WSJ : EU to Publish Details of Probes of Tax Deals Benefitin

EU to Publish Details of Probes of Tax Deals Benefiting Apple, Fiat

Regulator Is Investigating Whether Tax Deals Amounted to Illegal State Aid

A pedestrian carries a shopping bag as she passes an Apple store under development in Edinburgh, U.K., on Sept. 17. EU regulators are set to publish a preliminary view that the U.S. tech giant and Fiat violated EU law with their tax practices, said people familiar with the matter. Bloomberg News BRUSSELS—European Union regulators will publish as soon as Monday their preliminary view that tax deals granted to Apple Inc. AAPL +2.94% and Fiat F.MI +0.44% SpA violated EU law, people familiar with the matter said, marking the next formal step in the bloc's drive against alleged tax avoidance by multinationals.

The European Commission, the EU's central antitrust authority, opened formal investigations in June into whether tax deals granted to Apple in Ireland, Fiat Finance and Trade in Luxembourg and Starbucks Corp. SBUX +1.42% in the Netherlands amounted to illegal state support for the companies.

The commission will publish its so-called opening decision in the Apple case as soon as Monday, explaining why it reached the preliminary view that two tax deals agreed between the U.S. company and the Irish government—in 1991 and 2007—amounted to illegal state aid, a person familiar with the matter said.

Apple will have 30 days to respond to the EU's decision, the person said.

The commission will also publish its opening decision on tax deals struck by Fiat in Luxembourg, another person familiar with the matter said. Fiat declined to comment. The status of the decision on Starbucks, which didn't respond to requests for comment, was unclear.

A spokesman for the Irish government said it is "confident that there is no breach of state aid rules in this case." Ireland "has already submitted a formal response to the commission earlier this month, addressing in detail the concerns and some misunderstandings," he said.

He also said the opening decision will be published on Monday

The decision to examine the tax deals through the lens of the region's state-aid rules, a first for the European Union, means the commission could eventually demand that the companies return any unpaid taxes, tax experts said. It wasn't clear how large these sums would be.

Rain falls on a Fiat logo pictured on a car in Milan on Jan. 2. Associated Press The publication will shed light on the EU's investigation into alleged illegal sweeteners offered to multinationals in several EU countries, which is understood to have been under way for more than a year.

EU competition chief Joaquín Almunia has said the investigation could range much wider. It has already covered Ireland, Luxembourg, the Netherlands, Belgium and the British territory of Gibraltar.

At issue are the comfort letters, known as tax rulings, sent by governments to multinationals to give clarity on how a specific tax will be calculated. These would be illegal if they gave selective advantages to some companies.

This week's expected moves are a formal step aimed at giving interested third parties—such as Apple and Fiat, which aren't themselves under investigation—a chance to comment, said Martina Maier, an antitrust lawyer with McDermott Will & Emery in Brussels.

The published documents are unlikely to contain confidential information such as the sums of money involved, Ms. Maier said. But they will shed light on the reasoning behind the commission's decision to open the investigations, she said.

While the companies themselves aren't under investigation, their input is being sought because they would be required to return any unpaid taxes.

The investigation will focus on so-called transfer-pricing arrangements, under which companies can redistribute profit within a group by charging for goods or services sold by one subsidiary to another, typically located in different countries. Experts say companies can use transfer pricing to minimize their tax bills.

While not illegal, such arrangements could violate EU rules if tax authorities allowed specific companies to charge prices internally that didn't reflect market conditions.

In the three cases under investigation, the commission is concerned that national tax authorities allowed the companies concerned to underestimate their taxable profits, thereby granting them an unfair advantage over competitors, Mr. Almunia said in June.

The commission will base its decision in Apple's case on guidelines on transfer pricing established in 2010 by the Organization for Economic Cooperation and Development, a club of rich countries, a person familiar with the matter said.

The move came after earlier efforts by the EU to crack down on tax avoidance and tax evasion made painfully slow progress and yielded little. Despite much hand-wringing by some politicians over Ireland's low corporate tax rate, tax policy remains largely in the hands of national governments, which can veto EU decisions.

Air France Pilots Union to End Strike, AFP Reports

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Air France Pilots Union to End Strike, AFP Reports 2014-09-28 11:21:23.547 GMT

By Marie Mawad Sept. 28 (Bloomberg) -- SNPL, the biggest union for Air France pilots, has decided to end strike, Agence France-Presse says, citing union spokesman Guillaume Schmid. * Union wants “to pursue talks in a more serene environment,” Schmid is cited as saying * A representative for Air France declined to comment by phone * Representatives for SNPL couldn’t immediately be reached by phone

Link to Company News:AF FP <Equity> CN <GO>

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

To contact the reporter on this story: Marie Mawad in Paris at +33-1-5530-6290 or mmawad1@bloomberg.net To contact the editors responsible for this story: Kenneth Wong at +49-30-70010-6215 or kwong11@bloomberg.net Robert Valpuesta, Mike Harrison

(SundayTimes) Greene King to raise Spirit bid

Greene King to raise Spirit bid


Shareholders in Green King, maker of Old Speckled Hen beer, are worried about overpaying for SpiritShareholders in Green King, maker of Old Speckled Hen beer, are worried about overpaying for Spirit (Lynne Sutherland)
GREENE KING, the pub operator and maker of Old Speckled Hen beer, is weighing an improved £700m offer for rival Spirit, owner of Chef & Brewer.

