★ 13

Companies and sectors in this issue

CompaniesAIA................................................18

Air France­KLM ....................... 24

American Express..................... 13

Anheuser­Busch InBev.............10

Apollo Global Management....24

Apple...................................... 16,24

Archer Daniels Midland...........24

Assured Guaranty.....................14

BMC Software.................12,18,24

BMW.............................................18

Bain Capital .......................... 18,24

Bank of America..................14,24

Bharti Airtel ................................18

Blackstone .................................. 18

CA Technologies........................18

Canon...........................................13

Carlsberg.....................................10

China Life....................................18

China Shipping...........................18

Citic Securities...........................18

Citigroup......................................14

Coca Cola....................................13

Credit Suisse.........................10,14

DLF...............................................18

Daily Mail and General Trust .14

Dell................................................18

Deutsche Bank................10,14,18

Diageo..........................................13

Elliott Management...................18

Emap............................................14

Eon...............................................24

Facebook................................13,15

Flagstar Bancorp.......................14

Ford..............................................13

Fresenius.....................................10

GIC Special Investments.........18

GMR ............................................. 18

General Electric...........................2

General Motors ..........................4

Golden Gate Capital............18,24

Google.....................................15,16

Green Plains .............................. 24

HBOS...........................................14

HSBC........................................... 10

Haitong Securities.....................18

Heidelberg­.................................24

Holcim.........................................24

Huawei.........................................16

Infineon........................................18

Italcementi..................................24

JPMorgan Chase.......................14

KPN.............................................. 12

Kabel Deutschland....................12

Khazanah.....................................18

L'Oréal ...........................................4

Linde............................................24

Lufthansa ...................................18

MBIA.......................................14,24

MStar Semiconductor..............16

MasterCard.................................12

MediaTek.....................................16

Microsoft.....................................16

Monster Beverage....................24

Motorola Mobility ...................... 16

Munich Re...................................18

Nestlé...........................................13

Nielsen Holdings..................14,24

Onex Corp.............................14,24

Penton Media.............................14

Poet .............................................24

SABMiller .................................... 10

Samsung..................................... 16

Sasol .............................................. 7

Sony.............................................13

Starbucks......................................4

Telecom Italia.............................12

Telekom Austria ........................ 12

Toshiba........................................13

Toyota ..........................................4

Unilever........................................13

Valero Energy............................24

Verizon.........................................12

Visa...............................................12

Vodafone.....................................12

Wells Fargo.................................14

Yamaha ........................................4

ZTE...............................................16

SectorsMedia ...................................... 14,15

Mobile & Telecoms...................16

Software......................................15

Technology HW & Equ............ 16

Travel & Leisure........................18

FINANCIAL TIMES

News Briefing

Gold price

Source: Thomson Reuters Datastream

$ per troy ounce

1300

1400

1500

1600

Apr 320131571

May 6 20131468.5

Gold prices see an increaseof 0.3 per cent, Page 24

BMC to go for $7bnUS business softwaregroup’s activists push it toprivate equity deal. Page 18

Nielsen deal with OnexMedia measurement andretail data group offloadsexhibitions unit. Page 14

Lufthansa withdrawalWolfgang Mayrhuber bowsout of race to becomechairman. Page 18

Inside BusinessReforms open door toperformance­linkedpensions. Page 14

India groups plug holesAs growth fails to pick upin the country, big groupslook to deleverage. Page 18

Motorola Mobility chargeBrussels turns on handsetmaker in latest patentwars battle. Page 16

Chinese groups in IPOsGalaxy Securities andSinopec Engineering seektotal of $3.6bn. Page 18

Fresh prescriptionMove towards becoming aglobal pharma retailer stilla goal for Alliance Boots.www.ft.com/ukcompanies

Islamic insurance targetSharia­compliant cover tobe offered to commercialproperty buyers.www.ft.com/ukcompanies

Ethanol fillipSupport for corn asethanol output hits10­month high. Page 24

Benchmark cheerApollo hits all­time high asstocks hover near recordtrading levels. Page 24

Caution reignsEurope’s stocks slip offfive­year highs as growthworries stall rally. Page 24

Aussie fallsThe Australian dollar fellamid speculation of aninterest rate cut. Page 24

Markets & Investing

Companies

Tuesday May 7 2013

Calling in the chips Industry curbs capacity expansion to lift prices Page 16© THE FINANCIAL TIMES LIMITED 2013 Week 19

You know you’ve got a properbull market when a stockcalled GungHo tops the chartsby value traded.

