Citigroup fined $2 million over facebook IPO

New York: The top securities regulator in Massachusetts has fined Citigroup $2 million, charging that an analyst there leaked confidential information about Facebook's initial public offering.

Secretary of the Commonwealth William Galvin announced the charges Friday. Citi agreed to the settlement without admitting or denying wrongdoing.

Citi was part of the team of banks that helped underwrite the deal that made Facebook a public company in May. When a bank helps underwrite such a deal, it has information about a company that the broader investing public does not have. The bankers who underwrite the deal are not supposed to act on that information or share it with any favored clients, because it would give them an unfair advantage over the public.

The arrangements can also bring accusations of conflicts of interest; banks not only help companies go public or do other deals, they also have units that provide research on the companies. The research is supposed to be impartial, but the banks have a stake in how a company does if it is helping it with underwriting.

According to Galvin's office, a junior analyst in Citigroup's San Francisco office was assigned to help research Facebook. On May 2, the junior analyst sent an email to two employees at the technology website TechCrunch.com, with proprietary information about Citigroup's research on Facebook.

"I am ramping up coverage on FB and thought you guys might like to see how the street is thinking about it (and our estimates)," the junior analyst wrote.

A TechCrunch employee wrote back: "There's no way I can publish this doc from an anonymous source, right?"

A minute later, the junior analyst replied: "My boss would eat me alive."

The analyst and the TechCrunch employee were friends, according to Galvin's office, and had gone to Stanford together.

Citigroup fired the junior analyst in September. The bank told Galvin's office that the junior analyst acted alone. In addition to agreeing to the $2 million fine, Citi also agreed to review its policies for overseeing analysts' communications, and to strengthen compliance training for the analysts.
http://profit.ndtv.com/news/international-business/article-citigroup-fined-2-million-over-facebook-ipo-312538?pfrom=home-latest

Euro zone rot........

Euro zone rot spreads to Germany, China mending

By Jonathan Cable

LONDON | Wed Oct 24, 2012 6:04pm IST

(Reuters) - The euro zone's biggest member Germany is being sucked into the bloc's worsening economic quagmire, business surveys suggested on Wednesday, as similar data signalled the slowdown in China may be abating.

The slump that began in Greece and spread to other smaller euro zone economies was clearly gripping the core in October, marking the worst month for the 17-member bloc since it emerged from recession more than three years ago.Markit's Composite Purchasing Managers' Index (PMI), which polls around 5,000 businesses across the 17-nation bloc and is viewed as a reliable growth indicator, fell to 45.8 this month.

That was the lowest reading since June 2009, confounding consensus expectations in a Reuters poll for a rise to 46.4. The index has now been below the 50 mark that separates growth from contraction since February. Similar PMI data for China suggested the world's second biggest economy, a key world exporter, is slowly recovering from its weakest period of growth in three years, with new orders and output at their highest in months. A comparable PMI for the United States due at 1258 GMT is also expected to rise, showing a modest acceleration in growth.

GERMAN PLUNGE

The manufacturing PMI for Germany - another major exporter and Europe's economic powerhouse - plunged to 45.7 from 47.4, also confounding expectations for a rise and well below even the lowest forecast polled by Reuters. The rate of decline was even worse in France.

"(It) reinforces concern that the economic downturn in the region may be deepening and widening," said Martin van Vliet, senior economist at ING. The data were published just before European Central Bank President Mario Draghi was due to appear before German lawmakers for a grilling over whether his plans to buy euro zone sovereign debt might trigger inflation or compromise ECB independence. They also coincided with the latest numbers from Germany's Ifo institute showing business sentiment in the country dropped sharply to its lowest in more than 2-1/2 years, the sixth consecutive monthly fall.

"Any hopes of a rebound appear to have been dashed for now. Germany is heavily dependent on exports so a global slowdown is going to impact on Europe's growth motor," said Peter Dixon at Commerzbank. Germany has been mostly resilient to the three-year old sovereign debt crisis. But economic data in recent months have shown the rot is spreading.

The euro zone economy contracted 0.2 percent in the second quarter and is predicted to have shrunk 0.3 percent in the third, meeting the technical definition of recession. While official data implies a similar decline in the third quarter just ended, Markit said the PMIs suggest the downturn will accelerate into the current quarter - a far gloomier prediction than in a Reuters poll last week.

