Monday, 8 November 2010

The Tax Haven That's Saving Google Billions

By Jesse Drucker


The heart of Google's (GOOG) international operations is a silvery glass office building in central Dublin, a block from the city's Grand Canal. In 2009 the office, which houses roughly 2,000 Google employees, was credited with 88 percent of the search juggernaut's $12.5 billion in sales outside the U.S. Most of the profits, however, went to the tax haven of Bermuda.


To reduce its overseas tax bill, Google uses a complicated legal structure that has saved it $3.1 billion since 2007 and boosted last year's overall earnings by 26 percent. While many multinationals use similar structures, Google has managed to lower its overseas tax rate more than its peers in the technology sector. Its rate since 2007 has been 2.4 percent. According to company disclosures, Apple (AAPL), Oracle (ORCL), Microsoft (MSFT), and IBM (IBM)—which together with Google make up the top five technology companies by market capitalization—reported tax rates between 4.5 percent and 25.8 percent on their overseas earnings from 2007 to 2009. "It's remarkable that Google's effective rate is that low," says Martin A. Sullivan, a tax economist who formerly worked for the U.S. Treasury Dept. "This company operates throughout the world mostly in high-tax countries where the average corporate rate is well over 20 percent." The corporate tax rate in the U.K., Google's second-largest market after the U.S., is 28 percent.


In Bermuda there's no corporate income tax at all. Google's profits travel to the island's white sands via a convoluted route known to tax lawyers as the "Double Irish" and the "Dutch Sandwich." In Google's case, it generally works like this: When a company in Europe, the Middle East, or Africa purchases a search ad through Google, it sends the money to Google Ireland. The Irish government taxes corporate profits at 12.5 percent, but Google mostly escapes that tax because its earnings don't stay in the Dublin office, which reported a pretax profit of less than 1 percent of revenues in 2008.


Irish law makes it difficult for Google to send the money directly to Bermuda without incurring a large tax hit, so the payment makes a brief detour through the Netherlands, since Ireland doesn't tax certain payments to companies in other European Union states. Once the money is in the Netherlands, Google can take advantage of generous Dutch tax laws. Its subsidiary there, Google Netherlands Holdings, is just a shell (it has no employees) and passes on about 99.8 percent of what it collects to Bermuda. (The subsidiary managed in Bermuda is technically an Irish company, hence the "Double Irish" nickname.)


All of these arrangements are legal. "Google's practices are very similar to those at countless other global companies operating across a wide range of industries," says Jane Penner, a company spokeswoman who declined to address the particulars of Google's tax strategies. Irving H. Plotkin, a senior managing director at PricewaterhouseCoopers' national tax practice in Boston, says that "a company's obligation to its shareholders is to try to minimize its taxes and all costs, but to do so legally."


The setup lowers Google's overseas tax bill, but it also affects U.S. tax revenues as the government struggles to close a projected $1.4 trillion budget gap. Google Ireland licenses its search and advertising technology from Google headquarters in Mountain View, Calif. The licensing agreement allows Google to attribute its overseas profits to its Irish operations instead of the U.S., where most of the technology was developed.

Scientists Report Early Success in Growing Mini Liver in Lab

SATURDAY, Oct. 30 (HealthDay News) -- Scientists who created functioning miniature livers say their success is an early, but important, advance in the quest to grow replacement human livers in the laboratory.


"We are excited about the possibilities this research represents, but must stress that we're at an early stage and many technical hurdles must be overcome before it could benefit patients," project director Shay Soker, a professor of regenerative medicine at Wake Forest University Baptist Medical Center, said in a facility news release.


In the study, the researchers used mild detergent to remove all the cells from animal livers, leaving only the collagen "skeleton" or support structure. Then, the original cells were replaced with two types of human cells: progenitors, which are immature liver cells, and endothelial cells, which line blood vessels.


The liver skeleton with the new cells was placed in a bioreactor, a piece of equipment that provides a constant flow of nutrients and oxygen to the organ. Within a week, there was progressive formation of human liver tissue and liver-associated function.


According to the scientists, the next step in the research is to find out if these bioengineered livers will continue to function after they're transplanted into an animal.


The research is to be presented Sunday at the annual meeting of the American Association for the Study of Liver Diseases in Boston.


Along with offering a solution to the shortage of donor livers, bioengineered livers could be used to evaluate the safety of drugs, Soker and colleagues pointed out.


More information


The American Liver Foundation explains how to take care of your liver.


Paycheck Anxiety Hits U.S. as Tax-Debate Delay Risks Raising Withholding

By Timothy R. Homan


(To see examples of changes in withholding taxes for different income levels, click here.)


(Bloomberg) — Employers in the U.S. are starting to warn their workers to prepare for slimmer paychecks if Congress fails to vote on an extension of Bush-era tax cuts.


"I've been doing payroll for probably close to 30 years now, and never have we seen something like this where it gets that down to the wire," said Dennis Danilewicz, who manages payroll services for about 14,000 employees at New York University's Langone Medical Center. "That's what's got a lot of people nervous. All we can do is start preparing communications with a couple of different scenarios."


Lawmakers won't start debating whether to extend the cuts, which expire Dec. 31, until after the Nov. 2 elections. Because it takes weeks to prepare withholding schedules, the Internal Revenue Service will probably have to assume the cuts will expire and direct employers to increase payroll deductions starting Jan. 1, experts say.


"We're kind of stuck between a rock and a hard place," said Ron Moser, head of human resources for the school district of Kenmore-Town of Tonawanda, New York, which pays about 1,900 teachers, custodians and aides each month. In upstate New York, where winter heating costs are among the highest in the country, many school employees earn between $20,000 and $40,000 a year, he said, and losing $50 in a paycheck is "a significant dollar amount."


"We're starting to get the calls" from employees asking what they need to do for the next tax year, Moser said.


President Barack Obama and most Democrats want tax cuts extended for middle-income earners and to end for the wealthiest Americans, the top 2 or 3 percent of earners. Republicans want tax cuts extended for everyone, arguing that an increase makes little sense as the economy recovers from the worst recession since the 1930s. Tax cuts went into effect in 2001 and 2003.


For Moser, the challenge of the moment is keeping people in the Buffalo suburb, home to about 78,000 residents, calm about what will happen in January. The area has several manufacturing employers — including 3M Co., General Motors Co. and Praxair Inc. — and unemployment is 7.6 percent, lower than the national rate of 9.6 percent. Still, many people are worried, he said.


"The bulk of our employees don't understand" the coming tax debate in Congress, Moser said. "When they see this type of thing happening they go into panic mode. They don't follow what's going on."


If Congress fails to act, income tax rates will revert to higher levels dating from June 2001.


For a married couple with an income of $80,000, that would drain an extra $221.48 in withholding from a semi-monthly paycheck, according to calculations by the Tax Institute at H&R Block. Married individuals earning $240,000 a year would lose an additional $557.78 to withholding in a single semi-monthly paycheck. The Tax Institute at H&R Block calculated federal tax rates for single-income earners and married taxpayers without children.


Paychecks could shrink in January and into February, depending on how long it takes Congress to act.


January could well be a time of "sticker shock" for salaried employees and their employers, said Kathy Pickering, executive director of the Tax Institute, an independent research division at Kansas City, Missouri-based H&R Block Inc.


"If the laws get passed late in December, it's just necessarily going to take one to three weeks to get those payroll tables updated and implemented into the system," Pickering said.


Allowing the tax cuts to expire, even temporarily, would deal a blow to disposable income and could curtail the consumer spending that accounts for about 70 percent of the economy, said Alec Phillips, a Washington-based economist at Goldman Sachs Group Inc.


"The longer the expiration lasts, the more significant the impact will be," he said.

The New Crop of Windows Smartphones

By Rich Jaroslovsky


For a tech company, a late product can be as deadly as a bad one. That may be the situation confronting Microsoft (MSFT) as it releases Windows Phone 7, its new smartphone operating system. The software is fun, easy to use, and not just another iPhone wannabe. The bad news: It might be too late for good news.


Once a major player in handheld devices, Microsoft has seen its market position tumble since the 2007 arrival of the iPhone and the more recent explosion of handsets running Google's (GOOG) Android operating system. Its comeback attempts have fared as badly as Mike Tyson's: Last year an update of Microsoft's previous software was roundly panned; this year, two new phones aimed at young social- networkers were killed off in less than two months.


Unlike those efforts, Windows Phone 7 is nothing to be embarrassed about. Microsoft deserves credit for doing some things that go against the prevailing smartphone norm. Instead of a screen covered with little app icons, users get a set of colorful rectangles that Microsoft calls "live tiles." Some provide information at a glance and summon basic functions—the phone tile, for instance, tells you how many calls you've missed and brings up the dial pad. Others link to frequently used programs, such as a mobile version of Microsoft's Internet Explorer browser. Still others are entry points for Windows Phone 7's Big Idea: the "hubs." These are collections of programs, information, and functions organized around a single theme.


There are six hubs: People, Pictures, Music & Videos, Marketplace, Microsoft Office, and Games. The People hub, for instance, aggregates your address book, Facebook friend list, and updates in one place. Music & Videos is based on Microsoft's Zune software, which is easy to use and syncs with content on your computer. Pictures is a home for your snapshots and a portal to others' Facebook photos. The hubs are easy to grasp, but not nearly comprehensive enough. Facebook is well integrated into the People hub—but Twitter isn't. The Pictures hub is great if you use Facebook or Windows Live. Prefer Flickr? It's a hassle. You can customize the home screen with your own tiles or add apps, but you'll find yourself scrolling through tiresome lists.


