Japan unblocks aid loans to China BBC News
The Japanese government says it will release delayed aid loans to China worth hundreds of millions of dollars. Japan had delayed a decision on the loans in March as relations between the two countries deteriorated, sparked by disputes over historical issues and energy resources. But Chief Cabinet Secretary Shinzo Abe said that Tokyo had decided to release the aid after studying the issue. The move comes amid some signs of improvement in bilateral ties. In May, the foreign ministers from the two countries met for the first time in more than a year at an international economic conference in Qatar. Chinese Foreign Minister Li Zhaoxing and his Japanese counterpart Taro Aso held talks which the Japanese side described as "extremely meaningful".

'Various situations'
The move to unblock the funds came after a meeting of a government strategy panel. "We made the decision considering the significance of Japan-China relations, environmental issues and anti-Japanese sentiment in China," Mr Abe said. Japan will extend funds of 74bn yen ($658m), officials said. In March, Japan said it would delay a decision on paying further yen loans to China because of the two countries' worsening relations. Mr Abe said at the time that the decision did not mean the government was cutting off or freezing aid to China, but Tokyo needed more time to work on what it called the "various situations" in Sino-Japanese affairs. Prime Minister Junichiro Koizumi's continued visits to the controversial Yasukuni war shrine in Tokyo have angered China's leaders, effectively freezing high-level diplomatic contacts. The two sides have also failed to reach agreement on the issue of gas resources in the East China Sea.

Dow Dives 199 on Rate, Energy Fears

Wall Street found itself double-teamed by the Federal Reserve
chairman and an ayatollah, and the result was a rout. By Tom
Petruno.
http://email.latimes.com/cgi-bin1/DM/y/e3i...Io30G2B0Ha3a0Ei

Not Everyone Can Win in Vegas Real Estate Game

Actor George Clooney is backing out of a $3-billion project. But
well-established players are going strong. By Annette Haddad.
http://email.latimes.com/cgi-bin1/DM/y/e3i...Io30G2B0Ha3b0Ej

Radical Design May Result in New Slant on Aircraft

In a small wind tunnel once used to design the B-2 stealth bomber,
Northrop Grumman Corp. engineers in El Segundo are developing an
aircraft that could alter the skies. By Peter Pae.
http://email.latimes.com/cgi-bin1/DM/y/e3i...Io30G2B0Ha3c0Ek

http://www.nytimes.com/aponline/business/AP-Bernanke.html
Bernanke Jolts Markets Over Inflation
By THE ASSOCIATED PRESS
Published: June 6, 2006
Filed at 10:01 a.m. ET

WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke is promising that the central bank will remain vigilant in fighting inflation. The comments sent shock waves through financial markets hoping the Fed was about to call a cease-fire on interest rate increases.

Instead, Bernanke's comments are likely to mean further increases in borrowing costs for consumers on their home and auto loans and credit card debt and for small businesses trying to raise money at their local bank.

The comments to an international monetary conference on Monday were exactly the opposite of what Wall Street was expecting.

Investors had grown hopeful that a slew of slower-than-anticipated economic reports, including a shockingly small 75,000 job increase last month, would persuade the Fed to call a halt to further rate increases.

While acknowledging in his comments that economic growth did appear to be slowing, Bernanke chose to also emphasize a number of troubling developments regarding inflation.

He noted in particular that core inflation, excluding energy and food, was rising at an annual rate of 3.2 percent by one inflation gauge and 3 percent by another.

''These are unwelcome developments,'' he said.

Bernanke said that the Fed ''will be vigilant to ensure that the recent pattern of elevated monthly core inflation readings is not sustained.''

Stocks were mostly lower in early trading Tuesday after Bernanke's comments ignited a selloff Monday.

Wall Street's modest decline followed a nearly 200 point drop in the Dow Jones industrial average Monday.

In Tokyo Tuesday, the benchmark Nikkei 225 index dropped 1.81 percent, while India's benchmark Sensex index fell 2.5 percent. In Europe, London's key index, the FTSE 100, fell more than 1 percent by early afternoon, while key stock indexes were down almost 1 percent in Frankfurt, Germany, and 1.4 percent in Paris.

Bernanke ''provided an emphatic commitment to maintaining price stability that suggests to me that he will be pushing for another tightening at the end of the month,'' said Stephen Stanley, chief economist at RBS Greenwich Capital.

Economists had been hoping that the Fed, which had pushed a key rate up for a 16th consecutive time in May, would take a pause at the Fed's June 28-29 meeting.

However, many analysts now believe that not only is a pause in June off the table, but that the Fed might decide to keep pushing rates higher at the August meeting as well.

Part of the reason, they believe, is that Bernanke, who succeeded Fed legend Alan Greenspan on Feb. 1, wants to prove his inflation-fighting mettle, much the same way Greenspan did when he took over in August 1987, pushing through a half-point increase in rates at his first meeting.

Bernanke ''is earning his inflation-fighting credentials, which have been questioned on Wall Street,'' said Mark Zandi, chief economist at Moody's Economy.com.

But the outcome could be the same for both men, a risk of overdoing the rate hikes. Greenspan's half-point increase was blamed for contributing to unease that triggered the Black Monday stock market crash in October of 1987.

But economists said Bernanke is apparently willing to run the risk of raising rates too high because he does not want to let the Fed's credibility as an inflation fighter, won over two decades, slip away.

''He is sending a very strong signal that it will be important to stop inflationary forces and expectations from building further,'' said Lynn Reaser, chief economist at Bank of America Investment Strategies Group.

Part of the problem, analysts said, is that Bernanke has gotten off to a rocky start in terms of communicating his intentions to Wall Street. He first stumbled in testimony before the Joint Economic Committee on April 27 when he raised the possibility that the central bank might pause in hiking rates to assess the impact the earlier increases were having on the economy.

When the markets rallied strongly on the belief that Bernanke was signaling not just a pause but a halt to the two-year rate campaign, the new Fed chairman complained to a reporter at a Washington dinner that he had been misinterpreted. Those comments sent markets plunging when they were reported two days later.

A chastened Bernanke said that any further comments he made would be through ''regular and formal channels.''

But his remarks in Monday's speech caught the markets by surprise, demonstrating that even when Bernanke is using normal channels he can send investors on a roller-coaster ride.

Analysts predicted as long as Bernanke remains worried that the central bank is behind the curve on fighting inflation, interest rates will keep rising.

^------

On the Net:

Federal Reserve: http://www.federalreserve.gov

Erin Brockovich Takes Role as Plaintiff in Medicare Suits

Erin Brockovich has a famous name, Hollywood good looks, an agent
and a new cause: Medicare. Her seven lawsuits, filed Friday in Los
Angeles County Superior Court, allege that healthcare companies
are charging Medicare, the federally funded health plan for
seniors, to treat illnesses they helped cause by medical error or
neglect. By Daniel Yi.
http://email.latimes.com/cgi-bin1/DM/y/e3k...Io30G2B0HbFg0E1

Study Says Grim Retirement Awaits Many

WASHINGTON - Almost 1 in 2 American families is headed toward
years of financial struggle in retirement, according to a new
report that says workers are unprepared for cuts in pension and
Social Security income. By Jonathan Peterson.
http://email.latimes.com/cgi-bin1/DM/y/e3k...Io30G2B0HbFh0E2

Toy Maker Seeks Bridge 'Tween Kids and Adults

It's a sad if inevitable truth of the hyper-competitive
$21-billion-a-year U.S. toy industry: Today's must-have plaything
eventually finds its way to the bottom of the pile or a dusty
corner of the closet. By Abigail Goldman.
http://email.latimes.com/cgi-bin1/DM/y/e3k...Io30G2B0HbFi0E3

Google Spreadsheets: Very Basic, Pretty Interesting PC World
Google Spreadsheets is, indeed live--but not yet, alas, open to all comers. Try to get in for the first time, and it'll let you get in a first-come-first-served queue; I did, and got in, and found that this service, which is a "Google Labs" experiment is very simple (don't shred your copy of Excel quite yet!) and has gaping holes in terms of even basic functionality...but it's nifty for what it is. As I mentioned in my last post, I've tried a bunch of AJAX-y spreadsheets and hadn't found one that had all the basics of Excel-like user-interface behavior down pat. Google Spreadsheets does--use the mouse, arrow keys, and other means of input, and they almost always do what you'd expect. The service is a tad sluggish at times--especially when opening, closing, importing, and exporting spreadsheets--but for the most part, it's acceptably snappy. (Deleting a worksheet from a file, however, has been agonizingly slow in my informal experiments.) In terms of mimicking standard spreadsheet features...well, it does many of the the things you'd expect, with a good library of formulas, multiple worksheet support, and reasonably rich formatting features (I was happy to see that you can merge cells). I've only imported a couple of Excel spreadsheets so far, but they came in more or less intact. (However, the one with fairly fancy filtering in Excel came in minus its filtering drop-downs.) What Google Spreadsheets does, it does quite well, but there are far more Excel-type features that it doesn't even attempt to emulate than ones that it does. (Zoho Sheet, just to pick one competitor, does a lot more at the moment.) There's no printing feature beyond what you can get from your browser. Sorting is bare-bones. You can freeze rows but not (as far as I can tell) columns, and there's no charting whatsoever. And any Excel feature that's even a tiny bit advanced simply isn't here. One other complaint, as long as I'm squawking: Depending on your screen resolution, you may find that the amount of screen space in Google Spreadsheets that's actually devoted to the spreadsheet is kind of skimpy--it seems like the UI could be more space-efficient:

Then again, Google's spreadsheet does some things that Microsoft's doesn't. Like Writely and many of the other best browser-based apps, it includes painless built-in collaboration--in theory, you can quickly share sheets with anyone who has a Google Account (aka a Gmail account; I've had a little trouble so far getting this to work with every coworker who has one, however). You can choose to let folks either just view the spreadsheet or have editing rights, and in the latter instance you'll see changes as they make them, and vice versa. Google Spreadsheets' most unexpected feature is a built-in chat feature: If you and one or more people you've shared a sheet with are in it st the same time, you can use a chat window to communicate. This won't change number-crunching forever--you can do something similar today with any IM client--but it's nicely implemented, and could certainly come in handy if you need to work on a spreadsheet with someone who's not in the same room at the same time. Here's what the chat window looks like:

