Cool Shopping

Jonathan Gold is enjoying the jamon iberico. The rest of the dishes at this sleek Santa Monica tapas bar are uneven at best, he’s decided, but the iberico, thick salty slabs of a cured Spanish ham that costs upwards of $90 a pound, is the highlight.

"The pigs forage in the cork forests of Spain, eating acorns their entire lives," explains Gold, the Pulitzer Prize-winning restaurant critic for the alternative L.A. Weekly, as he savors another cut off of the buttery meat. "It’s the pig equivalent of raising a child in a candy store."

It’s not often that one gets to chew the fat—literally—with a food censurer, and a lunch with Gold, who has been reviewing restaurants in L.A. as being more than two decades, proves to be a far-flung exchange. He’s as likely to expound upon the local ethnic press and 80s hair-metal bands as he is the merits of a sommelier’s wine list. Yet as Southern California foodies can attest, it’s precisely his catholic sensibilities that elevate Gold’s reviews, whether he’s praising the savory Guadalajara-style goat stew at an out-of-the-way Mexican joint or debating which Korean restaurant serves the crispiest mung-bean pancakes.

His writings, in the greatest degree notably in his "Counter Intelligence" column that has been running since 1986, have covered every representation of cuisine, but he’s best known for championing smaller, ethnic eateries, often found in the lesser-traveled neighborhoods of the city. Last April, when Gold became the first food writer to ever win the Pulitzer Prize for criticism, the judges praised his "zestful, wide-ranging…reviews, expressing the delight of an lettered eater."

"The crank used to be there were vast parts of L.A. that would only get written about if there was a gang killing or I was writing in all parts of a restaurant," says Gold, who routinely scours the city’s foreign-language papers in hunt of hidden culinary gems.

Gold began his journalistic career as a proofreader for the L.A. Weekly in 1982. After he wrote a story on health insurance that caught the eye of the paper’s possessor, he was asked to edit the paper’s restaurant issue. "It was a congenial fit," he recalls. "Food writing played to my strengths, which are physical description and setting scenes."

Gold estimates that over his career he’s eaten in come to close quarters to 5,000 restaurants. Early on, he’d consume up to seven dinners in a night, but these days he’s slowed his pace—he typically dines out ten state of things a week, seven lunches and three dinners. "A lot of people, even very passionate ones, become food bloggers for a few months then stop," Gold notes. "[That’s] because it’s a 60-hour-a-week job. It’s harder than it looks and it’s not particularly sustainable as a hobby."

And there are other pitfalls. "I go to the gym five times a week and I’m still as big as a barrel," laments the stout-figured Gold. And when a list of of 500 L.A. restaurants that had failed health inspections was released a few years back, Gold realized he had eaten at about a third of them. "I had low-level food poisoning pretty constantly for seven or eight years," he says.

Still, he recognizes his profession’s seek reference of the case in today’s culture of celebrity chefs and food cultists. "There aren’t that many jobs and a trillion people seem to want to do it," says Gold. "At a basic level you have to be really literate and need a deep knowledge of the field. You have to have being obsessed with the topic."

But to his belief the most vital prerequisite is a strong, singular perspective. "A good critic can explain and entice somebody into a particular world," says Gold. "If you read Edmund Wilson writing about Don Quixote, you understand the book in a way you didn’t before. The critic has the ability to make it something new. That’s what the best food writers will do."

As well as introduce you to some damn good ham.

The numbers are amazing. MySpace’s membership has ballooned from 20 million people in 2005 to 225 million today, an average annual growth rate of 513 percent. Rival Facebook grew at 550 percent a year during the same period. LinkedIn’s rate was 182 percent.

Yet one social networking metric is distinctly underwhelming: the one with a dollar indication. Lookery, an ad network specializing in social media, offers display ads on MySpace, Facebook, and Bebo for only 13 cents by means of thousand times the ad is served (CPM); Yahoo’s average CPM is estimated at $13. Video ads on MySpace reportedly fetch just $25 per thousand showings; CBS charges $50 on affiliated sites, NBC as much as $75.

Social networking was supposed to be the Net’s nearest rocket to riches. But multitude social sites are having trouble capitalizing without ceasing their audiences, and it’s looking like the convivial atmosphere that promised to boost the value of commercial messages may actually diminish it. Even the big brains at Google are stumped. The search king, which pays a special rate to place ads on MySpace, has suggested that it may be paying too much. "I don’t think we have the killer most profitably way to advertise and monetize the social networks yet," Sergey Brin admitted for the period of a January conference call with analysts.