Rooney Anand, chief executive of Greene King, had an all-share offer of 100p rejected by Spirit this month. It valued Spirit at £661m.

Senior City sources said he was likely to return with a higher offer. Analysts have suggested Greene King would need to bid at least 110p per share to succeed. A deal at that price would value his target at £727m. The company has until October 21 to put up or shut up.

Shareholders are nervous of Greene King overpaying. “We are supportive up to about 110p a share, but more than that and it doesn’t make sense,” said one leading investor. “Spirit shareholders need to know that too,” the investor said.

Re/code:Activist Attack on Yahoo Is All About Forking Over Alibaba Cash

Forget AOL — Activist Attack on Yahoo Is All About Forking Over Alibaba Cash

While the noisy late Friday afternoon attack on Yahoo by perennial shareholder attacker Starboard Value was designed to attract headlines, especially the suggestion that the Silicon Valley Internet giant merge with AOL, it was just a feint for the real purpose of the parry.

Which is — according to a spate of sources I talked to and because it is as obvious as can be — to put pressure on Yahoo CEO Marissa Mayer to hand most of the cash from its huge stake in Alibaba Group and other Asian assets — both today and in the future — back to investors rather than using it to make big acquisitions.

Yahoo already has promised give back half of the billions of dollars it is garnering in the sale of a portion of its large stake in the Chinese e-commerce company in its IPO last week.

But a range of big shareholders want it all, as Re/code has previously reported they did, as well as the rest of any money Yahoo makes when it can sell any of the 16 percent stake it has left in Alibaba. In addition, investors want Yahoo to unlock the value of its 35 percent ownership in Yahoo Japan, by employing a variety of creative tax-saving tactics that Yahoo CFO Ken Goldman has publicly promised he would do.

What it’s not as much about is a strategic hook-up with AOL, which Yahoo has been pitched by a variety of investment bankers over the last year and also very recently and which Mayer has largely rejected.

As I wrote previously, many think such a merger could save costs by bringing together two companies that are in the same two key businesses, advertising and content. Others consider it a potential disaster, knitting together two companies saddled with backward-looking assets and a questionable recipe for future growth.

That is, outside of acquisitions, which Mayer has employed heavily in the past two years of her leadership, frantically buying up a range of small mobile-focused startups to try to inject more innovation, talent and product savvy into the long-moribund Yahoo.

While the effort is laudable in principle, investors seem unimpressed with her purchases, and, at this point at least, they have yielded no concrete bottom-line improvements to Yahoo’s much-flagging core business.

Thank goodness for the Asian assets then, which have caused the stock of Yahoo to soar over the last two years and shielded Mayer from her apparent lack of progress in turning around the company.

Now, as the gift that keeps on giving, the Asian holdings have become a kind of poison pill for Yahoo, because the rest of the Alibaba stake must be held for at least a year and unwinding the Japanese assets is extraordinarily complex. Most of all, any related transactions require elaborate cooperation with both Alibaba and also SoftBank, which controls both Yahoo Japan and holds a huge chunk of Alibaba.

In other words, Mayer best be trying really hard to get along with Alibaba’s Jack Ma and SoftBank’s Masa Son right about now.

She will certainly need the help if Starboard’s aggressive move — one hedge fund big told me that it was one “ballsy, but crazy” effort — causes others to pile on. That did not happen in the case of AOL, when Starboard took a shot at AOL two years ago by trying to shake up its board and questioning CEO Tim Armstrong’s leadership. But, while it lost the bid to install its own directors, it eventually forced the company to sell valuable patents and distribute the money to investors.

With Yahoo — which has been like catnip to activist investors over the years — Starboard is back to the “unlocking value” argument, pointing to the Asian assets and also to cutting costs and halting the incessant purchases by Mayer. Most loudly, it proposed the AOL merger, which it claimed — presumably Starboard pretty much made up the number — could save $1 billion.

So far, there have been no serious talks between Yahoo and AOL, though Starboard is hoping to prime the pump.

“Interestingly, based on our research and the legal advice we have received on how to unlock the value of Yahoo’s equity holdings, we believe a merger of AOL and Yahoo’s core business may be one of the best ways to both fully seize the cost reduction opportunity and also to tax-efficiently monetize Yahoo’s non-core equity holdings,” wrote Starboard’s Jeffrey Smith. “We trust the board and management will do the right thing for shareholders, even if this may mean accepting AOL as the surviving entity in a combination, should that be the best and most tax efficient structure.”

That line had to hurt Mayer, whom sources say has been particularly focused on AOL’s Armstrong not taking the CEO role when she has been presented such a deal in the past. Both worked previously at Google.

