The Star Online: Business
The Star Online: Business |
- Google social net is about preserving leadership
- New York Times Co. to repay US$250mil loan early
- Yum reports 10 percent growth in 2Q earnings
| Google social net is about preserving leadership Posted: 13 Jul 2011 05:53 PM PDT NEW YORK: Google didn't build its new Plus service simply to have an online hangout like Facebook. Rather, Google's new social-networking endeavor is about trying to gain valuable insights into people's lives and relationships. This could help the company do a better job of targeting ads so that advertisers would pay more and have less reason to spend their money on Facebook. If it succeeds, Plus represents Google's best shot yet at muscling into a market that has threatened to topple the Internet search and advertising leader, as Facebook leads the way in making the online world social. Plus is Google's carefully scripted venture into a territory where its previous efforts have been duds. On the surface, Plus is reminiscent of Facebook - with a Google touch. It lets people share photos and status messages, chat with friends and acquaintances and follow news updates. A prominent feature called circles allows users to organize the people they interact with into groups, such as family, close friends or fishing buddies. Users can choose to share things only among certain circles. Google Plus is still in a restricted, test phase, and invites to join are highly coveted. Only time will tell if it takes off among the broader public or if it's too little, too late to face off with Facebook and Twitter on the social front - just as Microsoft has failed to surpass Google in search with latecomer Bing. Google Inc., which reports its latest quarterly results on Thursday, has done quite well without its own social network. Its search engine accounts for two-thirds of queries made in the U.S., and even more in parts of Europe. Its revenue is expected to surpass $36 billion this year, the bulk of it from text ads that appear alongside search results and other Web content. But online behaviors are changing. People are spending more time on Facebook and other social networks. And they are increasingly relying on their friends' recommendations when deciding where to eat and what movies to watch. Google, meanwhile, has bungled past social media efforts. A sharing program called Wave was quickly killed off because users didn't know what to make of it. Buzz, a later venture, was the center of a privacy fiasco. Google had been too aggressive about automatically creating circle of friends, which inadvertently revealed whom they've corresponded with on Gmail. Early response to Google Plus has been positive. But that's no guarantee for broader success. As Google botched one social media effort after another, Facebook grew exponentially. Today, half of Facebook's 750 million worldwide users log on to the site every day. That's roughly the entire population of the U.S. and U.K combined. More than 250 million people engage with Facebook in some form on outside websites each month around the world. They do this by clicking the ubiquitous "like" and "recommend" buttons on news and other sites or by logging on to websites using their Facebook passwords. Google's chairman and former CEO, Eric Schmidt, has acknowledged that the company failed to respond to Facebook's threat fast enough. His successor, Google co-founder Larry Page, has made social networking one of his top priorities since he took over in April. "We don't think it's a coincidence that (Google Plus) was introduced less than three months after Page returned to the CEO post," said Standard & Poor's equity analyst Scott Kessler in a note to clients. Facebook's greatest advantage is the immense trove of information that its users have shared about themselves through about 4 billion posts and connections they make collectively every day. Facebook knows what people are reading, eating and watching. It knows who's friends with whom, and which friends people trust for recommendations on what shoes to buy and which plumbers to hire. Google can't index most of this information on its search engine because Facebook doesn't share it. Instead, Facebook has formed a search partnership with Google rival Microsoft Corp. In May, Microsoft's Bing search engine started to use information from people's Facebook preferences to tweak its search results. This means Facebook users who search for shoes or concert tickets on Bing might get results that are tailored to the interests they listed on the site. For people who aren't logged on to Facebook when they search, Microsoft's search engine might still emphasize links that other Facebook users have recommended. That puts Google at a disadvantage. Unless it can get similar data through a social service of its own, Google is left with a formula that sorts through the pattern of Web links and other computer data to determine where a site should rank in its recommendation. The system has become increasingly vulnerable to manipulation by websites looking to rank higher than their rivals. As a result, Google search results might not be as useful as recommendations drawn from an analysis of what they have already signaled that they like by pressing a Facebook button. There's another key way that social data can help Google. On Facebook, companies can target their advertising with razor-sharp precision given all sorts of information that people willingly share, such as a preference for Coke over Pepsi or whether they've ever been married. For example, they can show a particular Cheetos ad only to single men aged 17 to 41 who live in New York, are Yankee fans and enjoy the "World of Warcraft" video game. "That's Facebook's biggest calling card to marketers," said Debra Aho Williamson, principal analyst with eMarketer. Advertisers are typically willing to pay more for such targeting because they'd be pitching to consumers most likely to buy. Google does a good job already of targeting ads based on what people search for, write about in emails and watch on YouTube. Social data could help Google do even better. Danny Sullivan, who follows Google closely as editor-in-chief of the blog Search Engine Land, said that if Google Plus succeeds, Google would get "a good insurance policy" amid the rise of social networks. The need for it became apparent when Google's deal to include Twitter updates in its search results expired recently, Sullivan said. Google has temporarily shut down its "RealTime" search feature, though it told users to stay tuned while it explores how Google Plus will figure into it. That said, Google Plus