Stanford Prosecutor Arrested for Assault
When R. Allen Stanford, the Texas financier accused of running a $8 billion Ponzi scheme, finally broke his silence and spoke to reporters on Monday, he teared up when discussing his legal troubles: "You have no idea what this is like for me."
Well um, one of the SEC lawyers prosecuting his case may feel at least some of Stanford's pain.
J. Keith Edmundson, assistant regional director at the SEC's Ft. Worth office was arrested on Saturday for public intoxication and assaulting a police officer. In his mug shot (right), he looks about as happy as Stanford did facing the media in his lawyer's office in Houston two days later.
Sgt. Pedro Criado of Ft. Worth Police Department said Edmundson ignored a police officer who was directing traffic at an arts festival in the city's downtown area Saturday night. He crossed the street despite her repeated orders to wait. She chased after him and grabbed him by the wrist and smelled alcohol on his breath. A scuffle ensued.
Other officers rushed over and Criado says Edmundson had to be "pushed against a wall to be subdued and handcuffed." He was taken to jail. His friend, fellow Ft. Worth lawyer Richard Roper dragged himself out of bed to get Edmundson released on his own recognizance. "He basically promised to appear at any future proceedings," said Roper.
Ft. Worth attorney Tim Moore has taken over the case. Neither he nor Edmundson returned calls seeking comment but SEC spokesman, John Nester said, "We are aware of the incident and it is under review. We take such matters seriously and are prepared to take any appropriate action."
by Kate Murphy
Photo courtesy of Ft. Worth Police Department
A Ponzi By Any Other Name
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Is Hedge Fund Synonymous With Ponzi Scheme?
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the world as we write it
Wednesday, April 22, 2009
Stanford Prosecutor Arrested for Assault
Happy 20th Birthday, Game Boy
Twenty years ago this week, Nintendo released the Game Boy, its first handheld video game console. Excited Japanese customers snatched up the innovative monochrome handheld by the thousands, which retailed for 12,500 yen (about $94 at 1989 rates) at launch?a small price to pay for what seemed to be an NES in your pocket. Nintendo initially offered four games for the new Game Boy: Super Mario Land, Baseball, Alleyway, and Yakuman (a mahjong game), but the number of available titles quickly grew into the hundreds.
Later that year, the Game Boy hit the US at $89.99 with a secret weapon?Tetris as its pack-in game. Selling over a million units during the first Christmas season, the Game Boy proved equally successful in the US, and that success was by no means short-lived: to date, Nintendo has sold 118.69 million units of the original Game Boy line (not including Game Boy Advance) worldwide, making it the longest running dynasty in the video game business. So in honor of the Game Boy's twentieth anniversary, we give you six reasons why the Game Boy dominated the handheld video game market during most of its astounding two-decade run.1. Tetris
It's common pop-marketing knowledge these days that every new hardware platform needs a "killer app" to truly succeed. In the Game Boy's case, Tetris filled that role perfectly.
Alexey Pajitnov's block-stacking classic was easy to play in short sessions, and its simple graphics and mostly non-action gameplay proved perfect for the Game Boy's limited screen capabilities. (If you'll recall, the first Game Boy had a slow LCD response time, which translated to blurry "ghosting" during movement in action games.) Nintendo of America's management made a gutsy and intelligent move to pack in Tetris with its new handheld instead of a proven name like Super Mario Land, and that move proved essential to the Game Boy's long-term success.
Tetris didn't start with the Game Boy, of course (Pajitnov created it for the PC in 1985), but the Game Boy made it mainstream. Ultimately, Tetris proved so popular that it quickly drove sales of Nintendo's handheld console into the millions. Tetris's grown-up gameplay also attracted adults to Nintendo's new platform, expanding Game Boy's potential audience beyond the usual adolescent NES set.2. Battery Life
The original Game Boy boasted anywhere from 10 to 30 hours of battery life on four AA batteries, according to different sources (the more generous estimates came from Nintendo itself at launch). Nintendo achieved this feat of longevity by using a non-backlit monochrome screen and a low-power 8-bit processor in its first handheld. By contrast, Nintendo's competitors were obsessed with color backlit LCD displays and more beefy processors that made their units into battery guzzlers. The NEC TurboExpress, Sega Game Gear, and Atari Lynx only managed to squeeze out 2-5 hours of play time on 6 AA batteries, which could prove quite expensive for their owners over time.
