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Canada's Government Could Topple ( VIA Wall Street Journal) December 1, 2008

OTTAWA — Canada’s minority Conservative government, re-elected less than two months ago, could be toppled in the next few days if Prime Minister Stephen Harper doesn’t make changes to an economic statement that has all three opposition parties up in arms.

Two of the three Canadian opposition parties are negotiating to form a coalition government, which the third has agreed to support, if the government is defeated in a confidence vote in the House of Commons on the government’s updated budget forecast, which the opposition parties said doesn’t address the financial crisis. The plan also would eliminate some subsidies to political parties.

Former Liberal Prime Minister Jean Chrétien and Ed Broadbent, former leader of the New Democratic Party, are brokering a behind-the-scenes deal, according to a person familiar with the matter.

The two parties plan to ask Governor General Michaëlle Jean to allow them to govern as a coalition if the Conservative government is defeated. The Quebec-based separatist Bloc Québécois will support them, but won’t be part of a coalition.

Finance Minister Jim Flaherty’s economic and fiscal update, delivered on Thursday, contained an array of spending cuts to keep the budget in surplus. The projected surplus for the current fiscal year ending in March 2009 was pared to 800 million Canadian dollars (US$650 million) from C$2.3 billion predicted in the C$241.9 billion budget last February. In the following two fiscal years, the surplus is now expected to be just C$100 million each year, down from C$1.3 billion and C$3.1 billion respectively.

The plan didn’t contain measures to stimulate an economy that Mr. Flaherty acknowledged was in a recession. The government said it was reviewing spending to save C$4.3 billion in the next fiscal year and as much as C$11.3 billion over four years after that.

The opposition parties said the plan fails to address the growing financial crisis in Canada. But their ire was especially stoked by a controversial plan to eliminate about C$30 million a year in taxpayer subsidies to political parties. Although the Conservatives stand to lose the most, they attract more contributions from individual donors, unlike their opposition rivals that depend to a greater degree on the subsidies.

A spokesman for Mr. Harper said Friday that the prime minister is prepared to stand his ground on the political subsidy issue.

Original Article HERE

MediaPost Publications – Around the Net In Online Marketing – 11/11/2008 November 11, 2008

Read The Rest—>MediaPost Publications – Around the Net In Online Marketing – 11/11/2008

WSJ Video Global Markets in Turmoil, NYSE on the Market Crises and Investors Reaction September 17, 2008

Mossberg on Apple's Mobile Me launch failure July 28, 2008

Expecting Google to Gain Traction July 17, 2008

…

All eyes on Google for signs of online ad slowdown

SAN FRANCISCO (MarketWatch) — Google Inc. is expected to post strong profit and sales growth when it reports fiscal second-quarter results after the market’s close Thursday, while investors and analysts will be keen to hear what the market leader has to say about the health of the online advertising business.

GOOG 533.44, -2.16, -0.4%) will post earnings excluding special items of $4.70 a share, and net revenue of $3.86 billion, according to FactSet Research.

Microsoft's dealings with Yahoo! too Complicated? July 15, 2008

…

Mossberg on iPhone apps July 15, 2008

Newer, Faster, Cheaper iPhone 3G July 9, 2008

Apple Inc.’s iPhone has been the world’s most influential smart phone since its debut a year ago, widely hailed for its beauty and functionality. It was a true hand-held computer that raised the bar for all its competitors. But that first iPhone had two big drawbacks: It was expensive, and it couldn’t access the fastest cellular-phone networks.

On Friday, Apple is launching a second-generation iPhone, called the iPhone 3G, which addresses both of those problems, while retaining the look and feel of the first model’s hardware and software.

The base version of the new iPhone costs $199 — half the $399 price of its predecessor; the higher-capacity version is now $299, down from $499. Yet, this new iPhone is much, much faster at fetching data over cellphone networks because it uses a speedy cellular technology called 3G. And it now sports a GPS chip for better location sensing.

