"It's getting to be embarrassing." -- Scott Kriens, CEO of Juniper Networks, on the U.S. ranking No. 12 in the world for per-capita broadband access
Proxy adviser Glass Lewis is recommending that clients reject a move by eBay at its annual meeting on June 24 to have shareholders set aside 24 million shares for future option grants.
Glass Lewis estimates that eBay (EBAY) employees raked in $373 million in option gains last year. At its current rate, the company is expected to shell out an additional $1.7 billion worth of options this year -- the equivalent of about $318,000 per employee, or three times 2003 net income. "Is this a business that's really being run for the economic benefit of investors or the enrich-ment of the employee base?" asks Gregory Taxin, CEO of Glass Lewis.
EBay shareholders are doing quite nicely, with total 2003 returns of 90%, compared with 28% for companies in the S&P 500. That's why Glass Lewis recommends yes votes for two directors on the compensation committee who are up for re-election and for CEO Margaret Whitman, who has received 3.2 million options in the past three years. An eBay spokesman says average option grants per worker have fallen by 69% from 2001 to 2003. And excluding grants to new employees, dilution is a modest 1.8%. Maybe so, but $318,000 is a lot of change by any measure.
Long-distance phone companies have little trouble putting calls through without a hitch. But when the bill comes in, well, that's another story. Between 3% and 6% of long-distance invoices are riddled with errors, says Eric Goodness, with market researcher Gartner.
The problem: massive, disjointed networks and billing systems can't always calculate the length, origin, or location of every call with 100% accuracy. The errors might amount to a few seconds here, a few minutes there, but for corporations, it adds up. Says Goodness: "I'm seeing companies save 30% to 45% off their telecom expenses."
Now entrepreneurs are taking advantage of the wrong numbers by offering systems that can compare actual calls against the bills. Jack Holt, CEO of s3 Matching Technologies of Austin, Tex., says he is saving some clients hundreds of thousands of dollars a month. The uproar over billing errors has pushed MCI to launch a task force to review complaints. It soon will decommission several redundant billing systems to improve service. AT&T (T) says its billing accuracy has increased by 65% in the past four years. Looks like the long-distance carriers still have a ways to go.
What's a big-shot network guy doing at a little startup in Silicon Valley? Driving the next media revolution, says Scott Sassa, ex-president of NBC West Coast, who left on June 3 for social networking phenom Friendster. Thanks to the rise of personal video recorders that let people skip ads, contends Sassa, network TV will be a grim business.
It's quite a change in mind-set for 45-year-old Sassa, who also helped start Fox's cable network. At NBC, he oversaw the likes of The West Wing and Fear Factor before moving in 2002 to a strategic planning job.
For now, Sassa's mum on specifics for Friendster, which boasts 7 million registered users who link up with friends to arrange dates and find long-lost buddies. He thinks the site could be a conduit to Gen Yers who are turned off by the boob tube. "There's a powerful marketing potential," he says. One hint: The site could help members offer trusted referrals of products and services to their friends -- or friends of friends.
Missed Jennifer Garner's teen comedy 13 Going on 30? Well, you won't have to wait too long. Sony Pictures plans to have the hit at a Blockbuster near you on Aug. 3, scarcely three months after it appeared at the local Bijou. That's nearly a month quicker than Sony averaged a year ago, according to industry tracker DVD Release Report.
Hollywood is simply following the money. Traditionally, studios release their films on DVD five or six months after the premiere. But DVD and video sales now generate more than twice as much revenue as theater showings, says Adams Media Research. That's why Disney's Miramax unit will ship copies of Kill Bill Vol. 2, starring Uma Thurman, just shy of four months after its Apr. 16 opening, says DVD Release Report. Sony also says it's planning to release DVDs of its comic book adventure film Hellboy a little less than four months after its Mar. 30 debut.
Theater owners worry that folks will find it easier -- and cheaper -- to wait for the DVD rather than brave the lines at their cineplex. But theaters are "aiding and abetting" quicker DVD releases by playing films on more screens, says longtime studio executive Amir Malin. That shortens box office runs and allows studios to hustle DVDs to market even faster.
Still, Malin says Hollywood risks angering theater owners as it releases more DVDs after just three months. Last year, several theaters threatened not to show Fox's From Justin to Kelly when Fox planned a DVD release six weeks after its premiere. Fox backed off. Sometimes, the biggest fight scenes aren't on the big screen.
Manufacturers of sport-utility vehicles, already fretting that high gas prices could crimp U.S. sales, now have a political backlash in France to contend with. On June 8, the Paris City Council endorsed a plan to forbid driving most SUVs in the city on days when a pol-lution alert is in effect. There were 19 such days last year. SUVs would also be permanently banned from roads along the Seine and in major parks.
The plan, which could take effect next year, would apply to vehicles with high carbon-dioxide emissions. Most of those affected would be SUVs, which according to govern-ment statistics release twice as much CO2 as smaller cars. Oddly, the action comes as the SUV craze is catching on in France. Sales grew 11% last year and account for 5% of all car sales.
Is the sugar that goes into Coca-Cola in Central America being produced with child labor? Human rights activists claim Coke buys sugar from a refiner in El Salvador supplied by plantations using child labor.
The sugar, bought by the beverage giant in bulk from the nation's largest mill, Central Izalco, is used in bottled drinks sold in El Salvador and in canned sodas sold across Central America. Human Rights Watch, a New York advocacy group, says its investigations through 2003 revealed that Izalco is supplied by four plantations that routinely use workers under the age of 18. Michael Bochenek, a lawyer for the group, contends Coke should use its clout with refiners to prevent the use of child labor. "They have a responsibility to ensure that human rights are respected further back in the supply chain," he says.
A Coke spokeswoman notes that none of the direct suppliers to Coke bottlers -- the mills and refiners -- use child labor. She says Coke is working with the sugar industry there, which recently enacted new guidelines that it hopes will minimize the use of child labor during the 2004-05 harvest.
A word to Thin Mint lovers: Girl Scouts are stepping up their efforts to make cookie deadbeats pay up. OldDebts.com, a debt collector, has been hired to send 2,000 letters in one Midwestern state alone. It won't reveal which state, and the parent organization, Girl Scouts of the USA, says cookie sales are run locally. But it's not the first time Girl Scouts have used enforcers to collect their Samoas. Last year, a Washington group hired an agency to recoup $30,000 it was owed. Girl Scouts may need someone on retainer: Next spring, the average price of a box of cookies could jump as much as 50 cents, to $3.50.
For tech companies, India is more than a source of cheap labor -- it's a booming market. Thanks to reduced tariffs, a surging economy, and all those software writers, sales of gear such as cell phones and PCs are expected to jump 20% this year, to $6 billion.
Now, companies are expanding in India. Elcoteq Network, which makes cell phones for Nokia, is building a plant. And contract manu-facturer Flextronics International, which just bought local telecom player Hughes Software, plans to make cell-phone components.