UPDATE 3-Apple stuns Wall St. with rare miss, shares dive
* CFO blames rumors of new iPhone, customers wait* Shares diveBy Poornima Gupta and Edwin ChanSAN FRANCISCO, Oct 18 (Reuters) - Apple Inc reported a rare miss in quarterly results after sales of its flagship iPhone fell well short of Wall Street expectations, hammering its shares.Shares of the world’s most valuable technology corporation dived more than 5 percent to below $400 after it said it sold 17.07 million iPhones — well short of the roughly 20 million expected by analysts.Apple’s CFO said iPhone sales came in ahead of internal expectations but were hurt in September by customers waiting for a new version.The September quarterly report was Apple’s first under new Chief Executive Tim Cook, who took over in August after co-founder Steve Jobs resigned. The company lost its leading visionary and co-founder when he died Oct. 5.Cook takes over during a critical juncture for the company, which is battling a fast-rising Google Inc in the mobile arena while fending off consumer electronics giants such as Samsung and Amazon.com Inc .”Expectations for this company were red-hot, that is why we downgraded it,” said BGC Partners analyst Colin Gillis, who lowered his rating on the shares days before. “The reality is their business is not an annuity. They have to sell their quarter’s worth of revenue every 90 days.”“They had a big upgrade cycle with the iPhone, the numbers came in weak. They need to set records every time they report to keep up the momentum.”Apple said its revenue rose to $28.27 billion but that was also lower than the average analyst estimate of $29.69 billion, according to Thomson Reuters I/B/E/S.The company reported a net profit of $6.62 billion, or $7.05 a share. That fell shy of expectations for earnings of $7.39 per share.”There’s no question this was a transition quarter ahead of the 4S,” said WP Stewart portfolio manager Michael Walker. “With the early pace of iPhone 4S sales, my guess is that disappointment is relatively short-lived.”“I’m not going to call Q3 a throwaway quarter for iPhones, but it was definitely transition.The company moved 4 million iPhone 4S units — more than double its predecessor — in its first three days, despite lukewarm reviews.A PERIOD OF TRANSITIONA large spike in sales of Mac computers during the September quarter failed to lift earnings. Apple sold 4.89 million Macs, up 27 percent from a year ago. And it moved 11.12 million iPads.Gross margin came to 40.3 percent — a tad higher than Wall Street’s forecast of 39.74 percent. International sales accounted for 63 percent of the quarter’s revenue.Some analysts had feared the lack of a new iPhone in more than 15 months would hurt the September quarter, while arguing the holiday season would turn out strong after the introduction of the fifth version of its smartphone.”We expected iPhone sales to decline in the September quarter from the June quarter as a result of the announcements we made at WWDC in June, where we said we would launch iOS 5 and iCloud in fall,” Peter Oppenheimer, Chief Financial Officer, said in an interview with Reuters.”That basically created the rumor of the day across the September quarter, especially at the end.”Apple said it expected December quarter earnings of $9.30 a share on revenue of about $37 billion.The forecast for the December quarter far surpassed Wall Street’s projection for just above $9.00 — a rare instance of its outlook exceeding expectations. Apple typically guides so conservatively that investors disregard its forecasts.But that failed to discourage the after-hours sell-off. Before the numbers, Apple’s shares had climbed to as high as $425 in extended trade.”What is interesting is the guidance is less conservative than usual for their next quarter. It’s a timing issue, where it looks like the business that people thought would be in the September quarter is occurring in the December quarter,” said Sterne Agee analyst Shaw Wu.”One of the things obviously is the iPhone 4S just started shipping a few days ago.”
