Qatar Posts $26 Bln Budget Surplus In July-Sept

Qatar’s government budget leaped into a large surplus of QAR94.6bn (US$26bn) in the July-September period, the second quarter of its 2012/13 fiscal year, preliminary central bank data showed on Thursday.

The fiscal surplus of the world’s number one exporter of liquefied natural gas was equivalent to 53.9 percent of gross domestic product in the period, according to the central bank.

It was more than double the QAR42.2bnl surplus recorded in the same quarter of the previous year, and compared with an QAR18.5bn deficit in April-June. That put the cumulative surplus at QAR76.1bn in April-September.

Because of the timing of revenue flows, Qatar’s budget usually records deficits in the first quarter of its fiscal year, which begins in April, and then bounces back into surplus for the rest of the year.

The OPEC member booked a robust QAR54.3bn surplus in the 2011/12 fiscal year, the biggest since at least 2005/06, despite a surge in spending on public sector wages.

Analysts polled by Reuters in January forecast Qatar’s budget surplus would be 9.1 percent of GDP in the current fiscal year.

Expenditure rose nearly 14 percent from a year earlier to QAR40.8bn in July-September. Revenue was QAR135.3bn, up 74 percent. Oil- and gas-related revenue accounts for roughly 70 percent of Qatar’s budget income.

Under its budget plan the Gulf Arab state said it would boost spending to QAR178.6bn in the current fiscal year, including wages, services and projects, but expected a comfortable surplus of QAR27.8bn.

In September 2011 Qatar, which has avoided the social unrest that rocked much of the Arab world, raised basic salaries and social benefits for state civilian employees by 60 percent, while military staff received 50-120 percent increases.

It plans to spend an average of over 10 percent of GDP annually on infrastructure in the run-up to hosting the soccer World Cup tournament in 2022.

Iran’s Khamenei rebuffs US offer of direct talks

Iran’s highest authority, Ayatollah Ali Khamenei, on Thursday slapped down an offer of direct talks made by US Vice President Joe Biden this week, saying they would not solve the problem between them.

“Some naive people like the idea of negotiating with America, however, negotiations will not solve the problem,” Khamenei said in a speech to officials and members of Iran’s air force carried on his official website.

“If some people want American rule to be established again in Iran, the nation will rise up to face them,” he said.

“American policy in the Middle East has been destroyed and Americans now need to play a new card. That card is dragging Iran into negotiations.”

Khamenei made his comments just days after Joe Biden said the United States was prepared to meet bilaterally with the Iranian leadership. “That offer stands but it must be real and tangible,” Biden said in a speech in Munich.

With traditional fiery rhetoric, Khamenei lambasted Biden’s offer, saying that since the 1979 revolution the United States had gravely insulted Iran and continued to do so with its threat of military action.

“You take up arms against the nation of Iran and say: ‘negotiate or we fire’. But you should know that pressure and negotiations are not compatible and our nation will not be intimidated by these actions,” he added.

Relations between Iran and the United States were severed in 1979 after the overthrow of Iran’s pro-western monarchy and diplomatic meetings between officials have since been very rare.

Currently U.S.-Iran contact is limited to talks between Tehran and a so-called P5+1 group of powers on Iran’s disputed nuclear programme which are to resume on Feb. 26 in Kazakhstan.

Israel’s Deputy Prime Minister Dan Meridor said he was sceptical the negotiations in Almaty could yield a result, telling Israel Radio that the United States needed to demonstrate to Iran that “all options were still on the table”.

Israel, widely recognised to be the only nuclear power in the Middle East, has warned it could mount a pre-emptive strike on Iranian atomic sites. Israel sees its existence as directly threatened by the prospect of an nuclear-armed Iran, given Tehran’s refusal to recognise the existence of the Jewish state.

“The final option, this is the phrasing we have used, should remain in place and be serious,” said Meridor.

“The fact that the Iranians have not yet come down from the path they are on means that talks… are liable to bring about only a stalling for time,” he said.

Iran maintains its nuclear programme is entirely peaceful but Western powers are concerned it is intent on developing a weapons programme.

Many believe a deal on settling the nuclear issue is impossible without a US-Iranian thaw. But any rapprochement would require direct talks addressing many sources of mutual mistrust that have lingered since Iran’s 1979 Islamic Revolution and the subsequent US embassy hostage crisis in Tehran.

Moreover, although his re-election last November may give President Barack Obama a freer hand to pursue direct negotiations, analysts say Iran’s own presidential election in June may prove an additional obstacle to progress being made.

