electronic Arts for an estimated $20-$40 million.

Separately, an Australian surfer living in London, Phillip McGriskin, 37, sold his online payments company Envoy Services for £70 million ($107 million) to WorldPay this week, netting himself £7 million on his personal stake.

Murray’s Melbourne-based Firemint, which now has about 60 employees, produces some of the most popular mobile games including Flight Control, Real Racing and Puzzle Quest. In announcing its acquisition, Electronic Arts said the Firemint team was “remarkable for its critical and commercial success”.

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A screenshot of Firemint's flagship game, Flight Control.A screenshot of Firemint’s flagship game, Flight Control.

Electronic Arts and Firemint have so far refused to disclose the financial terms of the deal, which is expected to close in four weeks. Murray, 37, was unavailable for an interview today.

But in a blog posted late Wednesday evening, Murray said it was “business as usual” and that the team of 60 would remain in Australia and that he would continue to run the company. “We reckon that we make some pretty awesome games at Firemint and we reckon we know how to continue making them,” Murray said.

A source with knowledge of Firemint’s sales said the company garnered $10 million in revenue a year and, based on this, tech industry investors believe the sale price would have been between $20 and $40 million.

For Flight Control alone, in January last year Firemint announced it had sold 2 million copies at $1.19 a piece.

A separate source with links to a major venture capital firm that invests in technology companies estimated the company sold for between $25 and $100 million.

“They’ve got 60 people so they’d be costing at least $150,000 a head for sure. If there’s 60 of them, that probably means they’re spending $9 million a year at least in costs; if you assume that they’re making at least $9 million a year in revenue, even just on a revenue multiple of four or five times you imagine it’s somewhere between $25 and $100 million, depending on how crazy Electronic Arts were for it,” the source said.

“Even if you’re making $5 million a year in revenue you’re going to get $25 million.”

Murray started Firemint in 1999 after he graduated from the University of Queensland with an engineering degree. He initially did programming work for other firms until he discovered the iPhone and its lucrative app store.

The Firemint acquisition caps off a stellar 12 months for Australian technology entrepreneurs.

In July last year, Australian tech whiz Andrew Lacy made millions after selling his game app start-up Tapulous – responsible for the hit Tap Tap Revenges series – to Disney. He had previously been sleeping on the couch of another Silicon Valley entrepreneur.

The same month, Australian enterprise software makers Atlassian, whose founders Mike Cannon-Brookes and Scott Farquahar met at the University of New South Wales, raised $US60 million after selling a minority stake to a large US venture capital firm. They started the company in a Sydney garage on a $10,000 credit card debt.

The same US venture capital firm, Accel, invested between $70 and $110 million in the Australian online foreign exchange payments service OzForex in November.

Last month, Accel also invested $35 million in the Australian crowdsourced design site 99designs.

This month, it was revealed that online discounts giant Groupon acquired Melbourne-based group buying site Crowdmass for an undisclosed sum. It comes after Yahoo7 in January acquired group buying site Spreets.

“It’s awesome for the Australian industry – it’s a great validation of the technology we’ve built. If you look at the five or six major deals over the last 12 months, they’re all at least eight figures, probably some of them into the nine figures,” Cannon-Brookes said.

Sourced & published by Henry Sapiecha

Yahoo warns of weak 1st quarter

more cost cuts planned

A Yahoo billboard is seen in New York's Times Square October 19, 2010. REUTERS/Brendan McDermid

By Alexei Oreskovic

SAN FRANCISCO | Tue Jan 25, 2011 5:29pm EST

(Reuters) – Yahoo Inc warned revenue will again slide this quarter as traffic to the Internet portal drifts elsewhere and the company begins sharing search revenue with Microsoft Corp followed that with a declaration it is preparing its biggest year of hiring ever in 2011.

Yahoo has struggled to contain costs and jumpstart revenue growth while bleeding traffic to competitors such as Google and Facebook. It now ties up with Microsoft on search, hoping to keep a lid on expenses.

The company reported its third consecutive quarter of declining page views on its websites two years into the tenure of CEO Carol Bartz, who took over to try to revive its fortunes.

