Price Gains on Quality In Cellphones

In a recent survey, proportionally fewer cellphone users than in 2006 cited signal quality as their main reason for having switched to their current carrier, according to comScore, a research firm. And a larger proportion than before cited price as the deciding factor; that percentage crept up to 19 percent from 14 percent.
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In other words, people are beginning to treat cellphone service as a commodity, its providers distinguished only by price. “At the end of the day, they all have pretty decent coverage,” said Serge Matta, a senior vice president at comScore. “It’s really an issue of, ‘What’s the next most important thing?’ And price really is key.”
The study, which polled about 2,000 cellphone users from Feb. 29 to March 5, 2008, also found that exactly a third did not have a traditional land-based phone, up from 14 percent in late 2006. “It surprised us,” said Mr. Matta, who added, incidentally, that he would get rid of his landline within the next few weeks

Heidi Klum's Bikini

April 28 (Bloomberg) -- Men appreciate centerfold Heidi Klum's beauty in the 2008 Sports Illustrated Swimsuit Issue. Women lust after her $137 string bikini.
Within two weeks of the magazine's arrival on newsstands in mid-February, Red Carter, the designer of the American-Indian inspired two-piece Klum wore, managed to move a 400-plus inventory of the suit. According to the Miami-based swimwear maker, his overall sales in the two months since are 60 percent higher than a year earlier.
``It doesn't get better than that,'' said Carter, 39.
At times the target of feminist ire, the Swimsuit Issue also turns out to be a clothing catalog for more than 28 million female readers of the magazine. These women, along with merchandise buyers, are making inclusion a ticket to increased swimsuit sales and legitimacy for lesser-known designers. The magazine's best-selling and highest-revenue edition is ``the Academy Awards'' for the U.S. swimwear industry, says fashion consultant Carolyn Moss.
Even as women's apparel sales look to show no gain in 2008, swimsuit sales will rise 5 percent, according to Marshal Cohen, chief industry analyst for Port Washington, New York-based market research firm NPD Group Inc. The industry generated annual revenue of $2.75 billion in 2007 out of total women's clothes sales of $104 billion that year, according to NPD Group.
Huge Growth
``Five percent growth in a slowing economy is a huge story in its own right,'' Cohen said. While slower than the 2007 increase of 7.5 percent, a gain that size in 2008 ``would be like 10 percent any other year.''
Cohen relates rising revenue to decisions by strapped consumers to vacation more cheaply by sunbathing in their backyards and at local pools and beaches, rather than going to cities, he said.
Sales in 2007 more than doubled from the prior year, partly because designers including Badgley Mischka entered the segment with swimsuits for $500 or more, said Colleen Sherin, fashion director for Saks Inc. in New York. Swimwear makers also offered suits that provide more coverage to satisfy American modesty and bigger cup sizes to accommodate larger women, said Moss at the New York-based consulting firm Tobe. Another innovation in recent years was to allow shoppers to mix and match tops and bottoms, she said.
Those aren't the kind of swimwear women see in Sports Illustrated. The magazine is catering to a more fashion-conscious shopper. She has a median age of 37 and annual income of $70,700, according to Karen Dmochowsky, a Sports Illustrated spokeswoman.
The edition of the magazine, published by Time Warner Inc., will be on sale until May 20 and has a readership of about 70 million. That compares with a monthly average of 21 million.
Ad Bonanza
The 2008 issue, with 112 advertising pages, includes about 120 styles from about 70 brands -- some priced close to $700. Diane Smith, who has been editor of the issue for 10 years, says she seeks out designers each July at the biggest swimwear trade show in Miami. She looks for suits that match issue themes. For a shoot in Russia, she sought designs that looked like Faberge eggs, the editor said.
Smith also gives a top-secret list of the planned exotic photo-shoot locations to select designers, who then make tailored submissions. Lourdes Hanimian, 44, from Miami-based brand Luli Fama, once fashioned a suit in 48 hours out of paper cigar bands for placement in a South American layout.
The issue helps set the tone for the season because it is bigger and earlier than rival products from fashion magazines that tend to take a more ``instructional'' approach, giving readers advice on how to select flattering styles, Saks's Sherin said.
Model Designer
Creators go to lengths to win selection. Carter and Beach Bunny Swimwear founder Angela Chittenden each submitted 50 to 100 designs to see whether any would catch Smith's eye. Carter ended up with three designs this year, his third time to make the issue, and Chittenden, a former swimwear model herself, landed nine, more than any other brand.
Chittenden, 30, said being selected helped double her sales from a year ago. She declined to provide figures. Chittenden produces lacy lingerie-inspired, skimpy Brazilian cuts. Her tops have underwires with molded air pockets for a push-up effect.
``People were afraid to take a chance on my style before they saw it in Sports Illustrated,'' said Chittenden, who is based in Newport Beach, California.
While Smith also includes big makers such as privately held Gottex Models USA Corp., she said her ``thrill'' is to feature small creators.
``I saw Beach Bunny in Sports Illustrated, and I fell in love with the stuff,'' said Brandi Greenfield, 32, an Irvine, California, baby-linen company owner. ``You really look cute in it and stand out a little bit.''

