Business News: FCC Adopts Rules for Web Service

Business News: FCC Adopts Rules for Web Service

FCC Adopts Rules for Web Service

Posted: 21 Dec 2010 03:20 PM PST

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By Todd Shields

(Updates with comments from Obama in fourth paragraph, Representative Upton in ninth and Verizon in 15th.)

Dec. 21 (Bloomberg) -- U.S. regulators banned Internet service providers led by AT&T Inc. and Comcast Corp. from blocking or slowing Web content sent to homes and businesses, while allowing mobile phone companies to put limits on traffic.

The Federal Communications Commission approved the so- called net-neutrality rules by a vote of three to two today. Supporters argued that Internet providers, which also own some of the content they deliver online, may interfere with videos and services owned by others such as Google Inc.

The agency also affirmed that providers may charge subscribers based on how much data they consume. The pricing issue has become more important as companies including Netflix Inc. stream movies and other data-hungry content over the Web.

“Today’s decision will help preserve the free and open nature of the Internet while encouraging innovation, protecting consumer choice and defending free speech,” President Barack Obama said in a statement released today by the White House.

The rules create “a strong and sensible framework” that “protects Internet freedom and openness,” FCC Chairman Julius Genachowski, a Democrat appointed by Obama, said before the vote. “We’re adopting a framework that will increase certainty for businesses, investors and entrepreneurs.”

Commissioner Meredith Atwell Baker, one of two Republicans to vote against the regulations, called the rules an overreach.

‘Inhibiting’ Network Evolution

“There is no factual basis to support government intervention,” she said. “The majority’s approach will inhibit the ability of networks to freely evolve and experiment.”

Senator Mitch McConnell of Kentucky, the Senate’s Republican leader, called the vote “a first step in controlling how Americans use the Internet.”

Representative Fred Upton, a Michigan Republican who is to become chairman of the Energy and Commerce Committee when Congress convenes next year, said he would work “to strike down the FCC’s brazen effort to regulate the Internet.”

Genachowski proposed the net-neutrality rules in September 2009, and debate has expanded to involve Congress, courts and companies. Net neutrality is the idea that cable and telephone companies must treat all Web content equally by not interfering with the information their subscribers access on the Web.

Google, Amazon

Google, Amazon.com Inc. and Dish Network Corp. have said FCC rules are needed so that the telecommunications companies that deliver their content, such as electronic maps and online television shows, don’t favor the Internet service providers’ own online products or those of partners that pay for higher speeds. Comcast, for example, will own movies if its purchase of NBC Universal is approved by government officials.

Google rose $8.01 to $603.07 as of 4 p.m. New York time in Nasdaq Stock Market trading. Amazon gained $1.46 to $184.75.

Internet carriers Comcast, Verizon Communications Inc., Verizon Wireless and Time Warner Cable Inc. said rules may make it difficult to manage the growing traffic on their networks, and would limit investment in new Internet capacity.

Comcast increased 32 cents to $22.25 in Nasdaq Stock Market trading. Verizon climbed 20 cents to $34.94, while AT&T dropped 6 cents to $29.07 in New York Stock Exchange composite trading.

Verizon is “deeply concerned” with the FCC vote, which “appears to assert broad authority for sweeping new regulation,” Tom Tauke, the company’s executive vice president of public affairs, policy and communications, said in an e- mailed statement.

‘A Workable Balance’

Comcast Executive Vice President David L. Cohen said in a statement that the rules “appear intended to strike a workable balance between the needs of the marketplace for certainty and everyone’s desire that Internet openness be preserved.”

The compromise passed by the agency appears to provide certainty needed for job creation, “though a final view must await a careful reading of the FCC’s order,” Jim Cicconi, AT&T senior executive vice president, said in an e-mailed statement.

Stephen Wozniak, the co-founder of Apple Inc. who traveled to Washington from his home near San Francisco to attend today’s FCC vote, told reporters after the meeting that the FCC should have passed more restrictive rules.

For example, Internet-service providers may block online consumers from receiving movies streamed by Netflix, forcing users to watch movies owned by the telecommunications and telephone companies, Wozniak said. “Every normal person in the United States knows this,” he said.