Analysis: Even brief spending cuts could hit U.S. economy hard

Wed Feb 6, 2013 6:53pm EST

WASHINGTON (Reuters) – The U.S. economy could take a big hit from automatic government spending cuts even if Congress only leaves them in place for a month or two.

The cuts were meant to be so painful that they would force Congress to find a more thoughtful way to tighten the budget.

But many analysts assume they will take effect as scheduled, forcing federal offices to furlough some of their 2.8 million workers and trim spending on everything from paper clips to missiles.

It is anyone’s guess, however, how long lawmakers will be able to stomach the economic pain. The duration of the austerity measures will determine the force of the blow to the economy. Some analysts think having the cuts in place for more than a few months could trigger a brief recession.

The Congressional Budget Office said on Tuesday the cuts would translate into $42 billion less in federal spending between the beginning of March and the end of September.

If $6 billion in spending is cut in March – which would be the average decline over a seven-month period – economic growth would be stunted by roughly seven-tenths of a percent in the first quarter, said Omair Sharif, an economist at RBS in Stamford, Connecticut.

“You are going to feel the pain right away,” Sharif said.

Expectations for growth during the first quarter are already lackluster. Analysts polled by Reuters last month said they expected the economy to grow at a 1.5 percent annual rate in the first quarter, though some have since raised forecasts.

If the cuts continued into the second quarter, the austerity could erase almost all the growth expected during that period, Sharif said. After the second quarter, the impact would lessen.

Sharif’s calculation only takes into account the direct effect on growth from spending cuts. The loss of income at government contractors and among furloughed employees would also hurt the economy throughout the year by reducing consumer spending and business investment.

Pentagon officials have said up to 800,000 of the military’s civilian employees would work one less day a week because of the cuts.

The Air Force said it would have to curtail orders for Lockheed Martin Corp’s F-35 fighter jet and delay a new version of the MQ-9 Reaper drone being built by privately held General Atomics.

Congress has been scrambling to find a way to postpone the budget cuts, but has shown little sign of progress.

In its report this week, the CBO projected that the economy would grow 1.4 percent this year if the austerity measures kick in. At that pace, the jobless rate would average 8 percent in the fourth quarter, just above the 7.9 percent reading from January.

Most Wall Street banks expect the cuts, known as the “sequester” in Washington parlance, to take effect at least briefly.

Kevin Logan, chief U.S. economist at HSBC in New York, does not. He acknowledges there is a good chance he is wrong and says the cuts could push the United States into a brief recession.

“The full implementation of the sequester over a short period of time could very well be the trigger,” he said.

(Reporting by Jason Lange; Editing by Tim Ahmann and Stacey Joyce)

Fox dampens higher profit, revenue at News Corp

Wed Feb 6, 2013 8:11pm EST

(Reuters) – Rupert Murdoch’s News Corp on Wednesday reported higher quarterly revenue and profit on strong growth at its cable assets including its Regional Sports and FX networks.

But the rosy quarterly figures – revenue and profit beat expectations – masked troubles at three of News Corp’s properties, most notably Fox.

The “fourth network,” as Fox is sometimes called, has seen ratings weaken, with more softness at “American Idol” and “X-Factor.”

“It’s no secret (Fox) had a tough fall,” said News Corp President and Chief Operating Officer Chase Carey on a call with analysts, pinning the blame on both programming and a sports line up that fell short of expectations.

Carey, for instance, specifically cited the fact that the San Francisco Giants’ World Series sweep of the Detroit Tigers deprived Fox of three high profile nights of live event programming.

News Corp’s other trouble spots were overseas, with SKY Italia experiencing a drop off in subscribers because of that tough economy and declines at its Australian newspapers – the early seeds of the News Corp empire.

Carey said Sky Italia’s performance so far this year is tracking $100 million below expectations and $150 million lower than last year’s performance. He said News Corp plans to take $200 million out of the unit’s cost base over the next two to three years.

Shares of News Corp, whose global assets also include The Wall Street Journal and film studio Twentieth Century Fox, fell 3 percent in after-hours trading after closing at $28.22 on Wednesday.

The media conglomerate said revenue rose 5 percent to $9.43 billion for the quarter that ended in December. Analysts were expecting revenue of $9.28 billion, according to Thomson Reuters I/B/E/S.