Last Thursday, before Japanshut down for Golden Weekholidays, a little-knowndeveloper of games for mobilephones did exactly that withits Y94bn ($950m) of turnoverexceeding that of Sony, Toshibaand Canon put together. Evenmore remarkably, GungHo didso right in the middle of JapanInc’s earnings season.

That suggests the domesticretail investor is rediscoveringa taste for equities. And forforeigners counting oncontinued rises in the world’ssecond biggest equity market,that could be good newsindeed.

For much of the 60 per centrally in the Topix since mid-November, retail investors inJapan stood and watched,occasionally stepping in to selllong-held stocks in order tosplurge on holidays and homeimprovements. Foreigninvestors, meanwhile, helpedthemselves to trillions ofshares dumped by Japanesebanks, companies andinstitutions seeking torebalance portfolios.

Now, however, the hugesurges in companies likeSoftBank-controlled GungHo –the producer of Puzzle &Dragons, a hit game nowspreading outside Japan – are asure sign retail investors aregetting involved. According tothe Nikkei newspaper, netinflows into stock mutual fundstotalled Y440bn in April, thebiggest monthly haul in 13years.

After many years of rottenperformance by equities, theprevailing mood is cautious.Nomura’s surveys of individualinvestors continue to indicate astrong preference for cashingout, once gains reach doublefigures. But if expectations ofinflation do begin to pick up inJapan, so, too, could tolerancefor risk. And as brokers nevertire of pointing out, even a1 per cent shift withinhousehold assets would meanY15tn of flows into stocks – ormore than double the netbuying from abroad this year.

The next leg of the “Abetrade” could be made in Japan.

The Short ViewBen McLannahanFacebook to turn on video ads

By Robert Budden andEmily Steel in London andApril Dembosky in San Francisco

Facebook is set to launch videoadvertising in its news feed inJuly as it seeks new revenuestreams to bolster its shareprice after its lacklustre stockmarket listing last year.

The move by the world’sdominant social networking siteis a bid to tap into the vastamounts that marketers spendon television, budgets thattower over online ad spending.

It is also an attempt to capital-ise on the rapid growth inonline video advertising asglobal brands follow users fromthe TV to the internet.

Digital video advertisingspending remains a small frac-tion of the $64.5bn market forTV ads in the US but it isexpanding rapidly, with eMar-keter expecting it to hit $4.1bnin the US in 2013, up 41.4 percent from 2012.

The new video ads will appearin a user’s news feed with thefirst video starting automati-cally but without any sound.Users will then have the optionof activating audio at whichpoint the video will restart fromthe beginning.

Several of the global brandsthat sit on Facebook’s clientcouncil, an advisory board ofbig advertisers, are expected to

take part in initial trials. Com-panies on the council includeUnilever, Nestlé, Ford, Diageo,American Express and CocaCola.

There are concerns over howthe ads will affect the user expe-rience. Analysts fear that if theads prove too disruptive, theywill hit activity on the site.

Brian Wieser, an analyst withPivotal Research, said video adsfolded into the news feed wouldbe no more intrusive than any

other ads Facebook deliveredthere but any auto-play featurethat forced people to watchcould annoy some users.

Facebook will be charging inthe “low $20s” per thousandvideo views, even when usershave not activated audio,according to people familiarwith the company’s plans.

Each ad will be limited to amaximum of 15 seconds of air-play and, to give more powerfulexposure for brands, Facebook

will initially ensure that individ-ual users see video content fromonly one advertiser in any oneday.

That rate is a little less thanthe average $29 that marketerspay for a broadcast TV commer-cial that reaches 1,000 people,according to MagnaGlobal.