"We are more downbeat than the official data. The PMIs are running at levels in the third quarter and start of the fourth quarter historically consistent with GDP falling at about 0.6 percent," said Chris Williamson at data collator Markit. Bad news has been flowing out of company boardrooms too. Carmaker Volkswagen reported a fall in nine-month operating profit on Wednesday and sportswear maker Puma (PUMG.DE) reported sales in the region dropped in the third quarter. Heineken NV (HEIN.AS), the world's third-largest brewer, reported a stronger than expected increase in third-quarter revenue, but sold more beer everywhere except western Europe.

Markit's measure of services business expectations sank to its lowest reading since February 2009, at the nadir of the last recession and when world stock markets were tumbling.

STABILISATION IN CHINA

But it was a different story for China, where the HSBC Flash Manufacturing PMI rose to a three-month high of 49.1 in October but remained below the key 50 mark. "(This) adds to recent signs of stabilisation of the Chinese economy, thus underpinning our view that the slowdown in activity is bottoming out," said Nikolaus Keis at UniCredit.

A Reuters poll taken after last week's GDP data showed economists anticipating a modest rebound in growth in Q4 to 7.7 percent from Q3's below-target 7.4 percent. Even that figure would not be enough to lift full year expansion from an expected 13-year low, however. (Editing by Catherine Evans)

http://in.reuters.com/article/2012/10/24/economy-global-wrapup-idINDEE89N06420121024

How to use Twitter for more than just tweeting
15 OCT, 2012, 03.23AM IST, KARAN BAJAJ & HITESH RAJ BHAGAT,ET BUREAU Twitter may limit you to only 140 characters but the add-ons you can get for it are virtually unlimited. ET introduces you to 35 less-known ways that let you do a lot more with your Twitter account.

tweriod.com: Tweriod analyses your tweets and followers to let you know the best time to tweet. Tweeting then will get you more responses/retweets.

tweetwally.com: Here, you can see a page that collates tweets with a particular hashtag or keyword — makes it easy to track a topic on twitter.

twylah.com: Twylah aggregates your tweets and shows links/images tweeted by you on a single web page. Your followers can easily get a glimpse of topics that you tweet about. The service is currently in beta so you have to request an access code.

manageflitter.com: This tool categorises your followers — inactive, no profile pic, spam or by language. Use this information to unfollow the irrlevant ones. You can also schedule tweets.

tweetalarm.com: Get notified (by email) when someone mentions specific keywords on twitter — notifications can be instant, daily or weekly.

monitter.com: Here, you can search for a particular topic or keyword on twitter and sort the results based on the location of the tweeter.

nurph.com: At Nurph, you can create a virtual chat room where followers can tweet-chat with you. You also get a robot assistant that learns from the ongoing conversation and can reply on your behalf.

useqwitter.com: Sign in to Qwitter to find out who unfollowed you. The free version lets you track a single twitter account — it updates weekly.

futuretweets.com: Ever wanted to send automated tweets in the future? Here, you can schedule a tweet for later (day or time). Hint: use it as an alibi.

twit-twoo.net: Create an account & they'll tweet you with reminders for an event or happening. Use it to remind you of anniversaries or to-dos.

splitweet.com: Effortlessly manage multiple twitter accounts with this handy tool. Great for corporate use too.

flashtweet.com: Simply put, FlashTweet allows you to acquire targeted followers. You can also use it to mass follow based on a keyword or location.

twitchamp.com: Like a friendly competition? Compare how you're doing on twitter with your friends. You only need to enter the usernames.

tweetcube.com: Use this free service to share files (up to 10MB) on twitter. You can share any sort of file, but the catch is that it gets deleted in 30 days.

tweetstats.com: Just enter your username here to get detailed stats — tweet density, replies, retweets — it's all there.

tweetwrappr.com: Useless but funny, TweetWrappr lets you 'gift wrap' a tweet and send it to someone as a URL.

visibletweets.com: Just enter a keyword or hashtag and watch as everything gets animated for you in real time.

tweetrans.com: Want to be a global tweeter? Use this tool to send tweets in multiple languages in one step.

tweepsmap.com: Simply shows you where in the world your followers are.

