MediaFile

Fired AOL India employee talks

Robert MacMillan

Mar 10, 2011 16:14 EST

AOL cut more than 900 jobs around the world today — 20 percent of its staff — and  India took a pretty tough cut from the axe: 400 jobs, according to several sources, and 300 contractors, according to another source. The nice thing for Reuters is that we have a big  bureau in Bangalore, not too far from AOL, and plenty of our people know other people there and were able to get important details about the job cuts.

I coordinated some of the coverage from here since I’m hanging out in the bureau, and was happy when I heard that my colleague Nivedita Bhattacharjee got time to talk with one of the employees who was laid off today. Here is some of what he told her. We agreed to his request for anonymity because he wants to get work again and does not want to disqualify himself from jobs because he spoke to the press.

The entire team had a meeting, and they briefed us about how issues will be handled… we work in AOL. It’s something that we are always prepared (for). We were expecting an announcement soon.

They had some U.S.-centric plans, so they didn’t need us.

I’m leaving on good terms. It’s quite a good severance package… In many ways people are satisfied — we are getting four months’ salary as compensation and, depending on each case, there will be other benefits added to it.

Every fired employee (gets) four months of severance, which is pretty good, but with this action, nobody really has much faith in management, and (we) have been scarred by the experience of easily being let go … after being told for months prior that we were a valuable asset. …

Most technology product teams are being moved to HP. Services like finance, advertising,… paid services are now going to move to MindTree. Of course, not every team in full is being moved. They laid off some, and the remaining will become HP and MindTree employees.

from Breakingviews:

The limits of emerging market deal-making

Eric Auchard

Sep 30, 2009 16:50 EDT

 So much for emerging-market solidarity.

A proposed $24 billion deal between Bharti of India and MTN of South Africa has fallen apart, not for the usual issues of price or control, but national ego.

The apparent sticking point was that South Africa was eager to retain MTN's national character and had approached Indian authorities to consider a dual-listed entity, a structure that Indian laws currently do not allow.

The opportunity for a landmark deal in southern economic cooperation, one that would have created the third-largest wireless operator in the world, looks lost. After several failed attempts, it is the credibility of their respective governments, not the companies themselves, that is left in doubt.

The message from the South African government is that international buyers can invest in, but not control, the country's companies. UK mining conglomerate Xtrata has been a two-time loser there, having abandoned a takeover plan for Lonmin Plc, then met with roadblocks in its offer to buy Anglo American.

India has been more than willing to help its biggest companies push onto the multinational stage in cars, steel and technology. But international companies looking to buy into India have received rough treatment as well.    Every country seems quite happy to have their companies do the buying, but no one wants to see its national heroes sold.

from The Great Debate:

Forget Microsoft, Yahoo’s value is overseas

Eric Auchard

Aug 25, 2009 11:58 EDT

-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --

The fate of Yahoo Inc has become intertwined in the public's imagination with the success or failure of its dealings with Microsoft Corp in recent years.

That's despite the fact that as much as 70 percent of the value investors put on Yahoo's depressed shares are tied up in its international assets or cash holdings -- factors that have nothing to do with Microsoft.

Yahoo's operations trade for just $5 to $6 per share out of its current $15 share price, once you exclude its Asian investments and the value of its cash. Its hidden assets in Japan and Chinese affiliates -- Yahoo Japan Corp and China's Alibaba Group -- alone are worth around $6 to $7 per share.

The trouble is that Yahoo needs to find a way to cash out of its increasingly rocky relationship with Alibaba Group, in which it holds a 39 percent stake after it pulled back from operating its own business in China in 2005.

Yahoo's best chance here may come next year if Alibaba succeeds with a second IPO of its Taobao.com consumer ecommerce site, building on the success of the 2007 IPO of Alibaba.com, now valued at more than US$13 billion on the Hong Kong exchange.

Truth be told, Yahoo's huge success in building the biggest U.S. Internet media destination never translated very well overseas, despite the early foray into Asia that left it with lucrative assets in Japan and China. These passive investments came to substitute for a global operating strategy.

from Commentaries:

Bracing for bar brawl in mobile phone emerging markets

Eric Auchard

Aug 17, 2009 09:00 EDT

The last thing that the complex negotiations between India's Bharti and South Africa's MTN Group to create the world's third largest mobile phone company needed is more complexity. The existing deal involving an intricate mix of cash and stock is further complicated by currency fluctuations and diverging growth rates between the maturing Indian market and the wide-open African one.

