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Germany’s Model Stresses Execution Over Innovation

March 13, 2013, 4:48 p.m. ET

Germany’s Model Stresses Execution Over Innovation

By BEN ROONEY

BERLIN—Henning Wehn has carved a niche for himself as Germany’s comedy ambassador to the U.K. On a recent TV program when asked what was the worst thing to overhear about yourself, playing to the German stereotype he replied “he isn’t all that efficient.”

The Wall Street Journal Deutschland recently held a tech cafe event in the heart of the capital’s startup district, Mitte, and much of the talk around the tables of the Kaffeemitte was on German entrepreneurship. The general consensus was that while Germany may not culturally be the most entrepreneurial country, the emphasis on execution was a national strength.

It should come as no surprise, then, that a particularly German way of building startups is emerging from the capital city; companies that are less focused on product innovation, and instead hone their execution.

Stepping away from the accelerator model (find existing exciting startups that are doing innovative things, provide them with mentors and a working space in return for equity), Berlin appears to be favoring the incubator (create companies that target specific and identified markets, hire smart people to run with the idea and provide them with the tools to execute).

Leading the way is the powerhouse of the German online economy, Rocket Internet. Founded by the media-shy Samwer brothers, it takes a proven business model, clones it and then just out-executes its competitors. According to the company’s youthful managing director, Alexander Kudlich, “We are able to launch within 3 1/2 weeks—from decision to launching.”

“It’s only about operationally doing every little thing right and faster and better than the others.” Read more of this post

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SAP as Most Valuable German Company Validates Deals Spree: Tech

SAP as Most Valuable German Company Validates Deals Spree: Tech

When SAP AG (SAP) changed leadership in 2010, the software maker had just been through its first major job cuts in 38 years, clients were upset with price increases, and analysts considered the company a takeover target.

There’s little chance of a takeover now. SAP’s stock has gained 92 percent since Bill McDermott and Jim Hagemann Snabe took over as co-chief executive officers. SAP has vaulted past Siemens AG (SIE) and Volkswagen AG (VOW) to become Germany’s most valuable company despite revenue that’s 10 percent of Volkswagen’s and one-fifth that of Siemens.

McDermott, 51, and Snabe, 47, have made key acquisitions in cloud-computing and mobile applications, invested in a database that can analyze mountains of numbers in seconds, and hastened the development of new products. That has helped SAP increase sales to clients ranging from automakers to central banks to the National Football League.

SAP “oils the engine of the economy and lends it better momentum,” said Stephan Thomas, a portfolio manager at Frankfurt Trust, which oversees about $21 billion in assets and has recently increased its holding in SAP.

With a market capitalization of $102 billion, SAP is the world’s ninth-most-valuable technology company and the only European in the top 10. SAP’s price-to-earnings ratio, a gauge of how much investors are willing pay for the stock relative to profit, is the highest of the top 10. At 27 times earnings, SAP’s P/E exceeds Google Inc. (GOOG)’s 24.5 and 16.7 for archrival Oracle Corp. (ORCL), according to data compiled by Bloomberg. Read more of this post

Samsung Needs No Steve Jobs as Low-Profile Mobile Chief JK Shin Showcases Galaxy

Samsung Needs No Steve Jobs as Low-Profile Shin Showcases Galaxy

Samsung Electronics Co. will hold a very Apple-like event to unveil its latest smartphone in New York today. The Korean company will take the wraps off the Galaxy 4S at Radio City Music Hall and stream the event live on video screens in Times Square.

Samsung has no Steve Jobs, however. Instead, the person hosting the festivities will be J.K. Shin, the company’s low- profile head of mobile.

Shin can’t compare with Jobs, the Apple Inc. (AAPL) chief executive who set the standard for product introductions, dazzling audiences with crisp presentations honed over weeks of rehearsals. The Samsung executive, who favors blue blazers and tan slacks in contrast to Jobs’s jeans and black mock turtlenecks, tends to let devices take the spotlight. Still, any lack of charisma on Shin’s part isn’t hurting Samsung, which has surged past Apple in the global smartphone market.

“Over the last four or five years, Samsung has done a great job in stealth mode without a Jobs-like figure to help them,” said Tim Bajarin, president of technology consulting firm Creative Strategies. “Without a lot of fanfare, they’ve just made great advances and taken a strong position in the market.”

Shin introduced the previous version of the flagship phone, the Galaxy S3, in London last year during a press event that featured the London Metropolitan Orchestra and soaring floor-to- ceiling video displays. Read more of this post

Turkey’s $580,000 Taxi Plates Drive Free-Wheeling Market

Turkey’s $580,000 Taxi Plates Drive Free-Wheeling Market

Beyond the polished Fiats and Fords parked at the Oto Center in a remote working class district of Istanbul, traders tout an investment vehicle that has tripled in value over the last nine years: license plates for taxis that fetch about 1.05 million liras ($580,000).