IDEA CHANGED THE MARKET SHARE!!!!

Telecom's dark horse rises

Idea Cellular has almost doubled market share, made profits & is third-largest operator today

Krishna Kant / Mumbai October 12, 2012, 0:10 IST

There are two ways to win a marathon — either lead the race from the beginning or stay close to the leaders while conserving energy for that final push. Idea Cellular seems to be following the second strategy.

At the time of its initial public offering (IPO) in May 2007, the AV Birla Group company was the seventh-largest mobile operator and such a small player that few noticed it. Five years on, the company has emerged as India’s third-largest mobile operator by revenue and is now in a position to not only survive the current industry upheaval, but to also come out stronger once the dust has settled.ts numbers are irrefutable. Since its IPO, Idea’s revenue market share has nearly doubled to 15 per cent; its revenue has shot up five times to cross Rs 20,000 core during the 12 months ending June and its annualised cash profit is in excess of Rs 4,000 crore — more than enough to meet its recurring capex. Most importantly, it has achieved this without stretching its finances. Idea is currently the least leveraged among its peers despite investing nearly Rs 32,000 in network expansion in the past five years. No wonder, for analysts and industry observers, it is the company to beat.

“The industry has reached an inflection point, with most operators running at losses and reeling under debt. The stage is set for consolidation through a wave of mergers and exits. This is an opportunity for Idea Cellular to further scale up its operations,” says an industry analyst with a leading brokerage who didn’t want to be identified.

In November 2005, when the Birla group company decided to buy out AT&T and the Tatas in order to take over Idea, the company was relatively unknown. At that time, Idea was a regional operator, restricted to just eight circles in Western, Central and Southern India despite being one of the original licensees along with Bharti Airtel and Hutch-Essar (now Vodafone). Idea’s rise since then has been a lesson in corporate financing, project execution, as well as branding and marketing. “We really like the management and their execution abilities. In just a few years, they have transformed Idea from a regional player to a pan-India operator,” says a telecom analyst with a leading brokerage in Mumbai.

“We have analysed the company’s revenue market share (RMS) in detail and note that it has gained RMS in each of its 22 circles in the last three years. Idea remains our top pick to play the improving outlook for the Indian telecom sector,” says a recent report by BNP Paribas. (Click for graphs)

Birla, the game changer
Idea Cellular Managing Director Himanshu Kapania says Aditya Birla Group’s taking control of Idea was the game-changer. “For 10 years, we had three parents but no godfather to provide a clear-cut vision. This was a recipe for failure and, obviously, the company failed to compete,” says Kapania, who re-joined the company in 2006 after it came under the Birla umbrella.

“Our chairman (Kumar Mangalam Birla) prodded us to ask the most obvious question. How do we become one of India’s top operators?” says Kapania. The question made sense as Idea had the backing of one of India’s largest and most cash-rich groups. The rub-off effect began to show in its capex plans. In the first 30 months after the Birlas took control, Idea invested Rs 6,500 crore in expanding its network, one and a half times more than what it invested in the previous 10 years. Its cumulative investment in equipment and network has since jumped by nearly 10 times to around Rs 40,000 crore at the end of FY12 against Rs 4,000 crore at the end of FY05.

Spending billions however doesn’t automatically translate into higher number of subscribers and revenue in the mobile business. Industry experts attribute Idea’s success to its on-ground execution skill and its singular focus on the mobile market. “Idea has done a great job in aligning its strategies and economics to the high growth segments in the market. Additionally, its focus on mobile GSM market has helped align the organisational efforts towards the strategy,” says Mohit Rana, partner and vice-president at AT Kearney India.

Mobile is a capital-intensive business to begin with; it becomes an FMCG business during customer acquisition and ends up as a service industry while retaining and servicing the customers. Given this, operators always run the risk of spreading themselves too thin. And, in the heady days of 2006 and 2007, new entrants always ran the risk of getting into a high-cost war for subscribers. “We had two options then. Either join the race and spend billions to buy subscribers wherever we can get them, or focus on the quality of growth. We chose the latter,” says Kapania. By quality, he means the incremental revenue that each new subscriber brings against the cost of acquiring and servicing her.

