February 02, 2007

Beijing Pops a Housing Bubble. Now Housing Prices Will Surely Rise.

posted by MR WAVETHEORY at 2/02/2007 10:19:00 PM
A stock market bubble, a housing bubble, a stock market crash, a housing crash? In an effort to cool down the housing market, Beijing has issued an edict to restrict foreign ownership of housing to those who have lived in Beijing for one year for work or study. It applies not only to foreigners but also residents of Hong Kong and Macau who move the Beijing. For the lucky few who bought multiple houses before the edict, it will mean big profits.

By restricting ownership by foreigners, my take is that this will only ensure a rise in the price of housing. After all, it's all about scarcity value. Those foreigners who got in early are exempt from the rules and those who didn't get in ... well, they missed the boat big time. It's all about supply and demand. Cut off supply, keep demand the same, and you have rising prices. Simple economics. Even the economic planners in Beijing should know that you can't stop foreign ownership of housing. You can't stop a bubble from developing. You can only slow it down.

The communist government began allowing Chinese families to buy homes in the 1990s, and later let foreigners buy real estate. The government still officially owns all land in China, but buyers of apartments and houses receive deeds valid for up to 70 years.

Housing prices have risen 20% in the past year. The truth is that housing is rising because the cost of living is rising, the economy is growing, and people are getting wealthier. It's the wealth effect in full force and shows just how much of a market economy China has become. The planners should be happy that their is working!

China Daily printed the new value added tax rates on real estate appreciation.

According to the January 16 government notice, the VAT, which has been suspended for more than a decade, took effect on Thursday.

Property developers will have to pay 30 to 60 percent of their net gains as VAT. The tax will depend on the net profit from the sale of a property.

If the value-added rate is below 50 percent the tax will be 30 percent.

If the value-added rate is between 50 and 100 percent, 40 percent will be levied.

If the value-added rate is between 100 and 200 percent, 50 percent will be levied.

If the value-added rate is more than 200 percent, 60 percent will be levied.

The VAT will be collected when a single project is completed or transferred, according to the notice.

You have to love their reason for the tax: "excessive profits."

Excessive profit margins are said to be one factor behind the country's soaring housing prices.

SAT issued a notice shortly after the announcement that the tax is aimed at readjusting the profits of property developers and would not burden buyers.

"Though housing prices are decided by the market's supply-demand and have no direct link with the cost of development, the value-added rates would eventually affect supply and demand, and buoy prices," said Dong Fan, director of the property research center of Beijing Normal University.

Do you really think curbing supply will reduce the price of housing? Come one people. Go back to Econ 101, the part on macroeconomics. Remember the lesson where they talk about the effects of taxes on wealth? Taxes are a direct transfer of value from private ownership to public ownership that directly raise the price of housing for consumers while reducing the price paid to producers. The percentage of value extracted by taxes is a direct economic loss to both consumers and producers. By sticking this huge tax bill on producers and consumers, the government is just making the housing problem worse for consumers. Producers are not dumb. Producers will just raise prices to make up for the economic loss and consumers will just end up paying higher prices. I give two thumbs up to Beijing for raising the price of property even further. Thank you for continuing to support ever increasing real estate prices.

Yahoo Launching New Search Ranking Model Monday February 5th

posted by MR WAVETHEORY at 2/02/2007 06:15:00 PM
In case you were wondering about Panama, a special email went out to the largest Yahoo Search Marketing Advertisers alerting them of the launch of Panama on February 5th.

New Ranking Model Set for Feb. 5 Intro
A new ranking model that will determine an ad's ranking in search results based on bid amount and ad quality will be launched on February 5, 2007, and is designed to reward strong, relevant, creative ads

On January 23, we announced that a new ranking model for our search marketing advertisers in the U.S. market will be launched on Monday, February 5. With this change, all Yahoo! Search Marketing ads in the U.S. market will be ranked by quality in addition to keyword bid price. The new ranking model is designed to provide you with more valuable customer leads, and provide users with a more relevant search experience.

As you know, since the introduction of our revolutionary pay-per-click search advertising product (going back to the GoTo and Overture days), search ads on Yahoo! and its distribution partner sites have been ranked solely by max bid--the higher the bid, the higher an ad appears within the search results. When the new ranking model goes into effect, both max bid and the ad's quality together will determine where an ad is ranked in search results. The quality of an ad will be determined by its historical performance and its expected performance relative to other ads displayed at the same time. So, ads of higher quality should generally receive better placement on the results page.

