Sunday, 19 August, 2012

GREECE GOESGUNG-HO ‘Budget breather for Greecewould spur economic recovery’

ATHENS

AGENCIES

The estimate chimes with the view of GreekPrime Minister Antonis Samaras who hastried, unsuccessfully, to win such an exten-sion in the past and is expected to refloatthe proposal next week with the leaders ofFrance and Germany as well as with Jean-Claude Juncker, the Eurogroup chief.Under the terms of its European Union/In-ternational Monetary Fund bailout, Greeceis bound to implement painful austeritymeasures to bring its budget deficit below 3percent of GDP by the end of 2014, from anexpected 9.3 percent of GDP this year. Butwith the country in its fifth consecutiveyear of recession and social and politicaldiscontent rising, Samaras is keen to softenthe impact of budget cuts on society by ex-tending the deadline international lendersset it. The latest estimate, reported by theImerisia newspaper, cited calculations byfinance ministry officials it did not name,saying they had worked out that a two-yearextension would help the economy shrinkat a slower pace in 2013 and reboundquicker from 2014. Under such a scenario,the economy would shrink by 1.5 percent in2013 and grow by 2 percent in 2014, thenewspaper said. If no extension wasgranted, the economy would contract by upto 4.5 percent next year and not recover be-fore 2015, it said. Greece’s ability to serviceits debt is seen by its politicians as some-thing that can only be facilitated by growthas its lenders will only continue bankrollingit if it makes all the necessary budget cutsand reform measures to reduce its debt to120 percent of GDP by 2020 from 165 per-cent in 2013.

SAN JOSE

AGENCIES

Richard Donaldson, a former leadpatents attorney for Texas InstrumentsInc, told the court on Friday a 2.4 percentroyalty Samsung wanted on the price ofthe iPhone was discriminatory becausethe patents in question enabled just afraction of the smartphone’ s features.

Later, New York University profes-sor Janusz Ordover likened that rate -equivalent to $14 per $600 iPhone - to a“holdup.” “Samsung’s conduct distortedthe decision making process” in settingstandards, said Ordover, a formerdeputy assistant attorney general for theJustice Department’s antitrust division.“It enabled Samsung’s technology tobe introduced, to become part ofthe standard. They have ac-quired holdup power.”

Samsung accuses Appleof infringingt h o s e

patents, which are related to wirelesscommunications for smartphones andare broadly licensed to Intel Corp andother technology corporations. Apple,meanwhile, accuses Samsung of copyingthe design and some features of its iPadand iPhone.

The former Texas Instruments exec-utive joined a string of rebuttal expertwitnesses that Apple presented in courtin the closing hours of the U.S. legal bat-tle with its South Korean rival.

Closing arguments and jury deliber-ations are set to begin next week.

The court battle is a facet of a big-ger war for supremacy in the mobilemarket between the two corporations,which sell more than half the world’ssmartphones. The mobile market isone of fastest growing and most lucra-tive in technology sector. “If other

companies were to determine that thisis a reasonable royalty, then the totalroyalty on the iPhone would be some-

thing like 50 percent,” Don-aldson testified. “It’s

neither fair nor reason-able because you could

not be successful in themarket.”

Other expert witnesses in-cluded Michael Walker, a formersenior Vodafone Group Plc re-

search executive, who from2008 to 2011 chaired the Eu-

ropean telecoms stan-dards authority. He said

Samsung failed to dis-close in a timely fashion

the patents referred to byDonaldson.

During cross examination,Samsung lawyer Charles Verho-

even probed theidea that trade se-crets and confi-d e n t i a linformation wereexempt from arequirement forfull and timelydisclosure. Inany case, theSouth Koreancompany hadnever comeu n d e rs c r u t i n yfrom thestandards-s e t t i n gagency onthat issue,he said.

The court-room battlehas trans-fixed insid-ers sinceJuly. Appleis demand-ing more than $2.5 billion in damagesand a sales ban, while its rival is de-manding licensing fees. Samsung alsosays Apple’s damages should be calcu-lated not on gross margins, but after allother costs - such as marketing - are fac-tored in.

