Five Best Thursday Columns

Jonathan Cohn in The New Republic on Starbucks In hopes of inspiring latte-sipping lawmakers to reach a deal on the fiscal cliff, yesterday Starbucks started writing "come together" on every cup it sells in the DC area. Cute effort, right? More like misguided, argues Jonathan Cohn. He thinks the issue isn't about two warring parties reconciling—it's about convincing the Republicans to quit hijacking the negotiation process. "One party, the Democrats, is already acting responsibly. And one party, the Republicans, is not," Cohn writes. "Washington doesn't need two parties that can 'come together.' It needs one party to 'get it together.' Maybe [Starbucks CEO Howard] Schultz should put that on a coffee cup."

RELATED: When Zuck Met Medvedev

Jacob Sullum in Reason on mental health With so many voices crowding the debate around gun violence, which issue should we be focusing on to prevent another horrible mass shooting like the one at Sandy Hook Elementary—gun control or mental health? Jacob Sullum remains skeptical about the latter. "Even if the mental-health criteria for rejecting gun buyers (or for commitment) were expanded, there is little reason to think [mental health professionals] could distinguish between future Lanzas and people who pose no threat," Sullum writes, citing data that says around half of Americans will become mentally ill at one point in their lives.

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James Bessel in The New York Times on Hagel's pro-Israel critics One of the many camps that doesn't want to see Chuck Hagel become the Secretary of Defense includes the pro-Israel lobby. Groups like the Emergency Committee for Israel are already swinging at Hagel for remarks he made about the Jewish state years ago. "Support for the Jewish state remains strong among both parties on Capitol Hill and across the American electorate, and it won't disappear anytime soon," James Bessel writes. "But that support will wither if Aipac and other mainstream Jewish leaders don't forcefully reject the zealots in their midst."

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Leonid Bershidsky in Bloomberg View on Russia This time last year, Russia's dissidents seemed primed to remake the country, taming its corruption through massive protests. But 2012 hasn't seen those hopes borne out, argues Leonid Bershidsky. Instead, Vladimir Putin has squashed his opposition and launched "a new cold war" with the U.S. "By pushing back his opponents instead, Putin showed that, at 60, he still knows what cards to play with most Russians: traditional values, Orthodox Christianity, anti-Americanism," Bershidsky writes. "As a man deeply rooted in the Soviet past, he has fallen back on the old regime's tested recipes for suppressing dissent, and he has succeeded in annihilating the threat of peaceful revolution that seemed so real a year ago."

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William H. Janeway in the Los Angeles Times on venture capital When it comes to juggernauts like Facebook and Spotify, Silicon Valley venture capitalists might not have built that, but they would say such innovations wouldn't have gotten built without their money. But one venture capitalist—William H. Janeway—wants to give credit to who really built the platform for all this development: government. "My colleagues and I and the entrepreneurs whom we backed were all dancing on a platform constructed by the federal government," Janeway writes. "Government cannot play the role either of entrepreneur or venture capitalist in creating the low-carbon economy. But entrepreneurs and venture capitalists cannot build this new economy by themselves."

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Why Apple's First American-Made Mac Minis Wouldn't Create Jobs

If the latest rumors are true, Apple's made-in-America shift will be an extremely experimental, low-cost operation — and if you look at the supply chain, that may point to more of a symbolic gesture than a genuine engine of job creation. The whispers, which have increasingly better sourcing, now say the tech giant will move its Mac Mini production line from China's Foxconn to the the U.S., possibly near California or Tennessee, per the rumor site DigiTimes. It's still a rumor, of course, but it would make sense for Apple CEO Tim Cook to choose the cheapest and simplest of Macs in fulfilling what he promised earlier this month would be a move "to bring some production to the U.S. on the Mac." It's not going to be a massive Apple factory on these shores, not nearly. Here's why the market and the product specs will dictate less man power:
RELATED: Apple Still Isn't Doing a Very Good Job Creating U.S. Jobs
Low-demand equals low-supply equals a smaller operation. Apple does not break down individual Mac Mini sales in its quarterly reports, but DigiTimes guesses 2012 sales totaled somewhere around 1.4 million units. In one quarter last year, the company sold 1.48 desktop computers, which includes the Mac Mini, iMac, and Mac Pro. Say those sales divided equally; then over a year Apple would sell just under 2 million Mac Minis. Even with that higher estimate, it's a teeny-tiny number compared to the 3 million iPads (Minis and normals) it sold over one weekend in November.
RELATED: Apple Will Be Made in America, Finally
With demand relatively low, Apple won't have to run a huge operation in the U.S., which means fewer jobs necessary at any new or converted factory.
RELATED: Obama's Awkward Steve Jobs Reference at the State of the Union
Tiny product equals fewer parts equals a smaller operation. You can see from the photo above just how little the littlest, lowest-end Mac computer really is. The iFixit teardown for the latest Mac Mini takes 14 steps compared to the iMac, which takes 25. Meaning, the reverse — putting it back together — takes around that amount of work (plus, you know, factory speed), which may point to a much, much lower percentage of workers per product to get the new line of Minis built here.
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The smaller box also has fewer parts, some of which will come from American suppliers. (To get the "Made in America" stamp requires a certain amount of parts and labor built in and working on U.S. soil.)
RELATED: How iPhone Overcame Hardware Concerns to Massive Sales
Perhaps Apple's making a smart choice by starting small, as TechCrunch's Darrell Etherington argues. All of this smallness means lower costs for Apple. It also means fewer possibilities for something to go wrong in the supply chain. Or you could take the cynical road, and see Apple's choice not as a test model for the future, but as a way for the company to say it makes something here. And then go back to China.

