International
Monday Newspaper Review - Irish Business News and International Stories
By Finfacts Team
Nov 6, 2006, 08:02

The Irish Independent also reports that hairdressers, beauticians, fast-food operators and fishermen have paid several million euro in taxes and penalties to the Revenue Commissioners.

The Irish Times reports that the Government will not increase State spending wildly in next month's Budget despite general election pressures, Taoiseach Bertie Ahern has claimed.

Speaking following a successful Fianna Fáil Ardfheis, Mr Ahern said: "We won't do anything zany. We will continue to be well-managed. We will continue to be prudent but we have resources, and we are very glad that we have those."

State pensions will rise next year above the €200-a-week target promised in 2002, he declared, while significant extra money will be given to education, health and infrastructure.

However, Mr Ahern said Minister for Finance Brian Cowen would be careful about committing money to projects and schemes "that may not be sustainable in the long term. We just won't do that," he said.

Meanwhile, Mr Ahern accused elements of "persistently trying to bury me" during the recent controversy over payments he received in the 1990s from friends and others in Dublin and Manchester.

"I watched a lot of people batting very hard for me - my colleagues did, a lot of people in the media did, a lot of the public did, and a lot of people who rang in to chat programmes did. There was one group out to bury me, very persistently to bury me," he told TV3's The Political Party.

Asked by presenter Ursula Halligan if he meant The Irish Times, Mr Ahern replied: "Well, yeah, there were elements. They tried day-in, day-out, but you just had to get on with it and just had to keep on doing your job and I did it to the best of my ability."

Mr Ahern made only the briefest of references to the controversy during his presidential address to the 5,000 ardfheis delegates on Saturday night, in the course of which he was roundly cheered.

"I became involved in politics because I wanted to make a difference in the life of my own community. And while we would all, I am sure, lead perfect lives if hindsight were foresight, I am proud of my record and grateful for the chance you have given me to serve Ireland," he told delegates.

Asked if he believed that there was "some big, bad enemy out there waiting to get" him, Mr Ahern replied: "Yes, I do. I do. This wasn't just off the back of a truck. This was a sinister, calculated set-up, there's no doubt about that."

Mr Cowen, the man tipped to replace Mr Ahern in time, described the Taoiseach as "astute and brilliant", "noble" and as the "consummate politician" of his generation.

Introducing Mr Ahern, Mr Cowen said his achievements over 10 years had been "astonishing".

Leading Ministers repeatedly attacked Fine Gael but, most particularly, the Labour Party, warning that taxes would rise if both parties came to power next year.

The Irish Times also reports that it was another buoyant year for accountancy firms, with fee incomes growing at an annual rate of almost 18 per cent, according to Finance magazine's annual survey of accountancy firms.

A poll of 21 top accountancy firms shows that fee incomes stand at €903 million in 2006, compared with €766 million last year. But the rate of growth in fee income has slowed down on 2005, when fee incomes grew by 20 per cent.

The "big four" accountancy firms - KPMG, PricewaterhouseCoopers, Deloitte and Ernst & Young - have seen their share of total fee income fall from 75.7 per cent to 73.5 per cent.

The growth rate in fee income at the four companies, which earned €663 million out of the total €903 million, has fallen behind the rest of the sector, with average growth of 14.2 per cent.

Only KMPG, the top earning firm, recorded higher than average growth.

Its 20 per cent increase in fee income to €211 million meant it overtook PricewaterhouseCoopers, which was ranked second with fee income of €210 million, an increase of 16 per cent.

It was not such a good year for the third and fourth-placed firms. Deloitte grew its fee income by 10 per cent to €125 million, while Ernst & Young saw its fee income increase by just 6.4 per cent to €117 million. This means Deloitte has lengthened the gap between itself and Ernst & Young.

Meanwhile, acquisitions are driving growth among mid-tier firms, Finance comments.

The best performer in the last financial year was Moore Stephens, which saw its fee income almost double from €4.2 million to €7.9 million following the inclusion of Limerick-based firm McNamara and Associates in its network.