Tiresome leadership rivalry aside, in the last few months, numerous sources have told me Mayer has told them that she has also been on the receiving end of a lot of messages from big investors that they want a lot of the Asian money back. Such requests have been vexing to Mayer, these sources said, who has a large shopping list of companies to help get Yahoo on track.

Thus, it will be interesting to see how Mayer reacts to the Starboard attack. She did issue a statement Friday, titled “Yahoo! Inc. Reiterates its Commitment to Delivering Shareholder Value” that said exactly nothing:

We are committed, as an organization, to acting in the best interests of the Company and all of its shareholders. We have maintained, and will continue to maintain, an open dialogue with all of our shareholders. As part of our regular evaluation of Yahoo’s strategic initiatives to drive sustainable shareholder value, we will review Starboard’s letter carefully and look forward to discussing it with them.

Going forward, we have great confidence in the strength of our business. The management team and the Board of Directors remain committed to building value for all shareholders through the continued execution of our strategy, investing in products that will drive sustainable growth: search, communications, digital magazines and video. We continue to leverage our portfolio of world-class products which include Yahoo Search, Mail, News, Sports, Flickr, Tumblr, and advertising solutions among others. Additionally, we will continue to focus on evaluating various capital allocation initiatives, an update to which we plan to provide on our third quarter earnings call.

Her best move next, say many who have been through this before, is to at most to continue to publicly agree with Starboard that much needs to be done at Yahoo without promising to do anything specific at all.

And then do what she whatever wants. “Her only bad move is to panic now and react to Starboard with more than a meaningless smile,” said one person familiar with the situation. “Mayer has a board that is in her pocket, and they are not going to argue with her in any way, so why worry too soon?”

Translation: Just because a dog barks at you doesn’t mean it’s going to bite. Then again, it just might.

WSJ : SoftBank in Talks to Acquire DreamWorks Animation

SoftBank in Talks to Acquire DreamWorks Animation Move Comes at Crucial Juncture for DreamWorks Animation and Chief Executive Jeffrey Katzenberg

Japanese telecommunications giant SoftBank Corp. 9984.TO -0.77% is in talks to acquire DreamWorks DWA +0.58% Animation SKG Inc., according to people familiar with the matter.

The development comes at a crucial juncture for DreamWorks Animation and its chief executive, Jeffrey Katzenberg, one of Hollywood's highest-profile executives, who has sought to define a long-term strategy that would help the company counteract a recent spell of mixed box-office results.

Since spinning off from DreamWorks SKG and going public in 2004, DreamWorks Animation stock has largely risen and fallen on the box-office performance of its feature films, something Mr. Katzenberg has been trying hard in recent years to change.

A string of box-office disappointments has severely depressed the company's share price, forcing Mr. Katzenberg to assure investors that moves in industries like television, digital video and consumer products will help make the stock price less reliant on the two to three feature films the company releases annually.

DreamWorks Animation is also trying to reduce the cost of its film budgets, which exceed $100 million and require consistent hits to break even.

For SoftBank, news of the talks come just over a month after the Japanese tech giant dropped plans for another big American acquisition. After taking over Sprint S +0.47% Corp., the third-largest mobile carrier in 2013, SoftBank set its sights on acquiring the No. 4 carrier, T-Mobile U.S. Inc. TMUS +1.44% But SoftBank dropped the plans in August, after meeting strong skepticism from regulators who opposed the concentration of the industry.

SoftBank CEO Masayoshi Son has for some time pursued content acquisitions, including a failed attempt last year to buy Vivendi SA VIV.FR +0.58% 's Universal Music Group, the world's largest recorded-music company.

The deal talks were reported earlier by the Hollywood Reporter.

DreamWorks Animation has produced some of the biggest hits in animation history, with franchises that include "Shrek" and "Madagascar." Its recent track record is much spottier.

Three recent movies: "Rise of the Guardians," "Turbo" and "Mr. Peabody & Sherman" incurred write-downs following weak box-office performances.

DreamWorks's Animation latest release, "How to Train Your Dragon 2," would be a highly profitable film for the company, Mr. Katzenberg said on a recent call with Wall Street analysts, though the movie's domestic gross still fell short of expectations.

The company's movies are released through Twentieth Century Fox, whose parent company, 21st Century Fox Inc., FOXA +2.07% was until recently part of the same company as The Wall Street Journal.

DreamWorks Animation reported a second-quarter net loss of $15.4 million in July, on revenues of $122.3 million.

In July, DreamWorks Animation announced that the U.S. Securities and Exchange Commission is investigating the $13.5 million write-down the company took on "Turbo," a summer 2013 release that underperformed. DreamWorks announced the investigation on an earnings call with analysts but declined to offer any details, saying only that the company was cooperating with authorities.

Mr. Katzenberg's company is a spinoff of DreamWorks SKG, the entertainment company that opened to much fanfare in 1994 as part of an effort run by him, director Steven Spielberg and music executive David Geffen. Mr. Spielberg is the only founder still actively involved with the original company.

