Cisco to meet quarterly target, disappoint on outlook
















(Reuters) – Tech investors hoping for good news may have to look further than Cisco Systems Inc‘s quarterly report as analysts expect Chief Executive John Chambers to be pessimistic in his forecast for the coming year.


Cisco, which is expected to meet estimates when it reports its first-quarter results on Tuesday, is seen as harbinger in terms of spending on information technology because of its global reach and customers across all sectors.













Chambers has been warning since April that businesses are reluctant to spend and that conditions will get worse before they get better.


Most analysts expect him to stay conservative given continued financial weakness in Europe and a drop in U.S. federal spending as concerns mount over the so-called fiscal cliff, which refers to a combination of tax hikes and spending cuts that loom at the end of the year and may tip the economy into recession.


JP Morgan analyst Rod Hall said he has changed his investment recommendation on Cisco to neutral from overweight in light of weak corporate and government spending as well as the continued economic pressure in Europe, but also in regard to longer term risks.


“To be clear, we’re not making a call on (fiscal quarter)FQ1’13, but do believe FQ2’13 guidance is likely to disappoint and expect 2013 to be a tough year as macro pressures persist,” he said.


Hall also said he anticipated that Cisco could face some risks by 2014 from technological developments such as software defined networking (SDN).


SDN lets customers create virtual networks that can operate independently of underlying physical networks, which may pose a threat to Cisco’s network dominance.


BMO Capital Markets analyst Tim Long said that in light of a cautious outlook BMO has reduced its 2013 earnings per share outlook to $ 1.94 from $ 1.96 and lowered its sales outlook for Cisco to revenue of $ 48.9 billion from $ 49.2 billion.


“October results should at least meet expectations, though guidance is likely more at risk,” Long said in a note.


Analysts, on average, expect Cisco to post EPS of 46 cents and revenue of $ 11.79 billion in the quarter that runs until end-October, according to Thomson Reuters I/B/E/S.


Wedbush analyst Rohit Chopra said Cisco has proven it can ride out tough times.


“Despite the macroeconomic environment, we believe Cisco is well positioned given its track record in navigating challenging environments, its broad portfolio of products, and continued actions to control its cost structure ahead of its rivals,” Chopra said. “We advise long-term investors looking for a well-capitalized company that can weather an uncertain spending environment to own the stock.”


Cisco shares were up slightly at $ 16.90 on Monday. The stock has lost around 10 percent in the past month and is down 7 percent year-to-date.


(Reporting By Nicola Leske; Editing by Peter Galloway)


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General investigated for emails to Petraeus friend
















PERTH, Australia (AP) — In a new twist to the Gen. David Petraeus sex scandal, the Pentagon said Tuesday that the top American commander in Afghanistan, Gen. John Allen, is under investigation for alleged “inappropriate communications” with a woman who is said to have received threatening emails from Paula Broadwell, the woman with whom Petraeus had an extramarital affair.


Defense Secretary Leon Panetta said in a written statement issued to reporters aboard his aircraft, en route from Honolulu to Perth, Australia, that the FBI referred the matter to the Pentagon on Sunday.













Panetta said that he ordered a Pentagon investigation of Allen on Monday.


A senior defense official traveling with Panetta said Allen’s communications were with Jill Kelley, who has been described as an unpaid social liaison at MacDill Air Force Base, Fla., which is headquarters to the U.S. Central Command. She is not a U.S. government employee.


Kelley is said to have received threatening emails from Broadwell, who is Petraeus’ biographer and who had an extramarital affair with Petraeus that reportedly began after he became CIA director in September 2011.


Petraeus resigned as CIA director on Friday.


Allen, a four-star Marine general, succeeded Petraeus as the top American commander in Afghanistan in July 2011.


The senior official, who discussed the matter only on condition of anonymity because it is under investigation, said Panetta believed it was prudent to launch a Pentagon investigation, although the official would not explain the nature of Allen’s problematic communications.


The official said 20,000 to 30,000 pages of emails and other documents from Allen’s communications with Kelley between 2010 and 2012 are under review. He would not say whether they involved sexual matters or whether they are thought to include unauthorized disclosures of classified information. He said he did not know whether Petraeus is mentioned in the emails.


“Gen. Allen disputes that he has engaged in any wrongdoing in this matter,” the official said. He said Allen currently is in Washington.


