domingo, 19 de junio de 2011
Refrigeration and Air Conditioning Technology
Refrigeration and Air Conditioning Technology, 6th Edition, a time-honored best seller, has been updated and revised to provide superior hands-on information needed to successfully maintain and troubleshoot today's complex heating, air conditioning, and refrigeration systems. The new sixth edition contains units updated to include advances or changes in technology, procedures, and or equipment. Over 250 new images have been added to emphasize the practical application approach to the book. It fosters a solid foundation and understanding of environmental problems and their solutions, and displays a depth and detail of theory, diagnostics, and repair procedures that make this a fitting book for basic HVAC-R education as well as upgrading and certification training for technicians in the field.Price: $147.95
Leading 21st-Century Schools: Harnessing Technology for Engagement and Achievement
Aligned to the ISTE NETS standards for administrators, this guide provides an actionable plan for integrating new technology into teaching and learning and realizing measurable improvement.Price: $36.95
sábado, 18 de junio de 2011
Apple Is Said to Bid in Auction for Nortel Networks Patents
June 18 (Bloomberg) -- Apple Inc. has joined the bidders for a trove of patents from Nortel Networks Corp., the bankrupt maker of phone equipment, two people familiar with knowledge of the matter said.
Nortel, based in Mississauga, Ontario, said this week it has received “significant level of interest” in the technology portfolio and will delay the auction by a week until June 27 to accommodate demand. The people familiar with Apple’s plan didn’t want to be identified because the bidding isn’t public.The move would put Apple in competition with Google Inc. for the 6,000 patents, which could be used in smartphone technology. Google, looking to bolster its Android software, offered $900 million in April in what Nortel said was a starting point for an auction. RPX Corp., a San Francisco-based patent- buying firm, is considering a bid, an attorney for the company said last month.Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment.Nortel filed for bankruptcy in January 2009 after a loss of $5.8 billion, hurt by customers putting off spending on new equipment during the recession. Since then, Nortel has raised about $3 billion to pay creditors by selling businesses. The patents portfolio is the last of the major assets to be sold.Research In Motion Ltd., the maker of the BlackBerry smartphone, and phone-equipment supplier Ericsson AB are also weighing bids, people familiar with those companies’ plans have said.Range of TechnologiesThe Nortel patents cover telecommunications technology used in wireless handsets and networks, as well as Internet search, semiconductors and social networking. The intellectual property may also help protect companies in legal disputes or generate licensing revenue.The U.S. Justice Department has been monitoring the bidding for the patents to see if they may be used to hinder competition in the wireless industry, one of the people familiar with the matter said.To top Google’s bid, companies have to offer at least $929 million under rules approved by the courts overseeing Nortel’s bankruptcy. The growing interest may boost the price for Nortel’s patents to more than $1 billion, said Rich Ehrlickman, president of Boca Raton, Florida-based patent broker IPOfferings.The case is Nortel Networks Inc., 09-10138, U.S. Bankruptcy Court, District of Delaware (Wilmington).--With assistance from Steven Church in Wilmington and John Lear in Chicago. Editors: Nick Turner, Stephen West
To contact the reporters on this story: Olga Kharif in Portland at okharif@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net; Hugo Miller in Toronto at hugomiller@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net; Peter Elstrom at pelstrom@bloomberg.net
Keenwash: A Waterless Car Wash from the Middle East
Salah Malkawi for Bloomberg Businessweek
Water is precious in Jordan, where shortages have prompted decades of rationing and exacerbated tensions with Israel. Nader Atmeh and his sons, Hassan and Moutaz, want to do their part by eliminating the traditional car wash in the Middle East. They say their waterless washing business, Keenwash, is saving Jordan hundreds of thousands of gallons a year.
Keenwash uses a nontoxic, almost entirely biodegradable spray-on liquid. Mixed and bottled at the Atmehs' factory on the outskirts of Amman, the water-based blend of surfactants and polymers softens and emulsifies dirt so it can easily be wiped off a vehicle's exterior with a cloth. Cleaning a midsize sedan such as a Toyota (TM) Camry or BMW 3 Series uses about 5 ounces of the liquid and takes 15 minutes or so. (A typical drive-through wash uses about 50 gallons of water.) Keenwash operates three cleaning stations in mall parking lots and sends cleaners to homes and businesses. It doesn't plan to sell its line of cleaners in stores; its business model is to sell franchises to aspiring entrepreneurs.
Waterless car washes have been around in the U.S. for a few decades. Nader, 65, first saw one on a visit with his brother in Dallas in 2003. While testing U.S. products in Jordan, he found the results mediocre—not clean enough, not shiny enough. And pricey: One 16.9-ounce bottle cost $16. A pharmacist who studied at Alexandria University in Cairo and founded cosmetics and household cleaning product manufacturers, Nader spent three years working on a cheaper formula calibrated for the hot, sandy Mideast environment, with a higher percentage of natural wax and ultraviolet ray-blocking agents. Since Nader and his sons founded the company in 2008, Keenwash has cleaned about 35,000 cars, including the U.S. and British Embassy fleets. It expects $500,000 in revenue this year.
This kind of car wash is still a rarity in the U.S., says Eric Wulf, who heads the International Carwash Assn. in Chicago. "It's no surprise the waterless thing has also raised its head [in the Middle East]," he says, adding that U.S. and European manufacturers install at least 50 car wash systems annually. Keenwash's basic service is cheaper than it is in the U.S.: about $7 per cleaning in Amman, vs. the $20 to $30 that franchise consultant Manish Adhiya in San Diego recommends that local shops charge.
Despite the recent political turmoil in nearby countries, Keenwash is expanding. Saudi Arabia has five franchises; Bahrain, Kuwait, Oman, and the West Bank each have one. Hassan is negotiating a deal in Egypt, where he hopes to sell 250 franchises to a group fighting youth unemployment. "These revolutions and changes in the political situations will help," says Hassan, 30. "Maybe they did hurt a little in the first few months, but I think that we will benefit eventually."
Nader Atmeh has a BS in pharmaceutical chemistry
He saw his first waterless car wash on a trip to the U.S. in 2003
Uses 5 ounces of liquid vs. regular washes' 50 gallons of water
Botnet Busters
Illustration by Jiro Bevis
By Christopher S. StewartAlex Lanstein stared at the 65-inch computer monitor in the living room of his Boston apartment. Streaming data lit up the screen, the actions of a cyberlord giving orders to his botnet, a zombie army of hijacked computers controlled from an unknown location . It was early in the morning of Mar.16. The 25-year-old cybersecurity analyst had spent months preparing for the events soon to unfold. His reddish hair still matted down from sleep, Lanstein stood up and poured another cup of coffee. Suddenly, the data stream flickering on the monitor became dark, and a smile curled across Lanstein's stubbly face. Operation Rustock had begun.
Lanstein's employer, FireEye, is a Silicon Valley company that defends corporations and governments against targeted malicious software, or malware. FireEye's clients include Fortune 500 companies—Yahoo! (YHOO), EBay (EBAY), and Adobe Systems (ADBE), among them—and members of the U.S. intelligence community. The company had recently shut down some of the highest-profile spam-blasting organizations, winning recognition for imposing order on a generally disordered and unpoliced world.
Now, Lanstein and FireEye were chasing their mightiest target to date, the Web's most sprawling and advanced spam machine, called Rustock—pusher of fake pills, online pharmacies, and Russian stocks, the inspiration for its name. Over the past five years, Rustock had quietly—and illicitly—taken control of over a million computers around the world, directing them to do its bidding. On some days, Rustock generated as many as 44 billion digital come-ons, about 47.5 percent of all the junk e-mails sent, according to Symantec (SYMC), the computer security giant based in Mountain View, Calif. Although those behind Rustock had yet to be identified, profits from it were thought to be in the millions. "The bad guys," is what Lanstein had taken to calling them.
For months, FireEye plotted a counterattack, along with Microsoft (MSFT) and Pfizer (PFE)—Rustock was peddling fake Viagra, as well as sham lotteries stamped with the Microsoft logo. Working from FireEye's intelligence, U.S. Marshals stormed seven Internet data centers across the country, where Rustock had hidden its 96 command servers. Microsoft lawyers and technicians were there, too, along with forensics experts. Another team had been deployed in the Netherlands to destroy two other servers.
The sting was executed flawlessly, with everyone pouncing at once. And yet Rustock somehow fought back. From an unknown location, perhaps in Eastern Europe, the botmaster remotely sneaked back into its spam network, locked out Microsoft's technicians, and began to erase files. Clearly, those behind Rustock didn't want anyone seeing what was inside those hard drives.
After a struggle lasting about half an hour, the technicians finally wrested back control of the server. Lanstein's cell rang. T.J. Campana, senior manager for investigations for Microsoft's Digital Crimes Unit, told him it was over. "The bad guys lost."
Global spam levels plummeted as Rustock was taken off line. At the same time, the cybergeek community saw that something significant had happened. Who killed Rustock? And how? For two more days, Lanstein was under order from a federal court in Seattle to keep silent as a way to defend against any leaks to the enemy. Even later, when he could talk, some of the biggest questions remained unanswered, such as who was behind Rustock, and what would he, she, or they, try next?
