Factbox: Forbes Top 10 Richest People in the World

NEW YORK (Reuters) - Mexican tycoon Carlos Slim is the richest person in the world for the second year in a row, Forbes said on Wednesday. 

1. Carlos Slim (Mexico) - $74 billion, telecommunications

Slim, 71, first showed a business talent as a 10-year-old selling drinks and snacks to his family. After studying engineering, he founded a real estate company and worked as a trader on the Mexican stock exchange. Cigar-smoking Slim is known for a "Midas touch" in acquiring struggling firms and turning them into cash cows.
His enormous wealth contrasts starkly with his frugal lifestyle. He has lived in the same house for about 40 years and drives an aging Mercedes Benz, although it is armored and trailed by bodyguards.
He has become involved in combating poverty, illiteracy and poor healthcare in Latin America and promotes sports projects for the poor, but has never voiced plans to give away large chunks of his wealth to charity.

2. Bill Gates (USA) - $56 billion, Microsoft

Sensing the start of a personal computer revolution, Gates, 55, dropped out of Harvard University in 1975 to start Microsoft and pursue a vision of a computer on every desk and in every home. Microsoft went public in 1986 and by the next year, the soaring stock made Gates, at age 31, the youngest self-made billionaire.
In 2008 he stepped down from what is now the world's largest software firm to work at The Bill and Melinda Gates Foundation. He has given $28 billion to it.
Together with his wife Melinda and Warren Buffett, he has also convinced 57 U.S. billionaires to sign up to the Giving Pledge and publicly vow to give away at least 50 percent of their fortune during their lifetime or upon their death.

3. Warren Buffett (USA) - $50 billion, Berkshire Hathaway

Buffett, 80, has run his Omaha, Nebraska-based conglomerate since 1965. Its interests run from railroads to ice cream.
In 2006 he pledged to give away 99 percent of his wealth to the Bill and Melinda Gates Foundation and family charities. So far he has given $8 billion to the Gates Foundation.

4. Bernard Arnault (France) - $41 billion, LVMH

Arnault, 62, a friend of French president Nicolas Sarkozy, was educated at the prestigious Ecole Polytechnique and joined his father's construction company at 25. He earned the reputation of a ruthless corporate raider after pushing out shareholder rivals when he started building the LVMH group in the 1990s with the Louis Vuitton, Moet and Hennessy brands.
It is now the world's biggest luxury goods group. His image as a predator stuck to him afterward when he fought in vain to acquire Gucci in 1999 and 2000. Then this week he snapped up Roman jeweler Bulgari for $5.18 billion.

5. Larry Ellison (USA) - $39.5 billion, Oracle Corp

Ellison, the flamboyant Oracle founder and CEO, is known for his free, public outbursts against rivals such as German software maker SAP AG. The executive, supposedly a model for the "Iron Man" movie character Tony Stark, late last year attacked Hewlett Packard and its board for the abrupt and -- he said -- unfair sacking of longtime friend Mark Hurd. Ellison then hired him.
Ellison, who won yachting's America's Cup last year, is considered one of the "old guard" of Silicon Valley.

6. Lakshmi Mittal (India) - $31.1 billion, steel

London-based steel tycoon Mittal, 60, runs ArcelorMittal, the world's largest steel manufacturer.
Mittal's firm is largely funding a $29 million spiraling red tower, designed by Turner prize-winning artist Anish Kapoor and taller than New York's Statue of Liberty, that will soar over London's Olympic Park for the 2012 games.
In 2005 he spent $10 million to promote sporting talent and encourage potential Olympians in his homeland after he was disappointed by India's lone medal at the Athens Games.

7. Amancio Ortega (Spain) - $31 billion, retail

Amancio Ortega, 74, started his clothing business in the 1960s making dressing gowns in his garage in La Coruna. His company Inditex owns the Zara fashion house and is now the world's biggest clothing retailer. Ortega closely guards his privacy and does not give media interviews. He announced in January that he plans to step down as chairman of the company.

8. Eike Batista (Brazil) - $30 billion, mining, oil

A half-German college dropout who for years struggled to emerge from the shadow of his well-known father, Batista has long said he wants nothing less than to be Brazil's and the world's richest person. Everything about the 53-year-old -- from the Mercedes-Benz SLR McLaren sports car he keeps as decoration in his parlor to the "X" in the name of all his companies that represents wealth multiplication -- screams of unashamed ambition.
A top-class speedboat racer who was married to a famous Rio de Janeiro Carnival queen, Batista dined with U.S. pop star Madonna in Rio last year and, according to local reports, handed her a check over dinner for $7 million as a donation for her social projects.
He has a burning ambition to transform Rio into a modern, thriving city. Just before Rio was awarded the 2016 Olympic Games, he bought up a nearby marina that will be a hub of the games -- an example of his eye for a well timed deal.

9. Mukesh Ambani (India) - $27 billion, petrochemicals, oil and gas

A chemical engineer by training, Mukesh, 53, dropped out of an MBA from Stanford University and joined Reliance in 1981.
Mukesh, who said in 2009 he would take a two-thirds pay cut after the Indian prime minister's comments on "vulgar salaries," gave his wife a private jet on her birthday. He also splashed out $1 billion on a 27-story home. He has a volatile relationship with his younger brother Anil, and they have fought over interests from oil and gas, retail, telecoms, entertainment, financial services to infrastructure.

10. Christy Walton & family (USA) - $26.5 billion, Wal-Mart

Christy Walton is the widow of John Walton, who was the son of Wal-Mart founder Sam Walton. Sam Walton built the global Wal-Mart empire from a single dime store in Arkansas. It is now the world's largest retailer.

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Marketers Celebrate Glimmers of Recovery

FTER a few years of struggling, the advertising industry is finally willing to believe some good news. Nancy Hill, chief executive of the American Association of Advertising Agencies, or the Four A’s, kicked off the group’s annual conference here on Monday bearing what she called “hard-core, positive, yes-our-industry-has-survived-and-is-robust news.”
The statistics Ms. Hill provided were probably enough to inspire more than a few advertisers to get back to the planning board. According to Nielsen, in February 111 million people watched the Super Bowl — one of the largest opportunities for advertisers. Ms. Hill said that chief marketing officers were seeing revenue gains, with brands like Procter & Gamble and Kraft increasing spending. She said a 30-second ad slot during the Oscars telecast this year was the most expensive in the history of the awards. “That which does not kill us makes us stronger,” she said. “Maybe Charlie Sheen should take a note from us.”
It is advertising, it would appear from Ms. Hill’s remarks, and not Mr. Sheen who is in fact winning. Here are some highlights from the conference, which ended Wednesday.


KINKY LAUGHS The second morning of the conference began with off-color comedic relief from the author, musician, sometime politician and longtime Texan Kinky Friedman. After earning a few muffled laughs from the crowd, many of whom were still grabbing cups of coffee, yogurt and pastries, Mr. Friedman offered to sign copies of one of his books. “I’ll sign anything but bad legislation,” said Mr. Friedman, who ran for governor of Texas in 2006.
 
DATA RULES Content may be king in media, but in advertising it is data. Most of the vendor booths at the event were focused on data analytics, media management and back-office technology for advertisers. The technologies can help advertisers track consumers on the Web and understand which ads are most effective for certain audiences. Other technologies were geared to helping agencies buy digital advertising or manage their accounts online more efficiently.
 
