Thursday, 26 November 2009

Did T-Mobile sell my personal data?

How much is my personal data really worth? I can surely sell it for a good hundred quid! This week a T-Mobile employee was allegedly caught selling personal details of thousands of mobile phone customers. The sale of personal details is not an old issue. I think it is the ethical responsibility for companies to protect your data. Can you trust a company to protect your personal data? Why can't it be stopped?

There now is a strong push by Information Commissioner, Christopher Graham to change the way a person is prosecuted for stealing personal information. It is absolutely ridiculous that customers are subjected to cold calls from random people at random hours of the day when their contracts are to expire. I think it is a highly unlawful practice of selling personal data for financial gain. The 'substantial amounts of money' sold to brokers working for other mobile phone companies are able to take advantage of your information with the only fear of prosecution with a fine.

According to the BBC, T-Mobile had been asked to keep information of the breach secret to 'avoid any criminal prosecutions being prejudiced'. It would definitely not be good PR for the company as the story could certainly dampen their Christmas season sales.

But in an interesting turn of events saw the information become public. I think the Government would not also like to destroy their PR coming close to election time. It was case of deducing which phone companies were not subject to investigation. The company remaining was T-Mobile.

As a mobile customer I think I would like to know if my data was sold to a third party without my permission as soon as possible. I would also expect some compensation for the time and annoyance of these callers. But there is a zero probability that a company will be willing to give compensation nor would they be able to stop the calls.

The Information Commissioner's Office (ICO) has said that “The number of records involved runs into the millions, and it appears that substantial amounts of money changed hands”. It is good to hear that the ICO is pushing for jail sentences for breaches of data protection law, section 55. The sale of contract details included information on names, addresses and contract expiry dates.

The press this week have been on the side of tougher penalties. And who wouldn't. There is no suggestion that the a jail sentence would not be justified and that idea has been reinforced by the ICO.

The Financial Times reported the story early. The article was short and factual with very limited comment except for the news from the ICO. There was no mention of the company who was breached since the Information Commissioner had refused to name the company at the time of the interview.

But the other press articles published later in the day do mention T-Mobile.

The Reuters article focuses on the statement from T-Mobile and also mentions the breach of the Data Protection Act Section 55. The article is also has quotes from the ICO. I thought that this article was the most unbiased story for the time it was published.

The BBC however, always reports the story but with a governmental opinion included. The article states quotes from the Conservative Justice Spokeswomen Eleanor Laing and Liberal Democrat Home Affairs Spokesman Chris Huhne both obviously criticising the Government's failure. The length of the article was longer than the Reuters article and I thought gathered opinion from all parties.

The Daily Mail was the shortest of them all and was the most easiest to read. The reporter included the same information from the ICO and at the end of the article there were 25 comments. The general public expressed their hatred of cold calls and other phone companies. The Daily Mail definitely is a paper for the people.

We interact more with government, public authorities and businesses more than ever before. Our personal information is at a greater risk of being used for unlawful activities. The only way to stem the problem is to introduce harsher penalties. Jail is a good punishment. I think it is absolutely essential that our personal information is protected so we don't get annoying phone calls at crazy times of the day. Lucky I am not with T-Mobile!


Friday, 13 November 2009

Murdoch vs Google

Rupert Murdoch would not surely sue Google right? I think it would be a mistake to bite the hand that feeds you bread. His proposal to charge online customers for news and block Google from using headlines and paragraphs of news stories in search results is very interesting.

This week in a 35 minute interview with Sky News Australia (a third owned by Murdoch), Murdoch indicated that he would use legal means to prevent Google and other search engines from taking his newspaper material.

It is a very topical issue since many readers, including myself are used to online newspapers being free and searching for new stories. I think it would harm the ability of Google and News Corporation papers to generate advertising revenues. However, it would be more detrimental to News Corporation as I believe that people will easily shift their reading habits and view other free online sources. Google can generate money from other sources but News Corporation cannot. It’s a two way street.

But as quoted by Murdoch “What’s the point of having someone come occasionally who likes a headline they see on Google? We’d rather have fewer people coming to our web sites and paying”. Paying for news has been successful for the Wall Street Journal but I do not really expect people to pay to view The Sun. It is not worrying for Murdoch?