Carrefour Says 15 Stores in China Hit by Anti-French Protests

April 28 -- Carrefour SA, the world's second- biggest retailer, recorded lower sales at 15 of its 112 stores in China after cell-phone text messages and Internet blogs called for a boycott of the French company.
``The calls for a boycott aren't over yet and it's too soon to say what impact this will have,'' Jacques Beauchet, a member of Paris-based Carrefour's management committee, said in an interview with BFM radio today. More protests are expected on May 1, he said.
France was criticized in China after protesters disrupted the Olympic torch relay in Paris and French President Nicolas Sarkozy refused to rule out a boycott of the opening ceremony of the Olympics games. People rallied outside Carrefour stores in as many as 12 cities in the past two weeks to protest against disruptions to the relay.
The stores remained open during the protests, but sales were lower, Beauchet said, without giving more details.
Carrefour has canceled sales promotions planned for the May 1 public holiday in China after a call for more protests. The French retailer boosted sales in China 24 percent last year, making it the country's sixth-biggest retailer, according to the China Chain Store & Franchise Association.
The Olympic torch tour has drawn protesters who've used the global event to criticize Beijing's crackdown in Tibet and its human rights record. China blames supporters of the Dalai Lama, Tibet's spiritual leader, for organizing the most serious unrest in 20 years in Tibet's capital, Lhasa, last month.

Mars Agrees to Buy Gum Maker Wrigley for $23 Billion

April 28 -- Mars Inc. agreed to purchase Wm. Wrigley Jr. Co. for $23 billion, with financing from Warren Buffett's Berkshire Hathaway Inc., combining the world's biggest maker of chewing gum with the producer of M&Ms chocolate.
Wrigley, with $5.39 billion in sales in 2007, surged 23 percent in New York trading today after the companies said Mars would pay $80 for each Wrigley share. Mars, which generates $22 billion in annual revenue, is offering 28 percent more than Wrigley's closing price on April 25.
Uniting Mars, which also makes Snickers, and the 117-year- old Wrigley creates a company to compete with chocolate maker Hershey Co. and Cadbury Schweppes Plc, the world's largest candy maker. U.S. confectionary companies are exploring combinations as competition intensifies and milk and sugar prices rise. Gum has higher margins than chocolate and is growing faster, Mirabaud Securities analyst Julian Lakin said.
``There's really nothing that can go wrong with something like the Wrigley and Mars brands,'' Buffett, Berkshire's billionaire chief executive officer, said today in an interview on the CNBC television network. ``People are eating more and more of their products every day.''
The purchase will be financed with $11 billion from Mars, $4.4 billion from Berkshire and $5.7 billion from Goldman Sachs Group Inc. Berkshire will also buy a $2.1 billion stake in the Wrigley unit once the purchase is completed.
Wrigley jumped $14.14 to $76.59 at 10:27 a.m. in New York Stock Exchange composite trading. The shares had gained 6.7 percent this year before today. McLean, Virginia-based Mars is closely held.
`Great Price'
``It's a great price,'' said Thomas Burnett, director of research at New York-based Wall Street Access. ``Nobody is going to pay more than that. Who is going to go up against Mars and Buffett?'' He doesn't own shares of Wrigley or Berkshire.
Sales at Wrigley may rise 9 percent this year, the slowest pace since 2000, according to the average estimate of nine analysts surveyed by Bloomberg. Competition from London-based Cadbury's Trident and Dentyne gums in the U.S. has eroded its market share. Cadbury, the maker of Dairy Milk chocolate, bought Pfizer Inc.'s Adams candy unit for $4.2 billion in 2003 to become the world's second-largest maker of chewing gum.
Since November 2006, Mars has been winning market share in the U.S., while Hershey's has dropped, Alexia Howard, a Sanford C. Bernstein analyst who recommends investors sell Hershey, wrote in an April 11 note to investors.
`Strategic Sense'
``The deal appears to make strategic sense for Mars as it would give the global confection leader even greater scale as well as global distribution,'' Eric Katzman, an analyst with Deutsche Bank Securities Inc., wrote in a research note today before the announcement. Other companies may be forced to consider a merger, he said.
The trust that controls Hershey discussed ways to merge the chocolate company with Cadbury in a way that wouldn't decrease the trust's ownership, the Wall Street Journal reported last year. Cadbury will split off its U.S. drinks unit May 7 and begin trading as two separate companies: Cadbury Plc in London and Dr Pepper Snapple Group in the U.S.
Hershey rose as much as 7.3 percent in New York trading, while Cadbury climbed 2.4 percent in London.
In 2006, Wrigley named former Nike Inc. chief William Perez president and CEO, the first person outside the Wrigley family to head the company.
Gum Growth
Gum is the ``fastest-growing sector,'' said Lakin, who is based in London and recommends investors ``hold'' Cadbury stock. ``The consumer finds it attractive because it's mostly calorie free. This could give Cadbury a tough time.''
William Wrigley Jr. began selling soap in Chicago in 1891 and eventually turned to chewing gum, an item he was giving away for free with each sale, according to Wrigley's corporate Web site. He introduced Juicy Fruit and Wrigley's Spearmint in 1893, two brands the company still sells today.
Mars, founded in 1911 by Frank C. Mars, is still family owned. The company gets about 45 percent of revenue from chocolates and other snacks. Its biggest division is pet food, which sells Whiskas cat food and Pedigree for dogs, and accounts for 46 percent of sales, according to the company's Web site.
Berkshire Hathaway, based in Omaha, Nebraska, has about $40 billion to spend on acquisitions. Buffett, 77, has built Berkshire over four decades from a failing textile maker into a $195 billion holding company with businesses ranging from candy making to insurance.
Berkshire has stakes in companies including Coca-Cola Co. and Buffett ranks as the world's richest person, according to Forbes magazine.
Additional financing as well as advice is coming from JPMorgan Chase & Co, Mars said. Simpson Thacher & Bartlett LLP is acting as its legal counsel.
Goldman Sachs and William Blair Inc. provided Wrigley with financial advice. Skadden, Arps, Slate, Meagher & Flom, LLP served as legal adviser.

