Morgan Stanley’s Facebook analyst: sober man in world of hype

(Reuters) – Scott Devitt has long stood out for being cautious in a world of Internet bulls.

In the more than 12 years that he has covered Internet companies as a Wall Street analyst, Devitt has developed a measured approach to a sector that often succumbs to hype.

Devitt, who replaced star Internet analyst Mary Meeker at Morgan Stanley in 2010, was one of the few analysts to cut his price target for Google in January after the company’s fourth-quarter earnings missed analyst expectations by more than $1 a share. In February Devitt downgraded Amazon to equal weight from overweight, while the majority of analysts had a buy or strong buy on the stock.

And Devitt once insisted that his then-employer skip underwriting a dot-com bubble era IPO because he was not convinced the company could compete with a larger rival.

But all those contrarian calls pale next to the one he made just days before Facebook priced its $16 billion initial public offering. That one has become the subject of industry debate, regulatory scrutiny and investor lawsuits.

Devitt was one of a number of analysts to lower his revenue and earnings expectations for the social media giant after the company informed analysts that it was dropping its quarterly and annual revenue guidance. Facebook also issued an amended prospectus cautioning that the shift of its users to mobile platforms could have a negative impact on revenue growth.

Such a move was highly unusual because it occurred just days before Facebook’s highly anticipated IPO, whose lead underwriter was Morgan Stanley, Devitt’s employer. The investment bank not only had control over the process, but over 38 percent of Facebook shares being sold

Devitt’s and other analysts’ revised revenue forecasts were shared via phone calls with institutional investors, but not with retail investors, before the stock began trading publicly.

That in turn raised questions over whether the playing field was skewed against Main Street investors from the start and sparked lawsuits

It is a limelight that Devitt is not used to and doesn’t feel comfortable with, according to people who know him.

“On one hand we could say this is fantastic that the analyst had the guts on the eve of the biggest IPO in history to say something bearish,” said Josh Brown, author of the blog The Reformed Broker. “On the other hand, the only ones who were on that call were a handful of institutional investors,” said Brown, who does not know Devitt.

Devitt did not return calls or e-mails for comment.

Morgan Stanley said in a statement that it forwarded Facebook’s revised prospectus to all of its retail and institutional clients and that its IPO procedures were in “compliance with all applicable regulations.” The company did not respond to questions about why it did not tell all its clients, including small investors, about the forecast change.


When Devitt replaced Meeker, he had no desire to become as big a name as was Meeker – who was dubbed “Queen of the Internet” in the industry – according to two people who know Devitt well but asked to remain anonymous because their employers do not allow them to speak to the press.

“He’s not loud or showy in any way,” said one of the people who is close to Devitt.

While friends say Devitt is frugal, public property records show that last summer he and his wife, Katherine, purchased a 4,800-square-foot historic home set on 2.3 acres in Ho-Ho-Kus, New Jersey, for $1.575 million. Even so, Devitt, a 39-year-old father of three, takes the bus to Manhattan every day.

He often keeps the same cars for years, friends said, and currently drives a minivan. He once sold a Saturn that was so old that the friend who bought it joked it wouldn’t make it beyond his own property, according to the second unnamed source, a former colleague.

“He’s kind of a fish out of water in New York – family is very important to him,” said the person, who is close to Devitt.

Devitt nearly left the analyst world in 2007 when he accepted the job of chief financial officer at online jewelry retailer Blue Nile Inc. But Devitt changed his mind because he did not want to relocate his family to Seattle, according to a news report published at the time.

His approach to analyzing companies might also strike some in the world of New York bank analysts as different, too. Devitt, sources said, often takes time to talk to investors about his recommendations and why he made them. He also solicits feedback from the people he works with, even junior level colleagues, according to people who know him.

Devitt has a history of being cautious. In 2007 and 2008, many analysts were bullish on e-commerce provider GSI Commerce as it went on an acquisition tear, but not Devitt, said Michael Rubin, founder and former CEO of GSI, which was bought by eBay for $2.4 billion in 2011.

“Others just liked us for the fact that we were doing acquisitions, but Scott wanted to see how things played out,” said Rubin, founder and CEO of Kynetic LLC.

Rubin saw this as a challenge. “I paid more attention to what he had to say,” he said. “He was very thoughtful about all of his research.”


Devitt was born in Massachusetts and is an avid Red Sox fan, according to friends. But he mostly grew up in Jacksonville, Florida, where he played baseball in high school and then in college at then-Division II University of North Florida. He shares the school record for most runs – five – scored in a game, according to UNF’s records.

After earning an M.B.A. at University of Georgia’s Terry College of Business, Devitt worked as a financial analyst at Dell, according to his LinkedIn profile – which appears to have changed at least once since the Facebook IPO to add to his specialties “resistance of the institutional imperative.”

As a teenager and later in college, Devitt helped with the family sporting goods business, The Hatman Inc, which sells vintage sports jerseys and hats, according to his LinkedIn page.