DreamWorks SKG is also having mixed success with its films. The studio has scored some hits like "Lincoln" and "The Help," but its more recent releases, like "Need for Speed," have disappointed at the box office. Earlier this month, Mr. Spielberg hired veteran television executive Michael Wright to run the studio, a move thought to come ahead of a coming move by longtime DreamWorks top executive Stacey Snider to Fox.

(NYT) Casino Magnate Steve Wynn Sues Short-Seller for Slander

Casino Magnate Steve Wynn Sues Short-Seller for Slander

As far as billionaire spats go, the brewing fight between the casino billionaire Stephen A. Wynn and the short-seller James S. Chanos may be among the most unusual.

Mr. Wynn sued Mr. Chanos for slander in Federal District Court in San Francisco on Thursday, contending that Mr. Chanos falsely claimed that Mr. Wynn’s company had violated laws against bribing foreign officials.

According to the lawsuit, Mr. Chanos, the founder of the hedge fund Kynikos Associates, which focuses on short-selling, said during a private event that Wynn Resorts had violated the Foreign Corrupt Practices Act. Such a move may have been meant to negatively affect the stock price of the casino operator, especially given Mr. Chanos’s reputation for short-selling, or betting against a company in the hope that its share price will go down.

Mr. Wynn has already beaten back allegations from a former business partner, the Japanese billionaire Kazuo Okada, that the company had improperly donated $135 million to a university in Macau.

Mr. Wynn wrote in the legal complaint that he and his company had been investigated by several government agencies, including the gaming overseers of Nevada and Massachusetts and the Securities and Exchange Commission.

“Chanos fabricated the statement and published it with reckless disregard for the truth,” the lawsuit read.

The complaint did not disclose how much money Mr. Wynn was seeking, other than unspecified compensatory and punitive damages and legal costs.

(NYT) Major Allergan Investor Joins Chorus Against Salix Deal

Major Allergan Investor Joins Chorus Against Salix Deal


A third Allergan shareholder has come forward to insist that the Botox maker not agree to an all-cash acquisition that would thwart a takeover offer before a special meeting scheduled for Dec. 18.

Jackson Square Partners, which represents investors holding more than $1 billion in Allergan shares, on Saturday sent a letter to company’s board in which it questioned Allergan’s strategy and called on it to engage in deal talks with Valeant Pharmaceuticals and Pershing Square Capital Management, which are waging a hostile takeover effort.

Jackson Square expressed dismay that Valeant had not engaged in deal talks with Valeant or Actavis, which had also expressed interest in a deal, and questioned why the company did not buy back its own shares when they were trading much lower last year.

Jackson Square also questioned Allergan’s reported efforts to speedily acquire Salix Pharmaceuticals in an all-cash deal, which would not require shareholder approval and would most likely thwart interest by Valeant and Pershing Square and Actavis.

“This approach appears to be intended to not only pre-empt shareholder approval, but also eliminate interest from the various bidders for the company,” Jackson Square said.

In its letter, Jackson Square said that Allergan “management has defended this stance by claiming that shareholder feedback has been strongly in favor of an acquisition, preferably to be completed prior to the special meeting on December 18.”

But the investor said it did not believe that claim.

“That a large majority of Allergan shareholders would support such a strategy is hard to fathom, and doesn’t reflect our understanding of the situation,” Jackson Square said.

“If there are investors who feel this way, however, we want to be very clear: we are not among them,” the letter continued. “Completing an acquisition prior to the special meeting will all but eliminate Allergan’s alternatives for creating value. Limiting options is not in shareholders’ interests. We strongly urge you to fully engage all available paths, thereby ensuring value maximization.”

Indeed, a review of Allergan’s investor base raises questions about how many investors could support management’s plans to strike an all-cash deal before the special meeting.

Investors holding more than 35 percent of Allergan shares have called for the special meeting, at which they will have a chance to remove a majority of the board. Pershing Square is the largest holder of Allergan shares, with nearly 10 percent. Investors with at least 25 percent of shares also support the special meeting.

T. Rowe Price and Pentwater Capital Management, which together hold nearly 7 percent of shares, on Friday also called on Allergan to refrain from any deal making before the shareholder meeting.

Hedge funds and other investors have bought up another substantial block of Allergan shares. Index funds, which are not likely to support a deal, are substantial holders as well. And retail and small institutional shareholders, a fragmented group, own a substantial block as well.

That breakdown, with an absence of many large shareholders who have not already come out against an all-cash acquisition of Salix, is why Jackson Square says it is unlikely that a majority of shareholders support the Salix deal.

Allergan responded to the growing investor protest on Friday.

“We appreciate the perspectives of our stockholders,” Allergan said in a statement late on Friday. “The Allergan board has a longstanding track record of consistently acting in the best interests of Allergan’s stockholders and delivering superior performance as prudent stewards of capital. We recognize that what matters is value, and Allergan’s board remains confident in the company’s ability to deliver significantly more value than Valeant’s grossly inadequate offer.”