Google has been quoted in the Australian “its news listings service and web searches were a tremendous source of promotion” for news organizations, sending them about 100,000 clicks every minute”. I think Murdoch might be wrong.

This issue is not only blocking searches on Google search service but the fact that Murdoch believes search engines are breaching copyright law. This is where search engines are using the legal justification of ‘fair use’ for reproducing excerpts of news stories online.

I do not know much about copyright law but am beginning to get an understanding that the internet is a domain that has a cloudy area between breaching copyright law or not. There are so many different types of opinion on the issue. However, to avoid expensive legal action Google has the ability to remove content from Google News at a publishers’ request. It will save everyone a lot of time and money.

In the press this week the headlines for this story was dominated by the name ‘Murdoch’. His influence in the media is far-reaching. It is interesting that Sky News Australia granted the interview as I believe it could have been more impartial. However when I watched the interview I felt it was slightly subjective since I wonder what was the motives of the interview. Was it to scare Google or for self promotion.

The Australian reported a response from Google and the ability to take off stories from search results. It was very factual. I found that the language of the article was very colloquial since it contained a lot of quotes. I think that was a good way to produce the article considering The Australian is a News Corp paper.

The Financial Times was a short article however it focused more on Murdoch attacking the BBC. The content quoted the Sky News interview and was very UK centric. But I suppose that can be expected from a UK paper.

I also read an article from the BBC. The interesting thing about this article was that it failed to mention Murdoch’s criticism of the BBC and the way they handle taxpayer funds from TV licenses. It was very concise and direct. It failed to give any background information but I suspect the article was written with the intention for a response from the BBC in another article.

The Guardian I felt was the most opinionated. It uses words to describe Murdoch’s staff as ‘lieutenants’ and challenges Murdoch on the other ways to access the Wall Street Journal without a subscription. The article also chose quotes that made it seem Murdoch was an angry man. However, the Guardian was the only news source that embedded the Sky News interview into their article. It was a good form of reference to understand the context of the article.

In my opinion I think News Corporation should not remove its papers from search results since I enjoy browsing for different news. I also highly believe that it would be difficult for Murdoch to get subscribers to pay for tabloid papers such as the The Sun or The New York Post. It also seems there is going to be some difficulties in implementing the online pay model since it has already been delayed. The test will be the money. Who will get more advertising revenue, News Corp or Google?



The Australian

Financial Times



Sydney Morning Herald

Daily Mail


Sunday, 8 November 2009

M&S: Big Brands or Big Numbers

Marks & Spencer (M&S) this week made two significant announcements. I believe the most important news was better-than-expected profits. The second announcement was plans to sell ‘big brands’. One set of news focuses on the past while the other ensures the future profitability of the company. Which is more important? Or was this a good publicity ploy by M&S?

Based on the M&S website two press releases were released. First, was the press release to ‘Sell Branded Grocery and Household Products’. Secondly, the press release for financial results.

But not unsurprising ‘Big Brands’ was the leading story in most press headlines and journalists pounced on the story. The financial data was a worked-into the story or later updated, and I believe saturated the financial news. As an investor I would like to know the financial data first but as a shopper this is great news.

However, the better-than-expected profit before tax of £298m did lead to analysts raising their full-year estimates and according to the Financial Times ‘shares in M&S rose 6.5 per cent in early trading’. Analysts were predicting profits of £285m. This highlights the importance of future earnings growth for a company and the reaction from the market. Analysts were right to believe that the stock was undervalued.

But the decision to offer selected branded goods was a good way to hide the fact that M&S will be facing intense competition from Waitrose, a threat to future earnings growth.

It is a pre-emptive strategy since figures show, stated from Times Online: ‘M&S is losing market share in food, falling from 3.7 per cent to 3.5 per cent in the quarter’. Since Waitrose plans to open up to 300 smaller stores it would be necessary for M&S to keep their customers in their stores instead of wandering off to their local Tesco for other products. However, it is a strategy that may harm a 125 year old brand.

M&S selling other brands in its stores could likely devalue the brand of M&S products since it puts M&S in the league of convenience stores such as Tesco. But M&S is smart by introducing products from brands they could not replicate or compete with, such as Marmite and Kit Kat. I think falling profitability and lower market share is more likely to devalue M&S to shareholders and opinion varies greatly.

