The Fly Speaks

Wednesday, 09 September 2009 14:00

2007

Bubbles in China and business valuation "China’s stock market is in a bubble. There’s only one way forward for Alibaba’s stock, and that is down. Shares in Alibaba.com nearly tripled today when they started trading in Hong Kong. The shares closed at HK$39.50, after the stock was originally priced at HK$13.50. Alibaba’s shares now trade at 320 times its expected net profit this year of HK$83 million." Source: VentureBeat blog post, Alibaba shows China in bubble , 7 Nov. 2007. For more on valuation, multiples and EBIT see: Business valuation with price earnings multiples and Business valuation with EBIT multiples.

Net's growth makes magic "For the first time in history, you have a global market of 1+ billion people, all connected over an interactive network where they're all a click away from you. That's amazing. And 100 million new people are being added to that count every year, and that will continue for the next 30 years. A huge and growing market makes all kinds of magical things possible, and I think that's what we're seeing now." Source: Marc Andreessen writing his post Serial entrepreneurs and today's Silicon Valley (29 Oct. 2007), inspired by a phone call from Gary Rivlin. Rivlin, journalist with The New York Times, called to research After succeeding, Young Tycoons Try, Try Again (28 Oct. 2007). Rivlin's story spotlights Max Levchin, who at 27 years age sold his interest in PayPal and now at 32 is firing up slide.com.

Christian Dior - tres magnifique rise in business valuation "...[T]he business value of Christian Dior rose from US$15 million in 1985 to US$11.95 billion in 2003. Thus in the 18 years to 2003, the Christian Dior business valuation increased so that it was valued about 800 times more in 2003 than it was in 1985. In percentage terms that's an increase of 79,900%." Quote from Noric Dilanchian article, Fashion lore and law.

Business.com sold for US$345 million Until today The Fly missed this news which remains remarkable. In July 2007 "Business.com" sold for US$345 million, plus additional deferred payments. Business.com is more than just a domain name, and maybe that's why it's not listed as a pure domain name play at DN Journal (a lowbrow US domain name industry news magazine). Business.com is a profitable business search engine, directory and pay-per-click advertising network. It was last sold in 1999 for US$7.5 million. The buyer, R.H. Donnelley Corporation, publishes print and web-based phone directories and in its press release it states: "Business.com employs approximately 100 highly-skilled technologists, strategists and businesspeople and serves more than 6,000 business-to-business advertisers and their agencies. The company is profitable and is expected to generate revenues of greater than $50 million in 2007." For further information on domain name sales in 2007 go to Online advertising, shaken not stirred.

Google GPhone versus Microsoft Windows Mobile With its share price now over US$600, and its market capitalisation over US$190 billion, Read/Write Web reports Google's market valuation is currently higher than Wal-Mart or Coca-Cola.

Litigation funding provides "access to justice" " There are about 12,000 pieces of commercial litigation involving disputes worth more than $100,000 in NSW and Victoria but fewer than 100 of them are supported by commercial litigation funders. ... The Law Council of Australia has told SCAG [Standing Committee of Attorneys-General reviewing how litigation funding should be regulated] that the fledgling litigation funding industry must be allowed to develop to expand access to justice, and has warned that overregulation would stifle its growth." Matthew Drummond, "Litigation funder targets smaller end", The Australian Financial Review, 5 Oct 2007, p. 58. Comment: The High Court of Australia found a litigation funding agreement lawful in the 2006 case, Campbells Cash and Carry Pty Limited v Fostif Pty Limited.

We don't want no innovation? "Innovation creates value and yet we have business schools that don't recognise it. ... There are maybe two or three business schools in the country that take this seriously, which is bizarre. ... The way we use and apply knowledge is now as important to the value-add in the economy as efficiencies in production." - Mark Dodgson, Professor and Director of the Technology and Innovation Management Centre at The University of Queensland's Business School. Quoted in Luke Slattery's article, "Challenge to embrace innovation", The Australian Financial Review (Education insert) p. 33, 10 Sep 2007.

