Samsung are (probably wisely) steering clear of Apple and going after the low to mid-range smartphone market along with Nokia. Though they’re late to the smartphone game, Samsung could be well placed to mop up market share across the whole sector – the bottom end with their own phones, the top end with the chips they provide to Apple for the iPhone. They’ve also announced that as well as their own operating system, they’re going to be using Android a lot more and Windows a lot less – it’s the latest blow to Windows, who have been looking very sorry in the mobile sector for some time.

The other big mobile news today is that Google is acknowledging the sector all the more – their latest purchase is AdMob, whose network for delivering ads on web pages seems like a good fit for Google’s ever-heftier cash cow. As is now the norm, AdMob uses information about your ethnicity, gender and age to target appropriate advertising your way – though the privacy advocate that the FT spoke to didn’t seem too concerned about the company. 

The Wall Street Journal has a blog post about AdMob’s founder Omar Hamoui, who only started the company while still at business school in 2006. Some of the wisdom of his head of European operations, Russell Buckley, syncs rather nicely with this whole shift towards openness that iPhone and Android are predicating: “Far too many entrepreneurs get paranoid about protecting their idea to the point of paralysis. The value of most ideas is in the execution, not in what the concept actually is. To make it reality, you need to share it – actually, with as many people as possible, counter-intuitive though this might seem.” Meanwhile Jim Goetz, partner at Sequoia Capital who first invested in AdMob, says Hamoui succeeded because “he kept a maniacal focus on the independent developer… He ignored the carriers, he ignored the ‘walled garden.’” Proof that in the digital age, the loosened-up businessperson is likely to be the most successful.

Photo: Jeff Kubina

Kraft’s chief exec Irene Rosenfeld told analysts yesterday that “Given the complexion of the market and the global landscape, we believe it would be difficult for [Cadbury] to go it alone”. These two cats from the Wall Street Journal are saying the deal is definitely going to happen, in a vaguely homoerotic, suppressed bromance manner as they can’t seem to stop pawing at each other. And investors seem to think it’s going to happen too, sending Cadbury shares soaring yesterday. No doubt Hershey’s, Nestle, Kellogg and Pepsi, who have all also been linked with a deal, are indeed troubled by the idea of Kraft getting their hands on Cadbury’s, but whether Cadbury’s is just indulging them in order to drive the actual Kraft deal higher is another matter.

So with it looking like just a matter of “how much” rather than “if”, one analyst told Bloomberg, “We’re moving towards the end game of consolidation in confectionery” – in other words, the world is going to have just two or three companies worldwide making almost all of our teeth-rotting treats. It’s exhumed the old debate about homegrown British manufacturing, as another company looks set to sit alongside such Americanisms as processed cheese and Oreos – “it is really about what Britain should do for a living. If so many people are to survive on this small island we must do more than hawk shares”, says Carl Mortished in today’s Times. All the interviews with Bournville pensioners and sighing over purple foil suggest a certain amount of pointless sentimentality surrounding the opposition to this deal, but Mortished’s point is a good one – we’re giving up and cashing in before the race to new markets (India, Brazil etc) has even properly begun. Rosenfeld’s “submit, puny Brits” comments yesterday should be seen more as symptomatic of her steamrollering ambition, rather than any real forecast of Cadbury’s ability to survive in an ameliorating recession; Kraft make disgusting, oozing foods that only Americans will eat, while Cadbury’s make delicious chocolate that the whole world now seemingly loves.

But hawk shares we will, and the deal is a fillip for a City that has been twiddling its thumbs M&A-wise this year – Goldman Sachs, UBS, and Morgan Stanley are set to receive £100m in fees for putting the deal through, while Bloomberg reports today that Kraft are in talks to bag $8bn in financing via a bridge loan from Deutsche Bank and Citigroup.

So the deal looks like hoisting another American corporation onto the world stage at the expense of British expansion, with a bunch of non-British banks (with admittedly lots of British employees) coining it as the deal goes through. Sigh. Well, just as long as Kraft don’t shut down Cadbury World – as any child who grew up in Birmingham will tell you, it’s a museum where chocolate is fed to you in bar form at regular intervals throughout your trip, culminating in a frenzy of sugar-rushing school parties deliriously spending their pocket money on tat in the gift shop. There are cars shaped like Creme Eggs. If you ever want to create a high-margin business that embeds a semi-religious brand empathy in consumers from a very young age, build a museum in a chocolate factory.

