Thursday, February 2, 2012

Downside of Facebook; Malaria myths shattered; India telecom licences annulled; UK recession looms; Indonesia is 'Fesbuk' nation; Plastic problems

1 Downside of Facebook (San Francisco Chronicle) In its eagerly awaited initial public offering filing, Facebook said its annual revenue last year totaled $3.7 billion as profits hit $1 billion. About 845 million people around the world check into the site at least monthly - and nearly 500 million do so daily - giving Facebook the kind of global reach usually associated with a century-old brand like Coca-Cola. But as Champagne goes on ice across Silicon Valley and workers tally up their options, it's worth taking a moment to think hard about what's at work behind these numbers.

For all the concern surrounding Google's behavior today, it's hard to dispute that the founders started with fairly exalted goals - organizing the world's information - and then wrapped a breathtakingly successful business model around them. With Facebook, it almost feels like the other way around. After Facebook's early success at Harvard, its founders spotted a great business opportunity and showered us with platitudes about "openness" and "connection." To be sure, social networking is entertaining and fun. But when you get down to it, as a colleague of mine said, "It's a thin coat of paint over a massive data-mining operation."

At least with television, we submit to advertising in exchange for professionally produced content. At least with Google, the trade-off is the best information retrieval tool going. Facebook just invites us into a big open room that we have to fill up with interesting things. And in exchange for free rent on that unfurnished virtual space, we hand over the intimate details of our lives: our relationships, weddings, illnesses and tragedies. All of which would be less unsettling if Facebook had proven a trustworthy steward of that personal information. But it hasn't.

2 Malaria myths shattered (The Guardian) Malaria kills twice as many people every year as formerly believed, taking 1.2 million lives and causing the deaths not only of babies but also older children and adults, according to research that overturns decades of assumptions about one of the world's most lethal diseases. Dr Christopher Murray and colleagues have systematically collected data on deaths from all over the world over a 30-year period, from 1980 to 2010, using new methodologies and inventive ways of measuring mortality in countries where deaths are not conventionally recorded. Their figure of 1.2 million deaths for 2010 is nearly double the 655,000 estimated in last year's World Malaria Report.

The good news is that they have confirmed the downward trend that the World Health Organisation's report showed, as a result of efforts by donors, aid organisations and governments to tackle the disease. The bad news is that the decline comes from a much higher peak – deaths hit 1.8 million in 2004, they say. That means the interventions such as better treatment and bed nets are working, but there is much further to go than everybody had assumed. The study demolishes conventional thinking on malaria – that almost all the deaths are in babies and small children under the age of five. The study found that 42% were in older children and adults.

3 Five things about Facebook (The Guardian) 1. Mark Zuckerberg is in control. If you thought Rupert Murdoch had a tight grip on News Corp, spare a thought for anyone at Facebook who disagrees with its founder. Mark Zuckerberg owns 28% of the company's shares, but has struck an agreement with 56.9% of shareholders that gives him control over their votes. 2. A lot of people are going to get very rich. No price has been set for the company yet, but estimates are ranging between $75bn and $100bn. At the top end of that range, Zuckerberg's stake is worth $28bn, equivalent to the gross domestic product of North Korea. James Breyer, a Facebook board member and a partner at Accel Partner, Facebook's largest investors, stands to make a fortune. Accel owns 11.4%. Dustin Moskovitz, Facebook's co-founder and former chief technology officer, has 7.6%. Yuri Milner, the Russian tycoon behind investor DST Global, will also increase his billions, since DST owns a 5.5% stake. 3. Even the losers are winners. Eduardo Saverin, Zuckerberg's early partner at Harvard who was depicted as having been cheated out of his share of the company in the film The Social Network, does not own more than 5% of Facebook – his holding was not listed in yesterday's documents – but he is still likely walk away with a fortune. Even the Winklevoss twins, Zuckerberg's mortal enemies, come away winners. They hold 1.2m shares from a court settlement over their claims that Zuckerberg stole their idea. Those shares are now potentially worth $300m. 4. But you won't make any money any time soon. For one thing, Facebook shares won't begin publicly trading for several months, because the SEC needs to assess the validity of a potential IPO. But even once trading begins, getting in on the action is a long shot, and for retail investors (ie the man in the street) odds are you will have to buy when the price has already spiked. 5. It's the cash, dear. The biggest reason for any IPO. Facebook only has $3.9bn in cash right now, a paltry sum if it's looking to strong-arm competitors like Google, which has cash and short term investments of close to $45bn. Then there's the fact that Facebook's investor base is growing. Federal law mandates companies with more than 500 investors and $10m in assets to disclose quarterly financial results and certain other information. So, basically, they had no choice. Poor dears.

