October 20, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Book publishers operate in a traditional market - companies like Penguin were publishing books before the Google duo of Brin and Page were in nappies - or their parents were for that matter. They don’t like the idea of giving things away for free. The Internet on the other hand, is all about Trojan horses, and offering tasters. So it’s perhaps no surprise that book publishers and Google are clashing. Google has got its big print library project, in which it scans millions of pages and puts them on its site for free viewing. It argues that this will promote book sales - after all, in a book shop you can loiter by the stand and read a couple of chapters. But the US The Association of American Publishers, which includes Penguin in its numbers, is not impressed, and is suing the dot com star.

“We spent so much time on this I think half of our board ended up having trouble with their families because of cancelling vacations,” said Patricia Schroeder, president and CEO of the Association of American Publishers.

For its part Google said the association was short sighted. They can after all contact Google and tell them which books they don’t want scanned. “Why should we do that” say the publishers, “the onus should be on Google to approach us”

Meanwhile, Google has been forced to backtrack over the name of its email product Gmail. It’s the name that is the problem. Independent International Investment Research claims to already own the trademark - and in Germany too there’s a similar problem. So, the company is ‘dothing’ that name- at least it is in the UK and Germany and giving it the rather less catchy title of GoogleMail.

October 20, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

There’s a big picture emerging at eBay, but markets have not warmed to it, and despite a 40% increase in third quarter profits revealed yesterday, shares fell.

Markets are still cynical over its 2.2bn takeover of Skype- after all the VoIP company is expected to turn over just $60mn this year, and when eBay’s boss Meg Whitman and her colleagues started talking about free telephone calls, analysts started asking this question: “if the phone calls are heading towards zero cost, how can you make money out of Skype.”

The answer, the company reckons the nickels wil come flooding in from the combination of advertising and e-commerce. Partly, this revenue then will come as online auctions prove more popular and more lucrative as audio contact is thrown into the pot, but presumably eBay also sees a time when advertisements will appaer in front of our eyes as use the phone.

Maybe that’s not as ludicrous as if first seems. The Internet is fast representing a coming together of advertising and e-commerce- the two could become interchangeable. After all, the reasons why search engine sponsorship is so popular is largely because it drives customers to shopping sites, and we can see how people could, for example book cinema or theatre tickets, while making their phone calls over the net.

But, it’s a long game, and the markets haven’t got their heads around it yet - their focus instead is on the hear and now- and while it was a good quarter at the company- with profits, after one offs, hitting $280.2mn, with 68 million active users over the last year, its guidance for the next quarter is not so good. As a result shares fell by 5.7% in after hours trading

October 20, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Meanwhile, figures from the US earlier this week suggest that high energy prices are beginning to feed through the system. According to the US Bureau of Labor Statistics, producer prices surged by a massive 1.9% in September, the biggest monthly jump in 15 years. But, even if food and energy are stripped out of the equation, the index was still up 0.3%, indicating that the high price of oil is having a ripple effect across the entire US manufacturing spectrum.

And in London, yesterday, it emerged that the Bank of England’s Monetary Policy Committee voted nine to nil in favour of keeping rates on hold when it met up earlier this month. It appears that while the committee had plenty of doves who seem to be siding with the view that the economy is now easing to the extent that further reductions in the rate will be merited down the line - there are still birds of prey on the committee too, with hawk like comments being revealed.

So now we wait with baited breath - for the next meeting- will inflation fears, and the latest data of Internet shopping mean rates stay firm, or will the doves win the day?

October 20, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Markets collapsed across Europe and Asia yesterday, with the FTSE 100 seeing its biggest one day fall in 17 months, and, with a poetic twist, the day markets chose to tumble happened to be the 18th anniversary of the 1987 crash.

Analysts blamed inflation worries, and the Bank of England Monetary Committee didn’t help when the minutes from the latest meeting from earlier this month revealed a unanimous vote in favour of keeping rates firm.

And while analysts fret that the rate of interest is now less likely to see further falls, the interest rate hawks received more ammunition from a surprising quarter: figures on Internet shopping.

In fact, according to the Centre of Economics and Business Research the retail down turn we keep reading about could be exaggerated, because official figures take insufficient account of the booming Internet shopping sector and the ever growing number of internet shoppers, or as the think tank described them: ‘Invisible consumers.’