"By encouraging advertisers to focus on the quality of their ads, we can deliver a better search experience for all of our customers. Everybody wins," says Tim Cadogan, our vice president of search marketing. "We firmly believe that delivering more relevant ads to users will result in more quality leads to advertisers, invite even more participation in our network and ultimately create a more valuable marketplace for users, advertisers, publishers and Yahoo!."

With this change, we'll also provide you with industry-leading marketplace visibility and features that allow you to better understand your performance and make informed marketing decisions. Your fellow advertisers who have upgraded to the "Panama" system have already been gauging the quality of their ads by viewing the prominently displayed quality index within the application. You can also see an estimated average position and estimated forecast of clicks for your ad campaigns, which is based on budget allocation.

To take advantage of the new ranking model (and you have already upgraded to the "Panama" system), you should:

1. Include keywords in your ad (use our Insert Keyword feature).
2. Choose keywords for each ad group carefully.
3. Use ad testing.
4. Use our Excluded Keyword feature to optimize your Advanced match type.
5. Review your current bids and set a campaign budget to meet your business goals.

You can get more details here.

To take advantage of the new ranking model (and you have not yet upgraded), you should:

1. Include keywords in your ad.
2. Use our Excluded Keyword feature to optimize your Advanced match type.
3. Review your current bids and set a campaign budget to meet your business goals.

You can get more details here.

We will continue to send upgrade invitations to U.S. advertisers throughout Q1 2007, and we anticipate that all active U.S. advertisers will be upgraded to the new system by the end of this quarter. If you wish to schedule your upgrade as early as possible, you can make a request through the upgrade reservation page, and we will try to accommodate your request.

International Roll-Out
We are on schedule to also begin rolling out the new ad system in international markets in Q2 2007 on a market-by-market basis, starting with Japan. We will follow a similar process as in the U.S., in which we will introduce the interface first, followed by our new ranking model. We will be contacting our advertisers in each market with more specific information as their rollout dates approach.

BigBand Investor Jets Before IPO

posted by MR WAVETHEORY at 2/02/2007 12:05:00 AM
ADC is selling its stake in BigBand before the IPO. BigBand is a dotcom darling that has survived the bust founded in 1999. You can read the S-1 here.

US telecommunications networking equipment manufacturer ADC (Nasdaq: ADCT) has announced the sale of its holdings in the start-up BigBand Networks Inc., a producer of platforms for multimedia services, for $59 million. The announcement has drawn attention because of its timing, as BigBand prepares for its upcoming IPO on Nasdaq. The company hopes to raise $140 million.

ADC did not disclose the name of the buyer although sources inform ''Globes'' that it is apparently one of BigBand’s major shareholders, Redpoint Ventures.

A very bullish posting on the BigBand IPO. This is why the BigBand IPO is going to be exciting.

* The company has been building their business for long time, seven (7) years.
* They have a strong customer base of cable centric service providers
* They are a significant supplier to Verizon and the FiOS program
* They are profitable

Ping An Starts RoadShow for $3.9 Billion IPO

posted by MR WAVETHEORY at 2/02/2007 12:01:00 AM
Another year, another big IPO. Ping An Insurance is one of the biggest deals this year globally. The key issue of course is whether the market will take this at a good price since the Chinese markets have been very volatile.

Ping An Insurance (Group) Co. (2318.HK: Quote, Profile , Research), China's No. 2 life insurer, will kick off what is expected to China's second biggest domestic IPO on Friday, which analysts estimate will raise at least US$3.9 billion.

Ping An, 19.9 percent-owned by HSBC (HSBA.L: Quote, Profile , Research) (0005.HK: Quote, Profile , Research), will start book building and investor roadshows on Friday, selling up to 1.15 billion domestic A shares for a listing on the Shanghai Stock Exchange expected around the start of March, it said in the statement published in China's major financial newspapers.

The Shanghai offer, at its maximum size, would account for 15.66 percent of Ping An's expanded capital of 7.345 billion outstanding shares. The company has already listed in Hong Kong.
Ping An plans to sell up to 345 million A shares to strategic investors with a lock-up period of 12 months, accounting for 30 percent of the Shanghai offer, it said.