Microsoft Fight for Yahoo

April 28 (Bloomberg) -- Microsoft Corp. Chief Executive Officer Steve Ballmer is weighing a fight to oust Yahoo! Inc.'s board and pave the way for a takeover, after the Internet company let his deadline pass without agreeing to a deal.

Ballmer gave Yahoo an ultimatum to accept a $44.6 billion bid by last weekend. Now he is left to decide whether to walk away or begin the company's first hostile takeover battle. If he fights, he has to consider if he should continue to hold firm on the price or offer a better deal to win over shareholders.

Microsoft, the world's biggest software maker, can't afford to let Yahoo go, said Sachin Shah, an analyst for ICAP Securities in Jersey City, New Jersey. To crack Google Inc.'s dominance of the Internet advertising market, Microsoft is looking to handle more Web searches, sell advertisements with more graphics and videos, and be able to target campaigns and track their success.

``Microsoft does need Yahoo,'' said Shah, a merger-arbitrage analyst, in an interview with Bloomberg Television last week. ``If they didn't, they would have walked away a long time ago.''

Microsoft fell 20 cents to $29.63 at 9:34 a.m. New York time in Nasdaq Stock Market trading. Yahoo advanced 14 cents to $26.94. The value of the bid, originally $31 in cash and stock, has dropped to $29.68 based on Microsoft's closing price last week.

`Committed'

Microsoft has spent billions creating a Web search engine and technology to sell ads, and buying Internet companies such as AQuantive Inc. Acquiring Yahoo would give it the No. 2 spot in the $41 billion online ad market.

Losses at Redmond, Washington-based Microsoft's Internet business widened to $228 million last quarter, and sales rose to $843 million, at the low end of company forecasts. Google, owner of the most used Internet search engine, had $3.7 billion in revenue, excluding sales passed on to partner sites.

Advertising linked to search results accounts for more than half of Internet ad sales. Google handled six times more queries in the U.S. in March than Microsoft, according to ComScore Inc., a Reston, Virginia-based researcher.

``Microsoft is committed to completing the transaction and is unlikely to walk away from the deal,'' Citigroup analysts Brent Thill and Mark Mahaney in San Francisco wrote in a note to clients April 25.

`Quite Generous'

Some Microsoft investors say Yahoo CEO Jerry Yang would lose a proxy fight unless he finds an alternative that will boost his company's shares. Much of the stock is held by arbitragers who would accept $31, said Walter Price, a portfolio manager at RCM Capital Management in San Francisco. The firm owns Microsoft and Yahoo shares.

Ballmer called the offer ``quite generous'' three days ago. ``By this point if they don't agree we would have to take our arguments directly to the shareholders,'' he said after a speech to business executives in Madrid. ``We will see what they do, and we will move appropriately at that point.''

Options include a proxy fight or walking away from the offer and building Microsoft's Web unit without Sunnyvale, California- based Yahoo, using other investments and partnerships, Chief Financial Officer Chris Liddell said.

Yahoo spokeswoman Diana Wong didn't return calls for comment. Yang has said repeatedly that Yahoo is worth more, citing investments in Asia, the company's No. 2 position in Internet searches and potential cost savings of the deal. Seeking an alternative, Yahoo has approached rivals such as Time Warner Inc.'s AOL about a combination.

`Posturing'

Though Microsoft officials said last week that they won't raise the offer, analysts said it's still possible.

``Ultimately, we view this as posturing,'' Heather Bellini, an analyst at UBS AG in New York, wrote in a note April 25.

``Even if Microsoft tried to lower the value of the deal or walk away, we would expect them to eventually come back and raise it in order to consummate the transaction in a friendly manner,'' said Bellini, Institutional Investor magazine's top-ranked software analyst.