From a hardware design standpoint, Nintendo's first concern with the Game Boy always seemed to be battery life. It makes sense, because an electronic device's portability is directly related to how long you can use it without being tethered down by a power cord. So when it came to adding color to the Game Boy line, Nintendo took its sweet time?nine years, in fact. Why did it take so long? Nintendo wisely waited until it could provide a low-cost, low-power color LCD display that would not only keep the cost of the Game Boy Color low, but provide it with a long battery life comparable to its earlier monochrome cousins.
Ultimately, Nintendo's obsession with battery efficiency proved pivotal. While the Game Boy's early competitors possessed technologically superior displays and more processing power, consumers chose the Game Boy in large part because of the lower cost of operation (fewer batteries to buy) and greater portability afforded by its economical battery usage. Before long, the color power hogs drowned in Nintendo's wake while the Game Boy captured the portable gaming market.3. The Nintendo Brand
In addition to battery life, the Game Boy had a major advantage behind it that its competitors lacked: a monster brand name?Nintendo?that dominated 80% of the video game market. Sure, Atari was Atari?once a video game giant, but by the late '80s it was a tarnished shadow of its former self. Sega's success in the home console wars was still brewing, and NEC's relatively low profile and short history in the video game business didn't resonate with consumers.
By contrast, Nintendo's 8-bit home console, the Nintendo Entertainment System (and the Famicom, its Japanese counterpart), found itself near the peak of its popularity between 1989 and 1991?key years in the handheld wars. Consumers on both sides of the Pacific trusted the Nintendo name to deliver a high quality gaming experience. They knew they could count on Nintendo to provide world-class first-party software for the new console year after year, especially thanks to an enviable set of popular franchises like Super Mario Bros., Zelda, Metroid, and Kid Icarus.
Perhaps more importantly, Nintendo also brought to the handheld a dedicated group of skilled third party developers who knew they could rely on the Game Boy as a strong platform for their software. Plentiful third party support meant plentiful titles, which is always good news for the long-term health of any game system.4. Price
The Game Boy retailed for $89.95 at launch in the US. Compare that to its closest competitors at their launches: the TurboExpress sold for $249.99; the Game Gear, $149.99; and the Lynx, $189.95. Nintendo could afford to offer the Game Boy at a lower price primarily because of the unit's less expensive non-backlit monochrome LCD screen. The Game Boy also gained an advantage over its rivals in total cost of ownership: as previously mentioned, Nintendo's handheld cost less to operate over time due to its more conservative use of disposable batteries.
Launch price wasn't the only factor in Game Boy's success. Over time, Nintendo continued to lower the price of its portable console as production costs decreased, keeping the Game Boy affordable and price competitive despite significant improvements in technology.5. Pokémon
Tetris may have driven the public's ravenous early appetite for Game Boy, but Pokémon cemented it to legendary status. The monster collecting RPG for the original Game Boy sold a combined 20 million copies in the US and Japan and proved that the aging Game Boy platform was still relevant in the late 1990s. And having a new hot title for the handheld at the time proved especially important in the face of a new breed of portable platforms like the Neo Geo Pocket, Bandai Wonderswan, and Tiger Game.com that had learned a few tricks from Nintendo's portable wunderkind. Lacking an absolute must-have game like Pokémon, those new portable contenders quickly fell by the wayside.