Panetta said that while the matter is being investigated by the Defense Department Inspector General, Allen will remain in his post as commander of the International Security Assistance Force, based in Kabul. He praised Allen as having been instrumental in making progress in the war.


The FBI’s decision to refer the Allen matter to the Pentagon rather than keep it itself, combined with Panetta’s decision to allow Allen to continue as Afghanistan commander without a suspension, suggested strongly that officials viewed whatever happened as a possible infraction of military rules rather than a violation of federal criminal law.


Allen was Deputy Commander of Central Command, based in Tampa, prior to taking over in Afghanistan. He also is a veteran of the Iraq war.


In the meantime, Panetta said, Allen’s nomination to be the next commander of U.S. European Command and the commander of NATO forces in Europe has been put on hold “until the relevant facts are determined.” He had been expected to take that new post in early 2013, if confirmed by the Senate, as had been widely expected.


Panetta said President Barack Obama was consulted and agreed that Allen’s nomination should be put on hold. Allen was to testify at his confirmation hearing before the Senate Armed Services Committee on Thursday. Panetta said he asked committee leaders to delay that hearing.


NATO officials had no comment about the delay in Allen’s appointment.


“We have seen Secretary Panetta‘s statement,” NATO spokeswoman Carmen Romero said in Brussels. “It is a U.S. investigation.”


Panetta also said he wants the Senate Armed Services Committee to act promptly on Obama’s nomination of Gen. Joseph Dunford to succeed Allen as commander in Afghanistan. That nomination was made several weeks ago. Dunford’s hearing is also scheduled for Thursday.


___


Associated Press writer Slobodan Lekic in Kabul, Afghanistan, contributed to this report.


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RIM to introduce new BlackBerry 10 devices on January 30
















(Reuters) – Research In Motion Ltd plans to introduce its new line of BlackBerry 10 smartphones on January 30, the company said on Monday, giving investors a measure of confidence the long-awaited devices are approaching the finish line.


The Waterloo, Ontario-based company, a one-time pioneer in the smartphone industry, is betting its future on the new line of products, which will be powered by its new BlackBerry 10 operating system.













RIM has struggled over the last two years as its devices lost ground to snazzier and faster smartphones such as Apple Inc’s iPhone and Samsung Electronics Co Ltd‘s Galaxy line.


In a brief statement, RIM said the twice-delayed devices will be launched simultaneously in multiple countries. It will introduce two BlackBerry 10 smartphones, along with the platform that powers them at the event.


“While it is clearly an uphill battle for RIM given the recent launch of the iPhone 5 device and the aggressive marketing dollars being pushed toward Windows 8, we view it as a modest positive that a date is now officially set for the launch of the new BB10 devices,” Wells Fargo analyst Jennifer Fritzsche wrote in a note to clients.


RIM has said it plans initially to roll-out touchscreen devices. Phones with the mini QWERTY keyboards that many long-time BlackBerry users rave about will come a few weeks later, while lower-end versions of both devices will be launched later in the year.


The company did not say when the devices will be available in stores. That will be announced at the event.


Evercore Partners analyst Mark McKechnie believes the BB 10 devices will be available within two to four weeks of the launch event, but some such as Peter Misek of Jefferies expect the devices to go on sale only in March.


RIM’s Nasdaq-listed shares were up 3.2 percent at $ 8.82 in late afternoon trading on Monday. Its Toronto-listed shares rose nearly 3 percent to C$ 8.81.


ALL OR NOTHING


RIM says its new devices will be faster and smoother and have a large catalog of applications that are now crucial to the success of any new line of smartphones.


Last week, the new platform and devices won U.S. government security clearance, potentially allowing both U.S. and Canadian government agencies to deploy the new smartphones as soon as they are available.


These were the first BlackBerry products to win Federal Information Processing Standard 140-2 certifications ahead of their introduction, the company said.


RIM began carrier tests on the BB10 devices last month. The Canadian company hopes they will help it win back some of the market share it lost to the iPhone and devices that run on Google Inc’s Android operating system.


RIM’s stock has fallen more than 90 percent from a peak of over $ 148 in 2008. But at Friday’s close, the shares were up about 20 percent over the last two months on signs that the BlackBerry 10 devices are finally likely to make it to market.