In October, Yahoo began outsourcing its search advertising service in the United States and Canada to Microsoft, in keeping with the 10-year search partnership the two sealed in 2009. Under the terms of the deal, Yahoo will share 12 percent of its search advertising revenue with Microsoft.

But Chief Financial Officer Tim Morse said Facebook competition was not hurting Yahoo’s display advertising business.

“All impressions aren’t created equal. With the big customers and branded advertisers, and the premium dollars being spent, we really aren’t seeing that kind of competition,” he said in an interview with Reuters.

MORE COSTS TARGETED

Morse told Reuters after Tuesday’s financial results were released that there were still more costs to come out of Yahoo in coming years.

Asked if that meant additional layoffs, Morse said: “Over the next few years, there will definitely be some more people who leave, there will be more people who are hired.”

Net revenue, which excludes revenue shared with website partners, totaled $1.2 billion in the three months ended December 31, compared with $1.26 billion in the year ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for $1.19 billion in net revenue.

And it projected that net revenue in the first quarter will range between $1.02 billion and $1.08 billion, compared with the $1.13 billion expected by analysts.

Its fourth-quarter earnings also lagged targets.

Yahoo said its net income in the fourth quarter was $312 million, or 24 cents a share, compared with $153 million, or 11 cents a share in the year ago period. Analysts polled by Thomson Reuters I/B/E/S were looking for 22 cents a share.

Yahoo shares were down at $15.53 in extended trading after closing out the regular session at $16.02.

Sourcd & published by Henry Sapiecha

Apple’s iGod is no messiah

January 25, 2011 – 11:57AM
Steve Jobs is a revered figure among his own company. But is this really a healthy thing?
Steve Jobs is a revered figure among his own company. But is this really a healthy thing?

The cult of the chief executive facilitates their money-grab, writes Aditya Chakrabortty.

What happened the last time you called into work sick? A sympathetic sentence from a colleague, possibly. Some quality time alone with the television, certainly. In due course came re-entry, with the brackish waters of the office closing overhead as swiftly as if you’d never left.

When Steve Jobs announced last week that he would be spending some time away from Apple, he promptly knocked $20 billion off the value of his employer. News of his sick leave made front pages and even had Wall Street analysts bemoaning the loss of a “genius”.

Jobs has always been the best repackager in the technology industry. Over the past decade, he’s alchemised the plain old MP3 player into the iPod, turned the corporate road warrior’s mobile-email-browser-whatever into the iPhone and transformed the ugly tablet PC into the iPad.

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And last week, even as he took medical leave, the Apple boss did it again, setting the seal on the transformation of the chief executive into the figurehead of his own corporate cult.

The man business hacks call iGod has been playing this game for decades. Down the years photos show him in that unchanging Boomer outfit of black mock turtlenecks and stonewashed denim – instant recognisability in an anonymous industry.

Then there are his gnomic utterances and the annual religious convention, the Macworld Expo in San Francisco, where Jobs regularly turns up to lay hands on his devotees. This is free advertising for a company that needs to flog its products by the millions, of course – but the cult also numbers Apple’s own staffers. “It’s Beatlemania,” one former executive told the New Yorker in 1997 just as Jobs turned up on the company’s Cupertino campus again, after 12 years away. The saviour was back.

True, before Jobs rejoined the fold, the question most commonly asked about the company he co-founded was how long it had left before making the corporate obituaries. Yet that doesn’t make its turnaround solely the work of one heavily-stubbled mastermind, who saved a company through his singular vision, taste and liberal use of the i- prefix.

The messiah talk ignores the fact that Apple has around 46,600 full-time employees and another 3000 temporary staff – including some of the best designers and marketers in the business.

Far from being a semi-mystical software visionary, Jobs is a ruthless office politician (during his long campaign to take back his company, reported the New Yorker in that 1997 article, one Apple alumnus warned: “Steve is going to f..k Gil [Amelio, the former CEO] so hard his eardrums will pop.”)

Nor does it take into account the way in which global supply chains minimise the role of any one individual, no matter how powerful. Take, for instance, the iPad: the display panel is probably from a Korean contractor, the backlight will have been knocked up by a Taiwanese firm and the GPS is likely to have been made in Germany. Then there is the battery (Chinese, perhaps), the flash memory (which could well be from Japan’s Toshiba) and the case (Taiwan, again).