First, we balme all the company directors Author of the 2007 book Protecting your Position and Australian lawyer, Bruce Cowley, "...said that his investigations had uncovered 104 statutes in Queensland, 114 in NSW and 59 in Victoria that leave directors and officers personally liable for corporate fault. ... Those are particularly draconian provisions, because you’re really saying that the directors will have automatic liability, and it is strict liability. Directors will only be able to avoid that liability if they are able to make out the availability of a defence. In essence, that is a reversal of the onus of proof.” Source: Company directors exposed to statute stings, Lawyers Weekly, 3 Sep 2007. The considerable extent of state and federal legislation making company directors personally liable was also investigated in the September 2006 report of 133 pages, Personal Liability for Corporate Fault , by the Corporations and Markets Advisory Committee (CAMAC). Its call for change awaits action by governments Australia-wide.

Australia celebrates business and skilled migrants from India “India is our fourth-largest and fastest-growing merchandise export market. Australian merchandise exports to India rose to A$11 billion in 2006-07, increasing by an unprecedented 37% from the previous year" said Australian Government Minister for Trade, Warren Truss in his press release of 22 August 2007. The Minister was announcing the launch of www.utsavaustralia.in, and the press release talks up that site's promotion of Australian industry and business products, services and capability for businesses in India. Utsav Australia means Celebrate Australia. The portal also promotes Australia as a place for study and migration. The Fly notes in 2006-07 Australia welcomed 15,865 skilled visa stream migrants from India. A total of 97,920 permanent skilled visas were granted for the year, led by entrants from the United Kingdom (24,800). It was followed by India (15,865), China (14,688), South Africa (4,293) and Malaysia (3,838).

Mountains of Commonwealth legislation "In 1950 the Commonwealth Parliament passed 80 Acts which took up 281 pages. There was a steady increase in the volume of Commonwealth Acts for the next 50 years. In 2000, 372 Commonwealth Acts were passed, taking up 4,383 pages. Similar increases were experienced in the states and territories." D. C. Pearce and Robert Geddes, Statutory Interpretation in Australia, Sixth Edition (LexisNexis, Sydney 2006), p. 1. The Fly observes a pattern where now one Commonwealth Act can exceed the total number of pages of all Commonwealth Acts in 1950.  For example, there was 687 pages in Work Choices in 2005 (and that's not counting an additional 545 in its explanatory memorandum). Most recently there is about 500 pages in the Northern Territory National Emergency Response Bill 2007 package of 2007. For graphs illustrating the rise and rise of pages of Commonwealth taxation and commercial legislation over the decades see Rethinking Regulation.

Speed reading law makers On Tuesday 7 August 2007 Indigenous Affairs Minister Mal Brough introduced the Northern Territory National Emergency Response Bill 2007. It is part of new legislation in a number of bills totaling more than 500 pages. The Australian Democrats and the Australian Labor Party received it on Monday 6 August. They had less than 24 hours before a debate on it in the House of Representatives for 6 hours and 23 minutes. It was then passed to the Senate which considered it on Tuesday 14 August for two hours 38 minutes. It is expected to be passed by the Senate today, Wednesday 15 August. Source: Crikey, 14 Aug 2007 and print media.

Australian wine exports top A$3 billion "In the year ended July 2007, value [of wine exports] grew 8% to reach a milestone A$3 billion and volume grew 10% to 805 million litres. The average price declined 2% to A$3.73 per litre. ... The modest decline in the average price was a result of the average bottled price increasing 6 cents to A$4.86 per litre (up 1.3%) while the bulk average price declined 10 cents to A$1.02 per litre(down 9%)." Leading in the last 12 months as a growth export sales market for Australian wine was China (up 125.1%). It was followed by Netherlands (up 35%),  Ireland (up 28.3%), France (up 18.6%), Belgium (up 16%) and Singapore (up 16.4%). Australian Wine and Brandy Corporation, Wine Export Approval Report, July 2007, p. 2. For background information on trends see:  Liquor sector trends and statistics for 2007.

Net worth of Australian households "[T]he wealthiest 20% of households in Australia account for 61% of total household net worth, with average net worth of A$1.7 million per household. [T]he poorest 20% of households account for 1% of total household net worth, with an average net worth of $27,000 per household." Source: Australian Bureau of Statistics, "6523.0 - Household Income and Income Distribution, Australia, 2005-06", released 2 Aug 2007.

