Weekly Digest
Weekly Digest Issue No. 433
18-09-2008
by ElectricNews.net
Dell under pressure to disclose Limerick plans | HP staff hope to avoid jobs axe | Cracked, not smashed, at CERN | The rise and rise of social networking | Babcock & Brown plumbs new depths | Signal is strong on cost-cutting at Vodafone | Goo-Hoo alliance put under the microscope
Dell under pressure to disclose Limerick plans
Tension continued to mount in Limerick this week, as PC giant Dell steadfastly refused to reveal plans for its manufacturing plant and its 3,000-strong workforce. Last week Dell revealed that it was on a cost-cutting mission to sell off some of its factories and outsource manufacturing operations to Asia. Media reports have noted that an estimated six out of every 100 workers in Ireland's Mid-west region rely on Dell, directly or indirectly, for employment. Even as the PC maker remained tight-lipped about its plans for Ireland, the Wall Street Journal reported on Monday that Dell executives had privately discussed closing the Limerick plant for two years, citing "two people with knowledge of those discussions". One of these people said that Dell had in fact decided in early 2007 to shut down Limerick and to move production to a recently established Polish factory, although a firm timeline for doing this had not been decided. The story created ripples back home, with local business and civic leaders increasing the pressure on Dell to own up to its plans, and calling on Tanaiste and Minister for Enterprise Mary Coughlan to clarify the Government's position on the matter. According to Wednesday's Irish Independent, Minister Coughlan urged calm and said the sole source for the renewed speculation over job losses was "a single story in a single newspaper", a reference to the WSJ article. One wonders if the minister is aware that the WSJ cites "unnamed sources" in its paper on an almost-daily basis; but we can't remember the last time they printed a retraction.
HP staff hope to avoid jobs axe
The dark shadow of job losses also loomed over Hewlett-Packard workers this week, although it seems that Ireland may escape the worst of the storm. On Monday, news broke that the tech giant is looking to cut over 24,000 staff worldwide, as part of a cost-trimming strategy to shave off 7.5 percent of its total workforce. HP employs around 4,000 people on the island of Ireland in six different business units. The move to cut back has been fuelled by HP's integration of EDS, the IT services company it purchased earlier this year. HP said it would implement the cuts as part of a restructuring over a three-year period, and that half of the job losses would be at its US facilities. On Tuesday afternoon, HP told the Irish media that it was too early to tell whether any Irish jobs would be lost in the cull. "Workforce reduction plans will vary by country, based on local legal requirements and consultation with works' councils and employee representatives, as appropriate," HP said in a statement. But by Wednesday morning the Irish Times, citing sources close to the company, was reporting that the impact would likely be felt in Ireland but was "more likely to impact on the EDS side". The paper said the Irish Bank Officials' Association, which represents workers at HP and EDS, was seeking a meeting with HP management and wanted any redundancies to be on a voluntary basis.
Cracked, not smashed, at CERN
Set up the world's largest particle accelerator, and everyone wants to take a crack at you. While the world awaits news of whether the physicists at CERN can successfully smash protons together at the Large Hadron Collider, media outlets this week had to satisfy their newfound hunger for physics news with a minor incident involving the defacement of a website connected to CMS, one of the three principal LHC experiments, by a crew calling itself GST (Greek Security Team). CERN said the incident had "no impact on the operation of LHC or CMS," but the attackers did overwrite a web page on a computer used for monitoring, posting their own message in Greek. A UK-based Greek security researcher has helpfully translated the message and opined that the attack was an attempt to impress the Greek underground scene with a "high profile" hack. As for smashing particles, CERN's spokesman, James Gillies, told ENN by email on Wednesday that the first collisions aren't imminent. "The road from first beam to first collisions is a long and complex one. We don't expect first collisions for a while yet," Gillies wrote. "Once we start collisions, we'll be taking data round the clock, and the project is likely to run for 15 years or more." Plenty of time to get those patches in order, then.