(Reporting by Euan Rocha; Editing by Lisa Von Ahn, Janet Guttsman and Andre Grenon)


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Hathaway says ‘Les Mis’ made her feel deprived
















NEW YORK (AP) — Anne Hathaway credits her new husband Adam Schulman for helping her get through the grueling filming of the screen adaptation of “Les Miserables.”


In “Les Mis,” the 30-year-old actress plays Fantine, a struggling, sickly mother forced into prostitution in 1800s Paris.













Hathaway lost 25 pounds and cut her hair for the role. She tells the December issue of Vogue, the part left her in a “state of deprivation, physical and emotional.” She felt easily overwhelmed and says Shulman was understanding and supportive.


The couple wed in September in Big Sur, Calif. Hathaway wore a custom gown by Valentino whom she collaborated with on the design. Working with the designer is a memory she says she will “treasure forever.”


The December issue of Vogue hits stores Nov. 20.


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Online:


http://www.vogue.com/


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British medical journal slams Roche on Tamiflu
















LONDON (AP) — A leading British medical journal is asking the drug maker Roche to release all its data on Tamiflu, claiming there is no evidence the drug can actually stop the flu.


The drug has been stockpiled by dozens of governments worldwide in case of a global flu outbreak and was widely used during the 2009 swine flu pandemic.













On Monday, one of the researchers linked to the BMJ called for European governments to sue Roche.


“I suggest we boycott Roche’s products until they publish missing Tamiflu data,” wrote Peter Gotzsche, leader of the Nordic Cochrane Centre in Copenhagen. He said governments should take legal action against Roche to get the money back that was “needlessly” spent on stockpiling Tamiflu.


Last year, Tamiflu was included in a list of “essential medicines” by the World Health Organization, which often prompts governments or donor agencies to buy the drug.


WHO spokesman Gregory Hartl said the agency recommended the drug be used to treat unusual influenza viruses like bird flu. “We do have substantive evidence it can stop or hinder progression to severe disease like pneumonia,” he said.


In 2009, the BMJ and researchers at the Nordic Cochrane Centre asked Roche to make all its Tamiflu data available. At the time, Cochrane Centre scientists were commissioned by Britain to evaluate flu drugs. They found no proof that Tamiflu reduced the number of complications in people with influenza.


“Despite a public promise to release (internal company reports) for each (Tamiflu) trial…Roche has stonewalled,” BMJ editor Fiona Godlee wrote in an editorial last month.


In a statement, Roche said it had complied with all legal requirements on publishing data and provided Gotzsche and his colleagues with 3,200 pages of information to answer their questions.


“Roche has made full clinical study data…available to national health authorities according to their various requirements, so they can conduct their own analyses,” the company said.


Roche says it doesn’t usually release patient-level data available due to legal or confidentiality constraints. It said it did not provide the requested data to the scientists because they refused to sign a confidentiality agreement.


Roche is also being investigated by the European Medicines Agency for not properly reporting side effects, including possible deaths, for 19 drugs including Tamiflu that were used in about 80,000 patients in the U.S.


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Online:


www.bmj.com.tamiflu/


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In This Junkyard, It Seems, There Are No Dogs

















It’s kind of Orwellian that anyone would rapaciously buy an ETF with the ticker JNK—branding shorthand for “junk,” Wall Street’s sobriquet for high-yield, the riskiest layer of corporate bonds.


Nevertheless, JNK, the SPDR Barclays Capital High Yield Bond ETF, and competitor offerings are a hot destination in these yield-famished days. The appeal is irrefutable: You’ll get precious little income from Treasuries and muni bonds. Creditworthy corporations are borrowing at record lows. Why not then pile into riskier, higher-yielding debt, especially if you can do so via one tidy, exchange-traded ticker? (No need to ring Michael Milken.) What’s more, Moody’s sees the global default rate for “speculative-grade” debt ending the year at 2.8 percent, compared with an average of 4.8 percent since 1983. Yields have fallen 1.65 percentage points this year, to 7.05 percent on Nov. 1, according to Bank of America Merrill Lynch data.













What’s not to love?