Facebook has been taking itsvideo ad sales pitch to agenciesin recent weeks amid theannual “upfront” market in theUS where TV networks sell

about three-quarters of theircommercial inventory.

Based on the initial inventoryavailable on Facebook, theonline video ads could generateup to $1.5m of new revenues aday, people familiar with thesocial network’s plans said.

In the first three months ofthis year, the company gener-ated revenues of $1.46bn. Face-book declined to comment.

Data trail, Page 15

Social networking siteaims to boost revenuesConcerns over impacton user activity

Protests mount over use of BP Gulf spill fundsBy Ed Crooksin New York

A plan to build a conventioncentre in Alabama using moneygiven by BP to restore the coastof the Gulf of Mexico hasangered environmentalists, rais-ing concerns over how funds toimprove the environment arespent.

The plan is part of $594mworth of projects announcedlast week by BP and the fivecoastal states affected by the2010 Deepwater Horizon disas-ter, funded out of the $1bn that

the company promised in 2011for early restoration of the gulf.

Groups including the NationalWildlife Federation have pro-tested that building the conven-tion centre in Gulf State Park inAlabama, justified as a way toimprove public access to thenatural resources of the coast,will do nothing to repair thedamage done by the spill.

The controversy is a foretasteof even fiercer disagreementsthat are likely over the muchlarger sums expected to flowinto the region in damages andpenalties following the trial

over the disaster at the federalcourt in New Orleans.

The centre is planned as partof a refurbishment of the parkcosting $85.5m, the bulk of the$94m spending announced inAlabama. It will replace a lodgethat was wrecked by HurricaneIvan in 2004.

Robert Bentley, Alabama’sgovernor, said the centre, whichwill be built and run by a pub-lic-private partnership, wouldcreate jobs and help generatetourism.

David White of the NWF saidhis organisation was “shocked”

by the decision. “The Americanpublic expects to see BP’s oilspill money spent on projectsthat will restore the health ofthe gulf coast, not on pork-barrel projects like a conventioncentre,” he said.

Several of the new projectsare not directly related to dam-age done by the spill. Texas, forexample, is spending more than$10.7m to restore GalvestonIsland State Park to its condi-tion before Hurricane Ike, in2008. In Florida, $4m will fundtwo passenger ferries.

BP said that although some of

the places where its money wasbeing spent had not beendirectly affected by the spill, theprojects would “address loss ofuse by providing residents andvisitors with new recreationaloptions, better access to existingnatural resources and a greateropportunity to enjoy them”.

Projects have to be approvedby BP and the natural resourcetrustees, which are representa-tives of several US federal gov-ernment departments and agen-cies, and the five coastal statesof Louisiana, Alabama, Missis-sippi, Florida and Texas.

Tapping revenues: the new ads on the social networking site will play automatically without sound in a user’s news feed Getty

Bitcoin virtual currency triggersradar of real­time US regulatorsBy Tracy Alloway, GregoryMeyer and Stephen Foley inNew York

Senior US financial regulatorsare discussing whether Bitcoin,the cyber-currency, might fallunder their regulatory remit.

Bitcoin “is for sure somethingwe need to explore”, BartChilton, one of the five commis-sioners at the CommodityFutures Trading Commission(CFTC) told the FinancialTimes.

A person familiar with theCFTC’s thinking said the regula-tor was “seriously” examiningthe issue. Mr Chilton said: “It’snot monopoly money we’re talk-ing about here – real people canhave real risk in these instru-

ments and we need to ensurethat we protect markets andconsumers, even in what at firstblush appear to be ‘out there’transactions.”

The Bitcoin is attracting theinterest of regulators amidbooms and busts in the value ofthe four-year-old cyber-currencythat have spurred media inter-est. Intensified regulatory scru-tiny could pose challenges forproponents of Bitcoin, who havepraised the currency for itsindependence from traditionalauthorities.

In March, a branch of the USTreasury said that all compa-nies that exchange or transferthe virtual currency would beconsidered “money servicesbusinesses”. That means they

must provide information to thegovernment and introduce poli-cies to prevent money launder-ing. Since the ruling, at leastthree companies in North Amer-ica have reported having theiraccounts closed by their banks.