Farrell Grant Sparks also registered impressive growth last year, with its fee income leaping from €14.8 million to €26.8 million, following its merger with McClure Watters in Northern Ireland and Longford-based firm Lyons Keenan Kilemade.

The fastest mover in terms of organic growth was Grant Thornton, which grew its business by almost 43 per cent.

The Irish Examiner reports that Zamano, the mobile phone services company which floated on London’s Alternative Investment Market (AIM) last week, is poised to make an after-tax profit of €2 million this year.

In the first six months of this year the company made an after-tax profit of €988,000 and a turnover of €6m. It recorded turnover of €9.7m last year.

The company is expected to float on Dublin’s IEX market for small to medium cap companies inside the next six to 12 months.

The Financial Times reports that a “crowdsourcing” company that lets software developers vote on which product they will create next, a “social sharing” start-up that promises to get to “the very end of the Long Tail”, a maker of online Post-it notes.

These may sound like parodies of new internet companies emerging from Silicon Valley’s latest bout of internet euphoria. In fact, they are all start-ups that will be paraded this week at the Web 2.0 conference in San Francisco, an annual event that has turned into a celebration of the Valley’s recovery from its post-dotcom slump.

While promoters of the new wave of internet start-ups claim this is not turning into another bubble, it is reminiscent of the last boom in at least one respect. “There is a great deal of hype,” says Mitchell Kertzman, a partner at Hummer Winblad, a Valley venture capital firm.

And where there is hype, opportunism flourishes. Many of the companies emerging from this start-up wave, like the last, look as if they were created with an eye to being sold on quick. But this time the aim is not to “flip” them to Wall Street investors, but to sell them to a Google or Yahoo.

With the mania in full swing, the amount of venture capital money finding its way into US internet companies has jumped to levels not seen since the boom.

Defining exactly what it is that characterises this new wave of internet euphoria, however, is not easy. “Web 2.0 means so many things to so many people,” says Steve Ballmer, chief executive of Microsoft. “There’s a technology aspect, a community phenomenon, an advertising business model.”

The new internet companies are built on low-cost technologies such as open source software and cheap commodity hardware. Many – such as photo-sharing site Flickr – employ tools designed to stimulate online community behaviour. Also, thanks to the rise of online advertising networks, the new start-ups often have a way to generate revenue immediately.

Young internet companies once rushed to see how much cash they could raise, much of it to be spent on advertising. But the new entrepreneurs boast instead about how little they need. In spite of that, the sheer number of new arrivals suggests there will be many casualties. “For every YouTube, there have probably been 20 or 30 companies funded that won’t be worth anything,” Mr Kertzman says. “If a company doesn’t take off virally and get ‘hot’ on its own, the only tool you have is consumer marketing, which is very expensive.”

Meanwhile, the cash flooding back into consumer internet start-ups has had an inevitable effect. Geoff Yang, a venture capitalist at Redpoint – which backed MySpace – estimates that valuations of private internet companies have risen 30-40 per cent in the past six months.

However, the public markets have not experienced similar upswings, and the dearth of initial public offerings in the US suggests that few of these new companies will ever make it to Wall Street. Once Google and Yahoo tire of acquisitions, the Web 2.0 hangover could be acute.

The FT reports that a massive power outage temporarily plunged millions of homes across western Europe into darkness and initial findings suggested a routine safety operation in Germany may have been to blame, authorities said on Sunday.

The impact of the power cuts at around 2130 GMT on Saturday night was felt in heavily populated areas of Germany, France and Italy, as well as parts of Spain, Portugal, the Netherlands, Belgium and Austria, and even extended as far as Morocco.

The cuts prompted German government calls for an immediate explanation into the causes and renewed demands from top politicians for a shake-up of Europe’s troubled energy policy.

A spokesman for a French union said the outage was the worst in France in 30 years. Some European train services were disrupted.

French media estimated some five million people were affected, while authorities in Germany said at least one million there were left without power. The outages, most of which lasted for less than an hour, were also widespread in northern Italy.