Devitt is a fan of Warren Buffett; he even has a license plate holder that reads “In Berkshire Hathaway we trust,” according to one of the people close to him. His reading list include two items on Charles Munger, a value investor and Buffett partner whom Devitt’s friends say he greatly admires.

Munger has been publicly bearish on Facebook.

“I don’t invest in what I don’t understand. And I don’t want to understand Facebook,” Munger told CNN in early May.

Devitt’s cautiousness has worked against him. He has underweight ratings or equal-weight ratings on 15 of the 23 companies he follows, meaning that investors should either hold or sell those 15 stocks.

But for the past two years, the companies he has underweight have returned 19 percent, almost 8 percentage points more than the absolute return for all the companies he covers combined, according to Thomson Reuters StarMine data.

StarMine gives Devitt three out of five stars on his recommendations and two out of five stars on his earnings estimates, an average rating.

Some of his calls have been spot on, even if a bit early. In February 2011 he downgraded Netflix from overweight to equal-weight. Shares had been trading at $240.79 at the time. That July the stock hit a high of $298.73, up 19 percent. Devitt didn’t sweat it, a person close to him said.

By the end of the year, Netflix was floundering after changing its pricing and its decision to split its streaming and DVD businesses. Shares now trade around $67.46.

Sometimes, though, Devitt can be slow to downgrade a company, according to a Reuters review of his reports. In March, online deals company Groupon downwardly revised revenue and earnings it had reported a month earlier and its stock dropped 17 percent. Devitt called the announcement “a mild hiccup in Groupon’s compelling long-term story,” and kept an equal-weighting on the company.

The stock is down 27 percent since April 1.

Devitt has also found himself at odds with investment banking interests at the companies he has worked for. When online retailer was planning to go public for the second time in 2005, Devitt advised the firm he was working for, Legg Mason Capital Markets (now part of Stifel, Nicolaus & Company) against underwriting the deal, the former colleague said.

The firm did not heed Devitt’s advice, but “it takes a lot of guts for an analyst to (try to) kill a deal,” the former colleague said. eventually withdrew its IPO plans.

In May, Devitt initiated coverage of Millennial Media with only an equal weight, even though Morgan Stanley was the lead underwriter of the deal. Similarly, when Devitt initiated coverage of Groupon, for which Morgan Stanley was the lead IPO underwriter, he gave it an equal weighting.

“A lot of analysts play the game because of their relationships with the investment bank, but Scott tells you what he thinks,” Rubin said.

(Additional reporting by Olivia Oran; Editing by Jennifer Merritt and Steve Orlofsky)

Indian growth weakest in 9 years, rupee slides

(Reuters) – India’s economic growth slumped to its lowest level in nine years in the first three months of 2012, marking a dramatic slide in the fortunes of a country whose economy was boasting nearly double-digit growth before the global recession.

“Urgent and bold steps are immediately needed to prevent the economy from descending into a full blown crisis. This must be averted at all costs,” said Rajiv Kumar, secretary-general of the Federation of Indian Chambers of Commerce and Industry.

The economy grew 5.3 percent in the last quarter from a year earlier, a sharp slowdown from 9.2 percent growth in the last quarter of the previous year, government data showed. Finance Minister Pranab Mukherjee blamed the poor performance of the manufacturing sector, which shrank 0.3 percent from a year earlier, for the slowdown.

The data was released as the rupee plunged to yet another record low and protesters took to the streets across India to demand the scrapping of a steep petrol price hike announced last week.

The figures were the latest confirmation that the slowdown of Asia’s third-biggest economy is deepening.

“This is definitely a very important signal for the government – this is a make or break situation for India and the government has to step on the panic button,” said Rupa Rege Nitsure, chief economist at Bank of Baroda in Mumbai.

“If the government doesn’t step in now, India’s sovereign ratings may be jeopardized.”

Prime Minister Manmohan Singh’s government largely blames factors beyond its control, such as the euro zone debt crisis, for its economic woes.

But many economists and investors say weak leadership and muddled policies have failed to curb government spending and alienated many foreign investors.

Slowing corporate investment, stubbornly high inflation and ballooning fiscal and trade deficits have led to comparisons with India’s 1991 balance of payments crisis, a watershed moment in the country’s history that led Singh, then finance minister, to drive through transformational economic reforms.

Critics of Singh’s fractious Congress party-led coalition government say it needs a crisis to break the policy paralysis that has stalled major reforms, such as allowing foreign supermarkets into the retail sector and reducing costly fuel, food and fertilizer subsidies.

But Thursday’s nationwide strike called by opposition parties to protest the petrol price hike underscored the difficulty the government faces in pushing through unpopular economic reforms. The petrol price was increased last week after a six-month freeze.

The strike forced businesses, public transport, government offices and colleges to shut down in most of India’s 28 states.

A usually bustling Mumbai, India’s financial capital, looked deserted as people stayed at home and many shops remained closed. Protesters pelted buses with stones and lay down on train tracks to disrupt rail travel into the city.

TV footage showed protesters in the states of Madhya Pradesh, Odisha and Bihar burning tires and photos of Singh and Congress party leader Sonia Gandhi.