4 AstraZeneca cutting 7,300 jobs (The Guardian) AstraZeeca is cutting 7,300 jobs globally as the pharmaceuticals company battles sliding profits and rapidly declining success rates in research and development. The cuts, to be made over the next three years, come on top of 21,460 jobs cut since 2007 as part of a global reorganisation of the group, including big reductions in its US sales force. AstraZeneca employs 61,000 people worldwide. The latest cuts, which will cost $2.1bn to implement, are expected to save $1.6bn a year by the end of 2014.

5 India Court cancels telecom licences (BBC) India's Supreme Court has cancelled 122 telecommunications licences awarded to companies in 2008. The licences were issued by former minister A Raja, who is accused of mis-selling bandwidth in what has been called India's biggest corruption scandal. Mr Raja denies wrongdoing. Government auditors say the scandal cost the country about $40bn. India is one of the world's fastest growing markets for mobile telephones with 893 million connections. Reports say Thursday's verdict is likely to affect about 5% of connections used by mobile phone customers. Petitioner Prashant Bhushan called it a "historic judgement". "It will change the manner in which corruption will be examined and dealt with in the country," he said.

Reports said some of the companies affected by the court order include Loop, Videocon, Idea Cellular, Tata Telecom, Uninor and Swan. Uninor, the Indian joint venture of Norway's Telenor, said it had been "unfairly treated" and "was shocked" by the court verdict. Telenor President Jon Fredrik Baksaas said the ruling was "extraordinary", and that "If the worst comes to worst, it will be the end of Telenor's business in India."

6 UK recession looms (BBC) The UK economy will enter recession in the first half of the year as households continue to cut back, an influential think tank has warned. The National Institute of Economic and Social Research (Niesr) expects the economy to shrink 0.1% in 2012, but to grow 2.3% in 2013 if the eurozone debt crisis is resolved. The UK is already close to another recession - defined as two consecutive quarters of economic contraction - after official figures in January showed that the economy shrank by 0.2% in the final three months of 2011.

7 TV channel fined for Gaddafi footage (Johannesburg Times) Television channel e.tv has been fined R35,000 for airing violent footage of the killing of Libyan leader Muammar Gaddafi. The Broadcasting Complaints Commission of SA (BCCSA) received complaints in October, the regulator said in a statement.

E.tv news and the eNews Channel showed the footage without providing an advisory warning its viewers about the violence. The complainant said there had been images of Gaddafi in newspapers and on television after his death. "But I was utterly outraged this morning when at 7.30am and every time e.tv news channel 403 ran its headlines. They showed the moments before Gaddafi's death, where he was surrounded by lots of men and was clearly being beaten and dragged," the complainant wrote. "The images were shown with no prior warning to viewers and repeatedly until at least 12 noon."

8 Facebook and Glenstrata: Which is bubblier? (BBC) Some would argue there are two great bubbles in the world right now, in internet shares and commodities, but goodness how they manifest themselves differently on the stock market. Today's manifestations of these phenomena are the merger talks between the mining and commodities trading groups Xstrata and Glencore, plus the announcement that Facebook will be coming to the stock market. Both represent big deals: a merger of Xstrata and Glencore would be worth around $110bn, and Facebook looks set to have a market value of around $80bn. But what's under their respective bonnets could not be more different.

Glenstrata or Xcore would have revenues well over £110bn a year and after tax earnings of £6bn. So its market value would be less than the money going through its books. As for Facebook, its revenues last year were £2.3bn or $3.7bn - which is less than a twentieth of its expected market valuation. And profits after tax were a billion dollars, an eightieth of what the company is likely to be worth when shares are traded. Now you might be tempted to conclude that Facebook is the bubble stock and Glenstrata can't possibly be.

But it is not quite as simple as that, because in the case of Glenstrata, the bubble may be in their earnings rather in the share price. For Glenstrata it is whether the rise in price and increases in demand for copper, iron and coal and all those other feedstocks of the still fast-growing Chinese economy can go on forever. And for Facebook the issue is whether its turnover will continue to rise at an exponentially fast rate - basically whether it can generate ever growing revenues from its 845m monthly active users.