I'd hoped in my previous post that Google Spreadsheets would have some sort of real integration with Google's Writely word processor (which sadly still isn't signing up new users right now). It doesn't--it's a completely stand-alone product, with a distinctly different UI. Spiritually, though, they're fraternal twins, at least. They're both lean, mean, and fun to use. In other words, they're Google-esque. At least Google Spreadsheets is Google-esque if you can be Google-esque without having any sort of search feature--there's no way to search within a spreadsheet, or to search all your spreadsheets... As with almost all things Google, Google Spreadsheets does leave you wondering what the company is up to. Very roughly speaking, it and Writely offer what Excel 1.0 and Word 1.0 offered many, many years ago. Does Google want to build them out into deep, feature-rich applications? How long will its attention span last when it comes to this stuff? Even if its ambitions are expansive, there are still a ton of features which are may simply impossible to implement in a browser-based app right now. (Side note: Google has launched so many services without a clear revenue strategy that I've forgotten to ask "How does it plan to make a profit at this?" For the record, Google Spreadsheets is a free, ad-free service...and it's hard to imagine how you could target ads based on the numbers in a particular spreadsheet.) Google has talked up Google Spreadsheets as being perfect for managing stuff like soccer-team scores. Even a soccer coach might want some capabilities it lacks in its current form, such as real printing tools. (The good news is that nobody needs to go out and spend hundreds of dollars on Excel for basic tasks: If Google Spreadsheets isn't up to a task, the equally free OpenOffice.org probably is.) One nice thing about soccer coaches, from Google's perspective: They're probably not very secretive about their files. Google Spreadsheets doesn't encrypt your data, which will make it a non-starter for many of the sensitive subjects that end up in spreadsheets. Me, I imagine I'll continue to spend time in Excel or OpenOffice.org's spreadsheet for most of my number-crunching tasks. But I'm in a happy groove of using Writely for some of my basic word processing--especially when I want a file to be easily gotten at from any computer--and I like the idea of at least trying to use Google Spreadsheets in a similar way. Especially if it fills in some of the holes I've mentioned. When Google focuses on a product, it can evolve and improve with dizzying speed (Google Desktop!). But other projects seem to fester (Google Groups, in beta, and, seemingly, limbo, for half a decade!). Anyone want to hazard a guess as to which kind of product Google Spreadsheets will turn out to be? It doesn't need to evolve into Excel to be great--in fact, its straightforwardness and lack of bloat is, potentially, a killer feature itself. But the service does need to evolve a bit further to reach its potential.
By Harry McCracken
Google bent upon invading Microsoft Hindustan Times
Google Reveals Launch Of Limited Test Of Spreadsheets On Google Labs Trading Markets
Reuters - Blogging Stocks - ITBusiness.ca - AXcess News - all 404 related »

Markets steady after recent falls BBC News
European stock markets have steadied in morning trading after inflation concerns pushed Japanese shares to their lowest level in six months. Shares in London, Frankfurt and Paris edged up but investors remained wary after the heavy falls of recent days. Markets have been unsettled by fears of growing inflation in the US and hawkish comments by Fed boss Ben Bernanke. The benchmark Nikkei index fell 1.8% to end trading at 15,096.01, its lowest closing mark since last November. The drop was prompted by a second successive day of selling on Wall Street after Fed boss Ben Bernanke acknowledged inflation concerns.

Knock-on effect
Investors are concerned that moves to curb inflation in the US could stifle economic growth in the world's largest economy.This could have a knock-on effect on the global economy, at a time when high oil prices are already putting a strain on economic output. "The market is now beginning to be wary of the possible risk that the US economy could be exposed to the risk of stagflation, that is a combination of economic stagnation and inflation," Shigeo Kikuchi, an analyst at Takagi Securities, told the Agence France Presse news agency. "As long as such fears are out there, the local market will be pressured by sustained selling from large overseas investors, such as hedge funds, as they accelerate capital repatriation back to their home countries." Markets in US, Europe and Asian have seen notable falls in recent days. The benchmark Dow Jones index in the US fell below 11,000 for the first time since March during Tuesday trading - although it later recovered slightly to close at 11,002 - after seemingly hawkish comments by Mr Bernanke on inflationary pressures. His comments raised the prospect of further interest rate rises. Worries that US consumer spending could be undermined by rising prices hurt shares in Japanese exporters in the tech and car sectors. Toyota, Honda and Nissan all saw their shares fall in value while Advantest and Sony were among other losers.

http://msnbc.msn.com/id/13158092/




IBM to invest $6bn in India over three years
By Khozem Merchant in Bangalore
Financial Times


Updated: 9:12 p.m. ET June 6, 2006
IBM plans to invest nearly $6bn in India over the next three years, the country's biggest inward technology investment to date as the US group builds its presence in the world's biggest offshore technology services market.

The investment illustrates how seriously IBM is taking the emerging rivalry of Indian information technology companies, whose lower-cost model is challenging the big western com-panies.

"I am not going to miss the [India] opportunity," Sam Palmisano, IBM's chief executive, told a gathering of 10,000 IBM staff in Bangalore yesterday.

IBM's proposed investment is triple the sum already invested by the company so far in India and exceeds a combined $3.9bn of investments recently announced by Microsoft, Intel and Cisco. Each has been recruiting heavily in India, pushed by global customers demanding Indian costs, and expertise.

IBM already employs 42,000 people at more than a dozen centres in India. Before yesterday's announcement, IBM had been widely mentioned as a potential buyer of Sayam, India's fourth-biggest IT services company, based in Hyderabad. IBM's investment suggests it has instead opted for organic growth.

The $6bn investment will be aimed at strengthening IBM's global and domestic software and business services operations in India, and the creation of a new telecoms research unit.

Mr Palmisano made no mention of Indian rivals but, as analysts noted, India's IT groups pose a growing threat to the global status quo. As services have become more standardised, big clients have split large IT outsourcing contracts.

IBM is competing with an Indian rival for a $100m mandate from a US Fortune 100 manufacturer, and last year three Indian companies shared a $2.2bn outsourcing contract from ABN Amro with IBM and Accenture.

Mr Palmisano said he was excited by India's home market, where the spread of internet connectivity was leading to a boom in demand for IT services.

IBM's revenues in India grew 45 per cent and 55 per cent in 2004 and 2005 respectively and soared 61 per cent in the last quarter. "The reality is that global providers are now competing for large deals against the big Indian companies and that is forcing them to strengthen their Indian operations," says Ramesh Venkataraman, head of McKinsey's technology practice for south and south-east Asia.

Abdul Kalam, India's president, speaking at the same event, said there were immense opportunities for collaboration bet-ween Indian and US bodies in defence and civilian areas.

Microsoft Seen Beating Google In Spreadsheet Battle Forbes
Google's new Spreadsheet application doesn't pose an immediate threat to Microsoft, according to RBC Capital Markets. The research firm maintained an "outperform" rating and $32 price target on Microsoft shares after Google announced yesterday that it had launched a beta version of its Spreadsheet service. Spreadsheet is Google's second application aimed at Microsoft's Office suite: in March, the company bought Writely.com, a free on-line word processor that has a small subset of capabilities similar to Microsoft Word. "For now, we don't believe Google Spreadsheet to be a credible replacement for Excel, and we believe it to be very unlikely for any enterprise to run their core spreadsheet requirements on a web-based offering," wrote analyst Robert Breza in a report. "We believe it is more likely to spur Microsoft in developing a similar offering." If Microsoft chooses to counter Google's move with a light-weight suite of productivity tools, their likely platform will be Office Live, which is also currently in beta, said the analyst. Breza expects enterprise users to continue to demand off-line access, security, and extensive functionality, including the business intelligence functions and "add-in" capabilities, which will be expanded in Microsoft's Office 2007. For now, he says on-line tools like Spreadsheet or thinkfree.com's suite of products will have to become more durable to meet the "ruggedness" enterprise users are accustomed to under Microsoft's Office applications. "In the short-term, these on-line tools will provide a cheap/free alternative, though a similar trade-off in functionality will be made and is likely to continue as Microsoft continues to invest heavily in their core products," said the analyst. Microsoft expects to ship its next version Office 2007 suite, currently in its second beta release, in January of 2007.
By Maya Roney

Oil eases after Iran nuclear move BBC News
Oil prices have eased after markets were encouraged by Iran's initial reaction to international proposals to halt its nuclear programme. Iran's chief nuclear negotiator said a package of incentives aimed at ending its stand-off with the international community contained "positive steps". Tension over Iran's nuclear plan and fears over oil supplies in the event of sanctions have kept prices high. But on Wednesday, US light, sweet crude dipped 35 cents to $72.15 a barrel. Brent crude fell 26 cents to $70.55 in London.

Situation 'tense'
Tehran is studying proposals aimed at resolving the dispute, thought to include the offer of light water reactors and plane technology in return for its ceasing uranium enrichment.Negotiator Ali Larijani said talks with EU foreign policy chief Javier Solana were constructive although Tehran has refused to end enrichment, saying it is designed purely for civil use. "The market is still reacting sceptically to moves from both sides, with the situation remaining rather tense," PVM Oil Associates commented. The dispute is one of a number of factors which has kept the cost of oil above $70 a barrel in recent weeks.

Nigerian trouble
Militia violence in Nigeria's oil-rich southern delta - the scene of a string of kidnappings of foreign oil workers - and uncertainty over the upcoming US hurricane season have bolstered prices. High oil prices have unsettled global stock markets in recent weeks, with fears about the economic consequences of rising inflation in the US causing fluctuating share prices. Nigerian oil minister and Opec president Edmund Daukoru said the oil exporters' body was unhappy with prices at their current level, saying it laid "the seeds of further volatility". Austria, which holds the EU presidency, has called on major oil producers to raise production and refining capacity in order to take the heat out of the market. Opec members decided last month not to raise its production quotas, saying it would send the wrong signal to the markets.