‘Fail in Court’

The rules leave intact a system that lets carriers charge more when users consume large amounts of data, which will help Internet-service providers to upgrade and maintain networks, said Rebecca Arbogast, an analyst at Stifel Nicolaus & Co. in Washington.

Subscribers who consume content that requires large amounts of data to deliver, such as movies and online gaming, may bear part of the burden of increased access fees, said Craig Moffett, a New York-based analyst at Sanford C. Bernstein & Co.

“The FCC does not have the legal authority to issue these rules,” Robert McDowell, the other Republican commissioner at the FCC, said during the meeting today. “This new effort will fail in court.”

The rules drew criticism from Republicans in Congress.

Texas Senator Kay Bailey Hutchison, the top Republican on the Senate Commerce Committee, said in an e-mailed statement she would ask Congress to revoke the rules, calling them “an unprecedented power-grab by the unelected members” of the FCC.

‘Nationalizing the Web’

“The FCC is effectively nationalizing the Web,” Republican Representative Marsha Blackburn of Tennessee said in an e-mailed news release today. She said the FCC was exhibiting a “hysterical reaction to the hypothetical problem of anti- competitive online behavior.”

Democrat Jay Rockefeller, a senator from West Virginia who chairs the Commerce Committee, in a statement called the decision “a meaningful step forward.”

Some groups said the agency didn’t go far enough.

The FCC vote was a “squandered opportunity to enact clear, meaningful rules to safeguard the Internet’s level playing field and protect consumers,” Craig Aaron, managing director of the Washington-based advocacy group Free Press, said in a statement.

--Editors: Allan Holmes, Elizabeth Wollman

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net

To contact the editor responsible for this story: Allan Holmes at aholmes25@bloomberg.net.

Amazon Beats Kindle Sales Estimates by 60%

Posted: 21 Dec 2010 02:34 PM PST

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By Joseph Galante and Peter Burrows

(Updates with an analyst’s comment in fourth paragraph.)

Dec. 21 (Bloomberg) -- Amazon.com Inc. is likely to sell more than 8 million Kindle electronic-book readers this year, at least 60 percent more than analysts have predicted, according to two people who are aware of the company’s sales projections.

Analysts surveyed by Bloomberg estimated, on average, that the company would sell 5 million Kindles in 2010. Last year, Amazon sold about 2.4 million Kindles, said one of the people, who asked to remain anonymous because the company doesn’t disclose Kindle sales figures.

Chief Executive Officer Jeff Bezos is using the Kindle, unveiled in 2007, to expand into hardware and fuel digital book demand. The projections show Amazon is adding share in the e- reader market, where it vies with Sony Corp. and Barnes & Noble Inc., faster than predicted by analysts at Citigroup Inc. and at least five other securities or research firms.

“Kindle is gaining an unstoppable traction,” Sandeep Aggarwal, a San Francisco-based analyst at Caris & Co., wrote in a research note today. He has a “buy” rating on Amazon and doesn’t own the shares.

Drew Herdener, a spokesman for Seattle-based Amazon, declined to comment.

Analysts at Citigroup, Barclays Capital, BGC Partners LP and ThinkEquity LLC have estimated that Amazon will sell about 5 million Kindles this year. Caris & Co. predicted 4.8 million, while Goldman Sachs Group Inc. projected 4 million to 5 million.

Kindle Versus IPad

Amazon’s sales demonstrate that the market for stand-alone e-readers is growing even as Apple Inc. builds demand for the iPad tablet, which lets users read books, watch videos and carry out computing tasks. Apple, based in Cupertino, California, sold 7.46 million iPads from their April debut through September.

Shares of Amazon rose $1.46 to $184.75 at 4 p.m. New York time in Nasdaq Stock Market trading. They have gained 37 percent this year.

Amazon sells three versions of the Kindle. The $139 model downloads books, magazines and newspapers via Wi-Fi only. Another costs $189 and works over both Wi-Fi and 3G wireless networks. The larger Kindle DX costs $379.

Amazon has disclosed few details on Kindle sales. In October, the company said that sales of the lighter, faster Kindles, which were introduced in July, had surpassed total Kindle sales in the fourth quarter of 2009, the company’s busiest time of year. Sony and Barnes & Noble don’t disclose sales of their e-readers either.