The first batch of handsets running the new software goes on sale Nov. 8. I used it on two that AT&T (T) will offer, the HTC Surround and Samsung Focus. (More than 20 phones are expected to hit the global market by Christmas.) Microsoft will be spending big to advertise them and provide incentives for manufacturers, carriers, and developers to make Windows Phone 7 a hit. The company finally has a good offering, but good may not be good enough.

A Hard Choice for SiriusXM's Mel Karmazin

As told to Diane Brady

C:\Program

Mike McGregor for Bloomberg Businessweek


When we completed the merger of Sirius (SIRI) and XM in 2008, there was a lot of redundancy: two CFOs, two general counsels, two heads of programming, and other roles where there were two people when we only needed one. For every position, I had to pick between two qualified people.


It was very hard: About 500 people had to lose their jobs. Not because they weren't good, but because we didn't need them. I decided that we weren't going to try to find the single best person for each job. The choice was between the Sirius person and the XM person. We didn't look at anyone outside. We didn't want more people losing their jobs than was necessary.


The first thing I did was get to know the people who were going to report to me: I interviewed them and had to decide who was better. Knowing someone well can cut both ways. You know their strengths, but you also know their faults. It's not a perfect science—and I probably made mistakes—but I don't look for qualities I might have. I'm more impressed with someone who's not like me. It's because of my own insecurity: My father was a cabdriver, my mother worked in a factory, and I was a C student.


There's no best way to do something. When I first became a manager, my inclination was to think my style was right because I was the one who had been promoted. I learned it's not about style. Some people get out of a huddle and walk to the line of scrimmage while others run. I don't think that matters. What matters is what happens when the ball is snapped.


I try not to be as hands-on as I would like. People need to feel they're running their own business. I'll offer up opinions, but I try not to tell them what to do. When I make a decision, I tend to consider the facts and make it quickly. You just have to focus on the endgame. I think about what's right for our shareholders and subscribers. If I can make these decisions, anyone can.

The Best Places To Launch A Career

podcastLike many other baseball fans, Joe Kosa, 28, is spending his Sunday glued to a TV. But relaxed he's not. Instead, the ESPN (DIS ) production assistant is stationed in front of dozens of flat-screen TVs tuned to global sporting events at the headquarters of the Disney-owned network. He's furiously jotting down notes to weave into a storyline that will be read in 60 seconds flat on tonight's 6 p.m. SportsCenter broadcast. With the San Diego Padres leading the Chicago Cubs 9-0, the outcome is hardly in doubt, and writing the highlights should be easy. Then, Clay Hensley, who has pitched a near-perfect game for the Padres, steps up to the plate in the ninth inning and strikes out for the fifth consecutive time, possibly tying a Major League record. With an hour to go until showtime, Kosa confirms the dubious honor, then rushes to the edit room to compile clips of each and every strikeout for his account of what are simultaneously the pitcher's best and worst nine innings. During the first commercial break, he debriefs anchor Dave Revsine. Moments later, Revsine is reading Kosa's script to more than a half-million viewers. "It keeps you on your toes," says Kosa, who was promoted three times in his three years at ESPN. "You'll never come in to work and have the same experience twice." HAVE IT YOUR WAY 
It's opportunities like these, combined with a fast-paced business such as Bristol (Conn.)-based ESPN, that have helped catapult Walt Disney Co. to the No. 1 spot on BusinessWeek's inaugural "Best Places to Launch a Career" ranking. Disney's strong on-campus recruiting, solid benefits, and collaborative culture also helped land the entertainment giant at the head of the rankings, which identify top employers for new college graduates. Disney's place at the pinnacle is also a testament to its popularity with students, but its desirability goes well beyond the company's instant name recognition. In many ways, Kosa's experience at ESPN, where he enjoys exciting, high-pressure work, rapid advancement, and immediate impact, is the new American workplace writ small. Because if members of his generation have their way -- and they will -- there will be a lot more employers like ESPN.

With this ranking, BusinessWeek has put together a guide to the employers that really shine. Unlike other such rankings, BusinessWeek's incorporates feedback from three different sources. First we surveyed directors of undergraduate career services to find out which employers were creating buzz on campus. Next we asked those finalists to complete a questionnaire about pay, benefits, retention, and training programs, which we then compared with other employers in the same industry. Finally we asked Universum Communications to supply data from its survey of more than 37,000 U.S. undergrads about the finalists at the top of their list of most desirable employers.

The findings are often surprising. It's now clear, for instance, that to attract the best and the brightest, companies are no longer competing only with others in their industry. More open to career experimentation than previous generations, college grads are applying across a swath of industries. The result: No. 4-ranked Goldman Sachs (GS ) could just as easily be vying with No. 43 Teach for America and No. 13 Google (GOOG ) as with No. 9 JPMorgan (JPM ) and No. 22 Lehman Brothers (LEH ) for the very same applicant. The intensely competitive market for top young talent means companies have to fine-tune their game. Consider No. 2 Lockheed Martin Corp (LMT ). Starting three years ago, the giant defense contractor made a big push to boost its appeal to undergrads, particularly the shrinking pool of U.S. engineering students. Based in part on input from focus groups, it stepped up recruiting, increased vacation time, and improved its mentoring program. In 2005, the number of applications for entry-level positions nearly tripled.

NETWORKERS 
Like the baby boomers and Generation X before them, a new generation known as the Millennials, nearly 80 million strong, is just now starting to reshape the American workplace. Achievement-oriented and tech-savvy, the Millennials are eager for feedback and impatient to make an impact on their new organizations and on society at large. Networked in a way previous generations were not, thanks in large part to Internet phenomena MySpace (NWS ) and Facebook, they come equipped with many of the skills required by big employers, such as computer fluency and a knack for teamwork. But the same social networking skills and consumer smarts that make them valuable employees also make them acutely discerning job seekers.

Confronted with this demanding generation, also sometimes known as Generation Y or the Echo Boom, companies are scrambling to attract and retain the most talented among them. Some executives say they are offering entry-level employees more variety and challenges, providing senior-level mentoring, and even giving them opportunities to work for causes they believe in. Granting more competitive pay and benefits, faster career advancement, and more responsibility means taking big risks with the greenest employees on the payroll. Says Claudia Tattanelli, chief executive of Philadelphia research firm Universum Communications, which surveys Millennials: "The challenges are a completely different set than they were two, three, or six years ago."

REVOLVING DOOR 
Given the country's demographics, some accommodation is inevitable. Entry-level hiring is expected to surge in 2007 by more than 17%, the fourth consecutive double-digit increase, according to the National Association of Colleges & Employers (NACE). And this could be only the beginning. By 2010, as the exodus of baby boomers from the workforce accelerates, census data suggest, two employees will be leaving for every new hire entering, and new college grads will be a precious commodity.

The numbers demonstrate only half the challenge. In crafting the perfect pitch these days, it's not enough to have a marquee name or competitive pay, although those certainly help. To land the most desirable young grads, employers need to put something far more valuable on the table: the organization itself. Companies with corporate cultures that stress social responsibility, diversity, and the environment, all values that align with those of the twentysomething generation, stand to get the lion's share of interest from job seekers.

Some of the old recruiting orthodoxies are rapidly disappearing. Financial services companies, once the refuge of business majors and quant jocks, now accept liberal arts grads in droves even if it means a bigger up-front training investment to get them up to speed. Almost half of entry-level hires at Lehman Brothers and JPMorgan and a third of those at Goldman Sachs fall into this category.

In this rapidly shifting environment, many employers have seized the chance to distinguish themselves from the pack. Among the best 25 employers in the ranking are some that may not seem as if they would be hot with the graduating set, but they offer superior perks. Raytheon's hefty pay packages, Verizon Communications' (VZ ) benefits, and National Instruments' (NATI ) training budget helped propel those companies to the top. More and more, companies will be forced to match similar enticements. Universum Communications, which supplied student survey data for the ranking, says that the number of corporate clients seeking research on the Millennials and their attitudes has increased 45% in the past six months alone. "Half of that is from clients who are usually only focused on MBA recruiting," says Universum's Tattanelli. "They're now interested in creating a strong employer brand image early on."

CODDLED 
So who are these challenging Millennials? Researchers note that unlike the Gen Xers before them, who were the "latchkey kids" of the 1970s, many of these recent grads have grown up in households with actively involved parents and a strong support network in place. Coddled from an early age, as employees they are sometimes perceived by older colleagues, rightly or wrongly, as lacking a strong work ethic and having an unjustified sense of entitlement. With their overscheduled childhoods, many are also viewed as being unable to think on their feet, solve problems on their own, or take on leadership roles.

On the positive side, getting the job done well and efficiently is important to Millennials, say their employers. Boomers, by contrast, logged long hours and seemed to view face time as an end in itself. Teamwork and collaboration are this group's strong suits. "Traditional career ladders are still important today," says Anne Ceruti, vice-president for talent acquisition at Disney. "But collaboration is so much more important [to them] than it was for previous generations."

The most important thing employers need to know about Millennials is this: They can afford to be choosy. According to WetFeet Research & Consulting in San Francisco, the number of entry-level job seekers receiving multiple offers has been on the rise for five years, and 82% are confident they will find the job they want. The competition is driving up pay. The average increase for U.S. employees in 2006 is 3.6%, but starting salaries for some new college grads outpace that. The average offer for civil engineering grads, for one, is up 5.4%, to $46,023; that for accounting graduates has jumped 5.5%, to $45,656, according to NACE.

If one thing sets apart the Top 50 employers in the BusinessWeek ranking, which spotlights not only companies but also government agencies and nonprofits, it's their ability to give entry-level employees new opportunities early and often. Among the highest-ranked 25, for example, 21 provide extensive training programs that will hone workers' skills and help advance their careers. "The issue for younger people thinking about their careers is whether [an employer is] an organization that's going to develop them and provide a platform for other opportunities," says Tom Tierney, the former CEO of No. 17 Bain & Co. who now runs Bridgespan Group, a consultancy for nonprofits.