On Monday, the WSJ published “Goldman’s Trading Tips Reward Its Biggest Clients”, written by Susanna Craig. In it, it describes the rather unfair-seeming way that Goldman holds onto its big clients, essentially by disadvantaging the smaller ones to give the bigger ones exclusive information. Their research analysts, who look at all kinds of trading, manufacturing and financial trends, give short-term tips to Goldman traders during a “huddle”, who pass on the tips to big investors, who reap the rewards. These tips then don’t get included in the long-term research provided for other, less favoured clients, and in fact often differ wildly with the published research. It’s more grist for the mill that Goldman is just a big mutual backscratching club, who help out other elite members and end up in places like the head of the Treasury.

Three days on and the news has clearly rattled the regulators, who are falling over themselves trying to do something about it. Finra were poking around it before but now are stepping up their investigations, the SEC are involved, and William Galvin, “Massachusetts’s chief financial regulator”, has subpoenaed Goldman, saying: “We have concerns about the research analysts and the efforts under way to use them to secure additional business”. Craig allows herself the faintest hint of self-congratulation in her piece about the litigation she’s unleashed: “The huddles, which were the subject of a page-one article on Monday in The Wall Street Journal…” Her modesty belies what is a really top-notch piece of journalism, which looks like it’s going to democratise the investment process that little bit more.

Galvin added to his remarks: “Even the term ‘huddles’ sounds suspicious”. To these ears it’s merely more proof that Goldman is an Ivy League football dressing room transplanted onto a trading floor. I bet they do that all-fists-in-the-middle-then-throwing-them-up-in-the-air move, accompanied by “HUH” noise, when they finish a meeting, leaving a trace of unreconciled homoeroticism lingering in the air.

This being China, the news has taken nearly two years to start trickling out, with details of the court case begun last week making it into the FT this morning. One of the chairmen of developer Canton Properties, Wang Sheng, is accused of taking loans out in the company’s name from state-and-HSBC-owned Bank of Communications, and keeping them for himself. The president of the bank who allowed the loans has been on the run since the investigation was started in late 2007, making the attempts of his recent fraudulent peers in the States look very weak indeed. It’s in his interest to keep running – China’s state news agency reports today that the state has just executed two major fraudsters.

They’re not the only ones committing everyone’s favourite white collar crime though – check out these bozos from this week’s press: 

- First up is Edward Okun, who has been sentenced this week for running a fraud in which he used money given to him to invest in banks as pocket money for nice things like the divorce from his old wife and jewelry for his new one. He also bought his chums shots of cognac for $1,008 each during a holiday in the Bahamas, about which the restaurant owners still laugh now. In the overkill that saw Madoff get 150 years in jail, Okun was recommended 400 years – in the end he got off lightly with just 100.

- “Magician Paul Daniels helped his son escape jail today after he admitted stealing £10,000 from the NHS” is the opening paragraph in a Sun story today, but as is the case so often with the tabloids, they ruthlessly pique your interest only to disappoint you a paragraph later. Rather than performing some kind of disappearing trick involving glittery capes and awkward banter, Daniels actually just pleaded with the court to let his son off a fraud conviction.

- Ruth Madoff now has to announce any expenditures over $100, which when you’ve been living in a Manhattan penthouse is usually most of them. This constant inconvenience is compounded by exactly the wrong sort of Vanity Fair feature she would want – an in-depth analysis of her history and character by Mark Seal, who has been profiling the Madoffs for the mag and who Ruth apparently hates. It’s all here – the rudeness, the loud voice, the botched surgery. The pre-feminist who books belly-dancers for office parties, the hot-tempered and foul-mouthed party pooper, the “robot” addicted to normality, the MILF, the “fucking social climber”, the woman who was “sort of artificial and frozen—her face, her home.” Ruth claims that many of the depictions of her are inaccurate, but even if you ignore them all the crucial spectre still hangs over her, and it does throughout the article – that she couldn’t have possibly been unaware of the fraud.