According to FBI data cited in U.S. Senate testimony, annual cybercrime profits and damages have hit a trillion dollars. That's an incredible number and impossible to itemize, but even conservative estimates place direct losses—and lost revenues—in the billions.
Botnets such as Rustock are increasingly the tools for these crimes. To build a botnet, hackers send out a program, often disguised as a link or hidden in an e-mail attachment, that infects the host computer and communicates invisibly with a command machine. Thus linked, this network generates hard-to-trace spam and goes "phishing" for user passwords and company secrets. They conduct denial-of-service-attacks, in which a hacker cripples a website with a flood of junk messages, and they can be designed to disrupt, for instance, national electrical grids. Symantec estimates there are about 3.5 million to 5.4 million botnets worldwide.
Silicon Valley: Housing Bust? What Housing Bust?
The U.S. housing bust continues to wipe out wealth in major markets nationwide. Then there's Silicon Valley. Investor enthusiasm for technology initial public offerings this year has resulted in big payouts for some workers, who are bidding up home prices in the well-off suburbs south of San Francisco. In May the median price of single-family houses sold in Palo Alto climbed 20 percent from a year earlier, to $1.6 million, the biggest jump since 2008, according to preliminary figures from research firm DataQuick. In Mountain View, where Linked In (LNKD) is based, prices rose 3.1 percent, to $957,500.
Share sales such as the mid-May IPO of LinkedIn—the stock more than doubled on its first day of trading—are helping tech employees fund all-cash purchases and fight off rival bidders. With Palo Alto-based Facebook expected to go public next year, some buyers are rushing to close deals because they believe home prices are headed even higher, says Kenneth Rosen, an economist at the University of California, Berkeley. "I suspect we'll see an explosion in the next couple years," says Rosen, chairman of the school's Fisher Center for Real Estate and Urban Economics. "You've got young people with real money, and it's not surprising they want to have a house."
Facebook founder Mark Zuckerberg, 27, didn't wait for the IPO, buying a house this year in Palo Alto, according to a company spokesman. The San Jose Mercury News, reported that the seven-bedroom home in a "leafy and affluent" area cost $7 million and features five full baths, a spacious porch, and glassed-in sun room.
Such deals defy a U.S. housing slump that sent home prices in 20 major cities down 3.6 percent in March from a year earlier, to the lowest level since 2003, according to the S&P/Case-Shiller index. The Valley's surge has been confined mostly to cities where median home prices were already above $1 million. Cupertino prices gained 12 percent last month from May 2010, to a median $1.08 million, and values in Saratoga rose 4.7 percent, to $1.62 million, according to DataQuick. Palo Alto, adjacent to the Stanford campus, and Cupertino, where Apple (AAPL) is headquartered, are particularly desirable because of those institutional links and the areas' coveted public schools, says Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto. "We're a happening place because of the university," says Levy.
Sean Scott, head of sales for software firm Ingenuity Systems in nearby Redwood City, recently toured a four-bedroom home in Palo Alto and was discouraged by the $1.8 million price tag. The property drew five bids, including one more than 20 percent above the asking price, says Denise Simons, the listing agent at Alain Pinel Realtors. A sale is pending for at least $2.2 million. "The market seems to be returning to the crazy days," says Scott.
Steve Eskenazi, an entrepreneur who sold his portion of an online advertising network to Yahoo! (YHOO) in 2007, expects the wealth generated from tech IPOs, secondary share offerings, and buyouts to power the Valley's property market through 2014. "Most people in their 20s who find themselves millionaires feel it's their inalienable right to buy real estate," says Eskenazi, "and they're typically not price-sensitive."
The bottom line: Big tech IPOs have enriched workers and led to double-digit home price gains in Silicon Valley as buyers anticipate more to come.
Levy is a reporter for Bloomberg News.RIM Investor Jarislowsky Joins Demands for Chairman-CEO Split
June 18 (Bloomberg) -- Billionaire Stephen Jarislowsky, one of Research In Motion Ltd.’s largest shareholders, added his name to the call for the BlackBerry smartphone maker to split the roles of chairman and chief executive officer.
“You should not have these two people at both positions because they have worked together all their lives and they are basically the same person, from point of view of policy,” Jarislowsky, chairman of Jarislowsky Fraser Ltd., said yesterday in an interview.The Montreal-based investment firm -- formerly the company’s sixth-biggest investor, with 10.2 million shares of RIM at the end of the first quarter -- has sold more than half its stake, he said.RIM investors are becoming increasingly vocal about their dissatisfaction with co-CEOs Jim Balsillie and Mike Lazaridis, after the company’s second-quarter sales and profit forecast missed analysts estimates, hurt by sluggish demand for its aging BlackBerry portfolio. Lazaridis, who invented the BlackBerry to handle mobile e-mail, has shared the role of CEO with Jim Balsillie since 1992. They are also both co-chairmen.Northwest & Ethical Investments LP has called for RIM to separate the roles of chairman and CEO, and shareholders will vote on that question at the company’s shareholder meeting July 12, according to a RIM proxy statement last week. Separating the two posts does put the board in a better position “to ask the CEO the kind of hard questions they have to ask from time to time,” Robert Walker, vice president of ethical funds at Northwest & Ethical, said in an interview last week.Shares TumbleRIM, based in Waterloo, Ontario, plunged $7.58, or 21 percent, to $27.75 yesterday in Nasdaq Stock Market trading, dropping to its lowest level since 2006. The stock has fallen 52 percent this year.Other analysts have criticized the co-CEO structure. Northern Securities Inc.’s Sameet Kanade suggested in April that the company should put Lazaridis in sole charge.Jarislowsky is critical of Balsillie, who he says has lost focus.“I believe he is taking his eye off the ball,” Jarislowsky said. “He’s gotten involved in all sorts of things outside the business.”Balsillie has tried unsuccessfully to bring U.S.-based National Hockey League franchises to Canada in recent years. He also is the founder of the Balsillie School of International Affairs and chairman of the Centre for International Governance Innovation, both in Waterloo.Inefficient Setup?Beyond Balsillie’s own suitability for the role, other analysts have criticized what they see as the inefficiency of the co-CEO structure, because it creates an unnecessary duplication of responsibilities that slows product development.“With dual CEOs, you have a challenge,” said Brian Modoff, an analyst at Deutsche Bank Securities Inc. in San Francisco. “There are teams that are working on certain functions, but only reporting to one or the other CEO.”Lazaridis acknowledged the investor frustration on a conference call with analysts this week, saying he knew the past few months had been “difficult” for shareholders.“While I can’t promise that there won’t be bumps in the road ahead, I can assure you that Jim and I have never been more committed to the business,” Lazaridis said.Both men defended the co-CEO structure and gave no indication they plan to abandon it.“I just don’t think it’s the issue,” Balsillie told analysts. “I think I have expertise in what I do. I think Mike has distinctive expertise in what he does. I think there’s parts that overlap and we highly coordinate it.”Four analysts downgraded the company yesterday, including Caris & Co.’s Rob Cihra. RIM has proved “painfully slow” in getting new models including its touch-screen Bold into stores to keep BlackBerry customers from defecting to Apple Inc.’s iPhone or devices that run Google Inc.’s Android software, he said.“It appears RIM has slipped into eroding mismanagement,” he said.--Editors: Nick Turner, Lisa Rapaport
To contact the reporters on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net; Jonathan Erlichman in New York at jerlichman1@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
Oracle Seeks ‘Billions’ From Google in Java Patent Lawsuit
(Updates with Google’s objections in fifth paragraph.)
June 17 (Bloomberg) -- Oracle Corp. is seeking as much as $6.1 billion in damages in a patent- and copyright-infringement lawsuit against Google Inc. that claims the search-engine company’s Android software uses technology related to the Java programming language, according to court papers.The extent of the claims was disclosed yesterday in San Francisco federal court by Oracle, as it sought to prevent Google from filing under seal documents in the case stating Oracle’s monetary claims.“Oracle’s damages claims in this case are in the billions of dollars,” the company said in a filing, arguing that its demands “are based on both accepted methodology and a wealth of concrete evidence.”“They should not be hidden from public view,” Oracle said.Google said in a June 6 letter to U.S. District Judge William Alsup, posted today on the court’s online docket, that Oracle’s damages expert estimated Google would owe Oracle between $1.4 billion and $6.1 billion in damages if it was found liable for infringement.‘Breathtaking Figure’“A breathtaking figure that is out of proportion to any meaningful measure of the intellectual property at issue,” Google’s lawyers said in the letter. Even the low end of the range “is over 10 times the amount that Sun Microsystems Inc. made each year for the entirety of its Java licensing program and 20 times what Sun made for Java-based mobile licensing.”Google said the damages expert’s testimony should be excluded because the expert inflated royalty rates that may be owed by Google. Android is a smartphone operating system that Google licenses to mobile-phone makers.“Oracle’s ‘methodology’ for calculating damages is based on fundamental legal errors and improperly inflates their estimates,” the company said in an e-mailed statement yesterday.Deborah Hellinger, a spokeswoman for Oracle, declined to comment.Oracle, based in Redwood City, California, got Java when it bought Sun Microsystems Inc. in January 2010. The company sued Google the following August seeking a court ruling that would ban further use of its intellectual property and force the destruction of all products that violate Java-related copyrights on the code, documentation and specifications.Dalvik SoftwareOracle’s complaint targets Google virtual machine software called Dalvik that is used in running Android applications. Oracle said the software infringes its Java patents and that Google didn’t obtain a license to use Java in its products.Google, based in Mountain View, California, said in court filings that the patents are invalid and not infringed and that users of the Android platform have a license to any patents in the case. It said Oracle made general copyright-infringement claims with nothing to back them up.Researcher IDC expects the Android operating system to have more than 40 percent of the global smartphone market in the second half of 2011.Oracle rose 39 cents, or 1.3 percent, to $31.19 at the close of Nasdaq Stock Market trading in New York. Google fell $15.35, or 3.1 percent, to $485.02.The case is Oracle America Inc. v. Google Inc., 10-03561, U.S. District Court, Northern District of California (San Francisco).--With assistance from Edvard Pettersson in Los Angeles, Aaron Ricadela in San Francisco and Zachary Tracer in New York. Editors: Andrew Dunn, Stephen Farr.