RIM investor says directors canceled meeting
* Firm is leading drive for shake-up at BlackBerry maker* RIM not available immediately for commentTORONTO, Oct 18 (Reuters) - Jaguar Financial , a Research In Motion investor agitating for a shake-up, said two independent RIM directors canceled meetings called this week to discuss complaints about the BlackBerry maker.Jaguar, a Canadian merchant bank that targets underperforming companies, wants RIM to hire a chief executive to replace Mike Lazaridis and Jim Balsillie. It also wants RIM to consider putting itself up for sale, either as a whole or in parts.Jaguar Chief Executive Vic Alboini said on Tuesday meetings with directors David Kerr and John Richardson were canceled by RIM’s counsel.”This incident clearly demonstrates the control that management has over the independent directors,” said Alboini.The current co-CEOs have presided over a steady decline in the BlackBerry’s share of the smartphone market and have failed to keep pace with innovations by Apple and others, Alboini and other critics say. Balsillie and Lazaridis, who share the role of chairman, exert too much power over the board, they say.Jaguar says shareholders representing 8 percent of RIM’s stock back its demands, and investment bankers say that figure could grow if RIM fails to address their concerns.Shares of RIM were down more than 2 percent at $22.93 in Nasdaq trade on Tuesday, as the BlackBerry maker launched a three-day developers conference in San Francisco.At the event, RIM said it would soon launch a new operating system to power both its smartphones and the PlayBook tablet computer.
UK-U.S. extradition review deals blow to hacker
Britain launched the review in September following complaints the 2003 treaty made it easier to extradite people from Britain to the United States than vice versa.Gary McKinnon has been battling for six years to avoid extradition to the U.S. over what American officials called the “biggest military computer hack of all time.”McKinnon, 45, suffers from Asperger’s syndrome, a form of autism, and his supporters say he is too ill to be sent for trial in the United States. He faces charges that could lead to a 70-year jail sentence.Britain’s Home Secretary (interior minister) Theresa May has been waiting for medical reports on McKinnon before making a final decision on his extradition.The review, led by retired judge Scott Baker, said criticism of the treaty was based on a misunderstanding of how the legislation operated in practice.”The UK-U.S. extradition arrangements were examined in great detail and the panel concluded that the widespread perception that they operate in an imbalanced manner is not justified,” it said.”There is no ‘practical difference’ between the information required of both countries when requesting extradition.”The panel also rejected calls for the government to implement legislation that would allow a suspect wanted for extradition to be tried in Britain when the alleged crime was committed in the UK — as was the case with McKinnon’s computer hacking from his home in London.McKinnon was arrested in 2002 after U.S. prosecutors charged him with illegally accessing computers, including systems at the Pentagon and NASA, and causing $900,000 worth of damage.He says he became obsessed with looking through military data networks for evidence of aliens and secret technology.The extradition review’s finding is politically difficult for British Prime Minister David Cameron and his coalition deputy Nick Clegg, who raised McKinnon’s case with President Barack Obama during his state visit this year.The British leaders have backed criticism of the treaty, drawn up after the September 11, 2001 attacks to allow the quick transfer of suspects. Whilst in opposition, Clegg had called the treaty “lopsided.”