An overcrowded trade marked by 2007-like issuer complacency—that’s what. More companies are demanding and getting easy terms on their junk issues. The most popular junk ETFs are going deeper into credit risk to scrape for yield. The sluicing of retail money into these ETFs is perpetuating what has historically proved to be a vicious trend. “Signs of over-exuberance are creeping into the corporate credit market,” wrote Michael Lewitt, a hedge fund manager who publishes the Credit Strategist. “In the past, rising issuance of these types of low-quality bonds has been a warning that a market rally is coming to an end … Today’s new issues will be the troubled credits of tomorrow.”


On Nov. 7, Standard & Poor’s warned of the unprecedented dangers of a brave, new junk bond world. Wrote credit analysts Diane Vazza and Evan Gunter:


“The ease with which investors can enter and exit ETF investments creates new and risky dynamics in the speculative-grade market with the potential flow of ‘hot money.’ Speculative-grade companies have a higher default risk than investment-grade companies. Therefore, when the credit cycle turns against investors, losses from defaults can quickly outstrip the additional interest payments that high-yield investors receive. Since we are entering the stage of declining credit quality in the current credit cycle, the credit quality of an issuer or a portfolio has become paramount.”


Vazza and Gunter looked under the hoods of JNK and its rival, HYG, the iShares iBoxx $ High Yield Corporate Bond Fund. They found that both ETFs owned a higher proportion of the riskiest junk debt versus the overall high-yield market. While they estimated that the broad universe of high yield includes 7.9 percent of bonds rated CCC+ and lower, their share in HYG’s portfolio is at 11.0 percent and in JNK just under 10 percent. While higher risk juices returns in a favorable environment like the present one, the analysts explained, they take outsized losses once the credit cycle turns.


Sales of junk debt in the U.S. have come in at $ 294 billion so far this year, the fastest pace on record. It’s in that booming backdrop that private equity-owned companies have paid out $ 34.1 billion in dividends this year, according to Standard & Poor’s Capital IQ Leveraged Commentary & Data. That’s north of 2010’s total of $ 31.5 billion and the $ 23.8 billion paid out in 2007, when the leveraged buyout market peaked. By comparison: Some $ 1.2 billion in dividends were issued in 2008 and $ 440 million in 2009.


This boom has prompted an echo-boom in payment-in-kind transactions, or PIK toggles, which let companies pay interest in debt rather than cash, essentially deferring payments to their investors. That tactic was a hallmark of the private equity bubble of five years ago. According to Moody’s, as of mid-October two of the third quarter’s 14 dividend financings enjoyed PIK toggle structures, including Emergency Medical Services’ $ 450 million of notes to pay a dividend to Clayton, Dubilier & Rice and IDQ Holdings’ $ 45 million deal supporting a payout to Castle Harlan. Last month, Petco also got in on the PIK toggle boom.


Caveat junktor. Moody’s calculates that the default rate for companies that sold PIK-toggle bonds was 13 percent from 2006 to 2010, twice the rate for similarly rated issuers that didn’t use the tactic.


“Low yields are driving more and more investors into really strange territory,” says Lee Pacchia, a Bloomberg Law analyst who follows corporate bankruptcies. “They need to take on risk. While the market forces driving this trend could go on for a while, lowering standards could end badly. It’s called ‘junk’ for a reason.”


The institutional smart money is increasingly taking the other side of that trade. According to Bloomberg data, the number of bearish options on HYG are at an all-time high: The number of outstanding puts on HYG has almost doubled since Oct. 19, to a record of 118,444 at the end of last month. Hedge funds seeking that bet on both gains and losses in credit attracted $ 12.6 billion of deposits in the three months ended Sept. 30, the most since the last quarter of 2007, according to HFR.


It all makes you wonder how quickly people may have forgotten the lessons of the credit bubble, or what one hedgie has called the era of promiscuous lending. Will today’s junk boom end so differently?


“The history of money is a sad state of affairs,” wrote Prudent Bear’s Doug Noland in his recent post, titled “The Myth of Deleveraging.” “Failing to learn from a litany of previous monetary fiascoes, ‘money’ is these days being abusively over-issued.”



Farzad is a Bloomberg Businessweek contributor.


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Clarke’s 218 puts Australia on front foot
















BRISBANE (Reuters) – Australia captain Michael Clarke scored a brilliant unbeaten double century to give the hosts a remarkable 37-run first innings lead on the fourth day of the first test against South Africa on Monday.