How weird that all seems now, as the banking sector divorces itself from government and cruises back to the single life. First there was Goldman stating its intentions, then JP Morgan, and yesterday we had Lloyds paying off the Treasury to the tune of £2.6bn. And now today in the Wall Street Journal is the news that the U.S. Treasury expects the initial payback of bailout funds to be in the $50bn ballpark, twice as much as they originally expected for this point in time.

Of course, no-one’s really healthy just yet, and Lloyds in particular still has a long way to go. As well as the insurance premiums it must keep paying to the government to have its assets backed by the Treasury, the government still owns 43.4% of the bank. In the recent share offering, Lloyds has used the money gained from private investors buying new common shares to pay off the preference shares that the government held, but as the government also bought £1.7bn-worth of shares in that offering, the £2.6bn pay-off merely prevented the government’s stake in the bank from reaching above 60%. Lloyds should be disappointed to see that takeup of the common shares by private investors was only 76%, showing that faith in the bank hasn’t fully bounced back. They also announced 1500 more job cuts today as they heavily peg back the Cheltenham and Gloucester brand.

It’s also a bit worrying for what we previously looked at today, compensation. Many banks want to escape the restrictions on pay that are a condition of bailout money, and there’s a worry that there hasn’t been enough time to legally implement a new style of compensation before the banks escape back to the world of risky bonuses and lavishly refurbished offices.

But while the government wasn’t able to reap that much interest from the preference shares, considering they only had them for a few months, they did still get £250m. Maybe the best case scenario, of some banks failing while the others make the government lots of money while absorbing assets and creating a leaner banking market, will happen yet.

The US newspaper business is in dire straits. Recent death rattles have included Sam Zell’s Tribune group filing for bankruptcy protection and its LA Times title whoring itself ever more shamelessly to advertisers; the Boston Globe, who is owned by the same company that own the New York Times, is scraping together its existence – its unions have just approved cost-cutting measures, like pay cuts and the scrapping of lifetime job guarantees to try and make enough savings to warrant the paper’s ongoing existence.

Now the WSJ is poised to try and fill the gaps in content created by these cost-cutting papers: “We’re going to move in on each of the big cities”, said managing editor Robert Thomson. The paper currently allows free access to certain articles, but has a subscription plan for its premium financial content as well as a fair chunk of its other stories. Now it’s looking to make that more sophisticated, and allow, for instance, a reader interested in today’s Clearnet bid to buy just that story without having to fork out for a whole subscription. They’re also going to create premium subscriptions for their truly niche, high-quality business content, in areas like “energy, commodities, wealth management”.

It comes as the New York Times Co.’s chairman Arthur Sulzberger Jr. hinted a couple of week ago that the NYT might install a micropayment model: ”We continue to take a fresh, hard and deep look at various subscription, purchase and micropayment models”. Ariana Huffington is a fan too – in an interview with German paper Die Welt, she said the following:

“The idea that you can go back to a pre-Internet world where you can create walled gardens around content, and charge for admission, is simply futile. Those who try that are going to fail. Today we live in the linked economy, not a walled-off content economy. The challenge is to find different ways to monetize links among media through advertising or micropayment or whatever, not subscription for exclusive content.”

Well, it’s going to be a bit more sophisticated than that. Micropayments make sense for the WSJ, given their specialised content for specialised readers – you can maximise the profitability of a niche through micropayment, when a businessperson finds they absolutely need its individual bits of information. But a more casual reader will find the barrier of individual payment pretty offputting – a subscription model makes more sense for them, because after one payment they can go back to the browsing style they’re used to.

Micropayment probably needs to be not at the truly micro level of individual stories, but payment for a week’s worth of, say, green tech stories. Bundling a story from elsewhere on the site for free along with the paid package could work well too, both as an incentive to purchase and a means of drawing readers to other parts of the site. The beauty of online means that there is this freedom to offer these different payment structures at once – Huffington et al should be thinking of all of the possible ways to monetise their product.