Kindle Books Everywhere

Even as Kindle sales accelerate, Amazon is lessening its reliance on a single family of devices to sell its e-books, said Gene Munster, an analyst at Piper Jaffray in Minneapolis.

Amazon said in October that it’s developing software that will let users read its e-books on Microsoft Corp.’s Windows Phone 7 mobile operating system. Consumers can also get Kindle books on the iPad, iPod Touch and iPhone, as well as on Research In Motion Ltd. BlackBerrys and phones running Google Inc.’s Android.

Amazon got its start more than a decade ago as an online book retailer. CEO Bezos said in an interview in July that the company began designing the Kindle in 2004 to ramp up sales of e-books.

U.S. sales of e-books are set to almost triple to $2.8 billion by 2015, according to Forrester Research Inc. in Cambridge, Massachusetts.

--With assistance from Adam Satariano in San Francisco. Editors: Tom Giles, Nick Turner.

To contact the reporters on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net; Peter Burrows in San Francisco at pburrows@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.

Snow Snarls Europe Travel

Posted: 21 Dec 2010 01:05 AM PST

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By Chris Spillane and Cornelius Rahn

(Updates with Frankfurt airport closing, re-opening starting in first paragraph.)

Dec. 21 (Bloomberg) -- Air travel disruptions rippled across Europe for a fourth day in the countdown to Christmas as Frankfurt airport was closed this morning after heavy snowfall.

Fraport AG’s Frankfurt airport, Europe’s third busiest, reopened two runways after shutting all three earlier this morning for snow clearance, spokesman Juergen Harrer said in a telephone interview. Deutsche Lufthansa AG said it re-routed Frankfurt-bound long-haul jets to Munich and deployed additional wide-bodies to Dusseldorf and Zurich.

Northern parts of Germany will receive as much as 10 centimeters (3.9 inches) of fresh snow during the day, according to the German Weather Service. In London, tens of thousands of travelers who have been trying to head home for Christmas since the weekend remain stranded as Heathrow airport operates at a third of capacity and as snow, ice and frigid temperatures turned rail and road travel into chaos.

“It’s unbelievable,” Thomas Jachnow, a spokesman for Cologne, Germany-based Deutsche Lufthansa, said in a telephone interview. “We all thought it would get better and then this new wave of ice and snow hit us. Any optimism that our flight plan would normalize in coming days has dissipated.”

British Airways

BAA Ltd.’s Heathrow airport said it second runway will remain closed until later today. British Airways Plc has canceled 165 flights scheduled to depart from Europe’s biggest hub, according to the London-based carrier’s website.

“There is still ongoing disruption across Europe because of the adverse weather conditions,” said BAA spokeswoman Cathy Mussert. “There could be further delays and cancelations. We’re advising passengers to check with their airline to confirm their flight is operating.”

Gatwick, which serves London, reopened as planned at 6 a.m. with 600 flights scheduled for the day, according to the airport’s website. Paris’s Roissy-Charles de Gaulle and Orly airports were set to begin the day with at least 28 canceled flights before 7 a.m., data tracker FlightStats.com said.

Snow and freezing fog have hindered air travel across Europe since last week with up to 20 centimeters of snow falling in parts of the U.K. yesterday. Airlines including Cathay Pacific Airways Ltd., Qantas Airways Ltd. and Virgin Atlantic Airways Ltd. have also been forced to cancel flights, leaving thousands of travelers stranded.

Speed Limits

Eurostar Group Ltd. has placed speed restrictions on its high speed lines, adding up to two hours to journey times, according to a statement on its website.

The two Paris airports stayed open late yesterday to clear a backlog of flights delayed by the snow, and operating hours were extended for four days at London’s Heathrow airport.

“It is necessary to allow as many airplanes as possible to fly as long as weather conditions remain favorable,” French Transport Minister Thierry Mariani said in a statement.

Airlines and rail operators urged travelers to stay home if possible, and U.S. carriers waived fees as more snow was forecast for England, France and Germany.

BAA, the U.K. airport operator owned by Ferrovial SA, asked passengers without a confirmed flight not to travel to Heathrow airport. London’s City airport is open with some delays and cancelations, spokeswoman Geraldine Nolan said by phone today.

