Australian stockmarket sinks as miners drag, but Fairfax shares surge

AUSTRALIAN shares sank today as a pick-up in Chinese manufacturing activity failed to offset a string of disappointing US economic reports, and investors remained cautious ahead of earnings season.
http://www.theaustralian.com.au/business/markets/australian-stockmarket-sinks-as-miners-drag-butfairfax-shares-surge/story-e6frg916-1226259768741

The benchmark S&P/ASX 200 lost 0.9 per cent, or 37 points, to 4225.70. The market reacted to a negative lead from Wall Street overnight, after US consumer confidence, slowing business activity and a fall in home prices troubled investors. The US data last night let people know the recovery is not (progressing) as quickly as we thought, said Lucinda Chan, investment adviser at Macquarie Private Wealth. There is also a bit of caution with reporting season coming up and some profit-taking after a strong start to the year, she said. Data from China showed a mixed picture of manufacturing activity in the worlds secondlargest economy, as HSBCs Chinese manufacturing survey remained stuck in contraction in January, while the government version indicated the sector is now growing. Macquarie Private Wealths Ms Chan said the China readings werent too bad, but the US data overshadowed them and resulted in weaker commodity prices, which hit our market pretty badly today. Among the major miners, BHP Billiton lost 1.5 per cent after it said it would cut up to 155 workers from its nickel division due to the impact of a strong dollar. Fortescue Metals dropped 1.4 per cent and Rio Tinto lost 0.6 per cent. Shares in Energy Resources of Australia slumped 13.6 per cent after the uranium miner swung to a sharp annual loss in 2011, with the result hit by heavy rainfall and poor quality ore.

Other commodity-linked stocks fell after prices for raw materials weakened overnight. OneSteel and Alumina each shed 2 per cent. Financial firms also lost ground. Westpac fell 1.4 per cent, Macquarie Group dropped 1.9 per cent and the National Australia Bank eased back 0.8 per cent. Fairfax Media dazzled, with shares surging 10.1 per cent, after reports that iron ore billionaire Gina Rineharts stake in the company has increased to about 12 per cent. Elsewhere in the media sector, Ten Holdings edged up 0.6 per cent, while Seven West Media shed 2.9 per cent and Seven Group Holdings dropped 2.3 per cent. Property stocks were weak - Stockland Australia fell 1.2 per cent and Lend Lease lost 2.7 per cent, while building products maker James Hardie declined 2 per cent. The falls came after a Housing Industry Association survey showed new home sales in Australia tumbled 4.9 per cent in December 2011. Separately, the Australian Bureau of Statistics reported capital city house prices fell 1 per cent in the fourth-quarter of last year. Also on the economic front, manufacturing improved slightly in January, with the Australian Industry Group-PwC Australian Performance of Manufacturing Index rising 1.4 points to 51.6. "The growth was underpinned by expansion in key sub-sectors such as food and beverages and transport equipment," said Australian Industry Group chief executive Heather Ridout.

Bank fees class action widened to include St George and Bank SA

ST GEORGE and Bank SA are the latest Australian banks to be taken to court by customers angry at the fees they are charged.
http://www.theaustralian.com.au/business/financial-services/bank-fees-class-action-widened-toinclude-st-george-and-bank-sa/story-fn91wd6x-1226259359659

Legal firm Maurice Blackburn Lawyers today filed a claim against the two banks in the Federal Court to help thousands of customers claw back fees they have been charged.

The firm has previously launched similar action against National Australia Bank, ANZ, Commonwealth Bank of Australia, Westpac and Citibank. The firm is acting on behalf of thousands of Australian bank customers outraged at exception fees the banks charge for late payments on credit cards and on having insufficient money in business and personal transaction accounts. Maurice Blackburn senior associate Paul Gillett said the legal firm and bank customers taking part in the class action were in for a long fight to recoup the fees plus interest. Everyday Australians are sick of the banks taking them for granted, Mr Gillett told reporters in Sydney. And they are sick of the banks throwing their weight around and sick of the banks making massive profits while they do it. Maurice Blackburn is doing what it can to try and get some of that money back for families and small businesses around this country. More than 10,000 St George and Bank SA customers are party to the action. They are seeking to recoup $16 million in fees which the customers say they have been unfairly charged by the two banks. The latest action follows a $50 million claim the law firm launched in September 2010 on behalf of ANZ customers trying to claim back exception fees. In December 2011, action was launched against National Australia Bank, Commonwealth Bank, Westpac and Citibank. It is the biggest collective action in Australian legal history.

One year after Queensland floods, a third of local businesses still have no offsite backup: Acronis
However, Australian businesses are now more confident about backup and disaster recovery than ever before
http://www.arnnet.com.au/article/414050/one_year_after_queensland_floods_third_local_businesses _still_no_offsite_backup_acronis/

Despite Australian businesses now feeling more confident in their backup and disaster recovery plans than they did before, a recent Acronis survey has also found that one-third of local companies still have no off-site backup strategy. According to survey, titled 2012 Acronis Global Disaster Recovery (DR) Index, Australia joins the US and UK. in businesses around the world whose confidence about their ability to back up and recover data and IT systems following a disaster has grown. While the three regions reported below average confidence levels for the second consecutive year, with Australia scoring the lowest of the three, Acronis did find that Australias confidence has more than doubled in 2011 by 136 per cent. Additionally, businesses in Australia are 36 per cent more confident that their backup and DR operations will not fail, an increase Acronis Pacific General Manager, Karl Sice, attributes to Australia, just like Japan, having recently dealt with a natural disaster. The survey findings suggest that the natural disasters of 2011 have been a catalyst for positive change when it comes to most businesses testing their backup and DR operations, Sice said. However, Sice is quick to point out that several strategic-level negatives, such as executive refusing to buy-in and adopt multiple, disjointed solutions, persist as businesses come to grips with the ways to protect and secure business critical digital assets. The breakdown of the local confidence results included 22 percent of respondents being more confident that they had boardroom support, 32 per cent that they had enough resources, and 39 per cent that they had the necessary technologies. One would imagine that the flooding that Queensland experienced in early 2011 would convince many businesses of the importance of data back up and recovery, though the reality is that over a third, or 36 per cent, of Australian companies still have not implemented an off-site backup strategy, This number has remained the same as the previous year, a phenomenon Sice attributes to the lingering "it won't happen to us" mindset and the underlying negative connotations behind the concepts of backup and DR. Nearly a third, or 28 per cent, of all the Australian companies are still using more traditional method of physically backing up on-site instead of automating off-site backups, Sice said. As this traditionally form of backing up is typically done on either a tape or disk backup before it is taken off-site each day, Sice highlights that there is a chance of human error occurring, as it is usually an individual employee that is responsible for and remembering to carry out this task.

Other key findings in the report included SMBs worldwide being 14 per cent more confident overall compared to the previous year, 66 per cent of businesses checking their backup and disaster recovery plans more regularly, and system downtime found to be costing each firm on average over $US366,000 a year.