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Survey finds increase in e-reading, drop in paper

The tastes of the reading public are turning digital.
A Pew Internet Research Center survey released Thursday found that the percentage of Americans aged 16 and older who read an e-book grew from 16 percent in 2011 to 23 percent this year. Readers of traditional books dropped from 72 percent to 67 percent. Overall, those reading books of any kind dropped from 78 percent to 75 percent, a shift Pew called statistically insignificant.
Those owning an e-book device or tablet jumped from 18 percent to 33 percent, with much of that increase coming from last year's holiday season, when millions received Kindles, Nooks and other e-readers as gifts.
Awareness that libraries offer digital texts grew from 24 percent to 31 percent.
The telephone survey of 2,252 people aged 16 and older was conducted from Oct. 15 to Nov. 10. It has a sampling error margin of plus or minus 2.3 percentage points.

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New purported BlackBerry Z10 specs emerge: 1.5GHz processor, 2GB RAM, 8MP camera

Another week, another batch of purported leaks for Research In Motion’s (RIMM) first BlackBerry 10-powered Z10. BBin claims to have most of the Z10′s final specs confirmed and it is shaping up to be a powerful device. Rumored specs for the Z10 include a TI OMAP 4470 1.5GHz dual-core processor (Qualcomm Snapdragon MSM8960 for the U.S. and Canada), a 4.2-inch display (1,280 x 768 resolution), quad-band LTE, 2GB of RAM, 16GB or 32GB of internal storage, an 8-megapixel rear camera with LED flash, a 2-megapixel front camera, a microSD card slot, and an 1,800 mAh removable battery. On the connectivity side, the Z10 is also rumored to have NFC, Bluetooth 4.0, dual-band 802.11 a/g/n Wi-Fi, A-GPS, a Micro USB port and a Micro HDMI-out port. BlackBerry 10′s January 30th unveiling in New York City can’t come soon enough.

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Instagram gains users in December despite recent uproar as Zynga gets pecked to death by rivals

Zynga (ZNGA), the Facebook (FB) app behemoth, still reigns supreme on its most important platform. But the erosion of its dominant position continues as smaller rivals keep chipping away at its market share. On December 26, Zynga-owned Facebook applications had 267 million Monthly Active Users, down 20 million in two weeks. Far behind it followed Microsoft (MSFT) with 70 million MAU, King.com with 65 million MAU and Instagram with 43 million MAU.
[More from BGR: Samsung looks to address its biggest weakness in 2013]
But whereas Zynga lost nearly 7% of its Monthly Active Users in the two-week run-up to Christmas, Microsoft managed to inch up by 700,000 users, King.com by 600,000 users and Instagram by 2.1 million users.
[More from BGR: New purported BlackBerry Z10 specs emerge: 1.5GHz processor, 2GB RAM, 8MP camera]
Of course, the Facebook crackdown on aggressive customer acquisition techniques has limited the growth of all third-party app developers. But the most important of Zynga’s smaller rivals have been able to avoid the kind of MAU erosion that is now plaguing the Facebook app champion.
What really pops out from Christmas Facebook app trends is the way Instagram has been able to ride a wave of negative publicity to perky 5% monthly user growth over the past two weeks.
The tsunami of wrath and sarcasm unleashed on Twitter has not reversed Instagram’s momentum. It might even be possible that floating an outrageous-sounding privacy policy and then quickly reversing it could have simply increased Instagram’s brand recognition and piqued consumer interest among those who are not deeply involved in app trends.
This certainly adds some piquancy to the breathless commentary about Instagram’s “fatal blunder” and “possibly irreversible damage.

