News Archive

Oracle’s Ellison downplays threat of NSA database snooping

SAN FRANCISCO (Reuters) – Oracle Corp CEO Larry Ellison played down concerns on Wednesday about possible government snooping in his business customers’ private data.

At an industry conference in San Francisco, an audience member asked the Oracle co-founder what to tell potential Oracle cloud-computing clients who worry that the National Security Agency could access their information.

“To the best of our knowledge, an Oracle database hasn’t been broken into for a couple of decades by anybody,” Ellison replied. “It’s so secure, there are people that complain,” he added.

Oracle, and other major Silicon Valley companies are increasingly offering Internet-based business services for things like human resources, accounting and sales management, in a trend known as cloud computing.

Entrusting software and data management to cloud services can save companies the expense of maintaining their own servers and other IT infrastructure.

Former NSA contractor Edward Snowden’s revelations about U.S. government surveillance have increased companies’ concerns about privacy and may cost U.S. technology vendors billions of dollars in lost sales, analysts say.

David Litchfield, an established security expert and frequent speaker at top hacking conferences, disagreed with Ellison’s comments and said he regularly sees Oracle systems being compromised.

“Of all of the commercial databases, Oracle is the least secure,” he told Reuters by email.

The roots of Ellison’s software company go back to 1977, when the Central Intelligence Agency contracted him and two co-workers to design a database, codenamed Oracle. The same year, Ellison and his colleagues founded the database company that would eventually be renamed Oracle.

In an interview with CBS News’ Charlie Rose in August, Ellison said he believed the NSA’s widespread surveillance was essential to preventing terrorism.

(Additional reporting by Joseph Menn; Editing by Matt Driskill)

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Charges dropped against Chinese automaker BYD in U.S. wage dispute

SHANGHAI (Reuters) – China’s BYD Co Ltd (1211.HK) (002594.SZ) said a California labor law watchdog had dropped charges against it over wage payments in a case that had put the Warren Buffet-backed automaker’s labor practices under the spotlight.

BYD was accused by the California Labor Commissioner’s office in October of failing to pay five Chinese workers temporarily working in the United States the required minimum wage of $8 per hour.

BYD said in a statement on Wednesday that the Commissioner withdrew the case after the company defended itself by submitting documents that showed its workers were paid the equivalent of $12-$16 per hour.

But as BYD had paid the wages in Chinese currency instead of U.S. dollars – a practice that the Commission objected to – the company agreed to pay $1,900 to resolve the matter, it said.

BYD said that its hearing with California’s Labor Commissioner’s office will continue on two other matters – the alleged omission of information on employees’ check stubs and the alleged denial of flexibility on rest breaks for eight employees. BYD said it denied the allegations.

The dispute highlights potential obstacles Chinese companies face as they begin to make inroads in mature markets like the United States and Europe where they are under more stringent industrial laws and regulations.

BYD, which makes electric buses in the United States, currently employs 50 local workers and plans to add 100 more next year.

The Chinese company is stepping up efforts to sell electric vehicles overseas. It signed several contracts last year, including one to supply the U.S. cities of Los Angeles and Long Beach, and to Amsterdam’s Schiphol airport.

(Reporting by Samuel Shen and Norihiko Shirouzu; Editing by Edwina Gibbs)

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Mobile ad revenue lifts Facebook past Wall Street targets

SAN FRANCISCO (Reuters) – Facebook Inc delivered its strongest revenue growth in two years, beating Wall Street targets as the Internet company’s mobile ad sales continued to accelerate.

Shares of Facebook surged 12 percent to $59.98 in after-hours trading on Wednesday.

The world’s largest social networking company said that revenue from mobile ads represented 53 percent of its total advertising revenue in the last three months of the year, or $1.24 billion, versus the 49 percent proportion that mobile ads represented in the third quarter.

“They’ve cracked the code on mobile,” said Arvind Bhatia, an analyst at Sterne, Agee Leach. “Within a little over a year’s time mobile has taken over desktop,” in terms of ad revenue he said.

Facebook said it now has 1.23 billion monthly users, with 945 million accessing the service on a smartphone or tablet.

Facebook’s newsfeed ads, which inject paid marketing messages straight into a user’s stream of news and content, have boosted Facebook’s revenue and its stock price in recent months. The ads are ideally suited for the smaller-sized screens of smartphones and other mobile devices.

The average price per ad on Facebook has surged 92 percent in the past year, the company said, even as the total number of ad impressions on Facebook declined 8 percent.