Interestingly, Pokémon's success kept more than just the Game Boy alive. 1996-2006 were lean years for Nintendo on the home console front. While the Nintendo 64 and GameCube didn't sell particularly well, sales of Game Boy and Game Boy Advance hardware remained strong, largely driven by the Pokémon craze. In fact, after disappointing sales of the Nintendo 64, Nintendo decided to bring the blockbuster franchise to its ailing console. Sales of the N64 briefly tripled after the release of Pokémon Stadium in 1999. Even so, it wasn't enough to stay on top of the home console race. If Game Boy sales hadn't been so strong, it's possible that Nintendo might have left the hardware business entirely by now. So in some ways, Pokémon and Game Boy kept Nintendo afloat during tough times. Nintendo, and Game Boy, lived on to see another day.6. Flexibility
Throughout two decades of history, the Game Boy has clearly been a hardware franchise that would not sit still. As technology improved, Nintendo followed, regularly refreshing its handheld console to provide better battery life, sharper displays, and more compact form factors. As of 2009, Nintendo has released seven distinct models in the Game Boy series (all but one are completely backwards compatible with earlier units): Game Boy, Game Boy Pocket, Game Boy Light (Japan only), Game Boy Color, Game Boy Advance, Game Boy Advance SP, and Game Boy Micro. Within those seven models, Nintendo provided many color variations and even a few minor hardware revisions. Nintendo also released three home console adapters that allowed users to play Game Boy games on a TV set: Super Game Boy and Super Game Boy 2 (Japan) for the Super NES, and Game Boy Player for the GameCube.
At the moment, Nintendo's dominance in the handheld gaming business continues with the Nintendo DS line of consoles. The Nintendo DS launched in 2004 with Game Boy Advance backwards compatibility as a major feature, making the DS a spiritual successor to the Game Boy line. Even with the DS firmly in the spotlight, Nintendo still sells the Game Boy Micro, a compact version of the Game Boy Advance. So even now, the "Game Boy" name remains alive, although it's on life support. Unfortunately, Nintendo chose to remove Game Boy Advance compatibility from its latest handheld, the Nintendo DSi. As we look ahead, the future of the Game Boy brand remains uncertain at best, grim at worst, but it has been one hell of a ride. Happy 20th birthday, Game Boy. Next year, I'll buy you a beer.SourcesGame Boy Launch Date (Japan)Game Boy Sales NumbersGame Boy Sales in 1989Number of GB Titles ReleasedApril 21st, 1989 Game Boy Launch Titles and PricesNintendo Market Share in 1989Pokemon HistoryPokemon Offsetting Nintendo 64 Sales
by Benj Edwards, for Ars TechnicaRelated Links
Nintendo is Trouncing Its Competitors
The Gym Arcade
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Google Profiles tool makes it easier to search out Smiths
Google has good news for all the Mike Smiths, Leslie Joneses and others with common names who have trouble looking themselves up on Google.
Tuesday, Google introduced new tools to its search index that give folks named Jones and Smith common names that often get lost in results a chance to be found.
A "Profiles" section on Google search results lists the top four people at the top and others underneath. Users who take the time to get a Google ID and beef up their profile can show up there.
Danny Sullivan, editor of website Search Engine Land, says this is Google's attempt to take on Facebook and Twitter, sites frequented by people trying to connect with past and new friends.
"This improves Google's relevancy in people search," he says.
Many people use Google (GOOG) to search for themselves, just to see how they're presented to the outside world, and are unhappy with the results, says Joe Kraus, Google's director of product management.
"They have little control over how they appear in Google," he says. "And sometimes the search results are dominated by people with a large Web presence."
While Kraus says that Google made these moves to improve the overall experience for searchers, analyst Greg Sterling of Sterling Market Intelligence says the change is also a way to get Internet users more linked to the Google ID feature and potential services.
Once you have the ID, you might be more inclined to shop with Google Checkout, post pictures at Picasa Web Albums or build a blog on Google's Blogger, all areas where Google stands to profit with either fees or ads, Sterling says. "It deepens your engagement with Google."
Currently, names show up at the top of search results for people who either are well known, or have large Web presences and take the time to link their website, blog, Facebook, Twitter, LinkedIn, YouTube and other sites. Leaving comments on other blogs and sites can also improve your position in search results.
The Profiles section previously listed your name and included a photo. Now the section allows multiple photos, relevant links to your website and blog, age and employment information similar to information that sites such as LinkedIn and Facebook showcase.
Kraus says the online profiles will level the playing field a bit for searches. But interested people must take the time to add to their personal and Web data.
The most prominent names will still probably be listed on top, Kraus says, but the fact that all the Mike Smiths, for instance, will be linked together in a people section means "you won't have to hunt and peck through the entire index looking for that person," he says. "It helps you narrow the results down to people."
To sign up, go to google.com/profiles.
