World financial news

Chesterfield-based Aegion Corp. reported fourth-quarter net income of 15.2 million, or 38 cents per share, compared with $17.4 million, or 44 cents a share, in the corresponding period a year ago. Quarterly revenue rose to $256.7 million, compared with $246 million a year earlier.

Since October, Aegion has been the parent company of Insituform Technologies Inc. The company specializes in sewer and drinking water system renovation.

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China, the biggest supplier of rare earths, may almost double exports this year and meet quotas set by the government as lower prices stimulate demand.

Chinese exports were 49 percent of the government-alloted quota in the first 11 months of last year because the slowing global economy sapped demand, the Ministry of Commerce said in a Dec. 27 statement. Overseas sales quotas may be virtually unchanged this year at 31,130 metric tons, based on Bloomberg calculations.

Throughout the extraordinary surge in Apple Inc.’s share price, a persistent question has lingered:

Why is the stock still so cheap? One overlooked answer may be that Apple’s accounting isn’t as conservative as it used to be.

After topping $500 a share last week, the iPhone and iPad maker now has a $468 billion market capitalization. Yet Apple trades for only 14.3 times its earnings for the previous four quarters — about the same as the Standard & Poor’s 500 index’s price-earnings ratio — in spite of growth that’s far above average. Revenue last quarter rose 73 percent to $46.3 billion, while earnings more than doubled to $13.1 billion.

Many theories have been floated for why such a rapidly expanding company with such loyal customers would trade for so little. Perhaps investors believe Apple will cling to its $97.6 billion hoard of cash and marketable securities, rather than pay a fat dividend. Others have suggested a lack of confidence about the future. It’s a consumer electronics company, after all, and competition is brutal.

While each of those points has merit, here’s an explanation that hasn’t gotten enough attention: Thanks to an accounting rule change for which it lobbied, Apple gets to book revenue from sales of bundled products such as iPhones — which include hardware, software, services and upgrade rights — more quickly than it used to.

The easiest way to see the rule change’s impact is to look back at the two sets of numbers Apple reported for fiscal 2009.

Originally, the company said it had $5.7 billion of net income for the year on $36.5 billion of revenue. Then in January 2010 Apple retroactively adopted the new accounting principles and restated its previous numbers. The restatement boosted Apple’s fiscal 2009 net income 44 percent to $8.2 billion. Revenue was revised to $42.9 billion, 17 percent higher than originally reported.

Nothing changed economically, of course. Only the accounting did. On the surface, though, Apple’s valuation looked cheaper under the new reporting regime.

On Dec. 31, 2009, for instance, Apple had a market capitalization of about $191 billion low fee pay day loans. Using the fiscal 2009 earnings that Apple initially reported, its price-earnings ratio that day was about 33. Using its restated numbers, the ratio would have been about 23.

“It would appear that the market continues to consider a significant component of Apple’s revenues and gross profit to be presently unearned and not deserving of a normal market multiple,” said Charles Mulford, an accounting professor and director of the Financial Reporting and Analysis Lab at Georgia Institute of Technology in Atlanta.

Apple was one of a handful of companies that lobbied the Financial Accounting Standards Board for the new rules in 2009.

The impact for Apple seems to have been greater than for most others, probably because of the nature of its products. Dell Inc. said the rule switch had no material impact on its results.

Microsoft Corp. and Oracle Corp. said the same. Hewlett-Packard Co.’s earnings got a slight boost.

The FASB rule change had two main parts. One related to so-called multiple-deliverable arrangements, while another covered software sales. When Apple sells an iPhone, for example, the hardware and software are delivered at the time of sale. Other deliverables include the rights to future software upgrades and other features.

The old accounting rules required Apple to defer large chunks of its revenue and recognize the amounts gradually over each product’s economic life. While the details are complicated, the gist under the new rules is that Apple is allowed to record more revenue upfront.

Let me be clear: I’m not opining on whether Apple is overvalued or undervalued, and I’m certainly not making any predictions about its stock price. The point here is that it makes sense for Apple’s earnings multiple to have declined significantly once you consider how the company’s accounting has changed.

The bottom line: Not all iEarnings are created equal.

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Chinese Premier Wen Jiabao said the nation should take preemptive measures and start

The era of falling food prices has come to an end with the world population set to add another 2 billion people, according to Cargill Inc., the U.S. farm commodities trader.

The United Nations

The European Central Bank is likely to refuse to show its hand on how it will help cut Greece

Indonesia

A U.N. nuclear team arrived in Tehran early Sunday for a mission expected to focus on Iran’s alleged attempt to develop nuclear weapons.

The U.N. nuclear agency delegation includes two senior weapons experts _ Jacques Baute of France and Neville Whiting of South Africa _ suggesting that Iran may be prepared to address some issues related to the allegations.

The delegation from the International Atomic Energy Agency is led by Deputy Director General Herman Nackaerts, who is in charge of the Iran nuclear file. Also on the team is Rafael Grossi, IAEA chief Yukiya Amano’s right-hand man.

In unusually blunt comments ahead of his arrival in Tehran, Nackaerts urged Iran to work with his mission on probing the allegations about Iran’s alleged attempts to develop nuclear weapons, reflecting the importance the IAEA is attaching to the issue.

Tehran has refused to discuss the alleged weapons experiments for three years, saying they are based on “fabricated documents” provided by a “few arrogant countries” _ a phrase authorities in Iran often use to refer to the United States and its allies.