PRIVACY All of that digital data comes at a price. A theme echoing throughout the conference was data privacy. In her opening remarks Ms. Hill urged the audience “to actively participate in this discussion, because without self-regulation our creativity will be increasingly threatened.” In recent months, the Federal Trade Commission and the Commerce Department have both issued reports about online privacy and digital advertising, while industry groups like the Interactive Advertising Bureau have supported self-regulation.

David Vladeck, the F.T.C.’s director of consumer protection, was at the event to help explain the commission’s proposal for a “do-not-track” mechanism that would allow consumers to opt out of being tracked by advertisers and shown targeted advertising. Mr. Vladeck said that the commission recognized the benefits of behavioral advertising for consumers — they see more useful and relevant ads — but that data collection still raised “serious privacy concerns.” Mr. Vladeck added that while the commission did not recommend legislation and was encouraged by some of the recent progress made in self-regulation by industry groups, there was more to be done. “It’s not just the F.T.C. looking over your shoulder, folks,” he said. “So is Congress.”


On Wednesday, the day after Mr. Vladeck spoke, a panel of advertising agency representatives tackled the issue of privacy and responded to Mr. Vladeck’s speech and to the overall issues affecting the industry. Bob Liodice, chief executive of the Association of National Advertisers, said the industry was “gratified” by Mr. Vladeck’s remarks but expressed concern about what it considered mixed messages by the F.T.C., including the lack of a clear definition of tracking, collection or first-party marketing.

Carla Michelotti, executive vice president and chief legal, government and corporate affairs officer at Leo Burnett Worldwide, part of the Publicis Groupe, said Mr. Vladeck’s remarks were a sign that the commission was “extending an olive branch after a very harsh approach in the report.” All of the panelists encouraged advertisers, agencies and publishers to regulate themselves or risk being regulated by the government.
 
HELP WANTED Agencies are taking a close look at their hiring practices. A star-studded panel of advertising executives underscored the challenges they faced in recruiting a diverse staff, being more aggressive in recruiting talent, and rewarding and training current employees.
“No one wakes up in the morning and says, ‘You know what? I want to be in the advertising business,’ ” said Michael I. Roth, chief executive of the Interpublic Group of Companies. “The real issue is getting new talent interested in our industry, and frankly we do a lousy job at it.”
Martin Sorrell, chief of WPP, said, “The criminal neglect in our industry is that we do not recruit good people consistently.”
John D. Wren, chief executive of the Omnicom Group, added: “It’s neglect. We’ve gotten a lot more comfortable poaching, if you will, our own people.”
 
RUBBER DUCKS AND COOKIES The number of sponsors at the conference increased to 38 this year from 34 in 2010. Attendance was also on the rise, with a little more than 1,000 participants, up from 970 in 2010. Technology and media companies were the main sponsors. There was free Wi-Fi sponsored by Bloomberg and AOL. Google sponsored coffee breaks. Bloomberg and AOL also competed with gifts in attendees’ hotel rooms. AOL gave door hangers with miniature bottles of Moët Champagne, and plastic devil rubber ducks. Bloomberg left cookies from Tiff’s Treats, a local bake shop. At dinner on Monday night, Microsoft gave out bottles of Tabasco sauce with wrappers that said, “Spice up your next campaign with Microsoft advertising” and “Give your advertising some kick.”

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Vindication for Toyota Man Who Built Up US Sales

TOKYO (AP) — Toyota's U.S. business has been a lifetime passion for Toshiaki Taguchi — from humble beginnings 50 years ago when barely 100 Toyota cars were being sold a month, to crucial market for the world's No. 1 automaker today.
At the automaker's Tokyo office last year, Taguchi, 69, the former head of Toyota's North American operations, watched with trepidation the live broadcast of President Akio Toyoda's testimony before Congress, as he fielded allegations of cover-ups and dallying in carrying out massive recalls.

Only in the last few weeks, has Taguchi breathed easier. He is even feeling a bit vindicated.
U.S. regulators closed their 10-month investigation into the Japanese automaker last month and concluded that electronic flaws were not to blame for reports of sudden, unintended acceleration.
The Transportation Department study, which received help from NASA engineers, said the acceleration cases were caused by mechanical defects, such as faulty floor mats and gas pedals already covered by recalls.
Transportation Secretary "Ray LaHood even said his daughter drives a Toyota. I was very glad to hear that," Taguchi, a stately quiet man with a shock of white hair, told The Associated Press, switching to English from Japanese to emphasize his point.
Taguchi, now an adviser to Toyota, was quick to add it would likely take at least two or three more years before Toyota's battered image in the U.S. can hope to recover, and acknowledged that overly speedy expansion was behind the recalls.

When Toyoda on Wednesday announced a growth strategy targeting annual global sales of 10 million vehicles in the next several years, a record for any automaker, the company made a point of stressing that growth was not being pursued at any cost.
That attitude prevails at Toyota, a year and a half after the recall fiasco first hit.
"We grew too fast in the last decade, with so many new models and plants. Now is the time to get back to basics," Taguchi said in a recent interview at Toyota's Tokyo office.
'Back to basics' for the maker of the Prius hybrid, Camry sedan and Lexus luxury models amounts to working once again from scratch on building customer trust, according to Taguchi.
He should know.

Taguchi was a key figure in building the Toyota brand in the U.S. The endeavor started when he was sent to its tiny Newark office as an intern in 1966, just two years after he joined Toyota.
He went on to become president and chief executive of Toyota North America in 2000, following stints at the U.S. operations in the 1970s and 1990s.
It was during the initial years he earned his American nickname "Tag" that's still on his business cards today.
Toyota cars were so rare in the U.S. back then, Toyota drivers would give each other friendly waves on the streets.

The company was fighting a different set of prejudices to woo skeptical buyers: Bitter memories of World War II, the stereotype that "Made in Japan" meant junk.
Still, Taguchi never doubted Toyota would succeed in the U.S. — as long as it gained and then maintained a reputation for reliable products.
And friendship with Americans came naturally for Taguchi.
His mother worked as a typist at a U.S. military base in Japan in the 1950s — unusual for those times when middle-class Japanese women rarely held jobs, and Americans tended to be shunned as alien.

Dominic Galardi, 80, president of A-1, a 48-year New Haven, Connecticut-based Toyota dealer, is one American who will vouch for Taguchi's dedication.
During his frequent visits to A-1, Taguchi made a point of walking around to every department and shaking hands with everyone, a major morale boost for his employees, Galardi recalled.
"He saw me grow from a little gas station to what we are now today," Galardi said in a recent telephone interview. "He seemed like he could never be out of reach."
Today, Toyota is all-American, Taguchi says proudly, employing 30,000 Americans. Its dealers employ 100,000 Americans, and there are more if one counts suppliers, truckers and advertisers.
But over the past year and a half, Taguchi was forced to watch the rapid unraveling of the once sterling reputation for quality that he had so painstakingly helped build over the decades. 

Toyota announced recall after recall, covering a wide range of defects, including faulty floor mats, sticky gas pedals and glitches in braking software, ballooning to more than 14 million vehicles globally.
The company paid the U.S. government a record $48.8 million in fines for its handling of three recalls. Toyota faces dozens of lawsuits from owners in the U.S., including fatalities allegedly linked to defects.