Yahoo! Photos Gets Flickred Up Forbes
When Yahoo! snapped up photo-sharing startup Flickr in March 2005, many asked why, when millions of people per month were already uploading images to Yahoo!’s homegrown service. But Yahoo!’s acquisition strategy became clearer Wednesday as the company unveiled a renovation of Yahoo! Photos that incorporates some but not all of the quirky social features that make tiny Flickr the fifth most trafficked photo site on the Web, according to Nielsen NetRatings. Yahoo! Photo users will now be introduced to Flickr-ish concepts like sharing descriptive tags and comments with friends, but closer integration between the two products, such as sharing photos between Flickr and Yahoo Photos accounts and the ability to publish photos to the public Web, isn’t in the current plan, says Yahoo! Photos director of product management Will Aldrich. That’s because users of the two products are very different, and hardly overlap at all, says Aldrich. “Flickr isn’t the best fit for the mass market user,” he says. “Moms want to share photos of their kids, but they want to control it.” Flickr users generally post photos that are viewable by anyone. With cell phones and digital cameras in more than 50% of American households, nearly 22 billion digital images will be captured in 2006, according to the Photo Marketing Association. Yahoo! wants to store as many of them as possible on its servers, and with this beta-stage update now offers users unlimited storage space, and a clean, drag-and-drop interface that looks a little bit like Apple’s iPhoto application. Like most of its other web properties, Yahoo! turns traffic on its photo service’s pages into dollars with banners and sponsored text ads. But revenue also comes from printing paper photos, as well as printing photos on coffee mugs and calendars through an online store. Yahoo! also inked a deal with Target to let Yahoo! Photos users pick up prints from a local store within an hour after placing an order. Yahoo! Photos already ranks as the first or second most-trafficked photo site (according to April 2006 data from Nielsen NetRatings and ComScore Media Metrix), but Palo Alto, Calif.-based startup Photobucket is neck-and-neck. Photobucket, with more than $13 million in venture funding under its belt, says its business of hosting photos and linking them to other sites is profitable. The two companies both plan to take advantage of traffic stemming from user generated content, though they have opposite plans of attack. While Yahoo! integrated its photo service with other properties in the Yahoo! network, such as mail, messenger, mobile and 360, in order to keep users at Yahoo and bring guests to the site to view photos, Photobucket brings its services to social networking sites. Photobucket users travel frequently between the photo uploading site and News Corp.’s MySpace, Google’s Blogger, EBay and Facebook.
By Rachel Rosmarin

Japanese shares hit six-month low BBC News
Japanese shares plummeted to a fresh six-month low on Thursday as ongoing fears about interest rate rises in the US continue to hit the global markets. The main Nikkei index ended down 463 points or 3% to 14,633, falling below 15,000 for the first time in 2006, and its biggest one-day drop in a year. Its decline followed three successive days of falls on Wall Street. The losses have been caused by concern the US is going to keep raising interest rates to tackle inflation. It follows after US Federal Reserve boss Ben Bernanke acknowledged earlier this week that the central bank did have inflation concerns.

'Tough time'
Global investors fear that an interest rate rise in the US will slow the American economy and that this will have an immediate knock-on effect on global business. The Nikkei's Thursday declines were led by exporters such as Honda. "We're going through a tough time because we're not sure when the Fed will stop raising interest rates," said Han Yo-Seop, an analyst at Daewoo Securities. The Nikkei has now lost some 2,800 points since hitting a five-year high of 17,563.37 just two months ago. Its Thursday decline was mirrored by similar falls across Asia. By late afternoon trading, Hong Kong's benchmark Hang Seng index was down 279 points to 15,538.

Oil prices fall on Zarqawi death BBC News
Oil prices have dropped sharply to below $70 a barrel on news of the death of the militant leader Abu Musab al-Zarqawi in Iraq. Two key oil prices, for July delivery of US light sweet crude and UK Brent, fell to $69.54 and $68.35 respectively. Prices had already been on the slide because of healthy oil stocks in the US and an easing of tensions with Iran. On Wednesday former US central bank chief Alan Greenspan had warned that oil prices were hurting the US economy. Jordanian-born Zarqawi was seen as the leader of al-Qaeda in Iraq, and a figurehead of the Sunni insurgency. His group has been blamed for numerous kidnapping of both Iraqis and Westerners. "The hope is that with the removal of the terror leader in Iraq, the Iraqi situation will stabilise faster and future oil supply could increase," said Victor Shum, an energy analyst with Purvin & Gertz. The insurgents had frequently targeted Iraqi oil installations, and Iraqi oil output has still not recovered to anywhere near the level the government was hoping for.

Indian stock markets drop again BBC News
Indian share prices have fallen by 4% in the wake of steep declines in other Asian markets. The benchmark Bombay Stock Exchange Sensex fell by more than 400 points to 9,397.93, the lowest since January. Indian shares have fallen by more than 25% over the past month after hitting a record high of 12,612 points. Shares across Asian markets have fallen as ongoing fears about interest rate rises in the US continue to hit the global markets. Shares on the National Stock Exchange also tumbled, with the 50-company S&P Nifty index down 3.4% to 2,765 points. The falling share prices have led to heavy selling by mutual funds and retail investors.

Opportunity
Many middle-class Indians have made money on the stock markets over the past few years, but analysts say the era of making quick gains is over. However, they stress that the markets still present an opportunity for long-term investors. Kevin Grice, an emerging markets specialist at American Express bank, believes the share prices on India's markets have fallen to reasonable levels. "India is looking very attractive... The Sensex in this kind of area is now a buying opportunity," he told the Associated Press news agency.

European stocks follow Japan fall BBC News
European stocks have fallen sharply in early Thursday trading, after the main Japanese index plummeted in Tokyo. With fears continuing that interest rate rises in the US will hit global growth, Japan's Nikkei ended the day down 463 points, or 3%, at 14,633. This was the Nikkei's biggest one-day drop in a year, and the first time it had fallen below 15,000 in 2006. London's FTSE 100 opened down 98 points at 5,608, while both France's Cac and Germany's Dax were down more than 2%.

Inflation concern
The declines follow three successive days of falls on Wall Street. The losses have been caused by concerns that the US will need to keep raising interest rates to tackle inflation. Earlier this week US Federal Reserve boss Ben Bernanke acknowledged that the central bank did have inflation concerns.

Global investors fear that an interest rate rise in the US will slow the American economy and that this will have an immediate knock-on effect on global business. The European Central Bank is also widely tipped to raise eurozone interest rates by one quarter of a percent later on Thursday.

'Tough time'
The Nikkei's Thursday declines were led by exporters such as Honda. "We're going through a tough time because we're not sure when the Fed will stop raising interest rates," said Han Yo-Seop, an analyst at Daewoo Securities. The Nikkei has now lost some 2,800 points since hitting a five-year high of 17,563.37 just two months ago. Its Thursday decline was echoed by similar falls across Asia. India's benchmark Bombay Stock Exchange fell by more than 400 points to 9,398, its lowest level since January.

BP faces Alaska oil spill probe BBC News
British oil company BP could face a criminal investigation in the US over a massive oil spill in Alaska in March. The Financial Times newspaper has obtained internal emails which show it is under investigation by a grand jury. The emails reveal BP has been ordered to hand over a number of documents and other data relating to the leak thought to be caused by a corroded pipe. A spokesman for the company said BP would provide information showing it had acted properly. The spill of some 267,000 gallons (1m litres) discovered at Prudhoe Bay field, is the largest ever on Alaska's North Slope region. BP Alaska, which operates the pipeline, has denied claims it failed to maintain it properly. Such an investigation by a grand jury could lead to criminal charges and ultimately fines and prison sentences.

Second probe
The spill was detected on 2 March and plugged. Local environmentalists have described it as "a catastrophe". BP is already facing a probe into a blast at a Texas refinery in March 2005 in which 15 people died and 170 were injured. BP said "management failures" and "employee mistakes" were responsible. In 1989, the Exxon Valdez shipping disaster spilled 11m gallons (42m litres) of oil onto the Alaskan coast.

