Complex Smartphones Are the Latest Patent Battleground

By Olga Kharif

A spate of patent lawsuits in the mobile-phone market could push up costs for handset makers—and consumers

The patent wars are raging in the mobile device market, and they could result in rising costs for handset makers and higher gadget prices for wireless carriers and consumers. So far this year, Apple and HTC—two of the most innovative smartphone makers—have become embroiled in more patent-related litigation than in all of 2007, and they are on track to beat their own 2008 and 2009 records, according to Bloomberg data.

On May 7, Nokia (NOK) lodged a patent infringement suit against Apple in Madison, Wis., that said Apple's iPhone and iPad violate five Nokia patents. In just seven months, the companies have exchanged five suits and countersuits. The tussle began in October 2009 when Nokia accused Apple of infringing on 10 patents and demanded royalties.

In March, Apple (AAPL) sued Taiwan-based HTC (2498:TT), alleging it infringes on 20 Apple patents relating to touch and menu controls. The latest legal volley came May 12 when HTC responded to the Apple litigation with a complaint at the U.S. International Trade Commission, asking the agency to halt imports and sales of iPhones and iPads in the U.S. "We are taking this action against Apple to protect our intellectual property, our industry partners, and most importantly our customers that use HTC phones," Jason Mackenzie, a vice-president at HTC, said in a statement.

Microsoft (MSFT) is also pursuing patent payments from companies that make phones based on Android software. On Apr. 27, Microsoft said HTC will license its software for the phones. The terms haven't been disclosed. Patents also played a role in the recent $1.2 billion deal for Palm. Hewlett-Packard (HPQ) has said that patents associated with Palm's WebOS operating system for smartphones is one reason it wants to acquire Palm (PALM). "This landscape looks like France in 1914," says Eben Moglen, a professor at Columbia Law School. "This is the onset of a period of instability."

Revenue Pie

Patent holders want a larger slice of smartphone revenues, which grew 27 percent to $61 billion in 2009 and are on track to grow another 30 percent this year, according to Boston-based consultant Strategy Analytics. And the companies that want a slice come from not only the phone but also the PC and software industries, whose inventions and functions smartphones increasingly absorb.

Each industry has its own unique functionality to protect: Apple holds many patents related to computing, applications, and touch technologies, which have been a hit in the iPhone. Nokia holds rights to many of a telephone's communications capabilities, while Microsoft owns a wealth of patents related to mobile device software. As companies seek to keep their technological acumen away from rivals—or to collect patent royalties from those rivals—the lawsuits are piling up. "Whenever industries merge, there may be patent litigation," says Gustav Brismark, vice-president for patents strategy and portfolio management at Swedish telecom gearmaker Ericsson (ERIC), which holds many wireless connectivity patents.

One camp under attack: Manufacturers building phones with Android software, created by a coalition of companies led by Google (GOOG). They are a target, in large part, because of their success. In the first quarter, Android phones accounted for 28 percent of all smartphone unit sales in the U.S., ahead of Apple's 21 percent, according to consultant NPD Group. In its March complaint to the International Trade Commission, Apple said several of HTC's Android phones infringe on its patents, some of which relate to how an operating system works and handles applications. Apple also sued HTC in federal court in Delaware, alleging patent infringement.

European Stocks Gain as Sainsbury, BT Climb; Asian Shares Rally

By Sarah Jones

European stocks climbed for a second day after SAP AG announced a $5.8 billion acquisition and earnings from J Sainsbury Plc and BT Group Plc beat analysts’ estimates. Asian shares advanced.

Software AG and Cap Gemini SA advanced at least 1.5 percent as SAP, the world’s biggest maker of business-management software, agreed to buy Sybase Inc. Sainsbury rose 2.6 percent after the supermarket chain more than doubled profit. BT, the U.K.’s largest phone company, surged the most since July.

The benchmark Stoxx Europe 600 Index increased 0.4 percent to 257.5 at 9:45 a.m. in London. The measure has rallied 8.5 percent this week after the European Union unveiled a 750 billion-euro ($949 billion) financial assistance package aimed at stopping the region’s fiscal crisis from spreading and the U.K. and Spain pledged to shrink their budget deficits.

There is a “good fundamental backdrop that is producing the earnings that we are now seeing,” Mike Lenhoff, who helps oversee about $35.5 billion as chief strategist at Brewin Dolphin Securities Ltd. in London, said in a Bloomberg Television interview. “It’s coming through in terms of top-line growth and it is one of the reasons that markets are now responding as they are.”

In Asia, the benchmark MSCI Asia Pacific Index jumped 1.7 percent, led by computer-related companies after earnings from Tokyo Electron Ltd. to Tencent Holdings Ltd. boosted confidence in the industry. Futures on the Standard & Poor’s 500 Index were little changed before a report on U.S. jobless claims.

SAP Acquisition

Software AG, Germany’s second-largest software maker, climbed 3.2 percent to 88.69 euros after SAP agreed to acquire Sybase to help it fend off competition from Oracle Corp. Cap Gemini, Europe’s biggest computer-services company, rose 1.5 percent to 39.92 euros.

Sybase shareholders will receive $65 a share, 56 percent higher than the closing price of $41.57 on May 11, before the deal discussions became public. Sybase, the maker of the Sybase IQ database management software, soared 35 percent yesterday on the New York Stock Exchange, its biggest one-day gain since the company sold shares to the public in 1991. SAP shares slipped 2.5 percent to 35.16 euros today.

Sainsbury climbed 2.6 percent to 336.4 pence after the U.K.’s third-largest supermarket chain said profit more than doubled to 585 million pounds ($870 million) as it added convenience stores to win shoppers and attributed a higher value to its property asse

Sainsbury Earnings

Pretax profit, excluding one-time gains and losses, increased 18 percent to 610 million pounds, beating the median 598 million-pound estimate in a Bloomberg survey of analysts.