Kindle sales soar but Amazon mum on actual numbers

Amazon disappointed investors by posting a 58 per cent drop in profits, despite increased sales of its Kindle
http://www.arnnet.com.au/article/414033/kindle_sales_soar_amazon_mum_actual_numbers/ Amazon said flooding in Thailand and economic problems in Europe weighed on its financial results for the fourth quarter but it also said it was pleased with the results, which disappointed investors. Some observers were likely also disappointed that Amazon didn't disclose unit sales figures for its popular Kindle e-readers. It said only that during the last nine weeks of 2011, Kindle unit sales, including the Fire tablet, increased 177 percent compared to the same period in 2010. Some analysts believe Amazon makes very little money on the sale of Kindles, hoping to make money instead on e-book sales. That could be one reason Kindle sales didn't seem to have much impact on Amazon's profit. Its net income for the quarter dropped 58 percent to $US177 million, compared to $US416 million in the same quarter last year. But its sales disappointed too. Net sales grew 35 per cent to $US17.43 billion, below the $US18.21 billion that analysts polled by Thomson Financial had hoped for. On a conference call to discuss the results, Amazon CFO Tom Szkutak said the company was pleased with the results and made generally glowing comments about the quarter without offering many details. Amazon is pleased with "great growth" in Kindle sales, "strong growth" in digital media including books, video and music, and "tremendous growth" in Amazon Web Services, he said. However, analysts on the call sounded displeased with Amazon's continued investments back into its business, which they seemed to blame for the drop in profit. Amazon has been spending a lot on its business in recent years and it's been paying off, said Gene Munster, a tech analyst at Piper Jaffrey.

"The big surprise for investors tonight is what appears to be diminishing returns on that investment," he said, asking Szkutak to comment. Amazon's strategy of investing back in the business won't change, Szkutak said. "We're incredibly optimistic about the opportunity we have and that's why we have invested the way we have and why we're continuing to invest in the business," he said. "We're pleased with the performance in the fourth quarter and what we have going forward." One such investment has been in people, with headcount up 67 per cent in 2011 over the previous year. Most of those people are in operations and customer service, Szkutak said. The company has also been investing in capacity to support both Amazon Web Services and its retail business, he said.

Salesforce.com yields to pressure over analytics pricing

Salesforce.com's upcoming Analytics Edition features will now be included in some editions at no additional cost
http://www.arnnet.com.au/article/414039/salesforce_com_yields_pressure_over_analytics_pricing/ Salesforce.com will include some new analytics capabilities at no additional cost with the Enterprise and Unlimited editions of its CRM (customer relationship management) software, following complaints from customers who argued that the features should have been used to fill long-standing gaps in the products' core functionality, not sold separately. IDG News Service first reported the user discontent last week. Salesforce.com Chief Operating Officer George Hu announced the change in a blog post due to be posted late Tuesday. "We got it wrong, and we sincerely apologize to our customers," he wrote. While Salesforce.com initially considered the analytics capabilities to be an entirely new product, "feedback from customers clearly show they view these features as enhancements to our current functionality." The features, first announced as an Analytics edition, now will not be sold separately, Hu said in an interview. Salesforce.com planned to charge US$40 per user per month for the capabilities.

It charges $125 per user per month for the Enterprise edition of its CRM suite, and $250 for the Unlimited edition. A user affected by the turnabout expressed pleasure at the move. "It's an amazing example of a company listening to their customers and responding quickly," said Salesforce.com customer Jeremy Farber, who mounted a social media campaign against the pricing last week. Salesforce.com has made social media in businesses a central theme of its marketing and product strategies. In Farber's view, the pricing reversal is an explicit demonstration of "the power of social media." "They certainly could have just sat on [the complaints] and ignored it," Farber said. "Ten years ago I'd just be in my office [complaining] to myself." The outcry gave Salesforce.com a chance to show it can listen to its customers, and perhaps get some good publicity as well. "We've been preaching for a while now about the power of the social enterprise," Hu said. "We want to practice what we preach." That doesn't mean Salesforce.com will relent in every case, but complaints like these haven't been the norm, Hu said. "We've announced many products over the years with a separate price and had little to no push-back. This is the first time we've seen this, and that's a message from our customers." One industry analyst took a measured view of the announcement. "Analytics is the last frontier for Salesforce.com. They've got social, they've got mobile. The weakest piece of the link is analytics," said analyst Ray Wang, CEO of Constellation Research. "The good news is it's being included in the pricing. The bad news is that there are probably third-party tools that can do a better job." That said, "the bottom line is, other than exporting out to Excel, people want to use analytics in the environment they're in."

IRS helps bust 105 people in massive identity theft crackdown

http://www.arnnet.com.au/article/414008/irs_helps_bust_105_people_massive_identity_theft_cr ackdown/
The Internal Revenue Service and the Department of Justice teamed up for a coast-to-coast crackdown on identity thieves this week. The coast-to-coast law enforcement onslaught arrested 105 people in 23 states and included indictments, arrests and the execution of search warrants involving the potential theft of thousands of identities and taxpayer refunds, the IRS stated. In all, 939 criminal charges are included in the 69 indictments and information related to identity theft. MORE SECURITY NEWS: Has high-tech helped or hurt crime fighting? DOJ wants to know The IRS said auditors also conducted compliance visits to money service businesses in nine locations across the country in the past week. The approximately 150 visits occurred to help ensure these check-cashing facilities aren't facilitating refund fraud and identity theft, the IRS stated. The IRS also is taking a number of additional steps this tax season to prevent identity theft and detect refund fraud before it occurs. These efforts include designing new identity theft screening filters that will improve the IRS's ability to spot false returns before they are processed and before a refund is issued, as well as expanded efforts to place identity theft indicators on taxpayer accounts to track and manage identity theft incidents, the agency stated. The IRS earlier this month created a special section on IRS.gov dedicated to identity theft, including YouTube videos, tips for taxpayers and a special guide to assistance. The information includes how to contact the IRS Identity Protection Specialized Unit and tips to protect against phishing schemes that can lead to identity theft. The IRS is instrumental in fighting identity theft. A 2011 report by the Government Accountability Office stated that in 2010, the IRS identified more than 245,000 identity theft incidents that affected the tax system. The hundreds of thousands of taxpayers with tax problems caused by identity theft represent a small percentage of the expected 140 million individual returns filed, but for those affected, the problems can be quite serious. "The IRS provides taxpayers with targeted information to increase their awareness of identity theft, tips and suggestions for safeguarding taxpayers' personal information, and information to help them better understand tax administration issues related to identity theft," the GAO states.

Included in the GAO report was IRS' top 10 list of identity theft information everyone should be aware of. The list: 1. The IRS does not initiate contact with a taxpayer by email. 2. If you receive a scam email claiming to be from the IRS, forward it to the IRS at phishing@irs.gov. 3. Identity thieves get your personal information by many different means, including: stealing your wallet or purse; posing as someone who needs information about you through a phone call or email; looking through your trash for personal information; accessing information you provide to an unsecured Internet site. 4. If you discover a website that claims to be the IRS but does not begin with "www.irs.gov," forward that link to the IRS at phishing@irs.gov. 5. To learn how to identify a secure website, visit the Federal Trade Commission at www.onguardonline.gov/tools/recognize-secure-site-using-ssl.aspx. 6. If your Social Security number is stolen, another individual may use it to get a job. That person's employer may then report income earned to the IRS using your Social Security number, thus making it appear that you did not report all of your income on your tax return. 7. Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don't know. If you receive such a letter from the IRS, leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice. 8. If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost wallet, questionable credit card activity or credit report, you need to provide the IRS with proof of your identity. You should submit a copy of your valid government-issued identification -- such as a Social Security card, driver's license or passport -- along with a copy of a police report and/or a completed Form 14039, Identity Theft Affidavit. As an option, you can also contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490. You should also follow FTC guidance for reporting identity theft at www.ftc.gov/idtheft.

