April 12th, 2010
08:34 AM GMT
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Hong Kong, China – The leadership of the world's largest aluminum producer believes metals prices are making a comeback in 2010.

"We are bullish," Vladislav Soloviev, first deputy CEO of Rusal, told me in Hong Kong.

Demand, he believes, is strong, especially in China. The recovery in prices helped turn around his company's fortunes in 2009.

China's demand for commodities has been all over the news as of late. The country posted its first trade deficit in six years in March mainly because of the surge in imports of raw materials. Exports dropped because Chinese factories were slow to reopen after the Lunar New Year holiday.

The trade deficit is complicating the debate over the Chinese currency. Beijing has been under pressure to loosen its controls on the yuan, which many in Washington believe is set too low and contributes to the big U.S. trade deficit with China.

Soloviev believes Beijing will make a move this year. But unlike those in the manufacturing sector, he thinks a more flexible currency will give him a competitive edge.

Do you anticipate China will ease its currency controls soon?  If so, what does that mean for your business?

March 11th, 2010
10:35 AM GMT
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Tokyo, Japan – There's a scene in Steven Spielberg's 2002 movie "Minority Report" that’s stuck with me, even many years after I initially saw the film. As Tom Cruise walks through a mall, cameras lining the ceilings and walls scan his retinas and advertisements custom-made for him pop up. He enjoys beer, so up pops a Guinness ad. But the electronic tracking becomes problematic when Cruise is trying to hide from the authorities, realizing that it’s impossible in his futuristic world.

Well, that future has arrived in Tokyo. NEC has developed an advertisement that follows a similar idea to what was imagined in "Minority Report," with a camera installed inside an electronic billboard that reads your face.

Using facial recognition technology, an internal computer determines your gender and your age. The billboard then pulls up an ad based on your demographic, targeting your best possible interest. The billboard I tried out saw that I was indeed a woman in her thirties and... lo and behold, pulled up a very appealing lunch advertisement.

To be clear, it didn’t read my retina and didn’t talk to me. But the billboard did capture my image, store my demographic data and will send that information on to the company.

How can this work so quickly and so accurately, I asked NEC's engineer Junko Amagai. She started waxing engineer-like and lost me fairly quickly, talking about numbers, logarithms and data storage. But the bottom line is that facial-recognition technology has just gotten much more pedestrian - down to the pedestrians walking by these digital ads.

"This is a new age of advertising," Amagai said. "We can learn something we never knew for marketing." Amagai explained how currently street advertising is a one-way game and companies never get real-time data from passers-by. This system changes that.

The NEC technology estimates your age to within 10 years. The technology is even more accurate for a new system it is testing and had on display at a recent fair in Tokyo. I was surprised to see it nail my age nearly every time.

Does it make one feel a little, say, overly-observed? Art Frickus, a consultant from the Netherlands, certainly didn’t feel that way. "I believe in one-on-one communication," said Frickus. “All your messages must be relevant. So that’s why I believe in this kind of thing. As long as the content is not objectionable, I don't see any problem with it."

NEC, aware of some potential unease as it launches the product for testing in the United States, says signs will clearly state to observers that a camera is installed in the billboard. Images will not be saved, stressed NEC. The company then made a bold statement about the global prospects for such electronic advertising.

"Ten percent of digital signage will be like this," said NEC spokesman Kosuke Yamauchi. How soon? In two to three years, he explained. That’s not within tech-loving Japan, he said. That's a global prediction, from the United States to the EU to China.

So, naturally, one must wonder what will happen in say, 10 years. Will we see electronic tracking as sophisticated as what was imagined in "Minority Report?"

I dare not even try and guess.

July 23rd, 2009
12:22 PM GMT
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(CNN) – The Quest Means Business team has been tasked to try and explain business jargon to its viewers.

We are often guilty of throwing terms around when talking about company results that are difficult to explain in a sentence or two.

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is one of those for me.

So I was pleased to delve into it, not only to try and explain it, but also to really get my head around it. Why did companies publish EBITDA figures during the dotcom bubble era? Why do few companies use it now? Why is it not acceptable under so-called U.S. Generally Accepted Accounting Principles (GAAP)?