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AT&T profit boosted by video, Internet, iPhone
Wednesday, Apr 22, 2009 3:40PM UTC
By Sinead Carew
NEW YORK (Reuters) - AT&T Inc <T.N> posted a smaller-than-expected drop in quarterly profit on strong subscriber growth for its video and high-speed Internet service, as well as improved margins for its wireless service.
Subsidies for Apple Inc's <AAPL.O> iPhone had cost AT&T dearly in recent quarters, but analysts said the partnership is now starting to help rather than hurt profits as users of the touch-screen phone spend heavily on data services.
AT&T shares rose nearly 4 percent in morning trading as analysts said the biggest U.S. phone company had reported impressive results given the weak economy.
"You had broadband net adds very strong, U-verse (video service) net adds very strong and wireless was very strong," said Commresearch analyst Gregory Lundberg. "For this economy, it was an outstanding performance."
AT&T's first-quarter profit fell to $3.13 billion, or 53 cents per share, from $3.46 billion, or 57 cents a share, a year earlier. Analysts on average were expecting 48 cents per share, according to Reuters Estimates.
Revenue edged down 0.6 percent to $30.57 billion, which was below the analysts' average forecast of $31.06 billion, but investors were pleased with AT&T's performance in its growth markets, including its U-verse service.
AT&T said it had added 284,000 U-verse subscribers in the first quarter, giving it a total subscriber base of 1.3 million. U-verse competes with cable TV providers such as Comcast Corp <CMCSA.O> and satellite providers such as DirecTV <DTV.O>.
U-verse additions were ahead of three analysts' estimates that ranged from 240,000 to 281,500, and above the service's fourth-quarter additions of 264,000 subscribers.
AT&T said it had added 359,000 broadband Internet subscribers, well ahead of Lundberg's forecast of 225,000 additions.
IPHONE BOOSTS WIRELESS
The company added 1.2 million net cell phone customers in the quarter, in line with analyst expectations. It trails Verizon Wireless, owned by Verizon Communications <VZ.N> and Vodafone <VOD.L>, in mobile phone customers.
AT&T said 1.6 million Apple iPhone customers had activated services on the AT&T network during the quarter, more than 40 percent of which were new to the telephone operator.
"The base of iPhone customers is now large enough to offset the subsidies for new iPhone users," said Bernstein analyst Craig Moffett.
AT&T reported wireless profit margin of 40.9 percent, above the 39.2 percent forecast by Moffett.
But other analysts worried that AT&T, currently the exclusive U.S. provider for the iPhone, was depending too heavily on one device as they estimated about three-quarters of its net new monthly bill-paying customers were iPhone users.
"It's a little bit worrisome as to what happens if and when their exclusivity ends," said Stifel Nicolaus analyst Chris King. "Without iPhone their net adds would be negligible."
AT&T shares were up 96 cents, or 3.8 percent, at $26.24 in morning New York Stock Exchange trade. The stock has risen about 20 percent since March 9, when it hit a 2009 low of $21.71.
(Reporting by Sinead Carew; editing by John Wallace, Derek Caney and Lisa Von Ahn)
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Freddie Mac executive committed suicide: police source
Wednesday, Apr 22, 2009 4:21PM UTC
By Deborah Charles
RESTON, Virginia (Reuters) - David Kellermann, acting chief financial officer of troubled U.S. mortgage giant Freddie Mac, was found dead on Wednesday in his suburban Virginia home after apparently committing suicide, a local police source said.
Kellermann, 41, was named Freddie Mac's acting CFO last September after the Treasury Department seized the company, and its sibling mortgage agency Fannie Mae, as the agencies faced deep losses on a crashing U.S. housing market that was rapidly engulfing other financial institutions.
A police source said that Kellermann was found hanging in the basement of his home in Reston, outside Washington.
A 16-year veteran of Freddie Mac, Kellermann had played a key role in helping the firm navigate accounting scandals and answer questions from regulators and investors who put the company under intense scrutiny as the U.S. housing market ended a five-year boom in 2006.
Police officials in Fairfax County would not confirm the death was a suicide but said police were called at 4:48 a.m. EDT to his home.
"Officers arrived and were directed to the basement of the home where they found David Kellermann dead," said Eddy Azcarate, a spokesman for Fairfax County Police.