A total of 287.5 million shares, or 25 percent of the offer, will be open to subscription of ordinary institutional investors, with a lock-up period of three months, while the remaining 517.5 million shares, or 45 percent, will be sold to retail investors.

After the book building, Ping An plans to announce a price range on Feb. 9, it said. Retail subscription will start on Feb. 12 and a final price will be made public on Feb. 14, it said.

At the worst case, the deal is priced cheap.

February 01, 2007

The New Yahoo Search Ranking Model

posted by MR WAVETHEORY at 2/01/2007 07:08:00 PM
The New Yahoo! Search has a new ranking model and along with it here are some tips for advertisers.

Key Changes
5 Key Steps
New ranking model

Standard and Advanced match types
An ad's rank is determined by both bid amount and ad quality.
Ads with higher quality can deliver a lower cost per click and/or may receive better placement on the results page relative to lower quality ads.
Standard match type ads will no longer receive priority placement over Advanced match type ads.
To take advantage of the new ranking model, you should:
  1. Include keywords in your ad (use our Insert Keyword feature).
  2. Choose keywords for each ad group carefully.
  3. Use ad testing.
  4. Use our Excluded Keyword feature to optimize your Advanced match type.
  5. Review your current bids and set a campaign budget to meet your business goals.

More detailed tips on the Yahoo Search Marketing ranking model.

Wikipedia Goes to HBS - Harvard Business School Case Study on Wikipedia

posted by MR WAVETHEORY at 2/01/2007 01:37:00 AM
HBS has put together an interesting case study on Wikipedia. Unlike the normal case studies from HBS where you have to pay for them, the wikipedia case study is made available under GFDL.

It's a great study on how to make collaboration and Web 2.0 concepts work. The Wikipedia case study traces the history of Wikipedia:

* Why Nupedia (Wikipedia's more formal predecessor) failed to gather momentum, and why Wikipedia has gathered so much.
* Whether Wikipedia's highly egalitarian and freeform editing processes and policies yield good results and, if so, how this happens.
* How decision rights are allocated in Wikipedia.
* The merits of the Inclusionist and Deletionist perspectives.
* Whether Wikipedia really has become a "post-revolutionary Bolshevik Soviet, with an inscrutable central power structure wielding control over a legion of workers."
* Whether the Wikipedia community practices the 'right' level of deference to the opinions and judgments of subject matter 'experts.'
* If Wikipedia's policies are being correctly followed, what the fate of the "Enterprise 2.0" article should be.

Indian IPOs Partying Like Its '99

posted by MR WAVETHEORY at 2/01/2007 01:30:00 AM
The number of Indian IPOs scheduled from 2007 is staggering. Over 150 companies are slated to go public and raise $10 billion this year.

There is so much euphoria, one has to wonder when the hiccup will happen and cause a hangover from the coolaide. Like '99, a bubbly stock market is the cause of the merriment and celebration.

One reason is the Bombay Stock Exchange's benchmark Sensex Index, which delivered a nearly 50% return last year and is up about 2.2% so far in 2007. In all, some 150 companies will list this year and raise an estimated $10 billion, according to Delhi-based Prime Database, which tracks IPO activity. "This will be the highest-ever amount in a year," says Prithvi Haldea, Prime's managing director. Encouraged by the general investor enthusiasm for new issues—not to mention an economy expected to hit a growth rate of almost 10% in 2007—more than 30 companies have already filed or received approval from the Securities and Exchange Board of India to raise $6.3 billion.

A crash of course would be the best cure for the bubble.

The largest IPO this year will probably be New Delhi-based real estate company DLF, which is benefiting from India's booming commercial and residential construction market. Last August, the company shelved an IPO to raise about $2.5 billion to pay debt and fund construction after minority investors complained. A smaller offering is expected this year in the $2 billion range.

The word is that the DLF founding family will become one of the richest families in the world from the IPO. DLF may be interesting, but don't forget wireless.

Wireless telecom will be interesting, too. Take Idea Cellular. This Indian wireless operator, a unit of the Aditya Birla Group, is investing heavily to expand its network and compete with Hutchison Telecommunications International in India. It hopes to raise about $450 million in an IPO expected around March.

Nice. I want my share of this bubble buffet. Get it before it's gone!