BT soared 8.6 percent to 130.8 pence, the biggest intraday jump since July 30. The phone company said fourth-quarter operating profit rose 16 percent to 1.53 billion pounds, boosted by job cuts. Operating profit had been estimated at 1.44 billion pounds on revenue of 5.17 billion pounds, according to a Bloomberg survey.

DSG International Plc advanced 7.8 percent to 30.5 pence, the most since November, after the owner of Currys and PC World stores reported an 8 percent gain in underlying group sales. The company also said it has a new revolving credit facility.

3i Group Plc soared 6.5 percent to 285.7 pence after Europe’s largest publicly traded private-equity firm reported a greater-than-estimated increase in value of its holdings. Net asset value per share climbed to 321 pence at the end of March from 279 pence a year earlier.

Credit Agricole SA declined 1.7 percent to 10.49 euros. France’s largest bank by branches reported first-quarter net income of 470 million euros, missing the median estimate of 511 million euros in a Bloomberg survey.

A U.S. Labor Department report at 8:30 a.m. in Washington may show initial claims for jobless benefits fell by 4,000 last week to 440,000, according to a Bloomberg survey of economists.

France's Carrefour announces first wholesale outlet in India

French supermarket giant Carrefour, the world's second largest retailer, said Tuesday that it would soon open its first wholesale store in India, without a local partner.

Carrefour has been trying to break into India's 500 billion dollar retail sector for years and hopes the wholesale outlet in New Delhi will lead to a string of hypermarkets for consumers in the rapidly developing country.

We are starting our 'cash and carry' business in India as the government allows 100 percent foreign investment in this segment," Jean Noel Bironneau, general manager of Carrefour India, told reporters.

"So far FDI (foreign direct investment) is not relaxed (enough) for us to launch a hypermarket," he said. "The market in India is booming but we have to be cautious and have decided to start with our 'cash and carry' business first."

Bironneau said the first wholesale store would be 5,500 square metres (60,000 square feet) and would open in New Delhi this year.

India's tight foreign investment rules allow no overseas chains in the retail sector -- except for single-brand outlets such as Nokia or Reebok -- to protect local retailers.

Foreign groups such as Wal-Mart or Carrefour can only be wholesalers. Wal-Mart has teamed up with India's Bharti telecoms group and Britain?s Tesco has an alliance with the Indian tea-to-steel Tata Group.

Carrefour has been consistently linked to India's Future Value Retail, a unit of Pantaloon Retail run by businessman Kishore Biyani, and said on May 4 that it was still on the lookout for a partner.

"We are keen to open hypermarkets and are open to partnerships. We are also looking at giving out franchisees in India," Bironneau said at the launch of a Carrefour greenhouse nurseries project at a farm outside Delhi.

The wholesale store in Delhi will source 90 percent of its products from within the country and employ 300 people, Bironneau said.

Gold steadies near record

Gold held steady on Thursday after hitting another record near $1,250 an ounce the previous day on continued worries about euro zone debt, while the world's largest gold-backed ETF reached a new all-time high.

FUNDAMENTALS

Spot gold was at $1,236.85 an ounce by 0033 GMT, up 50 cents from New York's notional close on Wednesday, when it roared to record $1,248.15 on worries that a $1 trillion European rescue package will not solve the euro zone debt crisis.

* The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at a record high of 1,209.499 tonnes as of May 12, up 17.3490 tonnes from 1,192.150 tonnes in the previous business day.

U.S. gold futures for June delivery fell $6.2 an ounce to $1,236.9 an ounce.

MARKET NEWS

* U.S. stocks capped their best three-day run in 10 months on Wednesday boosted by technology and industrial shares, after Spain unveiled an austerity plan that reassured investors Europe was addressing its fiscal ills. (.N)

* Japan's Nikkei average rose 1.4 percent on Thursday led by exporters such as Advantest (6857.T), after Spain outlined measures to cut its deficit, easing fears that the Greek debt crisis could spread in Europe and sending European and U.S. stocks higher. (.T)

* The euro fell against the U.S. dollar on Wednesday as worries about euro zone economic growth blunted optimism about Spain's spending cuts and a successful bond sale in Portugal.

Japan’s Nikkei Falls, Led by Banks; Sony Drops on Stronger Yen

By Akiko Ikeda and Satoshi Kawano Businessweek

Japan’s Nikkei 225 Stock Average fell, led by banks on concern they will need to raise more capital, and as a stronger yen dragged down electric-appliance makers.


Mizuho Financial Group Inc., the nation’s No. 3 bank by market value, slid 1.2 percent. Mitsubishi UFJ Financial Group Inc., which holds about 20 percent of Morgan Stanley, dropped 2.4 percent, after the Wall Street Journal said U.S. prosecutors are investigating the New York-based bank. Sony Corp., the maker of Bravia televisions and that gets more than 70 percent of its sales abroad, lost 1.6 percent. Toyota Motor Corp. jumped 2.7 percent as the world’s largest carmaker forecast a higher profit.

Japanese banks need to reinforce their financial structures, which pale compared with those in other countries,” said Gentoku Kiyokawa, a fund manager in Tokyo at Fortis Investments. “A further weakening of the euro seems unavoidable as sovereign risks will likely increase in Europe.”

The Nikkei 225 sank 0.2 percent to 10,394.03 at the 3 p.m. close in Tokyo, after gaining as much as 0.9 percent. The Topix rose 0.1 percent to 932.83, with eight stocks falling for every seven that rose.

The Topix has gained 2.8 percent in 2010, compared with a 3.6 percent increase by the Standard & Poor’s 500 Index and a 0.4 percent slide by the Stoxx Europe 600 Index. Stocks in the Japanese benchmark are valued at 18.5 times estimated earnings, compared with 14.3 times for the S&P and 11.9 times for the Stoxx.

