1 Microsoft suffers for ad dud (San Francisco Chronicle) Microsoft is absorbing a $6.2 billion charge to reflect that one of the biggest deals in its 37-year history turned out to be a dud. The non-cash charge could saddle Microsoft Corp. with a loss for its fiscal fourth quarter ended in June. Analysts had predicted Microsoft would earn about $5.3 billion for the period. The company hasn’t suffered a quarterly loss during the past 20 years, according to its website. The world’s largest software maker blamed the setback on the disappointing performance of aQuantive. That’s an online advertising service that Microsoft bought for $6.3 billion in 2007 to mount a more serious challenge to one of its biggest rivals, Internet search leader Google.
The aQuantive deal ranked as the most expensive deal in Microsoft’s history until it was eclipsed last year by the company’s $8.5 billion purchase of Internet video chat service Skype. Investors can only hope Skype works out better than aQuantive. Microsoft’s $6.2 billion charge represents a sobering acknowledgement that aQuantive didn’t bring in as much online advertising revenue as envisioned, forcing management to write off most of the purchase price.
To add to Microsoft’s mortification, Google has been milking the acquisition of an aQuantive rival to widen its lead in the steadily growing online ad market. Google bought DoubleClick for $3.2 billion about eight months after Microsoft took control of aQuantive. Since then, Google’s annual profit and advertising sales have more than doubled. Last year, Google earned $9.7 billion and collected $36.5 billion in ad revenue.
2 GlaxoSmithKline fined $3bn in healthcare ‘fraud’ (The Guardian) GlaxoSmithKline has agreed to plead guilty to misdemeanour criminal charges and pay $3bn to settle what government officials describe as the largest case of healthcare fraud in US history. The agreement, which still needs court approval, would resolve allegations that the British drug maker broke US laws in the marketing and development of pharmaceuticals. GSK targeted the antidepressant Paxil at patients under age 18 when it was approved only for adults, and promoted the drug Wellbutrin for uses it was not approved for, including weight loss and treatment of sexual dysfunction, according to a US justice department investigation.
The company went to extreme lengths to promote the drugs, such as distributing a misleading medical journal article and providing doctors with meals and spa treatments that amounted to illegal kickbacks, prosecutors said. In a third case, GSK failed to give the US Food and Drug Administration safety data about its diabetes drug Avandia, in violation of US law, prosecutors said.
3 Euro gloom crosses Altantic (The Guardian) US factories saw their biggest one-month drop in orders last month since the 9/11 terrorist attacks as the effects from Europe’s sovereign debt crisis rippled across the Atlantic. Amid growing evidence that the battle to save the euro is now having a global impact, a key monthly snapshot of business in America showed manufacturing sliding into recession territory for the first time in three years. Shares fell on Wall Street after traders were taken aback by a gloomy report from the Institute for Supply Management in the US, which followed downbeat news earlier in the day from China and the UK as well as the 17-nation eurozone. Oil prices also fell back sharply, losing almost $2 a barrel amid concerns that weaker growth across the world economy would hit demand for energy.
4 Energy shortage hits India (The Wall Street Journal) India is facing an energy crisis that is slowing economic growth in the world’s largest democracy. At stake is India’s ability to bring electricity to 400 million rural residents—a third of the population—as well as keep the lights on at corporate office towers and provide enough fuel for 1.5 million new vehicles added to the roads each month. Shortages of coal, oil and natural gas will require India to import increasing amounts of high-cost fossil fuels, risking inflation and putting the country in stepped-up competition with China, Japan and South Korea. Buying oil from Iran, one of India’s biggest suppliers, is tougher because of US and European sanctions aimed at curbing Tehran’s nuclear ambitions.
Expensive imports have taken a toll on the nation’s finances. Though global crude oil prices have eased in the past few months, India is seeing little benefit because its currency, the rupee, has been dropping against the dollar, the currency used to price oil. “The prime minister and a few wise men are beginning to realize that there’s a very bleak outlook in terms of energy security, and that this is going to create the single largest constraint on the economy, one of alarming proportions,” said Gokul Chaudhri, a partner at New Delhi-based consultancy BMR Advisors, whose clients include Indian and foreign energy firms.
5 Salam’s pocket cartoon in The Economic Times, showing an employee asking a human resource development official: Sir, can I talk to you as a human being…?