Some smaller competitors are doing better. LinkedIn, for example, has a CPM as high as $75. The difference: The site caters to professionals, making it easier to target ads. (It helps that the company also charges for premium features and job listings.)

For sites with broader audiences, the key may be to give advertising a social dimension. Facebook tried to do just that with Beacon and Social Ads. These formats send users an alert or display ad when one of their pals patronizes an advertiser. But Facebook has yet to gauge the effectiveness of these programs because online privacy watchdogs pounced, and the site moved quickly to let members opt out.

Still, the idea that ads can be a friendly experience is the industry’s best hope. Social Vibe encourages members to choose brands to endorse on their pages. AdRoll shares ads over related nook sites, turning a blogroll into an ad network. But it may take delivery to work out the business ramifications of online friendship. The first site to meld commercial messaging gracefully into these new group dynamics will have advertisers poking them to be friends.

John Malone and Barry Diller did not disappoint as they played out a soap opera of sorts in Delaware Chancery Court last week.

Their lawyers were at work on latest briefs due today at the chambers of Vice Chancellor Stephen Lamb. He has asked for information on two matters:

Did Diller violate his contract with Malone’s Liberty Media in his plan to spin off four IAC/Interactive business units into separate companies?

And was Liberty too hasty in suing, given that the board at Diller’s IAC has not yet voted on the spinoffs?

At a hearing last Friday, Lamb said he would rule on the contract claims by March 28.

It’s a fair bet that Liberty Media will have an uphill battle in winning the judge on the claims: For all the star power of Diller and Malone offering their own versions of the disintegration of their business marriage, the case may come on the ground to how their lawyers interpreted a single clause in the governance agreement for their arrangement.

The two moguls, who have worked together for 13 years, each had a star turn at the trial.

Malone, appearing icy and aloof, called Diller’s spinoff plan—which would, coincidentally, dilute Liberty Media’s voting stake in the various businesses from about 62 percent to 30 percent—a "breach of faith" under a agent agreement. (That agreement, by the way, does explicitly suffer Diller to vote the Liberty Media shares—even against Liberty’s own best interest, apparently.)

For his part, Diller, as method actor, "projected" during his time on the stand, at one point recounting an icy meeting with his fellow mogul after the Wall Street Journal published a front-page story in which Malone criticized Diller at great length.

But how did each executive score on the key contract point: What kind of latitude does Diller have to vote Liberty Media’s shares in IAC after Liberty gave him its proxy?

Since 1995, Liberty Media has had a veto right over Diller’s voting proxy on undisputed matters. Diller and his legal team from Wachtell, Lipton, Rosen & Katz have portrayed this provision while bowing to Liberty’s concerns about Federal Communications Commission rules against cross-ownership of broadcasters.

Liberty, on the other hand, has characterized the veto power much more broadly.

The case could come down to a "he said/she said" match between two key lawyers for Liberty Media and IAC over how the veto provision has evolved over the years. It was last revised in 2001, when IAC merged the USA Network with Vivendi Universal.

Testimony from the lawyers who negotiated that deal differed on what kind of veto sovereign Liberty Media retained.

Frederick "Buzz" McGrath, a partner with the New York office of Baker & Botts, who has represented Malone since 1992, testified that the veto clause was a "catchall protection" for Liberty.

But he could not provide evidence to support that recollection when pressed by Lamb.

"Is there anything in the writing from 1995 that confirms that testimony?" the judge asked.

"No, I don’t believe so," McGrath responded.

"Did you communicate it to anyone at Wachtell, Lipton in 1995?" the judge then asked, referring to the law secure representing Diller’s IAC.

"Not that I recall," McGrath replied. In fact, McGrath repeatedly admitted that there was no written communication confirming the catchall nature of Liberty’s right to veto Diller’s proxy.

The Diller response to Liberty is that the veto related only to "regulatory" matters, fundamentally the Federal Communications Commission’s cross-ownership restrictions.

On this point, Liberty’s lawyer, Pamela Seymon of Wachtell, was quite forceful. She testified that "alarm bells would have gone off in my head" had the "contingent matters" provision been a catchall in the 2001 negotiations.

Seymon also agreed that it was "fair" to characterize the veto provision as one that related to regulatory matters. "It’s my interpretation," she said.