To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net.
To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
RIM Shares Plunge on Missed Estimates
(Updates with closing share price in fifth paragraph.)
June 17 (Bloomberg) -- Research In Motion Ltd. dropped to its lowest level since 2006 after the BlackBerry smartphone maker said quarterly revenue may drop for the first time in nine years and unveiled plans to reduce jobs.Revenue will be $4.2 billion to $4.8 billion in the fiscal second quarter, RIM said in a statement yesterday. That was less than the average analysts’ estimate for sales of $5.47 billion, according to a Bloomberg survey. Profit this quarter will be 75 cents to $1.05 a share. Analysts had predicted $1.40.RIM is losing market share in the U.S. to Apple Inc.’s iPhone and handsets running Google Inc.’s Android software, in part because it hasn’t introduced a major new BlackBerry model since August. Cheaper Google phones are also making inroads in Latin America, Asia and Europe, threatening the popularity of less expensive BlackBerry models like the Curve.“They are resting on their laurels,” Stephen Jarislowsky, chairman of Montreal-based Jarislowsky Fraser Ltd., said in an interview today. The firm was RIM’s sixth-biggest investor at the end of March with 10.2 million shares, and has reduced its holding by at least half since, he said. “Steve Jobs is a much better marketer than RIM,” he said, referring to Apple’s chief executive officer.RIM, based in Waterloo, Ontario, plunged $7.58, or 21 percent, to $27.75 at 4 p.m. in Nasdaq Stock Market trading, the lowest level since Sept. 12, 2006. The stock has dropped 52 percent this year.Dual CEOs“Its product portfolio is just not up to snuff with its key competitors,” said Paul Taylor, chief investment officer at BMO Harris Private Banking in Toronto, who manages about $14.5 billion, including RIM shares.RIM has come under increasing scrutiny from investors after its stock slumped, the company lost phone market share, and its new PlayBook tablet computer, a rival to Apple’s iPad, was criticized by technology columnists. Last week, investor Northwest & Ethical Investments LP called for RIM to separate the roles of chairman and CEO as analysts question whether RIM’s co-CEO structure is the best way to manage the company.“With dual CEOs, you have a challenge,” said Brian Modoff, an analyst at Deutsche Bank Securities in San Francisco, who rates RIM a “sell.” “There are teams that are working on certain functions, but only reporting to one or the other CEO, so there is a duplication in structure.”New Product DelaysThe company said yesterday it plans to eliminate an unspecified number of jobs and make organizational changes to accelerate product introductions. Benefits from the job cuts should start to appear in the third quarter, Chief Financial Officer Brian Bidulka said on the call.“They definitely have some low-hanging fruit in terms of cutting costs,” Modoff said. “A streamlined structure would be beneficial for the company.”The company unveiled a new version of its Bold phone last month with both the physical keyboard loved by BlackBerry users and the touch screen that made the iPhone popular. The Bold and other new devices will only be available late in the quarter, Co-CEO Jim Balsillie told analysts on a conference call yesterday.The forecast “means new devices won’t make it into the second quarter,” said Tero Kuittinen, an analyst at MKM Partners in Stamford, Connecticut. “This is a quarter they really needed new devices to get them in there and they won’t.”Kuittinen today cut his rating on RIM to “neutral” from “buy.” Robert Cihra at Caris & Co., Scotia Capital Inc.’s Gus Papageorgiou, Rod Hall of JPMorgan Securities Inc. also downgraded their ratings on the stock today.Smartphone Market ShareBalsillie reiterated that he and co-CEO Mike Lazaridis are committed to retaining the executive structure. He told analysts yesterday that “completing the transition and taking the company to the next level of success is also something neither of us can do alone.”Lazaridis added that he and Balsillie have “never been more committed” to RIM.RIM’s share of U.S. smartphone subscribers dropped 4.7 percentage points to 25.7 percent in April from three months earlier, according to ComScore Inc.Full-year profit will be $5.25 to $6 a share, excluding some costs, RIM said, down from a previous forecast of $7.50. Analysts on average predicted $6.24.Net income in the first quarter, which ended in May, was $695 million, or $1.33 a share, compared with $769 million, or $1.38, a year earlier. Sales rose 16 percent to $4.91 billion.‘Cut-Throat Competition’The company said it shipped 500,000 PlayBooks last quarter after starting sales on April 19. Analysts predicted sales of 350,000 units, the average of six estimates compiled by Bloomberg.RIM shipped 13.2 million BlackBerrys last quarter, compared with analysts’ estimates of 13.6 million. RIM said it will ship 11 million to 12.5 million phones this quarter, while analysts had predicted 13.7 million units.“From my 60 years in the market, I’ve learned you have to sell your shares before the other guys,” Jarislowsky said. “All of these products go through the same cycle. First it was the radio, then it was TV. At a certain point, you get saturation and cut-throat competition on price.”((Go to RIM US--Editors: Jillian Ward, James Callan
To contact the reporters on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net; Jonathan Erlichman in New York at jerlichman1@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
Falcone’s LightSquared, Sprint Agree to 15-Year Network Accord
June 18 (Bloomberg) -- Billionaire Philip Falcone’s LightSquared Inc. reached a 15-year deal with Sprint Nextel Corp. to share network expansion costs and equipment, and to provide high-speed wireless service to the phone company.
Falcone told Harbinger Capital Partners hedge fund investors yesterday about the accord in a letter obtained by Bloomberg News. The companies were discussing a deal valued at as much as $20 billion, people familiar with the matter said earlier this month.“LightSquared and Sprint will jointly develop, deploy and operate LightSquared’s 4G LTE network,” according to the letter. “Sprint will become a significant customer of LightSquared’s 4G LTE network.”The deal is an important step forward for Falcone, whose effort to challenge Verizon Wireless and AT&T Inc. was met with skepticism after plans for LightSquared emerged in government filings about 15 months ago. Falcone is gambling more than 60 percent of his hedge fund on LightSquared.“This deal is a huge positive for Harbinger investors simply because it represents such a large proportion of his hedge fund,” said Don Steinbrugge, managing partner of Agecroft Partners LLC, a Richmond, Virginia-based firm that advises hedge funds and investors. “It’s a step in the right direction given all the uncertainty surrounding this investment.”Sprint’s ChallengeFor Sprint, the deal would provide a new source of revenue as the third-largest U.S. wireless company struggles to compete with bigger rivals. AT&T is trying to acquire Deutsche Telekom AG’s T-Mobile USA unit, which would let it pass Verizon Wireless to become the country’s No. 1 wireless operator. Sprint Chief Executive Officer Dan Hesse is fighting to block the deal, which needs government approval, arguing it would stifle competition.Sprint, which has lost contract customers in 14 of the past 15 quarters, has pledged $5 billion to upgrade its network over the next three to five years. The company can use LightSquared’s network to lessen the load on its own network as data demand has skyrocketed, an issue that has plagued other carriers.Hesse said last month Sprint was in talks with Clearwire Corp. on a similar network deal. Kirkland, Washington-based Clearwire provides Sprint’s fourth-generation wireless service.Overland Park, Kansas-based Sprint fell 2 cents to $5.19 yesterday in New York Stock Exchange composite trading. The shares have gained 23 percent this year.GPS QuestionsLightSquared CEO Sanjiv Ahuja said in a June 10 televised interview with “Bloomberg West” that his company had held discussions with Sprint. Bill White, a Sprint spokesman, and Steve Bruce, a spokesman for New York-based Harbinger, declined to comment.“This gets LightSquared to their goal of nationwide coverage much more quickly than if they were going to build it out on their own,” Chris Larsen, a Piper Jaffray & Co. analyst in New York, said in an interview.The Federal Communications Commission has asked that LightSquared study whether its network interferes with global- positioning systems. The company has commissioned a study of the issue, due July 1.“LightSquared will have to resolve these issues with GPS before Sprint can make full use of that extra capacity,” said Larsen, who rates Sprint “overweight.”Separately, LightSquared will announce as soon as next week it will begin soliciting bids to sell wireless service from its satellite to governments or other agencies to help supplement their earth-based emergency and first-responder networks, said a person familiar with the matter.The satellite service would serve as a backup for the terrestrial networks in the case of emergencies that knock out equipment on the ground, said the person, who declined to be identified because the plans aren’t yet public. LightSquared launched the satellite in November.--With assistance from Saijel Kishan in New York. Editor: Julie Alnwick, Peter Elstrom, Stephen West
To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
The Big Business of Synthetic Highs
Jamie Chung for Bloomberg Businessweek
By Ben PaynterIt's a Friday afternoon in April, and Wesley Upchurch, the 24-year-old owner of Pandora Potpourri, has arrived at his factory to fill some last-minute orders for the weekend. The factory is a cramped, unmarked garage bay adjoining an auto body shop in Columbia, Mo. What Upchurch and his one full-time employee, 21-year-old Jay Harness, are making is debatable, at least in their eyes. The finished product looks like crushed grass, comes in three-gram (.11ounce) packets, and sells for about $13 wholesale. Its key ingredient is a synthetic cannabinoid that mimics tetrahydrocannabinol (THC), the active ingredient in marijuana. Upchurch, however, insists his product is incense. "There are rogue players in this industry that make the business look bad for everyone," Upchurch says. "We don't want people smoking this."
