Sunday, February 24, 2013

COMMENTS - 2013/02/24



WEEKLY BLOG COMMENTS – No. 52
DATES: 2013/02/17– 2013/02/24
ANALYST: Domingo Trassens
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Dear Friends:

Hello! I would like to share with you a series of comments posted by myself in the WSJ Journal Community during the last seven days about news related to politics, economy and business in United States and the rest of the world.

The special themes of this week are:

- Cyber Attacks: A New Cold War?

- Gloomy Days for Dell Inc

- Mergers Don’t Fix Problems of Traditional Retailers

Next, you will find the other comments organized in the following sections: United States, Europe, The World (Asia, Africa, Middle East…), Latin America and Economy, Business and Technology.


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THEME: Cyber Attacks: A New Cold War?


Subject: Chinese military is accused of stealing data from more than 100 U.S. companies hacking their computing systems.

My Comment: After all the recent “cyber attacks” suffered by American companies during the last weeks, the sources confirm that we are entering a new “war” full of risks and uncertainty.

This story of Wall Street Journal titled: “China Lashes Back at Hacking Claims” also shows how the Chinese authorities act when we point at them and we say they are the attackers.

Last Tuesday, the Chinese Foreign Ministry spokesman Hong Lei denied accusations from the United States that the China's army stole data from more than 100 U.S. companies with this statement: “Cyber attacks are anonymous and transnational and it is hard to trace the origin of attacks…"

First at all, through this statement, the Chinese foreign office is recognizing officially that there is a “cyber-war.”

Second, when Hong Lei says the “cyber attacks are anonymous”, he is demonstrating the contrary. Anybody who knows a little about the Internet can affirm today that it is possible to track the legal and illegal “movements” in cyber-space.

Also through the statement of Mr. Lei, we see the Chinese try to diminish these attacks with the childish expression: “it is hard to trace the origin of these attacks…”

Who is one of the observers of this cyber-war? Its name is Mandiant, an American company that is expert in Internet security.

During the last weeks, due to the series of “cyber-attacks” suffered by American companies, Mandiant’s executives went public and explained what they know about the attacks and the locations of the attackers.

On Wednesday Feb. 19, 2013, a journalist for the TV network PBS in an interview titled: “U.S. Security Firm Report Says Chinese Hackers Targeted Over 140 Victims” talked with the chief security officer of Mandiant, Richard Bejtlich, who commented about a study his company made to follow the recent attacks to technology companies and media with these words: “The study found evidence that linked it to a Chinese military unit.”

The Mandiant’s executive explained also that in a building located near Shanghai, they found a complete unit of hackers who work with thousands of computers as a normal job stealing terabytes of data with diverse information from more than a hundred western companies and government agencies.

According to my own research, Mandiant is a technology company of services and products founded in 2004 for Kevin Mandia, an industry guru expert in Internet security.

Through Mandiant and other similar organizations focused on the security of the information systems of corporations and government agencies to detect the intrusion of hackers, we see that today the cyber attacks are a huge continuous threat.

In recent days, the news confirmed cyber attacks against Facebook, Apple, Microsoft, Twitter, Wall Street Journal, New York Times and others. 

After any analysis of all these events, we have to conclude that the activities that we are talking about are not the actions of a group of amateur hackers working underground for some patriotic ideas against western targets.

We have to agree that the Chinese attacks against our government agencies and companies are a new kind of “cold war” that professional military troops with expertise in Internet are fighting against the United States and other allied nations. (2013/02/24)



Subject: According to different sources Microsoft ‘s computers were attacked by hackers during the last few days.

My Comment: The information available about the cyber-attacks that Microsoft suffered during the last few days doesn’t give enough elements to know the identity of the attacker/s and his/her/their targets.

Despite the shortage of technical elements that confirm the hacker activities, the news says that the attack against Microsoft was similar to the infiltration that Apple and Facebook suffered before.

Coincidences or not, during the last few weeks, Wall Street Journal, New York Times and other media also suffered hacker attacks.