Ahead of his departure, Nackaerts told reporters at Vienna airport he hopes Iran “will engage with us on all concerns.”

“So we’re looking forward to the start of a dialogue,” he said: “A dialogue that is overdue since very long.”

In a sign of the difficulties the team faces and the tensions that surround Iran’s disputed nuclear program, a dozen Iranian hard-liners carrying photos of slain nuclear expert Mostafa Ahmadi Roshan were waiting at Tehran’s Imam Khomeini airport early Sunday to challenge the team upon arrival.

That prompted security officials to whisk the IAEA team away from the tarmac to avoid any confrontation with the hard-liners.

Iran’s official IRNA news agency confirmed the team’s arrival and said the IAEA experts are likely to visit the underground Fordo uranium enrichment site near the holy city of Qom, 80 miles (130 kilometers) south of the capital, Tehran.

During their three-day visit, the IAEA team will be looking for permission to talk to key Iranian scientists suspected of working on a weapons program, inspect documents related to such suspected work and secure commitments from Iranian authorities to allow future visits to sites linked to such allegations. But even a decision to enter a discussion over the allegations would be a major departure from Iran’s frequent simple refusal to talk about them.

The United States and its allies want Iran to halt its enrichment of uranium, which they worry could eventually lead to weapons-grade material and the production of nuclear weapons. Iran says its program is for peaceful purposes, such as generating electricity and producing medical radioisotopes to treat cancer patients.

Iran has accused the IAEA in the past of security leaks that expose its scientists and their families to the threat of assassination by the U.S. and Israel.

Iranian state media say Roshan, a chemistry expert and director of the Natanz uranium enrichment facility in central Iran, was interviewed by IAEA inspectors before being killed in a brazen bomb attack in Tehran earlier this month.

Iranian media have urged the government to be vigil, saying some IAEA inspectors are “spies,” reflecting the deep suspicion many in Iran have for the U.N. experts sent to inspect Iran’s nuclear sites.

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On a quiet afternoon in Manhattan’s East Village, I’m having lunch inside a monastery while Rasanath Dasa, a banker-turned-monk, tells us about the moment he decided to leave Wall Street.

"My desire to work in Wall Street arose back in 1992, when foreign TV first came to India and I watched Charlie Sheen in the movie Wall Street," he tells the group of five who have traveled to his monastery. "For some reason, the images stuck in my head of ‘man, that’s what I really want to do — that fast-paced life.’"

But the religious life also appealed to Dasa. He joined a monastery while he was still hustling deals on Wall Street for his employer, Bank of America. When he started work on a project for Playboy, the stark contrast between his inner life and his day job became too much.

"At the time that the economy was tanking, I was actually making money selling sex," he says.

He’s a slight man who speaks slowly and carefully, pausing to gather his thoughts as he narrates. He’s sharing his story with us thanks to a startup called SideTour. Almost every week, Dasa hosts a lunch for those who want to chat with him about his journey from Wall Street to the monastery.

Forget daily deals on restaurants and spas, or flash sales on designer clothes. The hot e-commerce trend at the moment is selling one-of-a-kind experiences.

Lunch with Dasa — priced at $20 — is just one offering from SideTour’s lineup. Its roster also includes a race down an ice luge with an Olympic medallist (that’s $150) or a cooking session with the host of NBC’s America’s Next Great Restaurant at his West Village townhouse ($35), among dozens of other options. The company takes a 20% cut when customers pay for an event.

SideTour is far from alone in the market. In the U.S., a key competitor is Zozi, which has raised $11 million from investors and currently operates in more than 60 cities. Germany has a whole pack of startups in the field, including Regiondo, Yasuu and Gidsy, which recently expanded into the San Francisco market.

One notable rival, Vayable, offers up experiences around the globe. Launched in April, the service’s tours range from an exploration of an abandoned Soviet hospital in Berlin to an expert-led wine tasting in Paris.

Vayable founder Jamie Wong attributes the interest in selling experiences in part to the rough job market. More people are finding themselves out of work or in need of a second job.

"I think we’re in an era where both the economy and cultural shifts are really dictating this kind of change, where people are moving more towards a freelance type of lifestyle," Wong says.

SideTour founder Vipin Goyal backs that view. He says his startup gives people the opportunity to make money doing what they love.

"It’s a platform for people to share their expertise and monetize that," he says. "It’s a huge opportunity for folks to supplement their income or to create new sources of income for themselves."

Goyal got the idea for SideTour after he and his spouse left their jobs and bought around-the-world plane tickets for a six-month trip.

"In places that we had local folks to share experiences with, it made all the difference," he says. "In places we didn’t, our own experiences were highly dependent on serendipity."

He came home with the desire to build a platform that would help others connect with those kinds of experiences. Investors flocked to the idea: SideTour landed a spot in incubator TechStars’ first New York cohort this summer, and it recently raised $1.5 million in seed funding. Since launching five months ago, SideTour has hosted 70 experiences, with a 90% sell out rate.

So is this a lasting market or a flashy trend?

Both Wong and Goyal cite studies concluding that experiences, not things, are what make people truly happy.

"People are starting to reevaluate — especially in this economic environment — how they’re spending their money," Goyal says. "I think that’s where you see a lot of this focus on experiences." 

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Japan may exempt home purchases from any increase in its sales tax, or reduce the amount of increase, Finance Minister Jun Azumi said.

Prime Minister Yoshihiko Noda aims to double the 5 percent sales tax by 2015 to boost revenue and contain a public debt burden twice the size of Japan