NY Post : Herbalife opponent seeks to add plaintiffs to suit

A failed Herbalife salesman who is suing the company for being an alleged pyramid scheme asked a federal judge to add four other former distributors to his suit.

The new motion, filed late Monday in Los Angeles federal court, comes after attorneys for California resident Dana Bostick and the controversial nutritional products company failed to reach a settlement after 50 hours of formal mediation sessions, according to court papers.

Herbalife has “raised issues regarding [Bostick’s] ‘adequacy’ ” to serve as a class representative, the motion said.

The prospective plaintiffs “are from different states; have different experiences and backgrounds in their attempts to succeed as Herbalife distributors and reached different levels within the alleged Herbalife endless chain,” Bostick’s attorneys said in the motion.

They include:
•Anita Vasko, a homemaker from West Chester, Pa., who claims she lost $12,000 in 2013 on an Herbalife nutrition club after working six or seven days a week to make a go of it.
•Judy Trotter, a Washington retiree who said she was $10,000 in debt from her Herbalife business before quitting in the fall of 2012.
•Beverly Molnar of Pennsylvania, who claims she bought leads to try to get her business going and ended up more than $11,000 in debt.
•Chester Cote of Vermont, who said he tried to sell Herbalife products online in 2009, but couldn’t because prices were depressed by others sellers seeking to unload their products at a deep discount.

A hearing on June 30 will determine if the prospective plaintiffs can be added to the case. The deadline for filing for class certification is Aug. 25.

NY Post : Ackman’s winning streak stretches into May

Bill Ackman continued his hot streak in May, with his Pershing Square eking out a 2.9 percent gain in a tough month for hedge funds, according to investors.
The $14 billion Pershing Square is up 22.5 percent this year, making it the top performing fund in the US, according to HSBC’s widely followed ranking.
Ackman’s returns were bolstered by 14 percent gains in his Fannie and Freddie shares — a position that fellow billionaire Carl Icahn has embraced. Icahn revealed a $51 million stake in the mortgage giants on Tuesday.
A last minute spike in Allergan, which accounts for 30 percent of Ackman’s fund, also helped. The stock gained 1 percent last month after Pershing-backed Valeant boosted its cash offer to Allergan shareholders.
Ackman also outdid the broader market, which was up 2.3 percent in May — a feat neither of his fellow famous hedgies David Einhorn or Dan Loeb could duplicate.
Einhorn’s Greenlight Capital rose 2 percent in May, for a year to date gain of 5.4 percent.
His new short position on Athenahealth, which Einhorn publicized at the annual Ira Sohn investment conference on May 5, failed to gain traction. The stock gained 2.64 percent during the month.
Dan Loeb’s $14.5 billion Third Point was the laggard of the famous trio, only up 1.7 percent last month and 4 percent for the year.
Loeb won his battle with Sotheby’s in May, gaining three board seats and the auction house’s willingness to pay his legal bills for his unsuccessful bid to overturn the company’s poison pill. But Sotheby’s stock fell 6 percent during the month.
Loeb is also lagging the S&P 500 for the year. The broader market is up 5 percent.

WSJ : Merck, Sanofi, Glaxo Take Steps to Shed Older Drugs

Merck, Sanofi, Glaxo Take Steps to Shed Older Drugs
Potential Deals Are Part of a Narrowing of Focus on Products With Faster-Growing Sales

Several big drug makers, including Merck MRK -0.03% & Co., France's Sanofi SA SAN.FR +0.59% and the U.K.'s GlaxoSmithKline GSK.LN -0.09% PLC, are exploring the possibility of selling or splitting off large portfolios of older drugs as they seek to focus on products with faster-growing sales.

Merck has held preliminary discussions with a number of possible buyers for a group of treatments that could fetch in the neighborhood of $15 billion, according to people familiar with the matter.

Sanofi, meanwhile, is considering the possibility of putting some of its established products into a joint venture with another health-care company, according to a person familiar with the matter. And Glaxo said recently that it is "evaluating options," including divestment, for a group of mature drugs that make up about 15% of the company's sales. Other pharmaceutical companies are considering similar moves, bankers say. Private-equity firms including Advent International are considering bids for the assets, according to people familiar with the possible sales.

The businesses generally have wide profit margins, as their owners have already incurred many of the expenses associated with launching the medicines. Consequently, in a sale they could be worth a multiple of their annual sales, bankers say. The portfolios tend to have slow-growing or declining revenue, however, as many of the drugs have lost patent protection and compete with low-cost generic copies.

The deals are part of a narrowing of focus at big drug makers, which in recent months have been divesting slower-growing businesses or ones in which they have less of a competitive advantage.

"Companies are responding to their shareholders, who are asking management teams to double down on their strengths and divest their weaknesses," says Mark Schoenbaum, a pharmaceutical analyst with ISI Group in New York.

To be sure, the slow-growing or declining sales at these businesses could make them less appealing to the private-equity firms that some industry watchers say are the most natural buyers. Private-equity firms tend to make acquisitions largely using borrowed money, which could be harder to come by for the purchase of a shrinking business. And given that other drug companies may be wary of taking on businesses that could hamper their overall sales growth, it's not clear whether deals will materialize for any of the mature-drug portfolios.