When we put all these events together, the conclusion is clear: technology companies and media are the focus of the attackers.

The previous observation confirms the presumption that the hackers are not apprentices of criminality, they are professionals.

Probably, they are the same cyber-warriors who were attacking government institutions of our country recently.

From our perspective, they look like members of a “new unit” from a strong military organization. (2013/02/23) 4 Recommendations




Subject: Apple attacked by the same hackers who struck Facebook’s systems.

My Comment: The news talks about hackers who attacked Apple Inc, probably the same criminals who struck Facebook.

This is a big threat that we – America – have to face from now on with energy and a lot of intelligence.

The problem is that a lot of American technology companies acted in an ingenious mode during a long period when they shared with Chinese universities and organizations linked with the China government our secrets about technology.

The same situation happened in our friendly openness to the universities and research centers of other countries like Vietnam where there are people who hate us.

We have to learn that in totalitarian regimes, the universities are the “doors” to introduce technology and critical knowledge with the “pretext” that in the university environment everybody pursues only academic goals.

But the universities of the totalitarian regimes are inhabited by a lot of “friends” of the regime. Normally, the common people have no access to the high intellectual circles of those universities.

And also these universities are the training campus of the intelligent services of the regime and the military organizations.

For all these reasons, from now, we have to be careful when we share crucial information and knowledge with those people with “big smiles” on their faces and a sharpened knife hidden in their backpack. (2013/02/19) 2 Recommendations


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THEME: Gloomy days for Dell Inc.


Subject: Dell Inc posted its last financial results with decline of its net income and revenues.

My Comment: The story talks about the new fall of the Dell, the famous PC maker of the 90s and the beginning of the new Millennium.

When I saw the news, I entered the online press room of Dell where I found the official source of the information, the news release titled: “Dell Reports Fourth Quarter, Full Fiscal Year Financial Results”

Dell published its financial results of the 2013 fourth quarter and 2013 full-year with the fall of its revenues, operating income and net income in both the quarter and the year compared with a year ago.

This is the official information from the company distributed through a news release:

Fourth quarter
2013 Revenue: $14.31 billion
2012 Revenue: $16.03 billion
Year-over-year: -11%

Fourth quarter
2013 Operating income (GAAP): $698 million
2012 Operating income (GAAP): $931 million
Year-over-year: -25%

Fourth quarter
2013 Net income (GAAP): $530 million
2012 Net income (GAAP): $764 million
Year-over-year: -31%

Fiscal year
2013 Revenue: $56.94 billion
2012 Revenue: $62.07 billion
Year-over-year: -8%

Fiscal year
2013 Operating income (GAAP): $3.01 billion
2012 Operating income (GAAP): $4.43 billion
Year-over-year: -32%

Fiscal year
2013 Net income (GAAP): $2.37 billion
2012 Net income (GAAP): $3.49 billion
Year-over-year: -32%

A fast review of all these figures shows a very different picture from the Dell that we knew 10 years ago. Really, the landscape for this PC maker looks gloomy.

The story says that: “For the last few years, Dell has been tacking away from its reliance on PCs, building out a portfolio of products and services that it can sell to businesses. These include security software, storage systems, networking gear and the like, all of which usually have higher profit margins than PCs.”

My point: It is true that during the last few years, Michael Dell tried to build a portfolio of products and services with the intention to reduce the dependence of his company on the PC sales, but it is also true that Michael never made enough effort to re-create his company at the right time.