WWD : The Hunt for Next Michael Kors Continues

The Hunt for Next Michael Kors Continues

Michael Kors and his $15 billion fashion empire are proving to be a tough act to follow.

But that isn’t stopping Tory Burch, Marc Jacobs, Diane von Furstenberg, Kate Spade and a slew of others from trying. Whether they can bring together the same mix of personality and profit margin remains to be seen.

Investors and designers of all stripes have been struggling to replicate the success of Michael Kors Holdings Ltd., which brought back the big-time fashion initial public offering three years ago and created a new benchmark for the industry’s strivers. So far, no one has managed to pull together the same alchemy: the broad appeal of Kors’ persona and designs and the backroom savvy of backers Lawrence Stroll, Silas Chou and chief executive officer John Idol.

While Kors’ success looks straightforward, one must recall that a little more than a decade ago he was near bankruptcy. That is when Stroll and Chou came in and implemented their roadmap, which looks something like this:

• Secure experienced, aggressive operational talent. Stroll and Chou played a key role in the Nineties success of Tommy Hilfiger and Idol is known as a canny executive, with stints at Ralph Lauren, Donna Karan and elsewhere.

• Build some serious mainstream exposure. Kors had been a known-quantity in fashion for years and had American luxury roots, but it was his star turn on reality show “Project Runway” that thrust him into the popular imagination and gave his brand much broader reach.

• Trade on that fashion credibility with high-end looks that give the brand an air of exclusivity, while distributing many styles that have more mass appeal. To be a blow out, a brand must be democratic.

• Spend to support growth.

As deceptively easy as it is to describe the path to follow, the brand’s strategy is extremely hard to pull off — if it weren’t, the fashion world would be teeming with ubersuccessful Michael Kors clones.

Early contenders to the Kors mantle — from Kate Spade & Co. to Vince Holding Corp. to the privately held Burch — have all shown enviable growth, but have yet to catch fire in the same way.

The spotlight, though, is shining with a new intensity on Burch, who this week recruited some serious top-shelf talent and installed Ralph Lauren and Macy’s Roger Farah as co-chief executive officer. Farah has long been considered the business brain behind much of Lauren’s growth and his 14-year tenure at the brand saw sales shoot from $1 billion to $7.5 billion while the company’s market capitalization hit as high as $18 billion.

An IPO might not be in Burch’s immediate future — both the designer and Farah spoke of the virtues of being a private company — but the combination of branding and operational expertise could still supercharge the company. And she has a number of private equity investors who are going to, at some point, want a return on their investments.

Then there is Marc Jacobs.

The designer left his perch at Louis Vuitton last year after 16 years to focus on taking his own company public, with the help of Bernard Arnault’s LVMH Moët Hennessy Louis Vuitton, which owns a third of the business.

“I already think the next Michael Kors is Marc Jacobs,” said Hana Ben-Shabat, a partner in A.T. Kearney’s retail practice.

Ben-Shabat noted the company’s ties to LVMH, which has deep pockets, expertise in the industry and global reach.

“The brand is already doing so well under that umbrella,” she said. “There is a great chance they are able to replicate” the Michael Kors’ model.

Marc Jacobs has a good start, since he’s backed by LVMH and enjoys wide exposure, showing up in rap lyrics as well as on Diet Coke bottles, the latter as part of a collaboration.

And Kors’ eye-popping market capitalization has not escaped the notice of luxury titan Arnault.

“If we could do something along those lines, or even half, everyone will be happy,” said Arnault, flashing a smile to analysts and journalists during a meeting in January.

Robert Burke, chairman and ceo of the Robert Burke Associates consultancy, said, “Marc Jacobs has all the components to become the next Michael Kors. He has a collection line, which is well-recognized internationally. [He has] personality, a broad reach when it comes to the secondary lines, and even more potential if the secondary lines are developed correctly. And licensing, he’s very good with licensing on fragrance and eyewear and footwear. All the components are there.”

There are also other contenders, such as von Furstenberg.

“She could be — she recently had a strong foray into accessories and revamped her e-commerce [capabilities],” Ben-Shabat said. “There’s a lot of room to grow stores in the U.S. and abroad.”

Burke also saw potential in von Furstenberg’s business, which is being rejiggered with the help of Hilfiger vet Joel Horowitz, who has served as cochairman since 2012.

“She’s certainly positioning herself for a big move,” Burke said. “She’ll probably be quite successful.”

Ike Boruchow, an analyst at Sterne, Agee & Leach, isn’t counting out a Michael Kors-like success from Kate Spade.

The brand, which is now freed from the drag of Lucky Brand and Juicy Couture, saw its comparable sales increase 30.4 percent in the second quarter.

“When you look at Kate and their market share and their revenue base, it’s about a billion-dollar brand, maybe five percent market share in the U.S…. low margins,” Boruchow noted. “However, margins are rapidly expanding. They’re the top-comping retailer out there right now.”

Kors, however, is still far ahead of the pack in business terms.