Jobs is part of a widespread trend among chief executives to put themselves forward not as managers, but as leaders. Follow the coverage of the Davos summit this week and count the number of times a corporate finance officer for some accounting-software company or other is described as a business leader. Elite MBA programmes boast of how they will turn students into “change agents”.

As I type, the January 2007 cover of Harvard Business Review stares back at me. “The Tests of a Leader”, it blares, under a photo of some shirt-sleeved young Turk doing push-ups on a boardroom table.

“Managers do things right, leaders see the right thing is done,” said Warren Bennis, founding father of Leadership studies. The implication was clear: a manager was good at painting by numbers, but a business leader was more akin to Turner.

The result has been a tremendous boost in chief-executive power, according to Dennis Tourish, an academic at Kent University in south-east England. He points out that just before Enron imploded it was run like a cult, with Jeff Skilling exercising huge control and influence over who was recruited, how they worked – and who got laid off. And while Enron was an exception, Tourish points out that Jack Welch as boss of General Electric had similar power.

“Business leaders typically only have yes-men – no one to stand up to them.”

In the end what the leadership talk appears to add up to is an alibi for bosses taking much more money out of the companies they run. There is John Thain who, even as he ran Merrill Lynch into the wall, demanded it pay $US1.2 million to redecorate his office, including $35,000 for a “commode on legs”.

Then there is Mark Hurd, who ruled Hewlett-Packard with the iron law of pay for performance – until he was himself drummed out of office last August for alleged corporate malfeasance and took a severance package of $34.6 million. And in Britain, there is BP’s Tony Hayward receiving millions for his role in turning the Gulf oil spill from a tragedy into a farce.

Set against that lot, Jobs looks like an exemplar. But he is really the best example of an unhealthy trend.

Guardian News & Media

Sourced & published by Henry Sapiecha


Google to give outgoing

CEO Schmidt $100 million

January 24, 2011 – 8:29AM
Google chief executive, Eric Schmidt.Google chief executive, Eric Schmidt. Photo: Reuters

Google is set to give Eric Schmidt a $US100 million ($101.1m) equity award handshake as he hands over the chief executive officer job to co-founder Larry Page.

The award, which will include stock units and options will vest over four years and is Schmidt’s first such award since joining the company in 2001, a spokesperson said.

News of Schmidt’s equity award was first reported by Bloomberg.

In a surprise announcement last week, Google said Schmidt will take on the role of executive chairman in April and will be replaced as CEO by Google co-founder Larry Page.

The news came on the same day that Google reported earnings and revenue that blew past expectations.

But while Google has dominated internet search, it has struggled with social networking and is facing stiff competition from companies like Facebook and Twitter, which are stealing web traffic and engineering talent.

Schmidt said in an interview with Reuters that his move was not a reaction to competitors but an effort to speed up decision-making at the Internet giant.

Schmidt sells shares

In a regulatory filing last week, Google said that Schmidt in December drew up a plan to sell some of his stock in the company.

“The pre-arranged trading plan was adopted in order to allow Eric to sell a portion of his Google stock as part of his long-term strategy for individual asset diversification and liquidity,” the filing said.

As of December 31, Schmidt had about 9.2 million shares of Google stock and controlled 9.6 per cent of the company’s voting power. Schmidt plans to sell about 534,000 shares of Class A common stock – meaning he would continue to hold 8.7 million shares of Google stock and control 9.1 per cent of the company’s voting power.

Sourced & published by Henry Sapiecha

Cadadas pension funds splurge

$12bn on real estate in Australia

CANADA’S biggest pension fund has made investments worth about $6.7 billion in Australia in the past 1.5years.

The $137bn Canadian Pension Plan Investment Board is also committed to investing another $900 million with Goodman Group, including $595m for its share in the proposed takeover of the ING Industrial Fund (IIF) in a Goodman-led consortium.

It is the largest investor in Australia among global pensions, which have collectively put more than $12bn in Australian companies or assets in recent months.

Commenting on the IIF deal, Graeme Eadie, CPPIB senior vice-president, real estate investment, said the transaction was an opportunity to invest in a high-quality industrial property portfolio.