"Alan Bond in short pants"?"  In October 2006, private equity firm, CVC Asia Pacific, paid A$4.5 billion for 50% of the main media assets of Publishing and Broadcasting Ltd, the James Packer vehicle. The jewel in that crown was perceived to be the Channel Nine television network. Then in early 2007 CVC acquired another 25% and rolled it too into the new vehicle Consolidated Media Holdings. The ratings of Channel Nine have declined so much that Mark Day of The Australia on 26 July 2007 in his blog wrote: "It is a disaster which Nine's 75 per cent owners, the private equity firm CVC Asia Pacific could not have foreseen. It throws doubt on that company's ability ever to get a return from its investment. James [Packer] may well say CVC's youthful boss, Adrian MacKenzie is his Alan Bond in short pants."

About 1.4 million Australians use VoIP "About 1.4 million Australian consumers use services such as Skype or Engin at least occasionally to make voice over internet protocol (VoIP) calls via their internet broadband connection, says telecommunications research firm Market Clarity. About 160 consumer-level VoIP service providers operate in Australia, including listed companies such as Engin, MyNetFone and Freshtel, as well as international giants such as Skype, Google and Yahoo!, and diversified internet service providers such as iiNet and Internode. ...[O]nly 400,000 consumers pay anything for the VoIP services they use." Renai LeMay, "VoIP sellers still awaiting use-buy date", The Australian Financial Review, 17 July 2007, p. 29.

Apple Inc. wants 1% of the global mobile phone market in 2008 In his iPhone product demo video at the Macworld Conference & Expo 2007, Apple CEO Steve Jobs said that for 2008 Apple seeks 1% market share (equal to sales of 10 million units) of the global mobile phone market. Jobs quoted statistics on the millions of units sold globally in 2006 of various devices - 26M game consoles, 94M digital cameras, 135M MP3 players, 209M PCs, and 957M mobile phones.

Product placement market size in Australia "Last year US research company PQ Media estimated that Australian companies spent A$137.8 million placing products and brands in TV programs and films in 2005, up 25.4% from A$110 in 2004. Australia is the third-biggest product placement market in the world." Source: Julian Lee, "Vegemite rehearses for Hollywood debut", The Sydney Morning Herald, 21 June 2007, p. 27.

US motion pictures exports earned US$18 billion in 2006 Here are the combined 2006 revenue earnings of the six member companies of the Motion Picture Association (MPA) - Walt Disney Co., Paramount Pictures Corp., Sony Pictures Entertainment, 20th Century Fox Film Corp., Universal City Studios and Warner Bros. They earned US$42.6 billion. US$18.3 billion was from exports, the rest from domestic "all-media". Australia continued to rank as the 7th biggest export market for MPA members. The global revenues from "all-media" split: 44% from DVD home video, 26% television, 19% theatrical, 10% pay TV, and 1% VHS home video.

Source: Hy Hollinger, MPA study: Brighter picture for movie industry, Hollywood Reporter, 15 June 2007. See also data in MPA slides 2006 U.S. Theatrical Market Statistics.

Software piracy falls in China "China's piracy rate dropped four percentage points for the second consecutive year and has dropped 10 percentage points in the last three years, from 92% in 2003 to 82% in 2006. ... While the U.S. had the lowest piracy rate of all countries studied at 21%, it also had the greatest total losses at US$7.3 billion. China saw the second highest losses at US$5.4 billion with a piracy rate of 82%, followed by France with losses of US$2.7 billion and a piracy rate of 45%." Source: IDC press release, 15 May 2007. Australia's piracy rate is 29%: source: Fourth Annual BSA and IDC Global Software Piracy Study.

Online banking and IT security hints "According to the E-Money survey, primary measures that online bankers are taking to protect themselves [include] ... Logging out correctly at the end of each session (93%); Ignoring emails asking for personal information (92%); Regularly updating and protecting passwords (55%); [and] Setting daily withdrawal limits to suit their needs (47$). ... Since its launch in 1997, NetBank has grown to meet the changing needs of its customers to become Australia’s most popular online banking choice with more than 3 million registered customers." Source: Commonwealth Bank, Media Release, 28 May 2007, "Silver surfers riding the online banking wave". For  more IT security hints see Checklist of 51 hints for data and IT security.

The Simpsons 400 Episodes The Simpsons has aired 400 episodes over 18 seasons since it first aired in the United States in 1989, and then in Australia in 1991. This record puts it at the end of a list of even longer running Australian TV programs still being aired - Four Corners (1961), Here's Humphrey (1965), Play School (1966), 60 Minutes (1979), Neighbours (1985), and Funniest Home Videos (1990): Source The Australian Financial Review (28 May 2007, p. 52). With a focus on merchandising and character licensing, the May 2007 edition of License! Global takes an in-depth look at "The Simpsons US$5 billion worldwide empire."