While his market capitalization has dipped recently as the stock has fallen — it dropped 1.9 percent to $73.15 Thursday — the company’s outstanding shares are still valued at a total of $14.95 billion, just ahead of Ralph Lauren Corp.’s $14.5 billion.

Kors’ comparable sales rose 26.2 percent last year as net sales jumped 51 percent to $3.17 billion and profits increased 66 percent to $661.5 million.

Although fashion players often seek to stand out, the financial realm is usually geared toward fitting in. Investors are more easily sold a story that’s been told before, i.e. a company that in key ways looked liked Kors and talked liked Kors would be well received.

“People are always looking for the next hottest name,” said Simeon Siegel, analyst at Nomura Securities, referring to the handbag market. “To the extent that you can show a company that’s putting up great results in this category, investors will flock to it.”

Siegel said Kors’ personality is an important part of the company’s success.

“It’s not that easy to find both a product and personality that meshes really well,” he said. “Michael drives sales. John Idol…drives margins, they drive profitability. The biggest question in accessible luxury is balancing exclusivity, which you need, but also distribution, which is what gets you to the stage of Michael Kors. That’s a tough balance.”

Still, fashion is filled with lots of personalities. It’s the way the Kors persona has morphed into serious business results that stand out.

“I don’t think this is so much just about Michael Kors, which is a great name and he’s…a great guy, but this had just as much to do with Lawrence Stroll, Silas Chou and John Idol and the muscle they put behind this business,” said Allan Ellinger, senior managing partner at investment bank MMG. “What they did was kind of impose Michael Kors on the industry. If you take a look at how strong it came out of the box, this doesn’t happen every day.”

Plus they stuck with it.

“There was risk when they came into the marketplace,” Ellinger said. “When they first relaunched Michael Kors, they hit some speed bumps, but they had the wherewithal and experience to fine tune the business.

“You need money,” he said. “You need experience. You need vision. You need strategy and you need a very talented team. This is not just about building a wholesale business, this is about building a global licensing machine.”

It’s the global nature of the Kors business that appears to be the brand’s best hope for its own future, especially given its increasing ubiquity in the U.S.

“For now, it seems like Michael Kors is the next Michael Kors,” said Paul Lejuez, equity analyst at Wells Fargo Securities. “They do have a lot of momentum. You can look at their European business as their next opportunity. It makes sense to be excited about some of the opportunities they have globally rather than try to find one who’s going to displace them or show up on the scene in the same way they have in the U.S.”

The brand also has room to expand in Asia, although the designer, Idol, Stroll and Chou own Michael Kors Far East Holdings Ltd., which has the right to use the name in China, Hong Kong, Macau and Taiwan.

But it is the explosive nature of Kors’ growth in its home market that has also turned into one of the key concerns around the company.

Kors has become something of a victim of its own success and Wall Street has become increasingly uneasy about the company’s exposure.

“In the U.S., I am cautious on them becoming overdistributed,” Lejuez said. “Two-thirds of their sales at point of sale go through wholesale. To me, that’s a point of risk. As we saw with Coach, once they got to a certain size, they couldn’t push the productivity that much higher and I think that’s what Kors is going to run into in the U.S.”

Sterne, Agee’s Boruchow said the company’s managers “basically found anyone who wanted the product, which is everybody. When you’re doing that, it’s fantastic. It’s highly scalable. It’s highly leveragable. The problem with that is, sometimes when the brand starts to fizzle, you kind of get stuck.”

The analyst also noted that Stroll and Chou themselves have gotten out of their investment. During fashion week, the duo sold their remaining 11.6 million shares of the company — for $76.76 a share — and relinquished their board seats.

Then there are those who question whether anyone can be the next Kors. Often overlooked is that the company’s quartet started the journey toward mega-success more than a decade ago — long before the words social media or omnichannel were even around, and before retail consolidation really took hold. Many observers believe that, while there will be fashion firms that are hugely successful, the Kors phenomenon may now be difficult, if not impossible to replicate — and if a firm does, it’s as likely to be a Web-only phenomenon as it is a designer brand.

(BN) Goldman Said to Prohibit Investment Bankers From Buying Stocks


Goldman Said to Prohibit Investment Bankers From Buying Stocks
2014-09-27 04:00:03.3 GMT


By Michael J. Moore
Sept. 27 (Bloomberg) -- Goldman Sachs Group Inc., the top
adviser on corporate takeovers, is changing a policy addressing
conflicts of interest to bar investment bankers from trading
individual stocks and bonds, a person with direct knowledge of
the matter said.
Employees at the New York-based firm were notified
yesterday of the change, which takes effect immediately, said
the person, who requested anonymity because the matter isn’t
public. They also aren’t allowed to invest in activist or event-
driven hedge funds, the person said. Previously, bankers needed
approval before they could invest in individual stocks.
The change came on the same day that a former Federal
Reserve Bank of New York examiner’s recordings of her ex-
colleagues’ dealings with Goldman Sachs were featured in reports
by public radio and ProPublica. The former examiner, Carmen
Segarra, sued the New York Fed last year, alleging that she was
fired in 2012 because she refused to change her finding that
Goldman Sachs didn’t have a conflict-of-interest policy. Her
case was dismissed in April and she’s appealing.
The radio program “This American Life” released a
transcript of a broadcast that includes excerpts of
conversations it said were secretly recorded by Segarra. In the
transcript, Segarra described how she felt that her Fed
colleagues handled Goldman Sachs with kid gloves.
“What I was sort of seeing and experiencing was this level
of deference to the banks, this level of fear,” she said.
The New York Fed said it “categorically rejects”
Segarra’s allegations.