Get Ready For $100 Oil and $1,600 Gold Forbes
Commodity bull markets last 15 to 20 years on average, and the current bull phase is but six years along. Commodities always go to new highs once a bull market starts. Studies have shown that the best-performing assets during the first five years of the decade are the best-performing assets during the last five years of the decade as well. Conversely, the worst-performing assets during the first five years of the decade are the worst-performing assets during the last five years of the decade.Grasp these thoughts. They should be your guiding light. Furthermore, following the recent corrections in metals and energy issues, this may be one of the better times to make tangible asset investments. I have a stopgap--a fail-safe, if you will--model. It is the Annual Asset Allocation Model that we calculate each October. This model tells us which of three asset classes offers the best risk-to-reward potential for the next year. In October 2000, it shifted from bonds to tangible assets, and it has remained solidly in that mode ever since. If I were to calculate the model today, it would still tell us to invest in commodities. I often talk of balancing risk to reward. What does that mean? There was a time in the Middle Ages when you could shoot dice and get the same payoff no matter what number you bet on. You could win 10 Flanders on a 2 or on a 7. Well, there is risk and reward. The 7 is the most likely outcome. But there is only one way a 2 can come up out of 36 possibilities--a 1 on each die. There are six ways a 7 can occur - 6 on one die and 1 on the other, 5 on one die and 2 on the other, etc. Some bets are clearly better. In this case, the rewards are inadequate--equal payoffs will kill you. Successful investing, then, requires that you assess both risk and reward. Today's stock investors are obsessed with imagined potential rewards, but they have no regard for risk. Special Offer: The pullback in energy and precious metals stocks has opened up a buying window for savvy investors. Click here to download Curtis Hesler's "Oil & Gold: Slam Dunk Investing for Income and Capital Gains," a special report detailing specific buys, from Professional Timing Service. Stock market investors and bond buyers are betting on a 2--lots of risk for little reward. Commodity buyers are betting 7's, but the reward potential is enormous. The commodity naysayers are essentially arguing that higher commodity prices will cause a worldwide recession...then, raw material demand will fall and, thus, commodity prices will fall. This ignores the dynamics at work. China's economy alone is growing at over 9% annually. If it were growing at 7%, it would essentially double in the next ten years; quantitatively, that is a huge double. China's consumer class currently amounts to about 300 million people, which is equal to the entire population of the U.S. Already, there are shortages of raw materials and energy. A doubling of Chinese demand will not relieve the pressures we are seeing on commodity prices. Don't ignore India and the rest of Asia. Global commerce is expanding in areas where the numbers are enormous, and this growth is energy intensive. In ten years, the number of people demanding goods and services will easily double, but the amount of available energy and raw materials will diminish. We will see crude oil production peak, as well as a peak in production of other basic commodities, such as copper. A lack of new investment has left the world with a lack of new supply. The next ten years are going to be a whole lot like the 1970s, with a global bent. Special Offer: Emerging markets are hot. Play the strength of "BRIC" markets with names like this Chinese oil company and this Brazilian bank--both up more than 20% since John Christy told subscribers to buy them earlier this year. Click here for details in the Forbes International Investment Report. Betting on higher commodity prices during the next five to ten years is as close as you will ever come to placing a bet on a sure thing. The potential rewards far outpace the risk. The asset class that performs the worst in the first five years of the decade tends to do the worst in the last five years of the decade. That should bring the Nasdaq to mind. This should not be surprising, as commodity bull markets are always accompanied by bear markets in the popular averages. The Nasdaq has made a decent recovery from its first bear market leg, and it is now beginning its next decline. The other popular averages will follow suit. How far will they fall? Look for the Nasdaq to drop to 1,100 and the Standard & Poor's 500 to go under 775. A secular (long-term) bear market began in 2000, and a cyclical correction, which launched from lows in October 2002, is ending. The next leg in the secular bear is beginning. The U.S. Federal Reserve is targeting housing prices, and the housing market is already slowing in many parts of the country. Phoenix and San Diego are particularly soft. Higher energy prices are beginning to affect consumer behavior, and consumer spending is directly related to stock prices. As consumer spending slows, the stock market will fall. Bottom line: You should only hold stocks that are advantaged by higher commodity prices. Due to the recent corrections in metals and energy, this is an excellent time to be using weakness to accumulate commodity-related investments. Special Offer: Click here for three junior gold miners recommended by Professional Timing Service that you should have in your precious metals portfolio right now. Here is the most recent look at our Energy Forecaster, a model designed to measure the potential in the energy sector. It looks great. Something wicked this way comes, and it is Iran. The little rhetoric episode on June 5 is a preview. Iran will convert threats into action--you can count on that. They want oil denominated in euros; they want to decrease production to increase prices; they want to use oil as a weapon against the West while they develop other, more deadly weapons; they want political control in the Middle East; and they want to hurt the West. They will accomplish most of these goals. Crude oil settled back to $71.45 per barrel December basis, which is in line with the support level I was looking for. Currently, crude oil is looking stronger, and the next stop should be $81 basis December--probably this summer. It will not be long before the oil guys will be talking about a floor at $70, and I expect to see crude over $100 during the year. As for gold, I think the recent correction in precious metals is all but over. At least, the worst is behind us. The near term is setting up an excellent low in among precious metals. From a long-term standpoint, we are looking at a time that we will look back on as the last best place to buy gold and silver stocks. Gold is going to go to $1,600, and at least double its 1980 high, regardless of whether it goes to $600 or $580 first. The key here is to augment your future rewards and minimize risk by accumulating mining shares during weakness. In terms of recommendations, I still am bullish on Goldcorp and Gabelli Global Gold & Natural Resources Income Trust . I also think energy investors who buy into Canetic Resources Trust will be richly rewarded. A word of caution: As energy and the metals take more of the spotlight, the scams will come out of the woodwork. In the 1960s and '70s, when the space program was all the rage, sheet metal companies were going public with names like Space Age Metals. Stick with solid, proven enterprises and avoid the fly-by-nights. Excerpted from the June 2006 edition of Curtis Hesler's Professional Timing Service. For more information and to subscribe, click here.
Curtis Hesler, Professional Timing Service

Who creates a tipping point? bizjournals.com
Every now and then a gifted writer comes along who helps us better understand human behavior. Perhaps the most talented -- and engaging -- writer today who explains how society and individuals interrelate is Malcolm Gladwell. A former business and science writer with The Washington Post and The New Yorker, Gladwell is one of those exceptionally smart people who doesn't just look at situations, he analyzes them. And the reason that his two books, The Tipping Point and Blink, are simultaneously on the The New York Times bestseller lists is that Gladwell has the ability to open readers' eyes, and do it in a way that feels as if you are sharing his discoveries firsthand, rather than listening to a lecture. The Tipping Point is an exploration of how trends or "epidemics" in ordinary life occur. For example: Why did New York's crime rate fall? Why did Hush Puppy shoes inexplicably become popular? And why do certain movies, restaurants, vacation destinations, and yes, books, become wildly popular, while others languish? Gladwell identifies three kinds of people who have the ability to influence us and effect sweeping change. He calls them Connectors, Mavens and Salesmen. Since all three personality types are essential in creating social change, it helps to recognize the people in your work environment who fit each category. Let's start with Connectors. Gladwell researched a 1974 study called Getting a Job by Mark Granovetter and found that half of employed people found their jobs through a personal connection. But when the "quality" of these connections was analyzed, the studies proved that people don't get their jobs through friends, they get them through acquaintances. Gladwell makes a strong case for the fact that "Weak ties are always more important than strong ties." And the reason is that your friends tend to occupy the same world you do, i.e., they probably go to the same school, stores, social gatherings, etc. But your acquaintances are more likely to know things -- like job openings, let's say -- that you don't. As Gladwell points out, "Acquaintances, in short, represent a source of social power, and the more acquaintances you have, the more powerful you are." People who have the most intricate web of acquaintances are the Connectors. Mavens, on the other hand, are information brokers because they share and trade what they know, and for the trend or "social epidemic" to get rolling, someone has to be persuaded to do something. Mavens, according to Gladwell, "have the knowledge and the social skills to start word-of-mouth epidemics … It's not so much what they know, but how they pass it along. The fact that Mavens want to help for no other reason than they like to help, turns out to be an awfully effective way of getting someone's attention." So when it comes to starting a trend -- whether it's at the office or at the gym -- we know that we need a Connector who will spread the word, we know that we need a Maven whose word will be trusted, but we also need a Salesman who has the skills to persuade us in case we are unconvinced of what we are hearing. Good salesmen seem to have an X-factor. Attractiveness and optimism are givens, but Gladwell points out just how persuasive nonverbal and even subliminal messages can be. Gladwell dissects persuasion in a way that makes the wheels of society seem like a well-orchestrated -- if unconscious -- dance. He helps us better understand, for example, why Baltimore's syphilis rate skyrocketed in 1995 and why Divine Secrets of the Ya-Ya Sisterhood became a bestseller. Gladwell's book explains how changes that affect us all happens. "Simply by finding and reaching those few special people who hold so much social power, we can shape the course of social epidemics. In the end, tipping points are a reaffirmation of the potential for change and the power of intelligent action. Look at the world around you. It may seem like an immovable, implacable place. It is not. With the slightest push -- in just the right place -- it can be tipped."
By Connie Glaser

As It Starts TV Service, AT&T Hopes Its Pipes Are Fast Enough

The phone giant, using Net technology, aims to amaze. But its
network isn't the speediest. By James S. Granelli.
http://email.latimes.com/cgi-bin1/DM/y/e3u...Io30G2B0Hb1E0EC

'Fire-Safe' Tobacco Mandates Multiply

State laws requiring that cigarettes be self-extinguishing may
spur voluntary action. By Molly Selvin.
http://email.latimes.com/cgi-bin1/DM/y/e3u...Io30G2B0Hb1F0ED

Delphi Buyout Deal Is Reached

The agreement between the main parts supplier for General Motors
and its largest union could avert a strike and give the automaker
a boost. By John O'Dell.
http://email.latimes.com/cgi-bin1/DM/y/e3u...Io30G2B0Hb1G0EE

Shipping Industry Sees Signs of Slowing

Crammed inside a big metal box, Charlie Woo's toys make their way
from Asia to his downtown Los Angeles warehouse. Lately, the trip
has become less expensive for containers of miniature tea sets,
remote-control cars and super-size squirt guns. By Ronald D.
White.
http://email.latimes.com/cgi-bin1/DM/y/e3u...Io30G2B0Hb1H0EF

Talk of Tribune Spinoff Raises Fears and Doubts

As the company considers options for its broadcasting division,
some analysts question whether a spinoff could unlock value. By
Thomas S. Mulligan.
http://email.latimes.com/cgi-bin1/DM/y/e3u...Io30G2B0Hb1I0EG

US trade deficit reaches $63.5bn BBC News
The US trade deficit increased in April by 2.5% to $63.4bn (£35.4bn), as oil prices surged to nearly $71 per barrel. The figure was below that expected by analysts, who had feared that the deficit could soon reach $65bn. The trade gap was $252bn for the year to date, leaving it on course to exceed the record $716bn recorded in 2005. The high US trade deficit is leading to pressure on the US dollar, which has been falling in international markets, amid worries about financing the gap. Analysts said that the April figure may help ease some of the negative feeling that has surrounded the dollar in recent months, even if only for a short time."It's a pretty good number for the dollar all around," said Clyde Wardle of HSBC. The dollar gained against the euro and the yen on Friday after the US Commerce Department released its trade figures.

Major factor
Most of the trade deficit's widening can be put down to an $1.44bn increase in oil costs after crude prices climbed to record levels in April. The trade gap would have been even bigger but for near-record US exports to China and Canada. But, the US also imported more goods from China, leading to an increased deficit of $17bn with that country alone. US service exports - including things like travel, banking, and professional services - also surged to a new record. "The trade deficit, along with higher gasoline prices and the flagging housing sector, will slow GDP growth in the second and third quarters," said Peter Morici, trade economist at the University of Maryland. "All of this makes more difficult the challenges faced by Fed Chairman Ben Bernanke." Earlier this week, Mr Bernanke said that the central bank was worried about the rate of inflation, prompting a global sell-off in equities as investors worried that interest rates would have to rise to keep a lid on price growth. A separate report from the Labor Department on Friday showed that import prices rose by 1.6% in May, fanning inflation fears further. "When you are in a period of inflation phobia, this is not good news," said Keith Hembre, chief economist with FAF Advisors in Minneapolis.

Scoble To Exit Microsoft CRN
The blogs were humming this weekend about the decision of Microsoft uber-blogger Robert Scoble to leave the fold. (The Microsoft fold, not the blogging fold, that is.) Scoble—on his blog of course—says it's true. He's going to Podtech and is relocating from the Seattle area to the Valley. For the record and contrary to what other bloggers have written, Scoble says he remains a Microsoft fan and his move should not be taken as an anti-Microsoft ding. He also said Microsoft brought no pressure to bear on him for any negative things he may have said. And never fear he writes, some 3,000 other Microsofties are still blogging away. Oh joy. Still, a move is a move. And coming it as it does just as Tech Ed 2006 kicks off, it's bound to have tongues wagging. Just weeks ago Microsoft's Channel 9, another Scoble venue, touted him as "the star of Tech Ed Europe."
By Barbara Darrow, CRN

Wal-Mart sued over Fendi copies BBC News
Luxury goods firm LVMH has sued Wal-Mart, claiming the world's largest retailer is selling illegal copies of its Fendi-brand products in some shops. According to the lawsuit, Wal-Mart is selling fake handbags, wallets and key chains at Sam's Club stores in states including New York and California. LVMH complained that the Fendi goods were being sold as "genuine" at prices that were discounted as much as 70%. Wal-Mart did not make an immediate comment in response to the lawsuit.