The company also is rolling out the second generation of its iPhone operating system, with some nice new features, including wireless synchronization with corporate email, calendars and address books. And there’s a new online store for third-party iPhone programs that Apple hopes will make the device usable for a wider variety of tasks, including gaming and productivity applications. This new software and store will also be available on older iPhones, through a free upgrade.

I’ve been testing the iPhone 3G for a couple of weeks, and have found that it mostly keeps its promises. In particular, I found that doing email and surfing the Internet typically was between three and five times as fast using AT&T’s 3G network as it was with the older AT&T network to which the first iPhone was limited.

The iPhone 3G is hardly the first phone to run on 3G networks, and it still costs more than some of its competitors. But overall, I found it to be a more capable version of an already excellent device. And now that it’s open to third-party programs, the iPhone has a chance to become a true computing platform with wide versatility.

There are two big hidden costs to the new iPhone’s faster speed and lower price tag. First, in my tests, the iPhone 3G’s battery was drained much more quickly in a typical day of use than the battery on the original iPhone, due to the higher power demands of 3G networks. This is an especially significant problem because, unlike most other smart phones, the iPhone has a sealed battery that can’t be replaced with a spare.

Second, Apple’s exclusive carrier in the U.S., AT&T Inc., has effectively negated the iPhone’s up-front price cut by jacking up its monthly fee for unlimited data use by $10. Over the course of the two-year contract you must sign to get the lower hardware prices, that adds $240, overwhelming the $200 savings on the phone itself. If you want text messaging, the cost rises further. With the first iPhone, 200 text messages a month came free. Now, 200 messages will cost $5 a month, or another $120 over the two-year contract.

The iPhone 3G still has a couple of features that made the first version unpalatable to some potential buyers. It uses a virtual on-screen keyboard instead of a physical one. While I find the virtual keyboard easy and accurate, not everyone does. Also, in the U.S. and in many other countries, the iPhone is still tied to a single exclusive carrier, whose coverage or rate plans may be unacceptable to some.

Here is a rundown of the changes in the new model.

READ THE REST OF THIS WALL STREET JOURNAL ARTICLE CLICK HERE

NEWSPAPERS have lost the lead in local online advertising for the first time December 18, 2007

Local Papers’ Web Scramble

With Web companies now beginning to dominate the market for local ads online, newspaper publishers are scrambling to change the way they sell ads, hiring sales teams that specialize in the digital market and creating new editorial packages to sell. But it may be a case of too little, too late. McClatchy, which publishes 31 daily newspapers around the country, is revamping its commission and incentive plans to better reward staff for online sales. Gannett now operates 50 mom-centric social-networking sites around the U.S. as part of a broader strategy to boost online revenue through what it calls “hyper-localized” sites. Other publishers, from Lee Enterprises to Media General, are taking steps of their own to jump-start sales of local online ads.

But time may be running out. Now, for the first time, pure-play Web companies have the biggest share of the local online-ad market. In 2007, Internet companies had a 43.7% share of the $8.5 billion local online-ad market, while newspaper companies had a 33.4% share, according to the media research firm Borrell Associates. Just three years ago, newspapers had 44.1% of the local online-ad market. (Directories such as the Yellow Pages have 10.1%, and local television outlets 9.3%.)

Local media companies, because they are based in the communities they serve, would seem to have an edge over Internet sellers when it comes to persuading the diner or corner hardware store to take out an ad. But they have largely failed to convert that advantage into sales. Instead of tailoring their sales to local businesses, many newspaper companies initially focused on selling ads to bigger advertisers who were already buying space in their print products.

While this strategy allowed them to quickly and cheaply create a customer base for their online ventures, it also limited their growth, because they weren’t expanding their customer base. Many newspapers also hurt themselves by simply plopping their papers online instead of creating new Web sites that offered advertisers something they couldn’t get in print. Meanwhile, Web companies such as Google and Local.com are growing rapidly because they have made it cheap and easy for local companies to take out ads.