UPDATE 4-Google jumps as investors cheer mobile growth
* JP Morgan ups price target to $705 from $685* Shares up nearly 6 pctBy Alexei OreskovicSAN FRANCISCO, Oct 14 (Reuters) - Google Inc’s free Android smartphone software, already a big hit with consumers, is starting to win the hearts of investors.The world’s No. 1 Internet search company offered a peek at its mobile business during quarterly results on Thursday, revealing that the business was generating revenue at an annual run rate of $2.5 billion, up from $1 billion last year.That helped Google sail past third-quarter financial targets set by analysts, sending its shares up nearly 6 percent to $591.68 on Friday and easing some of Wall Street’s concerns that mobile returns might not justify the investment.”People just haven’t given them any credit for that division. I think it could be a huge part of the overall company,” said Pat Adams, portfolio manager at the Dunham Loss Averse Growth Fund, which owns Google shares.”There are so many more mobile devices out there than there are PCs,” Adams said. “What they did was brilliant to give that operating system away to get the search part of it,” he added.Google lets phone makers such as Samsung Electronics , LG Electronics and HTC Corp use its Android software for free, banking on consumers using those phones to visit Google’s advertising-supported website to search for information.The booming popularity of smartphones has frustrated many of the established giants of the computer industry, from Microsoft Corp to Hewlett-Packard Co .For Google, whose business is built upon people using its search engine, making the transition from the personal computers to mobile devices is crucial.The company has stepped up investments in its mobile business, which competes with iPhone-maker Apple Inc . Google’s Android mobile software — already the world’s most-used smartphone platform — powers 190 million devices, up from 135 million in mid-July.The explosion of Android devices, as well as the availability of Google search on Apple’s iPhones, has made Google even more dominant in mobile search than on the desktop PC, according to JP Morgan analyst Doug Anmuth who pegged Google’s mobile search market share at 90 percent.That strong position accounts for the sharp, 28 percent uptick in paid clicks on search ads that Google experienced during the third quarter, Anmuth said in a note to investors.Those ads appear to command lower rates than PC search ads, analysts noted. But some analysts said they expect that to change over time, especially as Google creates new forms of advertising that take advantage of a user’s location.Mobile advertising sales is but one component of what analysts believe could be a broader wireless opportunity for Google. The company has begun offering coupon deals, and could make money through retailer loyalty programs and its recently launched Google Wallet, a free service which allows shoppers to use their mobile phones to pay for purchases.MOTOROLA BETMore concerning for some investors is Google’s plan to acquire mobile phone maker Motorola Mobility Holdings for $12.5 billion.The deal will give Google access to one of the largest patent libraries in the wireless industry, as well as hardware manufacturing operations that will allow it to develop its own line of smartphones.But some worry that Google is entering a low-margin hardware business in which it has no experience, and that the move could jeopardize its relationships with other phone makers that use Android.BGC Partners analyst Colin Gillis said he did not think Google’s increase in mobile ad revenue would make investors feel any better about the Motorola deal, which is expected to close this year or early in 2012.”You could argue the Motorola deal puts some of that revenue at risk,” he said, noting that some current Android phone makers might see Google as a competitor once it acquires Motorola and reduce their support for Google products. Google has said it plans to operate Motorola as a separate business.Gillis also noted that the $2.5 billion annual run rate in Google’s mobile business, while impressive, remains less than 10 percent of the company’s overall revenue.And he added that Google may not necessarily have based the $2.5 billion run rate on one quarter’s worth of revenue, which would have suggested that Google made $625 million in mobile revenue in the third quarter.”They probably took the last month and multiplied it by 12. It could be the last day,” he noted. “We have no idea what that number really is.”Whatever the number though, Google’s mobile revenue is clearly growing quickly, and for many on Wall Street, that’s good enough for now. Many brokerages raised their price targets on Google on Friday, some by as much as 10 percent.”We think mobile is near a massive volume inflection point,” wrote Susquehanna Financial Group analyst Herman Leung in a note to investors on Friday.”At these growth rates, we think mobile revenue could be larger than display (advertising revenue) by 2012.”