Supported first by a maiden century from opener Ed Cowan in a record stand of 259, and then by Mike Hussey‘s 86 not out, Clarke’s 218 helped lift Australia from 40 for three when he took to the crease on Sunday to 487 for four when stumps were drawn.













It was Clarke’s sixth test century, and his third double hundred, in the 15 tests since he was named captain last year in the wake of the Ashes humiliation and Australia’s quarter-final exit at the World Cup.


Although by no means a chanceless knock, the 31-year-old played with patience when South Africa’s vaunted pacemen got anything out of the Gabba track before punishing anything loose with some fine shot-making.


When he carried his bat back to the pavilion at the end of the day to the raucous cheers of a sparse crowd at the famous Brisbane ground, Clarke had faced 350 balls over 504 minutes and scored 21 fours.


“I’m very happy with that,” Clarke, who accumulated his 1,000 test run of the year during the innings, said in an interview on the boundary.


“I didn’t feel great at the start and I think Ed Cowan batted beautifully.


“We’re in a great position with a 30-odd lead. I’d like another 70 odd runs in the morning and then I want to have a crack with the ball. We’ll see what happens.”


Cowan departed for 136 in heartbreaking fashion just before tea, run out at the non-striker’s end when Dale Steyn got a finger to a Clarke drive that hit the stumps and the opener was caught out of his crease backing up.


RECORD PARTNERSHIP


His partnership with Clarke was an Australian record for the fourth wicket at the Gabba, beating the 245 Clarke and Mike Hussey made against Sri Lanka in 2007.


Cowan’s wicket was the only wicket to fall on the day and Hussey started pouring on the runs as if determined to get the record back for his own partnership with his captain.


The 37-year-old bucked his poor recent form against South Africa by reaching his half century off just 68 balls with a drive through long-off and was closing on a century of his own when play ended.


It was Hussey’s cut four off Morne Morkel with which Australia overhauled South Africa’s first innings tally of 450 and put themselves in with an unlikely chance of even winning a test which lost an entire day to rain on Saturday.


Clarke’s negotiation of the “nervous nineties” for his century had been fraught and he was nearly run out going for a second run that would have brought him to the hundred mark.


There were no such jitters on his approach to the two hundred mark, which he passed by slapping the ball through mid-on for two runs before giving the badge on his helmet another kiss.


Cowan’s century was a retort to those critics who have consistently questioned his place in the team since he made his debut in last year’s Melbourne test against India.


The 30-year-old lefthander reached the mark two overs after lunch by pulling a short Vernon Philander delivery for four to the square leg boundary, beginning his joyous celebrations before the ball hit the rope.


South Africa’s number one test ranking is on the line in the series, which continues with matches in Adelaide and Perth after Brisbane.


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Labels maintain new music spend despite sales slump
















LONDON (Reuters) – Record labels say they have maintained high levels of investment in new music despite sweeping changes to their business in the digital age and a decade of falling revenues caused by sliding album sales and online piracy.


According to a new study from industry body IFPI published on Monday, record companies invested $ 4.5 billion in A&R (artists and repertoire) and marketing in 2011.













That was down from $ 5 billion in 2008, partly due to a significant drop in the amount record labels were willing to spend on marketing up-and-coming talent at a time of shrinking income.


But the A&R side fell less sharply to $ 2.7 billion last year versus $ 2.8 billion in 2008 despite a decline of 16 percent in the trade value of the industry globally over the same period.


Presenting the report in London, Max Hole, COO of Universal Music Group International, said he was cautiously optimistic that the music business would return to growth soon, helped by the proliferation of digital platforms.


“The stats are getting better, the rate of decline is slowing,” he told reporters.


“There’s every reason to hope that in the next couple of years we’ll reach the low point and start to go back to growth.”


According to the IFPI, in the first nine months of 2012, global recorded music sales had fallen by around one percent year-on-year after a fall of three percent in 2011.


The industry peaked in 1999 when sales were $ 28.6 billion, but has shrunk every year since, reaching $ 16.6 billion in 2011.


“I just feel that we are at a tipping point of lots and lots of services coming on, and services that really are in touch with the consumer,” Hole said, adding that, crucially, the platforms were more attractive than illegal pirate sites.


BANDS WANT LABELS


The report showed that more than 70 percent of unsigned acts in Britain and Germany wanted a record deal, despite the perception that many artists are keen to go it alone with the help of social networking.