9. Show your Social Security card to your employer when you start a job or to your financial institution for tax reporting purposes. Do not routinely carry your card or other documents that display your Social Security number. 10. For more information about identity theft -- including information about how to report identity theft, phishing and related fraudulent activity -- visit the IRS Identity Theft and Your Tax Records Page, which you can find by searching "Identity Theft" on the IRS.gov home page.

Yesterday, when the war began

Anthony Wong

http://www.acs.org.au/index.cfm?action=show&conID=201106100952597828
The Egyptian Governments decision to shut down the Internet during the days of violent unrest highlights the critical role of technology in maintaining or bringing down social order. Protestors had been using Facebook and Twitter to organise anti-government protests and embattled President Hosni Mubarak hit back by cutting access to the Internet within Egyptian borders. The action was unprecedented in the history of the Web, sparking intense discussion amongst analysts and bloggers, and prompting US President Obama to call for the Internet to be reinstated. Its the first time a national government has taken such a radical step and brings a new dimension to the whole issue of cyber resilience. Up until now, cyber resilience has always focused on how governments can protect critical digital infrastructure and online resources to ensure their continued operation in the face of an attack. Its still unknown what the financial and other impacts have been on Egyptian and international business as a result of losing access to the Internet. Australias cyber resilience efforts are aimed at avoiding such impacts by shoring up online security measures and educating business and the community about how to effectively protect their computer systems from attack. Computer hackers have operated since the early 1990s with varying degrees of impact. However, the growing pervasiveness of the Internet has led to many governments making cyber security a higher priority in light of the greater potential cost and inconvenience if todays systems were to be brought down. A study by AusCERT back in 2002 revealed that hacking was already a major issue in Australia with 67 per cent of organisations experiencing one or more attacks. Anecdotal evidence suggests Australias major banks are today the focus of many thousands of attacks each year by hackers seeking to penetrate their defences. Its an international issue and one where Australia continues to play a leading role. Last September, Australia was one of 12 nations that collaborated with the US Department of Homeland Security for a three day exercise aimed at testing Americas resilience under an international cyber attack.

Known as Cyber Storm III, the drills involved Australia, New Zealand, Canada, Japan and eight Western European nations along with 11 US States, seven Government departments and 60 private sector companies. The simulations were designed to test the defences of US Government, infrastructure and business hubs in the face of a concerted online attack from unfriendly forces. Not only does participating in exercises such as these give Australian authorities greater insights into the way that online attacks can operate and how best to defend against them, but it also builds closer ties to relevant agencies in other governments. Recent comments by Franklin D. Kramer, Vice Chair of the international affairs think tank, the Atlantic Council, and former US Assistant Defense Secretary for International Affairs, highlighted the need for governments to strengthen their ICT infrastructure and called for more offensive measures to protect critical resources. He cited several recent events, including Russias reported cyber attacks against Georgia during its 2008 war, the WikiLeaks exposure of classified US documents and the emergence of the Stuxnet worm as an apparent stealth weapon. Stuxnet first gained notice last July after it attacked thousands of Siemens industrial systems around the world, most notably in Iran, Indonesia and India. The first worm of its type capable of seizing control of industrial computers, Stuxnet was initially believed to be the advance wave of a covert military attack and was responsible for damaging Irans new nuclear facilities at Latanz. Russian security company, Kaspersky Labs, released a statement calling Stuxnet "a working and fearsome prototype of a cyber-weapon that will lead to the creation of a new arms race in the world." Although questions remain as to its origin, with varying reports pointing to Israel, the US and Eastern Europe, industry experts said it could easily be adapted by cyber terrorists and represented a loaded gun in their hands. The issue for Governments is how best to protect against this and other online threats.

14,000 jobs set to go

BY MARKUS MANNHEIM, PUBLIC SERVICE REPORTER
01 Feb, 2012 01:00 AM

UPDATE: Labor MPs reject job loss projections The federal bureaucracy and the military will shed more than 14,000 full-time jobs over the next three years, an analysis of the budget papers suggests. Canberra Times modelling, based on the funds Treasury predicts it will need to pay wages, shows the job losses will be spread evenly between 2012-13 and 2014-15, as Labor pulls out all stops to conjure a budget surplus. The office of Finance Minister Penny Wong, who is charged with identifying wasteful spending, would not say which agencies' wage allocations would be cut the most. But it is understood the public service, rather than the defence forces, will bear the brunt of her axe.

About two in five federal bureaucrats work in Canberra. Treasurer Wayne Swan and Senator Wong unveiled deep spending cuts in their recent mid-year budget review, to try to save an extra $500million in 2012-13.

The ''efficiency dividend'', an annual cut to administrative spending, will rise from 1.5 to a record 4 per cent next financial year. Senator Wong said last month much of the money could be saved without sacking staff. ''There is significant scope to get efficiencies without resorting to that [job losses]. Our position is we should look first to savings in non-staffing areas, such as reducing consultants, minimising media and advertising expenditure,'' she said. However, Treasury's financial statements show the Government plans to slash its wages budget by $667 million in 2012-13. Over the following two years, it will limit wage-spending growth to about 1.25 per cent a year. Assuming that public service and military salaries rise by 3 per cent a year (in line with government policy), this represents 5584 fewer full-time jobs in 2012-13 compared with the 262,995 staff employed in 2010-11. The analysis also suggests the Government will shed an extra 4518 jobs in 2013-14 and a further 4175 jobs in 2014-15. Senator Wong's office told The Canberra Times, ''The Government considers that existing redeployment arrangements, staff attrition and in limited circumstances voluntary redundancies, will provide more than sufficient avenues to meet any staff reductions across the APS.'' ACT Liberal senator Gary Humphries said last night significant staff cuts were inevitable given the recordhigh efficiency dividend.

''You can't make those sort of savings without cutting staff; it's just impossible.'' The Coalition also plans to reduce bureaucracy: during the last election campaign, it said it would shed 12,000 jobs over two years. However, Senator Humphries said that while the Opposition was honest about its intentions, Labor's stance changed constantly. ''Both sides of politics are united in their view that the size the public service must be reduced. ''We've said that for some time; the Labor Party pretended otherwise, but its rhetoric now aligns with ours. ''The key difference is that theirs is an ad hoc approach that's inconsistent with what they promised at the last election. It seems entirely unplanned.'' ACT Labor MP Andrew Leigh said the Government had ''every expectation that this temporary increase in the efficiency dividend can be met without job losses''. The Canberra Times's jobs projections are based on Treasury's ''wages and salaries'' financial statements, which historically are the best budget indicator of staffing levels. However, the Government could reduce the forecast job losses by restraining public servants' wage growth to less than 3 per cent a year, or by announcing new spending initiatives in the May budget. The Public Service Commission said the Government did not prepare its own staff forecasts beyond the immediate budget year.