Prices quoted inside stores that act as a private bourse have risen about 10 percent from 885,000 liras a year ago, with the number of permits issued by Istanbul’s government unchanged for two decades even as the population in Turkey’s commercial capital grew, according to the taksiplakasi.com website. The 4,600 liras a month paid by drivers to rent plates add another 5 percentage points of investment income, the website shows.

Slices of permits called plates, wheels and nuts trade like bonds and lure investors wishing to comply with Islam’s ban on earning interest in a country where almost all of the 80 million population is Muslim. The licenses are an alternative to real estate and resemble investments created by bankers in Islamic finance, such as rent certificates.

The market has become so liquid that “one can sell in half an hour and get the cash in less than a week, not much different from the Istanbul Stock Exchange,” Gursoy Atli, sales manager at Kale Ticaret, one of a handful of closely-held companies that trade licenses, said in a phone interview Feb. 19. There is little regulation and no guarantees. Read more of this post

Mayo Prostate Cancer Test Gives Hope When Tumors Return

Mayo Prostate Cancer Test Gives Hope When Tumors Return

Mike Hawker travels 3,200 miles from his home in Anchorage to the Mayo Clinic every six months to get a test for microscopic signs that a rare form of prostate cancer he beat three years ago may have returned.

For Hawker, a Republican state representative in Alaska, the trips are a matter of life and death. About 200,000 men who had been treated for prostate cancer learn each year, sometimes too late, that their malignancies have returned. The Mayo Clinic test offers the promise of catching recurring tumors early, before they can kill.

Mayo’s medical center in Rochester, Minnesota, is the only facility in the Western Hemisphere to offer the 20-minute scan, enhanced by an injected radioactive drug that lets doctors see rapidly dividing cancer cells. Demand is surging, though scans are limited to eight patients a day, three days a week.

Hawker, who survived an aggressive form of prostate cancer in 2010 that invaded everything from his knees to his eye sockets, sees the twice-yearly visits as his best hope.

“No one can figure out quite why I am alive,” said Hawker in an interview. “That machine is one of the diagnostic tools that is keeping me alive.”

Prostate cancer is the most commonly diagnosed malignancy, killing about 28,000 men last year. Lung cancer, the second-most common cancer is more deadly and claimed the lives of about 88,000 men. For at least one-quarter of the men whose prostate cancer recurs, the reappearance of the disease is life- threatening, said Eugene Kwon, a urologist and cancer researcher at the Mayo Clinic. Read more of this post

Networking Battles to Run the World: Cisco and VMware talked about ambitious strategies to create powerful data centers and networks, tied to millions of sensors and devices, with an eye on everything we do

MARCH 13, 2013, 6:38 PM

Networking Battles to Run the World

By QUENTIN HARDY

Cisco has a simple message: the world has bought so much of its equipment, why stop now?

Both Cisco Systems and one of its biggest competitors, VMware, talked about ambitious strategies Wednesday. The powerful data centers and networks they want to build, tied to millions of sensors and devices, promise to create all kinds of efficient systems with an eye on everything we do. Just as much, they talked about competing with each other.

Even before Cisco spoke, VMware was making its claim to a world where billions of devices were sensing the world and suggesting efficient actions. Rather than depending on legacy customers, VMware is counting on inspiring thousands of software developers, who will use computer networks as a platform for new business.

It is similar to the way Microsoft used outside developers to give it an edge on the personal computer, and Google used them on the Web. Networks are more specialized technologies, however, so it’s not clear they can attract a mass of outside talent. Cisco is hoping big companies will be better allies.

Speaking at a gathering of journalists and networking industry analysts, several Cisco executives outlined what they called a “$14 trillion opportunity” in bringing sensors, communications and data analysis to all the world’s traffic systems, hospitals, refineries, and other civil and business infrastructure.

“The first 10 years (of the commercial Internet) were really about transactions, and the last 10 were about interactions,” said Padmasree Warrior, Cisco’s chief technology and strategy officer. “The next 10 is about processes being more efficient.” Read more of this post

Private Equity Squeezes Out Cash Long After Its Exit

MARCH 13, 2013, 6:26 PM

Private Equity Squeezes Out Cash Long After Its Exit

By LYNNLEY BROWNING

When the Berry Plastics Group, a container and packaging company, went public last October, it generated up to $350 million in tax savings. But the company won’t collect the bulk of the benefits. Rather, Berry Plastics will hand over 85 percent of the savings, in cash, to its former private equity owners.

The obscure tax strategy is the latest technique that private equity firms are using to extract money from their companies, in this case long after the initial public offering.

In a typical buyout, the owners make money by sprucing up the operations and selling the business to another company or public investors. Private equity firms have also found ways to profit before the so-called exit with special one-time dividends and annual management fees.

Now, buyout specialists are increasingly collecting continuing payouts from their former portfolio companies. The strategy, known as an income tax receivable agreement, has been quietly employed in dozens of recent private equity-backed offerings, including those involving PBF Energy, Vantiv and Dynavox. Read more of this post

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