"It takes a long period of time to build a brand. The scary thing is that it can come tumbling down with a mismanaged crisis or a recall," said Mike Rozembajgier, Vice President of Recalls for Indianapolis-based ExpertRECALL, which handles recalls for major companies.
Toyota needs to stay transparent, forthright and communicative about the recalls to win back customer trust, Rozembajgier said. "They're taking steps in the right direction. But they're still a long way to go."
What went wrong was the initial slow response, which drew suspicion that Toyota was hiding something and fostered the perception that quality had nose-dived, said Yoshihiko Natsume, a retired Toyota vice president, who oversaw quality control.
"Toyota failed to assess the problem quickly and respond properly, despite its long experience in the U.S. and familiarity with the workings of U.S. society. And that may have come from a certain arrogance in becoming No. 1 in the world," said Natsume, who has known Taguchi since the 1960s.

Taguchi agrees.
"We did not do as complete a job as we should have in answering to the expectations of our customers and of society," he said.
In recent years, Taguchi has been active in several charities to foster U.S.-Japan grassroots ties, such as the Center for International Exchange.
The organization, which sponsors annual "home-stay" programs, is based on a friendship 170 years ago between John Manjiro, a Japanese fisherman, and William Whitfield, a captain of an American whaling boat, who rescued the 14-year-old Manjiro when he was shipwrecked. 

Descendants of both families take part in the annual festivities.
"At the heart of everything is what I learned at Toyota — respect for people at all times, doing your job with the other person's needs in mind, and remembering there is always room for improvement," said Taguchi.

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Appeals Court Cuts Forfeiture From Ex-Officer at Monster

An appeals court upheld the conviction of James J. Treacy, the former chief operating officer of Monster Worldwide, for improperly accounting for backdated stock options, but it also ruled that the amount he had to forfeit was not correctly calculated.

The United States Court of Appeals in New York on Wednesday also said that United States District Judge Jed Rakoff, who presided over the case in Manhattan, committed a “harmless” error by limiting Mr. Treacy’s lawyer’s cross-examination of a Wall Street Journal reporter. Judge Rakoff restricted the defense’s questioning, citing the journalist’s privilege.
The appeals court said that Judge Rakoff erred in setting Mr. Treacy’s forfeiture and restitution at $6.3 million. The three-judge panel said that Judge Rakoff should recalculate the forfeiture based on a Dec. 9, 1998, option grant, instead of the April 19, 1999, date he used. They agreed with Mr. Treacy that the change would reduce the amount he must forfeit.

Mr. Treacy was sentenced in September 2009 to two years in prison. He is expected to be released in August, according to Federal Bureau of Prisons records.
“We’re studying the opinion and we’re weighing our next step,” Bruce Bishop, a lawyer for Mr. Treacy, said in a telephone interview.
Prosecutors said that Mr. Treacy backdated options at Monster, the world’s largest online recruiting company, by treating them as if they had been granted on dates when Monster’s stock price was at or near a periodic low. None of the grants were recorded as compensation expenses, as the law requires, prosecutors said.

Mr. Treacy earned at least $14.5 million from the plan, including profits from his exercise of backdated options and bonus payments after he reached company financial targets, according to prosecutors.

Monster reported in 2001 that net income was $69 million when it was really $3.4 million after options expenses, prosecutors said. The company said in December 2006 that it had overstated earnings by $271.9 million in the previous nine years because of improperly recorded option grants.

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In Galleon Trial, a Case for Greed vs. a Picture of Diligence

“Greed and corruption — that’s what this case is all about,” a federal prosecutor said on Wednesday at the trial of Raj Rajaratnam, the billionaire hedge fund manager accused of being at the center of a huge insider trading ring.
Mr. Rajaratnam’s lawyer countered that “the government has it wrong,” portraying his client as one who made his fortune through “shoe-leather research, diligence and hard work” and who “conducted the best research in the business.”
Before a packed courtroom in Lower Manhattan, the two opposing lawyers — Jonathan Streeter, an assistant United States attorney, and John Dowd, Mr. Rajaratnam’s lead lawyer — previewed the evidence that the jury is expected to hear over the course of the trial, which is expected to last 10 weeks.

During the nearly three hours of opening statements, the 53-year-old Mr. Rajaratnam sat stoically at the center of the defense table, flanked by a team of six lawyers. If convicted on 14 counts of securities fraud and conspiracy, he faces up to 20 years in prison.
Much of the government’s case is based on more than 2,400 secretly recorded telephone conversations that Mr. Rajaratnam had, many of them with cooperating witnesses who have already pleaded guilty to insider trading.

Brendan McDermid/ReutersJohn Dowd, Raj Rajaratnam’s lead lawyer, argued that his client made a fortune through good research.

Brendan McDermid/Reuters Raj Rajaratnam on Wednesday, after the opening arguments in his case.

 

“He knew tomorrow’s business news today and traded on it,” Mr. Streeter said. “One crucial thing he didn’t know. He didn’t know the F.B.I. was listening.”
The prosecutor highlighted for the jury four of Mr. Rajaratnam’s associates and their alleged insider trading schemes with Mr. Rajaratnam: Anil Kumar, a former partner at McKinsey & Company and a business school classmate; Rajiv Goel, a former Intel executive and also a business school classmate; Adam Smith, a Galleon portfolio manager; and Rajat K. Gupta, a former board member of Goldman Sachs and Procter & Gamble. Three of them have pleaded guilty and are cooperating with the government.

Among the more dramatic moments in the opening statements came when Mr. Streeter laid out Mr. Gupta’s role in the case. Last week, the Securities and Exchange Commission accused Mr. Gupta of sharing confidential information about Goldman and P.& G. with Mr. Rajaratnam. The S.E.C. allegations did not include any specific details of conversations between the two men.
On Wednesday, Mr. Streeter focused on Mr. Gupta’s alleged tip to Mr. Rajaratnam that the Goldman board had just approved a $5 billion investment from Warren E. Buffett in the middle of the financial crisis. Minutes later, Mr. Rajaratnam bought a large amount of Goldman stock, the government says.

Mr. Streeter said the government planned to play a recording of a conversation between Mr. Rajaratnam and a Galleon colleague that took place the next day during which Mr. Rajaratnam explained that “something good is going to happen for Goldman.” (The defense disclosed that the colleague was David Lau, who worked in Singapore.)
Mr. Rajaratnam’s lawyer disputed that any of these conversations or relationships amounted to a criminal conspiracy. He made it clear that the mosaic theory of investing — collecting detailed, disparate information about a company to form a “mosaic” — would be a key theme of Mr. Rajaratnam’s defense.

“He assembled a mosaic of information and did his own calculations,” Mr. Dowd said. “The evidence will show that Raj did not cheat.”

The government acknowledged that much of Galleon’s trading was backed by sound security analysis. “People did legitimate stock research, but they cheated, too,” Mr. Streeter said. “And that cheating is called insider trading.”
Mr. Dowd sought to minimize the significance of the trades that form the basis of the government’s insider trading charges.
The trades in question accounted for just 1 percent of all trading at Galleon, which bought and sold stocks “at a dizzying pace” that amounted to billions of dollars annually, Mr. Dowd said. What’s more, he argued, the controversial trades did nothing to increase his returns.
“If that doesn’t make any sense, it’s because it doesn’t make any sense,” he said.