The CFTC regulates deriva-tives contracts and, under Dodd-Frank financial reform, hassweeping authority to overseeretail foreign exchange dealers.

CFTC jurisdiction generallydoes not extend to cash marketsunless exchanges list deriva-tives contracts based on them.

One person familiar with thediscussions said that Bitcoinwould not become subject toCFTC jurisdiction unless itbecame the basis for a deriva-tives contract.

MAY 7 2013 Section:2Front Time: 6/5/2013 - 20:27 User: fitzgeraldi Page Name: 2FRONT EUR, Part,Page,Edition: EUR, 13, 1

FINANCIAL TIMES TUESDAY MAY 7 2013 ★ 15

Source: company

Number of businesseson its site (m)

Number of globalmonthly active users (bn)

2009 10 11 12 130

0.2

0.4

0.6

0.8

1.0

1.2Total

Mobile

11.012.8

15.016.0

Revenues($bn)

2011 12 13

0

500

1000

1500

AdvertisingOther fees

8

Jun Jul2012

Oct Mar May2013

North America

Average revenuePer user, Q1 2013 ($)

Rest of world

Asia

Europe

2.85

1.38

0.65

0.21

0.07

0.030.48

AdvertisingOther fees

0.57

SOCIAL MEDIA

Green card grief

When Alex Schultz wasstudying physicsat Cambridge, his parents’mortgage wentunderwater, writesApril Dembosky.

He cobbled together oddjobs to pay for school andliving expenses, fromcleaning toilets to sellinginternet ads. He taughthimself about search ads,then figured out how toresell keywords fromGoogle ads to eBayaffiliates, earninga 20 per cent margin.

Ebay hired him afteruniversity to manage itsglobal affiliate programmeand transferred him toheadquarters in California.

Three years later, hewas offered a job atFacebook. That was whenhis American dreamstalled.

He could not get a visa.He had one from workingat eBay, but it was anL­1A: it could not betransferred to anothercompany. Facebook waswilling to sponsor him foran H­1B, the type reservedfor highly skilled workers,but there were none left.

It was only May, andalready the federal cap onH­1Bs had been topped,mainly by IT outsourcingcompanies based in Indiawho gobbled them up toensure a cheaper,immigrant labour force inits US support centres.

This has become a pointof contention for SiliconValley tech companies,says Laura Reiff,immigration lobbyist withGreenberg Traurig. It isone of the main reasonsFacebook has become avocal advocate for reform.

In the six monthsMr Schultz waited fora green card – the fast­tracked pace – Facebook’sstaff went from more than100 to 500.

It captured its growthguru in the end, butbecause it altered itsstock­based compensationplan during that window,the delay meant a big lossfor Mr Schultz.

“[My boss] called it themost expensive green cardever,” he says.

His colleagues at Facebook call himThe Wolf. Although Alex Schultzbears little physical resemblance tothe character in the cult hit PulpFiction, his no-apologies approach toreviving Facebook’s advertiser basehas conjured images among co-work-ers of the film’s crime-scene cleanerwho takes charge of messy situations,barks orders, and ultimately “solvesproblems”.

“I definitely break some heads,”says Mr Schultz, 30, Facebook’s seniordirector of growth marketing.

The messy problem he is taskedwith solving is luring small busi-nesses to join Facebook. Though thesocial network has deployed aggres-sive sales teams to win the marketingbudgets of large brands, it cannotafford to do the same for the millionsof small businesses around the world.Instead the company must rely ondata and design to get them hookedand eventually move to Facebook’sself-service paid advertising.

The competition is intense. BrianWieser, an analyst with PivotalResearch, says Google generates70 per cent of ad sales from smallbusinesses. He believes that most ofFacebook’s revenue growth – hun-dreds of millions of dollars worth – iscoming from this sector.