In different opportunities I explained that in 2000 I was invited to a Dell Conference in Austin and I had the opportunity to talk directly with Michael Dell. In that moment I said: “Michael, the PC business is changing, you have to concentrate with all your energy in the segment of solutions, services and consulting for the corporations and small and medium business.” Michael only smiled and looked at me like I was talking about something very distant to achieve…

In summary, the fall of the PC business is hitting hard on Dell Inc. (2013/02/23)


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THEME:  Mergers Don’t Fix Problems of Traditional Retailers


Subject: The boards of Office Depot and OfficeMax agreed about the merger of both office retail companies

My Comment: When we observe from a distance, the merger between Office Depot and Office Max looks reasonable. They are retail department companies focused on office products and services with very similar profiles, but…

But there are at least two negative points in this merger:

1) Today in some locations, both companies have stores very near each other. In all those cases, one of the current stores will be closed. This implies a cut of employment, more spaces empty in the shopping centers, less commercial activities in some areas.

2) The “power” to be one company instead of two implies less competition in a segment that the competition is very important because both companies are providers of tools, services and supplies for small business, freelancers and private people who need these supplies and services to manage their own businesses in a professional way. For example, from now on when the “new company” plans to offer copy and office services it will not have to look at prices of its competition.

In summary, during the last decade we learned that the majority of the big mergers are not a guarantee of business efficiency. They are only “killers” of employment and competition. (2013/02/21)



My Comment answering to another member of the Journal Community: I agree that through the merger at least one of either office retailers will survive. This presumption can works in the short term. 

But this is not the solution in the long term. All the “classic” department stores with hundreds of branches across the country have to change their business model if they want to survive and compete in a reasonable way with non-traditional competitors and Internet companies.

Other case similar to Office Depot and OfficeMax is Best Buy. All these companies have big buildings rented with high costs and they are not efficient in the interaction of seller-customer. Also, normally they separate their “tradition” shops from the online transactions departments like some complete business units.

My suggestions:

1) They have to integrate their face-to-face sales and Internet sales like one kind of transaction reducing all the costs to maintain two different organizations to sell the same products and the same customers.

2) In the way to reduce fixed costs, they have to install “sell-automatic-machines” in their stores like the ATMs of the banks. Also today some supermarkets have these machines.

3) They have to train the employees of the stores to be really “advisers” for the customers, no-classic-bored-sellers. By Internet or in the stores, all the transactions have to follow the same procedures and “end” in the same way. With this initiative, they will need less sellers than before, but they will hire better employees (professional employees) across the new key functions of the organization.

4) As part of the change, they have to “move” their old physical stores to new smaller and more automatic stores located in the best places in the cities and towns across the country. With this initiative they will reduce fixed costs but they will continue open in the majority of the locations that today have shops. This conversion of business happened before in the banking industry. Today when you enter into a bank, you find a lot of “friendly automatic machines” to manage normal transactions, a lot of literature to guide the customers according to their needs and 1 or 2 employees with less stress than before. Also with this criteria, in areas that are safe, they have the possibility to have 24/7 shops.

5) The package of the initiatives that I mentioned before require several important actions:
- A complete redefinition of their business model including their information and operational systems.
- A strong and intelligent training for the employees.
- An important improvement in the storage, handling and delivery systems of the products and stuff they sell.
- The education of their customers about the benefits of the new way to buy products and services.

I think there are more initiatives that Office Depot – OfficeMax, Best Buy and the others can take… These are only a series of simple suggestions, but through these suggestions these old “dinosaurs” of the retail business can change their luck, continue alive and make more profit. (2013/02/22)


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THEME:  United States



Subject: Republican Senators and the White House don’t agree in budget cuts.

My Comment: With aggressive rhetoric we will not solve this problem. All the “parts” involve in this “mess” (Congress and the White House together) have to sit around the same table with the same (fact sheets) “spreadsheet” of federal expenditures and cut all the items they can delete.

If they don’t know how to eliminate lines of the “spreadsheet” by hand, they have to use an Excel (or similar electronic spreadsheet program) and zero all cells with “stupid” spending items. It is fast! It is easy!

I believe till now there are a lot of “items” that nobody touched because everybody wants to protect the “corner” of his/her grandmother or grandfather and the “free-tuition college” of the grandchildren that probably will be born in 10 years from now.