Computer and Internet Use 2002 to 2006 Between 2002 and 2006, computer use increased from 55% to 69%, and Internet use at home went from 43% to 60%. While men were still more likely to use computers and access the Internet, the increases were greater for women. Source: Australian Bureau of Statistics, General Social Survey: Summary Results, Australia, 2006 (cat. no. 4159.0), 22 May 2007.

New Media Distribution Writing in The Australian Financial Review (10 May 2007, p. 50) Lyndall Crisp notes the increasing use of digital distribution mechanisms in the performing arts: “The Sydney Symphony ... has a relationship with Telstra Bigpond, which webstreams 10 live concerts to more than a million subscribers.” Crisp notes The Met in New York live broadcasts performances into cinemas across the USA, Canada, Japan, and several European countries.

Ten years of Crown Casino 1997-2007 "With 2,500 poker machines and 350 gaming tables, it is the largest casino in the southern hemisphere and a tourist attraction for Victoria. It draws 16 million people a year - 20% of them from overseas or interstate. ... The complex has two hotel towers totalling 947 rooms, 35 restaurants, 15 bars, 22 retail outlets and six entertainment venues. ... PBL bought Crown for the bargain price of the equivalent of A$1.7 billion in 1999..." Source: Mark Phillips, "It's still a numbers game for Crown", The Australian Financial Review, 3 May 2007, p. 44.

Television ratings in 2007 "2007: The ratings war has entered the most dramatic phase in five decades - Seven has won nine out of nine surveys since the beginning of the year and Nine is 'still the one' in name only." Source: Michael Idato, "Those were the days" (The Sydney Morning Herald, The Guide,  April 30-May 6, 2007, p. 8) article reviewing 25 years of TV in Australia.

Stock stock market concentration "The top 50 Australian stocks have a market capitalisation of A$953 billion or 76% of the A$1.3 trillion capitalisation of the top 300 stocks of the 1,837 listed entities on the Australian exchange, just 77 have a market capitalisation of A$3 billion or more." John Durie (Chanticleer column), "Tougher days for private equity", The Australian Financial Review,  19 April 2007, backpage. For an Australian perspective on private equity, see Private equity or private debt? Beware the Ides of March.

" Pay TV is found in 26% of Australian homes ", writes Neil Shoebridge today in "Sporting spectacles boost Foxtel" (The Australian Financial Review, 18 April 2007, p. 51). Shoebridge's article reports that Foxtel CEO, Kim Williams, yesterday told an ABN Amro conference that Foxtel's subscriber numbers increased 8.6% in the December 2006 half year to 1.3 million subscribers.

Profits of the big three in IT and the question of vulnerability. " After Microsoft, Oracle and Google recorded the largest profits among software companies in 2006. But Oracle’s profit of US$3.38 billion, and Google’s US$3.08 billion, are still no match for  Microsoft’s US$12.6 billion. ... Microsoft’s position, however, is vulnerable to attack... [Microsoft's] commitment to Vista is the last gasp of a technology that is nearing the end of its dominance. " Paul Strassmann, whose biography is here, writing in Real Numbers: Is Microsoft Losing its Grip? as published in Baseline, May 2007. Strassman claims two grounds for such vulerability - the higher cost and lower security for Microsoft's fat client architecture, versus say thin client and software-as-a-service architectures of its competitors.

" India is at the epicentre of the flat world," says Michael Cannon-Brookes, vice-president for business development in India and China at IBM, which has reduced its American work force by 31,000 since 1992 - even as its Indian staff mushroomed to 52,000 from zero. ... At the forefront of the outsourcing business is Infosys Technologies, an Indian company... Infosys devotes US$65 of every US$1,000 in revenue to training. IBM, by contrast, spends just US$6.56, according to a 2006 proxy statement. " Anand Giridharadas, "India's edge goes beyond outsourcing", The New York Times, 4 April 2007. [Ed. Its 50,000 employees in India equal 14.6% of IBM's 355,766 global work force.]