The two lawyers’ styles and strategies during opening statements were markedly different. Mr. Streeter, the prosecutor, zeroed in on just a few instances of alleged insider trading by Mr. Rajaratnam. Though there are more than 100 potential witnesses and more than 50 companies whose names could come up at trial, Mr. Streeter, who spoke for an hour, mentioned only a handful, focusing on what the government likely considers the strongest evidence of insider trading.

Mr. Dowd used the government’s uncluttered approach against it. “Unlike Mr. Streeter, I’m going to tell you about the entire case,” he said.
He did not disappoint. The defense lawyer’s opening statement was hyper-detailed, naming dozens of companies in a presentation that clocked in at one hour and 40 minutes.
While Mr. Streeter used no visual aids, Mr. Dowd posted more than 30 pages of memos on an overhead display in the courtroom. Each focused on a company in which Mr. Rajaratnam is accused of trading on illegal tips. Mr. Dowd took the jury through each trade, arguing that the evidence would show no evidence of insider trading — either the news passed to Mr. Rajaratnam was already public or it was bad information that caused Mr. Rajaratnam to lose money.

The government countered that it did not have to prove that Mr. Rajaratnam profited on his trades. “Insider trading is insider trading even if it doesn’t work every time,” Mr. Streeter said.
Mr. Dowd criticized the government for barely mentioning, or not mentioning at all, cooperating witnesses like Danielle Chiesi and Roomy Khan, both of whom have pleaded guilty to insider trading crimes. He described Ms. Chiesi as a drama queen who never had any inside information and Ms. Khan as a liar who was “playing the government like a violin” in order to get a reduced prison sentence.

Mr. Streeter appealed to the jury of ordinary New Yorkers by suggesting that Mr. Rajaratnam had an unfair edge over investors on Main Street.
“Secret information that other people don’t have is a very valuable thing in the stock market,” Mr. Streeter said, noting that the New York Stock Exchange was just a few blocks from the courthouse “where ordinary investors can buy and sell stocks.”

Five men and seven women have been seated on the jury. Among them are two employees of the Department of Education and two from the Metropolitan Transportation Authority. One jury member works at an office job at Verizon; another for Apple, as a graphic designer.
Underscoring the case’s importance, Preet Bharara, the United States attorney in Manhattan, sat in the back of the spectators’ gallery with Richard Zabel, head of the office’s criminal unit. The prosecutors’ family members were also present, including Mr. Streeter’s wife and the mothers of the two other prosecutors in the case.
 

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Review: With iPad 2, Apple One-Ups Itself

SAN FRANCISCO (AP) — With the original iPad, Apple brought an attractive, easy-to-use tablet computer to the masses at a reasonable price — a feat numerous companies are trying to top.
With Friday's release of the iPad 2, Apple is pulling further ahead, with improvements that make an already excellent tablet even more enticing. It goes to show that when it comes to tablets, Apple refuses to be bested.

The new iPad is skinnier, faster and slightly lighter. It comes with cameras for video chatting and snapping photos, while keeping the same prices, ranging from $499 to $829 depending on the configuration.
Competitors such as Motorola Mobility Holdings Inc. and Samsung Electronics Co. sell good tablets of their own, with many of the same features. Motorola's new Xoom even has a higher-resolution screen than the iPad. Still, nobody has been able to match the iPad's simplicity, innovation and style.

The iPad 2 looks much like the first iPad, though it has a sleeker, lighter body with a curved back. All this helps the tablet fit more naturally in my hands, and the modified shape makes it easier to hold for extended e-reading sessions, for example.
Among the most noticeable changes is the inclusion of cameras, one on the front and one on the back.

This is something I've been hankering for, as the iPad's crisp display, measuring 9.7 inches diagonally, seemed like the ideal canvas for video chat. The subsequent arrival of several tablets with front and rear cameras made it practically a necessity for iPad 2.
Fortunately, Apple thought so, too. Both cameras on the iPad 2 work with the company's FaceTime video chat application and the back camera shoots high-definition videos.
A friend I chatted with over FaceTime moved pretty smoothly on the iPad's screen, though the image could have been much sharper. With the front camera, my friend could see me. If I switched to the back camera, I could show him my surroundings.
You can take still photos, too, though I found this awkward given the tablet's size. The results were not fantastic, but self-portrait fans will find the front-facing camera useful for composing new profile photos for Facebook.

The new iPad has Apple's new dual-core A5 chip, which helped applications open more quickly than on the older iPad. The original never felt slow, but the faster I can start a new game of "Plants vs. Zombies," the better.
Add to that a new version of Apple's iOS software. The new processor and the new iOS combined to improve Web surfing, as I could load up pages noticeably faster over my home Wi-Fi network. As expected, videos loaded quickly and generally streamed flawlessly.
The new software allows you to share music and videos from your iTunes library on multiple Apple devices on the same Wi-Fi network. And it now lets you set the iPad's mute switch to function as a screen lock, which makes it even easier to prevent my Netflix movie from rotating mid-scene just because I've shifted my butt on the couch.

The updated iOS comes with iPad 2 and is available as a free download for the original iPad and the two most recent models of the iPhone and iPod Touch.
On Friday, Apple is also rolling out iPad versions of its iMovie video-editing software and GarageBand software for recording and editing music. I tried GarageBand ($5) and was wowed by how simple it was and how well it took advantage of the iPad's touch screen.
If you're musically inclined, you can pick up your guitar and adjust its sound through GarageBand's bevy of amplifiers and effects pedals. If you don't play an instrument (or feel lazy), you can swipe through a list of "smart" virtual instruments. A guitar with preset chords lets you strum by swiping the screen. You can arrange drums on a grid based on how noisy and complicated you want the beat to sound.

The coolest part is how sensitive the virtual instruments are. Start beating your fingers on a virtual drum kit, and you can hit the drums and cymbals harder or softer. You'll get different sounds if you hit the ride cymbal in different places, and you can even tap the rim of the snare instead of just hitting the drum itself.
It's quick and easy to record and edit songs, then save or e-mail them to a friend (who will hopefully applaud your artistic endeavors).
When playing back my musical masterpiece and other content on the iPad 2 I did long for a second speaker — there is just one on its back. Fortunately, that lone speaker did sound quite crisp, even with the sound turned all the way up.

Like the first iPad, the iPad 2 is rated for up to 10 hours of battery life, and it performed like a champ. Playing a mix of videos streamed from YouTube over Wi-Fi and saved on the iPad itself, I got a bit more than 10 hours of entertainment before it died.
You can buy versions that work with either AT&T's or Verizon Wireless' cellular network, rather than just AT&T before. The cheapest model connects only through Wi-Fi. You can also get it in black or white — before, your only option was black.

Without question, the iPad 2 is a great tablet. Still, this doesn't mean the first iPad is ready for the trash can. It's still a stellar gadget, and now it's cheaper (while supplies last) with the arrival of a successor.

Should you feel the urge to have the latest and greatest, however, go for it. Chances are, it will be the best tablet in town — at least until the iPad 3 arrives.

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Some SEC Officials in Dark on Lawyer's Madoff Link

WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission voted on a method to compensate victims of swindler Bernard Madoff with some commissioners and staff unaware that the SEC's then general counsel had personal ties to the fraud. 