News coverage for this story this week was very diverse with some papers offering a Retail Correspondent article and a Journalist article separating the content of the announcements.

The Financial Times (FT) offered both stories. The article by O’Doherty provided an objective and financially relevant story with quotes from Sir Stuart Rose, the Chief Executive and an analyst opinion from Oriel Securities. The article summarized the financial reports and gave details on the future strategies of M&S. As an investor I would be happy to read this article to help support my justification to invest in M&S.

The other FT article was written by the Retail Correspondent. It was very brief but concise story which highlighted the need for M&S to adopt brands to its product line. Felsted made reference to Waitrose which was good for the reader to understand the potential threats to M&S.

Bloomberg was different to the FT. They combined the story of profits and branded products. The article was more optimistic with headings like ‘Good Start’ and highlighted the 21 percent growth in profit from its overseas stores. The FT was more domestic. I like to know how overseas factors affect the UK operations.

Times Online was another news service which provided two articles. The Lindsay article did not contain as much financial data as the FT or Bloomberg articles. It was made up of quotes from Sir Stuart Rose and John Dixon, Executive Director of Food and made the article seem more colloquial.

The other Times article by Lenoux was subjective as it described the impending ‘war’ with Waitrose. I liked how the journalist mentions how the M&S boss down played the threat of Waitrose last month. Seemingly contradicting that view by implementing a new business strategy.

The Mail Online was the most subjective of them all. The journalist liked the idea of M&S selling the ‘big brands’ and the table in the article shifted attention to the ‘Big names they will stock’. I think this article is a good read for the average consumer as it gives them an idea what to expect in the stores. The article mentions very little financial data. But I suppose readership of the Mail are not likely to invest in shares of M&S but instead help boost profits.

As a poor student I do not look for ‘premium’ M&S products preferring the convenience and lower price for well known branded products at Tesco or Sainsbury’s. It depends on your taste. The same applies on what types of information you seek from the media. Do you want financial data? Or do you want to know about what they are now putting the shops? I surely would not be reading the Mail for investment tips. Anyways, I do enjoy the ‘M&S 3 for £5’ dinner deals!


M&S Press releases

Branded Products

Financial Results

Financial Times


Times Online


Daily Mail


Sunday, 1 November 2009

The 'Good' and the 'Bad'

The EU Competition Commissions’ decision to approve the UK government break-up of Northern Rock into a ‘good’ and ‘bad’ bank is likely to leave fewer scars than initially thought. Maybe in the short-term yes but in the long-term the UK taxpayer will be left with the left-overs. Is it fair for the taxpayer to be left with the costs of risky lending practices?

Bailing-out Northern Rock in 2007 was a good decision from the UK government as its failure would have caused greater instability in the UK mortgage market and the economy. However, splitting the bank in 2009 still has its consequences. These questions need to be answered: Will the split create more competition? Will the customers in the ‘bad’ bank be disadvantaged? How much more will the UK taxpayer need to pay?

The split allows for the ‘good’ bank to be bought by new entrants into the banking sector such as the Virgin Money, Tesco or private equity groups. The new bank will hold all of Northern Rock’s retail deposits and a portion of its low-risk mortgages and is subject to several EU constraints. According to the Times “The bank will have to limit new lending to £4bn this year…it will also have to ensure its retail deposit balance does not exceed £20bn”. The constraints will be a deterrent to any new buyer. It will increase the number of banks in the industry but I think the new bank will still need to be very competitive to break the market dominance of established banks like Lloyds TSB and Barclays. Limits are not a good way to increase competition.

The ‘bad’ bank will then hold the remaining mortgage assets and remain under government control. The issue, according to the Mail is that four in five Northern Rock borrowers will be consigned to the ‘bad’ bank which will eventually be privatised. Are they going to face higher interest rates and uncertainty with their mortgages? The future for those customers is uncertain but I fear the worse. It is highly likely that any new owners will adjust the price of their products to maintain the viability of their business and ignore public demands.