The trial in San Jose in the heart ofSilicon Valley has offered glimpses intothe two huge corporate machines - fromtheir design and marketing processes tothe profits they make on devices.

MONOPOLY POWER?Standing on the sidelines is Google

Inc, whose Android software powers

most of Samsung’sphones and is said byanalysts to be an indi-rect target of Apple’slegal assault against theSouth Korean company ina multiple of countries.

Tensions have runhigh with so much at stake,but the trial has offeredsome levity.

Judge Lucy Koh askedwhether Apple lawyer BillLee was “smoking crack” afterhe presented a 75-page list ofwitnesses, a quip that came upagain to much good-naturedchuckling - including from Leehimself - on Friday. Friday’s tes-timony centered on the concept

of standards or essential patents- intellectual property built into a

commonly agreed set of specifi-cations - and in this case, theUMTS wireless communica-tions standard used worldwideby mobile devices.

Professor Ordover testifiedthat standards essential patents - a pointof contention in a global market where cor-porations constantly seek an edge - haveenormous benefits to consumers and man-ufacturers. But they also have “potentialrisk” and can be abused. Ordover arguedthat Samsung unfairly wielded its twopatents against Apple. Apple’s lawyersargue that Samsung - a member of thebody that crafted UMTS standards in2005 - is charging an unfairly high licens-ing fee for those patents, in effect trying tostymie market advances. Samsung saysthe patents are intellectual property forwhich it rightly requires compensation.

THE SIMMERING APPLE PIE

MADRID

AGENCIES

There can be no limit set or atleast (the ECB) can’t say howmuch they will use or for howlong,” when it buys bonds inthe secondary markets, Luis de

Guindos told Spanish news agency EFE.The Spanish government will study

the details of the ECB’s debt-buying pro-gram, which are likely to be outlined be-fore the Eurogroup meetingmid-September, before making a decisionon applying for more European aid, deGuindos said.

Spain is at the centre of the euro zonedebt crisis on concerns it may need a fullbailout, which could stretch euro funds tobreaking point, on top of up to 100 billioneuros ($122.97 billion) it has already re-quested for its struggling banks.

Prime Minister Mariano Rajoy hassaid his government would study anymeasures by the ECB and the potentialconditions attached to any EU aid beforedeciding whether to apply for help.

In response to a renewed intensifica-tion of the debt crisis, ECB PresidentMario Draghi said on August 2 the ECBmay buy more government bonds, butonly once countries had turned to thebloc’s rescue funds for help and agreed tostrict conditions.

“I believe Spain has presented itsbudget adjustment program and its struc-tural reforms, which from a general pointof view, have been accepted as sufficientand appropriate,” de Guindos said.

Rajoy has introduced austerity meas-ures worth around 10 percent of GDP toreduce the public deficit to within EU-guidelines of below 3 percent of GDP byend-2014 as well as reforms to the finan-cial system and labor markets.

The yield on Spain’s benchmark 10-year bond fell to its lowest level sinceearly July on Friday after GermanChancellor Angela Merkel voiced sup-port for the ECB’s crisis-fighting strat-egy, reinforcing expectations of ECBinterventions.

The central banks has barely usedits existing bond-buy plan this year andhas bought no bonds for 22 weeks de-spite an intensification of the euro zonedebt crisis.REGIONAL AID: Spain’s public deficitleapt to 8.9 percent of gross domesticproduct in 2011 due, in part, to over-spending by its 17 politically autonomousregions and spooking investors whichhave since virtually priced the regions outof debt markets.

Madrid passed an 18-billion-europrogram mid-July to help the regionswhich, together with the country’s localauthorities, account for around half of allpublic spending and face debt redemp-tions of some 36 billion euros this year.

The state lottery would raise 6 billioneuros via a syndicated loan in the nextfew days to feed in to the liquidity pro-gram, de Guindos said in the interview.

The government of the Mediter-ranean region of Murcia became the sec-ond authority ask Madrid for help onFriday, saying it may need as much as

700 million euros in 2012.Murcia follows Valencia, which said

at the end of July it will need to apply tothe fund. Spain’s largest region of Catalo-nia has also said it was studying whetherapply for cash from the fund.