Aeroports de Paris, which runs the two Paris airports, said the average flight delay at Charles de Gaulle was two to three hours.

Shovels, Diggers

Dublin’s airport restarted flights at 11:30 p.m. last night after suspending services earlier while crews cleared the runway of snow and ice, according to a website statement.

“It can’t be beyond the wit of man, surely, to find the shovels, the diggers, the snow ploughs or whatever it takes to clear the snow out from under the planes,” Boris Johnson, the mayor of London, told the BBC yesterday.

Fraport is aiming to open the third runway at Frankfurt airport before noon, spokesman Harrer said. After heavy snowfall in a short time starting around 3 a.m., the airport operator decided that snow-clearance crews could not safely clear it if aircraft were using the runways, he said.

Eurostar, which links London to Paris and Brussels by train, asked passengers not already at stations to stay home and urged all customers to cancel non-essential travel. The service isn’t accepting new bookings through Dec. 24.

United Continental, American

Most other trains throughout France were slower than normal, though 90 percent were arriving less than 1 hour late, according to train operator SNCF.

U.S. carriers such as United Continental Holdings Inc. and AMR Corp.’s American Airlines waived ticket-change fees for passengers traveling to or from parts of Europe.

Qantas canceled flights from London and turned back other flights headed to the U.K., affecting 3,000 passengers, Simon Rushton, a spokesman for the Sydney-based carrier, said yesterday.

Cathay Pacific said it expects to operate three scheduled flights to London from Hong Kong through early tomorrow morning. The carrier’s four flights from Heathrow today are also expected to go ahead, pending capacity constraints and weather conditions, the airline said in an e-mailed statement.

Deutsche Bahn AG spokeswoman Kathrin Fellenberg said the winter weather continued to disrupt Germany’s national railroad network, causing numerous train delays and cancelations.

--With assistance from Nicholas Comfort and Mike Gavin in Frankfurt, Jennifer Freedman in Geneva, Blanche Gatt and Steve Rothwell in London and Mary Schlangenstein in Dallas. Editors: Kenneth Wong, Chad Thomas

To contact the reporters on this story: Chris Spillane in London at cspillane3@bloomberg.net; Cornelius Rahn in Frankfurt at crahn2@bloomberg.net.

To contact the editors responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net; Kenneth Wong kwong11@bloomberg.net.

‘Trusted Traveler’ Urged for U.S. Airports

Posted: 21 Dec 2010 10:19 AM PST

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By John Hughes

Dec. 21 (Bloomberg) -- The U.S. government can reduce consumer frustration with airport security and encourage more people to fly by adopting changes such as a “trusted traveler” program, an industry group said.

The U.S. Travel Association, whose members include American Express Co., Marriott International Inc. and Loews Corp., released a survey today showing consumers would take two to three more trips annually if security hassles could be reduced. Participants in the proposed program would undergo a background check in advance in return for less intrusive airport screening.

“Travelers are frustrated,” Roger Dow, president of the association, said on a conference call with reporters. “Our current system cannot be the best that the United States can create.”

The association, which last year persuaded Congress to adopt a fee to promote travel from overseas, is preparing recommendations for lawmakers and the Obama administration at the end of January to cut airport security hassles.

About 43.6 million passengers will travel on U.S. airlines during the holiday period that runs from Dec. 16 and Jan. 5, a 3 percent increase from last year, the Air Transport Association, an airline trade group in Washington, said this month. Travelers during the U.S. Thanksgiving holiday in November complained of more intrusive security pat-downs at airports across the country.

American Airlines, FedEx

The Washington-based U.S. Travel Association in March created the “Blue Ribbon Panel for Frictionless Security” to help develop recommendations. The panel includes Bob Crandall, former chief executive officer of AMR Corp.’s American Airlines, David Bronczek, president of FedEx Corp.’s Express unit, Sam Gilliland, chief executive officer of Sabre Holdings, and Tom Ridge, former Homeland Security secretary.

Dow, when releasing the survey data, declined to discuss specifics of upcoming recommendations. The association focuses on improvements such as assessing risk before passengers reach airports, shrinking the pool of people who undergo scrutiny at airports, lessening checkpoint crowding and making some security efforts optional for people with privacy concerns.