PM to pledge surplus as Rudd rebuked

BY CHRIS JOHNSON, CHIEF POLITICAL CORRESPONDENT
01 Feb, 2012 01:00 AM

http://www.canberratimes.com.au/news/local/news/general/pm-to-pledge-surplus-as-ruddrebuked/2439566.aspx
Prime Minister Julia Gillard will today declare emphatically that the Government will hand down a budget surplus in May and that she will seize any opportunity arising from the economic woes facing Europe. During a business address in Melbourne, Ms Gillard will state that only through watching closely the economic problems in Europe can Australians truly understand this country's own position of strength in the world economy. The Prime Minister's move to shore up her economic leadership comes after her reported rival for the top job, Kevin Rudd, was warned off mounting any leadership bid. Labor frontbencher Simon Crean told a Melbourne radio station yesterday that Mr Rudd was dumped as prime minister in 2010 because he was not a team player, and for that reason would not be able to mount a leadership comeback. ''People will not elect as leaders those they don't perceive as team players,'' Mr Crean said. ''There's no point in having a band of prima donnas, unless they operate as a team.

''He can't be prime minister again, so the question for him is he's got to accept that.'' The comments followed reports that suggested factional bosses had begun counting numbers to gauge support for Ms Gillard, amid ongoing speculation that Mr Rudd may make a run for the leadership. Ms Gillard refused to publicly back Mr Crean's assessment of Mr Rudd's chances of again becoming Labor's leader, maintaining he was doing a good job as Foreign Minister. ''It's very important for a nation our size that we do have our voice heard around the world,'' she said. ''Kevin Rudd as Foreign Minister is doing a good job in making sure our voice is heard.'' A Galaxy poll earlier this week showed Mr Rudd as the overwhelming favourite among voters as the best choice to lead the Labor Party. The year's first Newspoll also gave little joy to Labor and shows Ms Gillard's satisfaction rate down 3percentage points, to 33 per cent. Her support as preferred prime minister also fell 3 points, to 40 per cent. The poll shows the Coalition leading Labor 54 to 46 on a two-party preferred basis. Today, Ms Gillard will try and turn the nation's attention towards economic opportunities. ''As Australians see the problems of Europe, we see the importance of fiscal discipline,'' she will say. ''And as Australians increasingly come to know that our own fundamentals are strong by comparison, we know that we would not change places with any economy in the world. ''Now our job is to help Australians understand that it is this strength which is driving the transformations in our economy. And in turn, to understand that our nation is strong enough to bend those transformations to our own purposes... one which is full of opportunity.'' In her first major speech of the year, the Prime Minister will talk of a new Australian economy that is prosperous and fair, where mining and manufacturing flourish and where services grow. ''Where the Government manages the economy for working people, for the future,'' she says. ''And as Australians imagine this new economy we want to build together, we know that for everyone to have a share in the new economy, everyone must have the skills the new economy needs. We can see an opportunity to build a new Australian economy... to include every Australian in its growth.''

Shortfall in engineering industry blamed on unis

BY BIANCA HALL
01 Feb, 2012 01:00 AM

http://www.canberratimes.com.au/news/local/news/general/shortfall-in-engineering-industry-blamedon-unis/2439556.aspx
Australia's training centres and universities are producing just half the graduates needed to fill demand for engineers, industry leaders have warned.

And new data shows just 40 per cent of engineering job vacancies were filled in 2011. A Senate committee has been told the industry needs almost 28,000 engineers just to fill existing shortfalls, while existing engineers are ageing. Research shows 57.6per cent of engineers are aged 4059, and another 14.9 per cent are aged 60 and older. Australia's two-speed economy is worsening the problem, according to Australia Wide Personnel managing director Stephen Noble's submission to the inquiry. ''We need engineers. However, our universities are producing scientists,'' he wrote. ''In 2010, our universities produced 61 per cent more domestic graduate scientists than engineers. However, if you look on Seek today, there are 10 times the number of engineering jobs listed across Australia compared with scientific roles.'' The Department of Education, Employment and Workplace Relations issued 2011 figures earlier this week showing just 40 per cent of engineering job vacancies were filled last year. There were statistically 1.3 suitable applicants for each job, and the number of engineering jobs filled fell 10 percentage points on the previous year, the department's figures showed. Engineers Australia director of international and national policy Brent Jackson said with fluctuation across the industry, and between states, it was difficult to gain a clear view of the industry's problems. While some blamed the two-speed economy, he said it was not a phenomenon that was uniformly spread across the states and territories. ''It's not one thing, this is the thing with the skills shortage,'' Mr Jackson said. ''It's not evenly spread at all [and] it's pretty hard for us to pin it down to any one thing at all.'' The Productivity Commission reported yesterday just 15.8 per cent of Vocational Education and Training courses were engineering-based. The Senate committee inquiry into the shortage of engineering and related employment skills is due to report to the Government by June.

BEWARE OF BAD ADVICE

PUBLISHED : 18 Jan 2012 12:52:00 | Nassim Khadem
email print-font+font

http://www.brw.com.au/p/sections/features/beware_of_bad_advice_PRtPFB21eIBtbVXSWovHzK

People left penniless following the collapses of advisory firms Storm Financial and Westpoint will know that a bit of diligence in picking the right financial planner is crucial. Whether youre planning your budget, your next investment, or your life, its worth seeking out someone who can give you the best advice based on your situation, rather than trumpet their own agenda. Recent government reforms to the financial planning industry are intended to weed out thebad guys and make choosing a financial planner easier. In August last year, the federal government introduced draft laws on its Future of Financial Advice (FoFA) reforms, which aim to stop consumers becoming victims after these and other high-profile cases such as Trio, Opes Prime, Fincorp and Bridgecorp. In most cases, people failed to check properly what they were investing in after being roped in with promises of hefty investment returns. About 18,000 financial advisers across Australia, including the big banks, face a stricter regulatory environment. Under the first reforms, financial planners will be banned from accepting commissions for advice. The reforms, which were first announced inApril 2010 and involved a year of industry consultation, will ban trailing commissions (payments that planners receive for years after selling the original product) and commissions on risk insurance within superannuation. Financial planners wont be able to add fees to a bill automatically. Instead, a client has to opt-in every two years.

Under the changes, the Australian Securities and Investments Commission will also have greater powers to act against unscrupulous operators and refuse or cancel a licence. It can also ban individuals if they are not properly trained. If the reforms are passed in federal Parliament this year, most will apply from July 1, 2012. However, the ban on upfront and trailing commissions will apply from July 1, 2013. Financial Planning Association (FPA) chief executive Mark Rantall says the reforms, on balance, are a positive initiative which aid consumer protection. But he wants new laws that require financial planners to sign up to a code of conduct and register with a professional body such as the FPA, or other reputable organisations representing professionals who give financial advice, such as stockbrokers and accountants. Its about enshrining the term financial planner in law such that you cant call yourself a financial planner unless youre part of an approved professional body, Rantall says. Seeking out a member of the FPA, for example, ensures that the person has sought higher education and a higher code of conduct than the law requires. There are also general traits people can look for in a financial planner. Rantall says consumers can spot the bad guys by being on the lookout for someone who is trying to sell them something that doesnt suit their life goals. The better financial planners will ask a lot of questions about you, what youre looking for and what your goals and objectives are, he says. Try to be clear about what youre seeking to achieve and the problems youre trying to solve. Make sure the advice aligns with what you need. However, the president of the Independent Financial Advisers Association of Australia and partner with Brocktons Independent Advisory, Daniel Brammall, says choosing a member of a professional body doesnt guarantee reliability. In the case of Storm Financial, some of the advisers involved were FPA members who lost their membership after the damage was done. The collapse of Storm Financial and Westpoint happened regardless of the advisers involved being members of professional associations and regardless of their experience, Brammall says. So for the FPA to say that you have to be a member of a professional body is ignoring history.