“Newspapers are tied too closely to defending their print products and have not seen the Internet as an innovative and competitive tool to go out and compete,” says Gordon Borrell, chief executive of Borrell Associates.

Newspapers are feeling the biggest effects of this competition — local TV outlets and directory businesses aren’t experiencing the same degree of erosion in their core ad revenue. Analysts say newspapers may have maxed out on the amount of ads their existing print customers will buy online. They point to a slowing in the growth of online revenue across the newspaper industry. Online-ad revenues rose 21.1% in the third quarter to $773 million, down from 23% in the same quarter last year. The growth was as high as 39.7% in the first quarter of 2005. For newspapers, this slowing trend is taking place amid steep declines in the sales of print ads.

“All of the players, from Google to other local media companies, are putting more attention on going after the local dollar,” says Jack Williams, president of Gannett Digital, the Gannett unit responsible for developing online revenue.

On the plus side for newspapers, there is still a huge potential opportunity: Spending for local online ads is expected to grow 48% next year to $12.6 billion.

On the flip side, newspapers have a massive challenge ahead: Online-ad revenue at newspapers made up only 7.1% of total revenue in the third quarter, according to the Newspaper Association of America. Analysts say that ideally that figure should be in the low double digits, then hit the midteens in about five years as the drop in print revenues stabilizes.

Increasingly, newspapers are deciding to form deeper alliances with their main competition. More than a year ago, Yahoo struck a deal with about a half-dozen newspapers to create a national online-ad sales network. Since then, additional newspapers have signed up. In the coming year, papers in the alliance will start using Yahoo technology on their sites so that they can sell more-sophisticated ad offerings, such as behaviorally targeted ads. Separately, a group of 11 newspaper companies representing nearly 300 newspapers recently formed a partnership with real-estate site Zillow.com to tap into more real-estate classified ads.

Analysts say these kinds of steps will help but that none is a silver bullet. “Ultimately, it is going to take a lot of singles to really have a significant impact on the overall operations of the company,” says John Janedis, a publishing-industry analyst at Wachovia Securities

Dammit if they drop Dino Eggs I'm protesting or something. July 23, 2007

After Buying Binge,
Nestlé Goes on a Diet

VEVEY, Switzerland — Nestlé SA Chief Executive Peter Brabeck made two troubling discoveries last year: The food maker was churning out 130,000 variations of its brands, and 30% weren’t making money.

After 10 years running the world’s largest food company, Mr. Brabeck worries that Nestlé has grown so big that it has become unwieldy and slow. Now, in the final months before he steps down as CEO next April, he is pushing an aggressive plan to jettison weaker brands and simplify the organization.

Mr. Brabeck has eliminated thousands of items — including failing ones like low-carb KitKats and lemon cheesecake-flavored chocolate — and has plans to cut hundreds more by the end of the year. He is demanding that managers fix factories that cost too much. He has appointed a new head of innovation, and has told him to be pickier about which new ideas Nestlé pursues. Mr. Brabeck now tracks Nestlé’s 10 most promising innovations at monthly meetings with his top managers.

Nestlé faces a predicament that is increasingly common in the corporate world, as a wave of consolidation creates megaliths that are bigger than ever, and now need to be rationalized. “I compare us to a supertanker,” said Mr. Brabeck in an interview, adding that he worried the company’s size could have started to weigh on its growth rates.

While Mr. Brabeck has shed staples like frozen vegetables, he has also overseen a shopping spree, gobbling up premium brands such as Ralston pet food, Dreyer’s ice cream and, in April, Gerber baby foods. This spring, Nestlé resisted an approach by PepsiCo Inc. to merge because its portfolio of soft drinks and potato chips doesn’t match Nestlé’s goal of growing in health and wellness products, says a person familiar with the situation. (See related article.)

Nestlé’s sales have grown 40% since Mr. Brabeck became chief executive in 1997. Last year, Nestlé had sales of nearly $82 billion, about twice those of nearest rival Kraft Foods Inc.