“We know there’s a better way” to screen, said Dow, whose group members also include Walt Disney Co., InterContinental Hotels Group Plc and Choice Hotels International Inc.

--Editors: Andrea Snyder, Chris Staiti

To contact the reporter on this story: John Hughes in Washington at jhughes5@bloomberg.net.

To contact the editor responsible for this story: Bernie Kohn at bkohn2@bloomberg.net.

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Roubini, Galbraith Say Regulators Should Rush Servicing Rules

Posted: 21 Dec 2010 03:29 PM PST

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By Lorraine Woellert

Dec. 21 (Bloomberg) -- A group of analysts, investors and economists is urging federal regulators to write rules by early next year governing how mortgage servicers handle foreclosures, loan modifications and other activities.

The group cited an “urgent need” to develop national standards to fight servicing fraud, which they said is slowing the housing recovery.

“The house is burning down,” Christopher Whalen, one of the signers and the co-founder of Institutional Risk Analytics, said in a telephone interview. “What we’re saying to all the regulators is you have the legal authority to act now.”

In a letter sent today, Whalen and 51 others asked regulators to draft rules as part of ongoing work on risk retention, a Dodd-Frank Act measure that requires loan originators to keep a stake in the debt they sell. The Obama administration has until mid-April to finalize that rule.

The letter was signed by economists Nouriel Roubini and James K. Galbraith and Allan I. Mendelowitz, former chairman of the Federal Housing Finance Board. It was sent to U.S. Treasury Secretary Timothy Geithner, Federal Deposit Insurance Corp. Chairman Sheila Bair, and four other regulators.

The FDIC is pushing to include servicing standards in rules about risk retention. In Dec. 1 testimony to the Senate Banking Committee, Bair said the rulemaking gives agencies “a unique opportunity to better align the incentives of servicers with those of mortgage pool investors.”

Geithner and others also have called for servicer regulation.

Writing rules as part of the risk retention language “would be mixing apples and oranges,” said Tom Deutsch, executive director of the American Securitization Forum, a New York Trade group.

“We’re not opposed to servicing standards,” Deutsch said in an interview. Drafting them, however, will take time. “If we’re going to have a debate around servicing standards, we should have that on its own merits.”

--With Phil Mattingly in Washington. Editors: Lawrence Roberts, Dan Reichl.

To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.

American Air Pulls Flights From Orbitz.com After Court Ruling

Posted: 21 Dec 2010 03:28 PM PST

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By Mary Jane Credeur

Dec. 22 (Bloomberg) -- AMR Corp.’s American Airlines won a court ruling allowing it to pull listings from Orbitz Worldwide Inc. and said it will immediately stop displaying and selling tickets on the online travel site.

Yesterday’s decision by an Illinois state court in Chicago lifted a temporary restraining order granted last month that prevented American from dropping Orbitz, according to the Fort Worth, Texas-based airline.

American has developed a system of its own called Direct Connect that provides fare pricing and options directly to larger online travel agencies. The carrier also is trying to drive more bookings through its own website at AA.com.

“In today’s competitive marketplace, it is important for American to be free to customize its product offerings to improve the customer experience, as well as distribute its products in a way that does not result in unnecessary costs,” Ryan Mikolasik, a spokesman for American Airlines, said in an e- mailed statement.

Allowing American Airlines to drop Orbitz marks the “first shot in a long battle that’s going to be engaged” by all airlines in 2011, said Kevin Mitchell, chairman of the Business Travel Coalition, a group that represents corporate travel managers and is critical of American’s plans.

“When American pulls inventory from Orbitz, consumers will not have the ability to compare all apples to apples” on fare pricing, Mitchell said in a phone interview.

Sabre Holdings Corp., the parent of Travelocity.com, said in a statement that American’s actions will “make it much harder and more costly for agents and consumers to easily comparison shop among airlines, which will result in increased prices for consumers.”

Injunction Denied

The Circuit Court of Cook County denied a request for a preliminary injunction by Travelport LP, the travel-reservation systems provider whose affiliates partly own Orbitz, said Brian Hoyt, a spokesman for Orbitz, in an e-mail yesterday.

Revenue earned on American Airlines tickets and associated products such as rental cars accounted for about 5 percent of Orbitz’s revenue for the nine months ended in September, Hoyt said. Most of the affected ticket volume will be replaced by other suppliers, he said.