CEBR says that its analysis shows “that the share of internet sales in the retail sales index rose from 2.8 per cent in 2002 to 8.8 per cent in 2005… The results suggest that Internet sales rose by about a third from the annual rate of £15.4 billion in the first half of 2004 to a £20.5 billion annual rate in the first half of 2005. If all of this can be considered as additional to official retail sales, then total retail sales including the Internet would have risen at a much faster rate than that calculated by the ONS.”

The retail malaise is the single biggest reason why many are predicting at least one, but maybe several reductions in the UK rate of interest, but the CEBR said yesterday “We believe, however, that inflationary pressures from oil prices and bank charges, upward revisions to earnings data and the growing demand of the invisible consumer make this unlikely and unnecessary.”

And on the same day the CEBR proffered their theory, IMRG revealed its latest data on the state of Internet shopping, with it’s index for tracking the market hitting 1867 last month - that’s 38% up on a year ago - to put this in context the index was initiated in April 2000 with a score of just 100.

IMRG estimates that the UK’s 24 million Internet shoppers spent £1.6 billion online in September, an average of £67 each.

October 19, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Inflation hit its highest level for eight years, and markets sighed with relief. Inflation fears have been growing- we have said as much several time over the last few weeks, but in the end, the September figures released yesterday from the Office of National Statistics were not as bad as people feared.

September saw an annual CPI inflation of 2.5%, from 2.4% last month. Expectations were for worse- 2.6% the consensus, yesterday, the Item club predicted 2.7%.

The good mood was helped by the fact that a 5% rise in petrol was behind the inflation surge. As capital Economics said: “Excluding petrol and other energy components, inflation actually fell for the second month running from 1.8% to 1.7%. Core inflation, which also excludes food, alcohol and tobacco, held steady at 1.7%.”

As for clothes, they are now 5.3% cheaper than a year ago, compared to a 4.4% year on year drop last month.

Capital Economics said: “Nonetheless, with few signs still of ’second round’ effects on wage claims and inflation expectations, we remain confident that inflation will drop back below its target towards the end of this year or early in 2006 as energy effects fade and core inflation falls in response to below trend economic growth. Accordingly, we see little reason why the inflation outlook should prevent the Monetary Policy Committee from responding to the continued weakness of activity with further cuts in interest rates. If the data on retail sales and GDP out later this week are soft, rates could fall in November.”

At Investment and Business News we have warned that biggest catalyst to surgeing UK inflation could lie with the possibility that Chinese manufactures will start to compete on quality rather than price- upping clothing and furniture prices- and that a falling Sterling - in response to our diminishing oil reserves - could precipitate ’70s style spiraling prices.

October 19, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Profits at Yahoo were virtually unchanged from a year ago - while Intel saw a 5% jump - yet it was the dotcom star who had markets celebrating, while investors in the chip maker were starting to push Intel outside their portfolio. Meanwhile even the most cynical was impressed by the latest results from Motorola

A 5% increase in net income isn’t bad - but Intel just can’t make enough chips- and with AMD waiting in the wings- that doesn’t simply mean more customers for the future patiently awaiting the Intel delivery - instead it means they go elsewhere.

In all Intel posted $2bn net income in its third quarter, that was better than Wall Street expectations yet markets wanted to see so much more.

Compare the results at Intel with the latest figures from Motorola. In its third quarter, sales hit an all time high, and profits were three times up on a year ago, hitting $1.75bn for the three months until the end of September.

Overall sales of mobile phones were up 41% on a year ago, with its market share increasing by 5.5 percentage points to 19%. It shipped 38.7million handsets.

For the world’s most popular web site, it was new content, such as financial advice and music videos which helped draw in the dollars.

And while net income of $253.8m compared with $253.3m might seem like a tiny increase- a year ago Yahoo was benefiting from its sale of its shares in Google, profit, after stripping out one offs, was a full $100mn up on last year.

According to ComScore networks, the company gained 442.2 million global visitors in August, 18% up on a year ago. Number two for visitors is MSN with 425.5million and three is Google with 403.2millioin.

October 19, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

BSkyB has dominated TV coverage of live premiership football since 1992. And last year forked out a further £1bn to keep the exclusivity until 2007, broadcasting 138 games a year. To say it’s a nice earner for the premiership is an understatement, after all you could buy 20 David Beckham’s with that money. But the EU commission doesn’t like it- it’s that word monopoly that’s got competition commissioner, Neelie Kroes, up in arms.