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TEXT-S&P summary: Bharti Airtel Ltd.

We assess Bharti's financial risk profile as "significant" because of the
company's high debt. For the six months ended Sept. 30, 2012, Bharti's
debt-to-capital ratio remained high at about 61.6%, and its ratios of
annualized funds from operations (FFO) to total debt and debt to EBITDA were
at 23% and 3.5x, respectively. The company's financial ratios were marginally
weaker than in the previous year. This was because of: (1) consolidation of
US$450 million of debt at Qualcomm India, the India broadband wireless
business of Qualcomm Inc. (not rated), which is 49% owned by Bharti; (2) a
depreciation of the Indian rupee (INR); and (3) weaker-than-expected operating
performance. However, increasing cash flows from revenue growth and an equity
offering at Bharti's majority-owned subsidiary Bharti Infratel Ltd. have
mostly offset the effects of the above factors.
We expect Bharti's financial ratios to be susceptible to regulatory
developments in India, especially related to changes in the costs for past and
future spectrum, and the company's response to such changes. The impact of
such changes on Bharti's cash flows is hard to determine because cash flows
are linked to prices derived from the spectrum auction and regulation.
However, our projected positive free operating cash flow could more than
offset such impact, especially with the lowering of the auction price in key
regions. This, combined with growing revenue, could help offset the limited
headroom in Bharti's financial ratios at the current rating level. We expect
Bharti's FFO-to-debt ratio to stay about 25% and its debt-to-EBITDA ratio at
close to 3x in the fiscal year ending March 31, 2014.
Bharti's "fair" business risk profile reflects the company's good market
position as well as above average regulatory and country and macroeconomic
risks in its key markets, particularly India. While regulatory uncertainty in
India has somewhat reduced with recent regulatory changes, policy is still
evolving. The uncertainty is regarding a one-time spectrum charge for spectrum
above 4.4 megahertz (MHz) from July 2008, spectrum re-farming in the 900MHz
frequency band, and license renewal over the next two to three years. Also, we
believe that the company's established position in India makes it less
vulnerable to regulatory uncertainty than some newer entrants.
Bharti's operating performance has been weaker than our expectations in the
past six months. But we believe the company's India business will gradually
improve over the next two to three years as competition moderates and pricing
pressure declines. This is on account of: (1) high penetration; (2) evolving
regulation, which has reduced the number of players; and (3) telecom operators
focus on improving profitability, especially with high spectrum costs, rather
than garnering market share. Bharti's EBITDA margins fell to 31% in the six
months ended Sept. 30, 2012, from 35% in fiscal 2012. The weaker performance
is despite revenue growing by 14%--led by the Africa business--during the same
period. Ongoing intense competition in India and slower-than-expected
improvement in the Africa business were key contributors to the decline in
EBITDA margins.
Bharti has a good market position as India's largest wireless operator. As of
June 30, 2012, the company has a subscriber market share of about 20%,
population coverage of more than 86%, and revenue market share of about 30%.
We expect Bharti to benefit from its strong market position in most African
markets. The company has 193.2 million subscribers in South Asia and 58.7
million in Africa as of Sept. 30, 2012. Bharti also benefits from good
diversity, with operations across South Asia and Africa in diverse business
lines.
Bharti Group owns more than 35% of Bharti, while Singapore Telecommunications
Ltd. (SingTel; A+/Stable/A-1; axAAA/axA-1+) owns 32.25%.
Liquidity
We assess Bharti's liquidity as "adequate," as defined in our criteria. We
expect the company's sources of liquidity to exceed its uses by more than 1.2x
over the next 12 months. Our liquidity assessment is based on the following
factors and assumptions:
-- Liquidity sources include cash and short-term investments of INR35
billion and unused credit facilities of about INR55 billion as of Sept. 30,
2012.
-- Sources also include our projected FFO of about INR190 billion over
the next 12 months and proceeds from Bharti Infratel's equity issuance of
about INR30 billion.
-- Uses of liquidity include debt of about INR146 billion maturing in the
next 12 months (including short-term debt that we expect the company to roll
over).
-- Maintenance and other capital expenditure of about INR80 billion and
projected dividend of about INR4.5 billion, even in case of stress.
-- We anticipate that net liquidity sources will remain positive even if
EBITDA declines by 20%.
Bharti has adequate headroom in its covenants.
We believe Bharti has good financial flexibility because of its strategic
relationship with SingTel, its investments in tower companies, and access to
financial markets and bank lines.
Bharti's foreign currency risk exposure is high, in our view. As of March 31,
2012, two-thirds of the company's debt is in foreign currency.
Correspondingly, only one-third of Bharti's revenue is in foreign currency.
This exposes the company to currency depreciation risk. However, most of
Bharti's debt matures in the second half of the loan period. Such a maturity
profile, along with the company's access to foreign currency funds from
capital markets and bank lines, somewhat offsets the risks of refinancing
foreign currency debt maturities. Bharti is also exposed to interest rate
risk, although it currently benefits from a low interest rate environment.
Outlook
The stable outlook reflects our expectation that Bharti will maintain its good
market position in India and improve its operating performance in Africa. We
anticipate that the company's ratio of debt to EBITDA will be below 3.5x in
the next 12 months.
We could lower the rating if: (1) Bharti's business risk profile deteriorates
due to regulatory changes, competitive pressures, or an increase in country
risk, particularly in Africa; or (2) the company's financial risk profile
weakens. A material increase in debt because of an acquisition or spectrum
auction, any other regulatory change, or a depreciation of the rupee could
weaken Bharti's financial risk profile. A ratio of debt to EBITDA of 3.5x or
more on a sustainable basis could indicate such weakening.
We could raise the rating if Bharti significantly improves its operating
performance, particularly in Africa, or undertakes strategic measures, such as
raising equity, that significantly improve its financial performance. A ratio
of debt to EBITDA of less than 2.5x on a sustainable basis could indicate such
improvement.