WRAPUP 1-BlackBerry co-CEOs seek to control the damage
* Says full service back, but cause still unknownBy Alastair SharpTORONTO, Oct 13 (Reuters) - Research In Motion has fixed the root cause of a global disruption of BlackBerry services and is still working to clear a backlog of delayed messages, its co-CEOs said on Thursday, hoping to control the damage to RIM four days after the outage began.The chief executives - Mike Lazaridis and Jim Balsillie - apologized for the system-wide failure that left millions of BlackBerry users without email, instant messaging and browsing and said the company would work to regain their customers trust.”Our inability to quickly fix this has been frustrating,” Lazaridis said, sounding contrite. “We are taking immediate and aggressive steps to minimize risk of this happening again.”Asked about whether RIM would pay compensation to carriers or enterprises that pay a monthly fee for its gold-standard messaging services, Balsillie suggested the company would consider that question in the coming days.”Our focus has been 100 percent on getting the systems up and running. … That’s been our focus throughout the night and we have SLAs (service level agreements) with customers and that’s something we’re going to focus on now.”A number of network providers around the world have already said they would compensate their customers over the lost service.The outage - and RIM’s sluggish communications with its customers - have fanned rising dissatisfaction with Lazaridis and Balsillie, who made an unusual joint appearance on the conference call.Even before the latest outage, critics have called for a shake-up at RIM, saying the top managers have let the company fall too far behind Apple and other rivals in a rapidly changing market.The session was only the second call that RIM has held since the crisis began on Monday.Earlier on Thursday the company posted a video clip of Lazaridis apologizing for the incident. He repeated that message in his opening remarks at Thursday’s conference call.Public relations specialists have wondered why it took the company so long, saying its response to the crisis has been slow and poorly communicated.”I think a statement of empathy that wouldn’t cost anybody anything could have been made within hours,” said Allan Bonner, a leading public relations crisis management consultant in Toronto.”They’re doing crisis response the way they’re designing their software these days — it’s outdated, slow and not being well-received by their customers,” said Gene Grabowski, senior vice president at Levick Strategic Communications.FULL SERVICE RESTORED, RIM SAYSThe Waterloo, Ontario-based company said it had restored full service, even as it acknowledged that the backlog caused by the outage was still working its way through system.It said it determined that the outage - the most extensive in the company’s history - was caused by a malfunctioning switch at a data center in Slough, England, and the subsequent failure of a backup to operate properly.That triggered a massive reservoir of data that jammed up other data centers, spreading the disruption to most regions.Lazaridis said it would take some time to pinpoint why the switch and back-up both failed, setting off the crisis.
US defends deal to boost auto fuel efficiency
By John CrawleyWASHINGTON, Oct 12 (Reuters) - The Obama administration on Wednesday pledged transparency in setting standards to boost auto fuel efficiency and cut tailpipe emissions, countering claims that a landmark agreement securing automaker support for its environmental initiative was secretive.The agreement reached in July is the foundation of a planned rule requiring that new cars sold in the United States nearly double average fuel efficiency by 2025 to 54.5 miles per gallon. The administration said the formal regulation was a work in progress and would provide opportunity for outside input.”The deal is not done,” David Strickland, an administration pointman on the rules told a congressional committee investigating how White House, transportation and environmental officials came up with a plan with auto companies for a 40 percent gain in fuel efficiency by the middle of the next decade.Regina McCarthy, a senior Environmental Protection Agency (EPA) official who appeared with Strickland before a House Oversight subcommittee, also said her agency and Strickland’s National Highway Traffic Safety Administration (NHTSA) were involved in an “extensive public process” supported by auto industry executives and others.NHTSA and EPA have delayed a joint formal proposal of new fuel rules until mid-November. They hope to finalize the standards in mid-2012, giving automakers the regulatory certainty they want in order to craft product plans.The Oversight panel has sought documents and other information from the two agencies and automakers involved in negotiations that produced the agreement with automakers.If met, that target beginning in 2017 would require a 5 percent annual fuel efficiency improvement for cars and yearly gains of 3.5 to 5 percent for light trucks, which include sport utilities, pickups and vans.U.S. automakers traditionally have favored heavier, bigger trucks and truck-like vehicles and have lagged in fuel efficiency, while Japanese rivals have concentrated on smaller cars and got a jump on gasoline/electric hybrid technology.Congressional investigators led by Republican Oversight Chairman Darrell Issa of California want to know whether closed-door negotiations with auto executives on fuel and emissions standards skirted the law.”This is not how the process is supposed to work,” Issa said in a Sept. 30 letter to Transportation Secretary Ray LaHood, whose agency oversees NHTSA.Issa also questioned an agreement by automakers to not challenge any final rule in court, and the role played by regulators from his home state in forging an agreement.California can exert leverage over environmental rulemaking because of its size, potent consumer market and political strength, and powerful drive to curb greenhouse emissions.Jeremy Anwyl, chief executive of online auto research group Edmunds.com, told the panel that the administration was heavy-handed with industry in the fuel negotiations.”The expression I hear repeatedly is that they had a gun to their head,” Anwyl said.Strickland said he could “not speak to the state of mind” of industry executives but said meetings with automakers, suppliers, environmental groups and the United Auto Workers (UAW) were critical for developing the outline for a new rule.Thirteen auto companies, including General Motors Co , Ford Motor Co , Chrysler , Toyota Motor Corp and Honda Motor Co , agreed to the plan.Automakers have said they were not pressured by the Obama administration to reach an agreement although they resisted an initial push for a 62 mpg standard.The U.S. government at the time had unique leverage over GM and Chrysler, having bailed out both companies in 2009. The administration also has approved substantial loans for Ford and Nissan to retool factories for making more fuel efficient vehicles.