In a conference call with analysts on Wednesday, Facebook Chief Executive Officer Mark Zuckerberg said the focus going forward was to improve the quality and the relevance of the newsfeed ads, rather than boosting the amount of ads in users’ newsfeed.

Among the other priorities for the coming year, Zuckerberg said the company would focus on creating new standalone products and on improving Facebook’s nascent search product.


Facebook had spooked some investors in October when it said that it noticed a decrease in daily users among “younger teens.” The remarks raised fears that teen Facebook users might be drifting to new messaging services such as Snapchat and WhatsApp.

Facebook Finance Chief David Ebersman said the company did not have an update to share about teen usage during the quarter, though the company noted that overall user “engagement” had increased throughout 2013.

Roughly 61.5 percent of Facebook’s 1.23 billion monthly users visited the site every day in the fourth quarter, an increase from the 58.3 percent ration in the fourth quarter of 2012.

“The engagement on their site is going up and they’re recapturing people on Instagram, so they’re not losing people,” said Jefferies analyst Brian Pitz, referring to the Facebook-owned mobile photo-sharing service.

Overall revenue in the fourth quarter rose to $2.585 billion, compared with $1.585 billion in the year-ago period and above the $2.33 billion expected by analysts polled by Thomson Reuters I/B/E/S.

Ebersman said that expenses in the coming year would likely increase around 35 percent to 40 percent. He did not provide a revenue forecast for 2014.

Facebook reported net income of $523 million, or 20 cents a share, versus $64 million or 3 cents a share in the year-ago period. Excluding certain items, Facebook said it earned 31 cents a share, beating the 27 cents per share that analysts were expecting.

(Editing by Matthew Lewis and Lisa Shumaker)

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In Bernanke’s final act, Fed cuts stimulus despite market turmoil

WASHINGTON (Reuters) – The Federal Reserve on Wednesday decided to trim its bond purchases by another $10 billion as it stuck to a plan to wind down its extraordinary economic stimulus despite recent turmoil in emerging markets.

The action was widely expected, although some investors had speculated that the U.S. central bank might put its plans on hold given the jitters overseas.

Fed Chairman Ben Bernanke, who hands the Fed’s reins to Vice Chair Janet Yellen on Friday, managed to adjourn his last policy-setting meeting without any dissents from his colleagues. It was the first meeting without a dissent since June 2011 – a sign of how tumultuous Bernanke’s tenure has been.

In addition to proceeding with plans to scale back its bond buying, the Fed made no changes to its other main policy plank: its pledge to keep interest rates low for some time to come.

The decision suggests that it would take a serious threat to the U.S. economy before the Fed backs down from a resolve to shelve the asset-purchase program later this year.

Indeed, it offered a somewhat rosier assessment of the U.S. economy’s prospects than it did last month, saying “economic activity picked up in recent quarters.” It also largely shook off surprisingly soft jobs growth in December. “Labor market indicators were mixed but on balance showed further improvement,” it said.

“They really want to move to the sidelines here and get out of the (bond buying) business,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

All 17 top Wall Street economists polled by Reuters on Wednesday expect the Fed to wind the program down by year’s end, and nearly all believe the Fed won’t raise rates until at least the third quarter of 2015.

Major U.S. stock indexes closed down more than 1 percent, while yields on the benchmark 10-year Treasury note hit the lowest level since late October. The dollar rose against the euro but was little changed against a broad basket of currencies.


Importantly, the Fed stuck to its promise to keep rates near zero until well after the U.S. unemployment rate, now at 6.7 percent, falls below 6.5 percent, especially if inflation remains below a 2 percent target. Some analysts had speculated it might alter this guidance, given how close the jobless rate now is to the rate-hike threshold.

In fact, the central bank’s statement largely mirrored the one it issued after its December 17-18 meeting, when it announced an initial $10 billion cut to its monthly bond purchases.

At the time, Bernanke told reporters the Fed would likely continue to taper the purchases in “measured” steps through the year until it was fully wound down, as long as the economy continued to heal. He did not speak to the media on Wednesday.

In its statement on Wednesday, the Fed said it would buy $65 billion in bonds per month starting in February, down from $75 billion now. It shaved its purchases of U.S. Treasuries and mortgage bonds equally.

“The Fed’s action today represents a continuation of its resolute determination to end (bond purchases) during 2014,” said Daniel Alpert, managing partner at Westwood Capital in New York. “The policy has hit its ‘sell by’ date.”


In announcing its decision, the Fed made no reference to the sell-off in emerging markets that has depressed U.S. stocks in recent days.