Murcia will soon ask for around 85million euros to cover debt redemptionsand 225 million euros to finance its first-half deficit, though could request another400 million before the end of the year,they said on Friday.

‘Apple fires closing shots at Samsung in patents battle’

The European CentralBank must take

forceful and unlimitedsteps to buy sovereign

debt to help Spainreduce its refinancing

costs and eliminatedoubts over the euro

zone’s future, Spain’seconomy minister said

in commentspublished on Saturday

Samsung Electronics Co

Ltd abused its “monopoly

power” and demanded

an unreasonable royalty

from Apple Inc for the

use of wireless patents

in the iPhone, hurting

the device’s commercial

prospects, Apple

experts testified

Spain wants to have the cake,EAT IT AND YET ASK FOR MORE‘There must be no limit set on ECB bond buying’

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02

Sunday, 19 August, 2012

Business

LONDON

AGENCIES

EUROPE’S top shares closed at 13-month highs on Friday, extendingtheir longest weekly winning streakin seven years on hopes policy mak-ers were inching closer to concerted

action to tackle the region’s debt crisis.A late boost from upbeat economic data from

the United States pushed the FTSEurofirst 300index to 1,110.16 points, its highest since July 2011and up half a percent on the day.

Spain’s Ibex 35 and Italy’s MIB led local mar-ket gains, up 1.9 and 1.3 percent after GermanChancellor Angela Merkel voiced support for Eu-ropean Central Bank chief Mario Draghi’s promiseto do all it took to defend the euro.

Draghi has put forward plans for the bank andthe euro zone’s rescue fund to buy governmentbonds to bring down the borrowing costs of debt-laden countries; markets are on tenterhooks as towhether Merkel will agree to the scheme nextmonth. “The political discussion has becomestronger and more constructive,” Francesco Curto,head of the CROCI investment strategy & valuationgroup at Deutsche Bank, said.

“We know that we are going to get a recessionbut we’re not going to get a disorderly adjustment inEurope. This is the view that the market is taking.”The U.S. Conference Board said on Friday its Lead-ing Economic Index climbed 0.4 percent to 95.8,beating analyst estimates for a 0.2 percent rise. Thepreliminary reading of the index on consumer sen-timent rose to 73.6 from 72.3 last month, toppingeconomists’ forecasts for a slight uptick to 72.4.

The FTSEurofirst 300 index is up about 9 per-cent since late July when Draghi said the ECB wasready to do whatever it takes to preserve the euro.This week was its eleventh consecutive weeklygain, matching the longest winning run in 2005.

Traders said August’s low volumes had magni-fied the move up and warned investors may awaitconcrete steps from policy makers before commit-ting more money to the rally.

The ECB holds a monthly policy meeting onSept 6, when it could spell out exactly how it couldintervene in the bond market if asked. Six dayslater, Germany’s constitutional court will deliver a

ruling on the euro zone’s permanent ESM rescuefund before which Berlin cannot ratify it.

“This has been a short covering rally and peo-ple now want to see the actual money on the table,”a Milan-based broker said.ITALIAN BANK SHORTS: Shares in Italy’s No.3 lender, struggling Banca Monte dei Paschi diSiena, rose 17.6 percent after remarks by its chair-man that its main shareholder should sell downmore of its stake.

The move was likely fuelled by players clos-ing losing bets on the shares falling, given thatthe bank had 5.4 percent of its shares out onloan, or 64 percent of those available to be bor-rowed, as of the close on Thursday, making it thestock with the highest utilitisation rate amongItalian blue chips. The euro zone’s blue chipEuro STOXX 50 index rose 0.6 percent to2,471.53 points, showing technical strength afterbreaking out of a consolidation range between2,405 and 2,440 that had trapped the gaugesince last week, hourly charts showed.

“The upside breakout of the upper end of rangeat 2,450 have opened the way to further advance to-wards 2,494, the March 23 low.” Nicolas Suiffet, atechnical analyst with Trading Central in Paris said.

“From a chartist point of view, the validationof a classical flag pattern has reinstated a positivebias (and) although intraday momentum oscilla-tors are highly overbought, a continuation of therise is more likely.”