9 Pain for Panasonic (The Straits Times) Japan's Panasonic is bracing for a record net loss of more than Singapore $11.5 billion for the year to March due to the strong yen, Thai floods and acquisition costs. The new forecast is the worst-ever loss for Panasonic and far exceeds its earlier projection of a 420-billion-yen hit.

10 Indonesia is ‘Fesbuk’ country (Dawn) Indonesia, a developing Muslim nation which claims the world’s third-largest community of Facebook users, has become a showcase for the social networking site’s global power and reach. Facebook has broken technological and social barriers to connect 40 million users in the sprawling Indonesian archipelago of more than 17,000 islands, some without even landline connections. With even cheap cell phones in Indonesia sold already bundled with Facebook applications, for many, “Fesbuk” – as it is written in the national Bahasa language – simply is the internet.

Internet penetration via computers is low in Indonesia at less than 10%, but many have leapfrogged that technology by using wildly popular smart-phones which have seen mobile internet penetration reach 57%. “It’s the Facebook capital of the world,” Peter Vesterbecka, Rovio’s Asia-Pacific manager, said recently in the capital Jakarta, which has more Facebook users than any other city in the world. But in the world’s most populous Muslim nation, known for its strong religious and cultural beliefs, Facebook is not all fun and games. Indonesians are learning everything from English to the Koran through Facebook groups. Facebook group “Gay Indonesia Only!” with more than 8,000 members is a forum for homosexuals to meet and interact online.

11 Mohammed Ali’s trainer dies (Dawn) Celebrated boxing trainer Angelo Dundee, Muhammad Ali’s cornerman in his greatest fights, died on Wednesday at the age of 90. While working with Ali for the majority of the boxing great’s career, Dundee trained 15 world champions in total, including Sugar Ray Leonard and George Foreman. Dundee’s work spanned six decades and he was inducted into the International Boxing Hall of Fame in 1994, cementing his legacy as an invaluable asset to some of the most decorated boxers of all time.

12 A world caught in ocean of plastic (Dawn) On Midway atoll in the North Pacific, dozens of young albatross lie dead on the sand, their stomachs filled with cigarette lighters, toy soldiers and other small plastic objects their parents have mistaken for food. That sad and surreal sight, says Hong Kong-based Australian film director Craig Leeson, is one of the many symptoms of a plague afflicting the world’s oceans, food chains and human communities: the onslaught of discarded plastic. “Every piece of plastic ever made since the 1950s exists in some shape or form on the planet,” Leeson says. “We throw plastic into a bin, it’s taken away from us and we never see it again – but it still comes back at us.”

Provisionally called “Away”, the film – backed by David Attenborough and the UK-based Plastic Oceans Foundation – brings together new research on the spread of plastic with missions by “explorers” such as Ben Fogle to show the diverse effects of plastic trash. Its message is that while you may throw out your plastic goods, they are never really thrown “away”.

13 India’s telecom muddle (The Wall Street Journal) Navigating India's bureaucracy while trying to run an honest business is already difficult. On Thursday a Supreme Court verdict made it harder. In response to a petition by anticorruption activists, the court issued a ruling which means that even if a company manages to keep its own nose clean and win regulatory approval without paying off greedy bureaucrats, it could still lose its license to operate if competitors bribed officials.

The court canceled all 122 mobile phone licenses Delhi awarded in 2008 because former Telecom Minister Andimuthu Raja decided to do so on a first-come, first-served basis, instead of through a fair auction. This approach was indefensible, and the case has snowballed into the largest corruption case in Indian history. It's hardly an aberration. Judging by reports, graft and abuses of power are reaching epidemic proportions. The impact of the decision on the affected companies and consumers will be harsh. The nine companies who hold these 122 licenses have four months to shut down their operations, which will inevitably lead to hefty write-offs of their investments to roll out cellular networks

14 Meetings are stand-up jobs (The Wall Street Journal) Atomic Object, a Grand Rapids, Mich., software-development firm, holds company meetings first thing in the morning. Employees follow strict rules: Attendance is mandatory, non-work chitchat is kept to a minimum and, above all, everyone has to stand up. Stand-up meetings are part of a fast-moving tech culture in which sitting has become synonymous with sloth. The object is to eliminate long-winded confabs where participants pontificate, play Angry Birds on their cellphones or tune out.

15 Raghu Dayal in The Times of India: What Delhi, Mumbai or Kolkatha are left to mean to an ordinary citizen is crime, grime and chaos; vast wastelands of miseropolis. (My take: He doesn't know much of Chennai, capital of Tamil Nadu.)

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