From the outside the place looks abandoned. The only sign of life is a lone security camera. Inside, two flags hang above a makeshift assembly line. One shows a coiled snake and reads "Don't Tread On Me." The other has a peace symbol. The work space consists of a long, foldout table containing a pile of lustrous, green vegetation, a pocket-calculator-size electronic scale, a stack of reflective, hot-pink Mylar foil packets, and a heat sealer. Each packet has the brand name, Bombay Breeze, and is decorated with a psychedelic logo featuring a cartoon elephant meditating among abstract-looking coils of smoke and stars.
Upchurch supervises as Harness weighs out portions of the crushed foliage, dumps it into a packet, and slides the top through the heating machine to create an airtight, tamper-proof seal. He finishes about a dozen in 10 minutes, topping off what they will need for their deliveries: two shipments of more than 1,000 packets each. Upchurch points to a disclaimer near the bottom right-hand corner of each package that reads, in all caps: "NOT FOR CONSUMPTION." Says Upchurch: "That's to discourage abuse."
His protests and disclaimers to the contrary, Pandora is getting smoked—it's being packed into bongs and reviewed on sites such as YouTube (GOOG)—for its ability to alter the mind. Like many others, Upchurch is repackaging experimental medical chemicals for mainstream store shelves, most often with some clever double-entendre in the branding. He says he sells about 41,000 packets a month, delivering directly to 50 stores around the country and shipping the rest to five other wholesalers, some of whom use Pandora's products to create their own brands. Upchurch says he ships mostly in bulk orders for larger discounts. He projects his company will earn $2.5 million in revenue with $500,000 in profits this year, depending on what federal and state laws pass. "I think my business model is based less on charts than it is on guts, or something," he says.
"Incense" such as Upchurch's, along with "bath salts" and even "toilet bowl cleaner," have been popping up at gas stations, convenience stores, "coffee shops" that don't sell much coffee, and adult novelty stores. Today, Upchurch's shipments—he uses UPS (UPS)—are headed to places called Jim's Party Cabin in Junction City, Kan., and the Venus Adult Superstore, in Texarkana, Ark. Instate, Upchurch sells to Coffee Wonk, a coffee shop in downtown Kansas City, Mo. There, 28-year-old owner Micah Riggs writes the names of his offerings in multiple colors on a dry erase board near the register. The packets themselves are kept beneath the counter. While Riggs doesn't mind his customers talking about how they will use the incense, he's as circumspect about what he is actually selling as Upchurch. Nearly everything he says is in code. He'll say things like, "Is this your first foray?" and "There are different potencies of aroma."
Customers report different reasons for trying Riggs's products. Some say they need to pass a drug test; synthetics do not show up in standard tests. Others are businessmen in khakis who like the idea of buying from someone they trust. Riggs claims to sell mostly to the military, soccer moms, teachers, and lots of firefighters. "I don't tell people what to do with it," Riggs says. "This is a marketer's dream. I underpromise and it overdelivers."
Alone Together: Why We Expect More from Technology and Less from Each Other
In Alone Together, MIT technology and society professor Sherry Turkle explores the power of our new tools and toys to dramatically alter our social lives. It’s a nuanced exploration of what we are looking for—and sacrificing—in a world of electronic companions and social networking tools, and an argument that, despite the hand-waving of today’s self-described prophets of the future, it will be the next generation who will chart the path between isolation and connectivity.
Price: $28.95
Why Apple Isn't in the Dow
David Paul Morris/Bloomberg
By Roben FarzadSince 1896, when the Wall Street Journal's first editor and co-founder, Charles Dow, compiled a portfolio of bellwether industrial stocks, the Dow Jones industrial average has sought to reflect the changing U.S. economy. The benchmark has sometimes been slow to keep up with the times. The Dow booted Woolworth for Wal-Mart (WMT) in 1997 and didn't add Microsoft (MSFT) and Intel (INTC) until 1999. Even so, the 30-member index remains the most widely recognized measure of the market. "With each rebalancing of the Dow Jones industrial average, the selection committee looks to ensure the Dow reflects the current sector composition of the U.S. market," says John Prestbo, editor and executive director of the Dow Jones Indexes, majority-owned by CME Group since February 2010.
Today the Dow is notable for one giant omission: Apple (AAPL), the world's leading tech stock. With a market value of $307 billion as of June 14, the maker of iPhones and Macs is the second largest company in the U.S., behind ExxonMobil (XOM), a Dow component, and almost as large as Microsoft and Intel combined. "Apple should be in the Dow," says Paul Hickey, of Bespoke Investment Group in Harrison, N.Y. "Just as there used to be a General Motors (GM) vehicle in nearly every American driveway, there's now an Apple product in practically every American household."
Apple's absence, says Hickey, has deprived the Dow of 1,000 points. He calculates that if Apple had been added to the Dow instead of Cisco (CSCO) in June 2009, when bankrupt GM was ousted, the blue chip index would have closed at 13,081 on June 14, 8.3 percent higher than its actual level of 12,076.
So why hasn't Apple joined the club that includes JPMorgan Chase, Kraft (KFT), Caterpillar (CAT), and other household names? The answer lies in the peculiar way the Dow index is calculated. Most benchmarks, including the Standard & Poor's 500-stock index, weight their components by market value, which is the share price times the number of shares outstanding. The Dow uses only one component of that equation: stock price. Thus IBM (IBM), at $164, holds the top weighting in the Dow, 10 percent, even though it is only third by market value. Meanwhile, because General Electric (GE), Alcoa (AA), and Bank of America trade in the teens, they represent a combined 3 percent of the Dow—less than a third of IBM's weight. Such distortions, says Jeffrey Yale Rubin, director of research for Birinyi Associates, are why "investors should realize that the Dow is just a subset of the entire market—not the entire market."
With a share price of about $330, Apple would dominate the Dow, accounting for more than 17 percent of the index. A 1 percent change in Apple's stock price would translate to a 23-point change in the Dow. That kind of outsize impact, says Rubin, "would pretty much make the Dow irrelevant. I agree: Apple should be in there. But at this price, you can't just put it in." The keepers of the Dow acknowledge the problem. "Apple, at its current price level, would distort the Dow," says Prestbo.
There are no hard or fast rules for making changes in the index. Prestbo and several colleagues seek out new candidates when a Dow component is merged out of existence, a price sinks too low—or whenever rebalancing seems necessary. "While we don't comment on future component changes," says Prestbo, "for the DJIA to accurately tell the market's story, all 30 stocks' prices must fall within a modest range."
Apple could get its share price into range by splitting the stock, something it last did in 2005. The company declined to say whether it had any plans to do so. "They seem to have no interest" in a split, says Brian Marshall, a Gleacher & Co. analyst who has a target price of $450 for Apple. Aside from the honor, the company has little to gain from joining the Dow. When companies are added to the S&P 500, their stocks can get a boost from index funds that have to add the shares to their portfolios. While there are trillions of dollars indexed to the S&P 500, only $37 billion are in funds that follow the Dow.
The Dow's Apple conundrum may only get worse. If its stock, up sevenfold since 2006, reaches $430, Apple will overtake ExxonMobil as the biggest company in the U.S., says Marshall. Perhaps Apple shareholders shouldn't be in a hurry to have the stock join the Dow. Noting that tech stocks Cisco, Intel, and Microsoft are down by a third, on average, since their inductions, Hickey says: "It's actually been the kiss of death."
The bottom line: As the No. 2 company in the U.S. by market value, Apple may deserve a spot in the Dow. But its $330 share price would distort the index.