Market trades
An increasing number of high-end designer companies are turning to the courts in an effort to stem a rising tide of cheaper counterfeit products that are hurting their sales and denting their brand image. Many of the bags and other products are produced in Asia and sold in markets. However, a significant number find their way into well-known retailers, analysts said. Earlier this year, LVMH also took legal action against French retailer Carrefour, accusing it of selling fake handbags in China. Fendi, which has a chain of own-name boutiques and sells its products through selected department stores in top locations, is seeking damages from Wal-Mart and wants any illegal copies of its goods destroyed. The company cited one example of a Sam's Club store in Las Vegas selling one of its handbags for $295.03 compared with the recommended retail price of $925. Wal-Mart's Sam's Club shops sell everything from groceries to office supplies.

Social networks--future portal or fad? CNET News.com
Social networks like MySpace and Facebook are the zeitgeist for online executives and investors, just as they are for millions of young people. But attendees at the Piper Jaffray Global Internet Summit here still can't decide if these companies are next-generation portals, or merely flash-in-the-pan communities that will eventually fade from popularity like one-time high-fliers Geocities or AOL. Telling evidence stacks up on both sides. On the one hand, MySpace's scope of services and member traffic rivals that of many major portals. Since launching three years ago, MySpace, now owned by News Corp., has added e-mail, instant messaging and blog services, as well as jobs, video, book and music stores. According to founding MySpace member Colin Digiaro, who spoke here Tuesday, the company is talking to "all the usual suspects and unusual suspects" about licensing Web search technology to accommodate a growing demand among its 50 million members for that functionality. (It currently uses Yahoo search for internal site search and displays Overture ads for Web search results.) "We're trying to find the best-of-breed search functionality," Digiaro said.What's more, MySpace's monthly traffic figures have trumped those of MSN and AOL, according to ComScore Media, and they comprise about 75 percent of Yahoo's, the No. 1 site on the Web. Anecdotally, the time teens and college kids spend on MySpace is stealing time they would otherwise spend watching TV, according to an informal focus group of young and older teens interviewed at the conference. MySpace's "goal was to become a next-generation portal," Digiaro said. "I think we're there."

Trouble ahead for MySpace?
On the other hand, these social communities could turn out to be fads among capricious Web surfers, skeptics say. After all, rudimentary social networks have always been around in communities like AOL and Geocities. And if comments made during the same focus group of young and older teens are any indication, MySpace could be headed into trouble with a thriving portion of its members. The aging kids talked about tiring of MySpace and moving on to other social networks or activities, much the way some kids have left AOL's instant-messaging service. "I'm starting to get over it," said Juliana, a 21-year-old living in Orange County, who said she's now into Faceclick, another, newer social network for college kids. Monica, an 18-year-old who's enrolled at UCLA in the fall, said she's further along with MySpace, opting to spend her more than eight hours a day online at sites like photo-sharing site Photobucket.com and Acidplanet.com, a music-hosting site. "I used to be into MySpace and now I'm getting over it." Still, younger teens interviewed said that they were big users of MySpace, spending hours honing their member profiles. And 80 percent of MySpace's demographic skews over 18 years old. Yet, Safa Rashtchy, a senior research analyst at Piper Jaffray, compared the social networks to the walled garden environments of AOL and eBay, two companies that have lost favor among investors. He asked whether people ultimately like to stay within these online walled gardens. Also, it's unclear whether advertisers are spending enough with social networks to make their free services profitable. During a panel discussion of advertisers, ad executives said that many marketers don't want to associate their brands with the sometimes risque or inappropriate material that can surface on the social networks from their members. When pressed by industry observers, executives at MySpace and Facebook declined to say whether they are profitable. As part of Newscorp., MySpace is not required to report its finances. Owen Van Natta, COO of college-focused social directory Facebook, which is privately held, joked that it's a "definite maybe." Some panelists still took this as a sign that these companies, despite hosting user-generated content that generally doesn't cost as much to support as staff editorial, were not profitable. The cost of advertising rates at these sites aren't typically at a premium, either, making it unclear how much MySpace and Facebook are benefiting from growing online ad sales. In defense, Digiaro, MySpace senior vice president of sales and business development, said that the company works with all major advertisers in various vertical markets, including the Cokes and Ford Motors of the world. MySpace also commands ad premiums for such areas within its music and video stores, he said. He said to retain teen surfers, which comprise about 20 percent of its total audience, MySpace has introduced new features faster than rivals and has developed a lasting social connection with members that increases as their history of blog posts and e-mail amasses. The company also plans to expand internationally, starting with the U.K. and Ireland, and get on mobile handsets across the United States. He also suggested that MySpace could eventually introduce a transportable persona that members could take with them to other services. "Social networks will continue to evolve," he said.
By Stefanie Olsen

iPod 'slave' claims investigated BBC News
Apple is investigating a newspaper report that staff in some of its Chinese iPod factories work long hours for low pay and in "slave" conditions. The article in the Mail on Sunday alleged that workers received as little as £27 a month, doing 15-hour shifts making the iconic mp3 player. Employees at the factory lived in dormitories housing 100 people and outsiders were banned, the paper said. Apple said it did not tolerate its supplier code of conduct being broken.

Outsourced
In a statement the firm said: "Apple is committed to ensuring that working conditions in our supply chain are safe, workers are treated with respect and dignity, and manufacturing processes are environmentally responsible." The company added it was "currently investigating the allegations regarding working conditions in the iPod manufacturing plant in China". The report said that at a different factory, in Suzhou near Shanghai, which makes the iPod shuffle, workers were paid £54 per month - but that half of that went on accommodation and food within the factory complex. According to the Mail on Sunday, women rather than men were employed on the production line. Apple is one of thousands of companies that has outsourced manufacturing to China where labour costs are low. IPods carry the text: "Designed in California, Made in China".

US price growth fuels rate fears BBC News
US consumer prices climbed 0.4% in May, driven by a sharp rise in energy costs. The rise, in line with expectations, increases speculation that the US Federal Reserve will raise interest rates when it meets later this month. The Labor Department said core inflation, which does not include food or energy costs, increased by 0.3% for a third consecutive month. Fears that rising prices could trigger higher interest rates have put stock markets on edge in recent weeks. The announcement sent the FTSE 100, France's Cac index and the German Dax sharply lower. The rising cost of renting home and apartments had caused around half the rise on the core index, the Labor department said. This brought the brought the core annual rate up to 2.4% - the highest since early 2005 - and well above the level the US central bank, the Federal Reserve, believes is non-inflationary.

'Done deal'
Three consecutive months of 0.3% core inflation rises was "highly unusual," said Anthony Karydakis, an economist at JP Morgan Asset Management. "You have a problem in the area of rents because of the weakness in the housing market," he said. "Fewer people are buying homes, they become renters and put upward pressures on rents." Peter Dunay, investment strategist with Leeb Index Group said that 0.25% interest rate hike at the end of June now looked like "a done deal". Stock markets around the world have been nervous in recent weeks that worldwide interest rates are likely to rise further, which would weaken the prospect for corporate profits. The European Central Bank has recently raised rates, and many analysts are now expecting the Bank of England to follow suit by the end of the year.

Connecting the Corporate Dots: Social Networks Reveal How Employees and Companies Operate Managing Technology Wharton
What do Wharton faculty members and the workers who spy for the National Security Agency have in common? More than you might think. The Wharton scholars aren't analyzing links among billions of telephone calls to identify terrorists, a controversial NSA activity that caused a stir after it was disclosed recently in news reports. But they, too, are interested in mapping social networks. Social networking is a hot topic. Ordinary Internet users take advantage of networks when they turn to well-known websites like MySpace and Friendster to link up with other people. But more serious interest in social networks can be found among academics, consultants and corporations seeking to deepen their knowledge of how companies operate; how employees and board members interact; how key employees can be identified; and how relationships can be better understood to improve productivity and the dissemination of ideas. Technically, social network research is an offshoot of graph theory in mathematics. Graphs -- a set of dots connected by links -- are used to map relationships. At its most basic, research on social networks underscores the veracity of some of the truisms one hears all the time: "It's a small world." "It's not what you know, it's who you know." "Birds of a feather flock together." Though social networking is much in the news nowadays, it is not a new concept. Wharton management professor Lori Rosenkopf says research on the topic began in the 1950s, accelerated in the 1960s and 1970s, and really hit its stride in recent years with major advances in computing power. The subject gained heightened attention with the 1993 movie Six Degrees of Separation and the publication in 2000 of the bestselling book, The Tipping Point. "Companies have known about social networks casually for a while, but it's been hard to collect data," Rosenkopf says. "Traditionally, you'd find a graduate student in sociology who would write up a questionnaire asking people how frequently they talked with so and so. That costs a lot of money and takes a lot of time, and people may or may not give good responses. But now the ability to see what sites your employees access on the Internet and who they send e-mails to is becoming important." Mapping social networks can be useful in many ways, but Rosenkopf says there are at least two reasons why corporate interest in the subject is growing: Companies want to be able to identify key performers and get a better understanding of the nature of the interaction among employees. "Hopefully, you have organized your company the best way to get the job done," she says. "But mapping out a network will give you a sense of whether actual work flow and communication flow match what you hope to achieve. Maybe there are bottlenecks where one person is managing all interactions. If you expect two groups to work together closely, and you don't see them doing this, you might want to create liaison roles or other relationships to make information flow better. On the other hand, you may see groups talking to each other too much. When managers see network diagrams, they often realize they need to reconfigure their organizational chart." Network maps may also unearth what are known as "cosmopolitans" -- the employees who are most critical to information flow in the company. "The formal organizational structure [in companies] does not necessarily describe who talks to whom," says Valery Yakubovich, a University of Chicago professor who will join Wharton's management department this summer. "Even if some jobs in an organization are designed to coordinate across different functional areas, it's difficult to figure out who coordinates where in reality. So you ask people directly whom they go to for advice and who gives them the most valuable information to get things done. Then you map the whole network. Often you find that people you might not even think of as very valuable turn out to be important links in the structure of the organization." If a firm is contemplating downsizing, for example, it had better be prepared for serious disruption in the workplace if it lets such important people go. Indeed, maps of social networks often show that the people with the most impressive titles are not as vital to an organization as their position would indicate. "Sometimes downsizing causes dramatic, unexpected events because networks get broken up," Rosenkopf notes. "The NSA is thinking 'If we can just pull a couple of cosmopolitan terrorists out of the network, we can really disrupt the network.' But terrorists are smart. They try to organize in cells so that their relationships are not as obvious. Imagine a person in the middle of a map and 10 other people connected in the pattern of a star or flower. Everyone talks to the terrorist in the middle, but they don't talk among themselves. The challenge for the NSA is in establishing the relationships of everyone in the cell."