Banks were the biggest drag on the Topix on speculation Mizuho will sell 1 trillion yen ($11 billion) in shares. They extended declines after the Wall Street Journal reported Morgan Stanley is being probed by U.S. federal prosecutors over allegations it misled investors about mortgage derivatives.

Mizuho, Mitsubishi UFJ

Mizuho Financial Group fell 1.2 percent to 161 yen, a level not seen since Dec. 15. Mitsubishi UFJ, Japan’s largest publicly traded bank, dropped 2.4 percent to 449 yen. Sumitomo Mitsui Financial Group Inc., the nation’s No. 2, lost 0.6 percent to 2,798 yen.

“Banks have poor growth potential, so they cannot be mid- and long-term targets for investment,” Fortis Investments’ Kiyokawa said.

Sony slumped 1.6 percent to 3,040 yen, the lowest in three months. Fanuc Ltd., a maker of industrial robots that derives 80 percent of its revenue outside Japan, dropped 1.5 percent to 9,950. Daikin Industries Ltd., the world’s second-biggest air conditioner maker, fell 0.8 percent to 3,235 yen.

Yen Appreciates

I’m worried about the yen’s trend against the euro because the current level of the yen is higher than the levels projected by exporters,” said Hiroichi Nishi, an equities manager in Tokyo at Nikko Cordial Securities Inc.

The yen appreciated to as much as 116.57 against the euro from 117.66 in intraday trading. Against the dollar, the Japanese currency strengthened to as much as 92.44 from 92.94. The stronger yen reduces income when overseas revenue is converted into local currency.

Olympus Corp. tumbled 7.7 percent to 2,418 yen. The stock was the largest decliner in the Nikkei. The endoscope maker forecast net income will fall 56 percent to 21 billion yen this fiscal year. JPMorgan Chase & Co. analyst Hisashi Moriyama lowered his rating on the company to “underweight” from “neutral” and reduced a 12-month share price estimate 15 percent to 2,300 yen.

Stocks advanced in early trading, led by companies from Toyota to NTT Data Corp. which forecast profit increases.

Toyota Earnings Outlook

Toyota, which rallied 2.7 percent to 3,590 yen, was the biggest contributor to gains in the Topix. The automaker forecast profit to rise 48 percent to 310 billion yen ($3.35 billion) this fiscal year as it recovers from record North American recalls and expands sales in China and other Asian markets.

NTT Data, a network services provider, soared 11 percent to 357,000 yen, the biggest climb in the Nikkei. The company said full-year net income will rise 32 percent to 47 billion yen in the year started April 1. The company’s rating was increased to “buy” from “neutral” at UBS AG.

“The upward momentum for corporate earnings will continue and that’s where investors will focus,” said Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees about $64 billion.

Morgan Stanley’s Gorman Says No Substance to CDO Allegations

By Takahiko Hyuga and Finbarr Flynn Businessweek

Morgan Stanley Chief Executive Officer James Gorman said there is “no substance” to any allegations that the U.S. bank misled investors about mortgage derivatives it sold them.

Gorman, speaking at a press conference in Tokyo today, made the comment when asked about a Wall Street Journal report that U.S. federal prosecutors are investigating Morgan Stanley transactions in so-called collateralized debt obligations. He added that the firm hasn’t been contacted by the U.S. Justice Department.

“We have no reason to believe there is any substance behind any investigation that appeared in the Wall Street Journal article,” Gorman said.

Morgan Stanley arranged and sold CDOs backed by home loans, even as its trading desk would sometimes bet that their value would fall, the Journal said, citing traders. The investigation is reviewing whether Morgan Stanley clearly represented its roles, according to the report.

The probe, which is at a preliminary stage, marks deepening scrutiny of Wall Street firms by U.S. regulators following the global financial crisis, the Journal said. Rival Goldman Sachs Group Inc. is contesting a fraud lawsuit from the U.S. Securities and Exchange Commission, which alleges the firm misled investors about a mortgage-linked security in 2007.

Spokespeople for the Manhattan U.S. Attorney’s office and the SEC declined to comment, the Journal said.

Dead Presidents’

The probe stemmed from an ongoing civil-fraud investigation of more than a dozen Wall Street firms’ mortgage bond businesses by the SEC that began in 2009, the newspaper said. The Manhattan U.S. Attorney’s office is now conducting a criminal probe into some of those firms’ activities, it said.

The government frequently begins criminal investigations without filing charges, the Journal said. In bringing criminal charges, the government would need to prove beyond a reasonable doubt that the firm or its employees misled investors, it said.

Two of the transactions being probed were named after U.S. Presidents James Buchanan and Andrew Jackson, and were called the “Dead Presidents” deals by traders, the WSJ said, citing a person familiar with the matter. Morgan Stanley arranged and bet against the deals, and didn’t market them to clients, it said.

The firm made money on the two transactions, though it lost $9 billion on mortgage-related investments in 2007, the newspaper said. Morgan Stanley wasn’t among the biggest firms in the CDO market, it said.

Stock Picks: Apple, Green Mountain, Priceline, Primerica

Apple Inc. Kaufman Bros. equity analyst Shaw Wu reiterated a buy rating on shares of Apple Inc. (AAPL) on May 11. He raised a price target on the shares to $320 from $315.

In a note, Wu said that his sources indicate that sales momentum for the company's line of personal computers is "strong", helped by a recent updating of the MacBook Pro to the new Intel Arrandale processor. Wu said he believes the company's Mac business is tracking to its third consecutive quarter of year-over-year unit growth of greater than 20%, indicating further market share gains.

"We are also picking up that the iPad continues to do better than expected," the analyst said, with "surprisingly strong" momentum of the iPad 3G, which sells at a $129 premium to the Wi-Fi only version.