"We are not speculating as to the manner and cause of death. We're going to wait for the medical examiner to give that information," he said. "The body has been taken to the medical examiner's office. We do not suspect foul play."
He said police never discuss if any notes are found.
In March, Freddie Mac said that it was cooperating with the Securities and Exchange Commission in an investigation and that employees have been interviewed by investigators.
There was no indication what caused Kellermann to commit suicide.
While Freddie Mac has seen its executive ranks churn since accounting improprieties first emerged in 2003 and as it has booked multi-billion dollar losses in recent quarters, those who knew Kellermann spoke of his good character and dedication to the job.
"For many years, we have known David as a person of the utmost ethical standards who was hardworking and knowledgeable in his field," the Federal Housing Finance Board, Freddie Mac's chief regulator, said in a statement.
Freddie Mac and Fannie Mae, known as government-sponsored enterprises, had a hand in about half of the entire U.S. mortgage market and were taken over in an effort to ward off further damage to the U.S. housing market.
Colleagues and former co-workers were shocked at the news of Kellermann's death.
"He was a smart guy who had risen fast. And people liked being around him. That's not something you could say about everyone there," said a former Freddie Mac executive who knew Kellermann.
Kellermann had been closely involved in many key accounting and financial issues since 2003 when regulators found that Freddie Mac had improperly booked years of losses.
Before taking over as acting CFO, he served as senior vice president, corporate controller and principal accounting officer.
He volunteered in the community with a charity for the homeless.
Police spokesman Azcarate said Kellermann's family was still in the house, and "they are surrounding themselves with additional family and friends."
Kellermann died in a sprawling red brick house in quiet wealthy upscale neighborhood called "Hunter Mill Estates."
The New York Times said that according to neighbors and company officials, Kellermann had received a bonus of about $800,000. Such bonuses -- which totaled $210 million for executives at Freddie Mac and its sibling company Fannie Mae -- prompted scrutiny from lawmakers who have questioned bonuses for executives of firms receiving government bailouts.
The Times said that Kellermann hired a private security firm after reporters came to his house to ask about his bonus.
There have been several high-profile suicides in the global financial crisis in the past six months.
German billionaire businessman Adolf Merckle threw himself in front of a train in January after heavy losses on the stock market.
Merckle's business empire included major cement and drug companies but was hobbled by debt and effectively controlled by the banks that lent it money after a series of wrong-way bets on stock investments.
In December, Frenchman Thierry Magon de la Villehuchet, 65, co-founder of money manager Access International, was found dead in a New York office building, reportedly distraught over losing up to $1.4 billion in client money to Bernard Madoff's fraud. He slit his wrists with boxcutters.
(Additional reporting by Patrick Rucker in Washington and Walden Siew in New York; Editing by Frances Kerry)
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Postcard takes 47-year scenic route
Insurance agent David Conn received a postcard recently in his Hudson, Ohio, post office box: "Greetings from Montana."
The card said Fran and Polly were enjoying their cross-country train ride and had fed deer somewhere along the way.
That was all nice, and a little curious for several reasons: One, Conn didn't know anyone named Fran or Polly; two, the card was addressed to a different name at his P.O. box; and three, it had been mailed in 1962.
"This card looks like somebody just bought it at the drugstore," Conn told CNN. "It's not even yellowed. It looks spankin' new."
The card was addressed to Marion White, who was editor of Hudson's North Summit Times newspaper and once held the post office box Conn now uses. She later served for more than 20 years on the Hudson Village Council. She died in 1988.
A few days after receiving the card, Conn talked to White's relatives and others, who told him the sender had to be Fran Murphey. Murphey was an iconic Akron Beacon Journal reporter who lived her whole life in the same house near Hudson. She died in 1998.
Murphey's life was an eccentric mixture of the mundane and the extraordinary.
In her 55 years with the Beacon Journal, she became a local celebrity. She was well-known for, among other things, her preference for bib overalls, her love of travel, her sometimes salty language, her expertise on outhouses and her vast collection of postcards -- a quarter of a million of them, according to her niece Barbara Joy Godar.
"She was definitely one of a kind," said Godar, 73, of Akron. "She was a corker."