Markets in countries with large current account deficits, such as Turkey and Argentina, have suffered steep losses in part because of the prospect of less U.S. monetary stimulus.

These currencies and stocks slumped again after the Fed’s announcement, offsetting aggressive interest rate hikes by Turkey and South Africa.

Meanwhile, economic signals in the United States – from consumer spending to industrial production and trade – have suggested the U.S. recovery closed out last year on solid ground, reinforcing expectations the Fed would continue trimming the stimulus. The weak December jobs report has been viewed as an outlier.

The central bank launched its current round of bond purchases in September 2012, its third such effort since the darkest days of the financial crisis in late 2008.

The effort to bring the purchases to a halt will now fall to Yellen, who has strongly backed the unprecedented actions the Fed has taken to boost growth and get more Americans back to work. She will chair her first policy meeting on March 18-19.

Bernanke, a professor and leading scholar of the Great Depression before joining the Fed, took the central bank far into uncharted territory during his eight years on the job, building a $4 trillion balance sheet and keeping interest rates near zero for more than five years to pull the economy from its worst downturn in decades.

(Reporting by Jonathan Spicer and Jason Lange in Washington; Additional reporting by Ann Saphir in San Francisco; Editing by Tim Ahmann, Paul Simao and Ken Wills)

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Deutsche Bank faces up to long battle to restore reputation

FRANKFURT (Reuters) – The reputational risks surrounding Deutsche Bank (DBKGn.DE) have grown and it still has some way to go to win back public trust and prove it can overhaul its corporate culture, the bank’s two chief executives said on Wednesday.

Germany’s largest lender is facing an array of investigations into the conduct of its employees and a jump in litigation costs was partly responsible for a surprise 1 billion euro ($1.37 billion) fourth-quarter loss that has heaped more pressure on Anshu Jain and Juergen Fitschen.

“We know that here we have something to prove to you,” Fitschen told reporters at the bank’s annual news conference in Frankfurt. “We have realized that the reputational risk has become more and more significant.”

Deutsche Bank paid about 2.1 billion euros in fines in December, but fresh investigations – including one into possible manipulation of the $5.3 trillion-a-day foreign exchange market – have led analysts and investors to forecast an additional 1.4 billion to 2 billion euros in settlement costs for 2014 and 2015.

The bank has moved to shake up corporate practices, particularly at its investment banking operations in London and New York, turning down deals viewed as too risky, deferring bonuses for dealers and giving them less leeway on trades.

Deutsche Bank cut pay in its corporate banking and securities division to 5.3 billion euros last year, down 14.4 pct from 2012.

The number of front office staff in corporate banking and securities fell 2 percent during the year to 8,435, although the compensation figure for that division also includes pay for some other staff, the bank said.

Compensation and benefits across the entire bank was 12.3 billion euros last year, down 8.7 pct from 2012.

Jain admitted that the more cautious attitude had lost Deutsche business but said he was happy to pay that price and was confident that most of the litigation problems would be sorted out this year.

“We are hopeful that towards the end of 2014 we will have the bulk behind us,” he said.

The ability of the duo to oversee the cultural overhaul has met with skepticism in some quarters, given that Indian-born Jain once headed the investment bank at the center of many of the current tribulations and German-born Fitschen has become embroiled in an investigation into tax evasion.


Jain said he was accountable for the mistakes that were made in the investment bank, particularly during the “very troublesome period” preceding the financial crisis, but insisted that Deutsche needs his experience.

German financial regulator Bafin questioned the rigor and independence of the bank’s internal investigation into alleged rigging of Libor, the London inter-bank offered rate, according to documents leaked to German media.

Fitschen, however, dismissed talk of a breakdown in Deutsche’s relationship with Bafin.

“Don’t be led by the tone of voice of one letter,” he said. “There are intensive exchanges on every subject, and these exchanges can be described by both sides as open and constructive.”

For all its woes, Deutsche has stuck to ambitious earnings goals for 2015. These include return on equity of 12 percent, six times higher than last year, despite a tough trading environment in its core debt markets.

The bank is aiming to boost returns by shrinking its balance sheet and is about a third of the way through a crash-diet plan launched in June to cut 250 billion euros ($338.61 billion) from its books.

The faster the bank trims, the easier it will be to meet regulators’ capital demands.

Deutsche said on Wednesday that it expects the reduction of non-core assets to slow this year and that its 2013 dividend will be kept at the same level as the 2012 payout.

Jain and Fitschen also said they were well-positioned to lead consolidation in Europe after 2015, though they did not specify when or where deals would happen.