What is certain is that the UK taxpayer is likely to make a loss from the restructuring and will be left with a bank with toxic assets in the long-term. The sale of the ‘good’ bank is also a highly politically sensitive topic as the Brown Government is likely to sell in a fire-sale that would not likely maximise value to the shareholder or taxpayer. The UK government is also injecting another £8bn into Northern Rock to fund the break-up making a total debt of £27bn to the state. The bail-out has cost the government and the taxpayer billions of pounds but it is necessary to allow the banking sector be rid of government control.

But I feel the involvement of the EU Competition Commission has created more problems for the UK banking sector. In the short-term it forces governments to sell valuable assets to new entrants at a cheap price, leaving toxic assets for the taxpayer in the long-term. The taxpayer has got the raw bargain.

In the Press this week:
The Financial Times reported the story with objectivity and with sourced information from the EU Competition Commissioner Neelie Kroes. I liked how the article was concise and set the foundation for future reading.

The Bloomberg article was a more colloquial piece with more information. It was more enjoyable to read due to the statements from the Treasury and the CEO of Northern Rock. It also made greater reference to the governments’ involvement in the bail-out and sale of Northern Rock.

The Times Online and Mail Online used the same figures found in other press and focused on statements from Gary Hoffman in regards to the ‘decade’ to repay the state-support. £27bn was a number that was more prevalent in the articles.

The Times reported the story with a sense of victory, “People close to the company said that Northern Rock had achieved a victory”. It is interesting choice of words since the CEO of Northern Rock did not reveal a ‘victory’ in his statements and CEO is also very close to the company I think?

The Mail Online decided to present the article in a more politically motivated way. They interviewed Treasury officials and the opposition. As a reader I felt that the article was written with political point-scoring in mind. The reporter was also very critical of the cost of the restructuring plans and was more sympathetic to Northern Rock customers.

Overall the press this week seemed to expect the approval of the break-up. However throughout the media this week journalists seem to be waiting with anticipation the outcome of the Lloyds Banking Group and RBS decisions from the EU Competition Commission. This will be a greater shakeup of the banking sector and the consequences for the taxpayer may also be as huge. It seems the taxpayer will be pulling out their wallets again very soon.

Financial Times


Business Week


Times Online

Mail Online

Tuesday, 27 October 2009

FSA Crackdown

In news this week the Financial Services Authority (FSA) announced planes to ban self-certification mortgages and mandatory affordability tests for all mortgages. It is a good sign that the UK financial regulator is doing something to manage risky credit in the mortgage market. But the question is: Is it the lender's responsibility or consumer responsibility? I think its a balance of both.

Key measures proposed by the FSA include:

  • Affordability tests for all mortgages
  • Bans on 'self-certification' mortgages- do not require verification of borrowers' income
  • Ban on sale of mortgages that contain “toxic combinations”- such as offering a high loan-to-value loan to a borrower with a poor credit history

The FSA should enforce the measures now instead of waiting. It would be in the best interests for banks to act responsibly and for borrowers to act rationally when it comes to affordability.

Statistics provided from the FSA, 45 percent of mortgages issued in 2007 made no checks on the applicants' income. It is very scary considering the amount of money that an applicant would be able to borrow (in some cases more than a 100 percent of the value of a home!) and overstate income. Can the consumer be blamed for overstating their income if it comes down to the home dream they want? There is nothing stopping them.

The Council of Mortgage Lenders (CML) says that mortgages will be more expensive and harder to obtain but the measures are likely to prevent the credit shortage we have now. There has to be a balance to allow credit to flow into the economy but at the same time prevent irresponsible lending practices that fuelled the credit crisis. It will also help to dampen rising housing prices and allow for first time buyers to enter the market.

Banks should be able to lend based on an individual's needs but in a way that they can expect the money to be eventually returned. This includes a reducing high-risk lending practices and tightening credit standards.

The four papers I read this week highlighted the differences in opinion on the responsibilities of consumers and lenders.

The Financial Times headline read “Mortgage borrowers face stricter tests”. The article was objective, factual and straight-forward to read. It reported opinions from the British Bankers Association (BBA), Building Societies Association (BSA) and the CML who would be directly affected by the changes. The BBA and the BSA supported the measures but with some caution and implied that they have acted in a similar manner already.