The 5.3 percent growth rate was much weaker than expected and was even below the lowest forecast in a Reuters poll that had produced a median of 6.1 percent from predictions ranging between 5.5 percent and 7.3 percent.

Quarterly expansion was last lower in the January-March quarter of 2003 at 3.6 percent, Thomson Reuters data showed.


The GDP data showed that the manufacturing sector shrank 0.3 percent compared with a year earlier. The farm sector grew just 1.7 percent.

Gross domestic product rose 6.5 percent in the fiscal year to the end of March 2012, the lowest growth rate since 4.0 percent in 2002/03 and a sharp slowdown from the previous year’s 8.4 percent.

In the three years before the global financial crisis, India’s economy was roaring with growth of well above 9 percent and ambitions to challenge China as the world’s top emerging economy.

Indian benchmark 10-year government bond yields dropped 16 basis points as investors started to price in an interest rate cut to help the economy. India’s main stock index .BSESN was down about 0.6 percent.

Standard & Poor’s cut India’s credit rating outlook in April to negative from stable, worried by India’s fiscal and current account deficits. The decision jeopardizes India’s long-term rating of BBB minus, the lowest investment grade rating.

Mukherjee said on Thursday most of the factors that had led to India’s growth slowdown had “bottomed out”.

Private economists have cut growth forecasts to between 6 percent and 6.5 percent for the current fiscal year to March 2013. The government forecasts close to 7.5 percent.

The rupee fell on Thursday to a record low beyond 56.50 per dollar. Its slide of 14 percent from its 2012 high adds to inflation concerns in the country and raises the cost of imports.

That leaves policymakers in a bind. The government ran a fiscal deficit in the year to March 2012 of more than 5.7 percent of GDP, new figures on Thursday showed, suggesting it has little financial room to stimulate the economy.

The central bank will be wary that reducing interest rates could fuel inflation, which is already above 7 percent. A rate cut could also undermine the rupee further.

“The RBI is fighting a multi-faceted battle – managing currency, supporting growth, fighting inflation. I think they will wait for fiscal consolidation before cutting rates further,” Rahul Bajoria, an economist at Barclays in Singapore, said.

(Additional reporting by Annie Banerji, Satarupa Bhattacharjya and Arup Roy Choudhury: Writing by Ross Colvin; Editing by John Chalmers and Neil Fullick)

Wall Street drops on economic growth worries

(Reuters) – Wall Street fell on Thursday after a slew of economic reports indicating the economy may have stalled and the euro zone’s debt crisis cast doubt on global growth prospects.

A report by private payrolls processor ADP showed private employers created 133,000 jobs in May, fewer than the expected 148,000 while new claims for unemployment benefits rose by 10,000 for the fourth straight weekly increase. The data comes ahead of Friday’s key payrolls report.

Commerce Department data showed economic growth in the United States was slightly slower than initially thought as gross domestic product was revised down to a 1.9 percent annual rate from last month’s 2.2 percent estimate.

Adding to the negative tone, the Institute for Supply Management-Chicago business barometer declined to 52.7 from 56.2 in April, its lowest level since September 2009 and below Wall Street expectations.

“The markets have become less optimistic and much more accustomed to seeing numbers that are just not impressive,” said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

“It is clear the markets are pricing in a substantial slowdown moving forward in terms of GDP growth, employment gains, productivity gains – it’s not encouraging for bulls.”

Energy-related stocks were among the worst performers as crude prices slipped 0.8 percent as signs of a slowing global economy heightened demand worries. The PHLX oil service sector index .OSX lost 1.9 percent, weighed down by a 2.9 percent drop in Schlumberger NV (SLB.N) to $62.27. <O/R>

European shares, which had steadied, turned negative after the data. The FTSEurofirst 300.FTEU3 was off 0.5 percent. .EU

The European Central Bank increased pressure for a joint fund to guarantee bank deposits in theeuro zone, saying the region needed new tools to fight bank runs as the bloc’s debt crisis drives investors to flee risk.

The increasing concern over the euro zone’s debt crisis coupled with a spate of tepid domestic economic data has put the benchmark S&P index on pace for its worst monthly decline since September.

Equities have been closely linked to the fortunes of the euro, with the 50-day correlation between the currency and the S&P 500 at 0.92. Expectations of an Irish vote in favor of Europe’s fiscal pact helped the euro recover from a near two-year low against the dollar.

The Dow Jones industrial average .DJI dropped 65.39 points, or 0.53 percent, to 12,354.47. The Standard & Poor’s 500 Index .SPX lost 11.00 points, or 0.84 percent, to 1,302.32. The Nasdaq Composite Index .IXIC fell 31.92 points, or 1.12 percent, to 2,805.44.

Many top retailers reported stronger-than-expected sales in May, as shoppers overcame growing anxiety about the economy and the job market.

Target Corp (TGT.N) advanced 0.9 percent after posting better-than-expected May same-store sales. The Morgan Stanley retail index .MVR gained 0.3 percent.