Increasingly, the most popular and effective recruiting strategy is the use of internships. To identify promising recruits early and to sell them on a company at the same time, more employers are looking to their intern pool to fill full-time slots. Among employers that supplied internship data, nearly half increased their reliance on interns since 2004; at six companies on the list, more than 50% of the 2006 entry-level hires were former interns. At No. 4-ranked Goldman, that figure was 51%, up from 38% in 2004. "It's really the primary driver of our recruitment," says Aaron Marcus, Goldman's global head of recruiting.

Companies facing increased competition for interns say they are giving them the one thing they crave more than money: responsibility. At L'Oréal Group, one intern represented the company at a charity event; at Abbott Laboratories (ABT ), instead of fetching coffee for higher-ups, as at some placements, Fabiola Salcedo, 23, conducted a detailed analysis of imports and presented her findings to senior executives. "[I chose Abbott] primarily because of responsibilities I was given when I interned here," says Salcedo, who joined the company full-time last year. "I felt like I was really part of the department."

Employers are also getting more creative with the tactics they use to draw these young candidates for both internship and entry-level positions. Accenture, (ACN ) ranked No. 20, advertises on coffee sleeves on select campuses and holds raffles via text-messaging to publicize career opportunities. Google feels students themselves can be the best recruiters. The Mountain View (Calif.) tech juggernaut recruits engineering undergraduates on roughly 80 U.S. campuses to serve as "pizza ambassadors," providing classmates with pizza on Google's dime during exams. JPMorgan Investment Bank runs an interactive derivatives trading game to identify top talent. It has taken on a viral life of its own: When the bank advertises the "Fantasy Futures" game at one school, participation surges at other campuses in the area.

If recruiting is employers' first hurdle, retention is by far the highest. Those employers who provided the data reported that more than one-third of their new hires bolted within three years. And replacing them isn't cheap. Training costs averaged nearly $10,000 a head, which can add up quickly when you're hiring more than 1,000 college grads each year, as more than one-third of the ranked employers do.

The main reason young employees are heading for the exits, oddly enough, is the very thing boomers thrived on: the perpetual work day. Having grown up with parents who wore a grueling workweek as a badge of honor but were permanently sleep-deprived because of it, today's young professionals are pushing for a more balanced life. Of the 37,000-plus undergraduates surveyed by Universum this year, the No. 1 career goal was to "balance personal and professional life." "Building a sound financial base" ran a distant third, in part perhaps because young people are waiting longer to buy homes and start families.

To get the best hires to stick around, companies are more likely to provide a measure of freedom from cubicle life and offer everything from comp time to flexible work schedules. Those that don't are paying a price. For years, Eli Lilly & Co. (LLY ) and Abbott Laboratories offered new hires 17 and 15 vacation days, respectively, while rival Merck & Co. (MRK )kept the standard 10. Merck is now finding that college grads actually care. "We're looking at enhancing vacation because as recruiters we're seeing some challenges," says Merck's director of university relations, Regina P. Flynn. "Even at entry-level they're asking: 'What time off am I getting?"' No. 2-ranked Lockheed Martin allows some employees who work nine-hour days to take every other Friday off and gives others broad latitude to make their own hours. Michael Van Gelder, a 27-year-old team leader on a multimillion-dollar government project who joined Lockheed five years ago, says that's a big deal: "I'm not responsible to punch in and punch out. I feel I'm responsible for a job, not a shift."

YOUNG IDEALISM 
Often unable to offer competitive wages, nonprofits such as Teach for America Inc., No. 43, and federal agencies such as the CIA, which came in at No. 32, may nevertheless have certain pluses over for-profit companies in the bidding for young talent. Government jobs frequently have reasonable hours and solid benefits, and along with nonprofits they offer an outlet for youthful idealism, which is particularly strong among the Millennials, as it was among those who came of age during the 1960s. In the Universum survey, 27% of undergraduates now list contributing to society as a top career goal; the survey added the option this year after hundreds of students penciled it in. That's good news for both federal agencies, where 44% of civil servants will become eligible for retirement in the next five years, and the nonprofit sector, where employment growth is outstripping that at for-profit companies.

Private-sector employers, too, are picking up on the importance of providing new hires with a way to give back to society. Goldman, for example, recently took the $2,000 company match on charitable contributions, a standard employee perk, and supersized it to $10,000. Other companies are ramping up programs that let employees contribute more time to volunteer work. Consulting firms such as Bain and Accenture allow employees to take subsidized sabbaticals to consult for nonprofits, and No. 23-ranked Wells Fargo & Co. (WFC ) allows employees to teach at local schools during the regular workday without docking their pay.

How, on the other hand, do companies like No. 29 Philip Morris USA appeal to a socially aware generation? Clearly any employer in a business that damages health or the environment will be a hard sell, but high-profile targets like tobacco companies are particularly so. Philip Morris, however, has an innovative recruiting pitch that promotes the opportunity to develop technologies that make cigarettes less harmful. CEO Michael Szymanczyk says the campaign touches a nerve with certain recruits: "People who are interested in challenges, interested in solving tough problems, find this to be an attractive place to work because it's got plenty." It doesn't hurt that nearly 1 out of 5 entry-level employees earns more than $55,000 a year, far more than any other consumer-goods company in the ranking.

Having an opportunity to make a big impact can clinch the deal for young grads. At No. 21 Pepsi Bottling Group Inc. (PBG ), especially promising new hires who go through the company's training program can find themselves managing a team of employees within six months to a year, vs. the two to three years it typically takes elsewhere. And at Google, all employees are encouraged to spend one full day a week developing or working on a new idea of their own choosing. Google's penchant for putting young employees in the driver's seat is legendary. Salar Kamangar, who joined after graduating from Stanford University in 1999, five years before the company went public, wrote Google's first business plan and led the engineering team that launched AdWords, its proprietary method for tailoring Web ads to search terms (page 68). It's safe to say that without Kamangar, Google wouldn't be Google.

While Kamangar was a self-starter, a common criticism of Millennials is that they tend to require a lot of hand-holding by managers. Having grown up in the cocoon of parental attention and positive feedback, they expect much of the same from their employers, including frequent evaluations and mentoring. That's not always easy. Shan Cooper, Lockheed's vice-president for diversity and equal opportunity programs, mentors five Lockheed employees and says newcomers want to be evaluated "weekly, daily, hourly." Cam Marston, founder of Marston Communications in Charlotte, N.C., who advises companies on how to manage Millennials, says Cooper has it right: "I encourage my employers, even if they think they're giving a lot of feedback, to double it."

For the first time in U.S. history, four generations co-exist in the workforce, with many employees working well into their golden years. And that's leading to a rising level of intergenerational tension. Employers are finding their newest hires may be blurring the lines between boss and friend. Says Marston: "There's a difference between getting a drink with your boss and being your boss's drinking buddy. The Millennials are trying to cross that line a little bit."

One aspect of the Millennial mindset that worries some academics and executives is the generational preference for teams. Many of them, and to a lesser extent Gen Xers, grew up on a steady diet of organized sports and other team activities from before their first day of kindergarten. Even in school, solitary assignments have gradually given way to team projects. The result: a generation that feels most comfortable pursuing well-defined goals as part of a team. In the world of work, such a preference can be an asset. But as employees move into leadership roles, where goals are not always well-defined and success frequently requires a bold leap into the unknown, independent thinking and risk-taking could suffer. Every generation develops leaders, of course, but this one could have a harder time than most. Says Andrea S. Hershatter, director of Emory University's Goizueta Business School undergraduate program: "It is going to be an interesting challenge for them to become creative, autonomous professionals."

It's easy to overgeneralize about a generation, and as critics of such armchair psychology point out, it often means extrapolating too broadly from the experience of upper-middle-class suburban youth. But these are largely the young men and women who will fill the management tracks of U.S. companies and, in doing so, transform the American workplace. By the time the last of them walk onto the job in 2022, their predecessors will have already ushered in a new age of work that bears only a superficial resemblance to the one the boomers and Gen X left behind.


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Five Beliefs that Inhibit Good Design

By Deepa Prahalad


Posted on Harvard Business Review: October 28, 2010 9:57 AM


There are plentiful examples today of companies using design to create value for consumers and shareholders. Despite the growing interest in design across industries, there are also persistent misconceptions that keep many business leaders from realizing its potential in their organizations. Here are the most common ones:


1. Quality is more important than design in my business. Quality is important in every business and always will be. However, quality is the price of entry in many industries and it's rarely enough to win market share and loyal consumers.


There's a persistent belief in a trade-off between style and substance. In reality, design is a way of conveying quality. Data suggest that companies gain the luxury to focus on design when they have mastered quality, distribution, and understand their markets well enough to create a relevant offering. Google, Coca Cola, HP, Procter & Gamble—are just a few examples of firms that are high design and high performance.


What's true in the lives of individuals applies to companies as well—when you're exhausted, overwhelmed or confused about what to do next, you never look your best. Consumers look at a dirty store, picked-over merchandise and bad service and come to the same conclusions. Good design is like putting on a suit for an interview—it shows the other person that you care about the relationship.


2. It is more important for me to offer a great price than a great design. Some great designs and brands do cost more, but there is no absolute correlation between price and design. Great design exists at all price points. Some of the best-known examples are companies such as Target, IKEA and LEGO that offer goods in a budget-conscious segment. The pattern continues with the Top 20 global brands, which include luxury retailers but also accessible goods and services like Coca-Cola, McDonald's, Google and Gillette.