A Small World After All
Concepts generated by research into social networks have been making their way into the popular culture for years. Wharton management professor Martin J. Conyon recalls the impact of research by Yale University professor Stanley Milgram in the 1960s showing how closely people are interconnected. Milgram illustrated that packages could be sent from the Midwest to strangers in Boston and other cities through a series of only a few acquaintances. The finding of this experiment into what scholars call the "small-world phenomenon" was later popularized in the play and the film Six Degrees of Separation. "It's not possible to underestimate the importance of Milgram's finding," says Conyon. "To be able to do this when there are millions of people in the country is quite astounding." Another famous piece of research, conducted in the 1970s by sociologist Mark Granovetter, now at Stanford University, showed that many job seekers find work through social networks, not through want ads or employment agencies. What was particularly noteworthy about the finding, however, was that these people found jobs not through close friends or family members but through individuals with whom they had only a passing acquaintance. This phenomenon is known as "the strength of weak ties." "This was quite surprising because you would think your friend should have your interests at heart," Conyon says. "But the people who met only infrequently were still what we call 'highly clustered.' Any information they had on jobs they would pass on to you." Conyon, Rosenkopf and Yakubovich are all conducting their own research into various aspects of social networks. For example, Conyon and Mark R. Muldoon, a professor in the school of mathematics at the University of Manchester in Britain, have written several papers on links among the corporate elite. They have found that it is indeed a small world when it comes to people who serve on boards. Although there are thousands of publicly listed companies, those companies are closely linked to one another by a relative handful of shared directorships: Directors who sit on many boards do so with other directors who sit on many boards. In the jargon of researchers focusing on the phenomenon of small-world networks, these board members, when plotted on a graph, are "clustered" together, and the links connecting them are "short path lengths." Such close ties allow the rapid dissemination of governance practices and ownership structures -- poison pills, staggered terms for directors, compensation policies and the like -- throughout many firms. "Corporate practices can spread at quite a high speed through a network of boards," Conyon says. "This only happens because the world is small. If the world was not small -- if groups were just islands and directors didn't cut across different boards -- one would not see the diffusion of ideas and innovations as quickly." In one study, Conyon and Muldoon focused on boards in Singapore and found a high degree of clustering because personal friendships and corporate ties are especially important in Asia's business culture. Conyon and Muldoon have also shown that it is by design, not chance, that the corporate world is small. "Social networks aren't just manna from heaven that drops on us," Conyon notes. "We have shown in our research that big hitters who sit on many boards -- those whose services are in demand -- tend to sit on boards with other people who sit on many boards. This notion is called 'positive degree correlation.' Big hitters hang out with big hitters. Birds of a feather flock together. This is interesting because it's not necessarily the case that this would happen. It shows how networks of boards and the corporate elite are formed."

Staying on the Line
One of Yakubovich's current research projects focuses on social networking at a real-life telemarketing company that he has dubbed the Virtual Call Center to ensure its anonymity. The agents who take telephone orders from viewers of television infomercials do not work in the same office; instead, each works out of her home (most of the call-takers are women). As independent contractors rather than employees, the agents have the flexibility to schedule their work at their convenience so that they have enough time to take care of their children and do chores. As a result of the company's virtual nature and the way its incentive system is structured, it is a challenge for the firm to get agents to sign up for work and to keep them on their shifts. An agent may decide to stop working once she feels she has made enough money for the day, even though she can earn more if she keeps going. But Yakubovich learned that agents tend to work more when they have an opportunity to engage in social interaction by talking with other agents in chat rooms at those times when they are not on the telephone with customers. Such a social network can hold great appeal for workers who desire a place for companionship in the same way that employees at a factory or office use break rooms to socialize. "Even though they are geographically dispersed and this is a completely new kind of workplace, these agents create social networks," Yakubovich notes. "The social interaction becomes part of the work environment. People enjoy signing up for shifts and end up working longer when they do if they have a way to socialize" -- which turns out to be an unintended benefit for the company. Rosenkopf has conducted research into networks that exist among companies, such as cell phone manufacturers. Each firm that sells equipment and services sends its engineers to meetings at which they work to agree on technical standards that will allow phones made by different companies to communicate with one another. "I've mapped out how these firms keep crossing paths," Rosenkopf says. "I can tell you how many times Motorola and Nokia came together at meetings." Such information can be used to figure out which companies may be willing to form strategic alliances. Despite the benefits that can be derived from analyzing social networks, the Wharton researchers say that corporations have only begun to scratch the surface of its potential. "Applied work in firms is really still in its infancy," notes Rosenkopf. "Some firms are doing interesting things, but in many cases the idea hasn't hit its stride yet. The top leaders of Fortune 100 companies haven't been exposed to it in a major way. They may be aware of things like small worlds and The Tipping Point. It's not yet reached the point where companies are using these ideas for business process reengineering. But I do think it's coming."
Published: June 14, 2006

Tech Sector Has Had 'Jobless Recovery,' Says Report InformationWeek
There are more unemployed IT workers than the government counts, says a report sponsored by a tech union. But it still puts unemployment below 4%.
The IT industry lost nearly a half-million jobs between 2001 and 2004 and has recouped only about a quarter of them since, says a new report commissioned by WashTech/CWA, a tech worker union. For instance, the WashTech/CWA report refutes recent figures from the U.S. Bureau of Labor Statistics that said U.S. tech employment is near an all-time high of 3.4 million while unemployment is around 3%, near its record low. Unemployment is actually around 3.6%, or about the same level as in 2001, according to the WashTech/CWA report. At less than 4%, however, either number suggests a healthy tech employment environment. Between March 2001 and March 2004, the U.S. tech industry eliminated about 402,800 jobs, according to the report, "Information Technology Labor Markets: Recovering, But Slowly," which was prepared by the Center for Urban Economic Development at the University of Illinois, Chicago for the Washington Alliance of Technology Workers an affiliate of the Communications Workers of America (WashTech/CWA). The U.S. recouped about a fourth of those positions between April 2003 and February 2006, when 76,300 tech jobs were added, bringing the total losses from March 2001 to March 2004 to 395,6000 according to the study. Offshoring and the hiring of temporary foreign tech workers by U.S. firms are significant reasons for the job losses, according to the report. Modest job hiring, especially since March 2003, are largely due to IT projects that had been on hold but are now moving forward. While tech employment has been slowing rebounding, the WashTech/CWA study contends that the recovery is not as robust as recent reports by the U.S. government and various tech industry groups assert. "Unemployment is being undercounted," not taking into account tens of thousands of tech professionals who have lost jobs in recent years and stopped looking or are underemployed, says Nik Theodore, a co-author of the report and a professor at University of Illinois, Chicago. Also, BLS and some trade groups use a broader definition of occupations considered tech jobs than the WashTech/CWA study examined, Theodore says. For instance, some communication occupations defined as tech jobs by other groups were not classified as tech jobs in the WashTech/CWA report. "Employment levels have been volatile and remain so today," he says. WashTech/CWA is looking for reform, such as tighter policies for foreign workers who come into the U.S. with H-1B visas, as well as the passage of "trade agreements that encourage job creation," says WashTech/CWA president Marcus Courtney. "This is a jobless recovery," says Courtney, who doubts predictions by some businesses of an impending tech skill shortage. IT job growth has been uneven across geographical regions in the U.S, says the WashTech/CWA study. For instance, while regions such as Seattle, Washington D.C. and San Francisco have added the most jobs, areas such as Los Angeles continue to lose tech jobs, the report says. Metropolitan areas including Boston, Chicago, Dallas and San Jose have had modest increases. In contrast to the assessment of a lackluster job market from WashTech/CWA, another new report released by IT staffing firm Robert Half Technology says CIOs expect a modest uptick in tech hiring during the third quarter of 2006. Of 1,400 CIOs surveyed, 13% plan to add IT staff in the next three months while 3% expect cutbacks. The net 10% hiring increase is up 2% from the company's previous quarterly forecast. Robert Half Technology predicts the most robust hiring in the mountain states of the U.S., where 19% of CIO expect to increase hiring and none reported plans to reduce headcount. CIOs in that region are especially looking for .Net and Java 2 application developers, says the report.
By Marianne Kolbasuk McGee

Schwab Cuts Underscore Web Trading Price Pressure Morning Star
Charles Schwab Corp. unveiled a new price cut Wednesday, signaling that pressure on trading fees hasn't let up in the online- brokerage business. San Francisco-based Schwab has been slicing prices and making service improvements since 2004 in an effort to reconnect with its clients. In the latest round of cuts, Schwab is reducing the highest base commission that it charges clients for buying and selling stocks online to $12.95 from $19.95. " This is the next logical step," said Walter Bettinger, president of Schwab's investor-services group. Among several other changes, Schwab also lowered certain options-trading fees and eliminated a slew of "nuisance fees" for services such as picking up a check at a branch office and duplicate statements. Chief Financial Officer Christopher Dodds said Schwab wanted to "make it simpler and easier for (clients) to understand us and do business with us." For the online brokerage industry, the question is whether the Schwab cuts will prod others into lowering their prices further, a move that could hurt revenue. At Schwab, Dodds estimates the cuts may cost the company up to $25 million in quarterly revenue, compared to the nearly $1.3 billion the company had in first-quarter net revenue. Of course, Schwab is betting that any short-term pain will be mitigated by the cuts leading to more business from new or existing clients. "We do think it's going to fuel further asset consolidation at Schwab," Dodds said. At one of Schwab's rivals, online broker TD Ameritrade Holding Corp., Chief Executive Joe Moglia said he didn't see the Schwab cuts setting off large ripples, pointing out that Schwab didn't cut its lowest commission. "It's not the type of thing that would have industry-wide impact," Moglia said. Along with the cuts in fees, Schwab is making other changes, such as expanding client access to tools like investment research and seeking to improve its telephone response times. And in a move aimed at smaller clients, the company said it will pilot complimentary portfolio consultations over the telephone. "If they talk with you, they do more business with you," Bettinger said. Shares of Schwab closed Wednesday at $14.55, down 3 cents.
By Gaston F. Ceron, Dow Jones Newswires; 201-938-5234; gaston.ceron@ dowjones.com