Details of the 2009 deliberations emerged from sources and documents on the eve of congressional hearings on Thursday with SEC Chairman Mary Schapiro, who has said she knew former General Counsel David Becker's mother had invested with Madoff.
Becker's Madoff link, his clearance to work on Madoff matters by the agency's ethics council, and Schapiro's knowledge of the tie, is raising new questions about the agency's competence.
Schapiro told House Republicans in a letter this week that she knew of Becker's ties to Madoff money when he was first hired in 2009, but did not recall informing anyone else. She added that she "relied on Mr. Becker to present any ethics-related issues."
Sources familiar with the matter are disturbed and shocked that Becker's potential conflict of interest was not more widely disclosed at the SEC, an agency responsible for policing governance practices at corporate boards.
The scrutiny comes as the SEC is working to repair its reputation for failing to catch Madoff's decades-long, multibillion-dollar, self-confessed investment fraud, considered the biggest in history.

"If this was HP or IBM or some company like that, there is clear law that says they have a fiduciary obligation to share that information. It's not hard to move from that analogy to the commissioners," said James Cox, a professor at Duke University School of Law.
He added that if Schapiro knew of Becker's potential conflict, she "had a duty to share it with everybody else. There's no doubt about it."
An SEC spokesman declined to comment. Becker could not be reached.

INVESTIGATIONS LAUNCHED
House and Senate Republicans as well as the SEC's inspector general have launched investigations into whether any criminal or civil ethics laws were broken.
Madoff trustee Irving Picard has sued Becker and his two brothers for $1.5 million in alleged phony profits their mother's estate received.

The SEC's ethics counsel allowed Becker to work on Bernard Madoff matters, despite him and his brothers inheriting about $2 million in 2004 from their late mother's investments. Schapiro has asked the ethics counsel to review its procedures.
Stephen Crimmins, a partner at K&L Gates LLP and former senior SEC enforcement officer, plans to tell lawmakers in testimony that Becker was a "careful person" and disclosed the information about his mother's account.
Crimmins said there was no evidence that anything Becker did as general counsel in any way hindered Picard's decision to file a clawback claim against him and his brothers.

Becker was involved in helping the SEC craft a recommendation on how Madoff's victims would be compensated, including whether some of the money could be clawed back from investors who withdrew more than they invested.
Schapiro will be testifying on the Becker matter and other SEC issues before two congressional panels on Thursday, a House Oversight hearing and another by the Senate Banking Committee.
At first, in early 2009, the SEC took a position that would potentially hurt Becker's financial interests by recommending that investors could only file claims based on net equity, or the difference between what they put in and what they withdrew.

But later that year, the SEC changed course.
People familiar with the matter say Becker was involved in advocating a change which would benefit longer-term Madoff investors by adjusting the payments to account for inflation.
That refined method was a source of internal dissent within SEC staff. When it came time to vote on it, however, there was no mention of Becker's conflict, sources said, and the SEC commissioners voted to accept the new recommendation.

The change was never put into practice, and a federal court last year upheld the trustee's net equity method. Madoff victims are still fighting to get it changed.
Becker left the SEC at the end of February, but has submitted letters to lawmakers saying he was advised that he could participate in Madoff matters.
In a separate report completed earlier this year, SEC Inspector General David Kotz found that the agency does not do a good enough job of documenting conflicts of interest that employees may have which requires them to recuse themselves from working on certain matters.

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Blekko Blocks 1.1 Million Sites From Its Search Engine

Last month, Google caused a stir when it changed its algorithm to push down low-quality sites in search results. Now Blekko, a new search engine, is going much further by banning 1.1 million Web sites from its search engine.
Blekko had previously banned 20 Web sites that users complained about most, including eHow and Answerbag, both owned by Demand Media. But the new change will affect hundreds of millions of Web pages that Blekko said have very thin content and many ads.
“Google didn’t actually take anyone out, they just reshuffled the deck,” said Rich Skrenta, chief executive of Blekko. “Instead of demoting these sites to No. 5 or No. 7, we’re just throwing them out.”

Google’s and Blekko’s changes are in response to increasing criticism of sites that game search results by including keywords and phrases that people often search for in order to appear higher in search results and, in turn, make money on ads when people click on those sites.
But solving that problem is tricky, because a Web site’s quality is so subjective. EHow, for instance, has taken a lot of heat for publishing articles like “How to Make Friends” (the No. 1 piece of advice: “Smile. It’s contagious!”) but it can be useful for queries like “How to Right-Click on a Mac.”

The main thing that Blekko considered was whether the sites use online ad networks.
“If you make a machine to print money” — an ad network, in Mr. Skrenta’s opinion — “people will exploit it,” he said. “All you have to do is put some words on your page, do some link building and get listed on search engines. Then traffic will come and checks will come, and lo and behold, most of the people who did that are not substantive sites.”
Of course, most legitimate sites that publish news and articles also run ads. Blekko also considers whether a site publishes pieces on one topic, like a cooking blog, or on an endless variety of topics, like eHow. And it looks at how long and in-depth articles are, how trustworthy they are among users and whether the writers are professionals or amateurs.

Though it seems like many legitimate sites could be considered spam under this algorithm — newspapers cover a wide variety of topics, for instance, and many bloggers may be amateur writers but are experts in their fields — Mr. Skrenta said that when he combed through thousands of sites that the algorithm banned, he found only two false positives.
Examples of the sites Blekko now bans: cheap-refrigerators.net, best-weddinggifts and Boston.diningguide.com.

Search engines take different approaches to determine which sites are high-quality. Google does it algorithmically, though it tests algorithms with users. Blekko uses more human intervention, showing only results that Blekko or its users have deemed worthy.
“Slashtags define eligible sites that are allowed to compete for that top 10 position and also say there’s a set of people who aren’t eligible to appear in any category,” Mr. Skrenta said.

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Bank of Korea Hikes Key Interest Rate to 3 Percent

EOUL, South Korea (AP) — South Korea's central bank raised its key interest rate for the second time in three months Thursday as it tries to control rising inflation.
The Bank of Korea announced that it had lifted the benchmark base rate to 3 percent from 2.75 percent at a monthly meeting. The rate influences a variety of borrowing costs, including those on overnight loans between financial institutions and more broadly on items such as mortgage and credit card debt.

The decision came after South Korea's consumer price index jumped in February to its highest level in more than two years and remained outside the central bank's inflation comfort zone for a second straight month.
The BOK and central banks in China, India, Brazil and other countries have been raising interest rates amid higher inflation. Thailand's central bank hiked its key rate Wednesday by a quarter percentage point to 2.5 percent.

The Bank of Korea's inflation target is 3 percent, though that includes what it calls a "tolerance range" of plus or minus 1 percentage point. February's consumer price index jumped 4.5 percent from the same month last year. That came on the back of January's increase of 4.1 percent.
The central bank expects inflation to increase to 3.5 percent 2011 from 2.9 percent last year.
The decision was in line with expectations and came after the BOK surprised some economists by keeping the rate on hold last month.
Ten economists at 17 financial institutions surveyed by Yonhap Infomax, the financial news arm of Yonhap news agency, predicted the bank would raise the rate at Thursday's meeting.

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Owen Laster, Literary Agent at William Morris, Dies at 72

Owen Laster, one of the most powerful literary agents of his generation, who ran William Morris’s worldwide literary operations and had a long list of best-selling writers that included James A. Michener and Gore Vidal, died on Wednesday at his home in Manhattan. He was 72. 