doesn't necessarily need to be a Facebook clone. "Google needs to have a social strategy that is relevant to Google and the way people use Google applications," said Susan Etlinger, analyst at Altimeter Group. "That's very different from how people use Facebook." Facebook is, for now, an online hangout above all. People go there to scan status updates, chat with a friend or look at the latest photos, without necessarily having something specific in mind. With Google, people usually have an objective, whether that's searching for a hair stylist or sending an email about an upcoming party. Google's task is to make its existing products social as "social" becomes the norm for online activity, she said. "Eventually everything is going to be a social network," Etlinger said. "Social capabilities will be in everything on the Web." - AP Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| New York Times Co. to repay US$250mil loan early Posted: 13 Jul 2011 05:51 PM PDT NEW YORK: The New York Times Co. will repay a $250 million, high-interest loan from Mexican telecommunications billionaire Carlos Slim earlier than expected, allowing the company to reduce interest payments. Companies affiliated with Slim, a shareholder of the Times Co., lent the money at a hefty 14 percent interest rate at the height of the recession in January 2009. It came at a time when credit markets were tight and revenue prospects were bleak because of declines in print advertising. Since then, the Times Co. has found other sources of cash, including the sale of $225 million in notes late last year at a lower rate of about 6.6 percent. The company also sold most of its midtown Manhattan headquarters for $225 million and is renting back the offices from the new owners. Print advertising revenue remains weak, but the company's flagship newspaper has begun charging for full access to its website. "Over the past two years we have significantly strengthened the Times company's cash position," said Janet L. Robinson, president and chief executive. The Times Co. said Wednesday that the early payment of the loan will result in a pretax charge of about $46 million in the third quarter. But the company will save at least $39 million per year in interest and fees over the next three years. The company plans to repay the $250 million in notes due in 2015 on Aug. 15. It previously planned to repay the notes after Jan. 15, 2012, which was already three years ahead of the original schedule. The total payment will be about $279 million, which includes interest and about $26 million in fees for repaying the loan early. The company also recently sold more than half of its 17.8 percent stake in the Boston Red Sox for $117 million and said the deal gave it a pretax gain of $64 million. It said earlier this month that it will continue to look for a buyer for the remaining shares it owns in Fenway Sports Group, the parent company of the Red Sox, the Liverpool Football Club and other properties. Forbes lists Slim as the world's richest man. Slim's fortune is estimated at $74 billion, well ahead of Bill Gates' $56 billion and investor Warren Buffett's $50 billion. Slim built his fortune by amassing a range of retail, industrial and telecom companies. A civil engineer by training, he has bought troubled or government-owned companies of all types, fixed them and resold them for huge profits. Slim and his family own about a 6.9 percent stake in the Times Co., though he has no special voting rights or representation on the Times' board. Shares of the Times Co., which owns The New York Times, The Boston Globe and other newspapers, increased 11 cents, or 1.25 percent, to close Wednesday at $8.89. The stock had dropped nearly 8 percent to $5.91 on the first trading day after the company announced the Slim loan in 2009. - AP Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
| Yum reports 10 percent growth in 2Q earnings Posted: 13 Jul 2011 05:49 PM PDT LOUISVILLE, Kentucky: Yum Brands Inc., owner of the Pizza Hut, Taco Bell and KFC fast-food chains, said Wednesday that strong sales overseas served up 10 percent growth in its second-quarter profit, even though its U.S. business continued to struggle. Yum's sales in China rose fast, and its profit there soared. But the company reported across-the-board declines in the U.S., including a 5 percent drop in revenue at Taco Bell restaurants open at least a year. That chain, which accounts for about 60 percent of Yum's U.S. profit, is struggling to overcome publicity from a dropped lawsuit that claimed the filling in its tacos and burritos didn't contain enough beef to be called that. Taco Bell called the accusations false and fought back with hard-hitting marketing on television and in newspapers. But revenue at KFC restaurants in the U.S. open at least a year also fell 5 percent, and Pizza Hut had a 2 percent decline. Company officials said earlier this year they expected the second quarter to be the year's low point in the U.S. On Wednesday, Yum said it expects things to get better in the U.S. by the fourth quarter, which begins in September. It also raised its earnings forecast for the full year. Yum now expects to report a 12 percent or greater increase in earnings per share, excluding one-time items. The company previously said it expected at least 10 percent growth. Louisville-based Yum said it earned $316 million, or 65 cents per share, for the quarter that ended June 11, up from $286 million, or 59 cents per share, a year earlier. Its revenue rose 9 percent to $2.8 billion. Analysts expected adjusted earnings of 61 cents per share and revenue of $2.7 billion in the quarter. Operating profit in Yum's key China operations rose by a whopping 25 percent, adjusted for currency fluctuations. The company's operating profit dropped 28 percent in the U.S. Yum opened 99 restaurants during the quarter in China, where KFC has become a leading fast-food brand. Sales at KFC stores open at least a year in China rose 17 percent. In Yum's international division, which excludes China, operating profit rose 11 percent, adjusted for currency fluctuations. The company opened 142 new restaurants in 37 countries during the quarter. For that unit, growth in Thailand and other emerging markets, as well as in France, offset a weak performance by Pizza Hut in the United Kingdom. Yum operates nearly 38,000 restaurants in more than 110 countries and territories. The company also owns the Long John Silver's and A&W restaurant chains, both of which are up for sale. - AP Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by USA Best Price. |
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