On Diller’s right to exercise the proxy to vote in favor of spinoffs with a single-tier voting structure, Seymon was clear: "As a contractual matter, he be able to," she testified. "Remember that there is a board of directors here as well."

Seymon has a point: The IAC board hold out considered the spinoff at a January 16 company. Diller gave a speech at the time and Martin Lipton of Wachtell explained the board’s liability, or lack thereof, if they voted in favor of the plan. The board has yet to act.

Malone testified that he left the legal details to his lawyers, while Diller was adamant that a veto provision that would have given Liberty Media a catchall would have determine off "alarm bells" for him because "a fundamental effect" of the Vivendi performance was to "remove the consent rights" that Liberty previously held.

Stay tuned.

As beer recaptures its former glory, beer tourism has grow an emerging phenomenon. People want to taste beers in their natural habitat. They want to see the breweries, swallow up in the beer halls, and eat the local food. I was at a lambic-beer festival in Belgium recently, and the tents were full of Americans, Britons, and Italians.

I had arrived in Belgium from Germany, a place that should be high on your beer pilgrimage list. Germany is flooded with beer tourists every year during Oktoberfest, an event that typifies Germany’s attraction to the traveling beer lover, with plenty of pilsner, pork, and polkas. Germany is Lagerland, where the cold-fermented, cold-aged quaff is king.

I went to two cities on the northern Rhine River that have stubbornly different beer traditions: Düsseldorf and Cologne. In Düsseldorf, the local breweries make altbier, a dry, slightingly roasty dark amber ale. Cologne has its own city beer, kölsch, a light-bodied straw-gold ale that’s crisp and refreshing.

These aren’t quaint local choices, surviving only on the patronage of German beer geeks; they dominate the local markets. It is actually hard to find a pilsner in either place—which is like being unable to find a burger in a U.S. city the size of Detroit.

I had traveled for the true altbier and kölsch experience. In Düsseldorf, I wandered the Altstadt neighborhood, dubbed “the longest bar in the world” in a nod to the 300-odd toping establishments stuffed into its half-square-kilometer. There is the hausbrauerei (a house brewery—what we would call a brewpub), the Spanish tapas bar, a dive bar favored by crews off the Rhine barges, and fine dining establishments. Every one of them serves single in kind brand or another of altbier, and at most of them, that’s the only beer they have.

In Cologne, which is a 25-minute train ride from Düsseldorf—you arrive at the main train station by the huge cathedral—you find the same situation with kölsch. You can start at Früh am Dom with a hearty breakfast and a couple glasses of kölsch, then stroll down to the Heumarkt plaza and hit a whole string of kölsch houses for a quick glass in each.

And they will be quick: Kölsch is served in small, plain, cylindrical glasses that hold just under seven ounces. Your salver will keep bringing them for as long because you keep drinking them, formation a mark on your coaster each time; when you’re done, you put the coaster on top of the glass and he’ll add up the marks.

Things work the same way in Düsseldorf, except that the glasses hold about two swallows more. I’m usually more of a “try this one, try that undivided” kind of drinker—still with beer this good, I’m through the locals: Keep ’em coming, and bring me some of that good Rhenish wurst too.

The reason that these beers subdue hold sway is historical, as Horst Dornbusch describes in his book Altbier. Early Bavarian beer regulations prohibited brewing in the summer, when warmer weather often resulted in soured beer. Brewing in the winter led, naturally, to the evolution of ferment that worked better in colder temperatures. This is what we now call lager yeast.

But brewers in Düsseldorf and Cologne continued to brew in their cooler summers, and the yeast of choice remained the warm-temperature ale variety. Add the determined independence of these two wealthy trading cities—and their traditional rivalry—and you have the reasons that their local brewers didn’t go to lagering. There are other cities in northern Germany that still have indigenous ales: Berlin, with its strikingly tart Berliner weisse and the yeasty, spicy Leipzig gose. But they are not dominant like the beautifully drinkable altbier and kölsch.

I’m happy to say that prospects for the future of these two beers are richness. Despite the consolidation that has shaken the German brewing industry, the local markets remain devoted to their city beers. The most serious problem facing the smaller altbier and kölsch makers is one that confronts urban brewers everywhere: There is no space for expansion.