Italian Prime Minister Romano Prodi said the blackout showed the need for a common European energy authority and policy.

“It’s a rich contradiction that we depend on each other but we can’t help each other without a common authority ... we still don’t have a European energy policy,” he told reporters.

German utility E.ON said reports of the cuts began to emerge not long after it shut down a high voltage line over a river in northwestern Germany to let a ship pass through in safety, and that this may have been linked to the power loss.

“In the past, these operations were often performed without any problems arising,” the firm said, adding that the precise cause behind the loss in supply was still being investigated.

Bitter disputes

Bitter disputes surrounding mergers – including E.ON’s efforts to buy its Spanish rival Endesa – have hampered efforts by the European Union to formulate a collective energy policy.

German Economy Minister Michael Glos said he was expecting a prompt report from E.ON about what had happened.

“We will examine this report quickly so that together with the companies we can ensure that, if at all possible, such events are not repeated,” he said in a statement.

A spokesman for German utility RWE Rhein Ruhr said that because electricity was supplied on a shared network, the loss in power had spilled over into other areas.

The spokesman said more than one million people in the RWE Rhein Ruhr network were probably affected, including inhabitants in the cities of Cologne, Essen and Gelsenkirchen.

Spanish electricity grid operator Red Electrica de Espana reported that parts of Spain and Portugal suffered power cuts caused by a problem in Germany.

In Spain, the fall in tension caused 2,800 megawatts of wind energy and one gas-fired power station to be cut off and interrupted the flow of electricity to Morocco, it added.

German national rail operator Deutsche Bahn said more than 100 mostly regional train services were disrupted.

Belgian news agency Belga said some 11 municipalities in the country suffered power loss and that some trains were delayed.

Austrian Power Grid AG, a subsidiary of Austrian utility Verbund, said in a statement Europe had had a lucky escape.

“If this had happened during a normal workday, there is no telling what the consequences would have been,” it said. (Additional reporting by Caroline Jacobs, Jacques Clement, Julia Hayley, Philip Pullella, Reed Stevenson, Tom Kaeckenhoff, Karin Strohecker and Sabina Zawadzki)

The New York Times reports that for many grocery shoppers, the feeling is familiar: that slight swell of virtue that comes from dropping a seemingly healthful product into a shopping cart.

But at one New England grocery chain, choosing some of those products may induce guilt instead.

The chain, Hannaford Brothers, developed a system called Guiding Stars that rated the nutritional value of nearly all the food and drinks at its stores from zero to three stars. Of the 27,000 products that were plugged into Hannaford’s formula, 77 percent received no stars, including many, if not most, of the processed foods that advertise themselves as good for you.

These included V8 vegetable juice (too much sodium), Campbell’s Healthy Request Tomato soup (ditto), most Lean Cuisine and Healthy Choice frozen dinners (ditto) and nearly all yogurt with fruit (too much sugar). Whole milk? Too much fat — no stars. Predictably, most fruits and vegetables did earn three stars, as did things like salmon and Post Grape-Nuts cereal.

At a time when more and more products are being marketed as healthy, the fact that so many items seemed to flunk Hannaford’s inspection raises questions about the integrity of the nutrition claims, which are regulated by the Food and Drug Administration — or possibly about whether Hannaford made its standards too prissy or draconian. Either way, the results do seem to confirm the nagging feeling that the benefits promoted by many products have a lot more to do with marketing than nutrition.

Furthermore, the rating system, introduced in September, puts the grocery store in the awkward position of judging the very products it is trying to sell, not to mention the companies that supply the foods. In fact, most of Hannaford’s own store-branded products did not get stars.

Hannaford says it is not trying to be preachy or to issue a yes-or-no checklist, just to offer guidance to shoppers who want it — and if the average consumer’s reliance on the United States Department of Agriculture’s food pyramid system is any yardstick, many do not. Furthermore, the company said, there is a place for no-star foods in every balanced diet.

“We are saying there are no bad foods,” said Caren Epstein, a Hannaford spokeswoman. “This is a good, better and best system.”