Now it looks like the Commission, and the premiership, under the wise guidance of its chief executive, Richard Scudamore, have cobbled together a deal. Total coverage will be divided into five groups, and it’s been agreed that a second broadcaster must have rights over at least one of these groupings. And that’s not just any old 20% either, it must consist of a cross representation too - including top matches.

But don’t think that’s got the BSkyB rivals singing in the turnstiles. NTL and ITV were jointly pressing the Commission for greater competition, and said in a joint letter that “without a 50 per cent rule, it is difficult to see how it would make commercial sense to bid.”

Premiership football has long been one of those Trojan horses that BSkyB uses to pull in new customers for its total service. And it would appear that a watering down of that stranglehold from 100 to 80% isn’t going to make a huge difference.

But we still wonder whether in the long run, the whole issue of football rights will change. The Internet provides the opportunity for clubs to broadcast their own football matches. The question is where does the most money lie? Does it lie with allowing one or two broadcasters to exploit economies of scale and indeed other benefits too, such as creating a captive audience for other purposes, or will it reside with individual clubs exploiting their own key asset, namely the rights over the matches they play, packaged in their style, complete with flag waving. Brand loyalty can be incredibly strong in football, and we suspect most fans would rather pay their club to watch its matches over a channel dedicated to that club.

But then again this is perhaps a long game- and this development could be years off.

October 19, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Schools could be closed - forcing working parents to stay at home, while medical facilities could be overwhelmed, depending on the size and virulence of the outbreak — particularly in less-developed nations with already-strained healthcare resources.

Clearly in the business world - an outbreak could have a catastrophic effect on the tottering airline industry - with four of the top six US airlines already in Chapter 11, a string of bankruptcies in that sector could follow- the hospitality business could also head downwards.

Companies that make good use of technology, with a work force who can be effective from home - and who boast good video conferencing facilities, could actually thrive at the expense of more traditional businesses, while technology companies offering solutions for remote workplaces could boom.

But overall, warns Gartner, with supply chains potentially disrupted and widespread staff shortages- business will slowdown. And al those projections for economic growth we have been covering here could go out of the window.

Gartner has this advice for business:

” Make your workforce aware of the avian flu threat and the steps you’re taking to prepare for it.”

“Assess your business continuity preparedness for this type of workforce outage scenario and try to improve it (if necessary).”

“Assign someone in your business to track biological threats such as the avian flu. He or she should regularly review business continuity plans and update them in response to new information.”

“Establish or expand policies and tools that enable employees to work from home with broadband access, appropriate security and network access to applications.”

“Expand online transaction and self-service options for customers and partners.”

“Work with customers and partners to minimize any disruption by developing coordinated crisis
response capabilities.”

Meanwhile, still with the virus, eBay has agreed to halt all auctioning of the Tamiflu drug from Roche Holdings. By midday yesterday, bids for a single course of treatments, consisting of just ten capsules had reached £100. Roche had warned that drugs bought over the Internet could be counterfeit, while eBay said the sale of prescription drugs was not allowed over the auction site.

October 18, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

Big blue has a fair wind behind it, or so said its chief financial officer, Mark Loughridge yesterday, as IBM revealed its third quarter results. Markets liked what they heard, especially the prognosis for the quarter ahead. In fact profits in the third quarter were down to £1.52bn, compared to $1.55bn this time last year, but take off one time charges and the underlying profits were up 22%. Turnover was down, but then again the company did sell its PC unit. It did however, sign nine deals worth over $100mn, including a $1.7bn deal with ABN Amro, and it has a growing services backlog - all signs of better things to come.

October 18, 2005 | posted by Michael Baxter in Uncategorized | comments (0) |

When EMI blamed delays in the release of the latest Cold Play album for its disappointing performance earlier this year, the band’s front man Chris Martin was not impressed, and talked about working under the tyranny of shareholders.

For all that, when the eagerly awaited X&Y Cold Play album was released, it was an immediate hit. It wasn’t the only big seller to come out of EMI recenlty either. Gorillaz, Keith Urban and KT Tunstall all enjoyed big sellers too, and so too did up and coming arties The Rolling Stones, and Paul McCartney.

As a result of this, EMI saw a 4.5% rise in sales for the six months to 30th September. The company will be revaluing its half yearly results on November 16.