News Corp is preparing to separate its faster growing entertainment assets from its newspapers, a move that has been greeted with enthusiasm from investors who have driven up the stock almost 50 percent year-over-year.

Some details about the new publishing operations have been released, including naming Robert Thomson, a Murdoch confidant and the former top editor at The Wall Street Journal, as CEO. More financial information is expected to be released in the next month or so and the split is still on track to be completed by the end of the year, News Corp executives said on the call. Beyond that, however, no other information about the split was provided and analysts did not ask any questions about it.

Despite the problems in Australia, the division that operates the company’s newspapers and book publishing assets reported an operating income increase to $234 million from $218 million in the same period a year ago, credited in part to the launch of the Sunday edition of its British tabloid The Sun.


Murdoch was once again absent from the earnings call but his son James Murdoch, the company’s deputy chief operating officer, fielded questions including the latest cable news out of Europe.

Rupert Murdoch’s long-time rival John Malone on Tuesday inked a deal through his Liberty Global to buy British cable group Virgin Media – a potential threat to News Corp’s dominance in pay-TV in Europe and its BSkyB network in the U.K.[ID:nL5N0B5646]

But James, who also serves as a director at BSkyB, downplayed any competitive threat.

“Across Europe we compete as well as work with Liberty Global. I don’t think there is really a big change to the landscape there. We’re pretty pleased with momentum and pleased with the strategic position of the business,” he said.

Indeed, News Corp’s cable assets have turned in strong growth and this quarter was no exception. Operating income increased 7 percent to $945 million. Advertising revenue at its domestic cable channels rose 8 percent.

“You are getting a massive out performance of growth at the cable group and we think that is compelling,” said RBC Capital Markets analyst David Bank.

Also attractive is News Corp’s ambitions of expanding its sports programming. The company recently took a 49 percent stake in the network that airs the New York Yankees baseball team and snapped up a regional sports network in Ohio, Bank noted.

News Corp’s moves to acquire sports programming rights is widely believed to be the prelude to its launching a national sports network to compete with Disney’s ESPN.

On that point, Carey sheepishly said that while News Corp hasn’t made an official announcement, “you could call it the world’s worst kept secret.”

“We think sports is in a huge arena that has room in it to build really attractive businesses,” he added.

Carey also took the opportunity to take a shot at Time Warner Cable, saying that company’s recent deal for the television rights to the LA Dodgers, reportedly valued at $6 billion-$7 billion, was “too rich for our blood.”

News Corp said that net income was $2.38 billion or $1.01 per share, compared with $1.06 billion or 42 cents per share in the same period a year ago.

Excluding special items including costs related to the phone hacking scandal in the U.K., earnings per share was 44 cents, ahead of analysts’ estimates by a penny.

(Reporting By Jennifer Saba in New York; Editing by Peter Lauria and Bernard Orr)

Exclusive: S&P hires top defense attorney for $5 billion lawsuit

Wed Feb 6, 2013 8:01pm EST

NEW YORK (Reuters) – Standard and Poor’s has hired John Keker, one of the country’s top white-collar defense attorneys, to help fight a $5 billion lawsuit brought by the U.S. government this week.

Keker, who is based in San Francisco and has represented everyone from cyclist Lance Armstrong to Enron’s Andrew Fastow, was hired at the recommendation of Floyd Abrams, a prominent New York attorney who also represents the ratings firm.

“John Keker is one of the great trial lawyers in this country,” Abrams said.

Keker did not return calls seeking comment. A spokeswoman for his firm, Keker Van Nest, confirmed that Keker and another partner, Elliot Peters, were on the case.

The U.S. government sued Standard Poor’s in federal court in Los Angeles on Monday, accusing the McGraw Hill Cos Inc (MHP.N) unit of a scheme to defraud investors in mortgage-related securities that collapsed in the financial crisis.

Standard Poor’s has said the lawsuit is “without legal merit and unjustified” and that it will “vigorously defend” itself against the erroneous claims.

Abrams, a noted First Amendment lawyer who has defended SP in dozens of lawsuits over its ratings, said this week that freedom of speech may not be a defense in this case.

In an interview with Reuters on Wednesday, Abrams said bringing Keker onto the team was an indication that “we are going to be more than ready, if necessary, to have a trial.”

Keker, known as a combative defense attorney, won credit from legal experts in 2006 when Fastow, considered the mastermind of Enron’s fraud, was sentenced to only six years in prison.

Keker also helped Armstrong fend off a U.S. Justice Department investigation into doping last year. Armstrong admitted doping earlier this year, raising questions over whether the investigation could be reopened.