Bloomberg this week was a longer critical piece than the FT. It had additional quotes from the FSA CEO Hector Sants and mentioned the FSA plans for an extension of their powers. However, I thought that the Binham article was critical to the speed of the review since it was promised since March and the lack of momentum of mortgage approvals.

The Telegraph and The Daily Mail were very different stories but fun and easy to read. Once you read these articles you immediately know that the articles were written to support the home buyer. The Telegraph was more inclined to report the critics of the measures such as the CML and failed to report on the consumer's responsibilities in repaying their debts.

The Daily Mail was the most subjective of the articles which had a headline “Homebuyers forced to reveal how much they spend on alcohol in tough new mortgage tests”. This was an attention grabbing headline and surely got my attention! The Daily Mail wrote more about the affordability test. Not surprising, the Mail used different quotes from the BBA and BSA, focusing on the difficulty for would-be buyers.

As new measures are brought into the mortgage market it is important to consider the implications for lenders and borrowers. The articles I have read provide various opinions on the issue but are ultimately a good way to promote and encourage awareness for banks and consumers. To some extent there must be regulations in place to prevent the consumer from overstating incomes. Consumers must think rationally and know their 'true' limits on repaying loans. But to also be protected from overzealous banks who are willing to lend at a level that would be unaffordable. Banks must also act in a responsible and reasonable manner. Do their due diligence and maybe have some pessimism when it comes to loans being repaid.

Sunday, 18 October 2009

U.S Pay Tsar makes a move

From Left: Kenneth Feinburg, Kenneth Lewis
Who would want to work for free? This year CEO Kenneth Lewis from the Bank of America is! It is the first time that Kenneth Feinberg the U.S “pay tsar” has interfered in compensation payments for bailed-out banks and took away an employee's entire pay. Lewis will receive no pay, bonus or any other payments for 2009. This is very good news for the shareholder who has seen the company produce a third quarter loss of $2.24 billion. A CEO's pay should be reflected on the performance of the company. Right? However, financial press this week were more sympathetic towards executives than I thought.

I lack sympathy for the executive who is to pay back $1 million to the company when he can still have a retirement package of a cool $125 million. There should be alternative ways to encourage talent than the traditional method of linking stock options and bonuses to share prices. It encourages risky behaviour and short-term profitability whereby executives fail to represent shareholder interests.

The U.S government is doing the right thing for the shareholder and tax payer. As it will set a precedent for companies that receive capital infusions from the government and hopefully encourage a review of shareholder rights. But I do also feel that the Feinberg's role is retro-active and could effectively rip up existing contracts. Therefore making contact law invalid. Shareholders should also be able to voice their opinion on compensation pay-outs and thus reward executives for performance.

However this week in the major financial bibles the Financial Times, Bloomberg, and The Wall Street Journal, the shareholders were very quiet. It was also very interesting to read how Lewis was told to give up his salary by the 'pay tsar'. All sorts of adjectives were used.
The Financial Times- 'avert a dispute'
Bloomberg- 'decision based on advice'
The Wall Street Journal – 'demanded by'
Reuters – 'request'
The Guardian- 'ordered'

They can mean all different things depending on your view of the 'pay tsar'. But the Bank of America releases a statement which said: 'Mr Feinburg suggested that Ken Lewis should take no compensation for 2009'. However, I get the impression the statement from BofA was downplayed for the press.

The Financial Times was the most objective and most conservative in its language. The Farrell article mentioned 'averting a dispute'. It seemed that both Lewis and Feinburg worked together and reached an agreement. Farrell also quoted a Treasury statement on the role and responsibilities that Feinburg will play in compensation payments. I found this very enlightening for an uneducated reader on the conditions for government bail-outs. Other articles failed to mention it.

Bloomberg, I felt was very anti-intervention and subjective. It was not what I had expected. The whole article had opinion from managers from the US who gave the their opinion that the action by Feinberg was 'extreme' or 'unfortunate'. But I suppose that can be expected if Bloomberg chooses to interview employees that would directly benefit from stock options and massive bonuses. However the article does mention the restricted stock and option rewards Lewis received since 2006. Maybe an average pay-out of $15 million is not much for an executive? There is was no views from shareholders which I found discouraging from Bloomberg since they usually give a balanced view.