Bloomberg Businessweek Senior Writer Farzad covers Wall Street and international finance.domingo, 5 de junio de 2011
Information Technology Project Management (with Microsoft Project 2007 CD-ROM) (6th ed)
Information is traveling faster and being shared by more individuals than ever before. Information Technology Project Management, Sixth Edition offers the "behind-the-scene" aspect of technology. Although project management has been an established field for many years, managing information technology requires ideas and information that go beyond standard project management. By weaving together theory and practice, this text presents an understandable, integrated view of the many concepts skills, tools, and techniques involved in project management. Because the project management field and the technology industry change rapidly, you cannot assume that what worked even five years ago is still the best approach today. This text provides up-to-date information on how good project management and effective use of software can help you manage projects, especially information technology projects. Information Technology Project Management, Sixth Edition, is still the only textbook to apply all nine project management knowledge areas--project integration, scope, time, cost, quality, human resource, communications, risk, and procurement management--and all five process groups--initiating, planning, executing, monitoring and controlling, and closing--to information technology projects.Price: $116.95
RIM Declines as UBS Adds to Criticism of Co-CEO Structure
(Updates with closing share price in fourth paragraph.)
June 3 (Bloomberg) -- Research In Motion Ltd., maker of the BlackBerry smartphone, declined in Nasdaq trading as UBS AG analysts criticized the company’s dual chief executive officer structure, the second such critique in little over a month.UBS’s Amitabh Passi and Phillip Huang lowered their price target on RIM to $45 from $60, citing a lack of clarity about when new phones would debut, inroads made by Apple Inc.’s iPhone and devices based on Google Inc.’s Android software in corporations, and an overconcentration of responsibility with co-CEOs Mike Lazaridis and Jim Balsillie.“We are also not convinced the current management structure -- co-Chairmen, who are also co-CEOs, and one of whom is now CMO, is the optimal one either,” Passi and Huang said in a note today. They have a “neutral” rating on RIM.RIM fell $1.45, or 3.6 percent, to $38.98 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has lost 33 percent this year to its lowest level in more than two years.RIM’s share of North America’s smartphone sales has fallen as demand for iPhones and Android devices has grown. Revenue growth in markets such as Latin America and Europe may also be threatened as rival smartphones catch on outside the U.S., the analysts said.BlackBerry Bold Delay?“While international growth has been strong, we anticipate similar dynamics as in North America playing out,” the analysts said. There will be “no major product launches till probably late in RIM’s fiscal second quarter,” they said. That quarter ends in August.RIM’s share of U.S. smartphone subscribers dropped 4.7 percentage points to 25.7 percent in April from three months earlier, according to ComScore Inc. Google’s jumped 5.2 percentage points to 36.4 percent and Apple gained 1.3 percentage points to 26 percent.Sameet Kanade, an analyst at Northern Securities Inc. in Toronto, suggested in April that the company should scrap its dual-CEO structure and put Lazaridis in charge.Lazaridis, who invented the BlackBerry as the first mobile e-mail device more than a decade ago, has shared the role of CEO with Balsillie since 1992. Balsillie also took over as chief marketing officer after RIM’s first marketing chief Keith Pardy left in March, less than two years after joining the company.Shaw Wu, an analyst with Sterne Agee & Leach Inc. in San Francisco, also cut his price target on the stock, lowering it to $44 from $52. He reiterated his “neutral” rating on RIM.Apple’s planned iCloud service, which will allow customers to listen to their iTunes music from multiple devices, will only make it more difficult for RIM to convince consumers to opt for a BlackBerry, Wu said.--Editors: Ville Heiskanen, Peter Elstrom
To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
American Tower Drops 5.8% After Receiving Subpoena From SEC
(Updates with closing share price in third paragraph.)
June 3 (Bloomberg) -- American Tower Corp. fell the most in more than two months after the wireless tower operator said it received a subpoena from the U.S. Securities and Exchange Commission related to its accounting.The SEC requested documents from 2007 until now, with an emphasis on records for tax reporting and accounting, the Boston-based company said today in a regulatory filing. American Tower’s customers include AT&T Inc., Verizon Wireless, Sprint Nextel Corp. and T-Mobile USA.The shares fell $3.17, or 5.8 percent, to $51.21 in New York Stock Exchange composite trading at 4:15 p.m., the largest one-day drop since March 21. The stock is little changed this year.--Editors: Peter Elstrom, Stephen West
To contact the reporters on this story: Amy Thomson in New York at athomson6@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
Clearwire Dealers Say Credit Rules Dropped to Draw Customers
(Updates with closing share prices in 12th paragraph.)
June 3 (Bloomberg) -- Clearwire Corp. distributors lowered credit standards to attract thousands of new customers and inflate subscriber numbers starting in 2009, according to three former dealers.Clearwire employees told distributors to sign up customers with credit scores below the company’s standard or bypass credit checks altogether, according to dealers including Joe Cruz and AK Kurji. Though the practice pulled in new customers, many soon left Clearwire, often without paying a bill, they said. In e- mails obtained by Bloomberg News, one former Clearwire salesman offered to override any failed credit checks to add customers.“We would take a copy of their driver’s license and a two- month utility bill and we would send it in for a credit override,” said Kurji, who said he had 19 stores in Texas, Florida and the West Coast. “Our numbers jumped.”Clearwire has never authorized the practices described by Kurji and Cruz and hasn’t had systematic problems with them, said Mike DiGioia, a spokesman for the company.Kurji’s staff used lower credit standards from late 2009 until this year to sign up thousands of customers, with about 60 percent of all new customers qualifying for service only through overrides, he said. He closed his business this year after losing money on customers who canceled their contracts, he said.Business RisksHigh customer turnover may make it more difficult for interim Chief Executive Officer John Stanton to move the money- losing company toward profitability and compete against the two largest U.S. wireless operators, AT&T Inc. and Verizon Wireless. Revenue growth and earnings could be hurt if the Kirkland, Washington-based company still has a high percentage of low- credit customers, said Jonathan Chaplin, an analyst with Credit Suisse Group AG.“These are customers you have to replace every month before you grow,” Chaplin said. “The company would be growing at a faster rate if they didn’t have churn rates as high as they do.”Clearwire’s revenue is projected to double to $1.26 billion this year, as the net loss widens to $902.2 million, according to average estimates from analysts surveyed by Bloomberg.The company reported 6.15 million subscribers at the end of the first quarter, up from 688,000 at the end of 2009. The percentage of retail customers who leave each month, or churn, rose from 2.6 percent in the first quarter of 2009 to 3 percent or more for the past seven quarters. Verizon’s retail churn was 1.33 percent in the first quarter.Fraud InvestigatorsClearwire has fraud investigators to deal with salesmen or independent dealers who engage in unauthorized credit practices, said DiGioia, who wouldn’t comment on whether the company has taken steps to tighten its credit oversight recently. The company does have “flexibility” in its credit system so it can offer Clearwire’s contract service to a wide group of potential customers, he said.“I can’t say that we had a specific program directly set up to address this, but I can say, as a matter of corporate governance, we do have a fraud department that works to look for and address abuses like that,” DiGioia said. “Everything was set up with the best of intentions.”Clearwire fell 30 cents, or 6.9 percent, to $4.04 in Nasdaq Stock Market trading at 4 p.m. New York time. The shares have dropped 22 percent this year.The company was reshaped into a high-speed wireless provider offering 4G technology in 2008. Sprint Nextel Corp. took a majority equity stake in the company after folding assets into Clearwire as part of a $3.2 billion investment in the company with Google Inc., Comcast Corp., Time Warner Cable Inc., Intel Corp. and Bright House Networks LLC.Wholesale and RetailClearwire sells capacity on its network wholesale to companies including Sprint and Time Warner Cable so they can resell to consumers, and markets its own Clear service through its own stores and independent distributors like Cruz and Kurji. The company’s wireless service can be used to connect laptops and smartphones to the Internet.The company, which has lost money for the last ten quarters, has backed away from building its own retail stores after cash shortages. The wholesale business accounted for 4.86 million subscribers at the end of March, more than three quarters of Clearwire’s total.Cruz started selling Clearwire service at one store in 2009 and later partnered with David Raponi at a few others. They would check credit reports for potential customers with companies like Equifax Inc. and then assign each one a letter grade, from A to E, or N if the customer didn’t have enough information for a score.‘Time Bomb’A manager for Clearwire encouraged their staff to lower standards to sign up customers who scored D, E or N, covering those with the worst credit, Cruz said. The manager confirmed the practice in an interview and agreed to discuss it on the condition he wouldn’t be identified.“As time went on, it became more lenient,” said Cruz, who was a distributor for Clearwire for about a year starting in November 2009. “It was just a time bomb.”Cruz said the Clearwire manager approved certain customers with low credit scores, while his employees handled others. The practice increased commissions for salesmen and helped Clearwire representatives meet sales goals for bonuses, Cruz said.“Wanted to check with you and see if there’s ANY CREDIT OVERIDES I can help you get in TODAY?” the Clearwire representative wrote in the e-mail obtained by Bloomberg News.Manager Approval“I always hear from reps ‘I’m not selling because no one can pass credit checks’,” he wrote. “The time has come for you to call BS and on your reps (and yourself if needed!) and for the credit excuse to END now! I will personally enter in the credit overrides under your dealer code.”