Apple's iPod faces patent probe BBC News
Portable media player maker Creative Technology has said that US authorities will look at whether Apple's rival iPod player infringes one of its patents. The firms have swapped patent lawsuits in recent months, but Creative said the US International Trade Commission (ITC) was now launching a probe. Creative has asked the ITC to issue an order stopping Apple from marketing, selling or importing iPods into the US. It claims the iPod infringes its patent for a music player navigation menu.

iPod pre-eminence
On Wednesday, Creative filed a complaint alleging that iPods infringe on its patent for software it uses to organise and access music on its Nomad and Zen-branded media players. It said the ITC will refer the case to a judge who will hold hearings before making an initial determination as to whether an infringement has taken place. The ITC normally issues a ruling 12 to 15 months after an investigation begins, Creative said. Creative was one of the first companies to sell digital music players back in 2000, but it has struggled against the market dominance of the iPod since it was launched in 2001. It plunged into the red earlier this year, blaming its $114m (£62m) losses for the three months to March on the plunge in MP3 player prices and its need to get rid of stock. But it pledged to return to profit in the second half of 2006, saying it was renewing its focus on high-margin products, such as computer sound cards.

Indian shares stage record rise BBC News
Indian share prices surged on Thursday to close 6.9% higher, marking their highest ever single-day rise. Bargain-hunting traders and foreign investors bought shares after three days of heavy losses on the market, regaining some of the lost ground. Dealers said that the strongest gains came among motor manufacturers and producers of consumer goods. The Bombay Stock Exchange's benchmark exchange, the 30-share Sensex index rose 615.62 points to 9,545.06.

'Unexpected'
Overseas money had helped the market's momentum, said Vijay Tilakraj, senior dealer with brokerage Prabhudas Lilladher. "This was completely unexpected, but a welcome relief after the carnage," he added. Motorbike and scooter maker Bajaj Auto and cement manufacturer Grasim led the way, both gaining 14%.Indian shares have fallen sharply since 10 May, when the benchmark index reached a record high of 12,612 points. The markets have been volatile, having surged last Friday by 5.5%, only to lose ground again on Monday, Tuesday and then Wednesday, when it closed below the 9,000-point mark.

'Bouncing back'
Analysts believe that volatility will continue until there is more clarity about the state of global growth and the direction of interest rates in the US - the world's biggest economy. Market analyst Hemen Kapadia, of investment advisers Morpheus Incorporated, expects the Sensex to bounce back. "The fundamentals of the Indian economy haven't changed," he said. "It is still expected to grow at 7 to 8%, domestic companies are performing well and I think people have realised the sentiment was bearish without reason. Investors seem to be coming back to the markets." However, director of Ashwin Chinubhai brokers, Anand Dalal believes the underlying sentiment in the markets is still "very cautious". "It was not an India-specific problem, but external issues, such as the meltdown in global markets and the US increasing its interest rates, that led to the fall in the Indian markets," he said. "Investors do not believe the market has bottomed out and will hesitate to take any steps until they get a clearer picture of which way the Sensex is headed."

Slovenia to get euro green light BBC News
European Union leaders are expected to confirm Slovenia's adoption of the euro during a two-day summit in Brussels. It is due to join the twelve-member eurozone on 1 January 2007, the first of the 10 new EU members to do so. Slovenia has met eurozone criteria for public debt, budget deficit and interest rates and said inflation would remain below the eurozone benchmark. Lithuania's application for euro membership was rejected because its inflation rate was too high.

Euros for tolars
The euro will be Slovenia's fourth form of legal tender since splitting from Yugoslavia in 1991, when it dropped the dinar for a transitional currency before adopting the tolar. If all goes to plan, EU finance ministers will fix the exchange rate between the euro and the tolar on 11 July. The Slovenian central bank would have the task of distributing 155 million euro coins and 42 million bank notes by 1 January, with just a two-week transition period during which the currency will circulate alongside the Slovene tolar. The government hopes that euro membership will boost tourism and foreign investment in the small Alpine state of just under two million people. The EU summit is also expected to explore the issues of European energy supplies and the admission of new member states from Eastern Europe.

Petrol prices hit US production BBC News
US industrial production unexpectedly fell in May, highlighting weaknesses in manufacturing and signalling that the world's largest economy may be cooling. Industrial output dropped 0.1% in May after April's 0.8% rise, the Federal Reserve reported. Car production has been notably hit as high petrol costs have dented demand for sport utility vehicles. The drop is the first since January, after manufacturing saw a recovery in the early part of the year.

A blip?
Monthly production of cars and car parts was 1.3% lower in May, after a less dramatic 0.2% drop in April. General Motors saw its total sales fall by 16% in May while Ford suffered a 6% decline. While May's fall was not predicted by analysts, they are wary about saying whether the latest figures signal a new trend. "It is important to put this into context and realise what a strong number it followed in April, not come away convinced this is a new trend," said Dana Johnson, chief economist at Comerica. Despite signals that the economy is slowing, economists feel that the Fed is more likely to raise interest rates than not. That is due to concerns about growing inflationary pressures, fuelled by rising energy and property prices.

KFC sued in US over cooking fats BBC News
The fast food chain KFC is being sued in the US in a bid to stop it cooking fried chicken in partially hydrogenated oil containing trans fatty acids. The fats have been linked to raised cholesterol and a subsequent increased risk of heart disease. The case is being brought by the consumer group Centre for Science in the Public Interest, which says KFC could use healthier cooking products. KFC vowed to fight the court case, which it called "frivolous". The Centre for Science in the Public Interest is seeking a variety of economic damages in the case against KFC's parent company, Yum Brands. The group and Dr Arthur Hoyte, a retired physician from Maryland, want a judge to order KFC to use other types of oils or make sure customers know about trans fat content immediately before they buy food. Dr Hoyte said he was suing "for my son and others' kids, so they may have a healthier, happier, trans-fat-free future". He added: "If I had known that KFC uses an unnatural frying oil, and that their food was so high in trans fat, I would have reconsidered my choices," he said. He and the consumer group are seeking class-action status for their claim and want a judge to let Dr Hoyte represent anyone who ate at a KFC in the Washington DC area in 2004 and 2005.

Taste factor
Michael Jacobsen, director of the centre, said KFC knew it could use healthier fats in its cooking. But he added: "It recklessly puts its customers at risk of a Kentucky Fried Coronary." KFC spokeswoman Laurie Schalow branded the lawsuit "frivolous" and said the company would fight it in court. The company had provided nutrition and fat information to consumers online and in restaurants for a very long time, she said. And a spokeswoman for KFC GB Ltd added: "KFC provides a wide variety of menu choices and options for our consumers. "We also provide nutritional information on tray liners in all restaurants and on the KFC UK website." She added: "We have been reviewing alternative oil options, but there are a number of factors to consider including maintaining KFC's unique taste and flavour, supply availability and transportation.

Social-Networking Sites Continue Meteoric Rise In May TechWeb News
The social-networking phenomenon MySpace.com surpassed 51 million unique visitors in May, a Web metrics firm said Thursday. Another popular site YouTube.com, which focuses on people sharing video, doubled its traffic from April to 12.6 million visitors in May, ComScore Networks said. MySpace.com, a favorite of teens and young adults, had 51.4 million unique visitors last month, compared with 48 million in April. The popularity of social networking wasn't expected to wane in the near future in the United States or the rest of the world, ComScore said. "The challenge for social networking sites will now be monetization and how advertisers will respond to the global marketing potential of these sites," Peter Daboll, president and chief executive of ComScore, said. The top five sites were No. 1 MySpace.com, followed in order by Classmates.com sites, FaceBook.com, YouTube.com and MSN Spaces.
By Antone Gonsalves

10 Essential Blogging Tools Site Pro NEWS
So, you finally decided to take the blog leap. You've heard all about the marketing and search benefits so you stepped up to the plate and signed up for a TypePad, MovableType or WordPress blog software package and now you're a blogger. Okay, now what? Add the ten essential blogging tools listed below and you will also be well on your way to creating and promoting a blog that is a powerful marketing tool. I'll explain the use of the tool and offer some suggestions, including the tools I use on my own blogs including the DuctTapeMarketing blog.

Feed Reader
The best way to learn about blogs and blogging is to read, or at least scan, lots of blogs. One of the wonders of blogs is that you can have every new post from every blog you want to read delivered to your desktop or to online location via RSS, so you can easily read and scan the posts of many blogs in a very short time. Newsgator is a good online choice for feed reading and also has a version that integrates with Outlook. I use a free online service known as Bloglines.

Subscriber Center
You need to make it easy for your blog visitors to subscribe to your blog's RSS feed – so they can read your blog in their favorite feed reader. The best way to do this is to go to FeedBurner and burn your own RSS feed there and use the tools they provide to set up automatic subscriber links so people who want to use Bloglines, Google Reader, MyYahoo or Pluck, for instance, can click on one button to subscribe. Tech types can figure this out without the buttons but why not make it easy for anyone to figure out. Side note: Subscribe to each of these yourself and you will force some blog spiders to visit your site.

Email Subscription Option
A lot of people will never get the whole feed thing, but everyone gets email. Create an option for people to subscribe by giving you their email address – they will simply receive your blog posts like an email message. FeedBurner offers this service for free. FeedBlitz is another option or, if you already have an autoresponder email list service they may offer this service. AWeber offers this and helps me integrate these blog email subscribers into my other mailing lists.

Blog and RSS directories
There are hundreds of blog and RSS directories and getting listed in many can be a good thing. I use a piece of software called RSS Submit, but you can also visit Robin Goode's frequently updated list and submit your blog and feed by hand. Hint: Subscribe to the RSS feed he offers and you will be notified when new directories are added.