" For the past 10 years thoroughbred racing has ranked as Australia's second-most popular sport behind Aussie rules, according to the Australian Bureau of Statistics report on sport attendance. Australian Racing Board chief executive Andrew Harding points out that ...  'Over the past 10 years, Flemington [with a 130,000-plus capacity] has grown Ladies Day from about 15,000 people to 80,000. And Randwick will attract 80,000 people over four days of racing during its Easter carnival.' " Source: Fiona Carruthers and Jason Clout, "All's fair in love, war and racing", The Weekend Australian Financial Review, 5-9 April 2007, p. 46. See also Size and Scope of  the Australian Thoroughbred Racehorse Industry.

About Google. Total number of employees: nearly 12,000. Total 2006 revenue from advertisers: US$10.6 billion. Share of all Internet searches: 56%. Total number of users per month: 400 million. Total hoard of cash and investments: US$11 billion. Total 2006 payments to advertising syndicators (ie offering Google AdSense): US$3 billion. Current Google stock capitalisation: US$144 billion. "If you can believe it, Google's ... [stock valuation] tops that of Time Warner, Viacom, CBS, ad agency giant Publicis Groupe, and the New York Times Company combined." Source: Rob Hof, "Is Google Too Powerful?" in BusinessWeek.

"For much of the 20th century, about one American in a thousand was confined to a cell. The proportion of Americans behind bars started rising in the mid-Seventies, and by 2003 had done so for 28 consecutive years. Counting jails, there are now seven Americans in every thousand behind bars. That is nearly five times the historic norm and seven times higher than most of Western Europe." Jason DeParle's book review titled "The American Prison Nightmare", in the New York Review of Books, Volume 54, Number 6, 12 April 2007.

How popular are YouTube videos and where can they take you? Current figures show the most viewed YouTube video ever is Evolution of Dance. It has been viewed over 45 million times. In No. 13 position, and viewed over 12 million times, is the Free Hugs Campaign music video. It has generated 23,240 comments, making it the 4th most discussed video ever on YouTube. It was shot at Pitt Street Mall in Sydney and has a real life angle. Singing "All the Same" is the Australian band, Sick Puppies, based in LA since mid-2005. The band was already popular when the video helped build song sales on iTunes and airtime on Oprah, Jay Leno, Good Morning America and Sixty Minutes. Source: The Fly, 27 March 2007.

In 2006 Starbucks' revenue of US$7.8 billion was greater than the combined average annual coffee export revenue earned by all coffee bean producing nations in recent years!  US$6.2 billion was the combined average annual coffee export revenue annually from 2000 to 2004 by all coffee producing nations. Source: September 2005 submission to the UN by the International Coffee Organization. For more coffee statistics read this Dilanchian article: Coffee brand values.

The Australian Bureau of Statistics "Counts of Australian Businesses", 26 Feb 2006 reports that at June 2006:

• "...there were 1,963,907 actively trading businesses in Australia...
• Property and business services had the greatest number of businesses with 492,453 (or 25% of the total), followed by Construction (16%), Retail trade and Agriculture, forestry and fishing (11% each). ...
• there were 807,581 (41.1%) employing businesses and 1,156,326 (58.9%) non-employing businesses. ...
• businesses reporting annual turnover between $50k to less than $200k made up the largest share of the total business population with 780,062 (39.7%). Businesses reporting annual turnover between $200k to less than $2m were next at 652,798 (33.2%), followed by businesses reporting between zero to less than $50k at 404,643 (20.6%), and businesses reporting $2m or more at 126,404 (6.4%)."

A Washington Post opinion piece begins with this sentence "In the past year, Wikipedia, the online encyclopedia that "anyone can edit," has been cited four times as often as the Encyclopedia Britannica in judicial opinions, and the number is rapidly growing." It ends with this sentence: "In just a few years, Wikipedia has become the most influential encyclopedia in the world, consulted by judges as well as those who cannot afford to buy books. If the past is prologue, we're seeing the tip of a very large iceberg." Cass R. Sunstein: "A Brave New Wikiworld", Washington Post, 24 Feb. 2007. Prof. Sunstein teaches in law and political science at the University of Chicago. His latest book is Infotopia: How Many Minds Produce Knowledge (Oxford University Press, USA, 2006).

"The ACCC’s February 2007 Broadband Snapshot shows that broadband takeup continues to grow at a rampant pace. The report estimates that as at 30 September 2006, broadband take-up across business and household users has increased by over 1.2 million services, or 51 percent from the September 2005 figure of around 2.4 million." "Regulating media and broadcasting networks in a changing media environment" speech on 5 March 2007 by Graeme Samuel, Chair, Australian Competition and Consumer Commission.