Financial Safety

“The New York Fed works diligently to execute its
supervisory authority in a manner that is most effective in
promoting the safety and soundness of the financial institutions
it is charged with supervising,” it said in a statement posted
on its website.
U.S. Senator Elizabeth Warren, a Massachusetts Democrat,
called for a congressional investigation into allegations that
the New York Fed was too deferential to the institutions it
regulated. Senator Sherrod Brown, an Ohio Democrat who’s also on
the banking committee, backed Warren’s call for a probe.
In 2012, a Delaware judge rebuked Goldman Sachs over its
“incomplete and inadequate” handling of a conflict of interest
in pipeline operator Kinder Morgan Inc.’s $21.1 billion purchase
of El Paso Corp., the investment bank’s biggest takeover
assignment the previous year. Stephen D. Daniel, a former
Goldman Sachs partner who was lead banker on the deal, failed to
disclose ownership of about $340,000 in Kinder Morgan stock, the
judge said.

Protecting Reputation

Yesterday’s change had been discussed for months and
tightens a policy that was adjusted after the Kinder Morgan
deal, the person said. The move is intended to reduce potential
conflicts with clients and protect the firm’s reputation, the
person said.
The new restrictions at Goldman Sachs also will apply to
some employees outside of investment banking, including those
who could have access to confidential information as part of
their roles, the person said.
Spokesmen for Bank of America Corp., Citigroup Inc. and
Morgan Stanley declined to comment on the policies at their
companies. A spokesman for JPMorgan Chase & Co., the biggest
U.S. bank by assets, didn’t respond to phone and e-mail messages
sent after regular business hours.
The case is In re El Paso Corp. Shareholder Litigation,
Consolidated 6949-CS, Delaware Chancery Court (Wilmington).

For Related News and Information:
Senator Warren Calls for Hearings on New York Fed Allegations
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What the Secret Goldman Sachs Tapes Uncover: Michael Lewis
NSN NCIISN6JTSEU <GO>
A Vivid Glimpse of the Fed’s Cozy Relationship With Goldman
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Goldman Criticized by Judge on Kinder Morgan Deal Conflicts
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Top Stories: TOP <GO>
Top Finance Stories: TOP FIN <GO>
Goldman Sachs Risk Profile: GS US <Equity> RSKC <GO>

--With assistance from Matthew Boesler, Hugh Son and Dakin
Campbell in New York and Kathleen Hunter in Washington.

To contact the reporter on this story:
Michael J. Moore in New York at +1-212-617-6919 or
mmoore55@bloomberg.net
To contact the editors responsible for this story:
Peter Eichenbaum at +1-212-617-5722 or
peichenbaum@bloomberg.net
Steven Crabill, Dan Reichl

TechCrunch : Tinder And Evolutionary Psychology

Tinder And Evolutionary Psychology

Mobile dating application Tinder has been criticized heavily due to its appearance-based matchmaking process, which many consider so shallow and superficial that it could only be used to facilitate casual sex. However, the app’s popularity continues to grow at an extraordinary rate: it is currently available in 24 languages and boasts more than 10 million active daily users. It was also awarded TechCrunch’s Crunchie Award for “Best New Startup of 2013.”

The app’s runaway success cannot be attributed solely to singles looking for quick hook-ups. The counter-intuitive truth is that Tinder actually provides users with all the information they need to make an informed first impression about a potential long-term mate. And it does so by matching our human evolutionary mechanism.

How Does It Work?

Tinder connects with users’ Facebook profiles to make a limited amount of personal data available to other users within a pre-set geographic radius. A Tinder profile includes only the user’s first name, age and photos, along with the Facebook friends (if any) they have in common with the person viewing the profile. Upon signing up, a user is provided with potential matches and the option to “like” or “dislike” each one based on his/her profile. If two users mutually “like” each other, they can begin a chat.

Tinder’s success stems from its simplicity and minimalism, which relates to how our cognitive system works. The only way that human beings could’ve survived as a species for as long as we have is by developing a decision-making apparatus that’s capable of making quick judgments based on very little information. Although we always ascribe our decisions to a rational, conscious-brain motivation, this supposed motivation is never the entire reason for our decisions; in fact, it often has nothing to do with it! We like to think of ourselves as rational human beings that base our decisions on logical processes, but most of our decisions occur unconsciously and based on minimal information.

How do Tinder users choose partners?