Ping Service
Pinging is a term used for letting the various blog and RSS directories know when you have posted new content. Again, FeedBurner offers this as an automatic option called PingShot and you should activate it. PingGoat and Ping O Matic are other options but they require that you visit and update your record each time you post new content.

Bookmark Manager
As you surf around the web or hop from blog to blog you may find sites that you want to point out to your readers. Online bookmark managers allow you to bookmark and categorize web and blog pages as you collect them and are a great tool for managing all of the stuff you find on the web. I use del.icio.us but BlinkList does a fine job as well.

Blog Stats
I like to track a few key stats in real time because it shows what other blogs might be linking to you or posting about your blog. A lot of people just like to track this kind of thing for fun and frequently visit sites like Technorati. I like to track it for networking opportunities. I use a tool called MyBlogLog because it allows me to see where traffic is coming from but also tracks what links on my blog visitors are clicking on. It's amazing how this data can help you write more effectively. (MyBlogLog also ranks your links so visitors can see which links on your site are the most popular.)

Desktop Posting
With most blog software you must go online and post using a set of tools provided by the blog software. Many bloggers like to use a desktop application to create and submit their posts as it gives them some extra tools and allows them to more easily integrate content and files on their computer. I use w.blogger but also like Performancing, Qumana and ecto (apple folks) (w.blogger also doubles as a really simple HTML editor.)

Tell A Friend Script
My blog software (pMachine) has a feature that allows a reader to click a link and send the post to a friend. This tactic brings me lots of readers. You might try looking here for some simple scripts that do that same: http://www.javascriptkit.com/script/script...llafriend.shtml
http://www.stadtaus.com/en/php_scripts/tell_a_friend_script/

Republish Your Feed Headlines
The ability to republish your blog posts on other web pages, sites you own or sites of strategic partners is a great way to expose folks to your blog content. One more time we turn to FeedBurner for a painless way to republish your blog post to any web page you choose with something they call BuzzBoost.
By John Jantsch

What Ozzie Can Do for Microsoft BusinessWeek
Expect the new software czar to nudge Microsoft toward open standards support without radically changing the company's core business
The departure of Bill Gates as Microsoft's technology czar puts a heavy load on the shoulders of Ray Ozzie, his replacement as the company's chief software architect. Ozzie, while highly respected, has been with the company only for one year, so he doesn't have the cult-hero status of Gates to help him resolve internal conflicts and rally the troops around a new initiative. But industry observers say he has the management skills to bring much-needed discipline to the vast software development organization and he has a fresh perspective that might make Microsoft (MSFT) a more innovative company. Bottom line: While investors may fret that Microsoft is losing Gates' golden touch, in fact the company may actually be better off now. That's assuming Ozzie can get new ideas percolating in a company that still relies on its aging Windows and Office monopolies for most of its profits — and has been forced to play catch-up to Net browser pioneer Netscape in the 1990s and search leader Google (GOOG) in recent years. “All in all, I see this as a net positive for Microsoft, for its employees and its shareholders,” says Mark Anderson, president of Strategic News Service, a leading tech industry consultancy. Already Ozzie has had an impact. His Oct. 28, 2005 memo to Microsoft's executive staff was a call to arms in a major strategic push into a new generation of online services, called Microsoft's live services (see BusinessWeek.com, 11/2/05, "Why Microsoft is Going “Live.”"). “The world of online services and software-as-a-service has been passing Microsoft by, and I credit Ozzie with getting the company more fully in the game,” says analyst Dwight Davis of tech market research outfit Summit Strategies.

ACQUIRING OZZIE
Ozzie enjoys a reputation as one of the PC industry's most celebrated innovators. Most notably, while chief executive officer of software startup Iris Associates in the 1980s, he brought to market the first popular desktop collaboration software, Notes, which now is used by approximately 125 million office workers worldwide. Iris was acquired by Lotus Development, which was later bought by IBM (IBM). More recently, Ozzie started Groove Networks, a maker of Web collaboration software and services that made it easy for people to work on projects together even if they weren't at the same company. Microsoft bought Groove last year—in part to secure Ozzie's services. He was immediately appointed chief technology officer. “We wanted the technology but also we had wanted to work with Ray for 20 years,” Microsoft Chief Executive Steve Ballmer said at the press conference announcing the transition. Ozzie himself could not be reached for comment. Here's how Microsoft is shifting around its technology leadership. Ozzie takes over the chief architect job immediately, but continues to report to Gates for the first year of the transition. He's in charge of the technology vision of the company and responsible for keeping all of the product groups aligned. Craig Mundie, a longtime Microsoft executive, is taking charge of the company's intellectual property policy decisions and Microsoft Research, which does basic scientific research. Both men will begin to report directly to Ballmer starting a year from now, though Gates will continue to sit in on meetings.

SHARING CREDIT
Gates says his role as the technology genius at Microsoft has been greatly exaggerated. “There has been a disproportionate amount of attention on me, but in reality there has been an incredible amount of technical talent at Microsoft,” he said at the press conference. In particular, he praised J. Allard, who has been a leading light in Xbox game console technology, and Bob Muglia, who runs development in the computer and server tools business. In fact, analysts say Gates deserves part of the blame for mistakes and delays in the next version of Windows, called Windows Vista. TKTKTKTKTK/technology/content/jun2006/tc20060615_063374.htmTKTKTKTK Microsoft had been working on a successor to Windows XP ever since its introduction in 2001, but an overly ambitious list of proposed new features and problems with the basic structure of the technology caused the product to be delayed for years. While business versions are scheduled for release late this year, consumer versions aren't expected until sometime next year. Could Ozzie have done any better? Some analysts believe so. “It will be a very good thing to have Ozzie in this role,” says Tim Bajarin, president of tech market researcher Creative Strategies. “He is a very methodical person who sees both the whole picture of a project clearly and also understands how to manage it efficiently.”

OPEN STANDARDS
Others believe Ozzie will move Microsoft in the direction of becoming a better industry citizen. It depends on its proprietary technologies in Windows and Office at a time when the industry is increasingly embracing open standards. Microsoft has made some tentative moves in that direction as well, but only fitfully. Many see the shift as inevitable. “In the end, I don't think Microsoft will have any choice but to continue down the path to open-standards support and I think it's possible that Ozzie may be more willing than Gates and some others at Microsoft to accelerate that process rather than resist it,” says Davis of Summit Strategies. Not everyone praises Ozzie. One industry executive who asked not to be identified called Ozzie “massively overrated.” He pointed out that it took Ozzie and Iris many years to develop Notes, a mammoth project that has complexity issues much like those of Windows and Office. And, just when Notes was gaining strength in the market, the Web came along to make its technology foundation obsolete. When IBM took over the product through its acquisition of Lotus, Notes had to be substantially retooled. Don't expect Ozzie to push Microsoft too far out of its familiar groove. He's unlikely to make a radical break with the company's intense focus on the lucrative Windows and Office monopolies. But if he can spark even more creativity in the online sphere, the company's shareholders will be better off.
By Steve Hamm

Ozzie takes top Microsoft software job Scotsman
After a two-decade courtship of Ray Ozzie, Microsoft Corp. finally landed the soft-spoken industry visionary last year and now he will succeed company founder Bill Gates as its top technical guru. Standing at the forefront of Microsoft's push to integrate online services with its dominant desktop software and fend off aggressive Internet rivals, Ozzie assumed the mantle of chief software architect from Gates on Thursday. Ozzie's track record of ground-breaking software and respect among programmers is almost unparalleled in the industry. Ozzie created Lotus Notes, one of the first popular corporate e-mail programs, which was then sold to IBM. "There just aren't other people like Ray in this business. You couldn't ask for a better track record," said Gates in an interview with Reuters. "I have no doubts about Ray's abilities." Microsoft Chief Executive Steve Ballmer was also effusive in his praise for the white-haired Ozzie. "We wanted to work with Ray for about 20-plus years," said Ballmer. "We expected a lot, but this has worked out a lot better than we had any right to expect." Ozzie, 50, joined Microsoft last year as one of three chief technical officers after the Redmond, Washington company acquired his Massachusetts-based collaborative software company, Groove Networks. Now, he takes on a heavy responsibility as Microsoft looks to find new sources of growth beyond its Office productivity suite and Windows operating system, which already runs 90 percent of the world's personal computers. But decades of work on breakthrough software technology that fostered collaboration through e-mail and document-sharing has prepared Ozzie to fill shoes as big as Gates', according to several industry players. "He's got great integrity. He can therefore build trust with people," Lotus Corp. founder Mitch Kapor said of Ozzie. One Wall Street analyst agreed. "It's not like he has to build his credibility. He has got that in spades," said Charles Di Bona, analyst at Sanford C. Bernstein. Still, Ozzie will never wield the power his predecessor did in the same post, said Matt Rosoff, an analyst with Directions on Microsoft, an independent research firm. "He's not going to be able to take on all of Bill Gates' role," Rosoff said. "As the founder, Bill Gates had a kind of moral authority that no one else can really take on." (Additional reporting by Yinka Adegoke in New York, Eric Auchard in Las Vegas, Philipp Gollner and Scott Hillis in San Francisco and Daisuke Wakabayashi in Seattle.)
By Jim Finkle
'Mr Microsoft' Gates to ease out of job Bangkok Post
Gates Giving Up His Management Role At Microsoft By 2008 InformationWeek
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Gates to end daily Microsoft role BBC News
Bill Gates has announced he will end his day-to-day role as head of software giant Microsoft by July 2008. Mr Gates said the move would allow him to spend more time on health and education work at his charity, the Bill & Melinda Gates Foundation. "This is a hard decision," said Mr Gates, adding that he was not retiring but "reordering [his] priorities". Mr Gates will continue to serve as the company's chairman and advise on key development projects after July 2008. "I'm not leaving Microsoft," said Mr Gates."What's happening now is we're starting the transition plan... I'll be working as hard as I ever have during these next years." The firm said it would take two years to make sure the transition takes place smoothly. Mr Gates said there was a "common thread" between his work at Microsoft and the foundation. "I'm very lucky to have two passions that I feel are so important and so challenging," he said.

'No huge shock'
Microsoft's chief technical officer Ray Ozzie will be given the title of chief software architect and work with Mr Gates on all product issues.Craig Mundie meanwhile will assume the title of chief research and strategy officer. At the same time Mr Mundie will work with general counsel Brad Smith to focus on