Keker also represented ex-Citigroup banker Brian Stoker in a case brought by the U.S. Securities and Exchange Commission over his role in a mortgage bond deal that collapsed. Stoker was cleared of wrongdoing.

A former Marine, Keker prosecuted Lt. Col. Oliver North during the Iran-Contra scandal.

Abrams, a partner at Cahill Gordon Reindel, said he would meet with Keker in New York on Thursday.

Abrams said the government will find it difficult to portray the banks in the deals as victims of bad ratings.

In 11 of the deals highlighted by the government, the financial institution that bought the debt was the same institution that arranged the securities, Abrams said.

“They are the entities that had their hands on precisely what went into these CDOs because they were the ones that made the choices,” he said. “The notion that rating agencies are somehow to be held liable for their losses is an unlikely one.”

Abrams also discounted the lawsuit’s reference to a video of an SP analyst singing a parody of the 1983 Talking Heads song “Burning Down the House.”

“The government’s got a heavy burden here and I don’t think they can come close to meeting it,” Abrams said. “And they certainly can’t meet it by that sort of anecdotal, wise-cracking evidence.”

Abrams said the defense will look at whether 1989 the statute cited in the lawsuit, the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), applies to the government’s claims.

He said the government was effectively using the statute as a substitute for securities law, but with an expanded statute of limitations.

“Certainly it wasn’t passed with the intention to allow lawsuits like this,” Abrams said.

The case is United States of America v. McGraw-Hill Companies Inc, U.S. District Court, Central District of California, No. 130-00779.

(Reporting by Karen Freifeld; Editing by Eddie Evans and Tim Dobbyn)

Exclusive: RBS fined $612 million for rate rigging

Wed Feb 6, 2013 6:25pm EST

Advisory: strong language in paragraph 25

LONDON (Reuters) – Royal Bank of Scotland will pay $612 million to U.S. and British authorities to settle allegations it manipulated benchmark interest rates, and regulators warned there is more to come in the global investigation.

RBS became the third bank to pay fines in the Libor scandal.

The British bank, which is 82 percent-owned by the state after the world’s costliest bank bailout in 2008, said on Wednesday it was cutting bonuses to help pay for the fine, in a bid to avoid a public backlash.

The bank fears the scandal will embolden critics who want it to further shrink its profitable investment bank and focus on basic lending at home.

“What happened at RBS and other banks is totally unacceptable,” Britain’s finance minister, George Osborne, told reporters.

Britain’s Financial Services Authority (FSA) signaled more large fines were in the offing.

“The size and scale of our continuing investigations remains significant,” said Tracey McDermott, director of enforcement and financial crime at the FSA.

More than a dozen banks and brokerage firms, including JP Morgan, Deutsche Bank AG and Citigroup Inc, are being investigated by regulators over the manipulation of benchmark interest rates such as the London interbank offered rate, known as Libor, and Euribor, which are used to price trillions of dollars’ worth of loans.

For their roles in the Libor scandal, Switzerland’s UBS AG agreed in December to pay penalties of $1.5 billion, and Britain’s Barclays Plc has paid $453 million.

Deutsche Bank has suspended five traders in connection with alleged manipulation of Euribor, a source familiar with the matter said on Wednesday.

Recent reports have raised the possibility of other banks resolving liability through a group settlement, but in an interview on Wednesday, a top U.S. Justice Department official shot down that idea.

“Criminal cases are not resolved in a group setting,” said Lanny Breuer, the head of the department’s criminal division. “We are going to go after each individual financial institution.”


Investigators said they discovered hundreds of attempts by at least 21 RBS employees in London, Singapore and Tokyo to manipulate Libor. RBS traders aided dealers at other banks, including UBS, to rig the rates.

The abuse at RBS occurred from at least 2006 until late 2010 – after some of the traders learned of the probe into Libor.

The FSA criticized RBS for seating derivatives traders next to people who submitted Libor rates and said the bank’s systems and controls were flawed as recently as March 2012.

Like their peers at Barclays and UBS, RBS staff were blatant about what they were doing in internal chatrooms, according to extracts of exchanges released by investigators.

A Swiss-franc trader at RBS told someone submitting rates to Libor that if he submitted them in the way he wanted, he would “come over there and make love to you.

A manager said “pure manipulation” was at work.

The U.S. Department of Justice said the near 300-year-old bank was guilty of a “stunning abuse of trust”.