American is pushing online travel agencies to obtain flight and fare information directly from it instead of through global distribution systems such as Travelport’s Galileo and Worldspan, Orbitz Chief Executive Officer Barney Harford said in November in a conference call with analysts.

Travelport said in a separate statement that it’s “disappointed” with the court’s ruling on the restraining order and that the case will continue until a final judgment is made.

‘Detrimental’ Plans

“Travelport believes American Airlines’ plans to force a more restrictive distribution model will result in inefficiencies and added costs and will be detrimental to airline customers, travel agencies and consumers,” Jill Brenner, a spokeswoman for Travelport, said in the statement.

Two lawyers for Travelport, Paul Chronis and John Schriver, didn’t immediately return calls and e-mails seeking comment.

Separately yesterday, Delta Air Lines Inc. said it notified three online travel sites, CheapOAir.com, OneTravel.com and BookIt.com, that it terminated them as authorized travel agents as of Dec. 17. Tickets purchased from those websites through Dec. 17 will be honored, Delta spokesman Trebor Banstetter said.

Delta is trying to increase bookings through its own website at Delta.com, Glen Hauenstein, executive vice president of network planning and revenue management, said on a Dec. 15 webcast of an investor presentation.

Travelport is owned by Blackstone Group LP.

The case is Travelport v. American Airlines, 10CH48028, Circuit Court of Cook County, Chancery Division (Chicago).

--With assistance from Joel Rosenblatt in San Francisco. Editors: Michael Hytha, Peter Blumberg.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.

India Seeks African Coal Mines to Plug Domestic Supply Shortfall

Posted: 21 Dec 2010 03:28 PM PST

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By Kartikay Mehrotra and Rajesh Kumar Singh

(Updates with share prices in sixth paragraph.)

Dec. 22 (Bloomberg) -- India’s Coal Minister Sriprakash Jaiswal said state-run companies will seek deals to buy mines in South Africa, Botswana and Mozambique when he visits the continent next month in a bid to plug a domestic shortfall.

“The top priority is to buy coal mines,” Jaiswal said in an interview in New Delhi yesterday. “We already have two mines in Mozambique and the government is seeking more there and in other countries in Africa.”

Coal India Ltd., the world’s biggest producer of the fuel, and Neyveli Lignite Corp. are among state-owned companies looking for deposits overseas to feed an economy growing at more than 8 percent a year. Jaiswal said local supply may fall short of demand by 83 million metric tons in the year ending March 31, with Coal India set to miss its annual output target.

“Coal India is a bit late in the game,” said P. Phani Sekhar, a fund manager with Angel Broking Ltd. based in Mumbai. “It should have started this exercise 10 years ago and should have matured by now to make big acquisitions.”

Coal users imported 72 million tons of the fuel last financial year, Jaiswal said. The minister said he will visit South Africa, Mozambique, Botswana, Malawi and Swaziland starting Jan. 4.

Coal India shares gained 1.1 percent to 316.65 rupees at 9:24 a.m. in Mumbai trading. Neyveli Lignite rose as much as 1.4 percent and was trading 0.2 percent higher at 128.90 rupees. The benchmark Sensitive Index advanced 0.2 percent.

China Competition

India has lost out to China for assets overseas as Asia’s fastest-growing major economies seek to secure energy supplies. State-run Chinese companies spent a record $32 billion last year acquiring energy and resources assets overseas compared with India’s single $2.1 billion investment by Oil & Natural Gas Corp.

“In China, the government has supported this drive,” said Pauli Laursen, an Aabenraa, Denmark-based fund manager at SydInvest Asset Management. “It is a positive sign that the Indian government is also now joining to help its companies acquire assets.”

Coal India, in which the government sold a 10 percent stake in October to raise 152 billion rupees ($3.4 billion), may miss its target to produce 461 million tons of the fuel this fiscal, the minister said.

“There are delays on environment clearances,” Jaiswal said. “We need to increase production as coal will be the most important fuel for power generation for at least another decade.”

Coal Demand

India’s government has pledged to provide electricity nationwide by 2012 and needs to increase installed generation capacity to 200,000 megawatts to sustain economic growth, according to the power ministry. More than half of the country’s current capacity of 167,278 megawatts is fueled by coal.