More importantly, some of the most innovative designs today were created with affordability and scarcity in mind. The Tata Nano, the award-winning portable ECG machine from GE and One Laptop per Child were just a few notable efforts that challenged assumptions about price-performance relationships and generated design buzz. The push for sustainability across industries is likely to amplify this trend.


3. I would like to have a great design, but I have to launch on time. Design by definition must include execution. Focusing on design forces an organization to test ideas, synthesize feedback, and generate new concepts at a rapid pace. Historically, designers were brought in at the end of the launch process—and creating concepts under intense pressure is still the norm.


Look at the many of the companies that are strongly associated with design today. Apple, P&G, Target, Amazon, LEGO and others expand their portfolios and launch products more frequently than their peers. Design efforts don't slow down product launches. Indecision does. A widely shared set of decision criteria around design can make the process more efficient.


4. Design and aesthetics are too subjective—I need data to make decisions. Although great design speaks to a consumer's needs and emotions, there is no single aesthetic that companies must drive toward. Consistency between the brand values and the physical design is what creates a superior consumer experience. BMW, Honda and Hyundai have deep consumer loyalty with very different looks and features. Moreover, design priorities are based in actual data. Consumer testing and feedback can be achieved at low cost today with the internet and social media.


5. I will create the product or service; I trust the advertising experts to tell the story. The worlds of brand, advertising and design are rapidly converging. Well-crafted marketing and branding can boost the impact of a great design, but unless the message is reinforced by real-world experience, the effect is usually temporary.


In the best cases, the design itself can become the advertisement. Some familiar success stories—Dyson, FlipCam, the iPod, Method—illustrate this point beautifully. These designs fuel demand and propel brand loyalty. It's no accident that great companies often have great ad campaigns and use social media effectively—they are leveraging the same deep understanding of the consumer.


Business leaders don't need to go to design school to bring great design into their companies. They need to remember bring their own core skills—listening to consumers, asking questions, and openness to new ideas—into the design process. Design doesn't work in a vacuum—it's the alignment with the right business model and service that creates a compelling consumer experience. Getting to great design requires looking at consumers, not competing products, more thoughtfully.

Sunday, 7 November 2010

Being Steve Jobs' Boss

C:\Program

Jobs and Sculley in New York City, 1984 DIANA WALKER/CONTOUR/GETTY IMAGES


Steve Jobs was 28 years old in 1983 and already recognized as one of the most innovative thinkers in Silicon Valley. The Apple (AAPL) board, though, was not ready to anoint him chief executive officer and picked PepsiCo (PEP) President John Sculley, famous for creating the Pepsi Challenge, to lead the company. Sculley helped increase Apple's sales from $800 million to $8 billion annually during his decade as CEO, but he also presided over Jobs' departure, which sent Apple into what Sculley calls its "near-death experience." In his first extensive interview on the subject, Sculley tells Cultofmac.com editor Leander Kahney how his partnership with Jobs came to be, how design ruled—and still rules—everything at Apple, and why he never should have been CEO in the first place.


You talk about the "Steve Jobs methodology." What is Steve's methodology?


Steve, from the moment I met him, always loved beautiful products, especially hardware. He came to my house, and he was fascinated, because I had special hinges and locks designed for doors. I had studied as an industrial designer, and the thing that connected Steve and me was industrial design. It wasn't computing.


Steve had this perspective that always started with the user's experience; and that industrial design was an incredibly important part of that user impression. He recruited me to Apple because he believed the computer was eventually going to become a consumer product. That was an outrageous idea back in the early 1980s. He felt the computer was going to change the world, and it was going to become what he called "the bicycle for the mind."


What makes Steve's methodology different from everyone else's is that he always believed the most important decisions you make are not the things you do, but the things you decide not to do. He's a minimalist. I remember going into Steve's house, and he had almost no furniture in it. He just had a picture of Einstein, whom he admired greatly, and he had a Tiffany lamp and a chair and a bed. He just didn't believe in having lots of things around, but he was incredibly careful in what he selected.


Everything at Apple can be best understood through the lens of designing. Whether it's designing the look and feel of the user experience, or the industrial design, or the system design, and even things like how the boards were laid out. The boards had to be beautiful in Steve's eyes when you looked at them, even though when he created the Macintosh he made it impossible for a consumer to get in the box, because he didn't want people tampering with anything.


That went all the way through to the systems when he built the Macintosh factory. It was supposed to be the first automated factory, but it really was a final assembly and test factory with pick-to-pack robotic automation. It is not as novel today as it was 25 years ago, but I can remember when the CEO of General Motors, along with Ross Perot, came out just to look at the Macintosh factory. All we were doing was final assembly and test, but it was done so beautifully. It was as well thought through in design as a factory as the products were.


Now if you leap forward and look at the products that Steve builds today, today the technology is far more capable of doing things; it can be miniaturized; it is commoditized; it is inexpensive. And Apple no longer builds any products. When I was there, people used to call Apple "a vertically integrated advertising agency," which was not a compliment.


Actually today, that's what everybody is. That's what [Hewlett-Packard (HPQ)] is, that's what Apple is, and that's what most companies are, because they outsource to EMS—electronics manufacturing services.

Global MBA Job Market Turns Positive

(Corrects number of North American schools included in the Global 200 Top Business Schools ranking.)


MBA hiring improved around the world in 2010, and it has a good chance of continuing to grow, says Nunzio Quacquarelli, managing director of QS Quacquarelli Symonds, a London company that organizes the annual QS World MBA Tour. QS recently released several reports, including the TopMBA.com Jobs and Salary Trends Report and the Global 200 Top Business Schools Report, based on its survey of 2,145 recruiters involved with MBA hiring in more than 50 countries.


Quacquarelli recently shared the results of these reports and his thoughts on what recruiters are looking for in employees in a post-crisis economy, as well as the relevance of the MBA degree, with Bloomberg Businessweek reporter Francesca Di Meglio. Here are edited excerpts of their conversation:


What was the most surprising result of the 2010 employer survey?


We found the MBA job market is actually quite robust and picking up substantially in most major OECD [Organization for Economic Cooperation and Development] markets. Despite having had a pretty shocking credit crunch, the downward impact on MBA hiring was short-lived, with less than two years of cutbacks. Russia reported a 22 percent increase in MBA hiring year-over-year. And Latin America was also quite buoyant. This compares with the mature market in the U.S., which had a steep drop in MBA hiring in 2009 and showed a 9 percent increase in hiring in 2010. Hiring is still lagging compared with 2007 or 2008 levels. Still, we have seen a bounce back in the U.S., whereas Western Europe is showing just a 3 percent increase compared with 2009, which is quite an insignificant change.


MBA hiring is particularly picking up in the Asia Pacific region. We're seeing more than 30 percent growth in MBA jobs year-over-year in the Asia Pacific region, particularly in markets such as India, China, Australia, and Singapore.


Why? What is it about emerging markets that has them flourishing?


Emerging markets have traditionally had few companies geared toward hiring MBAs. As they are expanding outside their home markets, they see MBAs as a human resource [employed by] American and European companies, and they're following suit. The salaries in these markets are still less than at global employers, although a lot of [employers] are beginning to recruit MBA candidates for more international roles. The rapid GDP growth in many of these emerging markets means a lot of multinational companies are expanding their operations in these markets, and they are bringing MBAs in to do the job. When you have a critical mass of alumni in a country, and they rise to a position of seniority, they start to look for other MBAs to join their companies. That creates the network effect, and it starts to create momentum.


Other than pharmaceutical companies, which were the highest paying, are there other strong industries MBAs should consider?


IT and computer services are showing a strong increase in demand, which is quite driven by the Asia Pacific region. Many MBAs have an IT background and go back into that sector in managerial roles. There's also a huge outsourcing industry in Asia, which is employing many MBAs today. Consulting and professional services are showing a 19 percent increase from 2009, which is very encouraging. Financial service firms are also showing a strong lift. Banks moved back into profitability, so they're catching up with hiring, considering the people they laid off and the MBAs they didn't hire in the previous two years. Manufacturing is showing quite a strong lift.


Why is Europe the leader in salaries?


European students typically have six to seven years of work experience, whereas U.S. students average between four and five years. There is an extra three years, on average, of work experience, which results in Europeans commanding slightly higher salaries. Work experience is more important today than ever before. In a market where companies really want candidates to prove they are going to add value, they will look more and more at previous work experience. Although salaries are significantly higher among European schools, the bonuses payable to candidates from top-tier U.S. schools, on average, tend to be higher.

Popular Cars May Be Bypassing U.S. Market

By Joel Stonington


For years the secret to success in the automotive business was to penetrate the U.S. market. Automakers such as Toyota (TM), Honda (HMC), BMW (BMW:GR), and Mercedes-Benz (DAI) enjoyed plush revenues as their network of dealerships expanded across North America. So great was the market that automakers were willing to jump through U.S. regulatory hoops. They installed such devices as catalytic converters and introduced new models and engines—in some cases adapting right-hand-drive vehicles to offer left-hand drive. They kept production costs down and spent millions of marketing dollars to entice credit-happy American consumers.


That may no longer be the case. In the past, the main reason certain auto brands or models couldn't be found in the U.S. was that they failed to satisfy consumers, the government, or both. Now it's increasingly because there are more attractive—and accessible—markets.


In 2009, China surpassed the U.S.as the world's No.1 automotive market, according to Beijing-based China Association of Automobile Manufacturers, as millions of Chinese flexed their new-found economic muscles to buy cars. Domestic demand has been exploding and the major Chinese automakers such as Geely, Chery, and BYD are working hard to meet it. China is expected to consume about 15 million vehicles this year and as many as 20 million by 2015, according to Rebecca Lindland, an analyst at Lexington (Mass.)-based IHS Global Insight. Automakers around the world are hungrily eyeing ways to tap into hundreds of millions of potential customers in a single market.