The “deletion” of expenditures through an electronic spreadsheet is easier than “calls” to the press every minute with a new “statement” that they said before hundred of times. (2013/02/20) 1 Recommendation



My Comment: In my previous comment, I pointed out that everybody – including the White House - has to sit next to others around the same table with the unique mission: cut expenditures from the same spreadsheet.

No lectures! No speeches! Only cuts! And whoever makes more “cuts” will receive a symbolic award as the “Patriot of Federal Budget”.

Now is not more time for elections. This is a different political time. For this reason nobody has to leave the table till the job finishes.

After that if somebody wants to visit his/her friends in Ohio, Illinois or California, he/she can use his/her free time. (2013/02/20)


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THEME:  Europe



Subject: Across different Spanish cities the unrest against the corruption of the government grows.

My Comment: I always was an advocate of the democratic institutions and the authorities elected through a democratic process.

However, after I knew about the secret payoffs to Mr. Rajoy and other leaders of the ruling Popular Party, I think the best is the current government calls to new elections and resigns.

The normal people, the decent workers, the jobless workers and the rest of the citizens of a country deserve authorities without dubious actions. They are tired of the rotten handling by their leaders and politicians.

For this reason, I believe that it is right that hundreds of thousands of people across Spain are demanding the resignation of the Primer Minister Mariano Rajoy. After that in front the Court, he will have the possibility to demonstrate his “honesty” or his “dishonesty”. (2013/02/24)



Subject: After all the accusations against his previous government. Mr. Berlusconi returns to the main political scene of Italy.

My Comment: Again a new Italian election spreads uncertainty about the future of this country and the European Union.

After all the efforts that Primer Minister Mario Monti made to clean the institutions and reform the government with a package of economic and financial initiatives, the former Prime Minister Silvio Berlusconi comes to the main scene with the intention to retake control of the Italian government through the election.

If the Italian voters give Silvio Berlusconi the possibility of a political comeback, the world will not believe more on Italy and the European Union will suffer the consequences. (2013/02/23) 1 Recommendation



Subject: The economy of the euro-zone group is shrinking.

My Comment: Nobody can make miracles in a community like the EU where everybody drives in its way without care for the common regulations themselves approved. (2013/02/22)



Subject: Bulgarian government resigned amid protests despite it was working hard to change the financial situation of the country.

My Comment: The story says that Bulgarian Prime Minister Boyko Borisov announced the resignation of his government after “the crowd accused the government of corruption, chanting “Mafia”.

We will not discuss the pro-austerity initiative of the government that is resigning were right or wrong. Frequently in very corrupt countries, the corrupt people accuse to the non-corrupt people as “corrupt” to create confusion and continue handling their businesses without problems.

But we don’t understand what criteria was used the the EU authorities when they opened its doors to Bulgaria. The only positive point in this case is that till now Bulgaria is not a member of the “euro zone”. It is only another member of the community.

Everybody who is following the European events since the times of the Iron Curtain know that Bulgaria is a very poor and a corrupt country where Mafia groups wait at crossroads of the routes to steal from tourists and other occasional drivers.

Definitively the EU’s umbrella cannot include nations where the economic initiatives of austerity are very painful and they are refused by anybody till a decent and strong government can do hard “purges” across all the layers of the society. (2013/02/20) 2 Recommendations



Subject: A well-organized group of robbers with machine guns stole at least US$50 million in diamonds from a aircraft at a Belgium airport.

My Comment: The 120 packages of diamonds worth at least $50 million stolen at a Belgium Airport by gunmen wearing police uniforms is a very good case to reach some conclusions.

The eight masked robbers who assaulted a Helvetic Airways jet plane with machine guns remind me of the best command operations of highly trained terrorist groups that we saw in Latin America during the 1970s.

In those times, at least two or three terrorist groups – Montoneros, ERP, AAA… - acted with total impunity in Argentina and countries associated with this South America nation to robbing fortunes for the financing of their campaigns, kidnapping important Argentine and foreign entrepreneurs and other business and political personalities.