WRAPUP 1-Obama faces jobs bill roadblock in Congress
* Obama says economy needs a “jolt”By Laura MacInnisPITTSBURGH, Oct 11 (Reuters) - President Barack Obama conceded on Tuesday he may have to break up his jobs bill in the face of political paralysis in Washington that could thwart major action to spur hiring before the 2012 elections.Obama has tried to put his Republican opponents on the spot by highlighting their opposition to his $447 billion proposal to create jobs at a time when high unemployment is becoming the dominant issue in early election campaigning.But the plan looks set to to fail in the U.S. Senate later on Tuesday with Republicans refusing to buckle and some Democrats signaling their opposition.”If they don’t pass the whole package we’re going to break it up into constituent parts,” Obama said in Pittsburgh in his most frank acknowledgment to date that the plan will not pass in its entirety.Among measures which might be salvaged are a payroll tax cut which Obama wants to extend to avoid imposing an effective tax increase at a time wages have not been rising much. Obama’s bill would also extend unemployment benefits for the long-term unemployed.The U.S. unemployment rate has been above 9 percent since May.Obama’s visit on Tuesday to the industrial city of Pittsburgh, once a thriving steel center, was the latest stop in his tour to promote the jobs plan of swing states in advance of next year’s election.Republicans say the tour is aimed at saving his own job.Obama’s so-called Jobs Council, under the chairmanship of GE Chief Executive Officer Jeffrey Immelt, earlier delivered a report in which they proposed steps to foster U.S. innovation and make the country more attractive to foreign investment.The suggestions include ramping up infrastructure spending, streamlining visa applications to keep science graduates in the United States, and changing student loans to encourage graduates to work for start-up companies.But many of the recommendations would require support from Republicans to become law — a potentially tall order in a divided Congress in which Republicans control the House of Representatives and Democrats hold the Senate. The Council made some of these proposals in its report in June.LIKELY DEFEATObama’s 2012 re-election chances depend on his ability to spur the sluggish economic recovery and revive the nearly stagnant job market.The president launched the jobs bill last month to try to persuade Americans that he had a plan to get them back to work after a string of gloomy economic data that has raised concerns the country could dip back into recession.Even Wall Street is feeling the pinch, with a report from the New York State Comptroller showing that banker bonuses are likely to drop for the second year in a row.”Right now, our economy needs a jolt,” Obama said in later remarks in Pittsburgh.”The Senate of the United States has a chance to do something about jobs — right now — by voting for the American Jobs Act. This is a moment of truth for the U.S. Senate.”However, the bill was headed for likely defeat, as his Democrats were expected to fall short of the 60 votes needed to clear a procedural hurdle in the Senate.White House National Economic Council Director Gene Sperling said that the vote would highlight Republican obstructionism despite a public alarmed by high unemployment.He, however, made clear the Obama administration’s fallback option would be to offer the jobs plan piecemeal.”If they (Republicans) choose not to give the support that will allow this to get 60 votes, if they choose to do that, then we’ll come back piece after piece,” Sperling told CNBC.Several Democrats and nearly every Republican are expected to vote against the bill when it comes up for consideration in the Senate around 6 p.m. EDT (2200 GMT).