“It represents our largest real estate investment in Australia,” Mr Eadie said.

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This deal came within four weeks of CPPIB buying a 25 per cent stake in Westfield Stratford City for $700m. This is its second investment with the Australian shopping centre giant Westfield Group.

Its largest deal in Australia to date is toll road company Intoll, which it took over and delisted last month after shareholders approved its $3.5bn offer.

Intoll, the former Macquarie Infrastructure Group, was the second former Macquarie vehicle that CPPIB had acquired.

Its first acquisition was the former Macquarie Communications Infrastructure Group, for which it paid $2.2bn.

CPPIB, based in Toronto, is a professional investment management organisation that invests the funds not needed to pay current benefits. It has also invested with groups such as Dexus Property Group and Macquarie Global Property Advisers, a private equity group, and Colonial First State Global Asset Management.

It is thought to be close to acquiring an office tower in Lend Lease’s Barangaroo project, on Sydney’s waterfront.

CPPIB regularly co-invests with The Netherlands’ APG (Algemene Pensioen Groep, or “all pensions group”) such as in the Goodman consortium in which APG has a 25.2 per cent stake.

APG is also a 25 per cent owner of Westfield Stratford City in Britain and also has a third interest in the Westfield UK Shopping Centre Fund. One of APG’s first investments in Australia is a 40 per cent stake in a Valad fund, which owns Goldfields House, in addition to also owning an undisclosed stake in the unlisted Valad Core Plus Fund.

APG also has an investment in an unlisted GPT fund.

While APG declines to comment on specific investments, its head of strategic real estate in Asia, Daan van Aert, said Australia was an attractive area for real estate primarily due to the stable economic growth, strong regulatory framework and because it is a transparent market. “We are at our target exposure for Australia,” Mr van Aert said. “As such, we are currently more focused on asset management and recapitalisations of our existing portfolio.”

He said APG’s strategy was to set up local partnerships with the strongest real estate managers in the world, such as Westfield and Goodman Group from Australia.

Another Dutch pension fund, PGGM, last month invested $262m in the new Lend Lease Social Infrastructure Fund in Britain. PGGM holds $1bn in Westfield notes, secured on six shopping centres.

Global pension funds including those from Malaysia, Korea, Canada and Sweden have recently stepped up investment as they seek out countries with solid economic growth to invest in search of a stable future income stream.

While some chose to partner with the likes of Goodman Group, Colonial First State Global Asset Management, Westfield, Lend Lease or GPT Group, others opt for direct investment.

Korea’s National Pension Scheme, Malaysia’s Permodolan Nasional, Switzerland’s Swiss pension group AFIAA and Germany’s Deka Immobilien have all bought Australian office blocks.

Additionally, an unknown number of pension funds invest through global fund managers, like the Chicago-based LaSalle Investment Management; the Hong Kong-based CLSA Capital Partners; CBRE Investors; or Sweden’s SEB Asset Management.

As members’ contributions pile up around the world — just as in Australia — international property consultant DTZ recently estimated that $US281bn of new capital would be available for investments this year, up 22 per cent from a year ago.

China, Australia and India would attract about 15 per cent of that capital, said a recent DTZ report.

Jonathan Thompson, KPMG’s head of global real estate, who was in Sydney recently, said more pension funds would start to put their money in real estate. For instance, he said Norway changed its laws in March last year to allow the Norwegian Government Pension Fund, which manages $US520bn, to invest in real estate.

Alistair Meadows, regional director of international capital group Jones Lang LaSalle, said the next wave of investment would come from Asian pension funds.

By 2020, he said Asian pension funds were expected to have assets totalling $4.3 trillion.

Since 2009, South Korea’s National Pension Scheme, which invests the pension contributions of about 18 million people, had acquired $3.6bn of prime real estate in London; Tokyo, Berlin and Sydney, he said.

In Australia, NPS bought Aurora Place, a blue-chip CBD tower, for $635m.

On his recent visit to Seoul, Mr Meadows met several second-tier Korean pension funds — the equivalent to industry funds in Australia — that were keen to follow NPS’s footsteps overseas.

“We believe that most pension funds are underweight to real estate, especially in Japan and Korea,” Mr Meadows said.