RBS is paying 87.5 million pounds ($137 million) to the FSA, $150 million to the U.S. Department of Justice and $325 million to the U.S. Commodity Futures Trading Commission, which regulates trade in derivatives.

A unit of the bank in Japan also pleaded guilty in the United States to one count of criminal wire fraud.

The parent company avoided criminal liability in the United States, meaning it can retain its banking licence there and avoid a fire sale of its U.S. business, Citizens Bank.

As part of its deferred prosecution agreement, the bank was forced to admit and accept responsibility for its misconduct.

In a 41-page statement of facts, for example, the bank admitted its employees treated requests for favorable submissions in a routine, casual manner.

In one colorful example, a trader in an electronic chat in 2009 asked for a lower submission, then told the submitter he was “like a whores drawers” in acknowledging he often passed on requests for interest rates that went up and down.

Lawyers expect a wave of civil lawsuits, potentially costing banks tens of billions of dollars. It is unclear how many individuals will be prosecuted.

U.S. prosecutors have filed criminal charges against two former employees of UBS. Days before the Swiss bank was fined, British police and anti-fraud officers arrested one of the traders later charged in the United States along with two employees of British brokerage firm RP Martin.

The U.S. Justice Department’s Breuer said such inquiries continued. “As of today there are no individuals, but as you can tell, and we’ve demonstrated time again, this is an ongoing investigation,” he said.


RBS Chief Executive Stephen Hester wants to re-establish the bank as a “normal” lender, shrinking the balance sheet by 700 billion pounds and cutting thousands of jobs as he jettisons the previous management’s ambition for global domination.

Speaking to reporters in London, a visibly emotional Hester failed on three occasions to give a direct answer to questions on whether he had considered resigning over the Libor scandal.

“This has been a soap opera for four years,” he said. “The people who sit in judgment of us can dismiss us at any time if they feel that the bad bits get to be bigger than the good bits.”

Taxpayers are sitting on a loss of close to 16 billion pounds on their RBS stake, frustrating politicians.

Britain’s influential parliamentary commission on banking standards has summoned Hester and RBS’s chairman, Philip Hampton, to discuss the Libor scandal and the future of the bank on Monday.

RBS said all but six of the 21 staff implicated had either been fired or had already left the bank. The remainder were being disciplined.

RBS will cut 300 million pounds from its bonus pool, including clawing back awards from previous years, to pay the U.S. fines. The UK penalty will be donated to charitable causes, including supporting soldiers and their families, the government said.

John Hourican, head of RBS’s investment bank, is leaving at the end of April after it was discovered the manipulation went on after he took charge. He had no involvement in, or knowledge of, the misconduct, RBS said. Hourican will receive a year’s salary but forgo share awards.

“Libor is the railroad tracks on which our banking system runs,” Laura Willoughby, chief executive of consumer group Move Your Money, said of the rate rigging. “RBS and other banks have shattered trust in the very foundations of our financial system.”

RBS shares finished up 1.36 percent at 342.1 pence on Wednesday.

(Additional reporting by Laura Noonan, Andrew Osborn, Tim Castle and Myles Neligan in London, and Douwe Miedema and Aruna Viswanatha in Washington; editing by Mark Potter, Elaine Hardcastle, Leslie Adler and Matthew Lewis)

Wall Street ends flat as investors pull back

Wed Feb 6, 2013 5:37pm EST

NEW YORK (Reuters) – Stocks ended mostly flat on Wednesday, taking another pause in the recent rally that has driven the SP 500 to five-year highs, as transportation and technology shares lost ground.

Transportation stocks were among the worst performers. Shares of CH Robinson Worldwide (CHRW.O) fell 9.7 percent to $60.50 and the stock was the biggest percentage loser on the Nasdaq 100 after the freight transport company posted a lower-than-expected adjusted quarterly profit.

Without a strong catalyst, the market could struggle to continue its rally, analysts said. The benchmark SP 500 index has advanced 6 percent this year, reaching its highest since December 2007, while the Dow Jones industrial average .DJI has risen above 14,000 recently.

Bank of America-Merrill Lynch analysts see a near-term pullback likely, based on strong equity inflows at the start of the year, said Dan Suzuki, the bank’s equity strategist in New York.

“The fact that we’ve gone since November without seeing one, from a timing perspective, it wouldn’t be a surprise to see one now.”

With fourth-quarter earnings nearing an end, the market will be losing one of its big supports, said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. “That’s one thing that’s been holding the market up,” he said.