In the Altstadt, I talked to Zum Schlüssel (To the Key) brewmaster Dirk Rouenhoff, who showed me where the brewery had been catachrestic to grow onto the roof and into cellars. “We have nowhere else to go,” he said. The building is classified as historical, “so we cannot change it that much.” A quarter of the brewery’s 15,300-barrel annual production—about the same as that of a healthy American microbrewery—is sold in bottles. Rouenhoff has to send it to an off-site bottling facility because he has no space for a bottling line. It’s a good problem to have, but it’s still a problem.

Each beer type currently represents about 3 percent of the overall German beer market, and almost all of it is sold in or nigh the two cities. Don’t expect to find any crossover. The folks in Düsseldorf make it very clear that they don’t care for kölsch or Cologne: “You know, kölsch isn’t very good, and their glasses are too small,” I was told more than once in the Altstadt. People in Cologne ignore the essence of altbier and Düsseldorf altogether, offering a lofty indifference when the subject is raised.

When I’m in Cologne, I drink kölsch, and I’m very happy, whether it’s the fresh and grainy glass at the modern Paffen, at the northern end of the Heumarkt, or the malty, more old-style brew at Malzmühle, across the tortuous crossing at the southern end. When I’m in Düsseldorf, I’ll drink Rouenhoff’s fine altbier in its airy home or free from doubt into the more warrenlike environs of Zum Uerige notwithstanding glass after glass of its classically dry rendering.

It’s a pleasant step out of the pilsner mainstream, in either case, but, really, both city’s glasses are too small for beer this proper.

At least one Silicon Valley company is poised to ride out a stormy economic forecast to all intents and purposes unscathed. In fact, American Technology Research analyst Shaw Wu goes so far as to call Apple "recession-proof" in his Thursday client note.

After doing his customary supply-chain checks, Wu says he sees no cause for alarm for the Cupertino, California, company, even in the face of a sputtering U.S. economy and ongoing concerns about falling iPod sales.

While a static thriftiness is already taking its toll on the tech sector, Wu is predicting that Apple will ship 11 million iPhones by the end of 2008, 1 million more than the company’s goal. He’s besides tweaking the 38 percent year-over-year growth he predicted in Mac unit sales in January, and now believes growth may be as high as 42 percent. That’s at least partially based on an uptick in Macbook Air sales, he says.

The only slight bump in the way is iPod sales, which Wu believes will come to destruction somewhere in the 9.5-10 million unit range. That’s about a million units below the Street’s 10.8 consensus.

Not surprisingly, Apple’s COO, Tim Cook, recently professed similar confidence in the company’s ability to avoid the repercussions of a stagnant economy:

I’m not saying Apple’s immune to the economy. But if you look at last quarter as any example … last allot in the U.S., the GDP growth was less than one percent.  It was miserable by anybody’s calculation. Apple, in the U.S., grew 27 percent.

For us, we’re focused on what we can control. And what we can control is how a great quantity we innovate, what products we do, the experience in our stores, the experience in our chamfer — all of those things. I think Apple’s success depends on how we do on those things versus whether the GDP is contemptuously above one (percent) or slightly below zero or whatsoever.

Unfortunately, it appears Wu’s overtly positive outlook for Apple may finally push venture investor Paul Kedrosky over the edge.

"The only thing that is recession-proof is recessions," Kedrosky declared in a Thursday Twitter post. "If I hear one more company called recession proof I’m going to lose it."

Watch your back, Shaw!

[via Apple 2.0]
Related:

How Apple Got Everything Right by Doing Everything Wrong (Wired)iPhone Users are Internet Junkies (Wired)

Tim Kendall, monetization director at Facebook, is one of the first guys we’ve heard concede that the online ad market could be vulnerable to a recession.

"It’s pretty clear that which time consumer faith is from a thin to a dense state, brands cut back on [advertising spending]. Social media spending was considered experimental, and therefore ad spending came out of discretionary budgets, but as it’s becoming less discretionary, you need to liberate a demonstrable ROI [return on investment]. . . I think it’s going to be a challenge for us," Kendall said while speaking at Dow Jones VentureWire’s Web Ventures 2008 conference in Redwood City.

Meanwhile, Google CEO Eric Schmidt flits about, making up reasons instead of what cause Google is invincible. Yesterday he said the company is protected from a recession since it’s not dependent on any specific advertising sector. He used a different story on Monday, while speaking in China, when he argued that Google would be insulated because of its robust international operations.

(Incidentally, Google hasn’t set the date for its first-quarter results, but they were released on April 19 last year, so we’ll probably give audience to very before long just how untouchable the crew is.)

