Best Investment

(02-22) 04:00 PST Los Angeles —

More than a third of the 143 million pounds of California beef recalled last week went to school lunch programs, with at least 20 million pounds consumed, officials with the U.S. Department of Agriculture said Thursday.

About 50 million pounds of the meat went to schools, said Eric Steiner, deputy administrator of the USDA’s Food and Nutrition Service’s special nutrition programs.

Of that amount, about 20 million pounds have been eaten, 15 million pounds are on hold at storage facilities and 15 million pounds are still being traced, he said.

Officials said, however, that they still weren’t able to provide the names of all the places the meat wound up.

“Sitting here today, I cannot tell you how many locations the product has gone to,” said Dr. Kenneth Peterson of the USDA’s Food Safety and Inspection Service.

“Our focus is identifying the locations and making sure the product is under control,” he said.

The USDA shut down Westland/Hallmark Meat Co. of Chino (San Bernardino County) and issued the nation’s largest beef recall after the Humane Society of the United States released undercover video of workers kicking and shoving sick and crippled cows and forcing them to stand with electric prods, forklifts and water hoses.

The plant produces about a fifth of all the meat in the federal school lunch programs, said Bill Sessions, associate deputy administrator for livestock and seed programs with USDA’s agriculture marketing service.

One of the workers accused of abusing the debilitated cattle in the video, Luis Sanchez, turned himself in to Chino police on Wednesday, San Bernardino County prosecutors said Thursday.

Sanchez pleaded not guilty Thursday in San Bernardino County Superior Court to three misdemeanors involving illegal movement of sick or injured cattle. He was scheduled for a Feb. 28 pretrial hearing and remained in custody in lieu of $15,000 bail, Deputy District Attorney Debbie Ploghaus said.

Another worker, Daniel Ugarte Navarro, 49, was taken into custody Saturday and released Sunday on $7,500 bail. He has pleaded not guilty to five felony counts of animal abuse in addition to three misdemeanors.

BOSTON: At age 77, Edward “Ned” Johnson 3rd cannot keep this pace up forever. But it sometimes seems the chief of Fidelity Investments hopes to.

Johnsons tenure running the largest U.S. mutual fund company has spanned three decades - the only other change of leadership in 61 years at Fidelity was when Johnson took over from his father. But the job has become increasingly complex as Johnson tries to fend off rivals gains and streamline operations, while outsiders calls for governance reform grow louder.

“He hasnt missed a beat, and a lot of people have crumbled while hes still going 100 miles per hour,” said Eric Kobren, a former Fidelity employee who edits the independent money advice newsletter Fidelity Insight. He suspects Johnson “isnt going anywhere soon.”

The notoriously insular company is not publicly offering a timeline for leadership change, or disclosing details of a succession plan it says it has in place, even amid some suggestions that the uncertainty could be hurting Fidelitys ability to compete.

The heir apparent - Johnsons 46-year-old daughter, Abigail Johnson - has not been confirmed as such, and some observers question whether she even wants the job. And a flurry of management and organizational changes this year eliminated two other successor candidates from contention.

Outsiders still regard Abigail Johnson as an odds-on favorite for the top job, by virtue not only of her bloodline, but the diversity of management positions she has held overseeing Fidelitys increasingly far-flung financial services.

But her father is still firmly in charge - and by all accounts, apparently healthy.

“Nothing has told me that hes anxious to pass the baton very quickly, unless something were to develop with his health, or some family issue,” said Patrick McGovern, a friend who occasionally dines with Johnson and is founder and chairman of IDG Group, a Boston-based technology research and publishing firm.

Fidelity rarely makes executives available for interviews, and declined requests from The Associated Press. A recent statement issued by Ned Johnson on succession planning described a continuing process to “pass the corporation on in good operating order to the next generation of executives at the appropriate time.”

Whoever eventually succeeds Johnson, big changes are expected at the Boston-based company that is a huge force on Wall Street, as the largest provider of Americans workplace retirement savings plans and a manager of nearly $1.6 trillion in assets.

Observers say Johnsons successor will not have as much power as he has wielded filling the chairman and chief executive roles since 1977 - posts that could be split between two people when his replacement is named. And the private firm will face increasing pressure to operate more like a publicly held company, with greater attention to open governance, cost-cutting and short-term financial results.

“Whoever follows Ned Johnson cant run it the way he has - the old model doesnt work anymore,” said Bruce Raynor, co-chairman of the Council of Institutional Investors, representing public, labor, and corporate pension funds, and general president of Unite Here, a union of hospitality and textile workers.

Fidelity has recently diversified from its core mutual fund business into areas like individual retirement planning and employee benefit management, after seeing only middling returns in recent years from key mutual funds that fueled rapid growth in the late 1980s and early 90s.

Today, 46,400 Fidelity employees provide financial services to 23 million individuals.