The rise and rise of social networking
It's official - social networking matters more than porn to today's young adults. This latest peek into the power of social networking comes from Bill Tancer, general manager of the online traffic analysis firm Hitwise. In his new tome, "Click: What Millions of People Are Doing Online and Why it Matters," Tancer reveals insights into the psychology of web users (ie, all of us), based on the squadrillions of web searches we've all conducted over the past decade. The headline? Porn accounted for 20 percent of web searches 10 years ago, but that's dropped to 10 percent now, while searches for social networking sites have skyrocketed at porn's expense, especially among 18-24 year olds. And with everyone up to and including Ireland's Ulster Bank now going all Bebo in hopes of getting friendly with students, can anyone doubt where on the web the real marketing power lies?
Babcock & Brown plumbs new depths
What will become of Babcock & Brown, now routinely referred to in the financial press as "embattled"? The company, whose shares are in freefall after hitting AUD0.92 on Wednesday against a 52-week high of AUD31.08, has now learned that Standard & Poor's has cut the rating for its wholly owned unit, Babcock & Brown International Pty, by two notches to BB, with a negative outlook. B&B had assured investors it had no exposure to the failure of US investment bank Lehman Brothers, but investors clearly fear the company may have trouble paying back its substantial debts. Babcock & Brown owns nearly 8 percent of Eircom and its Babcock & Brown Capital Management division (BCM) owns 57.1 percent of the Irish telco. Bloomberg notes that B&B shares have now lost 97 percent of their value during 2008 and that the firm has been forced by lenders to sell assets at a loss to reduce borrowings. B&B has said it has "no current plan or timeframe to exit Eircom", but look at the size of the investment: BCM had ploughed AUD448 million into Eircom as of 31 December 07, according to its annual report; BCM's total market capitalisation at that date was AUD884 million, and B&B has since announced it's winding down the activities of the division BCM falls under. John Fanning, the Irishman that helped steer the acquisition of Eircom during his time as Chief Investment Officer at BCM, was named Babcock & Brown CFO earlier this month. Reacting to the rating cut on Wednesday, B&B admitted that it could face an additional AUD15 million in interest payments over the coming year, but insisted its August restructuring plans have already "foreshadowed a significant cost reduction program which would more than offset the increased cost".
Signal is strong on cost-cutting at Vodafone
It looks like Vodafone is getting out the scissors. The Financial Times notes that the new chief executive at Vodafone, Vittorio Colao, is giving clear signs that cost-cutting will be his primary focus. The new chief executive has named Michel Combes, formerly of France Telecom, as the new head of European operations at Vodafone. The company not only emphasised Combes's cost-cutting credentials upon his appointment, but also said that the company's newly appointed strategy and business improvement director, Terry Kramer, would have a clear brief to look for efficiency gains. Meanwhile Vodafone rival O2 is looking for its own efficiency gains with possible outsourcing of its network management division to BT. The move could entail the reassignment of 100 O2 jobs to the telco. Not quite so worried about the downturn in technology and telecoms markets, incidentally, is Paul Donovan, former chief of Vodafone Ireland who in 2006 ascended to manage Vodafone's emerging markets. Donovan is now due to leave Vodafone and is rumoured to be shortlisted as the new CEO of UK football team Arsenal.
Goo-Hoo alliance put under the microscope
The advertising pact between Yahoo and Google, drawn up in May while Yahoo was looking for alternatives to selling its search business to Microsoft, has come under fire this month, with the Association of National Advertisers (ANA) formally complaining about the alliance in a letter to US Department of Justice. The ANA's beef? Well, according to the association, a Goo-Hoo partnership would ultimately control 90 percent of online search advertising inventory, leaving little room for other players in the market. The US regulators are currently looking into the ins and outs of the pact, and earlier this week European antitrust regulators said they were going to assess whether they should launch their own review to see if the alliance contravenes European competition law. For its part Google seems unconcerned by the heightened scrutiny; in fact CEO Eric Schmidt said himself, Larry Page and Sergey Brin had expected it. Schmidt confirmed to reporters this week that the agreement was going to be put into action from October.
Caped Koala Studios has built a virtual world for kids, combining education and social networking 