Online Printing: The Next Big Thing?

posted by MR WAVETHEORY at 2/01/2007 01:28:00 AM

While everyone is focused on the Google earnings, the interesting news is coming out from VistaPrint which announced some pretty good earnings.

VistaPrint Ltd., an online retailer and supplier of graphic design services and customized printed products, posted revenue of $64 million in the second quarter, an increase of 76% from sales of $36.4 million in Q2 2006.

Net income in the second quarter reached $8.3 million vs. $5.5 million in Q2 2006, an increase of 13%.

Is online printing the next big frontier of e-commerce?

Bebo Shamelessly Promotes Oracle

posted by MR WAVETHEORY at 2/01/2007 01:24:00 AM
Bebo put out a press release on how it's built on Oracle 10g. Nice work PR machine. I wonder what kind of concessions and price cuts Oracle had to give Bebo?!

When Birch started Bebo, he knew from prior experience with other sites that scalability was a key issue, and that he needed a database that could easily and inexpensively scale as user demands increased. Bebo started with Oracle Database 10g Standard Edition One, which made it cost-effective to get up and running. Since then it has scaled up to Enterprise Edition on SUSE Linux so it could spread the load across additional processors. Currently, bebo.com is deployed on two database servers, and it will be moving to three shortly. Eventually Birch sees the site being deployed across four or five database servers.

If it could run on mysql, why run Oracle?

You have to love the resounding endorsement. That's what you do when you have no news.

"We use Oracle Database because it's the better product, faster and with better features," says Birch. "Scalability has also been important for us right from the start. Other social networking sites have run into major problems because of scalability issues, and I am confident that Oracle Database will enable Bebo to sustain the levels of growth necessary to take it where I want it to go -- to market leadership and a major role in the evolution of Web 2.0."


January 31, 2007

More Upgrades Coming For Yahoo Publisher Network?

posted by MR WAVETHEORY at 1/31/2007 12:59:00 PM
Just saw an update message from Yahoo Publisher Network. Seems like the engineers are hard at work upgrading the system.

Brief System Outage

This Friday, February 2nd, we will be performing a routine update to our system that may limit access to the Yahoo! Publisher Network portal between 5:00 PM and 9:00 PM Pacific Standard Time. This update will not impact your account or the serving of ads on your site.

Hopefully that means more revenue for Yahoo Publishers!

It's Good to Be King, Burger King!

posted by MR WAVETHEORY at 1/31/2007 04:58:00 AM
Burger King (NYSE BKC) just reported some pretty toasty numbers. (earnings press release)
Burger King Holdings Inc., the world's second-largest burger chain, said Tuesday its fiscal second-quarter profit jumped 41 percent on solid same-store sales and income from new restaurants, as the company continues to revitalize its brand through aggressive marketing and expansion.

It looks like EPS growth was stellar and got a boost from XBOX.

Net income rose to $38 million, or 28 cents per share, for the three months ended Dec. 31 compared with $27 million, or 24 cents per share, a year ago. Revenue climbed 9 percent to $559 million from $512 million.

Analysts polled by Thomson Financial had forecast earnings of 26 cents per share on sales of $544.7 million.

Same-store sales, or sales at restaurants open at least a year, rose 3.7 percent worldwide and 4.4 percent in North America. It was the Miami-based chain's 12th consecutive quarter of worldwide positive comparable sales.

The difference in market cap between Burger King and MacDonald's is huge. Burger king has a market cap of $2.5 billion. Ronald MacDonald: $54 billion.

There are some growth opportunities here along with a new health approach to dining (non transfat testing)

The chain said it expects more success with its breakfast value menu that is set to debut Feb. 19, with 10 items priced beginning at $1 that include French toast sticks and a new Hamlette sandwich, made with ham, cheese and egg.

Burger King also is beginning an expansion into Asia, with restaurants opening in Indonesia beginning in June. The chain also plans to open a new restaurant in Japan this year.

The King is second the Ronald MacDonald and operates more than 11,100 restaurants in all 50 states and in 65 countries. Ronald has 30,000 restaurants in 100 countries.

For some fun, check out the Burger King called "Eat Like A Snake" promoting the Triple Whopper.

China's Madonna "Wei Wei" Goes Mobi

posted by MR WAVETHEORY at 1/31/2007 04:45:00 AM
"China's Madonna" a singer named Wei Wei has decided to make downloadable tracks of her album available online at weiwei.mobi. Wei Wei's new album is called "Wei Wei 20X20 Celebration Collection" and it will debut online ahead of retail.