Owen Laster, right, with Dominick Dunne.

The cause was cancer, Sally Hudson, a niece, said.
Mr. Laster, in time-honored fashion, started out in the William Morris mailroom fresh from college and spent his entire career at the company, retiring in 2006. 
Initially he worked with writers and directors for film and television, but by the mid-1960s his enthusiasm for books and writers propelled him into the agency’s literary department, where he rose quickly and acquired a roster of highly successful writers. Mr. Laster was an old-fashioned agent with a refined manner. In a business with no shortage of sharp elbows, he seemed to operate by Marquess of Queensberry rules. Nevertheless, he not only adapted but flourished in the era of publishing conglomerates and superstar agents, brokering headline-grabbing deals.

In 1977, in an unusual two-for-one deal, he sold the memoirs of former President Gerald R. Ford and the first lady, Betty Ford, for $1 million to Harper & Row and Reader’s Digest. As the agent for the estate of Margaret Mitchell, he sold two sequels to “Gone With the Wind” for fabulous sums. The first, “Scarlett,” by Alexandra Ripley, went to Warner Books for $4.9 million in 1988. The second, sold to St. Martin’s Press in 1995 for $4.5 million, was published in 2007 as “Rhett Butler’s People,” by Donald McCaig.
The megadeals seemed to emerge from thin air. “He never let on what was going on,” said Joni Evans, an agent and publisher he brought to William Morris in 1994 as a senior vice president. “He’d just say, ‘James needs $4 million for the next book.’ He made very few mistakes, and he had an uncanny sense of what a property was worth.”
Owen Jacob Laster was born on Aug. 30, 1938, in Weehawken, N.J. His parents, immigrants from Poland and Ukraine, ran an embroidery factory. Owen grew up in several northern New Jersey towns along the Hudson River.
After earning a bachelor’s degree from Syracuse University in 1960, he served in the Army and went to work at William Morris, encouraged by a friend who knew of his passion for film, theater and books.

Mr. Laster resisted the idea at first. “I had this view of an agent as a wiry, skinny, greasy-haired person with a mustache,” he told The New York Times in 1986.
Within a few months he graduated from the mailroom to the publicity department, where he sent out photos and biographies of the agency’s show-business clients to nightclubs. By 1956 he was an agent, of the nongreasy type.
His career in books began a decade later when Helen M. Strauss brought him into the company’s literary department, which she had created in the 1940s. When she left William Morris two months later, he inherited several of her writers, and in 1973 he was put in charge of the literary department. In 1989 he became head of the agency’s worldwide literary operations.
Mr. Laster’s client list was unusually diverse, divided almost equally between fiction and nonfiction authors and, on the fiction side, between literary writers like Ralph Ellison and Edward Albee and best-selling genre writers like Joy Fielding, Bari Wood and James Crumley. For many years he represented Dominick Dunne, Susan Isaacs and Judy Blume, as well as numerous literary estates, including those of Frank Yerby, Leon Uris and Chaim Potok.
One of his quirkier successes was the novel “... And Ladies of the Club,” which made an unlikely literary star of its author, Helen Hooven Santmyer, an 88-year-old retired librarian from Ohio. When it was published by the Ohio State University Press in 1982, the novel sold only a few hundred copies, but a college classmate of Mr. Laster’s brought it to his attention, and Mr. Laster sold it to Putnam’s. After being republished in 1984, it became a main selection of the Book of the Month Club and a No. 1 best seller.

In its own way, the astonishingly successful career of Mr. Michener was just as anomalous. Against the prevailing literary winds, he remained one of the most dependable writers of best-selling fiction in the United States for decade after decade and, thanks in no small part to Mr. Laster, one of the richest. “It really is amazing how long he kept the Michener flag flying,” Ed Victor, a literary agent in London, said of Mr. Laster, with whom he often traveled to the Frankfurt Book Fair in Germany.

Several of Mr. Laster’s agents and assistants went on to establish important careers, notably Robert Gottlieb, who became head of the literary department and executive vice president of William Morris before starting his own company, Trident Media Group, in 2000.
Mr. Laster, who leaves no immediate survivors, came up with a simple explanation for his career in his 1986 interview with The Times. “I like to read,” he said. “I like books, and I like writers.”

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Appeal of iPad 2 Is a Matter of Emotions

“An utter disappointment and abysmal failure” (Orange County Design Blog). “Consumers seem genuinely baffled by why they might need it” (Businessweek). “Nothing more than a luxury bauble that will appeal to a few gadget freaks” (Bloomberg). “Insanely great it is not” (MarketWatch). “My god, am I underwhelmed” (Gizmodo).

Good heavens! What a critical drubbing! Whatever it is must be a real turkey. What could it be?
Only the fastest-selling gadget in the history of electronics: the Apple iPad.
All right, let’s not pile onto the tech critics. The thing is, they were right, at least from a rational standpoint. The iPad was superfluous. It filled no obvious need. If you already had a touch-screen phone and a laptop, why on earth would you need an iPad? It did seem like just a big iPod Touch.
But as it turns out, the iPad’s appeal is more emotional than rational. Once you get it in your hands, you get caught up in the fascination of manipulating on-screen objects by touching them. Apple sold 15 million iPads in nine months, created a mammoth new product category and started an industry of copycats. Apparently, it doesn’t pay to bet against Steve Jobs’s gut instinct.

On Friday the iPad 2 goes on sale, for the same price as the old one (from $500 for the Wi-Fi-only model with 16 gigabytes of storage, to $830 with 64 gigabytes and both Wi-Fi and cellular Internet connections). And if you thought there was an intellectual/emotional disconnect before, wait till you see this thing.
On paper, Apple didn’t do much. It just made the iPad one-third thinner, 15 percent lighter and twice as fast. There are no new features except two cameras and a gyroscope. I mean, yawn, right?

And then you start playing with it.
My friends, I’m telling you: just that much improvement in thinness, weight and speed transforms the experience. We’re not talking about a laptop or a TV, where you don’t notice its thickness while in use. This is a tablet. You are almost always holding it. Thin and light are unbelievably important for comfort and the overall delight. So are rounded edges, which the first iPad didn’t have.

The iPad 2 is now 0.34 inches thick. Next to it, the brand-new Motorola Xoom — the best Android competitor so far — looks obese. Yet somehow, the new iPad still gets 10 hours of battery life on a charge.
Some of the iPad’s new features play industry catch-up. A 5-megapixel camera on the back (no flash) can also record high-definition video. If you’ve never used a tablet as a camera, you’re in for a treat; the entire screen is your viewfinder. It’s like using an 8-by-10 enlargement to compose the scene.
T
here’s also a low-resolution front camera that’s useful for video calls, like clear, sharp Wi-Fi calls to iPhone 4, Touch, iPad 2 and Mac owners using Apple’s FaceTime software.
You can now connect the iPad to a hi-def TV, thanks to a single H.D.M.I. adapter ($40) that carries both audio and hi-def video. What you see on the TV mirrors whatever is on the iPad, which makes it a great setup for teaching, slide shows, presentations, YouTube and movies. It works automatically and effortlessly.