Coal demand in India may more than triple in the next two decades to 2 billion tons, Jaiswal said Sept 24. India produced 530 million tons of coal last year, the minister said. The country’s power plants may import 60 million tons of coal next financial year, Power Secretary P. Uma Shankar said Dec. 9.

Coal India is considering buying a Peabody Energy Corp. mine in Australia, one owned by Massey Energy Co. in the U.S., and another in Indonesia, Chairman Partha Bhattacharyya said Nov. 25, declining to name the third company. While Coal India hasn’t started due diligence on two more mines in Australia, it may appoint banks soon to evaluate offers, he said.

“It’s more expensive to bring coal from the U.S. to India because of the distance,” Jaiswal said. “Africa is an ideal location.”

--With assistance from Rakteem Katakey in New Delhi. Editors: John Chacko, Jane Lee.

To contact the reporters on this story: Kartikay Mehrotra in New Delhi at kmehrotra2@bloomberg.net; Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net.

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

BofA’s Hogan Leaves After Knox Promoted to Head Retail Branches

Posted: 21 Dec 2010 03:27 PM PST

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By Hugh Son

Dec. 21 (Bloomberg) -- Bank of America Corp. said that Mark Hogan, in charge of East Coast branches of the biggest U.S. bank, is departing after Katy Knox was promoted to supervise all locations.

Hogan “is leaving the company,” said Anne Pace, a spokeswoman for the Charlotte, North Carolina-based company. Knox, who joined Bank of America through its 2004 purchase of FleetBoston Financial Inc., will be in charge of banking centers and claims and fraud divisions.

Bank of America Chief Executive Officer Brian T. Moynihan has installed other former FleetBoston colleagues in top posts. Terry Laughlin was made a senior executive in the bank’s money- losing mortgage unit. Mike Lyons joined as a strategy and planning executive to help shrink the bank’s balance sheet. Moynihan also promoted Lauren Mogensen to deputy general counsel and corporate secretary.

Knox will report to consumer banking head Joseph Price, according to the Wall Street Journal, which reported Hogan’s resignation today.

--Editors: Dan Reichl, Rick Green

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

Intel Wins Approval for McAfee Acquisition From FTC

Posted: 21 Dec 2010 03:27 PM PST

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By Ian King

(Adds closing share prices in fourth paragraph.)

Dec. 21 (Bloomberg) -- Intel Corp., the world’s largest chipmaker, won clearance from the U.S. Federal Trade Commission to acquire McAfee Inc., bringing the company a step closer to expanding into the security-software market.

Intel, based in Santa Clara, California, announced the decision in a statement on its website. The company is still working with the European Commission as that organization reviews the purchase, Intel said.

In August, Intel agreed to buy the company for $7.68 billion, saying it will use the deal to create chips with built- in security. The acquisition of McAfee, also based in Santa Clara, would be the biggest purchase in Intel’s history. Integrating McAfee defenses into its products will make devices more efficient and secure, Intel has said.

Shares of Intel declined 13 cents to $21.10 at 4 p.m. New York time on the Nasdaq Stock Market. The stock has gained 3.4 percent this year. McAfee rose 33 cents to $46.38 in New York Stock Exchange composite trading.

Under the deal, Intel would pay $48 a share in cash per share -- 60 percent more than McAfee’s closing price before the acquisition was announced.

New Markets

Intel’s processors run more than 80 percent of the world’s personal computers. In addition to helping the company add features to its PC chips, McAfee is part of Intel’s plan to expand into new areas, such as mobile phones and consumer electronics. McAfee is the second-largest maker of security software, behind Mountain View, California-based Symantec Corp.

Intel plans to run McAfee as an independent company, under the leadership of current Chief Executive Officer Dave DeWalt. It also will continue to sell stand-alone software products. New Intel chips, including capabilities provided by McAfee, would go on sale next year.

Computer functions can run more quickly when it’s woven directly into a chip and doesn’t have to go through other programs, Intel said when it announced the deal. That also makes it harder for hackers to circumvent. In the first half of the year, McAfee added more than 10 million new malware variants to its database of security threats.