“In 2011, we expect to see them in Australia looking for direct acquisitions; co-investment with an Australian partner or indirectly through unlisted Australian property funds.”

While the established pension funds will have between 5 per cent and 10 per cent of their investment in property, Mr Meadows said most Asian pension funds had no allocation or less than 5 per cent of their assets in property.

DTZ associate director Aurelo Dinapoli said pension funds were keen to deploy their capital in key Australian cities — Sydney and Melbourne.

“We represented Chinese pension funds looking for Australian assets,” Mr Dinapoli said.

“Money is not an issue for this group. They have  lots of money to invest.”

He said that typically a pension fund looked to invest between $200m and $300m on its first investment in Australia.

Rick Butler, senior managing director of CB Richard Ellis, has facilitated several sales, including most recently the $113m purchase of 737 Bourke Street by Malaysian pension group KWAP.

Mr Butler said these buyers were interested in direct assets or in “club” deals with small numbers of like-minded investors.

Some consultants believe that the high Australian dollar may reduce the flow into Australia.

APG’s Mr van Aert said: “The general policy is hedging currency exposures, and as such the hedging cost is factored into our investment returns and decisions.”

Sourced & published by Henry Sapiecha

Tower insurance shares soar 42%

on directors’ Dai-ichi nod

December 29, 2010

Australia Tower Group shares surged 42 per cent to a record high as investors supported an all-cash takeover offer from the company’s Japanese cornerstone investor Dai-ichi Life Insurance.

Tower said today its directors recommended shareholders accepted Dai-ichi’s $4 per share, or $1.2 billion, offer to buy all shares it does not already own in the specialist life insurer.

The stock touched $3.88 – Tower’s highest-ever share price since splitting from New Zealand-based Tower in December 2006 – before closing up $1.14, or 41.8 per cent, at $3.87.

Over 20 million shares were traded during the day, Tower’s best daily turnover since October 2008.

IG Markets strategist Ben Potter said the hefty 46.5 per centage  premium to the Christmas Eve closing share price of $2.73 would have ruled out a competing offer.

‘‘I’d be expecting no other bidders around that price,’’ Mr Potter said.‘‘I don’t think people wouls have to think too long and hard about selling their shares at $4.’’

Dai-ichi’s offer to buy the remaining 71.04 per cent of Tower, made yesterday, valued all of Tower at $1.76 billion.

Dai-ichi general manager of international business management department, Takayuki Kotani, said the deal allowed Japan’s number two life insurer to increase its geographic diversification in the Asia Pacific region.

Mr Kotani described Tower as a profitable, growing company with good management and he flagged having a greater presence in Australia in the time ahead.

‘‘Beginning with this investment, Dai-ichi will strengthen its commitment to Australian marketplace over a period of time,’’ Mr Kotani said in a statement.

Dai-ichi, which bought its stake in Tower in August 2008 for $376.3 million and also holds insurance interests in Vietnam, Thailand and India, indicated it wished to keep the Australian insurer’s current management and independent directors in place.

Tower chairman Rob Thomas said the independent directors believed that the offer represented a ‘‘compelling premium and a highly attractive outcome’’ for shareholders.

Managing director Jim Minto said having Dai-ichi as a cornerstone shareholder for the past two years had been of great benefit to Tower’s business partners and customers.

‘‘Dai-ichi is a major life company and there is a strong natural fit that will allow continued benefits to flow for Tower’s customers, staff and business partners,’’ Mr Minto said in his statement.

Dai-ichi listed on the Tokyo stock exchange in April this year, after an initial public offering that raised $US11 billion ($10.92 billion).

Tower’s yearly results, released last month, showed the specialist life insurer’s net profit rose 88 per cent to $87.4 million in fiscal 2010 and a return on capital of 10.3 per cent.

The company did not release earnings guidlines, but said at the time it was targeting an 11 per cent return on capital in fiscal 2011 and a 13 per cent return in three years.

The directors’ recommendation of the Dai-ichi bid, which would be via a scheme of arrangement, is subject to the absence of a superior proposal and the outcome of an independent expert’s report.

It also requires court approval, the go-ahead of Tower shareholders, as well as the go ahead from Australian and Japanese authorities.

Sourced & published by Henry Sapiecha