Meanwhile, Vanguard Group and Capital Groups American Funds have recently enjoyed greater success attracting investor money amid rising popularity of low-cost index and exchange-traded funds.

Those investments do not play off Fidelitys strength as an active manager of funds that capitalize on the hottest stocks from day to day.

At Fidelity, Johnson family members hold 49 percent of Fidelitys voting stock - key managers control the rest - and the companys board consists solely of current or former company executives and Johnson family members.

The structure has come under criticism not only from activists like Raynor, but from Moodys Investors Service. A November report on Fidelitys creditworthiness questioned whether Ned Johnson and his family wield too much power, and said Johnson and other managers have not adequately defended the companys once-dominant position in mutual funds.

Moodys also said unresolved questions about leadership succession and recent management changes had created uncertainty that could hurt efforts to draw top talent to Fidelity.

Among its competitors, American Funds manages just 30 large funds compared with Fidelitys assortment of 431, and avoids mainstream media advertising in favor of brokers recommendations to clients about fund performance. Like Fidelity, American Funds is privately owned by employees, but without a dominant family like the Johnsons. Teams of “portfolio counselors” manage individual funds, adding more counselors as funds grow in size. In contrast, Fidelity typically closes funds to new investors when they get too big. Fidelity traditionally gives an individual manager broad oversight to run a fund, although it recently launched new team-managed funds.

As the writers strike keeps the television networks scrambling to fill their schedules, the producers of reality shows are gladly stepping in to fill the vacuum.

And with the propensity of those producers to incorporate the products of sponsors into the programs, dont be surprised if the vacuum bears a brand name like Hoover or Dyson.

It is typically easier to weave a product into an episode of a reality show like “American Idol” or “Survivor” than into a scripted series like “Greys Anatomy” or “Two and a Half Men.”

For one thing, the contestants in reality shows are usually more willing to pitch products than the actors in scripted programs. Actors prefer to worry about their art - and their long-term value as endorsers of a certain soda if viewers have already watched them cheerfully drinking a different brand.

Also, viewers seem more tolerant when products turn up in settings that are deemed realistic rather than fictitious.

A result is that the networks are expanding their reality plans, particularly as the ratings for some strike fare like “American Gladiators” are surpassing the viewership for the scripted shows they replaced.

NBC, which has embraced reality perhaps more ardently than its competitors, is even planning a prime-time reality special for May 11 that is being developed by and for an advertiser, Teleflora. The show - which also involves the NBC morning show “Today,” Redbook magazine and the Reveille production company - will center on a search for “Americas Favorite Mom.”

Needless to say, the winner can expect to be festooned with flowers, and a rose is to be named in her honor.

“Were looking to be the best partners for our advertisers,” said Ben Silverman, co-chairman at NBC Entertainment, part of NBC Universal, a division of General Electric. And one way to do that, he said, is “building programming assets in partnership with our advertisers.”

The trend of reality programs becoming showcases for brands is even having an impact on series in which advertisers are not paying to place products.

For instance, the Clearly Canadian line of beverages is featured prominently in a reality series, “Bobby G: Adventure Capitalist,” which will make its debut Thursday on the Mojo HD network as part of a block of three business shows called “Mojo Money Night.”

The series follows the adventures - and misadventures - of Bobby Genovese, an entrepreneur in the field of so-called small-cap or penny stocks; he owns companies including the BG Capital Group and BG Capital Management.

A good deal of the plot of the eight weekly episodes of “Bobby G: Adventure Capitalist” is devoted to his efforts to revive Clearly Canadian through steps like hiring as an endorser a popular Canadian-born athlete, Steve Nash of the Phoenix Suns basketball team.

“I love brand-name companies, especially ones that have fallen on hard times,” Genovese said in a telephone interview.

Even so, he added, “I had no idea the beverage business is as tough as it is.”

Mojo HD is part of In Demand Networks, which is owned by a consortium that includes Comcast and Cox Communications. The channel is aimed at an affluent audience, primarily male and aged 18 to 49.

Although brands are prevalent in “Bobby G: Adventure Capitalist,” the viewers are sophisticated enough to distinguish between programming and infomercials, said Nick Davis, executive producer of the series for Nick Davis Productions.

“We were encouraged to tell the story, warts and all,” Davis said. “If Clearly Canadian had imploded, wed have covered it.”

The NBC special, “Teleflora Presents Americas Favorite Mom,” will be a kinder, gentler show, seeking entries from viewers in categories like single mothers, working mothers and “unconventional” mothers. A Web site, americasfavoritemom.com, has been set up to accept nominations; it can also be reached through teleflora.com.

The increasing interest among advertisers in branded entertainment is easily explained, said Lynda Resnick, chairwoman at Teleflora.

“People are watching television; theyre just not watching commercials,” she said. “That is the distinction.”

But as a sponsor of branded entertainment, “you have to be integrated into the content, not added on,” Resnick said, because no one wants to watch “a talking head at the end of a show.”