But Nestlé’s profit margins have long been much lower than its competitors. The Swiss retail investors who were Nestlé’s biggest shareholders rarely pushed for change. Last year, U.S. shareholders edged out Swiss shareholders as Nestlé’s single biggest group of investors, with 35% of the company’s capital, up from 12% in 2000. They are now putting Mr. Brabeck under greater pressure to raise margins.

A leaner Nestlé could also make it easier to absorb acquisitions down the road. Mr. Brabeck’s successor is likely to face a big decision: whether to buy consumer-products titan L’Oreal SA. Nestlé holds a 29% stake in L’Oreal, putting it just behind the 30% held by French billionaire Liliane Bettencourt. Nestlé and Ms. Bettencourt jointly control L’Oreal through a shareholders agreement. Nestlé has pledged not to launch a takeover as long as Ms. Bettencourt, now 84 years old, is alive. But when she passes away or should she wish to sell during her lifetime, Nestlé has the right of first refusal.

Mr. Brabeck and other Nestlé executives are examining a number of scenarios, including selling the stake, retaining a minority stake, or taking over the whole company. They decline to say if they want to buy L’Oreal. A spokesman for the Bettencourt family declined to comment, as did a spokesman for L’Oreal.

In the fall, Nestlé’s board will choose a successor to Mr. Brabeck, 62, who has spent his entire career at Nestlé since joining in 1968 as an ice-cream salesman in Austria. He will remain as chairman. Nestlé laid out this succession timing after Mr. Brabeck took on the additional title of chairman in spring 2005 and some shareholders objected to his keeping both the chairman and CEO jobs indefinitely.

To show how massive Nestlé is, Mr. Brabeck points to the example of its Purina pet-food subsidiaries in Scandinavia. In each country where it operated, Purina was run separately from the other Nestlé businesses. At an investor conference in June last year, Nestlé Chief Financial Officer Paul Polman, a leading candidate to succeed Mr. Brabeck, illustrated the confused lines of reporting created by the subsidiaries. He showed a slide picturing several dozen boxes and a thicket of arrows connecting them in dozens of directions.

“We said, ‘Whoa, wait a minute, do we really need so many?’ ” said Mr. Brabeck. “It’s like a garden. You have to weed all the time.”

Last year, Nestlé cut about 50 of its 1,200 subsidiaries world-wide, including Purina in Scandinavia. Mr. Brabeck says the company may eliminate more than 200, longer term.

In accelerating these changes before he leaves office, Mr. Brabeck hopes to finish a project he regards as one of his biggest legacies. In 2002, Nestlé began installing a new information-technology system internally called Globe, which is now up and running. Using software from SAP AG, the system can determine right away, for instance, exactly how much raw cocoa Nestlé factories use and how many Nestlé Crunch bars it churns out. Previously, executives in Switzerland could wait months for such information.

Big manufacturing companies have used this system for years, but Nestlé was late in adopting it. Nestlé says installing it has taken a long time because of the company’s massive size and complexity. Now, it’s helping spur changes years overdue.

In monthly meetings, Mr. Brabeck and the rest of Nestlé’s executive committee review the number of stock keeping units, or SKUs, as tracked by Globe. Slides show the current number of SKUs for each country, color-coded in red, yellow and green, to indicate whether the figure rose, stayed flat, or declined.

It is surprisingly easy for a food maker to come out with too many new products. When sales are slow, brand managers often think they can win back c
onsumers with something new. In spring 2006, Nestlé’s Mr. Polman did a review of the total number of SKUs and found that for several years, they had been growing faster than sales. He ordered managers to cut 20% in 2006 and a further 10% this year. The number of SKUs now losing money has fallen to 20% of Nestlé’s total, from 30% last year, the company says.

One area where Nestlé has trimmed significantly is candy sales in the United Kingdom. There, sales of chocolate candy had been stagnant in the years leading up to 2006, and about 40% of Nestlé’s candy products were either losing money or barely making a profit. Brand managers there responded by rolling out new products like KitKats in flavors such as red berry and strawberries and cream.