Brammall says the most important check a consumer can make before picking a financial planner is to make sure they dont have a conflict of interest. He says there are two main ways of determining whether conflicts exist. First, if they are charging you fees based on percentages [of assets under management], run a mile, he says. Second, If they have an association with a product manufacturer, they have a conflict. He says wealthy individuals typically require more complicated investment advice, which is more expensive. But he says consumers concerned about being charged high fees can take their case to the financial ombudsman. The chairwoman of consumer group Choice, Jenni Mack, also warns consumers against agreeing to asset-based fees. She points to Rice Warner research in May 2011 that found consumers pay between two and 17 times more if they pay by asset-based fees rather than hourly rates or lump sums. We are very concerned that ongoing asset fees are commissions dressed up as fees, she says. They result in consumers paying way too much. The second part of the changes under the FoFA reforms is a ban on conflicted remuneration structures and soft dollar benefits (not actual cash payments but other kickbacks such as holidays or gifts). It also includes the replacement of the accountants exemption. Accountants will now have to partner a licensed financial adviser, obtain their own licence or become an authorised representative of a licensee to continue providing advice on setting up self-managed super funds. The Institute of Public Accountants recently joined with AXA and MLC to ensure its 22,000 members arent left behind. Chief executive Andrew Conway says 6500 members have already got involved and are licensed to give clients financial advice. We believe that the FoFA reforms will lead to a weeding out of cowboys in the financial service industry, he says. One of the things thats critical for the client is to ensure that the trusted adviser they engage has the skills to provide that advice. The partnership is our response to the continued blurring of the line oftraditional financial planner and traditional accountant. We see blurring as a good thing because clients benefit from broader services. Conway says the client needs to feel confident that the person giving advice is qualified and trustworthy. The client should be looking at a few things when picking an adviser, he says. First, are they a member of one of the professional bodies? Second, do they have professional indemnity insurance? And third, whats their fee model?

Big accounting firms are also moving into the financial advisory space as people with self-managed superannuation funds are increasingly looking for advice. Deloittes superannuation lead partner, RussellMason, advises large superannuation funds about what services to offer members, such as advice on salary sacrifice, contribution levels and investment options. He says that just like finding a good doctor or lawyer, a person seeking financial advice needs to shop around. Compare what theyre going to charge and the services theyre going to provide, he says. How accessible is the planner? Do you have someone who has the capacity to serve you on a six to 12 month basis to review your financial planning? Matt Hern, who runs his own financial planning business in Perth, Matt Hern Financial Planning, says that while the reforms will help get rid of fraudsters, picking a good financial planner requires more thorough investigation. He says ensuring financial planners are properly licensed is the lowest common dominator. In the PR release it sounds grandiose, he says. But for the consumer its not. Sure, the standards arent as low as they were before. But thats worlds apart from findinga true expert. Hern says many professions, ranging from banks and real estate agents to accountants and stockbrokers, claim to also be financial planners because they provide one-off financial advice. But he says a financial planner and a financial adviser are different. A first-time customer who goes to their bank for financial advice may end up with a product tactical adviser, he says. But first-timers need to see the big-picture person who thinks about their life goals. Someone whos the family chief financial officer ... and can help manage and co-ordinate the right financial decisions to achieve your goals. Hern says that as well as picking a true financial planner, consumers need to be prepared to invest in good advice. The biggest mistake that people make is being tightarses, he says. The average price people want to pay is $300. Yet, a plumber will charge you $100 just as a call-out fee. If people are mentally anchored to a low fee, they end up compromising on the advice they get. In the post-commission world, a good financial planner will charge a first-timer about $4000 to $5000. Thats for an initial plan set-up and implementation. And just like any greatplan, they need to have milestone check-ins; with lower fees at the end of year one, twoand three.

But Mack says you dont have to pay high fees, or be tied to seeing a financial planner on a continuing basis, to get good advice. As well as looking for advisers who charge hourly or lump-sum rates, Mack has two other tips: Think very carefully about whether you need an ongoing relationship with an adviser whereby fees are automatically deducted fromyour account, she says. And finally, be cautious about what products youre being recommended: is the adviser going to recommend products that they manage, or is it an adviser who will lookaround the market and give you generaladvice? In December, ASIC released guidelines for financial advisers in relation to FoFA reforms that aim to clear up issues surrounding conflicted remuneration and scaled advice (one-off limited advice rather than ongoing advice). The guidelines make it clear that financial advice cannot take a one-size-fits-allapproach. Mack says that while FoFA is a very significant package of reforms, it only applies to new clients. A recent ASIC review of the industry found the top 20 licensees combined had a total of 4.6 million clients, of which almost 1.5 million were identified by licensees as active. The estimated average size of a clients assets was about $131,000. This means 3.5 million clients are disengaged exactly the ones who need the benefits of FoFA but under the grandfathering provisions, they will not get them, she says. We think opt-in should apply to these clients. The best thing these clients can do is change firms so they will get the benefit of FoFA.

TIPS FOR PICKING AN ADVISER

| Nassim Khadem

You dont have to pay high fees or be tied to seeing a financial planner on an ongoing basis to get good advice, according to thechairwoman of consumer group Choice, Jenni Mack. She offers three main tips for consumers looking for a financialplanner: 1. Dont agree to pay asset-based fees (based on a percentage of the assets under management). She says Rice Warner research in May 2011 found consumers pay between two and 17 times more if they pay by asset-based fees rather than hourly rates or lump sums. 2. Think very carefully about whether you need an ongoing relationship with an adviser whereby fees are automatically deducted from your account, particularly where those fees are forperformance management.

3. Be sceptical about what products are beingrecommended: isthe adviser going tooffer products he orshe manages, or willthe adviser look around the market andgive you more general advice?
BRW

NOW YOUR PRODUCTIVITY

PUBLISHED : 19 Jan 2012 05:02:00 | Leo D'Angelo Fisher
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http://www.brw.com.au/p/sections/the_business_end/know_your_productivity_FexaPZwH6jVveJ6YOM Jf4L

Standby to hear a lot more of the p word: productivity. Everyones talking about it; everyone wants to see a lot more of it but precious few are willing, or able, to explain precisely what they mean by this all-purpose wonder word. Surely the message could not possibly be that weneed to work harder? The Australia Institute , in its report Something for Nothing: Unpaid Overtime in Australia , claims we already work the longest hours in the Western world an average of 44 hours a week. According to the institute, 45 per cent of employees work more hours than they are paid for on a typical work day. A survey by serviced office group Regus found that 41 per cent of Australian employees work between nine and 11hours a day. One reason people are working longer is that deliberately under-resourced organisations expect fewer employees to do more. This is their idea of productivity. More responsibility is being placed on fewer shoulders but it is also true that many people work longer hours as a symbol of their importance to the organisation. These workers are either faffing around on unnecessary or third-order tasks, or they have fallen into the habit of taking much longer to complete work that could be done easily within a conventional working week. Employers have not done themselves any favours by creating corrosive workplaces in which employees are being run ragged either because it is expected of them, or because they feel compelled to pile on the hours so that they may be considered indispensable. Whatever the motivations, such cultures ultimately are counterproductive. The global financial crisis has brutalised many workplaces workers are exhausted, disengaged and angry. Now, in the menacing shadow of the European economic crisis,

theyre being told they must increase their productivity. For most this means longer hours and more cutbacks. As the first step to improving productivity, managers should look not to the predictable resort of cracking the whip but how they manage their workplaces. The most productive employees will be those who feel their work is valued, that they have the trust and respect of their employer and that their employer provides every opportunity for career advancement, professional development and personal well-being.
BRW