He cautioned that a breach of the 2,433 sup-port, while not invalidating the short-term bullishsentiment, could see consolidation towards 2,376,the Aug 2 high.

S&P 500 up for sixthweek; fear indexhits five-year lowThe S&P 500 held near a four-year high, and themarket’s key gauge of anxiety sank to its lowest since2007, suggesting a belief that the problems stressinginvestors might be closer to a resolution.

NEW YORK

AGENCIES

The Nasdaq outperformed the broader market as Appleshares reached an all-time high. The CBOE VIX volatilityindex .VIX hit a 5-year low of 13.43 before closing down 5.9percent at 13.45. The S&P 500 made a solid move above theclosely watched 1,400 level in the last session, posting itsbiggest gain in two weeks. But trading volume remainedlow. “From a sentiment point of view, the market has littleto inhibit it from proceeding higher,” said Ralph Edwards,director of derivatives strategy at ITG in New York. “Thebest rallies are, of course, the broadest, so it makes sense toview, in real-time, the stocks that are propelling the indexso as to make sure that the advance is not just being carriedon the shoulders of one sector. Here, the news is also good.”Edwards noted that 47 S&P 500 stocks in all industrygroups except for utilities have recently hit a 52-week high,among them Home Depot Inc (HD.N), PepsiCo Inc(PEP.N), Chevron Corp (CVX.N), SunTrust Banks Inc(STI.N), Covidien Plc (COV.N), 3M Co (MMM.N), GoogleInc (GOOG.O), CF Industries Holdings (CF.N) and SprintNextel Corp (S.N). With few news headlines and lightparticipation during summer holidays, traders areincreasingly taking their cues from market technicals. TheS&P 500 needs to close above 1,419.04, the index’s Aprilhigh, to make a new four-year high. Shares in Apple Inc(AAPL.O) jumped to an all-time intraday high of $648.19earlier in the session. The stock ended up 1.8 percent at$648.11. The Broker Jefferies raised its price target on thestock to $900 from $800 and gave it a ‘buy’ rating. ButFacebook shares continued to slide after the expiration of alockup period on some of the company’s stock following itsinitial public offering. The shares fell as low as $19 a shareon Friday. Groupon Inc (GRPN.O) also slumped to a newlow on Friday after Evercore Partners analyst Ken Senadowngraded shares of the largest daily deal company andset a $3 price target on the stock. The stock closed down 5percent at $4.75, after falling as low as $4.51. The DowJones industrial average .DJI was up 25.09 points, or 0.19percent, at 13,275.20. The Standard & Poor’s 500 Index.SPX was up 2.65 points, or 0.19 percent, at 1,418.16. TheNasdaq Composite Index .IXIC was up 14.20 points, or 0.46percent, at 3,076.59. For the week, the Dow was up 0.5percent, the S&P 500 was up 0.9 percent and the Nasdaqwas up 1.8 percent. The S&P 500 has risen 2.8 percent inAugust and about 11 percent since a year low in June astraders eye some encouraging U.S. jobs data and highlyanticipated policy meetings at the European Central Bankand the Federal Reserve in September. The economic dataon Wednesday was mixed, leaving investors wondering ifthe recovery was real. The Thomson Reuters/University ofMichigan consumer sentiment survey for August showedthe main index rose to its highest since May to 73.6, buoyedby sales at retailers and low mortgage rates.

Oil prices have soared this week to ashigh as $100 per barrel – a three monthhigh – courtesy the latest episode in Iran-

ian sanctions and owing to the Saudi fail-ure in extricating as much black gold asthe West would’ve wanted. And now, theonus is clearly on Washington to conjureup the mechanism to tame the pricesurge. Also, there is the small matter ofgas prices closing in on $4 per barrel,

which makes the aforementioned tamingtask all more pivotal in this election yearfor the Obama regime. There are quite afew solutions that the think-tanks cansummon, even though they run the widegamut between being pragmatic andbeing over-optimistic.