“PS, you can thank me later for DOUBLING YOUR COMMISSIONS!” he said in the e-mail dated March 2010.The Clearwire manager said he thought salesmen were using failed credit tests as an excuse for low sales numbers when, in reality, they weren’t approaching enough potential customers. He left the company last month, he said.It’s up to general managers for specific Clearwire regions to override failed credit checks, company spokesman DiGioia said. Outside dealers like Cruz would have to send applications to a Clearwire regional manager for approval.Howard Kim, an independent dealer who runs 12 stores and 21 mobile kiosks in Texas and other states, said he has had a different experience with Clearwire. Kim, who has been selling the wireless service since May 2009, said about 90 percent of his requests for credit overrides are rejected.Clearwire gave managers leeway to sign up customers with low credit or no credit score under certain circumstances, said Rick Baughman, a former regional vice president for the company.Texas OverridesIn Texas, where he and Cruz worked, many people have low or no credit scores, because they’re immigrants without social security numbers or lower-income workers who use cash instead of credit cards. Because of that, people who showed they pay rent or other bills on time could have a credit score overridden.“In some cases, managers had the ability to override some credit scores,” said Baughman, who said he was laid off in November. “Depending on the day of the month and the month of the quarter, it was encouraged.”The overrides were practiced nationwide and were sometimes used too often, Baughman said. After hearing about the e-mail to Raponi and Cruz, Baughman said he tightened the credit override policies in his market.Raponi said his staff signed up thousands of customers by lowering credit standards, and about 80 percent qualified for service only through overrides.AT&T ComparisonAT&T does at times sign up customers who don’t meet its credit standards, said Mark Siegel, a company spokesman, though it then typically requires extra security such as a deposit. Clearwire would override credit standards if potential customers showed steady payments for utilities or other bills, Cruz said.Last year, Clearwire installed updated software that made it easier for dealers to sign up customers without social security numbers, which are used in credit checks, said Cruz.A new button appeared on Clearwire’s credit-check system that allowed salespeople to skip the step of entering a social security number. Instead, dealers could do a “soft” credit check by reviewing names and birth dates, which made it easier to approve customers, he said. Employees could also use the records of people with similar names and better credit to pass a prospective customer, he said.‘Chargebacks’Baughman confirmed the social-security override software, though he didn’t know of any examples of people using it to enter false information. The button was put in because some users were uncomfortable giving out their number, he said.DiGioia said the option to skip the social security check was installed because customers expressed privacy concerns.Cruz, Raponi and Kurji say the credit practices ended up costing them money, though they didn’t realize at the start that would be the case. Customers who signed up for service often left after a few months or weeks, frequently without paying any bills. Cruz and Raponi say as many as 60 percent of their customers were defecting in some months.Such departures meant that dealers had to pay Clearwire what the company called “chargebacks,” according to Cruz. They had to repay commissions received for new customers and make up Clearwire’s marketing costs if the customer quit his contract within six months, Cruz said.Dealers began discussing their problems on a website called clearwiresucks.com last year. The three decided to speak publicly this year for the first time, as they heard about others having similar issues.Kurji, who was told he was one of Clearwire’s top two dealers in the nation, said he closed shop after losing more than $500,000. He is considering a lawsuit against Clearwire, he said. Raponi estimated he lost between $75,000 and $80,000, while Cruz said he still owes Clearwire about $28,000.The rising payments to Clearwire in chargebacks made it impossible to stay in business, said Kurji.“How am I supposed to pay for my employees?” he said. “Now I’m bleeding money.”--Editors: Peter Elstrom, Ville Heiskanen
To contact the reporters on this story: Amy Thomson in New York at athomson6@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
Need Innovation? Hire an Entrepreneur
Twenty years ago, "entrepreneur" was spelled "L-O-S-E-R." If you were a bright, talented college grad, the only road to success was by working your way up the corporate ladder.
Today that's not the case. Recently we spoke at an event in Charlotte, N.C., called the Extreme Entrepreneurship Tour, a series of conferences for aspiring young entrepreneurs. In the audience were hundreds of high school and college kids, feverishly taking notes. The tour, which is only five years old, will attract an estimated 20,000 students this year.
A high percentage of those students will pursue their entrepreneurial passion in college. The number of entrepreneurship courses nationally has grown from 250 in 1985 to more than 5,000. This is now the hottest degree for the ambitious with dreams of becoming billionaires before age 29. Thank you, Mark Zuckerberg.
If you lead a large corporation, you may think none of this matters. You're probably getting plenty of well-qualified, new management applicants, especially given the weak economy.
What you do not realize is you're losing access to a certain type of individual—the kind who makes things happen, the risk-takers who drive change and help create disruptive innovation.
We studied sources of innovation in 25 consumer product categories over 50 years. From the 1960s to the 1980s, 64 percent of all major new innovations came from large corporations (more than $1 billion in revenue). During the past two decades, only 16 percent of innovations came from large companies, while 84 percent of them came from startups or small companies.
In corporations, disruptive innovation has always been somewhat serendipitous. Great corporate innovations are rarely planned by senior managers or chief executive officers, unless your name happens to be Steve Jobs.
To have any chance of finding that next "New Thing," you need entrepreneurial-minded people in the lower- to middle-management ranks pushing the boundaries and challenging the organization. Only now those people are opting out of the corporate experience altogether and getting venture capital funding to compete with the large firms they shun.
Many people mistakenly think this trend is all about technology; it's not. Take the most mundane category: cleaning products. During the past decade, it was reinvented by two young entrepreneurs, Eric Ryan and Adam Lowry, who bypassed corporate careers to start their own cleaning products company called Method. They built an innovative product line, raised several million dollars from VCs, and created a $100 million-plus new business that is now one of the leading cleaning lines at Target (TGT) stores.
Method transformed household cleaning, replacing harsh chemicals and utilitarian bottles with elegant packages and unique fragrances that make the drudgery of the task more pleasant.
Their company (now more than 100 strong) has attracted top talent from some of the best schools. These entrepreneurial-minded people prefer a "cool" startup over a traditional corporation (sorry, P&G).
This trend is not likely to change. The resources available to budding entrepreneurs are growing each day. Twenty years ago, there were few role models and fewer resources. Today there is a growing ecosystem of support. A number of other successful entrepreneurs, like Mitch Kapor (Lotus), Jeff Bezos (Amazon.com) and Dave McClure (PayPal) have become active investors in startups.
The Price of Clean Air
Illusration by Emily Keegin & Maayan Pearl
The Fisk Generating Station in the working-class Pilsen neighborhood on Chicago's Lower West Side once symbolized the future. The largest of its kind when it opened, the single-stack, coal-fired plant powered factories and residences throughout a growing metropolis.
That was in 1903. Today, Fisk and its slightly younger sister, the Crawford Generating Station, located nearby in another densely packed area, are relics: two of the more than 200 "legacy" coal-burning plants nationwide that were grandfathered in under 1977 amendments to the Clean Air Act. As a result of legislative compromise, these aging plants remain exempt from some of the act's main requirements that industrial facilities use modern pollution control methods.
Living in Pilsen provides a time-travel experience to an era when the air in American cities was grittier and more dangerous. "Around here, you get this thin gray film of dust on your windowpane and on the patio furniture," says Jerry Mead-Lucero, a local activist who lives near Fisk. "A lot of people don't have air conditioning, so the windows are open in the warm weather, and dust gets into your home or apartment."
And your lungs. Fine particulate matter, sulfur dioxide, and nitrogen oxide emitted by the Fisk and Crawford plants exacerbate respiratory and cardiac conditions, according to public health advocates. A study led by a Harvard School of Public Health professor and published in 2002 in the journal Atmospheric Environment linked the two Chicago plants to 41 premature deaths a year, as well as 550 emergency room visits. As if that weren't enough, Mead-Lucero points out, electricity from Fisk doesn't even go to local residents; the grid sends it to customers elsewhere.
Lawmakers gave Fisk, Crawford, and their ilk a Clean Air Act pass based on the expectation that the old plants would soon close anyway because of decrepitude and inefficiency. The act requires that if such plants are modernized, their owners have to bring them up to code. Congress didn't anticipate that some power companies would forgo modernization. "A lot of utilities have used chewing gum, duct tape, and rubber bands to keep the old plants running, while arguing in court that the changes are merely 'routine maintenance,'" says Henry Henderson, Midwest program director of the Natural Resources Defense Council. The nonprofit NRDC has sued—so far unsuccessfully—to try to force Fisk and Crawford to clean up or shut down.
The plants' owner, Midwest Generation, a unit of Rosemead (Calif.)-based Edison International (EIX), says that it cares about the environment and public health. It also says it obeys the Clean Air Act and all other relevant laws. Over the years the company has reduced the release of mercury and certain other contaminants, adds Douglas McFarlan, Midwest Generation's senior vice-president for public affairs. "We have no problem with the rules continuing to get tougher and tougher," he says. "Our analysis shows, though, that even if our plants closed, you would not see a real difference in Chicago. There are a lot of sources of pollution, and you have to look at the situation holistically."
The confounding problem of Chicago's antiquated power plants is more than a local concern. The situation sheds light on a debate unfolding 700 miles away in Washington over whether to step up enforcement of the Clean Air Act or slip back in the direction of Pilsen.