After Barclays and Citigroup weathered their shareholder meetings without incident, despite their respective lack of shareholder deference and general incompetence, Ken might have thought he was going to get away scot free. And he had moments of glowing support – applause when he said he gave away more than he earned last year (nice way to deflect those early bonus payments); scourge of shareholder meetings Evelyn Y. Davis gave Ken her “full support”; and bozos too scared of change overused their aquatic metaphors – “When the water gets rough, do you take the man who knows the most about the problems and throw him overboard?”, “We really need leadership when the water gets rough”.

But nevertheless, the motion to split the CEO and chairman positions passed, and Ken finds his absolute grip on BoA compromised. Perhaps talking complete jive, like saying the government didn’t have a hand in the Merrill deal despite testifying to the contrary just a couple of months ago, annoyed everyone a touch. Saying that actually buying up the bank was “good value” and good idea in the long run, when it announced $15bn in losses after the deal and helped drag down the BoA share price by 77%, also can’t have gone down well with the shareholders who had their heads out of the sand.

Why would Ken gloss over how Paulson leaned on him to go through with the Merrill deal? Paulson didn’t want the bank to go the way of Lehman, and so gave BoA a $20bn bailout to help absorb it. At the time, Ken didn’t disclose how the government intervened, was forced to testify that they had, and is now going back to his original line that there wasn’t government intervention. The only explanation is that he doesn’t want to look weak in front of his shareholders, but it’s really not that shameful to buckle under the pressure of the US government, and while the takeover wasn’t great for BoA, it probably stopped another panic in the credit markets. It happened, Ken! The sooner you admit that, the sooner we can move on with our lives!

Of course, the shifting of positions could be seen as merely having “symbolic meaning”, as David Weidner suggests in today’s WSJ (he focuses instead on the potential storm of crazy unleashed by Morgan Stanley spinning off their trading division, worth a read). “It’s not particularly significant in terms of how the bank will continue to be run”, says one New York asset manager to Bloomberg. As for the board itself, they expressed “unanimous support” for Lewis continuing in his new roles.

But others are suggesting that it’s the beginning of the end for Ken. “This is an unambiguous vote of no confidence…Whether he chooses to remain as CEO or not, the dominant influence that he had at Bank of America is now a thing of the past”, Campbell Harvey, finance professor at Duke University, told Reuters. “It’s kind of the first step toward the end for Lewis…I just don’t think he’s going to last”, said portfolio manager Ralph Cole. 

I wonder how much John Thain’s front page WSJ fightback on Monday affected things – it drew Lewis closer to the scandal that saw bonus payments made before the deal went through and those massive losses were announced. Of course, Thain wasn’t saying anything particularly new, but its interesting that he timed his refresher course just before the shareholder meeting. He’s got a partial victory at least, and potentially instilled a sufficient amount of doubt in Lewis’s abilities to eventually bring him down. Maybe he just wants him fired so he’s got someone to play chess and drink extra-strength cider in the park with.

Pang is a Taiwanese immigrant who claimed to have a degree and an MBA from the University of California, Irvine, when he actually had neither. In the mid-90s, he stole $3m from a investment fund he was working at because he “needed the money”. There’s a dispute over whether or not he was subsequently fired from the firm, but I can’t imagine he left with a nice fruit basket, and anyway, Pang’s got much bigger fish to deal with yet.

He later formed PEMGroup, raising hundreds of millions of dollars from Taiwanese banks, to invest in the debt of US companies. It looks like 16,000 investors, with $700m of investment, are affected by the alleged subsequent fraud committed with this money. Allegations about his time there include spunking $15m of funds that were meant to be invested in timeshare properties on a Gulfstream jet; making whoopee with Taiwanese whores; having a gambling addiction that subsequently resulted in “tough-looking men” dropping by to see him; buying fake asset-insurance; and literally showering female colleagues with money won at Vegas.

PEMGroup also bought up life insurance policies off old people, and collected them when they died (mmm, charming). Unfortunately “everybody lived a long time”, so they weren’t getting any payouts. They started to pay investors with the investments of new clients, i.e. a Ponzi scheme. The second-in-command, Nasar Aboubakare, was told of the scheme, and he subsequently told the Wall Street Journal. Between then and the story being published though, he allegedly offered Aboubakare $500,000 to tell the Journal it was all made up and sorry, he was just a bit mental. He forwarded that offer onto the Journal too.