Major labels have been accused of being slow to adjust to the challenges posed by digital music and illegal downloads, and relying too heavily on older, established acts to make money.


But the IFPI report sought to underline their role in unearthing new talent in a notoriously risky business.


Revenues invested in A&R represent around 16 percent of industry turnover, compared with 15.3 percent in the pharmaceuticals and biotech sector and 9.6 percent in software and computing.


The IFPI estimated breaking a pop act in a major market typically costs from $ 750,000 to $ 1.4 million, including a $ 200,000 advance, $ 200-300,000 on recording, $ 50-300,000 on videos, $ 100,000 on touring and $ 200-500,000 on marketing.


The Internet has revolutionized the way record labels go about their business, the report said.


A&R representatives today rely on the Internet as much as they do on attending gigs up and down the country to discover the next best thing, although most still want to see an act live before making up their minds.


According to the report, record labels are providing far more digital content as part of their marketing and promotion, and tend to sign deals with artists which go well beyond the shrinking recorded music business.


Brand partnerships, offering songs for use on television, in film and in commercials, and linking up singers from different regions to generate cross-over interest are just some of the ways they can help establish a new act, the IFPI added.


Hole said the recent merger between Universal, already the world’s largest music label, and EMI, would not lead to less A&R spending, but more.


“We have stated quite categorically that our intention is to reinvest in EMI and boost it and we think it will result in more investment in A&R,” he said.


“We operate a multi-label structure and that was something that had declined at EMI,” he added. “We’re going to reverse that.”


(Editing by Steve Addison)


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China says Hollywood putting pinch on domestic films
















BEIJING (Reuters) – China‘s films are taking a hit from a trade deal that allows for more U.S. movie imports, the country’s broadcast regulator said on Sunday, with their share of the box office take sliding even as the industry’s total revenues outpace those of last year.


The movie pact, which exempted 14 films from China’s annual quota of 20 foreign films per year, was hammered out in February during a trip to the United States by Vice President Xi Jinping, the man expected to take the ruling Communist Party‘s top spot after a congress held this week in Beijing.













After signing the deal, the number of American films in China and their proportion of revenues have increased by a “large margin”, Vice Minister of the State Administration of Radio, Film and Television Tian Jin said.


“The past dominance of domestic films in the Chinese market has been shaken,” Tian told a press briefing on the sidelines of the congress held once every five years.


China’s 2012 box office revenues reached 13.27 billion yuan ($ 2.12 billion) at the end of October, Tian said, already outpacing revenues from all of 2011. But the share of revenues for domestically produced films was only 41.4 percent, constituting “a huge drop”.


Tian said the U.S. film industry is reaping massive profits while domestic producers are under greater pressure, mainly because Chinese movies cannot compete with the Hollywood spectacles.


“The competitiveness of Chinese-made films must be raised,” he said.


Chinese film industry experts have said that Hollywood’s looming shadow means Chinese producers need to focus on quality if they are going to elevate their appeal to a Chinese audience.


February’s deal stemmed from a victory in a 2009 U.S. World Trade Organization case that challenged Beijing’s restrictions on import and distribution of copyright-protected materials.


The U.S. movie industry has long complained about China’s tight restrictions on foreign films, which they say helps fuel demand for pirated DVDs that are widely available in China.


It also argued that it was being boxed out of a booming market, as the fast-growing Chinese middle class spends more money in theatres.


The Chinese film market is seen as one of the largest potential markets for Hollywood, but it has also been tightly controlled by the state-owned China Film Group.


Chinese films frequently compete for international awards, but winners overseas are often not those supported by China’s government, which tend to fan nationalist and patriotic sentiment.


(Reporting by Michael Martina; Editing by Nick Macfie)


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Food labels multiply, some confuse consumers
















FRESNO, Calif. (AP) — Want to avoid pesticides and antibiotics in your produce, meat, and dairy foods? Prefer to pay more to make sure farm animals were treated humanely, farmworkers got their lunch breaks, bees or birds were protected by the farmer and that ranchers didn’t kill predators?


Food labels claim to certify a wide array of sustainable practices. Hundreds of so-called eco-labels have cropped up in recent years, with more introduced every month — and consumers are willing to pay extra for products that feature them.