Ok, I will try and explain it again. Basically (and really basically) it’s a way to express a company’s earnings (the same as net income or profits or the “bottom line”) in a given period. But it is a number that is expressed before the company strips out recurring charges or costs like taxes, interest paid on debt, the loss of value of assets etc. (If I write anymore, I will confuse myself).

Companies use EBITDA (and ITDA and other complication formulae) especially when the number is positive while all others may be negative: “Company X lost six billion dollars last quarter, but EBITDA grew 15 percent!”

To be fair it is a way to try and show a consistent number if a new company is growing fast and spending huge amounts of money so it has no hopes of turning a profit. That is why it became a popular number during the late 1990s.

Today, private equity likes to look at EBITDA figures during a potential takeover because it helps to clarify a company’s underlying ability to earn money.

Is it any clearer to you now?

If not, the video below shows me trying to explain it to a classroom full of children. They were enthusiastic to learn and were shouting “EBITDA” when we packed up to leave their London school.

May 13th, 2008
07:46 PM GMT
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NEW YORK – Call them growing pains. The virtual world Second Life has had a tough time of it lately.

CNN's own hub in Second Life.
CNN's own hub in Second Life.

Last month, its founder Philip Rosedale said he will step down as CEO of Linden Labs – the company which runs the community. He said he was staying on full-time as chairman preferring to focus on innovation rather than people management.

The management part certainly looks like it is getting harder. Over the last two years millions of users all over the world signed up to mix, mingle and play out their fantasies on Second Life. It was the hot thing. The virtual world had its own currency, its own economy and it didn't take long for the business world to catch on. Companies rushed to open virtual stores and offices.

But the initial hype has faded. Although it has an estimated 13 million registered subscribers, only a small portion – as little as 5 percent - are considered active. Corporations are shuttering their virtual stores. A series of banking scandals prompted Second Life to shut down all virtual-only banks in January. Lawsuits involving everything from land deals to copyright infringement have been filed.

Like real life, Second Life is getting ... well ... complicated.

That doesn't mean businesses are giving up. While the direct marketing opportunities didn't quite live up to expectations, companies are finding Second Life provides a great platform for bringing scattered employees together.

This past weekend the Los Angeles Times ran a great article featuring some companies who are actively using Second Life to hold strategy meetings, training sessions, question and answer forums and even throw parties! As you might expect, technology companies like Sun Microsystems, IBM and Intel are at the forefront, but it is expected to grow.

I am totally fascinated by this partially because I am a complete outsider. I'm not a resident of Second Life. I thought about it, but juggling work and family leaves me barely enough time for my first life. That may soon change.

A couple of weeks ago, Forrester Research analyst Erica Driver released a report in which she makes a case that Web3D is the next major Internet wave.

In 5 to 7 years, many of us might find we are asked to create work avatars that communicate and network with other employees in a digital world. Whether companies will use Second Life for that, create their own virtual worlds or use a combination is an open question.

How they manage that world will also present challenges. One of the interesting things about Second Life is that people feel free to explore and express themselves in ways they might not in their everyday life (so I am told.)

I loved reading about Intel employees who showed up at meetings in Second Life in the form of a half-man half-animal or another with blue skin. Will human resource departments be able to cope with that level of non-conformity?

I'd like to be optimistic and think that unlike e-mail and Blackberries, which stopped people from actually talking or interacting, having a work avatar might increase the sense of camaraderie and community within a company.

But almost as soon as I had that thought I started to worry about what my avatar should look like. Will I understand the slang? What if I land in the wrong place? Maybe it will just create more stress.

What do you think? Will widespread use of Web3D make work more interesting or just corrupt the fun of Second Life? What will your work avatar look like?

May 7th, 2008
07:11 AM GMT
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NEW YORK – With the economy teetering on recession, you would think it would be a terrible time to be a retailer... of any sort.

So I was struck when I read that Steve Jobs is busy expanding Apple's empire. Tuesday, Apple announced a deal with Vodafone to distribute the iPhone in 10 countries.

In Italy the company will work with two providers, Vodafone and Telecom Italia – a first and perhaps a sign of things to come. Apple says it wants to sell 10 million iPhones this year. It is an extraordinary goal given that the price tag is much higher than rivals.