Shares of Time Warner Inc (TWX.N) jumped 4.1 percent to $52.01 after reporting higher fourth-quarter profit that beat Wall Street estimates, as growth in its cable networks offset declines in film, TV entertainment and publishing units.

The Dow Jones industrial average .DJI was up 7.22 points, or 0.05 percent, at 13,986.52. The Standard Poor’s 500 Index .SPX was up 0.83 points, or 0.05 percent, at 1,512.12. The Nasdaq Composite Index .IXIC was down 3.10 points, or 0.10 percent, at 3,168.48. (AMZN.O) shares, down 1.7 percent at $262.22, led the decline on the Nasdaq.

Also causing some strain on the market, investors have been speculating about leadership changes in Spain and Italy and watching for comments from European leaders, analysts said. European Central Bank policymakers are due to meet Thursday.

The Dow Jones Transportation average .DJT was down 0.2 percent after hitting another record high on Tuesday. The average is up 10.7 percent for the year so far and has made a series of new highs since mid-January.

According to Thomson Reuters data, of 301 companies in the SP 500 that have reported earnings, 68.1 percent have exceeded analysts’ expectations, above a 62 percent average since 1994 and 65 percent over the past four quarters. In terms of revenue, 65.8 percent of companies have topped forecasts.

Fourth-quarter earnings for SP 500 companies are estimated to have risen 4.7 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

Walt Disney Co’s (DIS.N) stock was up 0.4 percent at $54.52, after the company beat estimates for quarterly adjusted earnings and gave an optimistic outlook for the next few quarters.

Volume was roughly 6.5 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the 2012 average daily closing volume of about 6.45 billion.

Advancers outpaced decliners on the NYSE by roughly 17 to 12 and on the Nasdaq by about 13 to 11.

(Editing by Bernadette Baum, Kenneth Barry and Nick Zieminski)

How a Failing Company Can Bring Out the Best in You

Want to gain confidence, wisdom, and leadership skills in record time? Go to work for a floundering company.

Mel Svenson/getty

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If you’ve never worked for a floundering company, you don’t know what you’re missing.

I’m serious. Nothing will prepare you better to lead. And nothing will prepare you better for life.

I’ve worked for a number of companies that, at one time or another, found themselves on the ropes and, you know what? I learned more about business, management, and leadership trying to help those companies fight it out with giants like Microsoft and Intel than all the rest of my experience combined.

The truth is that working for troubled companies brings out the best in people. It creates strong, resilient, adaptive leaders. Here’s what you’ll learn by working for companies that have to slug it out with market leaders while on a shoestring budget:

How to drink from the fire hose without drowning. When you’re understaffed, underfunded, and losing money every quarter, nobody’s going to wait around for you to figure things out. Your customers have better things to do. So do your competitors. These days, markets are constantly changing. Everything moves at lightening speed. There’s always too much information and never enough time to breathe. Better get used to it.

You can find your home. If there’s a test for knowing if you’re in the right place, it’s when the company you work for is in deep trouble and everyone’s got to sacrifice, pitch in, and fight. If you still love getting up in the morning and going to work under those conditions, then you’ve found your home.

You know what great leadership really is. Chief executives don’t usually get fired when things are going well. They get canned when times are hard and the board figures out what they’re really made of–and it falls short of their expectations. When business is floundering, that’s when the rubber meets the road. That’s when you can really tell if the company’s leadership has what it takes: the guts, the smarts, and most of all, the resilience.

The miracle of market segmentation. One of the most powerful techniques in marketing is called market segmentation. We can’t all be market leaders, but we can all find unique market segments and focus on leading those. It’s all about positioning your product in a niche you can dominate, and then growing from there.

How to win no-win situations. When you’re outmanned and outgunned, you always end up having to troubleshoot seemingly impossible problems. When you’re pushed so hard that your back is up against a wall, that’s exactly when you’ll rise to the occasion and do your best work. That’s right: necessity really is the mother of invention.

Guerilla warfare. Let’s face it: You don’t learn how to be scrappy, how to be crafty, how to do more with less, while working for the industry leader. You learn all that by working for an upstart that has to scrape and claw for every point of market share and every product feature with a fraction of the resources that the big guys have.

How tough and adaptive you really are. More than anything else, working for a company in trouble teaches you about yourself. You learn what you’re really made of. What you’re capable of doing when everything’s on the line and everyone’s counting on you. That’s why troubled companies really are gold mines. They’re opportunities for you to step up to the plate and take risks.