WIND IN THE SALES

PUBLISHED : 18 Jan 2012 14:37:05 | Leo D'Angelo Fisher
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http://www.brw.com.au/p/sections/the_business_end/wind_in_the_sales_YLx9bKQIMciOe2PMAazjOK

Whatever the business, whatever the market or specialisation, selling is the lifeblood of success. In the early stages of an enterprise, the founder is usually the person who is responsible for selling. But as the business grows, the companys principal and probably most effective salesperson the person who best understands the product or service on offer finds that theres less time to devote to sales and marketing. When entrepreneurs reach this critical point in their business, its time to delegate. For some, its the myriad management and operational responsibilities of a growing business that must be delegated so that they can concentrate on winning new customers. Others delegate the selling function to focus on running the business. This was the decision that faced Queensland businessman Joel Nebauer , founder and managing director of Gold Coast-based commercial fit-out and exhibition-display builder Focus Productions . Nebauer started the business in 2005 and was working 14-hour days involved in every aspect of the business, from sales and quoting jobs to product development and delivery. He knew it couldnt go on this way. The way he ran the business had to change. It required a new mindset, he recalls. Nebauer engaged Gold Coast accountant and business adviser Michael Burke of Burke Associates to help him restructure his role so that he could focus on sales and marketing. I love the creative and production side [of the business], but the company needs me to concentrate on sales, Nebauer says. Iam passionate about what we can do and I know what we can achieve for clients, so Im the best one for this role.

Burke helped Nebauer to restructure the business and develop a new business plan, and he assisted in training staff to take on new responsibilities. Most importantly, he helped Nebauer rewrite his job description. Joels business was in great shape, but it could not grow any further while Joel continued to be immersed in every aspect of it, Burke says. It is always difficult for an owner to let go and trust staff to do their job properly. Nebauers decision to focus on selling meant that he was able to remove a critical obstacle to further growth: himself. Joel was the bottleneck, Burke says. He was too involved in the details and day-to-day activities of the business. The cold hard reality was that the bestcontribution Nebauer could make tothe prosperity of his business was to recognise where his true strengths lay. The executive chairman of training provider Leadership Management Australasia , Grant Sexton , says that by focusing on high pay-off activities business owners, managers and employees can improve their contribution to the organisation. He urges clients to identify their high pay-off activities and increase the time devoted to them. For some it is a rude awakening. Once they start analysing their working week, many managers and employees are shocked to discover how little time they devote to the most important tasks sometimes as little as 15 per cent of their time, Sexton says. For Nebauer, his principal high pay-off activity was selling. By dedicating himself to the task, he now has the time to take a more strategic and considered approach to winning new business. We can be more selective about the work we pitch for, he says. Being selective usually means being authentic. Companies fed up with being bombarded with indiscriminate sales pitches from business-to-business service providers are increasingly insisting on authenticity says James Mason , managing director of business coaching company Mindshop . Service providers that treat selling as purely a numbers game the number of pitches it takes to convert to a sale do not focus on tailoring their marketing approaches to the specific needs of potential clients. A company that mass-mails its marketing pitch to 20,000 prospects to secure 100 sales a conversion rate of 0.5 per cent has no interest in either the quality of clients or whether their offering is right for them. Such an unsophisticated approach may have worked once, but Mason believes this no longer holds true. With most business owners now mature and savvy enough to spot one of these typical sales pitches from a mile away, the trait that is winning new

opportunities for [service providers] at present is to be authentic during the sales process, Mason says. So-called authentic sales pitches in which the focus in on targeting fewer, quality prospects usually have higher conversion rates. An authentic, or client-focused, business-to-business sales proposal, according to Mason, includes the following elements:
Demonstrating a genuine desire to helpthe client. Incorporating a prospective clients direction, vision and key issues before offering a customised solution. Having a problem-solving mindset. Providing a regular review period forthe engagement with no long-term contracts.

For most business owners, having [a service provider] sitting in front of them who is authentic is like a breath of fresh air, Mason says. So, if seeking to boost your conversion ability, dont resort to the hard sell or pitching a product that promises the world. Instead be authentic, listen to your prospective customers needs and have a genuine intent to deliver the most appropriate, customised solution. This will provide you the high-value, long-term clients that you will enjoy working with. Sales coach Sue Barrett says that in turbulent and challenging economic times businesses need to rethink how they sell and buy. Business and sales leaders will need to examine their go-to-market strategies and sales force structures, she says. Anyone looking for things to settle down and return to the good old days of selling should think again. Were never going back, so its time to adapt and forge a new path to selling. Selling now requires a different philosophy and approach. Barrett says this includes placing customers at the core of a companys operation. This means integrating marketing, sales, service and support to provide a single view of the customer as they move through the engagement lifecycle, she explains. It also means moving away from mass marketing to customer fragmentation and segmentation. She believes niche sales and marketing strategies will become the norm particularly as new consumer markets emerge demanding different ways of doing business. Smart companies will tune in to where buyers are electing to spend time and money, Barrett says. Sales teams will need to be even more targeted in their sales planning and prospecting efforts no more scatter-gun approach and marketing teams will need to stop producing catch-all marketing materials that ignore buyer preferences and attitudes.

She recommends that companies take the lead of business-to-consumer online retailers by making smarter use of customer data to predict business-to-business buying behaviour, drive sales and strengthen relationships. As available data grows around buyers preferences and habits, businesses will find new ways to understand their customers. We now have the science of behavioural economics where businesses can selectively target, connect and communicate with the worker, buyer, supplier and communities with much greater accuracy, relevance and meaning, Barrett says. Selling in 2012, she adds, will be about paying attention, really listening and responding in a much more considered manner.

Rinehart becomes biggest Fairfax holder

By Greg Roberts, AAPUpdated February 1, 2012, 2:00 pm

http://au.news.yahoo.com/thewest/business/a/-/national/12773943/rinehart-becomes-biggest-fairfaxholder/
Australia's richest woman, Gina Rinehart, has become the largest shareholder in newspaper publisher Fairfax Media in what could become a play for control of the 181-year-old company. Ms Rinehart, a mining industry billionaire, had acquired 12.8 per cent of the nation's second-largest newspaper company by late Wednesday. This puts her ahead of Commonwealth Bank's 12.4 per cent, according to IG Markets analyst Chris Weston. The news pushed Fairfax shares up 7.5 cents, or 10.14 per cent, to a three-month high at 81.5 cents. Fairfax publishers The Age, The Sydney Morning Herald and The Australian Financial Review and owns a string of radio stations. Ms Rinehart made her $192 million play at 81.77 cents a share - a 10.5 per cent premium to Tuesday's close - which has increased her stake from 4.9 per cent to just under the 15 per cent ownership limit under current government law. While neither Ms Rinehart nor Fairfax would comment on Wednesday, the move has been met by mixed responses elsewhere. This includes concerns that Ms Rinehart wanted a board seat and influence over editorial content. Media analyst Peter Cox said there was no way Ms Rinehart was buying into Fairfax as a major shareholder just for a financial investment. "This has to be driven by her view on politics in Australia," Mr Cox said. "What's the point of spending that money on it if you're not going to have influence?