Food manufacturers, she said, were apprehensive at first but relaxed when they learned that neither they nor their products would be penalized. “The people who represented salty snacks and cookies understood that they weren’t going to get any stars,” Ms. Epstein said.

Hannaford’s nutritionists acknowledge that their system is more stringent than the guidelines used by the F.D.A. The food agency sets standards that food manufacturers must use when they define a product as, say, low in fat or high in fiber, and companies may use those designations even if the product is loaded with less desirable ingredients. Hannaford’s panelists said their formula was more balanced, taking into account all the positives and negatives.

The store chain, with 158 supermarkets in five states, is believed to be the first grocery retailer to have developed such a comprehensive assessment program, and it is trying to have its food-rating algorithm patented.

Not surprising, the food industry still is not entirely happy, and it disputes Hannaford’s conclusions.

“We don’t like the idea that there are good and bad foods out there, and these sort of arbitrary rating systems,” said John Faulkner, director of brand communication at the Campbell Soup Company. The Healthy Request line of soup, he said, was “aligned with the government definition of what healthy is.”

Similarly, a spokeswoman for ConAgra Foods, Stephanie Childs, said that her company would like to know how Hannaford concluded that many items in its Healthy Choice line did not merit any stars.

“This is surprising to us,” Ms. Childs said. Healthy Choice, which offers a range of items from frozen meals to pasta sauces and deli meats, “has to use F.D.A.’s very stringent requirements for what is healthy.”

Admirers of Guiding Stars say the ratings illustrate how nutrition claims on packages can mislead consumers even if they are technically true. Many packages trumpet the benefits of a few attributes — high fiber, for instance, or no trans fats — while ignoring negatives like too much sodium, they said.

“You look at a General Mills product and it looks like the bee’s knees, but it may be nutritionally flawed,” said Michael F. Jacobson, executive director of the Center for Science in the Public Interest, an advocacy group based in Washington. “It may be high in sugar even though it has fiber in it.”

Many products that are marketed as healthy received zero stars from Hannaford because they contain too much salt or sugar or not enough nutrients, said Lisa A. Sutherland, an assistant professor of pediatrics and a nutrition scientist at Dartmouth Medical School who was part of the advisory panel that developed Hannaford’s formula.

V8, for instance, which says it has “essential antioxidants” and is “vitamin rich,” is “like drinking a vitamin with a lot of salt on it,” she said. Ms. Sutherland said that the F.D.A.’s guidelines for labeling, including its definition of “healthy,” were simply too lenient. Even the low-sodium version of V8 got no stars under the Hannaford system.

The F.D.A., for its part, points to its specific requirements for foods that make health claims as well as their labels. It also acknowledges that its policing abilities go only so far.

“The thing is, a lot of claims we see out there are puffery,” said Joseph R. Baca, director of the office of compliance at the F.D.A.’s Center for Food Safety and Applied Nutrition. “But they don’t get to the point where we can call them fake or misleading.”

Although Hannaford’s star ratings are posted on the same shelf tags that display prices, the chain has not changed the way it shelves products or markets them. This may have kept food manufacturers from rebelling, but it has not stopped them from questioning whether Hannaford is qualified to be the arbiter of healthiness.

“You end up with a lot of consumer confusion,” said Mr. Faulkner of Campbell Soup, which makes V8 as well as Healthy Request. “Do you defer to the Hannaford Brothers? The federal government?”

The label of Campbell’s Healthy Request Tomato soup, for instance, boasts that it is 98 percent fat-free, has zero grams of trans fat, low cholesterol and 30 percent less sodium than Campbell’s standard tomato soup. “I don’t know what their system is,” Mr. Faulkner said, referring to Hannaford. “What are they calling too much salt?”

Hannaford, part of Delhaize America, a division of the Delhaize Group in Brussels, started Guiding Stars after customer surveys indicated that people were confused about the nutritional information available to them. Hannaford formed a seven-member advisory panel of nutritionists and a physician to develop a formula for evaluating the healthiness of food.