You’ll gain confidence from your successes and wisdom from your failures. Most of all, you’ll grow into whatever it is you’re capable of becoming.

7 Easy Ways to Upgrade Your Office

Out with the old, in with the new! Get a jump on spring cleaning by swapping out some of your outdated technology.

Courtesy companies

Items clockwise: Logitech Bluetooth Illuminated Keyboard K81, HP HD-5210, Focal Upright Furniture, Jura ENA Micro 9 One Touch.

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It’s not too early to do a little spring cleaning and sprucing up around the office. Start with your gadgets. Out with the old, in with the new! Here are seven easy things to upgrade.

1. Spice up your meeting space.

I wrote recently about how the telepresence suite of yesteryear is going away. But that doesn’t mean you should stick with a low-tech meeting space. Consider installing a large-screen display on the wall, like the Samsung ES9000. This 75-inch HDTV lets you wave a hand or use your voice to control the display, and has a built-in camera so you can Skype with the remote office.

2. Get people talking.

Speaking of meetings, you probably already use the webcam that came with your laptop. The quality might be okay, but those cameras lack flexibility: If you move your laptop, the camera moves with it–which is not always ideal. I like the HP HD-5210 because it can clip to anything near you desk and captures in 1080p high-def.

3. Get quality paper for your printer.

This might seem trivial, and even a little expensive. But you’d be surprised how paper makes a difference. The bargain paper packs–you know, those thin and flimsy sheets from Walmart–are prone to sticking in printers. Consider spending a little more for a slightly thicker stock. Your print-outs will look more professional, and your employees will appreciate the bump up in quality if it means not having to dismantle the printer again to find the one stuck sheet. One site I found is The Paper Mill Store, which sells a thicker printer stock in multiple colors.

4. Change your lightbulbs.

Make it an annual practice to replace some of your older lightbulbs. Sure, they may be working fine, but they’re probably sucking up more energy and casting only a faint glow. Philips has new LED bulbs as part of the Hue package, which lets you control the lights with your iPhone or Android. Brighter bulbs can make a space look more cheerful. And LED bulbs consume less energy and last much longer, yet emit a warmer glow.

5. Ditch your old coffeemaker.

It may be fulfilling its function, but it’s probably not serving good coffee. When I met with several start-ups in San Francisco recently, I kept track of which coffeemaker they had in their break room. (Keurig, you are dominating.) But, I also spotted a few Jura models, my all-time favorite brand. They’re expensive, but you’ll end up spending less when you grind your own coffee. Plus, they don’t use throw-away cups. The Jura ENA Micro 9 One Touch can make coffee, espresso, and specialty drinks.

6. Get new keyboards.

Take a quick spin around your office right now. Go ahead, I’ll wait. Did you see crusty old keyboards everywhere? Employees hate those but they will keep using whatever is available. For an upgrade, consider the new Logitech Bluetooth Illuminated Keyboard K810. This model is smaller but has raised chiclet keys for fast typing. There’s a button to switch between your laptop, iPhone, and iPad.

7. Stand up for ergonomics.

A friend of mine who works at a local power utility says her company invested in stand-up desks a few years ago. And for good reason–sitting all day is terrible for you. Focal makes stand-up models that look cool in any cubicle.

4 Reasons Not to Trust the Stock Market

Share prices on Wall Street have been strong, which is a good thing for any growing business. Still, you better watch out.

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Manti Te’o.  Beyonce.  Lance Armstrong.  My God, can you not trust anyone anymore?

Sadly, that’s the state of things.  And it’s the same on Wall Street.  The Dow recently hovers now around 14,000, which is amazing when you consider it was near 6,000 just a few years ago.  But don’t get too excited.  Most business people don’t.  That’s because you can’t necessarily trust the stock market–any more than you trust the pilot when he says, “It should be a smooth flight.”  You have concerns.  Big ones.

A hundred years ago I was a controller for a now-defunct publicly-held company.  The firm was in the biotech industry, and like many companies in that industry during the 1990s, its executives were always out looking for money.  Although it had thousands of investors, most of the equity in the company was held by a half dozen Wall Street investment banks and a few high wealth individuals.