Growing smartly
The company knew its limitations and decided to follow a calibrated growth strategy. “We were not democratic in our resource allocation. We over-invested in circles where Idea was strong and could increase its revenue share and under-invested in circles where it was financially prohibitive to get market share,” says Kapania. Specifically speaking, the company focused its attention on its circles in Western, Central, Southern and Northern India and under-invested in Eastern India where it was a late entrant.

Idea is the original licensee in seven circles, namely Andhra Pradesh, Gujarat, Maharashtra, Haryana, Kerala, Madhya Pradesh and Uttar Pradesh (West). The company used its incumbency in these large and economically well-off circles to expand in neighbouring ones. “We grew in concentrating circles, drawing on our strength in our core circles to pull-in customers in adjoining areas,” says Kapania. For example, it used its long-time presence in UP (West) to become one of the top operators in UP (East) with 13 per cent revenue share at the end of FY12, within six years of launch. The company followed a similar strategy in Mumbai where it launched services in 2008. The Mumbai circle has a strong synergy with Idea operations in Maharashtra, Gujarat and Delhi.

The pick and choose model of growth helped Idea Cellular in many ways. First, it helped it in conserving cash. Secondly, it avoided a costly and high-risk competition with national operators and most importantly, didn’t allow the company to spread itself too thin—something that proved costly for ambitious players like Reliance Communication, Tata Indicom and Aircel.

Powerful branding
But what really shifted the tide in Idea’s favour was its branding and marketing campaign. When Idea went national with its new brand campaign in 2005, most others in the category talked about features and various tariff plans and they mostly talked to metro and urban consumers. Idea decided to break the mould. It positioned mobile as a life changing device and began to talk in universal themes. “We always believed in the transformational power of mobile and its potential to change the life of an average Indian,” says Kapania. This is the genesis of the brand punchline – “An Idea can change your life” –and brand campaigns themed on universal themes like caste wars, identity (at the time of the Mumbai launch), saving paper by increasing the usage of mobile, how mobile usage can cut population growth etc.

Talking about these universal themes helped the company to cut through the clutter and convey its message to rural India, where two-third of its subscribers reside. “Among leading operators, we were the last one to enter metros, so we tried to speak in a language that would be relevant to the widest possible audience,” says Kapania.

Not surprisingly, Idea is the only operator among eight new entrants that went national in 2008 to have crossed the “hump” and become a relevant and financially viable operator. The company now expects to raise its share further as it expands it footprint in the circles where its 2G licence was cancelled by the Supreme Court. The company will bid for spectrum in these circles during the November auction. “Currently, we are meaningfully present in just two-thirds of the circles. Our next target is to become a truly national player,” says Kapania.

Obviously, analysts are impressed. “Though we are advising clients to stay away from telecom stocks given the regulatory uncertainty; if an investor still wants an exposure in the sector, we are recommending Idea,” says the telecom analyst at Motilal Oswal Financial Services. Others want the company to come up with a clear strategy to take advantage of the impending consolidation in the industry. “Going forward, Idea needs to decide its role in the industry consolidation,” says Rana. There could not be a better compliment for a company, which didn’t even feature on the radar screens of experts and analysts until three years ago.

Concerns
However, for all its achievement in past few years, Idea is still to deliver meaningful returns to shareholders. “What growth? Idea shares trade at the same level as they were during the IPO. And given the regulatory uncertainty and likely capex on additional spectrum acquisition, nobody knows when it will start delivering,” says an analyst. He is not exaggerating. In FY12, Idea’s return on capital employed (on consolidated basis) was just 8.14 per cent while return on net worth was even lower, at 5.7 per cent. At these return ratios, a shareholder is better off putting money in a bank deposit than investing it in Idea.

Some analysts have begun to worry about the sustainability of the Idea growth engine. “Idea has been overly aggressive in its quest to be the fastest growing company in the sector. It had to pay a price in the form of margin dilution due to this strategy,” says a recent report by Edelwiess.

The management is aware of these issues but seems to be helpless at the moment, given the regulatory headwinds and is asking shareholders to be a little more patient. “It is a matter of time when pricing power returns to telecom operators. Though no one knows the path it will take,” says Kapania.http://www.businessstandard.com/taketwo/news/telecoms-dark-horse-rises/489351/

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