At least 19 Republican-sponsored bills have been introduced in both houses of Congress seeking to prevent the Environmental Protection Agency from taking actions such as limiting emission of climate-warming greenhouse gases and imposing tougher rules for ground-level pollutants such as mercury. Republicans and their industry allies warn that assertive regulation will hurt energy providers like Midwest Generation, killing jobs in a fragile economy. "Left unchecked, EPA's actions would have a devastating impact on jobs, U.S. competitiveness, and domestic energy prices," Representative Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, said on Apr. 7 after the House passed legislation he wrote forbidding the EPA from regulating greenhouse gases under the Clean Air Act.
How to Survive the End of the World as We Know It: Tactics, Techniques, and Technologies for Uncertain Times
The definitive guide on how to prepare for any crisis--from global financial collapse to a pandemic It would only take one unthinkable event to disrupt our way of life. If there is a terrorist attack, a global pandemic, or sharp currency devaluation--you may be forced to fend for yourself in ways you've never imagined. Where would you get water? How would you communicate with relatives who live in other states? What would you use for fuel?
Survivalist expert James Wesley, Rawles, author of Patriots and editor of SurvivalBlog.com, shares the essential tools and skills you will need for you family to survive, including:
Water: Filtration, transport, storage, and treatment options.
Food Storage: How much to store, pack-it-yourself methods, storage space and rotation, countering vermin.
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Garden, Orchard Trees, and Small Livestock: Gardening basics, non-hybrid seeds, greenhouses; choosing the right livestock.
Medical Supplies and Training: Building a first aid kit, minor surgery, chronic health issues.
Communications: Following international news, staying in touch with loved ones.
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When to Get Outta Dodge: Vehicle selection, kit packing lists, routes and planning.
Investing and Barter: Tangibles investing, building your barter stockpile. And much more.
How to Survive the End of the World as We Know It is a must-have for every well-prepared family.
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Rackspace: Providing Heavenly Service for Cloud Customers
Rackspace is converting a former mall into its HQ Jeff Wilson for Bloomberg Businessweek
By Ari LevyAt a former mall in San Antonio, near escalators that used to shuttle Mervyns shoppers between floors, Rackspace Hosting (RAX) Chairman Graham Weston explains a phrase his 3,500 employees have practically tattooed to their brains: "fanatical support." That's how Weston sees Rackspace beating larger, better-known competitors such as Amazon.com (AMZN) in the business of hosting others' websites and applications on servers around the world.
The 12-year-old company had a decade of near-death experiences, including a disastrous initial public offering during the 2008 financial crisis. (Its stock fell almost 20 percent on the first day of trading.) Since 2007, Rackspace's sales have grown by an average of 30 percent every year, and analysts expect net income to climb 49 percent this year, to almost $70 million. Wall Street has caught on: Rackspace shares, up almost tenfold since early 2009, are trading near an all-time high of $46 per share, valuing the company at more than $5.6 billion. Customers include 40 percent of the top U.S. companies by revenues.
Weston, 47, is an atypical tech entrepreneur. Raised on a south Texas cattle ranch, he used his penchant for finding value in distressed properties to amass a real estate empire that includes San Antonio's tallest office building. He lives on lakeside property purchased out of bankruptcy, and resides there with his wife and three kids in a double-wide trailer bought for $50,000 in a foreclosure sale. Weston built up Rackspace's infrastructure using the same skills: When the dot-com bubble burst, he snapped up three empty data centers for pennies on the dollar. To accommodate the company's growth, Weston paid $32.7 million for the abandoned Windsor Park Mall, which has 1.2 million square feet of space.
Real estate acumen won't help much with Rackspace's biggest challenges, namely, wooing in-demand programmers and stretching its relatively small cash hoard ($134 million, vs. Amazon's $8.76 billion) in a capital-intensive business. Weston and his chief executive officer, Lanham Napier, see customer service as Rackspace's key competitive advantage. Employees have been known to have pizza delivered to customers who are working late or sing Happy Birthday to You via speakerphone. The highest internal award for employees is a straitjacket with the words "Customer service Fanatic" on the front. "It's man vs. machine," says Weston of the difference between Rackspace and its rivals. "We have to become one of the most trusted people in our customers' lives."
Rackspace says the contrast is most apparent when disaster strikes. When Amazon's cloud-hosting service crashed in April, some found the Seattle company's response lacking. "They could've communicated better while it was happening," says Christopher Ahlberg, who received a two-week credit and an apology letter from Amazon when his data analysis startup, Recorded Future, went down. An Amazon spokeswoman says the company "identified improvements that need to be made in our customer communications" and is now implementing them.
When Rackspace lost power in 2007, employees called thousands of customers to apologize, explain the situation, and promise refunds. "What separates the men from the boys in this world is how they communicate," says Sean Andersen, director of interactive services for Six Flags Entertainment (SIX) and a Rackspace customer who says he was wholly satisfied with the company's response to the 2007 outage.
Rackspace is so insistent on customer experience as a competitive advantage that it's willing to give away its technology. The company spent three years building software tools to make it easier to set up cloud-storage systems. Last year it made the source code freely available as part of a project called OpenStack. It's a big risk: Dell (DELL) and Citrix Systems (CTXS) have said they will be selling systems based on OpenStack that could compete with Rackspace's offerings. Yet managing those systems still requires expertise, according to Lew Moorman, Rackspace's chief strategy officer and the president of its cloud unit. The company's betting that OpenStack users will hire Rackspace to do it for them. "Ultimately, we want to make it a better experience and not a technology game," Moorman says. "We think we're going to do it better than others."
The bottom line: Its stock near an all-time high, Rackspace is giving away software in hopes of wooing new customers to its suite of services.
Levy is a reporter for Bloomberg News.Zynga Is Said to Be Close to Hiring Goldman Sachs to Lead IPO
June 3 (Bloomberg) -- Zynga Inc. is in talks to have Goldman Sachs Group Inc. lead its initial public offering and provide a credit line of more than $1 billion to help make acquisitions, said a person with knowledge of the matter.
Goldman Sachs is expected to make a decision by today, said the person, who asked not to be named because the announcement hasn’t been made public. Zynga, the largest maker of games for Facebook Inc.’s site, is preparing to file for an IPO by the end of this month, the person said.Social-media companies are lining up for IPOs after shares of LinkedIn Corp., the largest professional-networking site, more than doubled in their debut two weeks ago. Groupon Inc., the biggest online coupon site, announced plans yesterday to raise up to $750 million in an IPO, and music streaming service Pandora Media Inc. is seeking as much as $123.2 million.As of early last week, Zynga had met with representatives of Goldman Sachs and Morgan Stanley, both based in New York, and was close to choosing bankers, a person familiar with the matter said at the time. Morgan Stanley, Goldman Sachs and Credit Suisse Group AG are underwriting Groupon’s IPO.Dani Dudeck, a spokeswoman for San Francisco-based Zynga, declined to comment, as did Andrea Rachman, a spokeswoman for Goldman Sachs.Zynga has 242.1 million monthly active users on Facebook, more than six times as many as the second-biggest developer, according to research firm AppData.com. The company owns three of the four most popular apps on the site -- “CityVille,” “FarmVille” and “Texas HoldEm Poker.”Virtual GoodsThe games are free to play, with the company making money by selling digital -- or virtual -- goods within the apps and letting players pay to reach higher levels. The worldwide virtual-goods market is expected to more than double to $20.3 billion in 2014, from $9.28 billion last year, according to ThinkEquity LLC, a San Francisco-based research firm.Zynga has acquired at least 10 companies in the past year, helping it expand beyond Facebook games and into smartphone apps. The company bought Newtoy Inc., maker of “Words With Friends,” in December. Four months later, it acquired Wonderland Software, creator of “GodFinger.”Zynga is valued at $8.2 billion on SharesPost Inc., an exchange that connects buyers and sellers of privately held companies. That makes it the second-most valuable U.S. game company, after Activision Blizzard Inc. Electronic Arts Inc. is third, at $8.1 billion on the Nasdaq Stock Market. Zynga recently hired former Electronic Arts Chief Operating Officer John Schappert for a senior role.Zynga is backed by venture firms Foundry Group, Union Square Ventures, Kleiner Perkins Caufield & Byers, Institutional Venture Partners and Andreessen Horowitz. Russia’s Digital Sky Technologies and Google Inc. are also stakeholders. In February, Zynga was in talks to raise funding at a valuation of about $10 billion from T. Rowe Price Group Inc. and Fidelity Investments, two people familiar with the matter said at the time.--With assistance from Douglas MacMillan in San Francisco. Editors: Nick Turner, Tom Giles
To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net.
To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net.
Amazon May Soon Need to Collect Sales Tax
Illustration by Topos Graphics
By Brad StoneCalifornia visitors to Wal-Mart Stores' (WMT) website must pay $214 to buy a Philips Electronics (PHG) 22-inch LCD HDTV, one of the hottest-selling flat-panel televisions on the Web. Customers of Amazon.com (AMZN) in that state see a price of $194 for the same product. The discrepancy stems largely from something that dates back to Julius Caesar: sales tax. Wal-Mart, with about 100 stores in California, has to collect it. Amazon, with no stores in California—or anywhere else, for that matter—does not.