That algorithm evaluates a 100-calorie serving of each product using only the information that is available on the “nutrition facts” panel and the ingredients list. A product receives credit for vitamins, minerals, dietary fiber and whole grains, but is docked points for trans fat, saturated fat, cholesterol, added salt and added sugar.

People who choose to adhere closely to the Hannaford ratings will have Spartan diets indeed. Not only did cookies and potato chips rate poorly, but so did whole milk (although skim milk received three stars) and products with nourishing-sounding names like Healthy Choice Old-Fashioned Chicken Noodle Soup.

Indeed, the “three star” lunches and snacks recommended on Hannaford’s Web site probably bear little relation to the meals most Americans are accustomed to eating. Hannaford suggests snacking on grapes, apple slices, raisins, plain yogurt, celery sticks, carrots and one to two ounces of popcorn — presumably without salt. A good lunch would be grilled chicken on a bed of spinach with a multigrain roll and an apple.

A. Elizabeth Sloan, president of Sloan Trends, which tracks the food industry, said that food manufacturers deserve credit for reformulating their products to make them healthier. But she said it was unrealistic for the manufacturers to remove all the fat, sugar and salt because nobody would buy the result.

“They have to keep the taste,” she said. “Look at all those super-duper healthy products that are in those healthy food stores. They don’t taste good.”

She added, “Nothing is healthy if you get right down to it, except mother’s milk, and that’s probably got too much fat.”

It is hard to tell whether Hannaford’s nutrition index has had any impact on what consumers are buying. The chain declined to provide sales data.

At a Hannaford store in New Windsor, N.Y., several customers said they had heard about Guiding Stars in radio advertisements or seen it in the store, but that it had not influenced their purchasing. Several shoppers said they did not see the point.

“I buy whatever it is on my list,” said Karen Wilson, 43. “If my kids want Cheerios, I buy them Cheerios and don’t look at the stars.”

LiseAnne Deoul, 34, said she liked the idea of Guiding Stars even though the system had not helped her narrow her choices during a quick stop last week to buy pasta.

“All of it was the same,” she said. “They all had two stars.”

Hannaford officials and members of the advisory panel emphasized that foods with no stars were not meant to be shunned.

“They are not everyday foods,” said Ms. Sutherland. “They are great sometimes foods.”

Nutritionists and food industry analysts said that Hannaford’s findings highlight some unpleasant truths about Americans and their eating patterns. People want to be healthier but do not want to change their behavior, and so marketers have stepped in with products that improve on the originals but still leave something to be desired.

The poor marks doled out by Hannaford show “what happens when an independent group sets the criteria,” said Marion Nestle, a professor of nutrition at New York University.

“As for health claims, expect to see more and more and more,” she said. “It’s the only thing that sells food these days.”

The NYT also reports that in a move into the old-fashioned business of ink on paper, Google is going to start selling advertisements that will appear in the print editions of 50 major newspapers.

Google’s plan will give the publishing business a high-tech twist: the company will expand its computer system, which already auctions off advertisements on millions of Web sites, to take bids for newspaper ads as well. Hoping to reach out to a new crop of customers, such as small businesses and online retailers, many of the largest newspaper companies, including Gannett, the Tribune Company, The New York Times Company, the Washington Post Company and Hearst, have agreed to try the system in a three-month test set to start later this month.

For Google, the test is an important step to the company’s audacious long-term goal: to build a single computer system through which advertisers can promote their products in any medium. For the newspaper industry, reeling from the loss of both readers and advertisers, this new system offers a curious bargain: the publishers can get much-needed revenue but in doing so they may well make Google — which is already the biggest seller of online advertising — even stronger.

Tom Phillips, who runs Google’s print operations, said the company was attracted by the $48 billion spent every year in the United States on newspaper advertising. Google, nonetheless, is trying to position itself as a friend of the newspapers.

“Print adds value the Internet doesn’t have,” he said. Mr. Phillips, the former publisher of Spy Magazine, was hired by Google earlier this year. “It is a different browse-able reading medium.”