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Decline of listed firms on London's junior market slows

A decline in the number of companies listed on London's junior stock market eased this year and around half the companies that did leave were bought up or transferred to bigger exchanges, a Deloitte report shows.
It said the number of companies listed on the London Stock Exchange's Alternative Investment Market (AIM) had fallen every year since 2007, but the fall in 2012 was just 4 percent, compared with 16 percent in 2009, its fastest year of contraction.
"During the time of the financial crisis ... the principal reasons why companies were leaving the list were negative," said Richard Thornhill, capital markets partner at Deloitte.
"Either they no longer perceived that the market offered them value ... or the economic climate forced them to de-list. The situation in 2012 has been very different, with the driving force behind companies leaving the list being transactions which have consistently realised value for shareholders."
Of the 113 companies who had left the market by the end of November, 41 were acquired, 17 were subject to reverse take-overs and three transferred to London's main market.
Those companies which were bought received an average premium of 53 percent to their closing share price on the day before the acquisition.
By the end of November, 65 companies had joined AIM, and the share prices of the 44 which raised money on admission had risen an average 26 percent since listing.
"There are good reasons to be confident about the market in 2013," said Thornhill.

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Toyota Tsusho Corp secures almost 98 percent of France's CFAO

Toyota Tsusho Corp , the Japanese conglomerate, said on Monday it had secured almost 98 percent of French distribution company CFAO .
The Japanese company said it would decide within three months whether to keep CFAO's French stock market listing.
TTC had bought a 29.8 percent stake in CFAO in July from luxury and retail group PPR . TTC later launched a tender offer for CFAO, including PPR's remaining 12.2 percent stake, at 37.50 euros a share. The deal valued CFAO at 2.3 billion euros (£1.9 billion).
At the close of the tender offer on December 17, TTC had received 97.91 percent of CFAO, it said in a statement.
"Although having acquired more than 95 percent of CFAO's voting rights shares, we will study whether to maintain CFAO's French listing," it said.
Its chief executive Jun Karube told French daily Les Echos in October that TTC wanted to keep CFAO's listing on the Paris stock exchange.
CFAO distributes vehicles and medicines in Africa and French overseas territories.

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S&P cuts Egypt rating on political strife