--Editor: Nick Turner, John Lear, Elizabeth Wollman

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Thomas Giles at tgiles5@bloomberg.net

Nike Falls After Orders Advance Less Than Analysts’ Estimates

Posted: 21 Dec 2010 03:26 PM PST

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By Matt Townsend

Dec. 21 (Bloomberg) -- Nike Inc., the world’s largest maker of athletic shoes, declined as much as 5.9 percent in extended trading after reporting orders that fell short of some analysts’ estimates.

Nike fell as much as $5.40 to $86.90 in extended trading after closing today at $92.30 on the New York Stock Exchange. The shares have climbed 40 percent this year.

Orders for December to April rose 11 percent for a total of $7.7 billion, excluding currency fluctuations, from a year ago. That missed the 11.6 percent gain projected by an average of five analysts surveyed by Bloomberg.

Japanese orders fell 5 percent, the worst performer among Nike’s markets. Nike, led by Chief Executive Officer Mark Parker, got less than 5 percent of its revenue from that country last quarter, compared with more than 25 percent for North America, its biggest market.

Net income rose 22 percent to $457 million, or 94 cents a share, in the period ended Nov. 30, from $375.4 million, or 77 cents, a year earlier, the Beaverton, Oregon-based company said today in a statement. Analysts projected 88 cents, the average of 16 estimates.

Revenue rose 10 percent to $4.8 billion. Analysts projected $4.82 billion, the average of 13 estimates.

--Editors: James Callan, Julie Alnwick

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

Foster’s Names Pollaers to Head Beer Unit After Split

Posted: 21 Dec 2010 03:25 PM PST

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By Robert Fenner

(Updates with closing share price in fifth paragraph.)

Dec. 22 (Bloomberg) -- Foster’s Group Ltd., Australia’s biggest brewer, named John Pollaers as the new chief executive officer of the company’s beer unit should its board proceed with plans to spin off the world’s second-largest wine business.

David Dearie would head the separated global wine business, Melbourne-based Foster’s said today in a statement. Any split of the beer and wine units, which requires shareholder approval, would be completed by the middle of next year, it said.

Current CEO Ian Johnston, set to leave after the split, has said the separate companies may be valued more “appropriately” after A$2.7 billion ($2.7 billion) of writedowns at the wine business. Pollaers, formerly with Diageo Plc, has run Foster’s Australian brewing division since April. Dearie became head of Foster’s Treasury Wine Estates in Australia and New Zealand in July 2009 after heading Brown-Forman Corp.’s wine unit.

“They have the right background to take on those roles,” said Theo Maas, who helps manage $5 billion at Arnhem Investment Management in Sydney, including Foster’s shares. “It takes Foster’s closer to a demerger.”

Foster’s was unchanged at A$5.62 as of the 4:10 p.m. close of Sydney trading. The stock has gained 2.2 percent this year, compared with a 1.9 percent decline in the benchmark S&P/ASX 200 index.

Fat Yak

Johnston first announced plans in May for a split of the company, which has a current market value of A$10.9 billion.

Pollaers has worked to stabilize Foster’s share of Australian beer sales at about 50 percent, accelerating the roll-out of new brews such as Fat Yak to offset declining sales of its Victoria Bitter, the nation’s top-selling brew.

The company is battling increased competition from smaller rivals such as second-ranked Lion Nathan, a unit of Tokyo-based Kirin Holdings Co., and a shift in consumer tastes to sweeter, pre-mixed drinks.

Foster’s share of the Australian beer market dropped 1 percentage point in the 12 months ended June. About half of that was because of the decline in traditional beers, such as Victoria Bitter, which account for 41 percent of beer sold in the nation, compared with 56 percent five years ago.

Dearie is cutting A$100 million of annual costs from Treasury by the end of June by reducing expenses for packaging, warehousing and bottling. He is also targeting shorter production runs for brands such as Wolf Blass to enable Foster’s to cut inventory holding costs.

In September, the company rejected a bid for its wine unit worth as much as A$2.7 billion, saying it “significantly undervalues” a business that generates in excess of A$2 billion from annual sales of more than 35 million cases of wine.

The offer came from a buyout firm that Foster’s didn’t identify.

--Editors: Andrew Hobbs, Terje Langeland.

To contact the reporter on this story: Robert Fenner in Melbourne rfenner@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net