Bankers in Davos last week said they expect a European Central Bank (ECB) health check of the euro zone’s largest banks this year to reignite domestic and cross-border merger activity by rebuilding confidence among lenders.

Jain and Fitschen declined to comment on the apparent suicide of William Broeksmit, a former senior manager at Deutsche Bank. Broeksmit, who retired from the bank last year, was found dead at his home in London on Sunday.

(Editing by Carmel Crimmins, David Goodman and Eric Walsh)

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Target says criminals attacked with credentials stolen from vendor

BOSTON (Reuters) – Target Corp said on Wednesday that the cyber criminals who breached its system used credentials they stole from one of the retailer’s vendors.

“The ongoing forensic investigation has indicated that the intruder stole a vendor’s credentials, which were used to access our system,” Target spokeswoman Molly Snyder said in a statement.

She declined to elaborate on what type of credentials were taken from the vendor.

(Reporting by Jim Finkle. Editing by Andre Grenon)

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Exclusive: Lufthansa to begin Airbus A380 flights to India in 2014

NEW YORK (Reuters) – The head of Lufthansa said the German airline plans to begin flying Airbus (AIR.PA) A380 superjumbo jets on routes to India later this year.

On Monday, India lifted a ban on landing the aircraft in the country, enabling carriers such as Singapore Airlines, Lufthansa and Emirates airline to fly the jets into the world’s second-most populous nation.

Lufthansa had earlier said it had no immediate plans to use the jet on those routes.

“We are interested to use the A380 also for the major Indian markets,” Christoph Franz, CEO of Deutsche Lufthansa AG (LHAG.DE), said on Wednesday in an interview in the Reuters Global Markets Forum, an online community for financial professionals.

Franz said Lufthansa definitely planned to use the jet in India but noted the launch would be later in the year, since its fleet of 10 A380s is already committed by current schedules.

He said it was possible for the summer schedule, but added, “We will likely make it for the winter flight schedule of 2014-2015”.

Under India’s rules, A380s will be allowed to land at the country’s four main airports – New Delhi, Mumbai, Bangalore and Hyderabad – which are equipped to handle the planes.

India’s decision was welcomed by foreign carriers aiming to tap India’s fast-growing air travel sector.

The A380 can carry more than 800 passengers in a single-class configuration, and the government had banned their use because of concern that foreign airlines would dominate the market for international travel.

(Reporting by Alwyn Scott, additional reporting by Victoria Bryan; Editing by Ken Wills)

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Starbucks strengthens technology brew with executive shift

LOS ANGELES (Reuters) – Starbucks Corp Chief Executive Officer Howard Schultz on Wednesday said he was promoting Chief Financial Officer Troy Alstead to the new position of chief operating officer, allowing Schultz to focus on keeping the coffee shop chain ahead of the curve in retail technology including mobile payments.

Alstead will assume oversight of the company’s day-to-day operations. Scott Maw, senior vice president of corporate finance, will succeed Alstead as CFO.

Starbucks, already a leader in mobile payments, gift cards, loyalty programs and digital marketing, for years has been finding ways to strengthen results by linking its cafe business and product sales through grocery stores and other retailers.

Schultz said such efforts helped the Seattle-based company outshine other U.S. retailers during the 2013 holiday season, when shopper visits to overall brick-and-mortar stores dropped and online sales increased.

Starbucks’ traffic rose 4 percent during the quarter that included the holiday season. The chain also saw a record $1.4 billion loaded onto gift cards during that quarter.

The CEO expects the company’s latest move to further strengthen Starbucks’ (SBUX.O) business.

It is an opportunity for Starbucks “to create new channels of revenue and profit outside four walls of stores .. amid a seismic shift” in the way consumers are shopping, Schultz who is also chairman, told Reuters in a telephone interview.

Schultz, who will be working closely with executives including Chief Digital Officer Adam Brotman and Chief Strategy Officer Matt Ryan, declined to give specifics on the company’s plans.

“This is not about succession planning and this is not about me in any planning to or even thinking about leaving the company,” he said.

Starbucks is an investor in mobile payments provider Square. When asked if Starbucks would buy Square, which counts the coffee company among its users, Schultz said Starbucks has no near-term acquisition plans.

He did say that future efforts would include the use of “Starbucks currency in other retailers outside Starbucks.”

Starbucks already allows registered Starbucks card users to earn “stars,” or points, when they buy coffee at a participating grocery store. Those stars can then be redeemed at a Starbucks cafe.