It may not be as crazy as it sounds. If the company changes its strategy and starts partnering with multiple operators, as it has in Italy, it would remove a big purchase hurdle.

In the U.S. iPhones are sold exclusively through AT&T.

A lot of people I know have been reluctant to buy an iPhone because they don't want to change mobile phone carriers. And there is another force at work that may do even more to help Apple reach those lofty goals.

Consumers, in love with their iPods and Macs, are asking their bosses to switch to Apple products at work. At least that is what the cover story of the latest BusinessWeek magazine claims.

The article cites a Yankee Group survey of 250 companies that showed 87 percent now had some Apple computers in their offices, compared to 48 percent just two years ago.

What is stunning about that number is that Apple does not market to corporations. This is purely a word of mouth phenomenon.

If it turns out to be true, it could mean huge things for Apple. The corporate computer market is worth billions. Apple has just a tiny fraction of that. Any increase would be a nice boost to the bottom line.

There are, of course, many reasons to be skeptical. Microsoft is the dominant player in the corporate market and is not likely to cede any market share without a fight.

Servicing corporate clients requires a big support staff and is expensive. And then there is the question of Jobs himself. His return to the CEO post revitalized the company. Some worry Apple is too dependent on his vision.

Those are all valid concerns. But Apple has an unparalleled ability to connect with consumers and build loyalty.

Ten years ago this month, Jobs and his design team unveiled the first colored iMac, the Bondi Blue. It wasn't technically that much better than its rivals, but it looked amazing. People flocked to it. And Apple hasn't looked back.

People buy one product and they want more. Analysts call it the halo effect and I have to admit, I believe it. Six years ago I broke down and bought an iPod. The experience has been so satisfying that the next computer I buy will be a Mac. If my company offered it, I'd jump at the chance to have an iPhone.

The headlines may be full of doom and gloom predictions about the consumer, but Apple seems to be bucking the trend. Yes, the company warned the third quarter may be tough, but analysts think they are being overly conservative. The consensus is that the stock, which has already rallied sharply, still has further to run.

I would love to hear what all of you think of Apple now that the iPhone is going to be widely available in Europe.

May 2nd, 2008
06:20 AM GMT
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NEW YORK – Is it possible for a company to make too much money? It is if you are big oil. Thursday, Exxon Mobil said it made a staggering $11 billion in profits in the first three months of this year. It is the second highest U.S. corporate profit on record. (Exxon's 4th quarter holds the top spot!) Although smaller in overall numbers, B.P. and Shell did even better during the first quarter. Consumer advocate groups are outraged. Oilwatchdog.com said the roof-busting profits are coming at the cost of squeezed consumers and the suffering economy. They want U.S. lawmakers to do something.The three Presidential hopefuls all say they have a plan. Democratic contenders Hillary Clinton and Barak Obama have both proposed a "windfall profit" tax on oil companies that would be used, in part, to fund renewable energy research. Clinton also wants to use that money to pay for a suspension of the federal gas tax this summer. A gas holiday, if you will, for consumers. The presumptive Republican candidate, John McCain also supports a gas holiday, though he is not in favor of a windfall tax.

Oh please. Energy is one of the biggest challenges facing our country and this is what they come up with? A gas holiday? Most energy experts say cutting the federal gas tax for three months would do little to actually help consumers and may actually result in worse roads. The federal gas tax goes toward highway construction and repairs. A windfall tax on oil companies doesn't sound much better. The U.S. Congress can't agree on anything, what makes anyone think they will be able to effectively use any new tax money to find new renewable sources of energy?

I think a more realistic solution comes from the ranks of oil royalty itself. Descendants of the oil baron John D. Rockefeller went public this week saying they will back a shareholder rebellion to try and force Exxon's management to put more resources toward alternative energy. A group of resolutions, to be introduced at this month's shareholder meeting, call on Exxon to adopt a new energy policy, fund research on climate change and set public goals for reducing carbon emissions. The great-granddaughter of John D. was quoted as saying, "the truth is that Exxon Mobil is profiting in the short-term from investments and decisions made years ago ....and ignoring the rapidly shifting energy landscape...." Another said, "They are fighting the last war and not seeing they are facing a new war."