Murphey's dispatch from Montana chronicled a trip she took with friend and colleague Polly Paffilas, who died in 2005. It bore a 3-cent stamp, the postcard rate in 1962, and was hand-canceled twice on July 5, 1962, with a Smokey Bear indicia at the Helena, Montana, post office.
Mail sometimes falls behind machinery or is left in a discarded mail bag and languishes for years at a time, but there's no telling where Murphey's card spent the past 47 years, said Mark Saunders, a spokesman for the U.S. Postal Service in Washington.
Victor Dubina, a postal service spokesman for northern and central Ohio, declined to surmise what happened to Murphey's card.
"Anything I'd guess would be sheer speculation," he said. "Over the course of the years we've seen little things like this pop up, and it's never the same."
Conn isn't sure what he'll do with the card. He may frame it and hang it on his wall. He's also considering donating it to Hudson's historical society or giving it to the Beacon Journal to display.
The postal service regrets the card wasn't delivered properly, but it makes for an interesting artifact, Dubina said.
"This is a lost art," he said. "Anymore, you either send an e-mail or send a tweet: 'I'm on the edge of the Grand Canyon.'
"Bless Fran's heart, she wrote postcards. We just don't see that much of it anymore," Dubina said. "Thirty years from now, 40 years from now, who's going to say, 'Ooh, I just got an e-mail from Victor'? 'How did I get it? What happened?'"
It's something special for loved ones, too, Saunders added.
"That piece of tangible postcard, that 'Greetings from Montana,' that's almost a piece of that individual that extends beyond their life," Saunders said.
Murphey built her postcard collection in part by mailing cards to friends while traveling and then asking for them back when she returned, Conn said.
"I can just picture her finally getting back from her trip, saying, 'OK, hey, Marion, where's that card I sent you from Montana?' and [White] said, 'I never got that card from Montana,' and [Murphey] was probably thinking, 'That's part of my collection! Where's the card?'" Conn said. "And here it is 47 years later, and it appears."
In her lengthy 1998 obituary in the Beacon Journal, colleagues recounted having to wait in the hallway outside Murphey's hospice room while she made phone calls for one final story.
"When she gets to heaven, I wouldn't be surprised if Fran finds some way to send news from the beyond," former Beacon Journal books editor Betsy Lammerding said in the obituary.
Looks like she found a way.
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Diageo and Moet Hennessy, a deal made in heaven?
Wednesday, Apr 22, 2009 1:2PM UTC
By David Jones
LONDON (Reuters) - Diageo Plc <DGE.L>, the world's biggest spirits group, would love to get its hands on Hennessy and Moet & Chandon, respectively the globe's best selling cognac and champagne, but the idea may need time to mature into a deal.
LVMH, the world's largest luxury goods group, has denied being in talks to sell its 66 percent owned wines and spirits unit Moet Hennessy, but market talk is unlikely to disappear about a deal that would make such good strategic sense.
Diageo's links with LVMH <LVMH.PA> go back 22 years, when Guinness -- one of the groups which went to create Diageo -- struck up a joint venture. Only a dozen years ago LVMH Chairman Bernard Arnault tried to join his drinks brands with Diageo's and give him a key controlling hand.
The result of the 22-year linkup is that Diageo holds 34 percent of Moet Hennessy, but at current spirit company valuations it could cost Diageo over 10 billion euros ($12.9 billion) to buy out Arnault and give the Frenchman cash to expand his fashion empire.
London-based Diageo already has the world number one brands in whisky, vodka, gin, tequila and liqueurs in Johnnie Walker, Smirnoff, Gordon's, Jose Cuervo and Baileys, so adding Hennessy and Moet & Chandon would make sense.
"We would see this as an excellent strategic acquisition for Diageo. It would fill the last major gap in its portfolio through the acquisition of by far the leading brand in the cognac category," said analyst Matthew Webb at brokers Cazenove.
Diageo declined to comment, but with all its key executives in an annual strategy meeting at its own Gleneagles hotel in Scotland this week, any imminent move seems unlikely.
However, a deal would bring Diageo into the attractive cognac sector and is the only way in as its 34 percent stake in Moet Hennessy precludes it from looking at others such as Remy, Martell or Courvoisier, even if Remy Cointreau <RCOP.PA>, Pernod Ricard <PERP.PA> or Fortune Brands <FO.N> wanted to sell.