Wu raised his forecasts for the fourth quarter to $14 billion in revenue and $2.90 in earnings per share (EPS) from $13.3 billion and $2.65, respectively; for fiscal 2010, to $58.7 billion in revenue and $13.20 in EPS from $57.5 billion and $12.75; and for fiscal 2011, to $67.5 billion in revenue and $15.00 in EPS from $65.8 billion and $14.45.

"We continue to believe that AAPL is positioned to outperform in this tough macroeconomic environment," the analyst wrote.

Green Mountain Coffee Roasters Inc.: Janney Montgomery Scott equity analyst Mitchell Pinheiro reiterated a buy rating and $115 fair value estimate on shares of Green Mountain Coffee Roasters Inc. on May 11.

Green Mountain, based in Waterbury, Vermont, announced on May 10 that the FTC has closed its investigation concerning the company's tender offer for Diedrich Coffee Inc. (DDRX). The company said that it had obtained Hart-Scott-Rodino antitrust requirements, and its $35 per share tender offer for Diedrich expired May 10. Green Mountain will acquire Diedrich for approximately $295 million.

Diedrich makes prepackaged coffee cups, known as K-cups, used in the Keurig brewing equipment produced by Green Mountain.

"We expect the transaction to close in a matter of days," Pinheiro wrote in a note. He said the acquisition is expected to be neutral to Green Mountain's EPS in fiscal 2010, which he estimates at $2.05. He expects the deal to add 20 cents per share to its fiscal 2010 EPS; he raised his forecast to $3.40 from $3.20.

"We believe the completion of the acquisition removes some of the uncertainty clouding the stock, and with the meaningful earnings accretion from DDRX, should reverse some of the negative momentum in the shares following the strong, but largely misunderstood, second quarter," the analyst wrote.

Pinheiro noted that a three-for-one stock spilt on the company's common shares will be distributed on May 17.

Priceline.com Inc.: Standard & Poor's equity analyst Scott Kessler reiterated a hold rating and $250 price target on shares of Priceline.com Inc. (PCLN) on May 11.

On May 10, Priceline, the second- biggest online travel agency, forecast sales and profit that fell short of analysts' estimates, after the euro weakened and a political crisis in Greece threatened consumers' travel plans. Excluding some costs, second-quarter profit will be $2.50 to $2.70 a share, the company said in a statement. Sales will be no more than $742.6 million. Analysts surveyed by Bloomberg had estimated, on average, profit of $2.82 a share and sales of $755.9 million.

First-quarter profit excluding some costs rose 70 percent to $87.2 million a year earlier, the company said. Sales increased 26 percent to $584.4 million.

In a posting on the S&P MarketScope service, Kessler said that the company's first-quarter EPS of $1.06 was 6 cents above his forecast. He noted that revenue growth came on continuing strength in the international hotel business. He said that growth decelerated from the fourth quarter, reflecting the impact of the Icelandic volcano and civil unrest in Thailand, factors which will likely affect second-quarter results. Rental car days declined and airline tickets sold rose only 3%, the analyst said.

"While we believe PCLN executed well, we think macroeconomic uncertainty in Europe and a weakened euro will make notable outperformance more challenging," Kessler wrote

Telefonica Makes $7.3 Billion Unsolicited Vivo Bid (Update2)

By Crayton Harrison and Paul Tobin Bloomberg

Telefonica SA, Europe’s second-largest phone company, made an unsolicited bid to buy out its Portuguese partner in a venture that controls Brazil’s biggest wireless carrier for 5.7 billion euros ($7.3 billion). The offer, rebuffed by Portugal Telecom SGPS SA, values the carrier, Vivo Participacoes SA, at about 140 percent higher than its market capitalization. Lisbon-based Portugal Telecom’s board unanimously rejected the bid, saying on its website that the Brazilian carrier is core to its strategy.

“It’s the only shot Portugal Telecom has at long-term growth,” said Peter Lyons, an analyst at Oscar Gruss & Son Inc. in New York. “If Telefonica does come back with another offer, it’s going to have to be something with shock value to create a rift between the shareholders and the management.” The bid fueled speculation the two companies will battle for control of the leading carrier in South America’s biggest mobile-phone market, where the number of subscribers is projected to grow 11 percent this year. The offer builds on Telefonica’s strategy of countering slowing growth in Europe through acquisitions in Latin America, where the company has spent more than $50 billion since the 1990s.

Telefonica fell as much as 3.9 percent. The shares slid 3.6 percent to 16.18 euros as of 10:39 a.m. in Madrid. Portugal Telecom soared 9.8 percent to 7.81 euros in Lisbon

Disappointed’

“We are disappointed with the initial response of Portugal Telecom,” said Telefonica spokeswoman Marisa Navas. “This is a very positive offer for the shareholders of Vivo, Portugal Telecom and Telefonica.”

An offer of 8 billion euros might be enough to persuade Portugal Telecom’s investors to push for a sale, said Lyons, who advises holding on to Vivo shares. Telefonica could also seek other acquisitions in Brazil’s mobile market such as TIM Participacoes SA, the third-largest wireless carrier behind Vivo and Carlos Slim-controled America Movil SAB, Lyons said.

A spokesman for Vivo in Sao Paulo, who asked not to be named because of internal policy, declined to comment.

The offer, expiring on June 6, values Vivo at almost 32 times projected earnings for 2010, according to Credit Suisse Group AG analyst Andrew Campbell. That’s in line with multiples at which shares of Latin American telecommunications companies trade, according to data compiled by Bloomberg.

GVT Failure

Spain’s Telefonica offered to buy half of Brasilcel NV, the unlisted joint venture with Portugal Telecom that owns about 60 percent of Vivo. The Brazilian carrier had 30 percent of the nation’s 179 million wireless subscriptions at the end of March, according to Anatel, the country’s phone regulator.

Failure to seal the deal would mark the second disappointment for Telefonica in Brazil in the past year. Telefonica lost out to France’s Vivendi SA in a takeover battle last year for land-line phone company GVT (Holding) SA. The Madrid-based company controls Telecomunicacoes de Sao Paulo SA, which offers home-phone and Internet service in the state of Sao Paulo.