By the way, one of those operations was perpetrated by Montoneros at one important Mexican airport to capture an Argentine businessman who was flying to that country in a private aircraft.

And what is my point? Always the terrorists are the best “teachers” of professional robbers who plan and execute spectacular robbery operations. For this reason, every time that we kill a terrorist we are killing a terrorist and more than one robber. (2013/02/19) 1 Recommendation


Subject: German Economy Minister Rösler said the economic future of EU and Germany depends on stabilization of the euro zone.

My Comment: I agree with German Economy Minister Rösler that the economic future of the European Union and Germany depends on stabilization of the euro zone.

But I really don’t know if the other members of the EU have the willpower to work together with Germany in the same direction.

The Sunday’s voting in Cyprus is a new sample that shows “the current call is still tenuous”.

Soon Italy will have elections and nobody knows if Mr. Berlusconi will return to power with his corrupt behavior.

In addition the current list of countries with problems includes Spain, Portugal and others. (2013/02/18)


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THEME:  The World, Asia, Middle East, Africa



Subject: The guns and mortal arsenal of the former Libyan regime is helping the terrorist operations of the Islamists in the African desert.

My Comment: The story talks about the recent actions of the Islamist extremists in the African desert and all the concerns related to their next steps in a new field.

From centuries, Africa always was the perfect ground for cruel and bloody battlefields. Since the Roman times, we can read hundreds of pages of history related to the African campaigns.

Now, after the fall of the Libyan regime, a lot of its weapons and mortal arsenals were hidden in the desert and others have been moved to different territories of the Saharan countries.

In front of all this landscape, we have to remark that heavy weapons, hard warriors and extreme ideologies are three of the most important components to generate long and deadly wars.

For all that we explained before, we suspects the campaign against the al Qaeda-backed militants in Africa will be difficult and with uncertain results. (2013/02/22) 3 Recommendations



Subject: The rift among members of the Bahrain royal family will creates problems to the U.S. navy base located in this Arab nation.

My Comment: The rift among different members of the Khalifa royal family anticipates serious palace quarrels with possible implications in the domestic and international politics of Bahrain.

In front of this scenery, it is evident that U.S. Navy's Fifth Fleet and Navy Central Command that use this territory as a hub of U.S. power in the Gulf will have problems.

From my point of view, it is good that Retired U.S. Navy Admiral Dennis C. Blair is urging the Pentagon to move the Fifth Fleet’s headquarters out of this country. (2013/02/20) 5 Recommendations


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THEME: Latin America



Subject: Venezuelan Hugo Chávez returned sick to Caracas after more than two months of a cancer treatment in Cuba.

My Comment: The sudden return of the Venezuelan President Hugo Chávez to Caracas from Cuba after more than two months of cancer treatment has different readings.

Is he returning home because due to his disease, he believes that he will die soon and he wants to die on his national land?

Is he returning home because the vice president now in charge of the Venezuelan government wants to avoid an internal turmoil that can knock down the Chávez’s regime?

Is he returning home because he feels well enough to resume his job?

Behind the photos of the Venezuelan leader in a bed next to his two daughters distributed by his government nothing is clear even now. (2013/02/21) 



Subject: Ecuadorian President Rafael Correa extends his power through a new presidential election.

My Comment: I don’t have doubts that Ecuadorian President Rafael Correa will be re-elected for a new term and he will extend his power in his own country and through Latin America.

This strategy was planned in 2009, when his government modified the Ecuadorian constitution and nobody really put up a strong objection.

He is an advanced student of government “tricks” from Venezuelan President Hugo Chávez. He knows exactly what he wants and he has the charisma, willpower and intelligence to handle all from his side.

He was educated in Belgium, US and Ecuador. His wife is Belgium and he has also more background than the same Hugo Chávez about economy, politics and other issues (His father was caught in the US dealing drugs).

From the other side, he integrates a group of left-wings leaders of Latin America together with Hugo Chávez, Cristina Kirchner from Argentina and the presidents of Bolivia and Uruguay plus others from Central America.