Dubbed 'China's Madonna', Sweden-based Wei Wei has sold 200 million albums worldwide. She said: "[Mobile phones] allow me to reach my older fans as well as the younger generation who use mobile phones much more than PCs for accessing the Internet. I'm also happy that direct-to-consumer downloading helps prevent bootlegged albums – a major problem in my home country."

That is a great marketing ploy! With ringtones generating often as much if not more sales than albums, you'd figure that albums that go straight to mobile (or ringtone) is the next big growth market just like films that make it straight to video.

Neat fact of WeiWei.

* She was born in Hohhot, Inner Mongolia and grew up in Liuzhou,Guangxi.
* Wei Wei is said to be the country's greatest singer in modern times.
* Epithets: “China’s Whitney Houston”, “China’s Madonna” and “China’s Celine”,
* Albums sold: 200 million cassettes and CD’s in China, one of best selling single artists in the world.
* Languages: Mandarin and English
* Marriage: Divorced April 17 2004, after 10 years of marriage. Wei Wei was divorced by her American husband Michael Joseph Smith in their adopted home country of Sweden.

Homepage: Wei Wei Music (in english and mandarin) Wei Wei Mobi (mobile)

January 30, 2007

20 Years of Super Bowl Ads, $1.72 Billion Spent

posted by MR WAVETHEORY at 1/30/2007 06:07:00 AM
TNS Media has announced some interesting stats on Super Bowl ads.

Advertising during the Super Bowl game has accounted for 682 minutes, over 11 full hours, of commercial time throughout the past 20 years (1987-2006). Those 11 hours represent 221 different advertisers, more than 1,400 commercial announcements and translate into $1.72 billion of network advertising sales.

The top five Super Bowl advertisers of the past 20 years have spent $613.4 million on advertising during the game, accounting for 35 percent of total advertising dollars spent in the game.

The FedEx Corporation, as the fifth top advertiser through 2005, was replaced in this year's report (covering 1987-2006) by Walt Disney. This is especially interesting as FedEx Corporation has advertised with the Super Bowl for 19 years, while Walt Disney has only advertised with the Super Bowl for the past seven years.

Top 5 Super Bowl Advertisers (1987-2006)



# of Years With Ads In Game

Ad Spend (
($ millions)


Anheuser Busch


$ 250.8




$ 190.0


General Motors


$ 65.7


Time Warner


$ 63.4


Walt Disney


$ 43.5

Top 5 Total

$ 613.4

Source: TNS Media Intelligence, January 2007

Each year, about 62 percent of the network TV ad money invested in the game comes from incumbent marketers who ran commercials the previous year.

Jon Swallen, senior vice president of Research at TNS Media Intelligence, said "While that's a very high retention rate, it's actually lower than the comparable rate for two other showcase TV events. Over the past 10 years, the average dollar retention rate has been 78 percent for the Academy Awards and 67 percent for the World Series," said.

The cost of an advertisement in the Super Bowl has more than quadrupled in the past 20 years, reaching $2.5 million in 2006 for a 30-second unit. For the 2007 game, CBS is reportedly fetching over $2.6 million for each 30-second spot.

Superbowl Advertising Rates (1987-2006)


Cost :30 Unit ($000)

Total Ad Revenue ($ millions)


$ 600

$ 31.5

























Source: TNS Media Intelligence, January 2007

Ad sales in the pre- and post-game coverage, plus ad sales by the network's local affiliate stations, are important components when considering the Super Bowl as an ad revenue-generating machine. For every dollar spent on network in-game ads, these ancillary sources contribute as much as an extra 74 cents.

Ancillary Ad Spend Around The Super Bowl




Network In-Game

$ 69.4

$ 136.4

$ 162.5

Network Pre/Post Game

$ 22.7

$ 29.5

$ 78.1

Local TV (Top 75 markets)

$ 21.3

$ 28.9

$ 42.2


$ 113.41

$ 194.8

$ 233.8

"Lift" from ancillary sources




Source: TNS Media Intelligence

The popular perception is that beer, soft drinks and autos are the most frequently advertised on the Super Bowl categories, given their annual presence in the game. However, the perennial leader is promotional advertising from the network itself. In a typical Super Bowl, one-fourth of all commercial time is a plug by the network for its own programming. The value of that air time in 2006 alone exceeded $52 million.