The more expensive iPad 2 models can also go online using either AT&T’s or Verizon’s cellular networks, but figuring out the right pricing plan requires a graduate degree in forensic accounting. With AT&T, for example, you can pay $15 a month for 250 megabytes of data, or $25 for two gigabytes. Verizon’s plans are 1 gigabyte for $20, 3 for $35, 5 for $50 or 10 for $80. O.K., but how are you supposed to know how many megabytes a bunch of Web pages and YouTube videos are going to consume?
On the bright side, both AT&T and Verizon let you sign up for cell service right from the iPad, only when you need it — no two-year contract. You can turn on service only when you’ll be traveling, for example.
Now, about Apple’s new iPad screen cover. Ordinarily, devoting time to a technology review of a screen cover would indicate that the columnist was a few sandwiches shy of a picnic. But Apple’s new cover is a perfect symbol of its fondness for high-tech magic tricks.
You attach this single sheet by drawing it across the iPad’s face as though you’re making a bed. With a satisfying clicking sound, hidden magnets anchor the thing solidly to the iPad’s face.
“But Dad,” my 6-year-old son pointed out, “you’re supposed to keep magnets away from electronics!”

“I know,” I replied sagely. “But this is Apple.” And then I showed him how opening the cover turns the iPad on automatically, and closing it again puts the thing back to sleep.
This cover ($40 for polyurethane in five colors, or $70 for leather in five other colors) is not for protecting the screen, whose hardened glass doesn’t need much help. It’s for fashion, for cleaning (Apple says that the cover’s microfibers mop away dust) and for propping up the iPad. Clever hinges in the cover’s rigid panels prop up the iPad at two different angles, so you can watch movies or freely use the on-screen keyboard with both hands.
There’s a gyroscope in the iPad, too, just as in the iPhone 4. You notice it only when you play games that have been written to exploit it. For example, you can look behind you in the Nova 2 shoot-’em-up environment by moving the iPad around you, or “walk around” the tower of wood blocks in Jenga.

Now, the coming months will bring a blizzard of tablets that are meant to compete with the iPad. And they’ll offer some juicy features that the iPad still lacks. On an Android tablet, you can speak to enter text into any box that accepts typing. You also get an outstanding turn-by-turn navigation app — and GPS maps are a different experience on a 10-inch screen. It’s like being guided to your destination by an Imax movie.
Furthermore, new Android tablets will be able to play Flash videos and animations on the Web, something that both Apple and Adobe (maker of Flash) assure us will never come to the iPad (or iPhone). Flash on a tablet or phone can be balky and battery-hungry, but it’s often better than nothing. Thousands of news and entertainment Web sites still rely on Flash, and the iPad, iPhone and iPod Touch simply can’t display them.
But you know what? The iPad will still dominate the market, because it dominates in all the most important criteria: thinness, weight, integration, beauty — and apps.

Oh, yes, the apps: there are 65,000 apps already available for the iPad (not including the 290,000 iPhone apps that run at lower resolution on the iPad’s screen). But Google’s programming kit for tablets just came out, so there are very few apps written for larger Android screens.
The kicker, though, may be the price. Apple is at the top of its game these days — and at the top of the industry. The rap, of course, is that you often pay extra for Apple elegance.
But the shocker here, though, is that the iPad 2 actually costs less than its comparably equipped Android rivals, like the Xoom and the Samsung Galaxy Tab. That twist must have something to do with Apple’s huge buying clout — when you order five million of some component at a time, you can usually persuade the vendor to cut you a deal.
But that surprising price detail may turn a lot of heads. It means that for the first time, your heart can succumb to the iPad mystique — without having to ignore the more practical input from your brain.

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A Grab for Wall Street’s Rising Stars Before They’ve RisenA Grab for Wall Street’s Rising Stars Before They’ve Risen

ome of the world’s largest private equity firms are in a tug of war over top talent. But the competition isn’t over brand-name executives commanding eight-figure salaries. Instead, firms are fighting for the affections of bankers barely old enough to rent cars.
This month starts the private equity recruiting season, an annual Wall Street ritual in which young analysts from leading investment banks like Goldman Sachs and Morgan Stanley are wined and dined by Kohlberg Kravis Roberts, the Blackstone Group, TPG Capital and a handful of other top-flight firms. The industry is gearing up earlier than ever this year, with some firms already making offers for jobs that won’t start until the fall of 2012, a full 18 months from now.
“Five years ago, it happened in September, then July, then May, then April. This year, it’s March,” said a senior partner at a large private equity firm, who spoke on the condition of anonymity because he was not authorized to comment on the hiring process.

Young analysts typically fulfill two-year contracts at their banks before making the switch to the more prestigious, higher-paid world of private equity. It’s a common move often referred to as “two and out.” Many of these analysts, referred to as “pre-M.B.A. hires,” are contacted by private equity firms only months into their first post-collegiate jobs, and some are as young as 22.
“There is a shortage of stars, and that gives a strong incentive for a given firm to be the first,” said Adam Zoia, chief executive of Glocap Search, whose clients include leading private equity firms. “But everyone sensible — the clients, the banks, the candidates — believes it’s in no one’s interest to start this early.”
Top firms have traditionally made informal agreements to synchronize their recruiting drives. It is a delicate monthlong dance that can include cocktail hours, meet-and-greets with executives and interview marathons sometimes referred to as “Super Saturdays.” This year, many of the largest firms scheduled events in April, approximately the same time as last year.
But in early March, word spread that Bain Capital, the $65 billion private equity firm, was holding interviews and making offers to top candidates, according to several people familiar with the matter. Bain’s competitors — some of which moved early in previous years — were forced to scramble. They quickly rearranged schedules and, in some cases, canceled planned recruiting events in order to make their offers as soon as this week.
“Every year, we talk to the other private equity firms and actually pretend we have a vested interest in being reasonable about this,” said a private equity executive who oversees his firm’s hiring efforts. “And every year, some jerk kicks off the process a month early.” The executive, who also spoke on the condition of anonymity to avoid angering rival firms, called the analyst recruiting process “one of the last vestiges of completely rogue behavior” in the well-heeled world of private equity.

Bain declined to comment.
The early recruiting process has serious limitations. Private equity firms are essentially wooing young analysts with less than a year’s experience, giving them little time to learn crucial skills like building complex financial models to value companies. Few have also received the annual performance reviews necessary for identifying top talent.
“The kids we’re talking to got out of college last summer, spent six months in training, entered the job in January, and have done exactly nothing since then,” the executive said. “So we’re asking them about their transaction experience, and they’re talking about what fraternity they were in.”
An accelerated process can be stressful for analysts, many of whom have to prepare for rigorous interviews on top of working long hours at their banks. And although the private equity path for analysts is well worn, many investment banks formally discourage employees from participating in outside recruiting. So, many conduct their job hunts in secret.

“It’s the time of year when everyone has 10 dentist appointments and 5 sick grandmothers,” said one young analyst at a large bank, who spoke on the condition of anonymity because he was not authorized to talk to the media.
Competition is fierce. According to industry insiders, more than a thousand analysts are expected to apply for perhaps 50 spots at the largest buyout firms this year. Coming from a so-called target group can help an analyst’s chances — Goldman Sachs’s technology, media and telecom group and Morgan Stanley’s mergers and acquisitions group are thought to be the cream of the crop — but there are no guarantees.