The new system will begin a test with 100 advertisers later this month. Google will not earn any revenue during the test, but when the system is formally introduced next year, it will take a cut of the advertising revenue. Google keeps about 20 percent of revenue for Internet ads it places.

Some newspapers see Google’s proposed system as a way to increase sales. “Every day in the newspaper we have a fair amount of space we set aside for ads that we are unable to fill,” said Owen Youngman, a vice president for development at The Chicago Tribune. “Google says they can bring us thousands of small advertisers for space we would otherwise fill with house ads, and we say ‘Great.’ ”

Newspapers have long tried ways to develop standby advertisers willing to fill unused space at a discount. But the Google program is meant to appeal to small businesses and those in far-flung locations that cannot be easily serviced by local papers.

“We have tens of thousands of advertisers we deal with face to face,” said Michael C. Lemke, the senior vice president for sales and marketing of The Seattle Times, which is participating in the test. “They are talking about an exponentially larger base that can do business on a self-serve basis. These are clients that metropolitan newspapers have a hard time getting to.”

Indeed, some of the 100 or so companies that Google has recruited for the test have done very little print advertising to date. EBags, a large online handbag and luggage store, does not have a traditional ad agency, but it is interested in using its existing account at Google to try print advertising, said Peter Cobb, the company’s co-founder and marketing director. He added that Google’s system would allow the company to approximate the methods used online where certain ads are associated with certain keywords.

“You can target professional males in business and sports sections and women in living and style” sections, he said. To use the Google system, newspapers list the sorts of ads that are available, including the sizes, days of the week and sections. They will also enter what is known as the open rate — a sort of list price — for each type of ad.

Advertisers then can log into Google’s main advertising system, known as AdWords, and click to go to the newspaper section. They will see a list of the participating papers and the sorts of ads that are available. They can then enter a bid for a certain type of advertisement, specifying the section and date range. Newspapers in turn see these bids and accept the ones they want.

The system is not exactly an auction — the papers do not commit to selling any advertising space. They can choose to accept as many or as few bids as they like at any time. One reason is that the papers often do not know how much space they have available until the last minute, depending on the other news and advertising on that day. Moreover, the papers sometimes can add pages if there is a lot of advertiser demand.

“The auction model doesn’t work in print where you can always rearrange a page to fit a small unit,” said Mr. Phillips.

The newspapers are hoping that the Google program can bring new customers without undercutting their existing prices. As a result, big papers, like The New York Times, will not use Google to sell large advertisements and those in the most popular positions.

“This is not about the customers we already do business with and our franchise product that is already in high demand,” said Denise F. Warren, a senior vice president and chief advertising officer of The Times. “For us it opens up a whole new segment of advertisers.”

Others will experiment with larger units as well.

“Friday through Sunday we probably are inclined only to do smaller space” said Mr. Lemke of The Seattle Times. “Tuesday, Wednesday and Thursday, we can accommodate more space, even full-page space.”

Of course, the advertisers expect that online shopping for ads will also help them find bargains.

“I’m hopeful the program will lower advertising costs in the print world,” said Bruce Telkamp, a senior vice president of eHealth, an online insurance agency. “By aggregating a large number of advertisers, Google should get purchasing power.”

Google has recently made other moves to build its advertising business. In January, it bought dMarc Broadcasting, a company that distributes radio advertisements. Its recent deal to buy YouTube, an online video site, positions the company to expand in both online and traditional television advertising.

Google had been talking to publishers and running tests of advertising in both newspapers and magazines for nearly two years. But it found that there was less of an opportunity in magazines.

“Low-frequency media doesn’t share as much as what we are good at,” said Mr. Phillips. Daily newspapers, he said, allow for Google’s mass of advertisers to test campaigns across a range of publications and change them quickly. Mr. Phillips said Google nonetheless hoped to work with magazines in the future.

Neither Google nor the newspapers would make any predictions of how much advertising would be sold in the program nor what the rates would be. “I have no idea how big this will be,” said Ms. Warren. “For us, we think there is very little to lose in the test.”