The first option for the US obviouslyis to press the accelerator on oil explo-ration itself. As far as oil opulent zonesare concerned there aren’t many richerregions than Alaska and more specificallythe ANWR (Arctic National WildlifeRefuge); but again, exploring the zone ornot is an extremely contentious debate inthe US. Secondly, and arguably more re-alistically, opening the Strategic Petro-leum Reserve is something that mighthelp Obama counter the hiking gasprices. The US President has also beendiscussing the idea of selling $500 mil-lion worth of oil from the reserve, underthe Republican’s pressure of course, andthis could somewhat plug the global de-mand-supply disparity of oil and bringthe price of gasoline down to somethingbordering on affordability.

With Keystone XL there is anotherpretty obvious solution to the predicamentin the pipeline – pun intended. The 1700-mile pipeline would bring volumes of oilfrom the Canadian tar sands in Alberta. Butthis potential move has environmentalistsraging as the project is touted as beingdetrimental to the global climatic condi-tions. Another option that various statesare considering is new tax proposals with

regards to gasoline. These proposals basi-cally are designed to channel the statespending and work as the neutralizer incase the oil prices continue their northwardtrend. A controversial maneuver – at leastfor the big guns of the oil game – would becurtailing the tax breaks for the oil giants.

The final option, and obviously themost comprehensive one, is the “all-of-the-above” strategy for Washington, asstated by Senator Barasso. It is pretty ev-ident that the oil prices in the US wouldobviously fluctuate in synchrony with theglobal prices and hence, in addition to the“all of the above” stratagem, or even ab-

sence thereof, the go-to play for Washing-ton should be to control excessive oilusage. The more prudent the usage andhandling of oil is, the lesser the nationwould suffer owing to the pendulum thatoil supply can become.

Digging the US out of the energyquagmire would not only have the snow-ball effect and control surging oil prices;it could be the decisive factor during thisyear’s presidential polls for Obama aswell. There is a multitude of options hog-ging the Washington drawing board; ear-marking the right one is crucial for theAmerican and global oil markets.

Oil, gas prices hog Washington’s drawing boardThere is a multitude of options on thetable for President Barack Obama ashe vies to score a triumph on thepolitical and energy fronts

KUNWAR KHULDUNE SHAHID

CRUDE AWAKENING

EuropEan SharES hit�13-month�high�on�euro�action�hopes

Where’s

the sizzle?

“Oracle, Google disclosureson paid bloggers lack sizzle”

SAN FRANCISCO

AGENCIES

But while the post-trial order from U.S.District Judge William Alsup earlier thismonth had riveted tech and legal circles,the companies’ responses contained nobombshells. “Neither Google nor itscounsel has paid an author, journalist,commentator or blogger to report orcomment on any issues in this case,” theInternet search company said in its courtfiling. Alsup’s highly unusual order camemonths after the companies had squaredoff at trial, which featured testimonyfrom high-profile technology executivesincluding Oracle Chief Executive LarryEllison and Google CEO Larry Page. Thecase attracted heavy media coverage fromthe mainstream press and technology-focused blogs. In his order, Alsup said hewas “concerned” about relationshipsbetween commentators and thecompanies, but the judge did not revealwhat specifically prompted him to act.Oracle on Friday said it had hired bloggerFlorian Mueller, who often comments onpatent issues, as a consultant on“competition related matters.” However,Oracle said it retained Mueller after hebegan writing about the litigation. “Hewas not retained to write about the case,”Oracle said. In an email to Reuters,Mueller noted he had previouslydisclosed the Oracle connection on hisblog. “It’s a consulting relationship, not apay-for-blog relationship,” he said onFriday. In its court filing on Friday,Oracle also said some employees mighthave blogged about the case, but said itdid not ask for or approve such posts.Oracle sued Google in federal court in2010, claiming the latter’s Androidmobile platform violated its patents andcopyright to the Java programminglanguage. It sought roughly $1 billion onthe copyright claims. Earlier this year,after the jury decided in Google’s favor,Alsup ruled Oracle could not claimcopyright protection on most of the Javamaterial that Oracle took to trial. Oraclehas said it will appeal.

g FTSEurofirst 300 up 0.5 percent, Euro STOXX 50 up 0.6 pctg Indexes hit 13-mth highs g Germany’s Merkel sounds

supportive of ECB’s Draghi g Spanish, Italian indexes lead rally

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