“We know growth from largebrands isn’t that substantial yet. Ifyou’re already spending $10m withFacebook, you’re not going to spend$20m or $50m,” he says. “The averagesmall business spends $10,000 a yearon Google. It’s not unrealistic toassume that same cohort could bespending $1,000 a year on Facebook.”

The challenge of attracting localbusinesses to the social network isintertwined with efforts to build – andhold on to – its 1.1bn user population.

“Advertisers are people, too,” readsa blue flyer hanging near Mr Schultz’sdesk. “No, srsly.”

The team has doubled the numberof small businesses on Facebook from8m last June to 16m today. Of thosebusinesses, at least 500,000 are payingadvertisers, putting Facebook ontrack to reach the milestone of 1madvertisers this year.

Exactly how Facebook woos smallbusiness is a complex science MrSchultz refers to as the company’s“secret sauce”. He is part of thegrowth and analytics team, whichstudies vast amounts of data – or “bigdata” – looking for patterns in howusers and advertisers use the site.

They study the behaviour of adver-tisers on the site – what they click onand what they do not – and try tofigure out what features will makethem more likely to set up a Facebookpage, and eventually buy ads.

Mr Schultz says: “We do whatpeople refer to as ‘growth hacking’,which falls somewhere between prod-

uct engineering and marketing.” Themandate to increase the number ofactive advertisers on the site wasissued in the lead-up to the company’spublic listing last May, around thesame time the social network sufferedthe departure of one of its biggestadvertisers, General Motors, and cameunder intense scrutiny over its lack ofprogress in mobile advertising.

Since then, they have made someimportant developments that havehelped convince small businesses topull out their credit cards, such aspreviewing a mock-up of an ad ontheir page as an enticement, and anew mobile ad-buying feature that

allows people to order and monitorads from their mobile phones.

Wording is also an important factor.Four years ago, the team noticed aspike in the data patterns in France.More businesses were buying adsthere compared with other countries.When they looked into it, they sawthat Facebook’s translators had trans-lated the “advertise” button from theUS site to “créer un ad” or “create anad”. Facebook changed the wording inall languages, and saw a 40 per centincrease in ad buying across theglobe, Mr Schultz says.

In addition to advertising, thegrowth team is deployed to work withteams across the company, includingmessaging, photos, and games, to findthe tricks that entice people to sharemore – which in turn increases thetotal time spent on the site, a concernof advertisers.

In developed countries in particular,such as the US and Western Europeannations, regions where Facebookdraws most of its revenues, somesurveys indicate that some usersmay be suffering from Facebookfatigue.

More than a quarter of Facebookusers in the US say they will reducethe amount of time they spend on thesite this year, according to a reportfrom the Pew Research Center, while61 per cent say they will take a “Face-book vacation” of several weeks.

Facebook’s official response to thesereports is to refer to the steadyupward curve in overall user growth.

Internally, the growth team focuseson “resurrecting” users who have“gone stale,” says Naomi Gleit, seniordirector of product management, andpreventing them from ever cyclingout of the monthly active usernumbers.

Historically, the biggest key to keep-ing people on Facebook is gettingthem to add more friends, she says.Today, almost as effective, is gettingthem to use mobile applications.

Such discoveries are the work of abreed of data scientists, who knowhow to look for and find patterns inhuge data sets.

Following in Facebook’s footsteps,many other companies and start-upshave started forming their owngrowth teams.

“The secret is out,” says DanSiroker, chief executive of websiteanalytics firm, Optimizely.

“In the past it was more luck thanskill to build a business that would be‘sticky’. Now you can get data thatshows what people like and youcan invest in those things to get abusiness to grow.”

Facebook on data trail of small advertisersNews analysisThe company’s analyticsteam tracks the onlinehabits of potential siteusers hoping to sellthem advertising space,writes April Dembosky

‘We do growthhacking, which fallssomewherebetween productengineering andmarketing’

Alex Schultz, Facebook

ON FT.COMFor all the latestdevelopments inthe world of mediaand technologywww.ft.com/techblog

MAY 7 2013 Section:Companies Time: 6/5/2013 - 17:44 User: digbyt Page Name: CONEWS2, Part,Page,Edition: USA, 15, 1