Another big question: whether drug companies will completely divest their older drugs, or hang on to them in emerging markets, where off-patent, low-cost medicines from well-known Western drug firms tend to sell well. "These tend to be solid and often growing assets in emerging markets, and so divesting them on a global basis will be detrimental to growth" in those markets, says Mark Clark, a pharmaceutical analyst with Deutsche Bank DBK.XE +0.37% in London.

The biggest portfolio currently on the block appears to be Merck's. The company's "diversified brands" category includes drugs that have lost patent protection, or soon will lose patent protection, in developed markets, including the anti-hypertension drugs Cozaar and Hyzaar; Propecia for male-pattern baldness; and the migraine treatment Maxalt.

Sanofi, meanwhile, believes it might be able to use its older products as a sweetener, to help convince another drug company to part with a particular asset, according to a person familiar with the matter. In such a scenario, Sanofi might agree to contribute its older products to a joint venture with the other company, in exchange for the opportunity to buy another asset from that company, this person said, adding that Sanofi is at the early stages of considering such a move. Sanofi has looked at possibly acquiring a number of assets recently, including Merck's over-the-counter and consumer health-care business, though it balked at the asking prices, people familiar with the matter said.

Glaxo's established-drug portfolio includes the antidepressant Paxil, the malaria drug Malarone and Lovaza, a treatment for high triglycerides, a type of fat in the blood. Glaxo reported an 11% year-over-year sales drop for the division in the first quarter, to £814 million ($1.36 billion). The division notched a "core" operating profit margin of nearly 60%. That's more than twice that of the overall company.

RTR China state media calls for 'severe punishment' for Goog

China state media calls for 'severe punishment' for Google, Apple, U.S. tech firms BEIJING (Reuters) - Chinese state media lashed out at Google Inc, Apple Inc and other U.S. technology companies on Wednesday, calling on Beijing "to punish severely the pawns" of the U.S. government for monitoring China and stealing secrets.

U.S. companies such as Yahoo Inc, Cisco Systems Inc, Microsoft Corp and Facebook Inc threaten the cyber-security of China and its Internet users, said the People's Daily on its microblog, in comments echoed on the front page of the English-language China Daily.

It is not clear what sparked this latest round of vitriol, nor what information the U.S. firms are alleged to have stolen. But Chinese media have repeatedly attacked American tech companies for aiding the U.S. government's cyber espionage since U.S. National Security Agency (NSA) contractor Edward Snowden revealed widespread spying programmes including PRISM.

Under PRISM, the NSA seized data from companies such as Google and Apple, according to revelations made by Snowden a year ago.

Chinese state-owned firms have since begun dispensing with the services of U.S. companies such as IBM Corp, Oracle Corp and Cisco in favour of domestic technology. As a result, Snowden's revelations may cost U.S. companies billions of dollars, analysts say.

"U.S. companies including Apple, Microsoft, Google, Facebook, etc. are all coordinating with the PRISM programme to monitor China," the People's Daily said on its official microblog.

"To resist the naked Internet hegemony, we will draw up international regulations, and strengthen technology safeguards, but we will also severely punish the pawns of the villain. The priority is strengthening penalties and punishments, and for anyone who steals our information, even though they are far away, we shall punish them!" it said.

Google has already had problems in China this week. On Monday, a China censorship watchdog said Google services were being disrupted ahead of Wednesday's 25th anniversary of the 1989 crackdown on pro-democracy demonstrators around Beijing's Tiananmen Square.

"We cannot say this more clearly - the (U.S.) government does not have access to Google servers - not directly, or via a back door, or a so-called drop box," said Google Chief Legal Officer David Drummond in an emailed statement on Wednesday. "We provide user data to governments only in accordance with the law."

Microsoft declined to provide immediate comment. Facebook, Yahoo, Apple and Cisco were not immediately available when Reuters sought comment by telephone and email.

Facebook is currently blocked by Chinese censors, but said last month it may open a sales office in China to provide more support to local advertisers who use the website to reach customers overseas.

ROCKY TIME

In December, Google, Microsoft, Apple, Facebook, Yahoo and other Internet companies issued an open letter to U.S. President Barack Obama and Congress to reform and introduce restrictions on surveillance activities.

Even so, U.S. tech companies have had a rocky time in China since the NSA revelations. Just last month, central government offices were banned from installing Windows 8, Microsoft's latest operating system, on new computers.

But the U.S. has responded with its own measures. In May, the U.S. Department of Justice charged five Chinese military officers with hacking U.S. companies to steal trade secrets.

The indictment sparked outrage in China and added urgency to Beijing's efforts to promote the development of local information technology (IT) companies.

Chinese media called the United States "a high-level hooligan" and officials accused Washington of applying "double standards" on issues of cyber spying.

After the charges were announced, China said it will investigate providers of important IT products and services to protect "national security" and "economic and social development."