Starbucks has mobile payment applications in eight countries

including the United States and Canada. It offers Starbucks cards in 28 countries.

The company reaps 70 percent of its total revenue from its U.S.-dominated Americas business, which includes sales from 11,500 U.S. cafes.

Its forecast for this fiscal year includes opening 1,500 new units around the globe – including 600 in the U.S.-dominated Americas region.

Shares in Starbucks inched up 0.2 percent to $71.70 in after-hours trade.

(Reporting by Lisa Baertlein in Los Angeles; Editing by David Gregorio)

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Wall Street sells off after Fed sticks with stimulus cuts

NEW YORK (Reuters) – U.S. stocks dropped more than 1 percent on Wednesday, hitting session lows after the Federal Reserve stuck with its plan to scale back stimulus even in the midst of emerging market turmoil.

With the day’s decline, the SP 500 is down 4 percent for the month – its worst monthly loss since May 2012. Some investors have been bracing for a correction, given the SP 500’s gain of 30 percent last year.

Trading was volatile after the Fed’s move, which further reduces its monthly bond purchases by $10 billion a month. Declines were fairly broad-based, with nine of the 10 SP 500 sector indexes ending lower. Shares of Boeing Co (BA.N) ranked among the biggest drags on both the Dow and the SP 500.

Overall improvement in the U.S. economy suggested the central bank would continue to cut the purchases, but some investors had speculated in recent days that the Fed might rethink its plan because of the emerging market problems.

“I think investors had hoped that the Fed would somehow respond to the recent turbulence and show they had their back,” said Jack Ablin, chief investment officer of BMO Private Bank in Chicago.

But the Fed really wants “to move to the sidelines here and get out of the QE business.”

In its announcement, the Fed said it would buy $65 billion in bonds per month starting in February, down from $75 billion now. In what was Fed Chairman Ben Bernanke’s last policy-setting meeting, the central bank also maintained its longer-term plan to keep U.S. interest rates low for some time to come.


The benchmark SP 500 has lost ground in four of the past five sessions as fears over slowing growth in China and large capital outflows from developing markets prompted investors to seek safe-haven assets.

The Dow Jones industrial average .DJI fell 189.77 points or 1.19 percent, to end at 15,738.79. The SP 500 .SPX lost 18.30 points or 1.02 percent, to finish at 1,774.20. The Nasdaq Composite .IXIC dropped 46.53 points or 1.14 percent, to close at 4,051.43.

The CBOE Volatility Index .VIX or VIX, Wall Street’s barometer of fear, jumped 9.81 percent to end at 17.35.

The Fed’s quantitative easing program has supported not just the U.S. economy but overseas economies as well by increasing liquidity, so cutting the stimulus has been a big factor in the emerging markets’ selloff.

Stocks were lower early in the session even after bold efforts by Turkey and South Africa to stabilize their currencies.

South Africa’s central bank raised interest rates for the first time in six years. Its move followed a dramatic rate hike by Turkey’s central bank late Tuesday, designed to defend its crumbling currency.

Boeing’s stock fell 5.3 percent to close at $129.78, after the aerospace and defense company issued conservative forecasts for profit and cash flow. Investors focused on those projections, though the company reported a surge in quarterly profit.

Yahoo (YHOO.O) shares dropped 8.7 percent to end at $34.89, a day after the Internet company reported a drop in online ad prices that hurt its revenue for a fourth consecutive quarter.

Among other profit reports, Dow Chemical Co (DOW.N) posted a quarterly profit that was well ahead of expectations. It also raised its dividend 15 percent and expanded its stock-buyback program. Dow Chemical’s stock rose 3.9 percent to end at $44.73.

After the bell, shares of Facebook (FB.O) rose 9.2 percent to $58.45 after the world’s largest social networking company reported quarterly revenue increased 63 percent. ID:L2N0L3017

Quarterly earnings expectations for the SP 500 have improved as more companies have reported results. Growth is now estimated at 9 percent, compared with 7.6 percent at the start of the month, Thomson Reuters data showed.

As the stock market rallied last year, valuations rose for SP 500 companies. The forward price-to-earnings ratio is at 14.9, compared with 13.1 at the start of 2013.

Volume was higher than average for the month. About 7.5 billion shares changed hands on U.S. exchanges, compared with the average of 6.8 billion so far this month, according to data from BATS Global Markets.

Decliners outnumbered advancers on the New York Stock Exchange and the Nasdaq by slightly more than 3 to 1.

(Reporting by Caroline Valetkevitch; Additional reporting by Steven Johnson; Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)

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