The firm was developing a very unique topical cream.  And it looked promising.  So promising that the stock price was increasing each week in anticipation of the results of an important clinical trial.  And then the news came: the trial was a bust.  I knew that the market would find this out at 7AM the next morning and the stock would drop by half, maybe more.  The biggest immediate concern?  To help large investors minimize their losses so they would hopefully come back in the future, of course!  So at 7:01 the next morning, senior managers–including me–got on the phone with big investors to alert them immediately to the press release we had just issued.  The big guys took their losses, but nowhere near the bath that those poor others who were not in the know absorbed when they finally got around to the news.  None of this was illegal.  But I learned two important lessons: a topical cream will not increase the size of a man’s genitalia.  And don’t trust the stock market.

The stock market is not a level playing field. 

No matter how much the government tries to make it fair, stocks are traded based on information.  And much of this information is not readily available to the common investor.  That’s because the common investor is doing other things than spending the day watching stocks.  Smart business owners I know who get into the market usually leave it to the professionals.  But they’re wary.  Because investing in the stock market means taking money from your business and giving it to some other guy to use to run his business.  Most of the time you don’t even know that guy.  And yet, you’re making a bet on him, usually based on incomplete information.  Isn’t Vegas a better option?  That’s concern No. 1.

Concern No. 2: On Wall Street, no real checks or balances are in place.

Much of the trading that’s done on the stock market is based on the financial results audited by the big accounting firms.  Business executives don’t really trust them either.  Ever read one of those audit opinions?  Go ahead–but brace yourself.  You’ll find that reading one will give a guy about as much comfort as reading 50 Shades of Grey.  That’s because no matter how big these firms are they don’t have the resources to truly audit large public companies.  So instead they audit by sampling small sets of data.  And they rely heavily on the representations made by management.  That would be the same management that pays their fees and accompanies them to basketball games, golf outings, and strip joints in Nashville.  This is the same management whose annual bonus is heavily dependent on a clean audit opinion and a rising share price.  And who can fire one accounting firm and hire another competitive firm, causing financial hardship to those very auditors.  Sound objective to you?  Let’s not even mention the credit rating firms like SP.  They’ve got their own problems.

But you know this already.

The stock market is not a microcosm of the economy (though many think it is). 

For example, the Dow Jones Index is made up of just 30 companies of the thousands that are publicly-held and tens of millions of other businesses in the United States alone.  These companies are supposed to reflect industries from manufacturing (General Electric) to financial services (American Express), technology (Microsoft) to energy (Exxon), and entertainment (Disney).  These are huge, well-run companies that operate all over the world.  They have MBAs who manage every dollar, expensive accountants who help them reduce taxes, and zillion-dollar budgets to build brands.  One of them makes Big Macs.  Respect.  But is this an accurate representation of the stock market?  I don’t trust that.

A stock market rise doesn’t accurately reflect economic conditions.  

Thank God for that.  GDP contracted last quarter, unemployment remains stubbornly at 8%, and business confidence is at historically-low levels.  Things are so bad the Super Bowl didn’t even have enough electricity.  Most economists believe that money is flowing into the stock market because there are not a lot of other places for it to go.  Today, moss grows faster on a dollar bill than any interest it can earn.  Property values, though rising, are still depressed.  Europe is a mess.  China’s hacking our computers.  Everyone already has an iPhone.  So where else are investors going to spend all that free money the Fed is churning out in its latest quantitative easing scheme?  How about the U.S. stock market?

Even knowing all this, I’m sure you’re not complaining.  You know how important a strong stock market is to the success of your company.  Money may not buy happiness but it can certainly help pay for that big order.  Rising portfolios contribute to a rise in confidence.  It makes people feel better.  Richer.  Happier.  Customers feel a little better about making investments and spending a few bucks.  Prospects who once cowered in the shadows a few years ago are now emerging and asking me how much it would cost to upgrade their software systems or buy new technology.  They’re not afraid to look at their bank statements as much as they were before.

You also know that a strong stock market underpins your growth.  For those who have excess cash invested in the markets, you likely find yourselves with a growing balance sheet.  Some of my clients are reaching out to their bankers for working capital, now collateralized by these higher asset values.  Other, more courageous and entrepreneurial souls are becoming enticed with the prospects of themselves going public.  Companies that are already publicly-traded are looking at investment deals where they can put their higher stock values to better use and to help finance start-ups and other ventures.

The rising stock market is a good thing.  And the smart business people I know are taking advantage of it (or plan to).  But i’d bet your wary of its rise.  I don’t trust the markets.  And neither should you.  The captain just put on the seat belt sign due to a “little unexpected turbulence.”  See?