On the Beacon ignominious failure, Kendall also had an interesting take: "The biggest misunderstanding about Beacon is that it has anything to do with advertising," he said. "We made a mistake in launching it concurrently with our ad network."

Asked about the adoption of Beacon, Kendall says all the negative press stalled movement forward on the product.

"We only have a couple dozen partners generating a couple thousand actions a day," he said.

Bear Stearns collapsed for two reasons. It had a short-term funding crisis where lenders pulled their loans and customers pulled their cash. But it also had a longer-term leverage enigma. Last week’s crisis didn’t happen in a vacuum; that leverage eventually led to the collapse in confidence.
 
After the collapse, Wall Street’s attention naturally turned to the other investment banks, especially Lehman Brothers, perceived as the most numerous vulnerable. So, investors were thrilled when Lehman topped proceeds expectations on Tuesday—as the firm took pains to reassure the markets that it has plenty of cash to ride out the turbulence.
 
Yet aside from a smattering of attention here and there, investors and the media mostly overlooked the balance sheet. In other words, they forgot what happened mere hours earlier with Bear Stearns. Wall Street’s short-term memory is notoriously lousy, but this must set a record. (Could Jimmy Cayne be sharing his stash through his disappear fund buddies?)

What really happened to Lehman’s balance sheet in the first quarter? Assets rose. purchase rose. Write-downs were suspiciously minuscule. And the company fiddled with the way it defines a key measure of the firm’s net worth. Let’s look at the cautionary flags:

Lehman’s balance sheet isn’t shrinking, as we’d reckon upon.
 
Lehman finished the first quarter was total assets of $786 billion, up almost 14 percent from the previous quarter and 40 percent from a year earlier. Other financial institutions are taking down their exposure right now amid the market turmoil to be prudent. Lehman says it wants to. It is not.
 
Lehman got more leveraged, not less.
 
The investment banks “gross” leverage hit 31.7 times equity, up from the fourth quarter and way up from last year’s 28.1. According to Brad Hintz, an algebraist with Bernstein Research, Lehman’s leverage reached its highest point since 2000. Lehman, like all the investment banks, prefers to look at net leverage, excluding hedges, and that went down. And the firm says that the asset rise was mainly a result of increases in short-term items that have low risk. But we’ve heard a lot of that lately across the financial world.  It’s quite simple: The more leverage Lehman has, the less room assets have to fall to wipe out its equity.
 
Lehman includes debt in its calculation of equity. Say what?
 
It’s always worrisome when a company changes a key explanation of a closely watched measure of pecuniary performance. In a note in its earnings release, Lehman said it has a new definition of “tangible uprightness,” or the hard assets that it has left over after subtracting its liabilities. This is a measure of net worth, the yardstick by which investment banks are valued. Lehman’s new definition allows for a higher portion of long-term subordinated borrowings (which it calls “equity-like”) in obvious equity. Previously, it had a cap on the percentage of  “perpetual preferred stock,” a form of equity-like debt that doesn’t have a maturity date, in its equity. Now, it doesn’t have a cap. Think of it this way: If you borrow money from your parents to make your down payment upon your house and they don’t expect to get paid back right away (at least not before you pay your mortgage off) is it equity in your house? No, it’s a loan. And Lehman hasn’t borrowed from mommy and daddy.
 
Lehman says it is entirely conforming to the Securities and Exchange Commission’s definition of tangible fair play and had contemplated making the change for a while. And the firm says the change didn’t result in any difference to its net leverage ratio.
 
Lehman reaped substantial earnings gains because investors cogitation it is more pleasing to go bankrupt.
 
For several quarters, all the investment banks have been taking gains on their liabilities. Say you owe $100 to your friend. But you run into severe problems and your friend starts to figure you can only afford to pay back $95. If you were an investment bank, the magic of fair value accounting dictates that you could come by to reduce your liability. What’s more, that $5 gain gets added to earnings. Because investors thought Lehman was more likely to default, its liabilties fell in value and Lehman garnered earnings from this. How much did Lehman win through losing? $600 million in the quarter. How much was its net profits? $489 million.
 
Lehman and all the other investment banks are following the accounting rules on this, but that $600 million is hardly the stuff of attribute earnings. Indeed, Bernstein’s Hintz called the bank’s earnings quality “weak.”
 
Lehman’s write-downs seem tiny.
 