Ciena Corp (CIEN.O) climbed 7.2 percent to $12.74 after the network equipment company posted a surprise second-quarter adjusted profit.

Joy Global Inc (JOY.N) slid 7.2 percent to $54.66 after the mining equipment maker said it expects order rate to moderate and revenue to remain flat for the next few quarters.

(Editing by Dave Zimmerman)

Retailers report strong May same-store sales

(Reuters) – Several top retailers reported stronger-than-expected sales in May, as shoppers overcame growing anxiety about the U.S. economy and the job market.

Victoria’s Secret parent Limited Brands Inc said on Thursday that sales at stores open at least a year had risen 6 percent in the four weeks ended May 26. The report came the day after department store chain Macy’s Inc posted a 4.2 percent increase. Both companies beat Wall Street forecasts, according to Thomson Reuters I/B/E/S.

Meanwhile, Costco Wholesale Corp’s May same-store sales rose 4 percent, hurt by the strong dollar’s impact on overseas sales. Analysts were expecting a 4.3 percent increase.

Other top retailers reporting May sales later on Thursday morning include Kohl’s Corp, Gap Inc, Target Corp and Nordstrom Inc.

Many analysts had warned that May sales might suffer because an unusually warm spring in much of the country prompted many shoppers to make clothing purchases earlier. Still, many chains benefited from the timing of Mother’s Day — this year it fell on May 13, five days later than last year.

Fred’s Inc and teen retailer Zumiez Inc were among the other chains to report higher-than-expected May sales, while home furnishings chain Pier 1 Imports Inc said its same-store sales for the first quarter ended on May 26 had risen 7.2 percent.

Still, concern about Europe’s debt crisis, slow job creation and a 6.1 percent drop in the Standard & Poor’s 500 weighed on shoppers’ spirits in May.

A report on Tuesday from industry group the Conference Board showed consumer confidence had fallen in May to its lowest level since the start of the year, marking the third month of declines and prompting some executives to sound a cautious note about the coming months.

“We recognize that 2012 will have more headwinds, a lot of concerns relative to Europe in the markets, volatility,” Saks Inc Chief Executive Officer Steve Sadove told shareholders at the luxury retailer’s annual meeting on Wednesday.

Last week Tiffany & Co lowered its sales forecasts, pointing to a slowing U.S. market for luxury goods.

But at the same time, U.S. shoppers got a break in the form of lower gas prices.

Excluding Rite-Aid Corp and Walgreen Co, which report their sales next week, Wall Street analysts are projecting May same-store sales for 20 top chains to be up 3.6 percent.

According to National Retail Federation data, May is the fourth-biggest month of the year, bolstered by Mother’s Day and the bridal season.

(Reporting by Phil Wahba in New York; Editing by Lisa Von Ahn)

Apple CEO sees TV as area of “intense interest”

(Reuters) – Apple Inc Chief Executive Tim Cook said technology for televisions was of “intense interest” but stressed the company’s efforts would unfold gradually amid speculation the iPad and iPhone maker was on the brink of unveiling a revolutionary iTV.

In one of his more revealing interviews since assuming the helm of the world’s most valuable company, Cook also said he hoped someday to see Apple products manufactured in the United States and outlined his approach to managing an organization long-associated with its late founder Steve Jobs.

“Another thing that Steve taught us all is to not to be focused on the past,” Cook told this year’s All Things Digital conference, an annual gathering of A-list technology and media executives in the upscale California coastal resort town of Rancho Palos Verdes.

Industry insiders and executives say Apple may unveil a TV-based device in late 2012 or 2013 that has the potential to shake up the cozy television content and distribution industry the way the iPod and iPhone disrupted music and mobile content, but Cook has steered clear of commenting on that issue directly.

“This is an area of intense interest for us,” Cook said, referring to Apple’s existing television set-top box product. “We’re going to keep pulling this string and see where it takes us.”

When asked specifically if Apple was making a television set, Cook said he was not going to answer that question.

Apple already sells a $99 set top box called Apple TV that streams Netflix and other content. Cook, who has previously said the Apple TV product had a hobby status inside the company, noted the company was sticking with it despite not being known as a “hobby kind of company.”

“Here’s the way we would look at that, not just at this area but other areas, and ask can we control the key technology?” he said in response to a question about how Apple thinks about improving the television experience for consumers. “Can we make a significant contribution, far beyond what others have done in this area? Can we make a product that we would want?”

Apple has been in negotiations with content companies for its devices. It began talks earlier this year to stream films owned by EPIX, which is backed by three major movie studios.

The company has a good relationship with content owners and doesn’t see the need to own a content business, Cook said, adding he has met with several people in that business recently.


In wide-ranging remarks, Cook said he would like to see more of the company’s products assembled at home than in China and contain more U.S. components such as semiconductors.

Apple has been criticized for relying on low-cost Asian manufacturers to assemble its products and for contributing to the decline of the U.S. manufacturing sector.

Cook, who took the helm of the world’s most valuable technology company in August shortly before founder Steve Jobs died, said manufacturing in the United States was difficult because of declining tool-and-die manufacturing expertise, among other things, but he was working on it.