The top three revenue earners from the $1.02 billion Australian online advertising market in 2006 were: (1) Google (A$206 million), (2) Telstra's Sensis earning (A$192 million), and (3) Fairfax Digital (A$115 million). These are all estimates made in this week's Australia Online issue of BRW magazine following "extensive interviews and profiling of online media businesses". Source: Foad Fadaghi, "Google beats the locals to secure top spot in digital media", Australian Financial Review, 22 Feb. 2007, p. 42. Further reading: Lightbulb post on 12 Feb. 2007:  Australian advertising revenue is draining overseas.

"In 2006, under 2 billion DRM-protected songs were sold worldwide by online stores, while over 20 billion songs were sold completely DRM-free  and unprotected on CDs by the music companies themselves. The music companies sell the vast majority of their music DRM-free, and show no signs of changing this behavior, since the overwhelming majority of their revenues depend on selling CDs which must play in CD players that support no DRM system." Steve Jobs, "Thoughts on Music", his Apple blog post on digital rights management (DRM), 6 Feb. 2007.

"For 2005, the [United States] current account deficit was US$805 billion, 6.4% of national income. In 2005, the U.S. trade deficit, the largest component of the current account deficit, soared to an all-time high of US$725.8 billion, the fourth consecutive year that America's trade debts set records. The trade deficit with China alone rose to US$201.6 billion, the highest imbalance ever recorded with any country." Chalmers Johnson (a retired professor of Asian Studies), quoted by Tom Engelhardt at the Website Working for Change, 31 Jan. 2007.

"[P]rivate equity takeovers in [calendar year] 2006 [globally] totalled US$758 billion - more than twice the 2005 level and equal to 20% of global acquisitions. ... Most private equity deals are leveraged by 70%, so US$400 billion [already raised for further acquisitions] translates to a war chest of up to US$1,300 billion." Robert Gottliebsen, "Death of the public company looms", The Weekend Australian, 3-4 February 2007, p. 41.

"More than half (55%) of all online American youths ages 12-17 use online social networking sites, according to a new [October-November 2006] national survey of [935 continental USA] teenagers conducted by the Pew Internet & American Life Project. ... Fully 85% of teens who have created an online profile say the profile they use or update most often is on MySpace, while 7% update a profile on Facebook. Another 1% tend to a primary profile on Xanga. Smaller numbers told us they have profiles at places like Yahoo, Piczo, Gaiaonline and Tagged.com."

Skye's proprietary P2P protocol: ."Peer-to-peer (“P2P”) technology was first widely deployed and popularized by file-sharing applications such as Napster and KaZaA. ... Decentralized P2P networks have several advantages over traditional client-server networks... by decentralizing resources, second generation (2G) P2P networks have been able to virtually eliminate costs associated with a large centralized infrastructure. P2P telephony became a natural next step where P2P could have a significant disruptive impact and Skype was founded to develop the first P2P telephony network." Source: "Skye P2P Telephony Explained".

"The number of Internet users in China reached 137 million people and is equal to 10.5% of China's total population. ... There is a very significant increase in the number of IP addresses reaching 98 million. .... The mobile Internet will become the latest fashion of the Internet... Among the 137 million are 17 million people using mobile phones to go online..." Source: China Internet Network Information Centre (a statutory body in China), 23 January 2007. Translation by Ai Ling, Dilanchian Lawyers.

"Apple rebuilt its fame on the iPod, and its accompanying iTunes online music store. Apple has sold more than 70 million of the devices since they were introduced in 2001, capturing about 70% of the MP3 player market. The device transformed Apple from a boutique computer company into a full-scale electronics firm, something it recognised yesterday by changing its name from Apple Computer to just Apple." Mike Hughlett, "Apple banks on mystique for iPhone", Chicago Tribune, 9 January 2007.

"Sensis delivered A$1.7 billion in revenue from its advertising and directories business in the year to June 30, 2006. ... Analysts expect [Telecom NZ's Yellow Pages business] unit to sell for more than 13 times EBITDA given the strong mergers and acquisitions environment. ... Telstra would be particularly interested in the asset... Diminished fixed-line phone revenue is a significant problem for Telstra's future profitability because profit margins are as high as 70% and these cannot be replaced by new revenue from broadband." Tracy Lee, The Australian Financial Review, "Telstra eyes Yellow Pages NZ", 5 January 2007, p. 14.