Analysts note a deal would allow Diageo to consolidate Moet's cash flow rather than just taking a dividend for its 34 percent stake, and bring Moet Hennessy brands within its wider geographic distribution system.
Diageo could well integrate Moet Hennessy with its own luxury brands business which sells top-end Johnnie Walker Blue Label whisky, Ciroc vodka, Zacapa rum and Don Julio tequila.
But why would Arnault want to sell? One investment banker said Arnault is a builder of businesses not a seller and the spirits side gives him a steady stream of income even in recession to offset its cyclical fashion businesses.
Paris-based LVMH was quick to deny media reports suggesting the group is in talks to divest Moet Hennessy. "LVMH confirms that no such negotiations are taking place," it said.
When Guinness and GrandMet merged in 1997 to form Diageo, Arnault's LVMH had a 14.2 percent stake in Guinness and as its biggest shareholder had a major say in the merger.
Then, Arnault proposed merging the wines and spirits businesses of Guinness, GrandMet and Moet Hennessy and pouring away Guinness brewing, Pillsbury and Burger King, giving him a 35 percent stake and effective control of the resultant group.
Arnault's assault was fought off, but Diageo went on to follow most of his advice, selling Pillsbury and Burger King, though it kept beer. Arnault sold his resultant stake in Diageo but the Moet Hennessy joint venture survived.
The rationale for Arnault selling appears to be that he could get a good price for a business which has held up relatively well in the recession, giving him the financial ability to expand the fashion side of LVMH's business where valuations have been hard hit by the downturn.
Cazenove's Webb says looking at previous deals in the spirits industry, the valuation of the 66 percent stake in Moet Hennessy would be between 10.6 billion to 14.5 billion euros, but this would likely be lower as potential savings from the deal will be far lower than in previous takeovers.
This is due to already existing distribution overlaps between Diageo and Moet Hennessy and also because Diageo's 34 percent stake means there is only one realistic buyer.
Another investment banker said Moet Hennessy was attractive because of its premium status, especially Hennessy. "It's one of the iconic brands like (vodka) Absolut for which the leading drinks players may be prepared to pay up," he said.
(Additional reporting by Victoria Howley; Editing by David Holmes)
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India adds record 15.6 million mobile users in March
Wednesday, Apr 22, 2009 5:8AM UTC
NEW DELHI (Reuters) - Indian mobile operators added a record 15.64 million customers in March, helped by the expansion of networks to smaller towns and rural areas, data from the telecoms regulator showed.
The mobile subscriber base in the world's fastest-growing wireless market rose by 50 percent, or more than 130 million, to 391.8 million in the 12 months ended March, the Telecom Regulatory Authority of India said.
India is the second-biggest market for wireless services, lagging only China which has more than 600 million users.
Indian operators had added 15.41 million customers in January and 13.45 million users in February.
The country also had about 38 million fixed-line subscribers at end-March.
(Reporting by Devidutta Tripathy; Editing by John Mair)
Bombed by The Black Rider at 6:58 AM
Lockheed says F-35 classified data not breached
Tuesday, Apr 21, 2009 11:6PM UTC
By Jim Wolf
WASHINGTON (Reuters) - The Pentagon and Lockheed Martin Corp, its top supplier, discounted a Wall Street Journal report that cyber spies had stolen secrets of the F-35 Joint Strike Fighter aircraft being built for the United States and nearly a dozen allies.
"I'm not aware of any specific concerns," Bryan Whitman, a Defense Department spokesman, said of the reported compromise of the Pentagon's costliest arms acquisition plan.
He spoke after the Journal said on Tuesday that "terabytes" of data about the plane's design and electronics had been taken, according to current and former officials said to be familiar with the matter.
Former U.S. officials were cited as saying the alleged cyber espionage appeared to have come from China. A Chinese embassy spokesman did not immediately respond to a request for comment from Reuters.
Such computer intrusions, if confirmed, could make it easier to defend against the multirole F-35, a roughly $300 billion program in the early stages of production. The United States alone plans to buy 2,443 of three F-35 designs for its Air Force, Navy and Marine Corps.
The radar-evading aircraft is being developed with financing from the United States, Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway. Other projected early buyers include Israel and Singapore.