“There are things that can be done in the U.S., not just for the U.S. market but that can be exported for the world,” Cook said. “On the assembly piece, could that be done in the U.S.? I hope so, again, one day,” he added.

Apple’s final assembly is done through Asian contract manufacturers, particularly Taiwan’s Foxconn Technology Group and its listed entity Hon Hai Precision. Cook noted that Apple does some component manufacturing in the United States, including the main microchip that runs the iPhone and iPad.

Apple makes the A5 processor in a 1.6 million square-foot factory in Austin, Texas, owned by Korean electronics giant Samsung Electronics.

Cook also said some of the glass for the iPhone and iPad is made in a plant in Kentucky.

The CEO talked about how the iPad was just in the “first innings,” but declined to say what was in store for it next.

He reiterated his belief that many consumers will use the iPad more than computers. In response to a question about PC software-maker Microsoft Corp’s efforts to enter the tablet market, Cook brushed off the threat.

“The more you look at the tablet as a PC, the more the baggage from the past affects the product,” he said.

Apple released the iPad in 2010 and it has quickly defined the tablet computer market, selling more than 67 million units so far.


The 51-year old Cook said he spends less time focused on marketing and design as CEO than his predecessor, who Cook said spent “virtually all of his time on those two things.”

At a company the size of Apple, Cook said, having a strong team is critical.

“You could have an S on your chest and a cape on your back and not be able to do everything,” said Cook, who later cited Robert Kennedy and Martin Luther King Jr as well as Walt Disney Co Chief Executive Bob Iger as figures that he looks up to.

Cook also discussed efforts to make the company more transparent on certain issues, such as supplier responsibility and environmental matters, but stressed he was committed to preserving Apple’s culture.

One Jobs legacy that Cook flagged is Apple’s well-known penchant for going to great lengths to keep details of new products under tight wraps, noting that he planned to “double down on secrecy” on products.

But he suggested Apple would not be constrained by its past.

“I love museums, but I don’t want to live in one,” he said.

By Alexei Oreskovic and Poornima Gupta

 (Editing by Matt Driskill and Mark Potter)

Exclusive: GSK eyes replacing Human Genome board: sources

(Reuters) – GlaxoSmithKline Plc plans to launch a campaign to replace the entire board of Human Genome Sciences Inc with its own nominees, stepping up its $2.6 billion hostile bid for the U.S. biotech company, sources familiar with the situation said on Wednesday.

GSK intends to initiate a consent solicitation process, which could come in the next few weeks, the sources said. GSK has started reaching out to executives in the pharmaceutical industry as well as finance and governance experts to nominate as candidates for Human Genome’s board, the sources said.

GSK plans to nominate 12 directors to replace the entire Human Genome board, the sources said. GSK is also expected to extend its tender offer for Human Genome beyond June 7, the sources added.

GSK declined to comment. Human Genome was not immediately available for comment.

(Reporting By Soyoung Kim and Paritosh Bansal in New York, and Ben Hirschler in London; Editing by Gerald E. McCormick)

(This story was corrected in the second paragraph to show that GSK, not Human Genome, has started reaching out to candidates)

Pill Could Reverse Effects of a Stroke Long After It Hits

(Technology Review) – For the 800,000 people in the United States who suffer a stroke each year, the window for drug therapy closes in the first few hours after the attack. That leaves some seven million stroke survivors in this country alone with no medical alternative beyond physical therapy. A small pharmaceutical company in New York hopes to change that with a drug that may help patients regain some of their lost mobility six months or more after a stroke.

Strokes happen when blood stops flowing to part of the brain, often due to a blood clot. Without blood to bring new oxygen, cells in the affected region start to die. If the symptoms of stroke are recognized quickly enough and the victim is brought to a hospital within a few hours, doctors can administer a clot-dissolving drug to minimize the damage. But only a small fraction of stroke patients seek medical attention soon enough for this intervention.

“If they miss this therapeutic window, the consequences are heavier, so it’s important to be able to do something for those patients who miss that window,” says Francesca Bosetti, a stroke expert with the National Institute of Neurological Disorders and Stroke (NINDS), part of the National Institutes of Health.

In the future, stroke patients who miss this window and are affected by reduced mobility long after their stroke may be able to turn to a drug that helps damaged nerves transmit electrical signals in the brain.

Earlier this year, Acorda Therapeutics reported that the compound dalfampridine improved motor function in both the forelimbs and hind limbs of rats that had suffered a stroke. This month, the company began recruiting patients for a clinical trial to test the effects of the compound in human stroke patients. Acorda plans to enroll about 70 people who have had a stroke at least six months prior. “That’s the time that deficits seem to stabilize, so we can eliminate naturally occurring improvements in patients,” says Jeff MacDonald, an Acorda spokesman.