Network Promotions In The Super Bowl

Time (mm:ss)

% of All Ad Time

Value ($ millions)




$ 24.9




$ 30.4




$ 46.9




$ 42.2




$ 46.8




$ 52.1

Source: TNS Media Intelligence, January 2007

The Major League Baseball's World Series and the NCAA Men's Basketball Championship are two other high-profile sporting events that attract significant interest from TV advertisers. While the World Series has a higher advertiser retention rate than the Super Bowl, the Super Bowl still rakes in more network TV ad dollars than each of the other multi-game events.

Major Sporting Championships Network TV Ad Revenue ($ Millions)

Super Bowl( Game

World Series (# games)

NCAA Basketball(

Final Four (# games)


$ 136.4

$ 136.3 (7)

$ 88.7 (3)


$ 134.2

$ 141.7 (7)

$ 101.9 (3)


$ 124.7

$ 124.9 (6)

$ 117.6 (3)


$ 147.3

$ 114.6 (4)

$ 126.4 (3)


$ 159.2

$ 147.5 (4)

$ 142.2 (3)


$ 162.5

$ 160.8 (5)

$ 154.7 (3)

Source: TNS Media Intelligence

Watch the Rejected GoDaddy Super Bowl Ads

posted by MR WAVETHEORY at 1/30/2007 02:59:00 AM
Watching the GoDaddy Super Bowl Ads has become a dot-com tradition. GoDaddy never fails to put together a great ad for the Super Bowl that is fun and sexy and sometimes almost crosses the line. One thing for sure is that they are creative. Their ads always gets rejected by the censors at CBS. This year, it took two tries before they got it approved by CBS according to Bob Parson, Founder of GoDaddy.

The rejected ads are fun to watch. There's the Basic Instinct ad that is a knock off of the movie starring Sharon Stone. This one stars the GoDaddy girl Candice Michelle. There is also the ad starring a bunch of tech nerds called I Own You.

Watch the rejected GoDaddy Super Bowl

Watch Basic Instinct.

Videos at Str8Up.com

Watch I Own You

Videos at Str8Up.com

Citigroup Picks Up One Rotten Egg

posted by MR WAVETHEORY at 1/30/2007 02:49:00 AM
Prudential PLC had no luck with Egg, the online consumer bank, and has finally unloaded EGG. Egg has been on the books for years.

In a move that one investor said made Prudential “look a bit stupid”, yesterday’s price was far below the £973 million at which the insurer valued Egg when it bought out a 21 per cent minority stake just over a year ago.

Pru bought the bank for 973 million pounds and unloaded it for half the price.

Citigroup, the US banking giant, made its first acquisition of a UK consumer bank when it agreed to pay £575 million for Egg.

The Egg story is the classic dot com story. Egg's annual report from 2000 tells a story of hyper growth. They acquired half a million customers in 2000. Note how they brag about impending profitability. Don't think that ever happened.

Egg acquired 559,000 net new customers in 2000, leading to a year-end total of 1.35 million customers. This gives Egg a critical mass of customers to build on as the business moves into profitability. The majority of new customers acquired were into the credit card proposition, which now has 745,000 customers. The credit card has proved to be a compelling product. With the addition in the final quarter of both the online and telephone versions of the Boots powered by Egg card, Egg now has three credit card propositions to offer the market, each tailored to appeal to different segments. In 2001 Egg will seek to reinforce the differentiating features still further.

Great expectations.

January 28, 2007

Earn 6% on Your Bank Account For 2 Months

posted by MR WAVETHEORY at 1/28/2007 10:39:00 PM
HSBC is touting a 6% introductory rate on new deposits for 2 months. Sounds like a bait and switch. The rate reverts to 5.05% after April 30, 2007. Are we all April Fools?

Bill Gates: Microsoft Is Going into Online Payment and Credit Card Business

posted by MR WAVETHEORY at 1/28/2007 10:35:00 PM
Bill Gates talked about how Microsoft is exploring various ways to enter the online payment business. Bill said there are various ways Microsoft has explored to undercut credit card companies which currently charge 2.75% + .35 cents per transaction to online merchants. These charges basically make small transactions under a dollar impossible online. Imagine paying $1 for a product online and paying $.35 to the credit card company! Did anyone say ripoff?