Combining the operations of that company with Vivo could save 3 billion euros a year in costs, Credit Suisse’s Campbell said last month in a note to clients.

Telefonica said if Portugal Telecom accepted its bid, it would buy outstanding common shares of Vivo for 600 million euros. That would value those shares at about 86 reais ($49) a share, according to Credit Suisse estimates, or double their closing price of 43.50 reais in Sao Paulo trading yesterday.

Carlos Slim

Vivo’s preferred shares, which are not included in Telefonica’s offer for outstanding shares and have limited voting rights, rose 5.6 percent to 45.50 reais yesterday.

Telefonica’s offer follows America Movil’s $24.5 billion plan, announced in January, to take over Telmex Internacional SAB to combine its wireless and land-line operations in Brazil. America Movil and Telmex Internacional are both controlled by billionaire Carlos Slim.

Portugal Telecom has counted on Brazil to spur revenue as growth in Europe has slowed and competition increased at home. The company’s Brazilian sales increased 4.1 percent to 3.23 billion euros last year, while revenue from Portugal declined 1.9 percent.

Brazil’s wireless market will expand 11 percent to 193 million subscribers this year, down from 15 percent growth in 2009, according to a Banco Santander SA research note last month

Barclays Settles Lawsuit Over Merrill Hire Fee, Headhunter Says

By Andrea Tan Bloomberg

May 11 (Bloomberg) -- Barclays Plc agreed to settle a lawsuit in Singapore with Pagoda Partners Pte. for failing to pay a S$365,000 ($264,000) fee for a banker it hired from Merrill Lynch & Co., according to the recruiter.

Pagoda partner Nick Burnham said today that he was “happy” with the out-of-court settlement, declining to reveal terms because of a confidentiality agreement. Pagoda filed a notice of discontinuance on May 7, court papers show. Timothy Cuffe, a Hong Kong-based spokesman for the London-based bank, declined to comment.

Pagoda had sued Barclays after the executive search firm sent the bank Timothy Last’s resume in January 2009 and wasn’t paid. Last, Barclays Capital’s head of equity derivatives flow sales for Asia, excluding Japan, was hired as a direct referral after Singapore-based Pagoda failed to set up a meeting, Barclays had said in its court filing, adding that there wasn’t an agreement with the recruitment firm.

“It’s always better to settle than pursue the legal route with big clients,” said John Koh, managing director at WMRC Pte. in Singapore, a finance industry recruitment firm. “Relationships matter a lot in this industry and it’s wiser to try and preserve them.”

Pagoda said in a February court filing that it was entitled to its fee, equivalent to 25 percent of Last’s total annual gross remuneration of S$1.46 million. Last was paid HK$2.7 million ($347,000) in his first year, including a salary of HK$1.65 million and HK$1.05 million in allowance, Barclays said.

Last, based in Hong Kong, was hired to help accelerate the expansion of Barclays Capital’s equity business in Asia, one of its key priorities, David Campbell, head of North Asia distribution at the securities unit, said in a May 18 statement.

The case is Pagoda Partners Pte. Ltd. vs Barclays Bank Plc, S977/2009 in the Singapore High Court.

Toyota quarterly profit $1.2 bln as sales recover

By YURI KAGEYAMA, AP Business

TOKYO – Toyota cruised back to profit in the latest quarter as the world's top carmaker cut costs and hitched a ride on the global auto sales recovery while fighting to salvage its reputation for quality.

Toyota Motor Corp. said Tuesday that January-March profit totaled 112 billion yen ($1.2 billion) compared with a 766 billion yen loss the year before.

Quarterly revenue jumped to 5.28 trillion yen ($57 billion) from 3.54 trillion yen a year earlier, when purchases of cars and other vehicles were slumping amid the global financial crisis.

Toyota is forecasting even better results for the fiscal year through March 2011, projecting annual profit to rise 48 percent to 310 billion yen ($3.3 billion).

Whether the world's biggest automaker can continue its recovery rests in part on salvaging its reputation after recalling more than 8 million cars worldwide for faulty gas pedals, a braking software glitch, faulty floor mats and other defects.

On Monday, the U.S. National Highway Traffic Safety Administration said it is carrying out a new investigation into Toyota to see whether it had stalled on a recall for a steering defect in 2005 in the U.S. It had carried out recalls for similar problems in Japan in 2004.

Toyota has already paid a maximum fine of $16.4 million for dallying on a recall for acceleration problems, and NHTSA could slap it with a fine of up to that amount again over the steering issue.

U.S. Transportation Secretary Ray LaHood, who is in Japan to visit Toyota and inspect high-speed trains, said Monday that additional fines may be levied against Toyota.

President Akio Toyoda, who is the grandson of the automaker's founder, said Tuesday the company was cooperating with the investigation, but did not elaborate.

Toyoda, appointed president in June last year, acknowledged that his job was similar to steering a ship in the middle of a storm. He said the ship was sailing toward what appeared to be sunny skies because employees were working together 'in one spirit."

"I feel that I am now at last standing at the starting point with the latest earnings," he told reporters at Toyota's Tokyo office. "This year will mark a new beginning for Toyota."

Toyota managers have given up their bonuses since the global fallout from the collapse of investment bank Lehman Brothers sent the automaker into the red.

Toyoda said that will continue and they will also return a portion of their monthly salaries to take responsibility for the recall mess, although he did not give figures.

The latest results appear to show Toyota has managed to contain the damage from the spate of recalls — at least, so far.

Toyota officials said the company spent 100 billion yen on recall-related measures, and lost between 70 billion yen and 80 billion yen in sales during the year ended March 31.

They were vague about such damage for the current year, except to say Toyota estimates spending 80 billion yen for incentives to boost sales.