By the way, Cristina Kirchner used the same tricks of Rafael Correa to extend her period as president of Argentina through changes in the constitution and nobody from the opposition of her country stopped her “game”. All these leaders know exactly the way to play with the democratic principles for their side.

Probably, the Brazilian President will also do her best with arrangements to continue in power when her term finishes because Ms. Dilma Rousseff is a good friend of Hugo Chávez and she practices the same ideology and visits the Venezuelan President in the Cuban hospital together with Cristina Kirchner.

But we – as the United States – cannot blame Rafael Correa, Hugo Chávez, Cristina Kirchner, Evo Morales (Bolivia) for the way they make politics and manipulate their people.

As I said in different times through comments that I posted in Journal Community, during the last four years we didn’t show a clear foreign politics line about Latin American issues. The more we showed to the world that we really don’t care a lot for the events below the Rio Grande (our border with Mexico).

More serious too: We didn’t understand till now why through the Latin America countries we find the most strong fighters lifting the flags of the anti-Washington politics. When something like this phenomenon happens, we have to look inside our foreign office and come to realistic conclusions. (2013/02/18) 3 Recommendations


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THEME:  Economy, Business and Technology



Subject: Alcatel-Lucent named a new CEO who is famous as a “cost-cutter”.

My Comment: After the resignation of the CEO Ben Verwaayen, Alcatel-Lucent named a new CEO. His is name is Michel Combes, former head of Vodafone’s European operations.

According to the story, Mr. Combes is a famous “cost-cutter”. What does it mean? It means that the new Alcatel-Lucent top executive will cut costs everywhere.

Is this initiative enough to rescue the French-American telecom-equipment maker? We believe the cut in costs is an important point to return to the profitability but...

But during the last few years we saw that Alcatel-Lucent has other problems like the inability to compete on different grounds with rivals like Huawei Technology selling products to any kind of customer.

Alcatel-Lucent has to increase its revenues and it needs to gain new customers and new markets. Normally, a cost-cutter is a “guillotine”. However, in this case, the formula to be successful requires two components: profitability and more income.

We have to observe the arrival of Michael Combes to Alcatel-Lucent and his efforts to recreate the telecom-equipment during a reasonable period. After that, surely all the observers will make new conclusions. (2013/02/23)



Subject: Wal-Mart says it expects flat U.S. sales in the current quarter.

My Comment: The news talks about the financial results of Wal-Mart. It says that the company expects flat U.S. sales in this quarter.

We believe that the “sales information” of this department store is a better indicator of the fluctuation of the domestic economy of the country than the unemployment rates of the US Labor Department.

When we travel across the country, in small cities and in remote locations, in the Rocky Mountains or on the beach, every time that we find a Wal-Mart store, we can perceive the current symptoms of the domestic economy through the observation of big or small bags the customers carry out and the level of activity and number of cars around each store. (2013/02/21) 1 Recommendation



Subject: After all the bad news from HP, the technology company posted its profit went down 16% in the last quarter.

My Comment: A fall of 16% in the last quarter earnings of Hewlett-Packard is nothing after the huge mistakes its top management committed during the last decade. (2013/02/21) 7
Recommendations



Subject: Apple has naming problems in Brazil with iPhone.

My Comment: I don’t understand why when Apple launches a new product to the market, before all the launching process, it doesn’t register the new “brand” everywhere across the world.

This is the way to avoid headaches. It costs less than the money it has to pay to acquire “brands” that are in the hands of others.

A company like Apple has tools and knowledge to project new business operations and products worldwide before possible speculators register its brands as their own brands in countries with strong potential like Brazil, Mexico, China, India, Indonesia, Russia and more.

In the consumer market the famous “brands” of the products have similar value that the products themselves.

In particular, when the Apple’s fanatics buy an Apple’s product they want to show its logo and brand very visible in the way that everybody knows they have an “Apple iPhone” or "Apple iPad" or "Apple iPod", (2013/02/18)

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