"So, I think it's possible she'd want to go on, buy more shares, get greater control and end up as the effective controller of Fairfax." Ms Rinehart's late father, Lang Hancock, was an investor in Western Australian newspapers The Sunday Independent and the National Miner. Mr Rinehart, who chairs her privately owned mining company Hancock Prospecting, has been a vocal critic of the Gillard government's mineral resources rent tax (MRRT) and Labor's plan to put a price on carbon pollution. Shortly after Ms Rinehart picked up a board seat at Ten Network Holdings, the conservative commentator Andrew Bolt was given a TV talk show on Sunday mornings. However the secretary of the journalists' union the MEAA, Chris Warren, said journalists should be reassured that the Fairfax board was committed to its charter of editorial independence. No individual shareholder or proprietor could seek to influence editorial decisions, he said. OptionsXpress market analyst Ben Le Brun said he was surprised Ms Rinehart would buy into Fairfax, given its debt, falling advertising revenue and a decision to sell down its stake in the profitable Trade Me online business. EL&C Baillieu Stockbroking media analyst Ivor Ries said Ms Rinehart's move on Fairfax was high risk, given he doubted she could influence the board and he doubted that the company would ever return to its profitable heyday. "She could just be being opportunistic ... she's enjoying the up cycle of mining, media is in a down cycle and she's buying it at the bottom to flip them out in 18 months to two years' time when the media cycle turns better," he said. Ms Rinehart's personal wealth is believed to have recently doubled to about $20 billion through the sale of a 15 per cent stake in the Roy Hill iron ore project in Western Australia to South Korean corporate giant Posco. That would mean her investment in Fairfax represents less than one per cent of her fortune, with Fairfax's complete market value only $1.7 billion.

New KPMG chair flags expansion

Sean Smith, The West AustralianFebruary 1, 2012, 6:42 am

http://au.news.yahoo.com/thewest/business/a/-/wa/12775498/new-kpmg-chair-flags-expansion/
Gary Smith has taken the helm of KPMG in WA but he is just as happy plugging the raft of other senior changes in the practice. Mr Smith says the changes are a sign of KPMG's intent, including his aim of further expanding the firm's presence in capital markets and substantially beefing up its major capital projects team. Greg Evans joins the Perth office today as a partner and head of mergers and acquisitions, having sold his boutique advisory firm Bedford Capital to KPMG last year.

Mr Smith's previous roles have been split, with Travis McAuliffe becoming partner in charge of advisory for WA and Ray Slayford moving from the Sydney practice to take the reins of the local management consulting division in April. Also, Graeme Sheard will return from KPMG in Thailand as partner in charge of private enterprise. As chairman in WA, where KPMG employs 470 people, Mr Smith succeeds Steve Scudamore, who will retire from the firm on June 30 after nearly 40 years. Mr Smith says he sees his elevation as "a good opportunity to embrace everything that Steve has done and to add my own focus". "There's certainly nothing to unwind, nothing is broken." Mr Smith, who enjoys boating and the odd game of "very bad" golf in his spare time, more recently headed KPMG's advisory practice in WA, having rejoined the firm from Ernst & Young in 2008. He admits, only half jokingly, to "bleeding blue" in reference to KPMG's livery. "I'm an absolute believer that our culture is what sets us apart. We have a friendly, engaged culture. We take ourselves seriously, but not too seriously." Mr Smith says the expanded M&A team, including director James Turnbull, hired from PwC last August, have been given a brief to substantially expand KPMG's presence in capital markets via the public company sector. "While we have always been active in that space, we were focused to a greater degree on private markets. Greg will certainly bring a balance to that. We want to get much more into that capital markets, lead adviser, mandate space." Mr Smith also aims to beef up the major capital projects group to get KPMG more involved with resources clients as they work on advancing projects towards final investment decision and commissioning. He says the leader of the major projects advisory team, Matt West, and KPMG's newly appointed global iron ore commodity leader, WA-based Rod Nelson, are in the process of hiring new staff.

Market closes lower on limp Chinese data

GARETH COSTA, The West AustralianFebruary 1, 2012, 1:13 pm

http://au.news.yahoo.com/thewest/business/a/-/national/12781502/market-closes-lower-on-limpchinese-data/
The Australian sharemarket fell for the third straight session after conflicting Chinese manufacturing data and the protracted Greek debt talks prompted profit taking. After opening in the black the S&P/ASX 200 index slipped to close 37 points, or 0.87 per cent, lower at 4225.7 points after the HSBC January Chinese PMI manufacturing index showed ongoing contraction in contrast to the official PMI measure which surprised my showing modest expansion at 50.6 points. The Shanghai composite was off 0.4 per cent at the close of the ASX as the official PMI data pointed to a soft landing for the Chinese economy but also limited need for monetary easing. Japans Nikkei index was marginally higher. Overnight Wall Street eased per cent after the Case Shiller house price index fell 3.7 per cent in December, the Chicago purchasing managers index missed forecasts and consumer confidence also fell well short of forecasts. Bloomberg has also warned that Fridays US non-farm payroll data could provide a hit to sentiment if the annual business birth/death adjustment follows historical precedents by leading to a sharp downward

revision in the estimates for jobs created in 2011. Over the past five years the adjustments have seen January post drops of 300,000 to 400,000 jobs because of previous over-estimations. The Australian dollar was steady at $US1.0620, but off its overnight high of $US1.0670. The broader All Ordinaries index was 34.7 points, or 0.8 per cent, weaker at 4291. On the ASX 24, the March share price index futures contract was 37 points down at 4189 with 34,220 contracts traded. Commsec market analyst Juliette Saly said todays weakness was no surprise because it was the first of the month. We outperformed other markets in January, so we're seeing profit-taking coming through now. Miners led the market lower, with BHP Billiton falling 57 to $36.91 and Rio Tinto dropping 42 to $68.74. Westpac fell 30 to $20.85, National Australia Bank dropped 19 to $23.66, ANZ lost 14 to $21.27 and Commonwealth Bank slipped 22 to $50.44. Topping the leader board, Fairfax leapt 7.5 to 81.5 on speculation Gina Reinhart, Australias richest person, had increased her stake in the company. Bank of Queensland fell 14 to $7.44 after being downgraded to hold by Deutsche Bank. Among the day's biggest losers was Energy Resources Australia, which slumped 21 cents, or 13.6 per cent, to $1.33 after it reported a $153.6 million loss for 2011. Telstra shares dropped three cents to $3.30 after a court ruling in favour of rival Optus that saw Australia's largest telecoms operator lose its $153 million deal to show games exclusively on its mobile phones. Building materials maker Boral closed down 22 cents, or 2.5 per cent, at $8.68 after it announced it sold its Indonesian business for $US135 million ($A127.87 million) and confirmed its previous expectations for its half-year profit. Supermarket giant Woolworths closed down nine cents at $24.70 while Wesfarmers, which owns rival Coles, eased 59 cents to $29.71, with its second quarter sales due tomorrow. Austock Securities senior client adviser Michael Heffernan said he expected the sharemarket to resume its recent bullish trend when the earnings season began next week. We'll start to see the big guns firing very soon, he said. I think expectations have been lowered to such an extent that if we get anything reasonable it will see us push higher.