It is too early to tell whether the resolutions will pass, but if they do it could signal an important shift in the energy sector. At the very least, Exxon shareholders are thinking longer term. I wish I could say the same about U.S. politicians. Trying to buy votes with a summer gas holiday doesn't help solve our energy problem. Neither does blaming the oil companies. We need a comprehensive energy policy that encourages private sector solutions and helps American consumers come to terms with a harsh reality: we need to stop using so much energy. Forget about knocking 18 cents off a gallon of gas this summer, how about a bigger tax break on a hybrid?

April 25th, 2008
07:46 AM GMT
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NEW YORK - Americans woke up Thursday morning to some shocking headlines. Some of the country's biggest warehouse retailers were limiting how much rice customers could buy.

Rice restrictions at a Costco store in San Francisco.
Rice restrictions at a Costco store in San Francisco.

Sam's Club, a division of Wal-Mart, said customers would only be allowed only four 10-kilogram (20lb) bags of jasmine, basmati or long grain white rice. Its competitors, Costco and BJ's, were also said to be contemplating limits. Food rations of any kind are unheard of in the U.S., so this was very big news indeed. For at least a little while.

It didn't take long for everyone to figure out the rice shortage was mostly media hype. Yes, some warehouse discounters seem to be experiencing inventory issues as small businesses and restaurants stockpile to avoid higher prices. But the majority of supermarkets have no restrictions whatsoever. Unlike places like Haiti and Egypt where real shortages have resulted in riots, in the U.S. rice is readily available. Expensive, but available.

That doesn't mean the news reports aren't useful. There is a school of thought in financial circles that when the media finally sits up and takes notice, the tide has already turned. This may be true for commodities. After making a record run at $120 a barrel Tuesday, crude oil fell $4 in Thursday's New York session before finally settling around $116 a barrel. Gold fell to a four-month low. Rice prices stayed close to record levels, but wheat, corn and soybean futures all moved lower.

Global consumers could clearly use some relief from sky high fuel and food costs. But investors who have exposure to the commodity markets might want to take profits and take cover. An oil trader I spoke with in New York warned crude was no longer trading based on the rules of supply and demand. Instead, he said oil had now become a financial tool. Farmers have complained the same is happening in grain markets. Speculators are in the driver's seat. Up till now they have been buyers. If that changes, the sell-off could be swift and painful.

April 11th, 2008
04:15 PM GMT
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NEW YORK – The drumbeat of economic news coming out of the U.S. this week has been nothing short of dismal. Business bankruptcies are surging. The price of crude oil hit a new record high. Shipping company UPS, which is often seen as a barometer of economic activity, has warned profits will be down.

Former Federal Reserve Chairman Alan Greenspan went on record, saying the U.S. is most certainly in a recession. Former Labor Secretary Robert Reich went further, telling CNN there was a remote chance that the U.S. was in a depression.

Don’t tell that to investors on Wall Street. According to them, the glass is half full. It is a phrase I have heard used over and over again this week. That’s right - the group at the epicenter of the credit crisis is feeling cautiously upbeat.

About the stock market that is.

They agree the U.S. economy is pretty terrible. But many believe a lot of that bad news is already priced in. There are some signs they may be right. After hitting a 19-month low in March, the S&P 500 is now up some 7 percent. The Chicago Board Options Exchange volatility index, which measures the level of fear in the market, has been steadily declining since mid-March.

And it is not just the traders on the frontlines. On Thursday, Goldman Sachs CEO Lloyd Blankfein told shareholders attending the company’s annual meeting that “the markets are probably in the last stages of the global credit crisis that began last summer.” He added that people “feel like they’re seeing light at the end of the tunnel.”

Fears of a financial meltdown are slowly being replaced by the fears of missing any stock rebound. Many hedge fund managers had a terrible first quarter and can’t afford to be left sitting on the sideline if U.S. stocks start to march higher.

Sound like a massive case of wishful thinking? It could be. Some of the strongest rallies come in bear markets. But if you have the stomach for risk and keep a short-term perspective, this may be a good time to look at some beaten down U.S. names.

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