In April, Martin Winterkorn, chief executive officer of Europe's largest automaker, Volkswagen (VOW:GR), reportedly told shareholders that he expected the Chinese car market to grow by 75 percent—and India's market to more than double—by 2018.


Do China's automakers yearn to enter the U.S. market? "Right now, obviously, the U.S. has no Chinese vehicles," says IHS's Lindland. "Because of the collapse of our economy, we aren't really the cash cow that we used to be. China has so much unmet demand and potential demand that it may be tough to make a business argument to sell cars here."


In addition to growing demand at home, Chinese automakers may also be wary of committing capital to selling in the U.S. They would need to meet U.S. environmental and safety standards just to face the risk that American consumers might reject their models as too small, underpowered, or simply cheap.


At the height of the most recent gas crisis, when a gallon of regular fuel hovered around $4, many U.S. consumers were desperate to trade in gas-guzzlers for more fuel-efficient coupes and sedans. European and Asia automakers rushed such models as the Honda Fit and Toyota Yaris to market while U.S. rivals were stuck with showrooms jammed with SUVs and pickups.


$

Nintendo Goes for the Hard Core with Its 3DS

By Pavel Alpeyev and Yoshinori Eki


In Nintendogs, a series of games for the Nintendo DS, players train, groom, and feed a virtual puppy. Neglect your Nintendog, and it gets filthy and runs away; care for it properly, and the pup frolics and paws at the screen. With more than 23 million copies sold, it is one of Nintendo's most popular series. It also helps explain the company's current difficulties.


Nintendo became a runaway success as the gaming company for non-gamers. The motion-sensing Wii console and the handheld DS featured beginner-friendly fun with titles such as Mario Kart and DJ Hero in addition to Nintendogs. Nintendo kept the technology simple and the prices low—the Wii made its debut in 2006 at half the price of Sony's (SNE) PlayStation 3—to attract casual players. The trouble is that casual gamers, by definition, don't play or buy a lot of games. While Nintendo isn't forsaking those customers, its new 3DS, due out in Japan in February and in the U.S. a month later, is an effort to win over the players who prefer their games to feature commandos, not canines. "The company has taken a U-turn and is focusing more on core gamers," says Atul Goyal, senior research analyst at CLSA Asia-Pacific Markets in Tokyo. "They understand that the casual market is crowded."


It's a shift born of necessity. Nintendo needs to reverse a sales decline that has caused its stock price to fall 21 percent since 2008. In September the company forecast net income for next year of $1.1 billion, the lowest level in six years. The problem, says Nintendo President Satoru Iwata, is that the company is competing "with anything that demands people's attention and energy." That includes the PlayStation and Microsoft's (MSFT) Xbox, as well as new motion-sensing consoles that Sony and Microsoft are introducing this fall. They'll go up against Nintendo's popular Wii. The company must also compete with popular online games such as Zynga's FarmVille and Mafia Wars. Apple (AAPL), too, is a threat. It has sold 120 million iPhones, iPod touches, and iPads in the past three years and now promotes them as handheld gaming machines that render a second device like the DS unnecessary.


The 3DS, which Nintendo announced in March, will feature wireless Web access, multiple cameras, and accelerometers to sense motion, just like Apple's iPhones and iPod touches. As its name suggests, the 3DS can show three-dimensional images—without the need for special glasses. Nintendo is working with studios to bring streaming, 3D movies to the device. To make it easier to play high-end games such as Activision's Call of Duty: Modern Warfare, the 3DS will house a more powerful processor and a higher-definition display than its predecessor.


Hardware specs are only part of the effort. Nintendo is unique among the big console makers in that many of its best-selling titles, such as The Legend of Zelda and all the Mario variants, are produced in-house, and Iwata says they often outperform games from third-party studios. Yet the titles high-end gamers love to play are typically made by outside developers. At a promotional event in Tokyo in September, Iwata pledged more support for outside game developers. Of the 75 titles already announced for the 3DS, only nine are from Nintendo's in-house studio. During the event, he chose Konami's Metal Gear Solid and Capcom's Resident Evil to demonstrate the graphical capabilities of the 3DS.


The 3DS was one of the hottest new products at the annual E3 game confab in Los Angeles in June, where lines of eager developers wrapped around Nintendo's booth waiting to test out the new system. Activision Blizzard Chief Executive Officer Robert A. Kotick says the device could be "a game-changer" for the industry.


The question is whether the 3DS will appeal to hard-core gamers. A lifelong Nintendo fan, Tetsuo Suzuka, a 37-year-old visual artist in Tokyo, waited in line to buy a Wii when it debuted in late 2006, only to end up selling it a year later. "The Wii is great for entertaining people at a party or for families," he says. "But it feels futile to be swinging arms around in a room all by yourself." Suzuka says he won't be waiting in line for the 3DS. "Even as the hardware gets more advanced, the contents are still the same light fare."


The bottom line: With the new 3DS, Nintendo is trying to appeal to hard-core gamers and the studios that make action-packed hits like Resident Evil.

With Cliff Edwards. Alpeyev is a reporter for Bloomberg News. Eki is a reporter for Bloomberg News.

How to Sink an MBA Application

C:\Program By Francesca Di Meglio

As many business schools approach the first-round deadline for MBA applications, the admissions committees are anticipating their annual stop in Crazy Town. Population? The one MBA applicant who steps over the line by doing something so inane, silly, or downright wrong that he or she ruins any chance of getting in.

These are not candidates who send out generic essays and forget to change the school's name, or nervously click their pens throughout the interview, although admissions teams say they see both of those errors often. These are the stories of MBA applicants who make major blunders—from proposing marriage to the admissions interviewer to including a picture of oneself aiming a bazooka—true stories that happened at IMD (IMD Full-Time MBA Profile) and ESADE (ESADE Full-Time MBA Profile), respectively, according to the admissions teams at both schools. For admissions officers, such application blunders are at worst annoying, and at best a comedic highlight to an otherwise boring day. But for applicants they can serve as cautionary tales: admission strategies that do not bear repeating.

There is no shortage of great stories about candidates who went too far in their quest for MBA admission, said Graham Richmond, chief executive officer and co-founder of the admissions consultancy Clear Admit, which is based in Philadelphia. Richmond, who previously worked in admissions at the University of Pennsylvania's Wharton School (Wharton Full-Time MBA Profile), said he has seen everything from candidates whose parents take the campus tour without their adult child to someone who wrote in a business school application (and sent relevant photos to boot) that her biggest failure was not being the maid of honor at her friend's wedding.

"For better or worse, these kinds of faux pas are the kind you don't recover from," said Richmond. "It's hard to do damage control once you're in the crazy zone."

One of the biggest mistakes an applicant can make, Richmond said, is to constantly call, hound, or demand face time with members of the admissions committee. Linda Abraham, president and chief executive officer of the admissions consultancy Accepted.com in Los Angeles, has had at least one client whose behavior poisoned his relationship with the admissions team of a top business school.

He got into an argument with a clerk at an admissions office, and felt compelled to make a formal complaint with the admissions director, describing the incompetency of his workers, said Abraham, who added that the admissions director let the applicant know he wasn't impressed. The applicant got rejected at that program, and although Abraham and the applicant don't know the specific reason, they can assume that this negative interaction played a part in his rejection, Abraham added.

Sometimes, once applicants get allotted face time during the admissions interview, they make a bad impression, said Julie Barefoot, associate dean of MBA admissions at Emory University's Goizueta Business School (Goizueta Full-Time MBA Profile) in Atlanta.

"On more than one occasion, the person fell apart," she said. "A few years ago, someone stopped the interview and said, 'This isn't going well,' and then sobbed."


View the original article here

A Former No-Name from Taiwan Builds a Global Brand

By Bruce Einhorn


The vodka and whiskey flowed freely in a Taipei exhibition hall the size of an airplane hangar on Oct. 7. A six-piece cover band entertained guests with Queen's We Will Rock You and Engelbert Humperdinck's Quando, Quando, Quando. The occasion: Taiwanese smartphone maker HTC was launching a line of handsets using Google's (GOOG) Android operating system. HTC, a brand virtually unknown in the U.S. two years ago, is the market leader in Android phones—the one segment of the market that's growing faster than Apple's (AAPL) iPhone. Before the music started, executives from wireless carriers and other partner companies took the stage to praise HTC's chief executive officer, Peter Chou. "The true inventor of the smartphone is Peter Chou and his team," said Yves Maitre, a senior vice-president at French operator Orange. "He is the one."


HTC's stock has jumped 94 percent this year, and with a market cap of 552 billion Taiwan dollars ($18 billion) the company is now the third-most-valuable Taiwanese technology company after chipmaker Taiwan Semiconductor and contract manufacturer Hon Hai Precision Industry, better known as Foxconn. HTC launched the first Android smartphone in 2008—the T-Mobile G1—and has a 39 percent share of that market globally. Thanks to the success with Android, which just passed Apple's iOS as the fastest-growing mobile platform in the world, analysts expect sales to soar 78 percent this year, according to data compiled by Bloomberg. That's far better than rivals Apple, Nokia (NOK), Research In Motion (RIMM), and Samsung Electronics.


Chou is looking for ways to extend his Android lead. Drew Bamford, HTC's director of user experience, says he plans to make Android phones better able to access video, music, and other content. That's been "a soft spot with Android products," he says. HTC is teaming up with U.S. e-commerce site Kobo to sell e-books and hopes to sign deals with retailers such as Amazon.com (AMZN) and Barnes & Noble (BKS). There's also an expected launch by early next year of an Android-powered tablet PC to compete with the iPad, something Chou and others at HTC won't discuss.