Well, look who’s behind bars!
Blog Guy, I know you cover all the big fashion shows, and my sister-in-law’s ventriloquist told me there were some HUGE celebs at Lisbon Fashion Week this year. Can you give us some names? I can do much better than that, I can show you pictures. Here is you-know-who, above, making a very rare public appearance… Wait a minute, Blog Guy. You’ve put one of those rectangular censorship bars over her face, so I’m not quite sure who that is. No, that’s not my style. My readers know that I always use the salmon-colored censorship bars, as you can see here on the right. I’m afraid that black bar is an actual accessory. So she’s really wearing that? Of course! She wore it just in case nobody recognizes her anymore. The very, very famous often do that in public, to draw attention to themselves so they can complain about not having privacy. Gosh, you know so much about how these things work, Blog Guy. So, the woman behind those rectangles is… Er, I was hoping you would know. I’m leaning toward Amelia Earhart. Join the Oddly Enough blog network Follow this blog on Twitter at rbasler A visitor poses for a portrait during Lisbon Fashion Week October 7, 2011. More stuff from Oddly Enough
A parka with windows, a big box in the sky
Could you find domestic happiness living in an angular white parka with windows? A big box set on top of an apartment building? A turtle-shaped shell? A modular Y filled with triangles? At the U.S. Energy Department’s Solar Decathlon, visitors can try on — OK, tour — these avant garde houses, knowing at least that they’re supremely energy efficient. And with the solar power industry on the defensive after the Solyndra bankruptcy, it’s a decent showcase for new technologies. Set up along the Potomac River on a slightly out of the way corner of Washington’s National Mall, the village of 19 solar-powered homes represents the work of collegiate designers from New York to New Zealand, the University of Tennessee to Tongji University in China. The requirements are strict: each house must be between 600 and 1,000 square feet, and no taller than 18 feet, and be powered by the sun. Any power taken from the grid must be offset by solar energy produced by the house. No fireplaces, fire pits or candles allowed. Officially opened on September 22, the contest judges the homes’ affordability, appliances, architecture, comfort zone, communications, energy balance, engineering, home entertainment, hot water and market appeal. The CHIP house — the one that looks a bit like a parka or a big down quilt heaped into a mound — was standing room only on opening day, with a waiting line for visitors. It wears its insulation on the outside, swathed in white vinyl, and its unusual shape is meant to help channel cool air in and hot air out, easing fuel costs. Most electric devices in the home are controlled by a system using an iPad and XBOX 360′s Kinect, which means they can be controlled with a wave or a pointed finger. Solar panels cover most of the roof. CHIP (short for compact hyper-insulated prototype) is the work of students from Caltech and the Southern California Institute of Architecture. The City College of New York decided to build a house suitable for the underutilized urban space on top of mid-sized residential or commercial buildings. The team from the University of Calgary in Canada constructed a tortoise like TRTL house — “technological residence, traditional living” — with solar cells standing in for the turtle’s shell. China’s team featured a modular Y-shaped house dominated by triangles, from the floor to the furniture. The Empowerhouse, by Parsons The New School for Design and Stevens Institute of Technology, has a known future: after the competition ends, it will become home for a family in Washington DC’s Deanwood neighborhood. Photo credits: SCI-Arc/Caltech’s CHIP house, September 23, 2011; Parsons The New School for Design/Stevens Institute for Technology’s entry, September 22, 2011; Team China’s Y house, September 23, 2011 (all photos by Stefano Paltera/U.S. Department of Energy)