Acorda is focusing on neurological disorders at a time when many pharmaceutical companies seem to be turning away from such maladies. The company was founded in 1995 to treat spinal-cord injuries and has since taken on other neurological conditions, including multiple sclerosis and stroke. The company originally licensed dalfampridine from drugmaker Elan in the hope of using it to treat spinal-cord injuries, but instead it found more success in treating multiple sclerosis patients. “We followed it to where it was leading,” says Andrew Blight, chief scientific officer for Acorda.

Spinal-cord injuries still garner a lot of focus from the company, which hopes to begin testing acompound licensed from Medtronic that protects neurons from the wave of cell death that follows the initial injury. Medtronic had already shown the compound to be safe in healthy patients, and later this year, Acorda plans to test its efficacy in patients in the first hours after a spinal-cord injury.

Patients with injured spinal cords are not nearly as numerous as stroke patients, “but if you are talking about costs to society, spinal-cord injuries are extremely expensive,” says Naomi Kleitman, a spinal-cord injury expert with NINDS. “They tend to happen in fairly young people who need a lot of medical and assistive help if they have severe injuries.”

The company is also looking to treat longer-standing spinal-cord injuries with a drug that would help break down the scar tissue that forms around a spinal-cord injury. The scar tissue is thought to prevent nerves from establishing the new connections that may help patients recover some functionality. The product is still in early development, and one challenge will be devising a method to deliver the large scar-busting molecule to its target site.

Despite the pressing need, the small market for spinal-cord injury drugs may be one reason the condition doesn’t get a lot of attention from pharmaceutical giants. “No one else wants to develop compounds to treat spinal-cord injury as seriously as Acorda,” says Edward Hall, a neurologist and spinal-cord and brain-injury specialist at the University of Kentucky in Lexington. “These aren’t going to be billion-dollar-a-year products.”

Numbers will not be an issue for long-term stroke patients. Stroke is the leading cause of adult disability, and the number of people living with its effects is growing. “We are getting better at preventing stroke death, but the incidence is going up because the population is aging, and age is the greatest risk factor,” says S. Thomas Carmichael, a neurologist and neurorepair researcher at the University of California, Los Angeles.

Relatively few groups are working on treating the effects of a stroke more than six months after it occurred, says Carmichael, in part because the disorder is tricky to model in lab animals.

“It’s great for the field that [Acorda] is there,” he says. “Right now, there are no pharmaceutical options.”

However, Carmichael cautions that even six months or more after a stroke, patients can respond to focused rehabilitative intervention, which suggests that movement is an important part of recovery. “You have to pay attention to physical activity.” A patient’s own activity level can confound a trial if it’s not well monitored, but it could also lead to the greatest outcomes, he says, if made a part of it.

Engineers Develop Cheap Onboard Tracking System For UAVs

(Technology Review) – The popularity of Unmanned Aerial Vehicles or UAVs has exploded in just a few years. That’s the result of smaller, cheaper computers that allow these vehicles to fly unaided, better radio communication systems and more efficient, lighter motors for longer flight times.

As a result, UAVs are extraordinarilly capable. The flying machines available in any toyshop for a few hundred dollars would have been the envy of any UAV research team just ten years ago.

But there are still limits to what these machines can do and one of them is tracking objects on the ground. Send up one of these cheap UAVs to circle your house or to follow a car and it’ll be hopelessly lost in seconds.

That’s because object recognition tends to be a computationally intensive task and there are obvious power and weight  limits for small flyers.

The standard way to solve this problem is to broadcast the images back to the ground where they can be crunched relatively easily and then sent back. But this obviously doesn’t work when communications systems are disrupted.

So today Ashraf Qadir and pals at the University of North Dakota in Grand Forks reveal a solution. With Department of Defense funding, these guys have built their own image processing machine, which is small and light enough to be carried by a small UAV. They say their device is capable of tracking objects such as cars and houses in real time without the need for number crunching on the ground.

The way these guys have solved this problem is to simplify it and then solve the simplified puzzle. They point out that from a plane, objects on the ground such as cars and houses do not generally change shape.

However, they do change their orientation and position relative to the camera.  So their object-tracking program essentially solves just these two problems. First , it uses the motion of the object in the previous frames to predict where it is going to be in the next frame. That’s fairly straightforward.

Second, it uses a remarkably simple process to follow the object as it rotates. When the onboard computer first finds its target, it uses a simple image processing program to creates a set of images in which the object is rotated by 10 degrees. That produces a library of 36 pictures showing the object in every orientation.

So the process of following  the target is simply a question of matching it to one of those images. Qadir and co have developed a simple protocol to optomise this process.

And that’s it. They’ve tested the approach both in the lab and in the air using a Linux computer on a single printed circuit board plus a small camera and gimballing system. All this is carried on board the university’s customised UAV called Super  Hauler with a wingspan of 350 centimetres and payload capability of 11 kilograms.

These guys say the system worked well in tests. The UAV has an air-to-ground video link which allows an operator to select a target such as a car, building, or in these tests,  the group’s control tent. The onboard computer then locks onto the target, generates  the image library and begins tracking.

From an altitude of 200 metres or so, Qadir and co say the system works well at frame rates over 25 frames per second–that’s essentially real time..