Market slightly lower mid-session

AAP, The West AustralianUpdated February 1, 2012, 9:41 am

http://au.news.yahoo.com/thewest/business/a/-/national/10308941/market-slightly-lower-midsession/
Australian shares were lower mid-session after disappointing economic data from the United States. European shares staged a positive performance overnight on hopes that Greece could have a new debt deal in place by the end of the week, plus news that most leaders have agreed to an ambitious new treaty to cut their deficits.

But there was disappointing data showing US consumer confidence eased and business activity cooled, weighing on commodity prices and dragging down local stocks. Austock Securities' senior client advisor Michael Heffernan said he expected shares to resume their recent bullish trend when earnings season begins next week. "We'll start to see the big guns firing very soon," he said. "I think expectations have been lowered to such an extent that if we get anything reasonable it will see us push higher." At 8.57am, the benchmark S&P/ASX200 index was down 17.7 points, or 0.4 per cent, at 4245, while the broader All Ordinaries index was down 15.5 points, also 0.4 per cent, at 4310.2. The March share price index futures contract was down 15 points at 4211, with 14,733 contracts traded. Media shares got a boost from news that Gina Rinehart, Australia's richest woman, has attempted to boost her stake in Fairfax Media. Fairfax shares were up eight cents, or 10.8 per cent, to 82 cents in response. More than 200 million Fairfax shares with a value of $180 million had changed hands shortly before noon. "We might see a few more people jumping on the band wagon," Mr Heffernan said. Retailers were largely flat investors awaited sales data from Wesfarmers due out tomorrow. Woolworths rose 14 cents to $24.93, following on from strong gains yesterday after its own sales figures came in near analysts' expectations. Wesfarmers shares eased 34 cent to $29.97. A weak performance by resources, energy and financial stocks weighed on the market. Westpac shares fell 16 cents to $20.99 after news that 10,500 customers of St George Bank and BankSA have issued proceedings against the bank over the bank's fees. Energy Resources Australia was among the day's biggest losers, shedding 10.5 cents, or 6.8 per cent, to $1.435 after it reported a $153.6 million loss for 2011. Building materials maker Boral was up three cents to $4.07 after it announced it has sold its Indonesian business for $US135 million ($A127.87 million) and confirmed its previous expectations for its half-year profit. Investors in resource companies are likely to be looking to manufacturing data from China, Australia's largest trade partner, for more direction throughout Wednesday's session. "China's Manufacturing PMI numbers could be a big turning point for markets in the region today," IG Markets' strategist Stan Shamu said.

Lower house prices add to rate cut case

AAP, The West AustralianFebruary 1, 2012, 9:21 am

http://au.news.yahoo.com/thewest/business/a/-/national/12778051/lower-house-prices-add-to-ratecut-case/

A further decline in house prices in the December quarter will add to the case for an interest rate cut this month, economists say. Data released by the Australian Bureau of Statistics today showed Australian capital city house prices fell 1.0 per cent in the three months to December 31, more than economists' expectations of an 0.7 per cent fall. That followed an upwardly revised 1.9 per cent fall in the September quarter. In the year to December, the house price index fell 4.8 per cent, the ABS said. A private sector survey released on Tuesday, the RP Data-Rismark Home Value Index, found prices fell by 0.2 per cent across capital cities, seasonally adjusted, in the month of December. The fall was 0.5 per cent for the December quarter, the survey found. St George chief economist Besa Deda said economists had expected a better result from the ABS data following the Reserve Bank of Australia's decision to cut interest rates by 25 basis points in both November and December. "We thought we might see a stronger result come through," she said. "Having said that homebuyers are probably still a little bit cautious with employment slowing and the (negative) global growth outlook." Though global economic conditions would be the dominant factor when the RBA meets on February 7, Ms Deda said the poor house price data made a rate cut more likely. "It should add to the case for a rate cut," she said. Ms Deda sais she expected home prices to stabilise in 2012, aided by the widely-expected February rate cut. "We're certainly looking for house prices to stabilise in the first half of the year and start to recover in the second half." Commsec economist Savanth Sebastian said the figures highlight that the housing sector is in a period of consolidation. "There are some initial signs and encouraging signs that there is a turnaround taking place, and that activity levels are starting to pick up given the recent rate cuts," he said. Mr Sebastian said house prices should strengthen after the Reserve Bank of Australia's February board meeting next Tuesday, where it is expected to cut the interest rate to 4 per cent. This would come on the back of two consecutive rate cuts at the RBA's November and December board meetings. "In addition, if you look at housing affordability, it is at some of its best levels since 2003, largely driven by lower interest rates, strong wages and the modest decrease in house prices," Mr Sebastian said. "I think fundamentally the housing market is in a solid place, but it is going to take a couple more months to see a turnaround in prices." Mr Sebastian said he doesn't expect the Australian housing market to be the main driver for more interest rate cuts by the RBA after its February board meeting.

"There's the potential for the Reserve Bank to reduce rates further, but it's really going to be dependent on the eurozone debt crisis," he said. CMC Markets chief market strategist Michael McCarthy said that while the result was lower than expected, it was difficult to read much into the trend indicated. "It's a very muddy picture in house prices at the moment. We've seen three of the private index publishers put out data in the last week-and-a-half and one suggested there was a fall in December, the other two suggested there was a rise in December,

Gold glitters as buyers play it safe

Gareth Costa, The West AustralianFebruary 1, 2012, 6:51 am

http://au.news.yahoo.com/thewest/business/a/-/national/12775570/gold-glitters-as-buyers-play-itsafe/
Gold followed up its ranking as the third best performing asset class last year by bouncing 12 per cent in January as central bank money printing fears fuelled another round of safe-haven buying. In Aussie dollar terms, gold rose 10 per cent last year and was another 6.6 per cent up at $1633/oz yesterday. World Gold Council data shows that last year Russia added 65.2 tonnes to its gold stash, the only country in the top ten gold reserve rankings that increased its holdings. South Korea nearly tripled its holdings to 54 tonnes, while Thailand bought 52.9 tonnes, lifting its holdings to 152.4 tonnes. Explaining the January surge, Barclays Capital analysts said gold held across the physically backed exchange traded funds rose 16 tonnes last week, the largest weekly increase in two months and just 11 tonnes off the peak. Flows for the first three weeks of January were up 22.4 tonnes, compared with net redemptions of 31 tonnes in December. Physical demand from Indian consumers has remained healthy despite the revision in customs duty increasing the tax on gold. "The weaker US dollar and favourable macro backdrop boosted gold prices through important technical resistance levels, even in the absence of physical demand from China given the Lunar New Year holidays," Barclays said. "This bodes well for gold particularly given that real interest rates are expected to remain negative for longer while concerns over currency debasement and inflationary pressures have resurfaced."