Moreover, in the period just after he was fired, Pang’s wife was murdered by an “elegantly dressed man carrying a briefcase and holding a gun”. The WSJ goes into full-on Philip Marlowe chin-stroking mode over the case, pointing out that Pang had been abusive in the past, that the day before her murder she’d gone to a private investigator with allegations that Pang had been seen with another woman. She was a stripper as well by the way, just to enhance the country-music/spy-novel nature of this narrative. Pang refused to testify in the case, and many of the jurors apparently thought he’d done it rather than the man they eventually acquitted; Pang since tried, in a neatly microcosmic version of his bigger fraudulent business, to defraud his stepson out of the life insurance.

Pang was on a “religious pilgrimage” in China when the news hit – he hired PR pitbull Mike Sitrick, who has represented Halle Berry, Paris Hilton and Naomi Campbell, to blanket deny everything, and then hired David Schindler to defend him against the FBI charges. Schindler was careful to point out that the charges had nothing to do with the alleged fraud, though I think they might be just getting to that a bit later, Dave. Good turd-polishing though!

Three cheers for Mark Maremont at the Wall Street Journal, who dug most of this stuff up, after the tipoff from Aboubakare. So will Pang be able to talk his way out of this one? How many more Ponzi schemes will there be before the recession is done? Will SEC staff ever get a holiday again? Keep watching to find out.

Bank of America, under Ken Lewis, originally claimed that Thain had kept them in the dark about Merrill’s losses, and that it was Thain’s decision to pay bonuses early. Thain contested this back in January when he got stung over his redecoration expenses, but clearly the accusation is still smarting because he’s contesting it again today: “The suggestion Bank of America was not heavily involved in this process, and that I alone made these decisions, is simply not true”. In other words: “it wasn’t just me that decided on an unsustainable program of compensation, it was Ken Lewis as well!”

Thain says that he was “stunned” by Financial Times reports that he had “decided” to speed up bonus payments to happen before the merger of the two bank. But let’s read between the lines here – he wasn’t stunned that he was being accused of having sped up the passage of bonuses, he was stunned because he was being solely accused, and by Bank Of America, who he charges as being co-conspirators in the early payments. Well, I’m sure that’s pretty galling for him, but for the rest of humanity it doesn’t change a thing – he’s still the architect of a cynical, damaging ploy to squeeze as much personal cash and stock from the deal as possible.

That said, let’s not let BoA’s attempts to get off the hook (“We believe it is time to move on. We wish Mr. Thain well in his future endeavors”) gain any traction. That non-public document, signed by Lewis and Thain, that stated that Merrill could pay out bonuses before the merger was complete, should do the trick. Read the whole WSJ piece here, and a good timeline of the whole debacle on the Huffington Post here.

The image of the “radioactive” Thain painted in the WSJ, of him putting on a suit every day without a company to go and work for, is the tastiest morsel of schaudenfraude we’ve had for a while. Don’t miss out.

The Google/AP hoo-ha is over whether Google effectively steal from newspapers in using their content for free – Robert Thomson, the editor of the Wall Street Journal, stated colourfully that Google were “tapeworms in the intestines of the internet”. The row started earlier this month, at the Newspaper Association of America, where Eric Schmidt told newspapers they had dropped the ball in letting Google distribute content. Schmidt opened his NAA keynote address with the words: “Try to figure out what your consumer wants. If you piss off enough of them, you will not have any of them.” The AP responded with upturned noses and an “industry initiative to protect news content from misappropriation online”. By which they mean a demand for a share of the revenue Google picks up from their content.

AP president Dean Singleton bawled, a la Network’s Howard Beale: “We’re as mad as hell and we’re not going to take it anymore!”, as the AP threatened Google (plus other search engines and aggregators) with legal action for using the work of news organisations without any “fair” revenue share. The claim is that Google are making money from news organisations: they summarise the content, index it, then use it to attract people to their site and therefore sell ads. The news organisations however, commission the work, pay for it, then get no return.