Of course, the systems has some limitations. Following a single vehicle is obviously much harder than selecting and following one of many in traffic, for example. Similarly, station keeping over a single tent in a field is relatively straightforward compared to the same problem in suburbia where all the houses look the same.

But one step at a time, as they say. These are problems for the future.

These guys have a proof-of-principle device that could easily be deployed cheaply and more widely. The Super Hauler isn’t quite in the ‘toy’ department yet but it isn’t hard to imagine how a version of this kind of software and hardware could be deployed in cheap UAVs elsewhere in the near future.

The Department of Defense obviously has its own uses for this kind of gear but for the rest of us it boils down to stalking. All of a sudden, it won’t be so hard to follow your boyfriend’s car when he says he’s going to the game or station keep over your girlfriend’s house when she says she “needs time to herself”. Gulp!

Opera would cost Facebook over $1 billion: analysts

(Reuters) – Opera Software would cost Facebook over $1 billion as competition from Google and others could push up the price tag, analysts said on Tuesday, as takeover talk pushed the shares up as much as 26 percent on Tuesday.

Oslo-listed Opera, coveted for its advanced mobile phone software technology, would be a perfect fit for Facebook but the firm’s business is also vital for some of the industry’s biggest players so any bid is likely to attract others to the table.

“Opera would be sensible for Facebook on several levels,” Arctic Securities said.

“It would enhance the now limited mobile experience of Facebook, improve Facebook’s mobile monetization problem, help Facebook retain online game developers leaving the social network over the lack of a mobile platform and further improve Facebook’s ability to target ads.”

Opera makes various web browsers that work across an array of platforms including mobile phones, tablets, PCs, and TVs.

The software is available on most phones, including the iPhone and the BlackBerry, and works on various operating systems, including Android, giving Opera the reach Facebook is seeking.

The browser can compress data by as much as 90 percent, saving consumers on data charges, and has the technology to better display ads, a key factor for Facebook which has struggled to convert its rapidly increasing traffic from mobile platforms to revenue.

Opera, which has about 200 million Mobile and Mini subscribers, has also built a significant market share in key emerging markets, such as India, Brazil and Asia, where Facebook has been generally weak.


It would be such a perfect fit for Facebook, analysts said it would have to pay a hefty premium.

DNB, Norway’s top bank, said the price would have to be double Friday’s closing level, or 68.6 crowns, valuing the firm at $1.35 billion, while Danske Bank and ABG Sundal Collier both predicted a price between 50 and 60 crowns a share, or between $1 billion and $1.2 billion.

At 1139 GMT, the stock traded up 17.2 percent at 40.2 crowns a share, valuing the firm at around $800 million.

Opera officials have repeatedly declined to comment.

However, Chief Executive Lars Boilesen last October said he would “love to” further cooperate with Facebook.

“We are already Facebook’s platform of distribution in emerging markets like Africa and India. A big part of the Opera Mini traffic is from Facebook. So we are already their channel in these markets,” he said in October.

“We would love to cooperate with Facebook, but the same goes for Google and everyone else. There are no limits here, because we are the leading mobile client in these markets,” he added.


Still, several obstacles remain.

Opera founder and top shareholder Jon S. Von Tetzchner said the firm should focus on organic growth.

“I want Opera to focus on growth and delivering good results; there are big opportunities for Opera,” Tetzchner, who holds 10.9 percent of Opera told Reuters. “We have been promised 500 million users by 2013 and I think that’s a good goal and the firm should keep going for it.”

“I personally think that an ARPU (average revenue per user) goal of $1 is even modest,” he said. “I am not pushing for a takeover.”

Tetzchner said he was not aware of a bid and had not decided how he would react to one but added it would be “undemocratic” for him to try to block it if others supported it.

Another obstacle could be Google, which has extensive relationships with Opera.

“A takeover by Facebook will likely send cold water down Google’s spine,” Arctic Securities said.

Google is Opera’s default search partner for Opera Mini and Opera Mobile worldwide outside Russia/CIS, making the firm a key relationship for Google.

(Editing by David Cowell)

Marubeni buys Gavilon for $3.6 billion as it eyes China

(Reuters) – Japanese trading house Marubeni Corp is to buy U.S. grains merchant Gavilon for $3.6 billion, the company said on Tuesday, as it targets China’s growing demand for corn from North America, the world’s top grain export hub.

China’s corn purchases are expected to surpass Japan’s annual imports of about 16 million metric tons (17. 6 million tons), the world’s largest, within as little as three years, analysts say. China is already the world’s top importer of soybeans.

“It’s a move to complete a grains-supply chain of elevators, export terminals, freight handling and an end-user market, and the target is the growing market of China,” said Akio Shibata, president of the Natural Resource Research Institute in Tokyo.

The U.S. grain trader has about $2 billion in debt, Marubeni said, which would take the total value of the transaction to $5.6 billion. The acquisition would be partly financed by bank borrowing, the Japanese firm added.

The announcement confirmed an earlier Reuters report.