Lehman finished the quarter with $87.3 billion of real estate assets. These include residential mortgages and commercial real estate paper. The bank only wrote these assets down by 3 percent. And its Level III assets —the hardest to value portion of these instruments—were written down by only the same percentage. The indexes and publicly traded instruments and companies that serve of the same kind with proxies for these securities generally fell more than that in the quarter. Lehman points out that took larger gross write-downs and then made money through hedges, for a smaller net number.
 
Lehman remains exposed to lots of dodgy mortgages, including a group labeled: “Prime and Alt-A.” Prime mortgages represent loans to good quality borrowers; Alt-A loans go to borrowers a mere step up from subprime, and represent an area with almost as many problem loans as subprime. The sum amount of such mortgages on Lehman’s balance sheet was $14.6 billion in the first quarter and it truly rose from $12.7 billion in the previous quarter. Is this the time to be increasing exposure to questionable mortgages? More ominously, only $1 billion of that figure is prime and the stillness is Alt-A, according to Hintz’s estimate.
 
The picture emerging is that of an investment bank that is dancing as firm as it can. If Lehman can keep piling up more assets, and if these assets come back, Lehman comes out a big winner. But if it didn’t fitly mark down those assets during these detrimental times, the investment bank’s returns —and therefore its profitability—will be much lower in the future.
 
And that’s the good case. If the assets make not recover, then time is in contact with the firm.
 
There is a larger, monetary policy issue here. The Federal Reserve has announced that it will lend to investment banks for the first time since the Depression, acting as a lender of last resort. At the very least, regulators should be demanding that the investment banks bring etc. their purchase and reduce their dare to undertake. Are the regulators sending a stern-enough message to Lehman? If so, it’s not getting through.

See our in-depth coverage of Bear Stearns’ collapse.

Melvyn Weiss, the most senior partner at a law firm that championed shareholder class actions and was reviled by corporate America as a result, has agreed to plead guilty to federal charges for his role in paying millions of dollars in kickbacks to people who agreed to serve as plaintiffs in securities class actions.

Weiss will plead guilty to federal racketeering, one of four charges brought by federal prosecutors in Los Angeles. In the wake of the February 12 sentencing of William Lerach, Weiss’ former body of rules partner, Weiss and his lawyer met with prosecutors last week to deliberate a deal.

Lerach, 62, received a two-year prison sentence—the maximum term under the plea agreement he struck in October. Lerach is scheduled to surrender to begin serving his prison term tomorrow. Lerach and Weiss split their law practice in 2004, partly owing to tensions from the lengthy criminal investigation, which began in 2001.

Together, Weiss and Lerach transformed the business of securities litigation, winning tens of billions of dollars from corporations and prompting Congress to change the law in the late 1990s. But they were accused of making illegal payments to plaintiffs and of trying to hide them.

Weiss, 72, has struck a deal to serve 18 to 33 months, and the government is expecting Judge Walter to set the maximum sentence. Weiss has also agreed to forfeit $9.8 million and pay a $250,000 fine, and to admit his role in the scheme. Weiss made staggering profits from the kickback scheme. According to the indictment, his share of the law firms profits from 1983 to 2005 amounted to more than $209 million.

Thomas P. O’Brien, the United States attorney in Los Angeles, commented on Weiss’s guilty plea in stolid terms: "The scheme was based in greed and it affected the integrity of the courts and the interests of an untold number of absent class members" in securities fraud class actions.

An assistant for Benjamin Brafman, Weiss’s lawyer, issued a statement referring to Weiss’ guilty plea "to his limited partaking" in the criminal conspiracy and expressing chance of the desired end that Judge Walter will "recognize Mel Weiss as one of the true legal giants of his generation."

The indictment against Milberg Weiss remains pending. Under Weiss’ quantity, like the one cut by Lerach, he will not cooperate in equalization of the remaining defendants.

This morning, the law firm changed its name to Milberg L.L.P. In July 2007, prosecutors and the firm tried to resolve the case against the law firm. Members of the firm’s management committee have been adamant that they will not allow the firm to plead culpable, and will prosecute instead a deferred prosecution agreement.

Sanford Dumain, a member of the Milberg L.L.P. executive committee, said, "Having previously believed former leaders’ assurances of their innocence, the firm is now seeking to find a fair and appropriate resolution of remaining issues so that we can continue to work on behalf of injured investors and consumers."