The Wall Street Journal is a short article compared to the FT and Bloomberg but also failed to voice shareholder interests. It was also strongly worded- Feinburg 'demanded' Lewis give up his salary. The last few paragraphs also focused on the work of Lewis which could justify Lewis receiving a salary but definitely not for the fiasco surrounding the purchase of Merrill Lynch last year. The article also reported 'the' rationale for the decision by Feinburg which was based on retirement benefits but the sources conveniently remain 'anonymous'.

The level of pay-outs to executives should be regulated to protect shareholder interests. But based on the press I have read this week it seems that Wall Street would prefer if 'pay tsar' did not exist. Its based on the rationale that if free markets exist governments should not get involved. Since executives are willing to do anything to get that big cash bonus or stock option, I feel that it is necessary in extreme cases like the Bank of America for the government to step-in and defend the shareholder interest. However within the boundaries of contract law. New alternatives to reward to employees should be developed and shareholders should also be given more rights. It will be riveting news for Wall Street to hear who will also get a pay-cut by the October 30 deadline. But not surprising for the Average Joe. But at this moment the 'pay tsar' is the only alternative and in the eyes of executives it looks like karma for corporate greed.

Financial Times


The Wall Street Journal
Print and Online


USA Today


The Guardian

The Economist

Friday, 9 October 2009

Interest rate hike a time to party?

Was the rate rise too pre-emptive for Australia? I think not. A world economic recovery? Highly unlikely. An increase in the target cash rate to 3.25 per cent signifies that the Australian economy is weathering the economic recovery better than other G20 nations and is 'close to trend'. My prediction, rates could hit 4 percent by early 2010.

The rate rise was based on the following factors:

  • Strong export growth from China
  • Rising Asset prices – such as home prices
  • Lower than expected unemployment

And to a lesser extent consumer and business confidence.

The direction of the indicators are the opposite from other developed nations such as the US, Japan and Britain. The indicators give some justification for the Reserve Bank of Australia (RBA) to raise interest rates to prevent the 'economy from expanding too quickly'.

Media organisations this week reported the news with very similar headlines with constant reference to the Reserve Bank Governor, Glenn Stevens. There is very little information that can be distorted by the news however an analysts' opinion may sway influence for a reader.

Two short articles, from Wearden in the Guardian and Burgess in the Times reported on Britain's upcoming decision to set monetary policy. The articles were written with a UK-centric voice with a neutral stance to a change in interest rates.

Wearden interviewed Howard Archer from IHS Global Insight and suggested that interest rates would remain unchanged. While Burgess at the Times also reported that rates would remain unchanged to 'avoid damaging rebounding consumer confidence'.

The Bank of England's decision is based on the lack of consumer confidence, lack of growth and liquidity in the British economy. I think it would be wise to hold back any rate rises until there was better signs of recovery in the British economy.

In Reuters they reported the rate rise as a 'first among equals' and it is highly unlikely that the 'US, EU zone, Britain, Canada and Japan' are to tighten their monetary stance. However, Australia's economy is now more-than-ever reliant on selling commodities to Asian-Pacific economies. Looking to Australia may not be a good indicator of a world recovery in technology-based developed nations in the EU.

Analysts interviewed by Reuters had an optimistic view on the Australian economy and predicted that there will be cash rate increases in the next few months to a high of 4 to 4.25 before stabilising. This is consistent with my prediction of a cash rate of 4 percent by March 2010, based on favourable unemployment data and low inflationary pressures.

The Bloomberg article reported the shock of the interest rate increase. 'Only one of 20 economists surveyed by Bloomberg News forecast today's move'. This highlights the pessimism that is prevalent in the world economy and the pre-emptive nature of the RBA.

The Bloomberg article was the most extensive with background information, interviews with major Australia banks and senior economists. The article also mentioned government measures that stimulated growth in the Australian economy and driving up asset prices. I believe it is in the best interest for the government to also think about unwinding some of the stimulus measures which are likely to overheat the economy.

A prediction of a 4 per cent cash rate for Australia by March 2010 is looking more likely on the cards. GDP growth and the potential of a 'housing bubble' are strong influences. Correct me if I am wrong. But Australia's economy is based on trade with China so as long as the Dragon blows fire the Kangaroo is likely to also hop along!


The Australian,28124,26172946-5018001,00.html