Although sales have held up in recent months, much of that came from unprecedented incentives to lure customers in North America as well as growth from fast-growing Asian nations like China.

For the fiscal year through March 31, Toyota posted a 209 billion yen ($2.3 billion) profit, a dramatic reversal from a 437 billion loss in the previous fiscal year, which was the automaker's worst annual red ink since being founded in 1937.

The annual results were much better than analysts' forecasts and Toyota's cautious, internal forecast for an 80 billion yen profit.

Global sales for the year ended March 31 totaled 7.24 million vehicles, down 4 percent from the previous year. Toyota is expecting that to improve to 7.29 million for the current fiscal year.

Toyota is forecasting revenue to improve 1.3 percent to 19.2 trillion yen for the year through March 2011, from 18.95 trillion yen for the year ended March 31. That had marked a 7.7 percent decline from the previous year.

Toyota said it has figured in costs for recall-related expenses in its forecasts for the current fiscal year.

"To achieve further profit recovery, what we need to do is offer high quality, reasonably priced vehicles," said Toyoda, while stressing that tough times were likely to continue.

Toyota's stock price slipped 0.7 percent to 3,495 yen in Tokyo.

Today Business Starup Project Distribution Warehause

Hi everyone My name is Seit Eren and today I'll present you a distribution startup project look what you need to start this business.

Homebased and e-businesses provide products that need warehousing and distribution. Starting this service requires planning, organization and an entrepreneur looking to help other businesses.

Distribution Warehause

Startup Costs : 10 000 euro- 50 000 euro

Business Overview

Homebased businesses and the internet have created a booming market for distribution and warehousing services. Why? Because homebased and cyberventures generally don't have the infrastructure required to store and ship their products that are being sold. Starting a warehousing and distribution service means you can act as a warehouse, shipping and receiving agent for as many as 20 or 30 different companies. This business venture
does require a great deal of research and investment capital. However, with careful planning and exceptional organizational skills, this type of business venture is capable of creating a six-figure income per year, all within a very short period of time for the enterprising entrepreneur

Engineers Tap Algae Cells for Electricity

With the help of photosynthesis plants convert light energy to chemical energy. This chemical energy is stored in the bonds of sugars they use for food. Photosynthesis happens inside a chloroplast. Chloroplasts are considered as the cellular powerhouses that make sugars and impart leaves and algae a green hue. During photosynthesis water is split into oxygen, protons and electrons. When sunrays fall on the leaves and reach the chloroplast, electrons get excited and attain higher energy level. These excited electrons are caught by proteins. The electrons are passed through a series of proteins. These proteins utilize more of the electrons’ energy to synthesize sugars until the entire electron’s energy is exhausted

Two Wind Farms get Investment from Google

Now big companies are going green and proudly proclaiming it too from rooftops. Google Inc. has invested $38.8 million in two North Dakota wind farms. This is the first direct investment by Google in utility-scale renewable energy generation. These two wind farms produce 169.5 megawatts of power. These two wind farms can light up around 55,000 homes. These wind farms are designed by General Electric Co and created by NextEra Energy Resources. They generate power from one of the world’s richest wind resources in the North Dakota plains. There is no need to lay down extra infrastructure for the two wind farms. Current transmission facilities are able to transmit power to the nearby areas. Google’s official blog claims, “Through this $38.8 million investment, we’re aiming to accelerate the deployment of renewable energy — in a way that makes good business sense, too.”

Earlier Google Inc. has invested in companies which are developing new technologies in the area of solar, wind and geothermal power. Such companies are BrightSource Energy, eSolar and AltaRock. With North Dakota wind farms Google made an exception.

Google’s stakes in the wind farms are in the form of “tax equity” investments. This way Google will be able to avail the benefit of use federal tax credits provided by the Government. According to this incentive the investors also take over a project and use federal tax credits to offset their own taxes as a return.

According to NextEra they sold about $190 million of Class B membership interests in the two wind farms. Now Google’s stake is around 20% of the Class B shares. The companies are not talking about the other investors currently. While Google’s NextEra investment doesn’t include to help in future expansion of the company but they hope that their investment would help in establishing additional wind power projects.

The power production from the wind farms would be sold to utilities under power purchase agreements. A Google spokesman claimed that their data centers won’t be using the power generated by wind farms.

The wind farms are willing to experiment with new technologies. They want to go for the cutting edge turbine technologies and new kind of the control systems that can continuously monitor output from every turbine and always adjust individual blade angles to improve efficiency. They would also use the blades that are 15 per cent larger on the usual turbines.

Rick Needham is the green business operations manager at Google. He says, “Smart capital includes not only these early-stage company investments, but also dedicated funding for utility-scale projects. To tackle this need, we’ve been looking at investments in renewable energy projects, like the one we just signed, that can accelerate the deployment of the latest clean energy technology while providing attractive returns to Google and more capital for developers to build additional projects.”

Google has also indicated earlier this year that it may play a more direct role in the US energy market. Google Inc. has made a request with the Federal Energy Regulatory Commission (FERC) that would help it to buy and sell electricity on the wholesale market. This has made green energy analysts curious about Google’s future role in clean and green energy scene.

European Shares Jump Most in 17 Months as EU Pledges Loan Fund

By Daniela Silberstein

May 10 (Bloomberg) -- European stocks rallied the most in more than 17 months after policy makers unveiled an unprecedented loan package worth almost $1 trillion to contain the region’s sovereign-debt crisis.

BNP Paribas SA, France’s largest bank, surged 21 percent as the nation’s CAC 40 soared 9.3 percent. Banco Santander SA jumped 23 percent, leading Spain’s IBEX 35 index 14 percent higher for the biggest gain on record. BHP Billiton Ltd., the world’s largest mining company, and Rio Tinto Group climbed more than 5 percent as copper increased.