Finding a date on Tinder involves a three-stage decision making process:

Rational Controlled Process – The user sets the gender, age range and geographic radius of a potential partner.
Emotion-Oriented Process – As the app presents potential matches fitting the appropriate search criteria, the user chooses ‘like’ or ‘dislike’ based on an automatic emotional reaction to each photo.
The Waiting Process – The third stage is out of the user’s control. In order to engage another person in a chat, that person first has to ‘like’ the user back.
How can so little information prove valuable?

Tinder exposes its users to two types of factors: rational (Geographical Distance and Age) and emotional (Appearance and Requited Interest). Each of these factors makes a unique contribution to the decision making process.

Geographical Distance – Research shows that the best single predictor of whether two people will develop a relationship is how far apart they live. People are more likely to develop friendships with people who are nearby (ex. live in the same dorm or sit near each other in class). An examination of 5000 marriage license applications in Philadelphia found that one third of the couples lived within five blocks of each other. Thus, geographical distance is a powerful predictor of the likelihood that two people will end up together.

Age – People with little or no age difference have significantly more in common than those with a larger age difference. When two people are the same age, they are generally at a similar stage in life, both psychologically and physically. They also likely share similar backgrounds, concerns, life challenges, and cultural/historical references. These similarities make it easier to find common conversational ground, and add an element of cohesiveness to a relationship that cannot be attained in relationships with a more notable age difference.

After the rational stage comes the emotional stage:

Appearance – Although it may seem shallow to admit it, we are strongly influenced by the physical attractiveness of others, and in many cases appearance is the most important determinant of whether or not we initially like a person. Infants who are only a year old prefer to look at faces that adults consider attractive, and we often subconsciously attribute positive characteristics such as intelligence and honesty to physically attractive people. Evolutionary psychologists have argued that this may be because physical attractiveness is an indicator of underlying genetic fitness. In other words, a person’s physical characteristics may be suggestive of fertility and health – two key factors in the probability of our genetic line’s survival and reproduction.

Furthermore, evidence has shown that most couples are closely matched in terms of physical attractiveness. This appears to be because we weigh a potential partner’s attractiveness against the probability that he/she would be willing to pair up with us. Thus, after the emotional process of categorizing a person as attractive, most of us have the self-awareness to determine whether society would perceive us as more, less or equally attractive as the potential partner. This determination affects our decision whether or not to approach the other person.

Looking beyond physical appearance, each image presented on Tinder also has a subtext. People use their photos to make identity claims – symbolic statements to convey how they would like to be seen. Examples include choice of clothing, presence or absence of jewelry and sunglasses, and the way they interact with other people in the photos. All of these signals shed additional light on the person in the image.

Similarly, behavioral residue refers to clues inadvertently included in the chosen photos. For example, smiling without a head tilt signals high self-esteem, selecting a close-up photo shows confidence and willingness to share minor flaws, and choosing a long-distance shot may indicate low self-esteem and a desire to hide flaws.

Requited Interest – Equipped with all this valuable information, the user waits for the final piece of the puzzle: will the other person “like” him back? If so, this approval gives a positive kick to the interaction. People are naturally attracted to individuals who make them feel good about themselves, and a mutual “like” lets each party know that the other considers them attractive and approachable.

The Chat

Finally, the Tinder chat is an extremely valuable asset for filtering a potential partner. Does he make a lot of spelling mistakes? Does she dominate the conversation with self-aggrandizing comments? Does he seem macho and disrespectful?

Here is a sample interaction documented by a female Tinder user:

He: “so, when can I see you?”

She: “What did you have in mind?”

He: “how about now?”

She: “Just so you know, I’m looking for a serious relationship. I’m not looking to play around.”

He: “To see you now is not playing around it called being spontaneous”

It is obvious from this brief exchange that these users are interested in completely different things. At this point, it should be easy for her to make a decision based on past experience and the understanding of the hidden meaning in his words.

Conclusion

When all the data collected during the Tinder matchmaking process is compiled, the emerging picture reveals a substantive amount of relevant information. Each of the provided clues helps the user to create a valuable mental picture of the person on the other side. Interestingly, this picture is often more accurate than what we can develop with a larger amount of information. Consider such online dating websites as Match.com and OKCupid. Unlike the minimalism of Tinder’s profile, these sites provide users the opportunity to build structured and detailed profiles, many of which contain inaccurate information. Users intentionally exaggerate their descriptions to portray themselves in the best possible light – something that just isn’t possible in the bare-bones format of Tinder.

Tinder’s popularity stems from its ability to match the human evolutionary mechanism. In a word, it is “distilled.” It cuts through the B.S., giving users only the data they need to develop a meaningful first impression. Though we like to think we base our decisions on a calculated cost-benefit evaluation, the truth is that most of the time we rely on automatic unconscious processes that have nothing to do with rationality. Thus, exposure to a detailed profile containing a person’s hobbies, education and personal information may lead us to conclude that our choice was influenced by these factors, but honestly once we know a potential mate’s geography, age, appearance and feelings about us, we have all the information we need.

And it is usually quite accurate.