HTC is an unlikely Android leader. When the company got its start in 1997, it manufactured personal digital assistants for Compaq. HTC followed the tried-and-true Taiwanese outsourcing formula of designing and manufacturing gadgets for other companies without a brand name of its own. Chou got his first big break in 2002 when Microsoft awarded HTC a contract to make smartphones, and the manufacturer quickly became the world's top producer of Windows phones. It set up its U.S. headquarters in Bellevue, Wash., to be close to Microsoft's home office.


Even as the Microsoft business was growing, Chou says he worried that a brandless HTC would forever remain a low-margin manufacturer of commodity products. "We were doing pretty well, we were making a lot of profit," he says. "But we were mostly minor partners" for telecom operators that bought and resold HTC phones. In 2007, the year Apple introduced the iPhone and set the smartphone market on fire, Chou decided to move away from the anonymous contract-manufacturing business. Last year, HTC spent $100 million on a fourth-quarter marketing blitz, and Chou says he'll spend up to $400 million this year. The company is now the world's fourth-largest smartphone manufacturer after Nokia, RIM, and Apple, according to IDC.

Saturday, 6 November 2010

Kindle vs. Nook

(To read a full comparison of the Nook and the Kindle, see Rich Jaroslovsky's review.)

The Good: Includes an additional color screen, permits friends to borrow downloaded books from one another, and allows free browsing of entire books when the user is in a Barnes & Noble store.
The Bad: Slow to boot up, format text, and display it on the screen. Color screen and Wi-Fi connection drain battery life.

The Good: Lighter and faster than the Nook, it boasts longer battery life, and each of its features has been thoroughly tested in the market.
The Bad: The physical keyboard seems clunky and unnecessary. And it lacks some clever features, such as lending rights.


View the original article here

No. 13 Google: The Search Ended Here



SEPTEMBER 18, 2006
BEST PLACES TO LAUNCH A CAREER

No. 13 Google: The Search Ended Here
"We have a startup mentality with the resources of a larger company"

Some entry-level employees get all the breaks. Others make their own luck. Salar Kamangar did both. He joined Google Inc. (GOOG ) after graduating from Stanford University in 1999, five years before the initial public offering, and his meteoric rise mirrored the company's own comet-like trajectory. In seven years, Kamangar, now 29, has gone from newbie to key player in one of the most remarkable corporate success stories of the decade. Among his accomplishments: writing the first business plan, becoming a founding member of the Google product team, and leading the engineering team that launched AdWords, Google's proprietary method for tailoring Web ads to search terms. Google's youngest vice-president talked with BusinessWeek's John DeBruicker about what makes Google one of the best places for entry-level employees.

You were a biological sciences major. How did you get into technology?
When I first [got] to school, I was passionate about the idea of being a doctor until I spent some time watching doctors working with patients. I was then passionate about the idea of being a scientist. But I realized the day-to-day wasn't exciting. Then, after spending two weeks part-time at Google, I found I was energized by the tasks involved in the job. The lesson learned was to make sure you're excited and passionate about the day-to-day and not just the idea of the job.

What's it like being the youngest vice-president?
I don't think about the "youngest" part. We have a startup mentality with the resources of a larger company. I think that's very important. If you're a college grad going into your [first] job, you don't want many, many levels of hierarchy [where] you feel like even if you have a lot of passion and energy it doesn't get channeled effectively.

Would your experience have been different had you joined Google later?
I was able to progress more rapidly because I got started early. A new employee [today] wouldn't have the same experience I did. Relative to nonstartups, Google is very much a place where you can quickly make a big difference and be noticed.

What is your favorite part of the job?
It's fun to be in a room with a bunch of creative people and be as contrarian and as outside-the-box as possible, while talking about how to take an existing product or business and make it better.

What would your advice be to a recent grad beginning the job hunt?
After finishing your education, don't worry about finding the perfect role at the perfect company, because odds are low that you'll be able to predict anything. Instead try to find the perfect industry -- you'll be in a much better position to identify, and end up in, the perfect company. It's usually futile to try to predict the next Google. I lucked out, but I was able to identify the kind of industry that would matter and grow the fastest.

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Stock Picks: First Solar, Merck, Microsoft

By Businessweek.com and Bloomberg News Staff


First Solar: Miller Tabak equity analyst Chris Kettenmann maintained a buy rating and $190 price target on shares of First Solar (FSLR), the world's biggest maker of solar power panels, on Oct. 29.


On Oct. 28, First Solar said third-quarter profit climbed 15 percent on higher sales in Germany and Canada. Net income rose to $176.8 million, or $2.04 a share, from $153.3 million, or $1.79 a share, a year earlier, the Tempe (Ariz.) company said in a statement. Profit was expected to be $1.69 a share, the average of 27 analysts' estimates compiled by Bloomberg. Sales increased to $797.9 million from $480.9 million.


The company said it foresees 2010 earnings per share (EPS) in a range of $7.50 to $7.65, vs. its previous forecast, issued in July, of $7.00 to $7.40,


First Solar plans nearly to double global production capacity to 2,700 megawatts in 2012, from about 1,400 megawatts this year, as its lowest-cost technology wins orders from Germany to Vietnam.


"First Solar appears well-positioned going into 2011, and we believe the company is poised for accelerated cost reductions from conversion efficiency gains," Kettenmann wrote in a note. "We believe management is telegraphing a meaningful increase of efficiencies at scale over 2011 with continued gains through yearend."


Kettenmann noted that the company is "upbeat" on North America market growth and "appears focused on further diversifying its end-market portfolio" away from Germany in 2011 and beyond, lowering risk from sales historically weighted to the German market. He said the company highlighted such emerging markets as Australia, India, and China on its earnings call as "significant new end markets with high growth potential."


Merck: Standard & Poor's equity analyst Herman Saftlas reiterated on Oct. 29 a buy rating and $42 price target on shares of Merck (MRK).


On Oct. 29, Merck, the second-largest U.S. drugmaker, reported third-quarter profit that rose more than analysts estimated as reduced costs helped overcome revenue losses from drugs facing generic competition.


Earnings, excluding a $950 million legal reserve for a Vioxx lawsuit and other one-time items, were 85¢ a share, beating by 2¢ the average estimate of 15 analysts surveyed by Bloomberg. Net income fell 90 percent, to $342 million, from acquisition costs and charges, the Whitehouse Station (N.J.) company said today in a statement.


Sales jumped 84 percent, to $11.1 billion, after adding products from its $49.6 billion acquisition of Schering-Plough last November. Merck said today that it's on track to cut 15,000 jobs from its combined workforce and close facilities to save $3.5 billion in annual costs by 2012.


Merck raised the lower end of its 2010 earnings forecast to $3.31 to $3.39 a share, excluding one-time items. The company previously said it anticipated profit of $3.29 to $3.39.


Merck lost exclusive rights this year to blood-pressure pills Cozaar and Hyzaar, whose combined 2009 sales were $3.6 billion. Sales of the two drugs declined to $423 million, from $861 million in the third quarter of last year. That compares with $387 million, the average estimate of three analysts surveyed by Bloomberg.


In a posting on the S&P MarketScope service, Saftlas noted that Merck's third-quarter EPS were 2¢ above his estimate. He said the top-performing drugs were asthma treatment Singulair, diabetes drugs Januvia and Janumet, and arthritis medication Remicade.

How Incentives Can Undermine Your Influence

By Joseph Grenny


I've studied the influence strategies of many leaders in the past 25 years but few more remarkable than Danny Meyer's.


Danny is, in my estimation, the most influential restaurateur in New York City. In 1985, he started the Union Square Café with a disarmingly delicious American menu. And in spite of the fierce competition for Manhattan diners, he succeeded phenomenally in both culinary and financial terms. For his next feat, he opened Gramercy Tavern, where he struck gold again. In the past 11 years, Gramercy Tavern and Union Square Café have ranked among Zagat's top 10 most popular restaurants in New York City. In 2004, after following with French, Indian, and Italian restaurants, Danny opened the renowned Shake Shack in Madison Park. Since then, six locations have followed. Today every one of his 10 restaurant brands have appeared every year in Zagat's top 40 for New York City. I wanted to find out why.


When I asked Danny to explain his sustained success, he told me a story. The week before, a guest at Tabla, his Indian restaurant, was settling his bill and asked his server if he could recommend a place to find a great cigar. The server said, "I'm sorry, I can't. But I know someone who can." He hustled across the restaurant and motioned to one of the other servers, who had just returned from Puerto Rico with a personal stash of exotic cigars. Moments later that server not only presented the guest with one of his prizes but also took time to rhapsodize about its provenance and specifications in loving detail.


After relating this incident, Danny went on to explain that his goal is to influence his 1,500 employees to achieve that same level of customer service daily. "We serve 100,000 meals every day," Danny told me. "What would happen to our growth opportunity if we could just make 5 percent of those experiences supremely and intimately special? Serving great food is what's expected of us. Our opportunity to become people's favorite restaurant lies in going beyond meal service to creating an experience of true hospitality."


As a student of influence, I wanted to know more about how Danny so predictably and repeatedly succeeds at engaging his remarkable staff in creating these kinds of experiences for their customers. I prodded Danny about his brilliant strategies in each of the six sources of influence: motivation, training and skill building, positive peer pressure, the influence of managers and coaches, incentives, and tapping into the power of physical space and environment. For five of those sources, Danny's strategies were masterfully planned and on point. When I asked about his use of incentives, however, his response couldn't have been more stark.


"Well, we don't really do much with incentives."


"Really?" I asked. "You don't do something to reward those who give away their own prized cigars?"


He furrowed his brow, then said politely, "No. Not really."


While Danny's response was startling, it is also extremely telling about his innate understanding of influence.