The Stoxx Europe 600 Index soared 6.9 percent to 253.57 at 4:35 p.m. in London, the biggest gain since Nov. 24, 2008, as only two stocks declined. The gauge last week posted the biggest drop in 18 months as concern grew that the region’s leaders will be unable to halt the spiraling government debt crisis. The measure has fallen 6.8 percent from its 2010 high on April 15.

“There is intent behind these measures and that is helping the markets,” said Christoph Riniker, a strategist at Bank Julius Baer Group Ltd. in Zurich, which manages about $226 billion. “Last week showed that we needed measures from central banks and we’ve almost recovered from last week’s losses. The fundamental picture still points to improvement towards the end of the year.”

Counter ‘Severe Tensions’

Jolted into action by last week’s slide in the euro to a 14-month low and soaring bond yields in Portugal and Spain, the European Union agreed to offer financial assistance to countries facing instability worth as much as 750 billion euros ($980 billion), including International Monetary Fund backing. The European Central Bank said it will counter “severe tensions” in certain markets by purchasing government and private debt and restarted a dollar-swap line with the Federal Reserve.

National benchmark indexes rose in all 18 western European markets. Germany’s DAX gained 5.3 percent and the U.K.’s FTSE 100 increased 5.2 percent. France’s CAC 40 climbed 9.3 percent while Spain’s IBEX 35 jumped 14 percent.

The VStoxx Index, which measures the cost of insuring against declines in the Euro Stoxx 50 Index, lost 22 percent to 38.66, the biggest drop on record.

The support package “shows the ECB, the EU and IMF can act quickly, in spite of all indications to the contrary during the ECB press conference last Thursday and in spite of all doubts about their ability to do so by most U.S. investors last week,” Credit Suisse Group AG’s London-based strategist Andrew Garthwaite wrote in a report. “Ultimately, this will lead all central banks (apart from China) to have a looser monetary policy for longer.”

BOE Bond Purchases

The Bank of England maintained its emergency economic stimulus today as the post-election deadlock leaves officials in suspense on the scope of government spending cuts to curb the record budget deficit. The Monetary Policy Committee kept its bond holdings at 200 billion pounds ($297 billion) for a fourth month and maintained the benchmark interest rate at a record low of 0.5 percent.

European equities were raised to “overweight” from “underweight” by London-based Morgan Stanley strategist Teun Draaisma, who wrote “we are optimistic on earnings growth, driven by emerging markets, U.S. and corporates.”

Against the backdrop of Europe’s fiscal crisis, the global economy has been strengthening. German industrial production rose more than economists forecast in March as the construction industry shrugged off the coldest winter in 14 years. U.S. employers added the most jobs in four years in April, the Labor Department said May 7.

Banks Soar

A measure of bank stocks in the Stoxx 600 rallied 14 percent, the biggest advance since September 2008. BNP Paribas jumped 21 percent to 53.12 euros, the biggest gain since at least 1993. Santander, Spain’s biggest bank, jumped 23 percent to 9.45 euros, the largest increase since 1990.

Deutsche Bank AG, the largest German lender, surged 13 percent to 51.63 euros. Dexia SA, Belgium’s biggest bank by assets, soared 17 percent to 3.86 euros. Allied Irish Banks Plc rallied 24 percent to 1.38 euros. National Bank of Greece SA advanced 17 percent to 12.11 euros.

Bank of Ireland Plc climbed 18 percent to 1.67 euros. The country’s biggest bank said investors agreed to swap 852 million euros of subordinated debt for equity, prompting the lender to cut the size of a planned share sale by almost 10 percent.

BHP Billiton advanced 5.7 percent to 1,971.5 pence. Rio Tinto, the world’s third-biggest mining company, rose 7 percent to 3,348.5 pence. Copper surged 2.3 percent in London, ending the longest losing streak since January.

Anglo American Plc rallied 8.3 percent to 2,708 pence. The owner of stakes in the world’s biggest platinum and diamond producers said it sold its zinc asset portfolio to Vedanta Resources Plc for $1.34 billion. Vedanta increased 11 percent to 2,560 pence

Bilfinger Berger AG surged 12 percent to 49.25 euros. Germany’s second-biggest builder said first-quarter net income rose to 48 million euros from 23 million euros and forecast output volume will gain.

RBS May Cut 2,600 Jobs in Insurance, Consumer Bank

By Gavin Finch and Kitty Donaldson Businessweek

May 10 (Bloomberg) -- Royal Bank of Scotland Group Plc, Britain’s biggest government-owned bank, plans to cut 2,600 jobs at its insurance and consumer banking divisions, according to a person with knowledge of the plan.

The lender may eliminate 2,000 employees at its insurance division, which includes Direct Line and Churchill, and a further 600 jobs at its consumer banking head offices in the U.K., said the person, who declined to be identified because the talks are private.

RBS cut about 26,000 jobs, or 12 percent of its staff, between 2008 and yesterday, according to Bloomberg data. The bank is being forced by the European Union to sell its insurance units, along with more than 300 bank branches, as a result of the government assistance.

“It is deeply disappointing to be facing further Scottish job losses on this,” Scottish Finance Secretary John Swinney said in a statement. “We are currently anticipating a total job loss of as much as 500 Scottish posts in Edinburgh and Glasgow.”

RBS, recipient of the world’s largest bank bailout, climbed 14 percent to 51.75 pence, giving the bank a market value of 30 billion pounds. The shares have gained 77 percent this year.

RBS is the only U.K. bank not to have posted a profit for the first quarter of this year. The lender lost a total of about 28 billion pounds in the past two years, following its acquisition of ABN Amro Holding NV.

RBS’s insurance unit posted a 50 million-pound loss from a profit of 76 million pounds a year earlier, the bank said when announcing first-quarter results last week.

“We are working hard to rebuild RBS in order to repay taxpayers for their support and having to cut jobs is the most difficult part of this process,” the Edinburgh-based bank said in an e-mailed statement. “We have strived at all times to be open and honest about the tough choices we are making.”