Standard & Poors' cut Egypt's long-term credit rating on Monday and said another cut was possible if deepening political turbulence undermines efforts to prop up the economy and public finances.
Egypt's popular uprising two years ago chased away tourists and foreign investors, helping push its budget deficit into double digits as a percentage of national output and worsening its balance of payments.
A divisive battle over a new constitution this month has also prompted the government to delay urgent austerity measures and put a crucial $4.8 billion IMF loan on hold.
S&P reduced Egypt's long-term sovereign rating to 'B-' from 'B', but left its short-term rating at 'B' for both foreign- and local-currency debt. It kept its negative outlook on the rating - suggesting another cut is the most likely next move.
"A further downgrade is possible if a significant worsening of the domestic political situation results in a sharp deterioration of economic indicators such as foreign exchange reserves or the government's deficit," S&P said.
Domestic debt was equivalent to 69.7 percent of gross domestic product as of the end of September 2012, while its foreign debt was 13.1 percent of GDP, according to the finance ministry.
Egypt reached an initial accord with the International Monetary Fund (IMF) last month for a financial support package, but later put on hold a series of austerity measures deemed necessary to secure IMF approval.
The government then asked the IMF to delay until January a meeting to approve the loan, which looks increasingly vital to prop up government finances but requires it to take unpopular measures on taxation and spending.
The measures included increases in sales tax on goods and services ranging from alcoholic beverages, cigarettes and mobile phone calls to automobile licences and quarrying permits.
President Mohamed Mursi withdrew them within hours of their being announced after criticism from his opponents and the media.

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U.S. budget uncertainty hangs over quiet stocks, FX

 European shares and oil prices edged lower on Monday with Wall Street expected to follow suit, as a deadlock in U.S. budget talks left an undercurrent of uncertainty in markets ahead of the Christmas break.
With a number of stock markets including in Germany, Italy and Switzerland closed for the Christmas holiday, the FTSEurofirst300 provisionally closed down 0.1 percent at 1,137.94 after a shortened session in British, French, Dutch and Spanish markets.
The MSCI index of global stocks was virtually unchanged at 339.97 ahead of what is expected to be another lower open on Wall Street, after the biggest drop since mid-November on Friday.
Activity in other assets was also subdued, with spot gold edging off a four-month low and Brent oil easing back under $109 a barrel.
Markets were left in limbo on Friday when President Barack Obama and U.S. lawmakers suspended talks until after Christmas on avoiding $600 billion of spending cuts and tax increases that threaten to send the economy back into recession.
Although there is no official date for talks to resume, the two sides still have a few days after Christmas to find a compromise before the January 1 deadline when the measures start to take effect.
Most political experts and economists expect a deal of some form. If they fail, the "fiscal cliff" could wipe as much as 4 percent off U.S. GDP next year, choking the global recovery before it gets going.
"The fiscal cliff is the only thing that is important for markets at the moment," said ABN Amro economist Aline Schuiling. "We were hoping the festive spirit would get everyone together and a deal would be done, but Obama has now gone to Hawaii for Christmas, so it looks like we'll have to wait."
YEN WEAKNESS
Most European bond markets were already shut for Christmas but one of the few to be open was in Britain where benchmark 10-year yields ticked higher.
Currency markets were also largely quiet. Against the backdrop of the fiscal cliff uncertainty, the dollar eased 0.2 percent versus a basket of major currencies while the euro climbed back above $1.32.
The major mover was the yen, which neared a 20-month low versus the dollar, after incoming premier Shinzo Abe renewed pressure over the weekend on the Bank of Japan to adopt a 2 percent inflation target.
The dollar was up 0.3 percent on the day at 84.45 yen. Chartists said the dollar needed to overcome 85.05 yen, its 200-week moving average, for it to make further gains.
"There has been some pretty significant yen selling all through the night and into this morning," said Peter Kinsella, currency strategist at Commerzbank.
"It is very noticeable we have not seen any retracement or dip in dollar/yen at all. The market is really saying they are convinced on yen weakness, and that is what we are going to see for the remainder of this year and in the course of next year."
STRONG FINISH
Trading on Wall Street was expected to be subdued when it opens later, also for half a day. Futures pointed to the S&P 500, the Dow Jones and Nasdaq 100 all starting down 0.3 percent.
The uncertainty over the U.S. budget is threatening to sour what has been a strong second half of the year for equity markets. The FTSEurofirst 300 is up 20 percent since June while the Euro STOXX 50 has gained almost 30 percent. Both indexes are set to post their best annual performances since the post-Lehman crisis bounce of 2009.
Investors are now showing increasing appetite for European stocks. EPFR Global data reported that flows into equity funds have increased for the last 19 weeks.
"This year has been a year of transition, and now it's time to turn the page and move on, to start picking stocks again for the long term, companies exposed to the emerging consumer in places like Asia and Africa," said David Thebault, head of quantitative sales trading, at Global Equities.
Others warn that the euro zone crisis may still have some bite left, however. Elections are due next year in Italy and Germany, while Spain's government, companies and banks need to refinance huge amounts of debt.
"Policymakers in Spain will not be looking forward to the start of the year and January will probably be quite volatile in Europe," said ABN Amro's Schuiling. "The funding in the first quarter for Spain will be the test... Its deficit is now roughly the same as Greece's."

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