Over the years, I've seen leaders incorrectly use incentives time and again in an attempt to influence others. They figure it's the quickest and easiest route to change others' behavior, so they throw incentives out like candy. In fact, those who really understand influence—who truly understand how to shape a powerful and effective organizational culture—tend to think of incentives last rather than first (or if you're Danny Meyer, not at all). What's more, these brilliant influencers' expectations of the effects of those incentives are usually modest. One leader told me: "I just try to be sure incentives don't undermine what we're trying to do." Turns out, Danny Meyer not only agrees, but he also has enough influence acumen to dismiss incentives almost altogether.

Commentary: The Inequality Delusion

By Drake Bennett

"I think when you spread the wealth around, it's good for everybody." So said Barack Obama almost exactly two years ago to an opinionated plumbing company employee named Joe Wurzelbacher. The comment, captured on video, was one that then-candidate Obama would have reason to regret: Joe the Plumber's celebrity has waned, and a defeated John McCain has gone back to the Senate, but the quote has lived on among the President's critics as evidence of his unabashed liberalism—even, to many, his secret socialism. "That is what change means for Barack the Redistributor: It means taking your money and giving it to someone else," McCain said at the time. "He believes in redistributing wealth, not in policies that grow our economy and create jobs."

Political equality is a sacred idea to Americans; economic equality, however, is not. Spreading the wealth is what Marx wanted to do, and Mao. One rallying cry of the Tea Party has been that health-care reform, the stimulus, and the proposed climate change legislation all amount to stealthy ways to redistribute billions of dollars downward. The impending elections are expected to sweep into Congress a crop of Republicans vehemently opposed to the leveling effects of activist liberal government.

Minnesota Representative Michele Bachmann, founder of the Tea Party Caucus, attacked the BP (BP) oil spill victims fund as "a redistribution of wealth," and Pat Toomey, the Tea Party-backed U.S. Senate front-runner in Pennsylvania, decries all governments for "confiscating the wealth they choose to transfer." Even Robin Hood, as portrayed by Russell Crowe in last spring's film, wasn't robbing from the rich to give to the poor but fending off the predations of greedy tax collectors.

So it might be surprising to learn that Americans are in broad agreement on the need for a more equal distribution of wealth. Yet that's what a forthcoming study by two psychologists, Dan Ariely of Duke University and Michael I. Norton of Harvard Business School, has concluded. First, Ariely and Norton asked thousands of Americans what they thought the nation's actual wealth distribution looks like: how much is owned by the wealthiest 20 percent of the population, the next-wealthiest 20 percent, and on down. The researchers then asked people what, in an ideal world, they would like the nation's wealth distribution to be.

Ariely and Norton found that Americans think they live in a far more equal country than they in fact do. On average, those surveyed estimated that the wealthiest 20percent of Americans own 59 percent of the nation's wealth; in reality the top quintile owns around 84 percent. The respondents further estimated that the poorest 20 percent own 3.7 percent, when in reality they own 0.1percent.

And when asked to give their ideal distribution, they described, on average, a nation where the wealth distribution looks not like the U.S. but like Sweden, only more so—the wealthiest quintile would control just 32 percent of the wealth, the poorest just over 10 percent. "People dramatically underestimated the extent of wealth inequality in the U.S.," says Ariely. "And they wanted it to be even more equal."

The United States, according to this study, is a nation of people who would like to spread the wealth around. They just don't know it.

Can it really be that simple? In part, this work fits into a proud tradition of social science research demonstrating the basic ignorance of the average American. (Ariely and Norton conducted a small follow-up survey of economists and found that though their estimates were better than average, they also got it wrong.)


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Friday, 5 November 2010

Dad's Family History of Breast, Ovarian Cancer Matters, Too

By Kathleen Doheny
HealthDay Reporter

THURSDAY, October 28 (HealthDay News) -- Women with female relatives who have had breast or ovarian cancer are often acutely aware of their own increased risk and may seek genetic counseling.

But they should also pay attention to their father's family history, one genetic counselor warns.

The inherited genetic predisposition to breast and ovarian cancer is mostly caused by a mutation in one or both of the BRCA1 or BRCA2 tumor suppressor genes, said Jeanna McCuaig, a genetic counselor at Princess Margaret Hospital in Toronto. And, she pointed out, "if your mom or your dad has a BRCA1 or BRCA2 mutation, you would have a 50 percent chance of inheriting it from either one."

That explains why a father's family history is as important to consider as a mother's, she said.

"Anecdotally, I've had patients come in and say, 'I never thought about my dad's side,'" McCuaig said. She decided to do some research into the implications of that statement. "We took two years of patient charts referred to our clinic, referred as new patients, and looked to see how many had relatives [with breast or ovarian cancers] on the mom's side versus the dad," she said.

She found that patients who came to her Familial Breast and Ovarian Cancer Clinic at the hospital were more than five times more likely to be referred with a maternal family history of breast or ovarian cancer than a paternal history of such cancers.

To get the word out, she wrote a commentary on the subject, published online in The Lancet Oncology.

The lack of awareness that women may inherit a mutated gene from their fathers is also present among many health-care providers, McCuaig suspects. This is problematic, she noted in her study, because they often serve as gatekeepers for referrals to specialized clinics, including those that do genetic testing.

If a woman tests positive for a BRCA1 or BRCA2 mutation, she has about a 50 percent to 85 percent risk of breast cancer in her lifetime, said McCuaig, citing various studies, and about a 20 percent to 44 percent risk of ovarian cancer.

In contrast, the lifetime risk of developing ovarian cancer in the general population is 1.4 percent, according to the National Cancer Institute, which also states that women who inherit a BRCA1 or BRCA2 mutation are about five times as likely to develop breast cancer as women without such a mutation.

Men with the BRCA 2 mutation have a 6 percent risk of breast cancer, McCuaig said, compared to less than 1 percent in the general male population. Men with BRCA1 or BRCA2 mutation also have a higher prostate cancer risk than other men, she said.

According to the study, about 20 percent to 30 percent of the more than 690,000 women diagnosed with breast cancer and nearly 190,000 diagnosed with ovarian cancer in developed countries have a family history of cancer, the study noted, and between 5 percent and 10 percent are due mostly to an inherited mutation in one of the BRCA1 and BRCA2 genes.

Women and men should take into account the cancer history on both their parents' sides of the family, McCuaig said, and health-care providers should ask about both sides when taking a medical history.

"It's an important point," said Dr. Len Lichtenfeld, deputy chief medical officer for the American Cancer Society. "For those of us in cancer treatment, it's not new information, but it's very important for patients and family to be aware of this and not forget" to consider the father's history.

"The bottom line? The family history [of breast and ovarian cancer] in the women in your father's family is every bit as important as the family history of the women on your mother's side," he said.

More information

To learn about BRCA1 and BRCA2 mutations, visit the U.S. National Cancer Institute.

SOURCES: Jeanna McCuaig, M.Sc., genetic counselor, Familial Breast and Ovarian Cancer Clinic, Princess Margaret Hospital, Toronto; Len Lichtenfeld, M.D., deputy medical officer, American Cancer Society, Atlanta; Oct. 24, 2010, The Lancet Oncology Copyright © 2010 HealthDay. All rights reserved.


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Emerging-Market Stocks: How Much Is Too Much?

By Ben Steverman

As U.S. investors put more and more money into developing economies such as China and Brazil, they are getting widely differing advice on what kind of role emerging-market stocks should play in their portfolios.

The flow of individual investor dollars to these fast-growing countries has sped up in 2010, as emerging-market stocks have outperformed those in the U.S. and other developed nations. Since its 2010 low on May 25, the MSCI Emerging Markets index is up 29.3 percent. In that same period, the MSCI World index, which includes only developed markets, has risen 16.8 percent and the U.S.-only Standard & Poor's 500 index is up 9.9 percent.

An Oct. 19 report from JPMorgan states that retail investors have put $60 billion in emerging-market equity funds so far this year while pulling $74 billion from developed-market stock funds.

According to TrimTabs Investment Research, $20.9 billion has flowed into diversified emerging-market exchange-traded funds so far this year, compared with $14.4 billion in all of 2009.

A Bank of America Merrill Lynch survey of fund managers, released Oct. 20, found that 49 percent have a higher-than-usual, or "overweight," exposure to emerging markets, up 17 points from last month. A Russell Investments survey of 350 financial advisers in September found 59 percent plan to boost their emerging-market exposure in the next year, up 11 points from a June survey.

Yet on Oct. 18, brokerage Morgan Stanley contradicted much of the rest of Wall Street with a recommendation to "scale back" emerging-market stocks. Morgan Stanley's chief Asia and emerging-market strategist, Jonathan Garner, told investors to reduce their holdings "gradually, rather than precipitately" from an overweight exposure of 6 percent more than usual to 4 percent.

The rapid rebound in the benchmark MSCI index since the May 2010 low was one reason cited for Morgan Stanley's downgrade of emerging-market stocks.

By contrast, from the third to fourth quarter of 2010, Barclays Wealth raised its recommended emerging-market stock portion from 8 percent to 9.5 percent. In its fourth quarter Global Asset Allocation report issued Oct. 1, Bank of America Merrill Lynch gives developing-market stocks a favorable "overweight" rating, at a recommended 11 percent portfolio weighting.

"We don't actually think emerging markets look cheap," says Barclays Wealth investment strategist Brian Nick. There are other reasons, however, to invest outside the developed world—especially to gain exposure to currencies that have a good chance of rising, he says. "It's important, we think, to have that emerging-market currency exposure, especially because the U.S. seems to be doing everything it can to weaken the dollar."

India's currency, the rupee, has risen 5 percent so far this year against the U.S. dollar, while the Brazilian real has increased 2.25 percent and the Chinese renminbi has gained 2.5 percent.