FT : Interdigital pushes for Apple patent deal

The head of Interdigital, a mobile technology patent company, on Tuesday tried to raise pressure on Apple to reach a broad licensing deal after announcing an agreement with Samsung valued in the hundreds of millions of dollars.
News of the Samsung accord came 10 days before a legal showdown at the US International Trade Commission that could have resulted in the South Korean company being barred from importing some of its handsets into the US.

The deal brought a degree of vindication for Interdigital, which claims more than 20,000 patents and patent applications covering a range of 3G and 4G mobile technologies. Its lawsuits against companies such as Samsung, Huawei and Nokia have drawn accusations that it acts like a patent troll, though the company denies the charges.
The agreement with Samsung, coming nearly 18 months after Interdigital brought a complaint before the ITC, should encourage Apple to reach a similar, broad-reaching accord, said William Merritt, the patent company’s chief executive.
“They can see the Samsung agreement, they can observe our successes in litigation,” he said. “Hopefully, these two things we can point to will lead to a successful resolution.”
Apple did not immediately return a request for comment. The iPhone maker has not been on the receiving end of any lawsuits from Interdigital, and until now it has only had a patent agreement with the company covering a very narrow range of technology.
Interdigital has had mixed success at the ITC with its campaign to get handset makers to pay up. Late last year, the court rejected a claim against Huawei, Nokia and ZTE over patents covering older mobile technologies.
The value of the Samsung accord – a five-year licence for a fixed amount, running to the end of 2017 – was not disclosed. However, Interdigital also raised its short-term revenue guidance on Tuesday, pointing to a total increase in its expected revenue by the end of 2017 of nearly $500m. Company executives said that the Samsung deal was the largest factor in this increase, though licenses with other companies also accounted for some of the extra revenue.
A campaign in Washington to crack down on patent trolls ended in failure last month after the US senate abandoned a bill to deal with claimed legal abuses by patent licensing firms. The proposed law stirred up a backlash from companies in industries such as pharmaceuticals, which rely heavily on patent rights.
“Ultimately, the patent debate is not a name-calling exercise, that’s a waste of time,” Mr Merritt said. “It’s really about behaviour. When you send 1,000 letters to coffee shops, that’s what we don’t want.”

FT : Abe gets green light for Japan corporate tax cut

Shinzo Abe has cleared the main obstacle to his plan to cut Japanese corporate income taxes, securing conditional approval from a pair of powerful groups that had opposed the idea – the finance ministry and tax experts in his own party.
But now the question is whether the prime minister can engineer a broader overhaul of the corporate tax system to address one of its most obvious failings: that in spite of high official rates, only three in 10 Japanese companies pay income tax.

After a series of meetings this week, Taro Aso, the finance minister, and Takeshi Noda, the head of the Liberal Democratic party’s internal committee on tax issues, both told Mr Abe they were open to cutting corporate income taxes as long as new “stable sources” of revenue could be found.
That demand has been taken to mean shrinking or eliminating some of the loopholes, exemptions and credits that have placed the corporate tax burden on a relatively small group of companies.
“We have a narrow tax base because we have so many tax breaks,” said Yoshikazu Miki, a professor of tax law at Aoyama Gakuin University who has advised previous governments on reform efforts. “It makes no sense just to look at the headline rate.”
That rate is high by international standards, at roughly 37 per cent depending on where in the country a company is located. Japan’s rate remains the second-steepest among countries in the Organisation for Economic Cooperation and Development, after the US.
Businesses complain that this has made them less competitive. South Korea, where electronics companies such as Samsung have surpassed once-dominant Japanese groups, imposes a rate of 24 per cent, a shade below the OECD average and 10 points less than Japan.
Sadayuki Sakakibara, who on Tuesday took over as the chairman of the Keidanren business lobby, said that Japan should ultimately aim for the OECD average of 25 per cent. “I’d like to see a real reduction in the corporate tax burden, starting in 2015,” he said.
Exactly how far and how fast the rate will come down remains unclear. The go-ahead from Mr Aso and Mr Noda means that tax cuts can be included in an update of the Abe administration’s economic growth policies that is due later this month. But many details are likely to be left for later, people close to the administration said.
The question of broadening the tax base looks likely to dominate the next phase of the debate. Some in the government argue that the tax burden on companies should simply be lowered, to stimulate growth and tempt both local and foreign companies to invest in Japan.
“No country that has cut corporate taxes has insisted on making it completely revenue-neutral,” said Akira Amari, the economy minister. “It has to be appealing to those who make investment decisions.”
A straight tax cut could be politically difficult, however, given that the government is increasing sales taxes, a move that it has said was vital to bringing down the deficit and stabilising a national debt that is the largest in the world.
“People have accepted higher consumption taxes because they’ve been told the money is needed to shore up the pension and healthcare systems,” said Mr Miki at Aoyama Gakuin. “If you cut taxes on corporations, it undercuts the argument.”
Tax breaks appear to be a tempting target. Even among large corporations, only half pay any corporate income tax, according to finance ministry data. In contrast, the ratio of zero-payers among large US companies is one in four, according to Washington’s Government Accountability Office.