Lockheed Martin, the primary contractor, said, "We actually believe the Wall Street Journal was incorrect in its representation of successful cyber attacks on the F-35 program."
"I've not heard of that, and to our knowledge there's never been any classified information breach," Bruce Tanner, the company's chief financial officer, said during a teleconference on the company's latest earnings.
The Wall Street Journal is standing by its story, according to Robert Christie, a spokesman for the newspaper's publisher, Dow Jones & Co, which is owned by News Corp.
Tanner acknowledged attacks on Lockheed Martin's systems, much like those on U.S. government networks, "are continuous."
"We do have stringent measures in place to both detect and stop these attacks," he said.
Later, the Defense Department said it did not comment on "alleged or actual cyber infiltrations, potential impacts to DoD operations, or any possible investigations."
This was to deny information on a potential success or failure that might help an attacker, said Lieutenant Colonel Eric Butterbaugh of the Air Force, a department spokesman.
Lockheed's chief subcontractors on the F-35 are Northrop Grumman Corp and BAE Systems Plc. Representatives of Northrop and BAE referred questions to Lockheed.
Last October, the Pentagon's chief internal watchdog office withdrew a finding that U.S. technology in the F-35 might have been compromised by unauthorized access at units of BAE Systems.
In a rare climbdown, the inspector general's office said in an October 23-dated statement that it had lacked "sufficient appropriate evidence" to support the conclusion of a March 6 report in which it had raised alarm about the security oversight of BAE facilities and computers.
The withdrawn report had noted that BAE was also playing a key role in the Eurofighter Typhoon, a competitor to the F-35 for billions of dollars in overseas sales.
EADS, with a 46 percent stake, is the largest shareholder in the Typhoon-building consortium, Eurofighter GmbH, based in Halbergmoos, Germany. BAE has 33 percent and Italy's Finmeccanica SpA holds 21 percent through its Alenia Aeronautica unit.
The Defense Science Board, a Pentagon advisory panel, said in a just-released report that the U.S. Defense Department was "not yet organized, trained, equipped or in many cases adequately focused on threats to cyberspace-enabled operations."
A task force formed by the board concluded in the March-dated report that "threats from cyber-intelligent adversaries represent a clear and present danger to U.S. national security" in the absence of tightened cyber security plans.
(Additional reporting by David Morgan, Karen Jacobs, Andrew Gray)
(Writing by Jim Wolf; Editing by Phil Berlowitz)
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Freddie Mac CFO found dead
The acting chief financial officer of mortgage finance giant Freddie Mac, David Kellermann, was found dead Wednesday morning, police said.
The death "may have been an apparent suicide," said Lucy Caldwell, a spokeswoman for police in Fairfax County, Va.
Authorities said there were no signs of foul play when officers were called to Kellermann's home in Vienna shortly before 5 a.m. ET, Caldwell said.
The exterior of Kellermann's brick home was quiet later Wednesday morning, according to video from the scene. A police officer left the home, and two black vehicles were parked in front.
Sharon McCail, Freddie Mac's vice president for public relations, said the company has not yet been officially notified that Kellermann is dead.
Kellermann, 41, who also served as a senior vice president, had been with Freddie Mac for more than 16 years.
He was named to the CFO and senior vice president positions in September 2008, and was responsible for the company's financial controls. This included overseeing financial reporting, compliance with tax requirements and regulations, and annual budgeting and financial planning.
Before assuming his current posts, Kellermann was corporate controller and principal accounting officer.
Kellermann held a master's degree in finance from George Washington University and a bachelor's in political science and accounting from the University of Michigan. He has served as a volunteer board member of the District of Columbia Coalition for the Homeless.
Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders.
The government took over Freddie Mac last year, as the nationwide subprime-loan crisis escalated. In September, Freddie Mac and Fannie Mae were placed under conservatorship by its regulator, the Federal Housing Finance Agency.
Both companies back mortgages held by private homeowners, and have received massive cash infusions from the government to keep them afloat.
Former Freddie Mac CEO David Moffett, who resigned in March, was replaced this month by Michael Williams, who had remained with the mortgage finance giant after the government takeover.
Williams said the company's immediate goals would be to modify mortgages, refinance home loans and avoid housing foreclosures in order to boost the housing market.
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