“And I dont want to bore people,” she added, so the show has to be entertaining enough to avoid playing like a program-length commercial.

The producer of the special, Reveille, is also creating reality series for NBC including “American Gladiators” and “The Biggest Loser.” Both have branded-entertainment deals with marketers like Subway restaurants, 24 Hour Fitness and Toyota.

The global scramble to lock up critical energy and industrial commodity assets is fast, furious, and unlikely to abate anytime soon. That reality is behind the outcry from Japanese, Korean, Chinese, and European steelmakers over the proposed $138 billion merger of Australia’s BHP Billiton ( ) and Anglo-Australian mining giant Rio Tinto ( ), which together would control nearly one-third of global iron ore supplies.

Iron isn’t the only hot commodity these days. Aluminum, zinc, copper– and, of course, oil–are all much in demand, particularly from the rapidly industrializing economies of China and India. The competition for resources could color the global inflation outlook and industrial merger strategies. There is already consternation in Washington over China’s investment strategy in Iran and its dealings with autocratic regimes in Africa, for instance.

Consider the rapacious commodity needs of China. This hungry dragon will consume about 35% of the world’s iron ore output, 30% of its aluminum, 25% of its zinc, and 23% of copper supplies by 2010, according to estimates by Deutsche Bank ( ). And India’s iron ore demand is expected to double to 150 million tons a year by the end of the decade. “China and India have a very strong appetite for commodities,” says Deutsche Bank analyst Amanda Lee. “They need to secure a future supply and are investing in natural resources all over the world.”

Flush with cash, Chinese state-linked companies have been aggressively shopping for energy assets in Central Asia and Africa. CNOOC (China National Overseas Oil Co. ( )) paid $2.7 billion for a 45% stake in a Nigerian oil field last year. China National Petroleum is already the top foreign investor in Sudan, thanks to its energy investments, and paid $4.2 billion for PetroKazakhstan in 2005.

Now, Indian companies are also getting acquisitive. Tata Power in April announced it is paying $1.1 billion for stakes in two Indonesian coal mines. India’s Jindal Steel & Power is set to become Bolivia’s largest foreign investor after agreeing in July to sink $2.1 billion into an iron ore mine and steel mill project. Ratan Jindal, CEO of affiliate Jindal Stainless, says he hopes to get his hands on manganese and chrome ore operations in Turkey–that is, unless some Chinese rival gets there first. “We bump into Chinese companies everywhere,” he says.
READER REVIEWS

MADRID: A deal by the Spanish real estate company Colonial to sell its rental business to Investment Corporation of Dubai sent its shares sharply higher Wednesday, but conditions remained before the sale could be completed.

ICD and Colonials two main shareholders issued a statement late Tuesday laying out the framework of a deal to split the company, restructure its mountainous debt, sell ICD the rental unit for about \1.9 billion, or $2.9 billion, and relist the rest.

It first needs to reach a binding deal with Colonials creditor banks, led by Goldman Sachs, Eurohypo, Calyon and Royal Bank of Scotland.

Before the closing of the deal, which may not be until October, even the price of \1.19 a share for the rental unit is up for renegotiation, depending on how much debt is spun off with the more cyclical land and development assets.

“The information theyve given is as untransparent as the rest of the deal has been,” Banesto brokers said in a note to clients. “Far from having a firm agreement we still have thousands of conditions before the deal can close.”

He added: “In the best of worlds, the minimum time frame will be five months plus what it takes to launch a full takeover bid.” Banesto recommended investors sell the stock even though it could have touched its lowest point.

On the market, investors brushed off all the unknowns about the bid and sent the stock up 15.3 percent, almost erasing a steep fall Monday when the market doubted any deal would be reached. Shares closed at \1.13, up 15 cents. The shares were suspended on Tuesday.

Stock market documents on Wednesday showed Colonials former chairman, Luis Portillo, had reduced his stake in the company to 34.2 percent from 39.7 percent.

Antonio Lopez, head of analysis at Fortis Bank, valued Colonials land and development unit at 35 cents a share and said the stock should rise toward \1.48.

ICD, an $82 billion fund that is the investment arm of the Dubai government, has been in talks with Colonials main shareholders since early February.

An initial proposal to buy the whole company with cash and bonds lapsed this month without agreement and ICD switched its focus to the rental business, which has shopping centers and offices in Barcelona, Paris and London.

Last year, the rental unit had lease revenue of \313.8 million - 54 percent from its 90 percent stake in Sociйtй Fonciиre Lyonnaise - with pretax earnings of \288.9 million. Colonial valued its assets at \9.2 billion.

In its end-of-year results, Colonial valued its land and development assets at \2.5 billion, but in the deal with ICD they are valued at \2.1 billion, with \962 million of debt.

The whole company has \9 billion of debt, including a \7.2 billion syndicated loan.