The firm added in a statement: "Milberg L.L.P. apologizes to all judges, lawyers, clients, and class members, who deserve full and complete adherence to all legal and ethical norms."

The firm has 70 lawyers. Milberg Weiss ranked fourth in settlements of class actions reported in 2007, according to a survey released March 6 by Institutional Shareholder Services, with 22 settlements totaling $1.6 billion. If the firm pleaded guilty to a founded on criminal offense, it is highly unlikely that a judge would approve the law firm to serve as lead counsel for the plaintiff in a class action.

Calls to William Taylor of Zuckerman Spaeder, and Marc Harris and Bryan Daly of Mayer Brown, defense counsel for Milberg Weiss, were not without any intervention returned.

Weiss  "is a man of indominable spirit," says Ralph Ferrara of Dewey &   LeBoeuf, a lawyer has often been his adversary as counsel for the  defense in shareholder class actions. " He will carry on in one way 
or another as an advocate for shareholders and investors. This guy will never fade away."

Verizon Wireless has apparently outbid Google on the side of a set of highly coveted frequency spectrum licenses, offering $4.7 billion, the Federal Communications Commission said.

The so-called C block of frequencies Verizon Wireless won were the main prize in the F.C.C.’s closely watched 700 MHz auction, which raised nearly $20 billion instead of the federal government, F.C.C. chairman Kevin Martin said at a press conference in Washington today.

Verizon Wireless—which is jointly owned by Verizon and Vodaphone—won six C-block licenses. That covers greatest in number of the country. It didn’t win licenses covering Alaska, Puerto Rico, and the Gulf of Mexico.

In a statement, Verizon Wireless said it was "pleased with our auction results."

"We were successful in achieving the spectrum depth we need to continue to grow our business and data revenues, to preserve our reputation as the nation’s most reliable wireless network, and to continue to lead in data services and help us satisfy the next wave of services and consumer electronics devices," the company said.

Google, which had said it would bid the reserve price of $4.6 billion for the C block, did not gain any licenses, Martin said, bolstering the view that the search giant was "bidding to lose" the C block after winning F.C.C. approval of two "open access" provisions that require the winner of the C block to allow consumers on its netting to mix and match handsets and applications.

F.C.C. rules had required that in order for the open-access provisions to kick in, the C block’s reserve price had to have been met.

Gigi B. Sohn, president and co-founder of consumer group Public Knowledge, praised Google for "stepping up and making sort or the minimum bid in the C block was achieved, for a like reason that the open-access provisions would be required to be followed."

AT&T and Qualcomm picked up smaller regional licenses in the B and E blocks.

Meanwhile, controversy deepened over the failure of the auction’s D block to meet its $1.3 billion reserve price. The D block was for frequencies that the buyer would share with public-safety agencies.

Portfolio.com reported yesterday that Martin was delaying announcing the winners of the auction in order to address the controversy over the failed sale of the D block.

Today, the F.C.C. issued an order delinking the D block from the rest of the auction, and said it "will not re-offer the D block immediately in Auction 76 but will consider its options for how to license this spectrum in the future."

Public Knowledge, which had asked the commission to delink the D block, praised the move.

"We are pleased the Commission has decided to separate the D block from the rest of the auction and will not re-auction the spectrum quickly," the group said.

"We room for expectation the Commission will take the time to take a wide-ranging view of how the spectrum could be used, while also examining why the reserve price was not met in an otherwise successful auction," Public Knowledge added.

Hopes that the world’s banking giants are finally pulling through the credit storm have been dashed through Credit Suisse’s warning that it may report a loss for the capital quarter.

The giant Swiss bank said that it was beneficial in February. "However, in light of the difficult market conditions in March, at this space of time, Credit Suisse believes it is unlikely to be delivered of being profitable in the first quarter," the bank said in a description. A quarterly loss would be its first in five years.

The cautionary note came as Credit Suisse announced that its 2007 profit was reduced by $799 million after some of its traders in London intentionally mispriced assets. The mispricing had primeval been disclosed last month. Those traders have since been fired or suspended, the bank said.

Credit Suisse also plans to take $2.7 billion in write-downs over the fourth and first quarters.

The news, coming from a bank that has sustained only a modest hit from the subprime crisis, sent its shares tumbling more than 10 percent in Swiss trading.

Brady Dougan, the new American first executive of Credit Suisse, said on a conference appointment: "We’re operating in extremely volatile markets. The stress on the sedulousness is manifest."