“I heard a kid in M.&A. already has three offers,” said one analyst in a target group, who was waiting to hear back about his own applications. “That’s what all the buzz around here is about.”
In perhaps the clearest sign that the recruiting frenzy has hit a boiling point, several smaller private equity firms have hired star students or well-connected ones straight out of college. Industry experts say they don’t expect that trend to spread to mega-firms like K.K.R. and Blackstone. But even longtime private equity players, like the executive managing his firm’s hiring process, admit that the competition has made anything possible.
“It’s a land grab,” the executive said. “And it’s a land grab for completely undeveloped property.”

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Heat Damages Colombia Coffee, Raising Prices

 

 TIMBÍO, Colombia — Like most of the small landowners in Colombia’s lush mountainous Cauca region, Luis Garzón, 80, and his family have thrived for decades by supplying shade-grown, rainforest-friendly Arabica coffee for top foreign brands like Nespresso and Green Mountain. A sign in the center of a nearby town proclaims, “The coffee of Cauca is No. 1!”

 But over the last few years, coffee yields have plummeted here and in many of Latin America’s other premier coffee regions as a result of rising temperatures and more intense and unpredictable rains, phenomena that many scientists link partly to global warming.
Coffee plants require the right mix of temperature, rainfall and spells of dryness for beans to ripen properly and maintain their taste. Coffee pests thrive in the warmer, wetter weather. Bean production at the Garzóns’ farm is therefore down 70 percent from five years ago, leaving the family short of money to buy clothing for their toddlers and “thinking twice” about sending older children to college, said Mr. Garzon’s 44-year-old son, Albiero, interviewed in a yellow stucco house decorated with coffee posters and madonnas.

The shortage of high-end Arabica coffee beans is also being felt in New York supermarkets and Paris cafes, as customers blink at escalating prices. Purveyors fear that the Arabica coffee supply from Colombia may never rebound — that the world might, in effect, hit “peak coffee.”
In 2006, Colombia produced more than 12 million of 132-pound bags of coffee, and set a goal of 17 million for 2014. Last year the yield was nine million bags.
Brands like Maxwell, Yuban and Folgers have increased the retail prices of many grinds by 25 percent or more since the middle of last year in light of tight supply and higher wholesale prices. Profits of high-end coffee chains like Starbucks and Green Mountain have been eroded.
Coffee futures of Arabica, the high-end bean that comes predominantly from Latin America, have risen more than 85 percent since last June, to $2.94 a pound, partly over concerns about supply, extreme weather and future quality, said George Kopp, an analyst at the International Futures Group in Chicago.

Yet as stockpiles of some of the best coffee beans shrink, global demand is soaring as the rising middle classes of emerging economies like Brazil, India and China develop the coffee habit.
“Coffee production is under threat from global warming, and the outlook for Arabica in particular is not good,” said Peter Baker, a coffee specialist with CABI, a research group in Britain that focuses on agriculture and the environment, noting that climate changes, including heavy rains and droughts, have harmed crops across many parts of Central and South America.
A leading coffee scientist, Mr. Baker has rattled trade forums by warning, Cassandra-like, of the possibility of “peak coffee,” meaning that, like supplies of oil, coffee supplies might be headed toward an inexorable decline unless growers make more concerted efforts to expand production globally.
Announcing its annual meeting this spring, the Specialty Coffee Association of America spoke of “extreme challenges,” warning, “It is not too far-fetched to begin questioning the very existence of specialty coffee.”
Two categories of coffee, Arabica and Robusta, account for virtually all consumption. With its more delicate taste and lower caffeine content, Arabica is the more popular and more expensive variety, though generally more finicky in its weather requirements. Robusta production dominates in Asia and Africa.
 
Colombia is the No. 2 Arabica exporter after Brazil, where production is centered on larger, more mechanized farms and continues to increase. Colombian highlands, where some of the most prized Arabica in the world grows at elevations of more than a mile, residents say that climate-related threats seem to be coming from all directions.
The Colombian Coffee Growers Federation says that high fertilizer prices have also dented yields. But it agrees with a 2009 report from the International Coffee Organization that concluded, “Climatic variability is the main factor responsible for changes in coffee yields all over the world.”
Average temperatures in Colombia’s coffee growing regions have risen nearly one degree in the last 30 years, and in some mountain areas the increase has been double that, according to Cenicafé, the national coffee research center. Precipitation in this area was more than 25 percent above average in the last few years.
At the new, higher temperatures, the plants’ buds abort or their fruit ripens too quickly for optimum quality. Heat also brings pests like coffee rust, a devastating fungus that could not survive the previously cool mountain weather. The heavy rains damage the fragile Arabica blossoms, and the two-week dry spells that prompt the plant to flower seldom occur.
“
Half a degree can make a big difference for coffee — it is adapted to a very specific zone,” said Néstor Riaño, a specialist in agroclimatology for Cenicafé. “If temperature rises even a bit, the growth is affected, and the plagues and diseases rise.”
While climate scientists agree that the increase in temperature is a clear signal of global warming and high ocean temperatures are generally associated with more frequent storms, scientists are uncertain whether the peculiar weather patterns in the area are directly related to warming, said Stephen E. Zebiak, director general of the International Research Institute for Climate and Society at Columbia University. 

“It is hard to know whether this severe weather represents natural fluctuations or is a climate change signal, though from a risk management sense, there is good reason to consider how to cope with these extreme events,” Dr. Zebiak said.  

In the hope of restoring coffee output, researchers at Cenicafé’s labs in Chinchiná are toiling on a mission that seems as pressing a priority for Colombia as finding a cure for cancer is for medical researchers.
Agronomists are teaching the farmers how to control the pests that arrived with the change in the weather. Climatologists are working to provide better local weather predictions. Geneticists are breeding plants that are more resistant to diseases or that can withstand torrential rains or a hotter environment.

The Coffee Growers Federation has advised farmers like Mr. Garzón to switch to a newer, hardier strain of Arabica that has been developed by plant breeders at Cenicafé over the last two decades.
While the federation says it tastes the same as traditional variants, farmers have resisted because they can ill afford to forgo the income of a yearly crop as they wait for new coffee plants to mature. They have also been wary that the switch could affect flavor.
Taste, quality and supply are delicate issues for an industry whose aficionados are notoriously picky. Coffee companies are “working with farmers across the region to address the impact of changing weather patterns that are a direct result of climate change,” said Lisa Magnino, a spokeswoman for Starbucks,
Starbucks has already bought enough coffee to last until 2012, she added. Luis Fernando Samper, a spokesman for Colombian Coffee Growers Federation, said that the beans that do make it to breakfast tables in the United States will yield coffee that is as good as ever. The problem is for Colombian farmers, who are producing far fewer beans over all and “more defective beans” that do not meet export standards.

For decades, said Luis Garzón, who started growing coffee at age 7, it was dry from June 1 to Sept. 8 in Timbío. Then, several years ago, the perplexing weather arrived. “It can start raining at 6 a.m. and go on for 24 hours,” he said.
First, yields declined. Then last year, the coffee rust fungus arrived at the Garzón farm, killing entire fields. “We learned our lesson,” he said, stroking the mottled yellowed leaves of some damaged plants. Now, the family is planting the new, hardier Arabica variant, called castillo. The coffee federation hopes that such innovation will allow growers to keep expensive Arabica coffee on American tables.
In the meantime, it is creating a “product origin” certification program for Colombian coffees, similar to the one that protects Italy’s Parmesan cheese. That way importers will not be tempted to substitute beans from Brazil or Indonesia.

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