Goldman's Blankfein staying put

By David Ellis CNN MONEY

NEW YORK (CNNMoney.com) -- Goldman Sachs Lloyd Blankfein secured a much-needed victory at the company's annual shareholder meeting Friday -- winning the support of his investors.

Shareholders largely voted against a proposal aimed at stripping Blankfein of his role as chairman. According to preliminary results released by Goldman Friday afternoon, only 19.1% voted in favor of separating the chairman and CEO roles.

Heading into the meeting, there was speculation that Blankfein's job might be in jeopardy given that the company is now facing civil from the Securities and Exchange Commission and the severe decline in the company's stock recently.

That sentiment permeated Friday's investor meeting at times. More than once during the three-hour event, vocal shareholders requested Blankfein either give up his chairmanship or step down entirely.

"I have no intention of doing that now," he said, facing several hundred shareholders, journalists and company staff.

Other shareholders spoke out in his defense, citing the firm's recent performance. Last fiscal year, Goldman (GS, Fortune 500) earned record profits of $13.4 billion.

"Why is everybody on the bandwagon about pulling Mr. Blankfein out? He is doing a very good job. He doesn't have to step down," said one Goldman shareholder, whose remarks were met with applause from the audience.

Blankfein has become the target for much of the criticism directed at Goldman since the federal government charged the firm three weeks ago with defrauding investors on the sale of a mortgage-related security.

Last week, he and six other current and former Goldman executives endured a nearly 11-hour Senate hearing last week that laid bare the company's day-to-day dealings.

Speculation has been growing that the company may soon attempt to strike a settlement with regulators in order to put the problem behind the firm.

Speaking to reporters after the meeting, Gary Cohn, the company's president and chief operating officer, declined to say if talks were underway but hinted that the firm was open to the idea.

"There are a myriad of opportunities out there and I won't rule any of them out," Cohn said.

Unlike last week's hearing in Capitol Hill, Friday's meeting drew scant attention from shareholder activists. Just under a dozen protesters gathered outside of Friday's meeting in lower Manhattan, demanding that Goldman disclose all of the money the company spent on elections and on lobbyists.

That recommendation failed to pass, but still managed to garner significant support from shareholders, collecting 37% of the votes.

Inside the meeting, shareholders quizzed top management about a variety of issues including its selection of former Wal-Mart (WMT, Fortune 500) CEO Lee Scott as a company board member as well as when the firm might start raising its dividend.

The discussion also drifted to broader issues now facing the firm and the financial industry, including its compensation practices and greater transparency on derivatives, a subject that is being considered by Congress as it undertakes financial regulatory reform.

Looking comfortable and confident Friday, Blankfein appeared to have little difficulty addressing such hot-button issues.

He also did not hesitate to tackle the tough question about whether the government's charges and continued bad press would make it difficult to hold onto its customers.

"I would say our business has held up quite well due to the support we have gotten from our clients," he said.

More than anything, Blankfein seemed intently focused on rebuilding the firm's tarnished reputation and providing greater transparency to its various constituencies, including clients, shareholders and the general public.

In his opening remarks, he said that the company planned to establish a business standards committee, which would enact a rigorous review of the firm's operations.

"We understand there is a disconnect between how we view ourselves and how the broader public perceives us," Blankfein said. "To address this, we need a rigorous self-examination."

Oil, Copper, Aluminum Jump on European Loan Plan; Rubber Gains

By Christian Schmollinger businessweek

May 10 (Bloomberg) -- Crude oil, copper, aluminum and rubber climbed on speculation a European loan package worth almost $1 trillion and a program of securities purchases will contain sovereign debt risks and bolster economic growth.

Oil soared 2.7 percent to $77.12 a barrel, the biggest intraday increase since April 29, copper surged 2.1 percent to $7,092 per metric ton and aluminum gained 3.3 percent to $2,140 a ton. Rubber increased 1.6 percent to 266.8 yen ($2.88) per kilogram. Gold dropped 0.7 percent to $1,200.40 an ounce.


Investors sought higher-yielding assets as governments of the 16 euro nations agreed to lend as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank will intervene in government securities markets, European Union Economic and Monetary Commissioner Olli Rehn said in Brussels. The Reuters/Jefferies CRB Index of 19 raw materials plunged 5.9 percent last week, the most since Dec. 5, 2008, on concerns the Greek debt crisis would spread

People have been selling risky assets for the past several weeks because of the Greek debts,” said Tetsu Emori, a commodity fund manager with Astmax Ltd. in Tokyo. “The people that were selling off are now buying back.”

The MSCI Asia Pacific Index of shares advanced 1.2 percent to 119.84 as of 2 p.m. in Tokyo, its first gain in six days. Standard & Poor’s 500 Index futures climbed 2.8 percent, the euro rose 1.3 percent to $1.2925 and the cost of protecting Asia-Pacific bonds from default fell the most in a year.

Oil Surges

Crude oil climbed from a 12-week low and June-delivery traded at $77.16 a barrel, up 2.7 percent, on the New York Mercantile Exchange at 1:05 p.m. in Singapore. Prices will likely return to $80 to $85 once the debt crisis in Greece is resolved, Algerian Energy Minister Chakib Khelil said yesterday.

The contract fell 2.6 percent to $75.11 a barrel on May 7, the lowest close since Feb. 12. Oil plunged 13 percent last week.

Three-month delivery copper on the London Metal Exchange traded at $7,085 a ton, up 2 percent. The metal’s finish of $6,945 a ton on May 7 was the lowest since Feb. 15. Zinc, nickel and lead also advanced.

Rubber rallied from its lowest price in almost five months. Futures for October delivery, the most-active contract, rose as much as 2.6 percent to 269.5 yen per kilogram. Gold fell as much as 1 percent to $1,196.10 an ounce, after climbing to $1,213.07 on May 7, the highest level since