Speaking at the World Economic Forum in Davos, Switzerland, Bill Gates indicated that Microsoft was looking into finding a way to make so-called micropayments a reality online. And to make it a reality, Gates noted that traditional credit card fees would need to be undercut, and severely. See, the credit industry makes money not only off interest, but they also scoop up 2.75% + $0.35 in fees for most transactions (on average). As you can see, this makes charging for inexpensive items quite unattractive; a $0.25 charge would be instantly doubled on account of fees. For people who have fantasies of selling web content by the page, this is unworkable.
Microsoft might come up with a flat fee payment solution.

The question is, how can Microsoft pull this off? The DOW Jones newswire quotes Gates as saying, "If you want to charge somebody $0.10 or $1 a month, that will just be a click... you won't have to manage some funny thing or pay some big credit charge, where half of it goes to the clearing."

It sounds like a brilliant solution.

EBay's Seller Fixed His Own Auctions

posted by MR WAVETHEORY at 1/28/2007 10:31:00 PM
eBay's biggest seller in the UK admitted to bidding on his own auctions to drive the price up. It's called shill bidding and it is considered fraud.

When the reporter asked whether he arranged for associates to bid on his own items, he replied: “Well, if I put something really expensive (up for sale) and I was concerned that it was going for nothing, I would phone a friend of mine, even a client of mine who buys from me, and say: For Christ’s sake, I sell you 100 quids’ worth of items a week . . . just put two grand on it, will you?” The reporter was posing as a seller of valuable antiquities. He inquired whether Paraskevaides could sell them on eBay and guarantee a minimum price.

He replied: “Leave it to me (laughs). Don’t call it shill bidding. Then I won’t be accused of shill bidding. Yes. I mean — I’ve got people.

“I’ve got some of my big clients who buy big items off me, I look after them. So I can get on the phone to America and say: Mr XXXX . . . you’re a multi- millionaire. You buy a hundred grand’s worth off me a year. Do me a favour would you. Just put — yeah. Exactly.”

Why does eBay let him get away with shill bidding?

He claimed eBay would never follow up a complaint against him for shill bidding because he generated about £15,000 a month in commission for the company. “Are they going to ban somebody who’s making them the best part of 15 grand a month? No,” he said.

It makes me feel so much better about buying on eBay knowing that eBay is looking after me.

Indian BPO First Source Goes IPO

posted by MR WAVETHEORY at 1/28/2007 10:24:00 PM
An Indian business process outsourcing company, First Source, is going public in Bombay. First Source was previously called ICICI OneSource. It's one of the top 5 BPOs in India.

The price band for the issue has been fixed between Rs 54 and Rs 64 per share.

The issue of 69,300,000 equity shares comprises a fresh issue of 60,000,000 equity shares by the company and an offer for sale of 9,300,000 equity shares by the ICICI Group, including a reservation for certain eligible employees of upto 1,200,000 equity shares of Rs 10 each. The issue will constitute 16.65% of the fully diluted post-Issue equity share capital of the company.
Firstsource Solutions Ltd, an India-based BPO company providing customised business process transformation in the banking and financial services has announced the entry into the capital market with it's IPO offering of 69.30 million equity shares of Rs 10 each for cash at a premium to be decided through a 100 per cent book building process. 'The price band for the issue has been fixed between Rs 54 and Rs 64 per share and the issue opens tomorrow and closes for subscription on 2 February, ' said Farid a representative of the company while addressing presspersons.

At least 40, 860, 000 equity shares shall be alloted on a proportionate basis to qualified institutional buyers and further 6, 810, 000 equity shares shall be available for allocation on a proportionate basis to non institutional bidders and 20, 430, 000 equity shares shall be available for allocation on a proportionate basis to retail bidders, subject to valid bids being received at or above the issue price. The company formerly known as ICICI OneSource intends to use the net proceeds of the issue to make acquisitions, set up new facilities, repay a loan and for general corporate purposes.

Firstsource would be listing it's shares on both the National Stock Exchange and the Bombay Stock Exchange shortly. DSP Merrill Lynch Ltd and Deutsche Equities India Pvt Ltd are the joint bookrunners for the issue, while ICICI Securities is the co-bookrunner.