It is the largest overseas acquisition, including debt, in agriculture or energy by a Japanese company since Japan Tobacco bought British cigarette manufacturer Gallaher Group for almost $19 billion in 2006, according to Thomson Reuters data.

Marubeni, Japan’s fifth-largest trading company, had been in advanced talks to buy Gavilon since early May. Gavilon is the largest transaction in Marubeni’s history, the company said.

Marubeni expects its global grain handling to rise to 55 million metric tons in the year to March 2013, when it adds Gavilon’s 30 million metric tons to its business, coming closer in size to global grain giants like Cargill, Daisuke Okada, an adviser on food products to Marubeni President Teruo Asada, said at a briefing in Tokyo.

“We expect U.S. grains will fill future supply gaps in corn and other grains in China as output growth there may slow due to problems including water shortages,” Okada said.

The company also said it expected the acquisition to lift its bottom line by more than $100 million from next year.

Acquiring Gavilon, whose owners include billionaire investor George Soros and hedge fund manager Dwight Anderson, may help the trading house challenge Archer Daniels Midland as the biggest supplier of grains and oilseeds from the United States to China.

“This acquisition supports an ongoing strategic plan by Asian grain importers to better secure future grain needs via the merger and acquisition process,” said grains analyst Mike Zuzolo of Global Commodity Analytics.

“Realizing that better supply-chain management should better prepare these importers in their global sourcing needs.”

Japan’s trading houses, or “sogo shosha”, have been scooping up assets around the world, targeting everything from shale gas to copper, as the world’s third-largest economy competes with China, the second-biggest, for resources.


Gavilon is the third-biggest U.S. grain merchant in terms of the size of its marketing network, behind Archer Daniels and Cargill and also has large energy and fertiliser trading assets.

Gavilon now has about 320 million bushels of storage in the U.S. putting it ahead of global grain giants like Bunge Ltd and Louis Dreyfus.

“As part of a larger trading organization, Gavilon will be well-positioned to more efficiently connect supply with growing global demand,” Gavilon President and Chief Executive Officer Greg Heckman said in a statement.

Marubeni’s acquisition of Gavilon is unlikely to face any pushback from farmers and agricultural businesses, which have long been accustomed to the presence of Japanese grain companies in the United States.

“We anticipate minimal changes to our organization and operations,” Heckman said.

A combination of Marubeni and Gavilon is seen by analysts as a good commercial fit, marrying Gavilon’s presence in the U.S. Central Plains and Midwest with Marubeni’s operations in the Pacific Northwest – the shortest U.S. sea route to Asia.

Gavilon also has a large footprint in the U.S. fertilizer market, an energy operation that includes 7 million barrels of crude oil storage and an oil, grain and ethanol trading unit.

Morgan Stanley is advising the U.S. company on the transaction, Gavilon said. Nomura is advising Marubeni, people involved in the discussions have said.

Marubeni’s rivals Mitsui & Co and Mitsubishi Corp had both been seen as potential bidders for Gavilon but decided not to pursue a deal.

Japan’s outward bound mergers and acquisitions totaled $25.4 billion, including debt, this year to date, versus $15.1 billion for Chinese overseas purchases, according to Thomson Reuters data.

There were 245 overseas purchases or investments by Japanese companies compared with 101 for those from China.

Large trading houses in Japan have more than doubled overseas acquisitions, investing $7.7 billion so far this year, up from $3.5 billion in the same period in 2011.

Marubeni said in 2009 it signed a letter of intent with Sinograin, a Chinese state firm, to “work closely in coming years” to build state reserves and commercial grain supplies.

In the next marketing year that starts in October, the market is expecting a 60 percent jump in China’s corn imports to around 8 million metric tons.

In part, the shosha may be betting that Japanese companies can make in-roads where China’s state-owned traders fear to tread.

Late last year, Chinese state-owned trading house COFCO said it was seeking acquisitions to secure supplies in the United States, Australia, Russia and South America. But it has not advanced any major purchases, although it has sent teams to various countries for discussions, sources said.

Beijing-backed firms have shied away from attempts at large U.S. takeovers since a political furor scuppered offshore oil driller CNOOC’s bid for Unocal seven years ago, analysts say.

Marubeni is already the second-largest exporter of U.S. grains to China, with soybean shipments surging five-fold since 2008, based on data from trade intelligence firm PIERS. Marubeni handled nearly 20 percent of China’s soybean imports in 2010, according to its annual report.

Unlike Marubeni, Gavilon has not made deep inroads into China, having exported less than 10,000 metric tons of grains over the past two years, data showed.

Marubeni is the best-established shosha inside the U.S. grain belt. In 2010, it overtook Japan’s national federation of farm cooperatives Zen-noh as the biggest Japanese exporter of U.S. grains and oilseeds, according to PIERS data, and accounts for more than a third of all shipments by Japan-based firms.

(Additional reporting by Soyoung Kim in New York, K.T. Arasu in Chicago and Risa Maeda in Tokyo; Editing by Aaron Sheldrick and Alex Richardson)