While eco-labels can play a vital role, experts say their rapid proliferation and lack of oversight or clear standards have confused both consumers and producers.


“Hundreds of eco labels exist on all kinds of products, and there is the potential for companies and producers to make false claims,” said Shana Starobin, a food label expert at Duke University’s Nicholas School of the Environment.


Eco-labels have multiplied in recent years in response to rising consumer demand for more information about products and increased attention to animal and farmworker welfare, personal health, and the effects of conventional farming on the environment.


“Credible labels can be very helpful in helping people get to what they want to get to and pay more for something they really care about,” said Urvashi Rangan, director of consumer safety at Consumer Reports. “The labels are a way to bring the bottom up and force whole industries to improve their practices.”


The problem, Rangan and other said, is that few standards, little oversight and a lot of misinformation exist for the growing array of labels.


Some labels, such as the USDA organic certification, have standards set by the federal government to which third party certifiers must adhere. Some involve non-government standards and third-party certification, and may include site visits from independent auditors who evaluate whether a given farm or company has earned the label.


But other labels have little or no standards, or are certified by unknown organizations or by self-interested industry groups. Many labels lack any oversight.


And the problem is global, because California’s products get sold overseas and fruits and vegetables from Europe or Mexico with their own eco-labels make it onto U.S. plates.


The sheer number of labels and the lack of oversight create a credibility problem and risk rendering all labels meaningless and diluting demand for sustainably produced goods, Rangan said.


Daniel Mourad of Fresno, a young professional who likes to cook and often shops for groceries at Whole Foods, said he tends to be wary of judging products just by the labels — though sustainable practices are important to him.


“Labels have really confused the public. Some have good intentions, but I don’t know if they’re really helpful,” Mourad said. “Organic may come from Chile, but what does it mean if it’s coming from 6,000 miles away? Some local farmers may not be able to afford a label.”


In California, voters this week rejected a ballot measure that would have required labels on foods containing genetically modified ingredients.


Farmers like Gena Nonini in Fresno County say labels distinguish them from the competition. Nonini’s 100-acre Marian Farms, which grows grapes, almonds, citrus and vegetables, is certified biodynamic and organic, and her raisins are certified kosher.


“For me, the certification is one way of educating people,” Nonini said. “It opens a venue to tell a story and to set yourself apart from other farmers out there.”


But other farmers say they are reluctant to spend money on yet another certification process or to clutter their product with too much packaging and information.


“I think if we keep adding all these new labels, it tends to be a pile of confusion,” said Tom Willey of TD Willey Farms in Madera, Calif. His 75-acre farm, which grows more than 40 different vegetable crops, carries USDA organic certification, but no other labels.


The proliferation of labels, Willey said, is a poor substitute for “people being intimate with the farmers who grow their food.” Instead of seeking out more labels, he said, consumers should visit a farmers’ market or a farm, and talk directly to the grower.


Since that’s still impossible for many urbanites, Consumer Reports has developed a rating system, a database and a web site for evaluating environmental and food labels — one of several such guides that have popped up recently to help consumers.


The guides show that labels such as “natural” and “free range” carry little meaning, because they lack clear standards or a verification system.


Despite this, consumers are willing to pay more for “free range” eggs and poultry, and studies show they value “natural” over “organic,” which is governed by lengthy federal regulations.


But some consumers and watchdog groups are becoming more vigilant.


In October, the Animal Legal Defense Fund filed a lawsuit against Petaluma, Calif., organic egg producer of Judy’s Eggs over “free range” claims. The company’s packaging depicts a hen ranging on green grass, and the inside reads “these hens are raised in wide open spaces in Sonoma Valley…”


Aerial photos of the farm suggest the chickens actually live in factory-style sheds, according to the lawsuit. Judy and Steve Mahrt, owners of Petaluma Farms, said in a statement that the suit is “frivolous, unfair and untrue,” but they did not comment on the specific allegations.


Meanwhile, new labels are popping up rapidly. The Food Justice label, certified via third party audits, guarantees a farm’s commitment to fair living wages and adequate living and working conditions for farmworkers. And Wildlife Friendly, another third-party audited program, certifies farmers and ranchers who peacefully co-exist with wolves, coyotes, foxes and other predators.


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Follow Gosia Wozniacka at http://twitter.com/GosiaWozniacka


Health News Headlines – Yahoo! News



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