Over the past year, Paul Grimwood, head of the U.K. candy business, has changed course. He began making brand managers, supply-chain executives and salespeople go before an eight-person panel to defend why the company should keep their products. The panel, which includes marketing, supply chain and production managers, meets every two weeks at the Nestlé confectionery headquarters in York.

Among the products the panel has cut are low-carb versions of KitKat and Rolo. After failing to take off, Double Cream chocolate bars, a premium candy made with extra cream and high quality cocoa from Ecuador, also got the axe. Three different Easter eggs containing plastic Disney characters are no longer being sold, and neither are individually wrapped chocolates in raspberry and coconut flavors.

In all, Mr. Grimwood cut the number of chocolates and candies in the U.K. by 37% between 2005 and 2006. By the end of this year, he hopes to trim a total of 45% from 2005. To prevent the portfolio from growing unwieldy again, he also cut the number of future innovations by more than half.

The company is courting customers like Nicola Ward, a 27-year-old beautician in London’s financial district. She says she’s rarely tempted by the new varieties of snacks she finds at her local newsstand. Buying chocolate as a break from work several afternoons a week, she alternates between a couple of favorites, like Nestlé’s KitKat Chunky bar and Cadbury Dairy Milk chocolate bars.

“I know what I like and I just stick with it,” she says. “I like the traditional types.”

As Nestlé’s new head of innovation, Werner Bauer is responsible for making sure some of the less promising new products never make it past the idea phase. Since taking on the position last year, he has slashed the number of new projects world-wide by about half. The number of ice-cream projects alone has fallen to 30 from 134 several years ago. Mr. Bauer meets with marketing managers and researchers to choose the 10 most promising innovations and puts them on a one-page list for the executive committee to track monthly.

Some of the other changes Mr. Brabeck is pushing for are relatively basic. The CEO says he was surprised to learn that it cost more to make flavored frozen treats in the U.S. than in Europe. So last year, Nestlé retrained the U.S. factory workers to feed the machines faster. By early 2007, the cost of producing the ice pops at the U.S. factories dropped by 33%, the company says.

To prod longtime weak divisions to improve, Mr. Brabeck and the executive committee name certain businesses to a list of “value destroyers,” which they review at monthly meetings.

One business that made the list: Herta, a German subsidiary that is one of the country’s leading makers of traditional ham, salami and liverwurst.

Herta, with annual sales of $345 million, had barely broken even for several years. Its costs were high because it used expensive refrigerated delivery trucks and paid its factory workers more than its competitors did. Meanwhile, sales were declining as Germans switched to lighter and healthier food and supermarkets began selling their own, less expensive packaged meat. Several years ago, Nestlé tried to sell Herta, but didn’t get the price it wanted.

Early last year, Nestlé sent in Daniel Meile, a Nestlé veteran who had restructured other troubled businesses. His assignment was to stop Herta’s losses by the fourth quarter, or sell the business. The executive committee in Vevey demanded a progress report each month.

After months of negotiations, Mr. Meile squeezed workers’ pay and benefits to save about $12 million. He used the savings to launch new products, including ham flavored with pepper, asparagus and walnut. New packages highlight that Herta ham contains just 3% fat. Nestlé researchers found that Germans were annoyed when Herta’s ham clumped together in the package. So Mr. Meile came up with a way to fold the ham slices over to make them easier to peel off.

“I called this my ham mission,” Mr. Meile says.

When Mr. Brabeck came to the Frankfurt headquarters in January, Mr. Meile laid out the new ham on a conference room table for the CEO to taste. Mr. Meile told Mr. Brabeck that Herta had broken even for the fourth quarter of 2006. Sales in the first quarter of this year were about 10% higher than the same period last year.

Mr. Brabeck took Herta off his value-destroyer list. In March, Mr. Meile celebrated by organizing a lunch with his team at the factory of the new Herta meats.

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