There's a growing sense among state and federal lawmakers that the online sales-tax reprieve, once meant to support and nurture a fledgling industry, constitutes an advantage that Amazon, with 90 million customers and $34 billion in annual sales, no longer needs. Over the past year an escalating war over online sales taxes has spread to Texas, Connecticut, California, and dozens of other states. Later this month the battle will reach Capitol Hill. Senate Majority Whip Dick Durbin (D-Ill.) says he plans to introduce a bill, called the Main Street Fairness Act, mandating that all businesses collect the sales tax in the state where the consumer resides.
Such measures have been proposed and disregarded by Congress for years, but Durbin believes the winds are shifting. "This idea is overdue," he says. "Online retail sales are now very fulsome and are growing at the expense of local units of government." Many state budgets are bleeding red, despite some recent revenue upswings around the country, and Internet sales-tax revenue has the gleam of found money. In many states, customers are supposed to declare their online purchases on their income tax forms but rarely do. A University of Tennessee study recently estimated that states will collectively lose $10.1 billion in uncollected online sales-tax revenue this year and $11.3 billion next year.
Amazon executives have long argued that state laws requiring it to collect sales tax violate Supreme Court rulings from 1967 and 1992, which stipulate that only retailers with a physical presence, or "nexus," in a state need do so. Surprisingly, Jeffrey P. Bezos, Amazon's founder and chief executive officer, recently told Consumer Reports that he supports federal legislation that rationalizes the patchwork of 30,000 state and local sales-tax jurisdictions around the country, each with its own rules and administrative quirks. Amazon declined to comment on Durbin's proposed bill.
Amazon's actions on the state level have spoken much louder than its words in support of a national solution. The company has fought state-by-state collection efforts, deploying both carrot and stick to hit politicians where they feel it most—jobs. In Texas, when the legislature passed a bill that would force online retailers with distribution facilities in the state to collect sales tax, Amazon announced it would close its shipping center outside Dallas, fire hundreds of local workers, and scrap plans to build other facilities in the state. On May 30, Texas Governor Rick Perry vetoed the bill.
In South Carolina, Amazon won an exemption on a new sales-tax law after threatening to pull its distribution center from the state and agreeing to send customers e-mails reminding them to pay the tax on their own— messages that are likely to be cheerfully ignored. On May 18 in Tennessee, legislators said they would delay considering until next year a bill that would tax online purchases. They were either spooked by Amazon's threat to move its two state distribution centers to Indiana or enticed by its new promise to evaluate locations for up to three additional centers.
Negotiating Technology Contracts in Health Care
Technology spending for hardware, software and consulting services accounts for a significant portion of most health care providers budgets today, especially since the Obama Stimulus Plan and HITECH Act are incentivizing providers to implement electronic health records. In a perfect world, technology works perfectly, improves efficiency and the quality of care and makes life easier for the provider. However, the real world is not perfect and things can, and do, go wrong with technology products and services after you purchase and/or license them from third party vendors. Technology contracts generally are written by the vendors and consultants. Unfortunately, many technology contracts fall short of giving providers adequate protection and often contain hidden pitfalls and costs. Despite this fact, many providers never give these contracts to experienced health lawyers to help them negotiate better terms and protections for their high-tech investments BEFORE signing. This is a potentially costly practice. Every health care provider should be concerned with at least the following FOUR KEY ISSUES, which should be addressed in any technology contract:
Warranties and Limitations of Liability: Despite elaborate sales presentations, technology contracts typically disclaim most, if not all, warranties and limit the liability of vendors to only refunding all or part of the purchase or license price paid for the technology. Such refunds are inadequate to protect the average provider when problems arise. A technology vendor should be required to give a written warranty in the contract that its product will perform in accordance with documented standards and for a reasonable period of time. At a minimum, this time period should be long enough for the provider to evaluate the technology in its operations. A better solution is to require a warranty for the useful life of the technology, or as long as there is a support and maintenance service agreement in place. A vendor also should not be allowed contractually to limit its liability on default only to return of the purchase price. If a provider suffers actual damages caused by the technology, the vendor should be required, in writing, to stand behind its product and services and reimburse such damages. A reasonable compromise is to require the vendor at least to tender the limits of its insurance coverage, which creates minimal additional risk to the vendor while better protecting the provider.
Payments & Performance: A provider should not agree to pay the full purchase price up front, as is often a contract requirement, leaving the vendor with little incentive to complete its responsibilities. The parties should mutually agree in advance upon a project timetable with milestone targets for delivery and implementation of the technology. Payments should be made in installments conditioned upon reaching the targets. In addition, providers should build in testing rights, in order to evaluate whether the technology is performing as promised. The provider always should have the final say in whether a test provides a successful outcome and whether the final payment should be made to the vendor.
Support and Maintenance: A technology hardware purchase or software license is only as good as the support and maintenance that goes along with it. The vendor should be willing to provide support for at least a defined useful life of the technology. Several questions should be answered in a written support agreement. Are updates or upgrades provided without additional charge? Will the vendor perform on-site or off-site support and maintenance? Will the provider pay a monthly fee plus an hourly charge or is there only an hourly charge? Does the hourly charge differ depending on when or what level of support is needed? Do the charges increase over the term of the support agreement? What is the vendor agreeing to support? Will changes made to the technology by the provider automatically terminate the warranty or support obligations? Unless the contract is specific regarding essential issues, a provider may find itself paying for less or different support and/or maintenance services than needed or expected.
Confidentiality: Confidentiality of patient health information is a critical issue. Federal HIPAA law has a variety of privacy and security rules providers and their business associates must follow. In addition, some states, including Florida, have enacted legislation that requires entities that conduct business in the state and which maintain computerized data that contains personal information to provide notice to any resident if there is a breach of security. A technology contract should specify if the vendor will have access to any of the confidential patient information. A health care provider must require the vendor and its employees to maintain the confidentiality of such information under federal and many state laws. The technology contract also should expressly protect the confidentiality of provider trade secrets and other proprietary information to which a vendor or consultant may have access.
Although technology contracts may appear intimidating, as they frequently are presented by vendors in small print and columned format, leading providers to believe they are non-negotiable forms, this is not the case in most instances. Investing the time and resources to have a health law attorney experienced in technology contracting review and help to negotiate contracts for hardware purchases, software licenses, maintenance and support, as well as technology consulting services, can save providers significant expense, disappointment and damages should the technology products or services not perform as promised.
Sandra P. Greenblatt, Esq. is a Florida Bar Board Certified Health Lawyer with more than 20 years experience representing health care providers, payors and businesses in their regulatory, transactional and technology matters. She is President of the health law firm of Sandra Greenblatt, P.A., located in Miami, Florida. You may contact Mrs. Greenblatt through her website, http://FLhealthlawyer.com For a more in depth discussion of technology contracting issues, see Ms. Greenblatt's Chapter on the topic in the 2009 "Health Law Handbook" available through The Florida Bar Health Law Section, or contact her firm to consult on your specific legal issues. This article is copyrighted by Sandra Greenblatt, P.A. and may not be reproduced without the author's prior written consent.
THIS ARTICLE IS AN OVERVIEW OF THE TOPIC AND DOES NOT CONSTITUTE LEGAL ADVICE, WHICH CAN ONLY BE GIVEN ON YOUR PARTICULAR FACTS AFTER ENGAGING THE SERVICES OF OUR LAW FIRM.
Apple Deals for Cloud Service Complete
June 2 (Bloomberg) -- Apple Inc. reached an agreement with Universal Music Group, the largest record label, setting the stage for its new service to let users access song libraries on multiple devices, two people with knowledge of the talks said.
The new music service, enabling customers to store their music on Apple’s servers, will be previewed on June 6 by Chief Executive Officer Steve Jobs at Apple’s annual developers conference in San Francisco, said the people, who declined to be identified because the deals aren’t public.Apple’s deal with Vivendi SA’s Universal Music, whose artists include Lady Gaga and U2, follows agreements with Sony Corp.’s music unit, Warner Music Group Corp. and EMI Group Ltd. By moving the files into the so-called cloud, songs will be available on devices such as the iPhone and iPad without users having to plug in and synchronize the gadgets. Instead, tracks can be streamed from anywhere with a Web connection.To start, the service will be available only for songs that have been purchased through iTunes, said the people. Later in the year, Apple plans to introduce a $25-per-year plan so music purchased outside iTunes can be stored on its servers and streamed through an Internet connection.Under the agreements with the labels, revenue from the cloud service will be split between Apple and the music companies. Apple will collect 30 percent, while the record labels will get 58 percent and owners of publishing rights will get 12 percent, the people said.Earlier this week, Cupertino, California-based Apple said it would discuss its new iCloud service at the developers conference. The company also will talk about upgrades to its software for Mac personal computers and mobile devices.Cnet.com earlier reported Apple had reached an agreement with Universal Music Group.--Editors: Jillian Ward, Nick Turner
To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Andrew Fixmer in Los Angeles at afixmer@bloomberg.net
To contact the editors responsible for this story: Thomas Giles at tgiles5@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net