Standard & Poor's equity market strategist Alec Young says flows of investor assets into emerging markets accelerated when, on Oct. 15, Federal Reserve Chairman Ben S. Bernanke said additional monetary stimulus via the central bank's purchase of U.S. Treasury issues—known as quantitative easing—may be needed to revive the U.S. economy. Quantitative easing in developed countries is "pushing this flood of liquidity into emerging markets," says Young, who recommends that 7 percent of a total portfolio go into emerging-market equities.

Data indicate that most U.S. investors still send a relatively small portion of their portfolios to emerging markets. According to the International Monetary Fund, emerging-market stocks have grown as a portion of total U.S. holdings from 1.63 percent in 2004 to 2.41 percent in 2009. That increase, however, lagged the growth during that time in emerging-market stocks' proportion of total world market capitalization, from 8.7 percent to 15.9 percent.

"Americans tend to be underweight emerging [market stocks] relative to where they should be," Young says.


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Africa: Coke's Last Frontier

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Marco DiLauro

By Duane Stanford


Piles of trash are burning outside the Mamakamau Shop in Uthiru, a suburb of Nairobi, Kenya. Sewage trickles by in an open trench. Across the street, a worker at a bar gets ready for the lunch rush by scraping the hair off a couple of roasted goat heads. It's about 70 degrees, the sun is beating down, it smells like decay, and it's time for Coke to move some product. Annual per capita consumption of Coca-Cola (KO) in Kenya is 39 servings. In more developed countries like Mexico, which consumes more Coca-Cola than any other country, it runs 665 servings per year. One does not need an MBA to see the possibilities.


Two, in fact, have just walked in. The pair wear short sleeves and jeans. They reach into a refrigerated cooler, grab two Cokes in glass bottles, and pull up two overturned red crates for chairs. Mamakamau Kingori, proprietor, 39, bustles up in a patchwork-quilt apron to take their money. The 500-milliliter sodas cost 30 Kenyan shillings (37 cents) each. As is often the case in Africa, the customers enjoy the drink on the premises, the deposit on the bottles being too dear.


Such a transaction happens about 72 times a day at Mamakamau's, and that has earned her the status of a "Gold" vendor, the highest level awarded by the local bottler. Kingori's sundry store—known locally as a "duka"—also sells plastic buckets and mattresses, and is no larger than a small bedroom. Her Gold status brings benefits, like an introduction to Coke's globally standardized selling techniques. She's urged by Coke to promote combo meals to boost profits, and so red menu signs supplied by the beverage company suggest a 300-milliliter Coke and a ndazi, which is a kind of greasy donut, for 25 Kenyan shillings. Coke also paid for the red refrigerated drink cooler at the entrance to the shop, which is protected by a blue cage. She's told to keep it full to draw attention, and to stock it according to a diagram inside: Coca-Cola always at the top, Fanta in the middle, large bottles on the bottom. At stores down Naivasha Road, and throughout the continent and the rest of the world, Coke fridges are stocked in similar fashion.


Chasing shillings in Nairobi is the sign of both a healthy company expanding its borders and an empire so mature that it must, for its last great push, reach into many of the most war-torn and impoverished countries on earth. Chief Executive Officer Muhtar Kent may not be weeping, like Alexander the Great, at the prospect of having no worlds left to conquer, but with Coke sales stagnant or plodding in most of its developed markets—North Americans bought $2.6 billion worth of Coke in 1989 and just $2.9 billion 20 years later—Coca-Cola will rely on some of the poorest nations to generate the 7 to 9 percent earnings growth it has promised investors. That means, from the dukas of Nairobi to the "tuck shops" of Johannesburg, Africa's mom-and-pop stores are a major front in Coke's growth plan, not only for the flagship soda but also for the company's huge stable of waters, juices, and other soft drinks.


Per-capita consumption of Coke is also low in India and China, relative to the U.S., Europe, and Latin America, but those two continents present less of an opportunity for the company than Africa. China's market, famously difficult for outsiders to navigate, is already crowded with competitors like Wahaha, whose founder Zong Qinghou is China's richest man. India drinks Coke, but loves Pepsi, too. In New Delhi, Pepsi (PEP) is so popular that the name is Hindi shorthand for soda of all kinds, even Coke. Coke will continue to compete in those countries, of course, but Africa, where Coke is the dominant brand, and where the middle class is just emerging, may offer a potentially greater payoff.

Early Humans More Advanced Than Thought

THURSDAY, Oct. 28 (HealthDay News) Early humans were using a highly skilled stone tool sharpening method 75,000 years ago in Africa, more than 50,000 years earlier than previously believed, a new study indicates.


This adds more evidence that modern behavior developed over time during the Middle Stone Age rather than after our ancestors migrated from Africa to Europe, as some scientists have thought.


Researchers from the University of Colorado at Boulder discovered that the delicate technique -- called "pressure flaking" -- was used by anatomically modern humans at Blombos Cave in South Africa during the Middle Stone Age. Previously, the earliest evidence of pressure flaking was from 20,000 years ago in France and Spain.


"This finding is important because it shows that modern humans in South Africa had a sophisticated repertoire of tool-making techniques at a very early time," study co-author Paola Villa, a curator at the University of Colorado Museum of Natural History, said in a university news release.


"This innovation is a clear example of a tendency to develop new functional ideas and techniques widely viewed as symptomatic of advanced, or modern behavior," she added.


Pressure flaking "takes place when implements previously shaped by hard stone hammer strokes followed by softer strikes with wood or bone hammers are carefully trimmed on edges by directly pressing the point of a tool made of bone on the stone artifact," according to background material in the study. Many stones -- with the exception of jasper, obsidian and high-quality flint -- also had to be heated before pressure flaking, researchers noted.


This technique enables better control of the sharpness, thickness and overall shape of two-sided items such as spearheads and stone knives, Villa explained.


The study appears in the Oct. 29 issue of Science.


More information


The Australian Museum has more about tools and human evolution.

NASA: Lost in Space

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Robert Cabana, director of the Kennedy Space Center, in front of the Shuttle Discovery as it awaits one final flight Stefan Ruiz

By Paul M. Barrett


It's 9 a.m., and 100 employees of the Kennedy Space Center are lining up for the chance to do some freelance work. Director Michael Bay will use the famed NASA facility—origin of the Apollo moon shots and home of the flare-winged Space Shuttle—as a backdrop for Transformers 3, the finale of his alien robot war trilogy, a Hollywood tip-of-the-hat to a place that once launched the future. Bay needs extras—and Kennedy has no shortage.


The facility's main mission, launching Space Shuttles, is about to end. Eight thousand engineers, technicians, and other employees are losing their jobs. Nearby towns that were built around NASA's programs—Cape Canaveral, Cocoa Beach, Titusville—are already in a defensive crouch, like wobbly boxers waiting for a knockout punch.


NASA management is holding "morale events" to elevate spirits. A few days before the casting call, agency officials eased security rules to allow employees' families to witness what is expected to be the final "rollout" of the orbiter Discovery. In a majestic evening ceremony, the Shuttle was transported from the 52-story Vehicle Assembly Building to the launchpad. Bathed in xenon spotlights, the white spaceship, attached to its twin solid rocket boosters and orange external fuel tank, crept 3.4 miles on the back of an enormous tractor called the Crawler. An armed helicopter and a nearly full moon hovered overhead. Husbands and wives and children stood in a roped-off parking lot next to minivans, clapping and whistling. Some wept.


In February, the Obama Administration abruptly canceled an over-budget program called Constellation that was supposed to take Americans back to the moon for the first time since 1972—and then on to Mars. For 30 years, NASA has flown the Shuttle, built and maintained the International Space Station, and overseen unmanned scientific probes. But no one seems certain where Americans should go next in space. Implicitly acknowledging NASA's lack of direction, the White House has instructed the agency to take a deep breath, marshal resources, and chart a new course. Routine trips to what is known as low earth orbit—the Space Shuttle's traditional responsibility—are supposed to be outsourced to private industry. Trying to protect jobs and existing contracts, Congress has slowed the Obama reform initiative without entirely stopping it. That leaves NASA trapped in what James E. Ball, an agency program manager in Florida, calls "a period of sustained ambiguity." This much is clear: The Shuttle will fly for the last time next year, and NASA has no new manned government rockets ready to go anytime soon. For five years, or maybe more, any American astronaut heading to the heavens will have to get there by renting a seat in a Russian Soyuz capsule or one of the several corporate-owned spacecraft now in development.


Rather than use the end of the three-decade Shuttle program to streamline NASA and sharply articulate new goals for space exploration in a way that would command public attention, much of the political leadership in Washington appears to be ignoring the issue. Communities along Florida's Space Coast, built on the optimism and industry of the space program, are in economic peril. The area's 12 percent unemployment rate—2½ points higher than the national average—is expected to rise to 15 percent over the next year, mostly as a result of the space industry contraction. Meanwhile, as America dithers, Russia, China, India, and other countries are expanding their shares of the space market.


Travis T. Thompson sits in an air-conditioned conference room talking about the end of the Shuttle program. A compact man with a handlebar moustache, he heads the orbiter closeout crew; he's the guy who shakes hands with each astronaut just before they lift off. "You come back and see me now," he tells them. Thompson, 52, speaks of his work with quiet pride. "What I do," he says, "is put astronauts in spaceships and close the hatch."


After three final flights—one scheduled for Nov. 1, two in 2011—the trio of tile-skinned orbiters will be cleaned, stripped of classified gear, and sent to museums. Thompson's job will end. The customized 747s that piggyback Shuttles to Florida after California landings will be retrofitted for less exotic cargo. The mighty Crawler, which ferried Shuttles to the launchpad, will be reduced to hauling more terrestrial freight around the Space Center.