Earlier this week, Eric Scmidt was quoted as calmly advising the shrieking industry: “The best way to get out of this is to invent a new product. That’s the way Google thinks. Incumbents very seldom invent the future….The whole secret here is the ads are worth more if they’re more targeted, more personal, more precise.” As much as innovation is key, the ad model is proving to be a problem. Jeff Jarvis pointed out that newspapers have had 10 years to adjust; to think and develop accordingly, and they haven’t been radical enough. “When papers die,” he says, “there will be silence, confusion and chaos and a few bad guys will escape the watchful eye of journalism. The good news is this: into this crying need, this vacuum, entrepreneurs will rush.” It’s a bleak prospect this journo-pocalypse, but as another newspaper falters almost every week, it seems the reality is rushing ever forward.

What the AP resistance serves to highlight is Google’s unquestioned lordship over the internet - email, RSS feeds, maps, images, news. And Google is the best at these things; challenging Google is a bit like David and Goliath, only David hasn’t got any little rocks to chuck in Goliath’s eyes this time. The underlying question is whether Google can do without news organisations, or visa versa. In the unlikely event, Google could probably take a hit that big and survive, but I think it’s fair to say that in this climate, news organisations cannot do without Google, as Google brings hits, and hits brings ads, and ads are one of two largely unsuccessful revenue models currently clutched at by the industry, the second being charging for content.

Advertising is now bringing insufficient revenue for newspapers. It’s also harder to target and specialise ads with news content, and a report out this week shows that even MySpace and Facebook users are hacked off with endless adverts and app requests asking if they’d like to receive another tastefully designed ‘council estate gift’ or BFF digital charm necklace. And as we saw recently, the maths of charging for content, unless you’re the WSJ or FT and have unique content that you’ve been charging for since day one, simply doesn’t add up.

The Guardian appears to be the only UK newspaper innovating effectively with the development of its Open Platform API service, which Bad Idea reported on back in March, and Arianna Huffington at the Huffington Post, talks of seizing the oppurtunities that “disruptive innovation” provides, pointing to their traineeships for investigative journalists, among other things.

Apart from this there’s not much innovating going on in the industry, just a lot of griping about the state of things and fiddling about within the framework of two existing models. As for Google’s position in all this, Tim Luckhurst on the Guardian’s Comment is Free, says that “Google doesn’t understand journalism”. Of course they don’t, they understand the internet and making money from it, and equally, journalism doesn’t understand the internet and making money from it. The industry is being stubborn, and Google are being ruthless.

It’s going to go under an Initial Public Offering, ie on the stock market, which seems weird considering that the markets’ moods are less predictable than a teenager’s at the moment, and no-one’s been doing any IPOs over the last few months. But the floatation won’t happen until 2010, so it’ll get a headwind of hype and excitement, maybe even a bidding war from buy-out firms prepared to pay over the eventual valuation. Given the popularity already of the Skype iPhone app, we can presume that the brand will be all the stronger come next year. Though Martin Peers at the Wall Street Journal suggests that growth will be limited thanks to calls being free, and that given Skype made $116m profit last year, the $1.7bn that eBay will want for it seems like a lot.

Even if they do get that much for it, it’s still a hefty loss for eBay on their original investment. eBay has also just announced it’s selling back web recommendation service StumbleUpon to its original owners, after they bought it for $75m back in 2007. “We realized there were few long-term synergies between the two businesses”, said StumbleUpon founder Garrett Camp. So “lack of synergy” seems to be a running theme here – eBay, flush from its brilliant core business, thought it should and could move with the times, or at least be seen to be doing so. But now they’re having to turn back to the auctions, something they should never have strayed from in the first place.

eBay resisted a buyback offer from Skype founders Niklas Zennstrom and Janus Friis, who look like an attendee at a caravan trade show and a trance producer respectively; they had pulled together a group of private equity firms to fund the purchase. The Guardian suggests that thanks to a beef over the Global Index technology that the pair licence to Skype, eBay is snubbing Zennstrom and Friis with the IPO. Take that, Scandos!

Maybe Zennstrom and Friis can now concentrate on turning the Joost platform they invested in into a viable TV equivalent of fellow Scandinavian ad-funded success story Spotify. At the moment it’s good for cartoons, the softest of porn, and little else, but surely has the potential to be massive. Maybe they could try and steal the music video market off YouTube while it festers in copyright law hell?