But if a third company, Zain of Kuwait, succeeds in starting up a full-scale bidding war for itself, the Bharti-MTN deal could come off the rails and fall apart.  Zain's CEO told Kuwaiti daily Al-Rai on Monday that it is in talks with three major, but so-far unnamed telecom firms, including one from India. Last month, Zain said it was reviewing the possible sale of its far-flung African operations after French conglomerate Vivendi called off talks to buy a majority of Zain's African business.  A Vivendi spokesman says nothing has changed since then. There's no word yet from other obvious suspects -- France Telecom or Vodafone -- on whether they are interested.

The most likely Indian bidder for Zain looks like Reliance Communications, India's distant No. 2 mobile operator to Bharti. There's history here, as Reliance tried to nab MTN a year ago. That move came after Bharti's first try to strike a deal with MTN, South Africa's second largest operator, fell apart over which company's management would end up controlling the combined entity.

At least temporarily, the only two parties we can rule out as bidders for Zain are Bharti and MTN. The two would be entirely likely candidates, except that they remain locked in exclusive talks with one another until the end of August. Zain's assets make it an obvious alternative should Bharti and MTN fail to make their belaboured third effort to strike a deal work after more than a year of trying. 

There may be too much sheer complexity in merging India's most successful company with the diverse strengths of MTN, a big player from South Africa to Nigeria to Iran and Afghanistan. Both companies have corporate egos to match their roughly US$30 billion market capitalizations. 

The outright acquisition of Zain's comparable assets looks a whole lot simpler. Clearly Zain, valued at around $20 billion on the Kuwaiti exchange, is trying to stoke a bidding war for itself by talking up mystery bidders. Coming just weeks ahead of the Bharti-MTN deadline, the Zain CEO's comments suggest he is trying to entice either Bharti or MTN or both into bidding for it.

Until recently, the two merger speculations appeared to be two separate events that happened to be taking place over some of the same battleground -- mobile phone markets across Africa and the Middle East. Maybe a good old fashioned frontier bar brawl is the easiest way of working this all out. 

The Wall Street Journal and the death of print

Robert MacMillan

May 18, 2009 11:03 EDT

Now you know that the uncertain future about the survival of newspapers is news: The Wall Street Journal’s op-ed page features an editorial castigating Massachusetts Democratic Sen. John Kerry and others for supporting the notion of federal government aid or bailouts for the struggling business.

The Journal gives us a recap of some ideas that have been seeping their way into the public consciousness in recent months, including:

• Maryland Democratic Sen. Benjamin Cardin’s bill to allow newspapers to exist as non-profits.
• Sen. Kerry’s endorsement of a proposal by Montana Democratic Sen. Max Baucus’s and Maine Republican Sen. Olympia Snowe’s to let newspapers offset their net operating losses over five years instead of two.
• Sen. Kerry’s endorsement of some flexibility under the anti-trust laws, presumably in a way that would allow U.S. newspaper publishers to dream up some ways to force people to pay for the news they read online in a model similar to how the cable TV providers work with the people who provide the shows.
• We note that the editorial didn’t even cover Washington State’s tax break for newspapers, not to mention Connecticut legislators’ recent willingness to help rustle up buyers for some former Journal Register papers. But you might as well add them to the list of ideas.

The Journal’s answer? No! No! No! On what grounds?

The “creative destruction” theory, spurred by people getting their news online, something that governments should let happen as a natural outcome of the free market. Here’s what the WSJ says:

The larger story here is that newspapers are enduring the familiar process of economic “creative destruction,” in this case brought on by the Internet. Advertisers are fleeing to search engines, while barriers to entry in publishing have crashed. Despite the pain this causes to certain companies, this is not much different than any other industry buffeted by new technology or business strategies. The shipping industry changed radically with the advent of containerization. Wal-Mart’s state-of-the-art inventory management transformed retailing. Apple’s iTunes has revolutionized the music industry.

Some new business model will emerge for journalism, if not for all newspapers, and in the meantime the business of reporting the news isn’t vanishing. It is taking new forms and adapting, with newspapers growing their audiences online even as the sources of their revenue shift. The industry is currently debating how to charge customers for content, and no doubt many experiments will be tried. No matter who emerges victorious, the journalism business will be stronger and more credible if it avoids the government’s embrace.