Economic Calendar

Tuesday, April 3, 2012

‘Apple Fever’ to Push Stock to $1,001, Topeka Capital Says

By Adam Satariano - Apr 3, 2012 2:53 PM GMT+0700

Apple Inc. (AAPL), already the world’s most valuable company, will see its stock price reach $1,001 within 12 months, lifted by growth in China and the debut of a new television product, according to Topeka Capital Markets.

The new target, issued yesterday by Topeka’s Brian White, is the highest among the 45 analysts tracked by Bloomberg and represents a 62 percent increase over the current price. The gains will be fueled by demand for the next iPhone, in addition to the expansion into China and the TV market, he said.

Charging cables for Apple iPads at Grant Beacon Middle School in Grant, Colorado, on Jan. 17, 2012. Photographer: Andy Cross/The Denver Post/AP Photo

April 3 (Bloomberg) -- Guy Phillipson, chief executive officer of Internet Advertising Bureau U.K., talks about the outlook for online advertising revenue. He speaks with Owen Thomas on Bloomberg Television's "Countdown." (Source: Bloomberg)

‘Apple Fever’ to Push Stock to $1,001

Apple products on sale at a store in Orem, Utah. Photographer: George Frey/Bloomberg

Traders work at the New York Stock Exchange (NYSE) in New York, U.S. Technology companies helped lead the advance as Apple , the most-valuable company, climbed 1.4 percent after authorizing a $10 billion stock-repurchase plan and a quarterly dividend of $2.65 a share. Photographer: Scott Eells/Bloomberg

“Apple fever is spreading like a wildfire around the world,” White said in a report, which initiated coverage of the company with a buy recommendation.

Apple will get to $1,001 by introducing a TV within a year, as well as an upgraded iPhone that works with speedier wireless networks, he said. China Mobile Ltd. (941), the Asian country’s largest wireless network, will start carrying the iPhone within a year, White said, adding millions of new potential customers.

Apple’s stock also is getting a boost because of a relatively seamless transition since the death of co-founder Steve Jobs, he said. The stock has risen more than 60 percent since he died in October. Tim Cook had assumed the role of chief executive officer from Jobs the previous August.

“Steve Jobs’s health was such a fear that was hanging over the stock,” White said in an interview. “Now you’ve seen that Tim Cook is doing a good job.”

Steve Dowling, a spokesman for Cupertino, California-based Apple, declined to comment on the report.

A Trillion?

Apple’s management should aim to become the first company to generate $1 trillion in revenue, a goal that’s achievable in the next decade, he said. Apple had sales of $108.2 billion in its last fiscal year, which ended in September.

A risk for Apple is the uncertainty over who will make critical decisions about future products, White said. Cook’s experience is with Apple’s supply chain and operations, and less with product development, the area where Jobs excelled.

The stock has already risen 53 percent this year, spurred by soaring iPhone revenue and the debut of a higher-resolution iPad last month. The shares climbed 3.2 percent to $618.63 yesterday in U.S. trading. Apple’s market value is $576.8 billion, far above the previous leader, Exxon Mobil Corp. (XOM) That company is valued at $410.4 billion.

In German trading, the stock today gained 0.7 percent to the equivalent of $620.67 as of 9:46 a.m. in Frankfurt.

Apple investors also are benefiting from a $2.65-a-share dividend, starting in July, and a $10 billion stock buyback plan. The company announced both initiatives last month.

Top of the Heap

White previously covered Apple for Ticonderoga Securities LLC, where his last price target was $666. The next closest prediction to his new $1,001 target is the $800 target of Morgan Keegan’s Tavis McCourt.

White said Apple can hit his target because its iPhone and Mac computers still have relatively low market share, giving them room to grow. He also foresees Apple introducing iPads with a smaller screen size, letting them compete more directly with tablet computers from Inc. (AMZN) and other rivals.

The much-anticipated television set, which Apple may introduce within a year, would create a new $100 billion market opportunity for the company, White said. China, meanwhile, offers some of the best growth prospects. Mobile-phone subscribers in the country with access to 3G wireless networks could reach 230 million by the end of this year, adding millions of new potential iPhone buyers, White said.

To contact the reporter on this story: Adam Satariano in San Francisco at

To contact the editor responsible for this story: Tom Giles at


Groupon Revisions Highlight New Model’s Risks

By Douglas MacMillan - Apr 3, 2012 4:21 AM GMT+0700

Groupon Inc. (GRPN)’s latest restatement, following accounting missteps last year, heightens concern about the reliability of the company’s financial reporting and raises questions whether auditors gave enough oversight to the coupon provider’s novel business model.

The Chicago-based company reported a “material weakness” in financial controls on March 30 and said fourth-quarter sales were lower than previously stated because of higher refunds to merchants. That cut revenue in the period -- Groupon’s first as a public company -- by $14.3 million to $492.2 million.

Groupon Inc's initial public offering and listing on the NASDAQ in New York. Photographer: Zef Nikolla/NASDAQ/Corbis

Groupon headquarters in Chicago. Photographer: Scott Olson/Getty Images

The announcement added to setbacks for Groupon, which has struggled to get its financial statements in order since filing for an initial public offering in June. The company abandoned an accounting method for operating income after a review by regulators and later restated 2010 results. The moves raise questions about why Groupon’s auditor, Ernst & Young LLP, didn’t point out concerns sooner, said Herman Leung, an analyst at Susquehanna Financial Group in San Francisco.

“This should have been highlighted by the auditors,” said Leung, who has a neutral rating on shares of Groupon and doesn’t own the stock. “The business is growing so fast that it sounds like they don’t have the proper financial controls to deal with the growth.”

Shares Fall

Groupon’s stock had its biggest one-day decline today, dropping 17 percent to $15.28 at the close in New York. The shares have dropped 24 percent since the IPO in November.

Groupon has been working with KPMG LLP to address the causes of the material weakness, said Paul Taaffe, a company spokesman. PricewaterhouseCoopers LLP and Deloitte & Touche LLP have also worked with Groupon, Taaffe said.

Charlie Perkins, a spokesman for New York-based Ernst & Young, declined to comment on the earnings restatement.

To address the concerns, Groupon also is bringing in more finance personnel.

“Although we plan to complete this remediation process as quickly as possible, we cannot at this time estimate how long it will take, and our initiatives may not prove to be successful in remediating this material weakness,” Groupon said in the regulatory filing. Still, the company plans to report on the effectiveness of its internal controls by the end of this year.

‘Extremely Unusual’

Restatements and disclosures of material weaknesses are rare this soon after an IPO because the Securities and Exchange Commission requires detailed checks on financial controls before a debut, said Lise Buyer, principal at Class V Group.

“It’s extremely unusual, as companies generally go through very thorough audits before filing and so should have their policies and procedures fairly well ironed out,” said Buyer, whose firm is based in Portola Valley, California. She advises startups on public offerings.

Just 12 percent of companies reported having ineffective financial-reporting controls within their first year of trading, according to data provider Audit Analytics. The Sutton, Massachusetts-based research firm looked at 1,848 companies that held IPOs since January 2004.

Groupon said it failed to account for an increase in higher-priced deals, which are more likely to be refunded by customers. The company started selling discounts on plane tickets in partnership with Expedia Inc. (EXPE) last year and began offering Groupon Reserve, a service for upscale deals such as a five-course meal at Santa Monica, California-based restaurant Whist for $99.

Groupon said the latest changes “are primarily related to an increase to the company’s refund reserve accrual,” leading to higher reimbursement rates.

Refunds, Reimbursements

The company says it will refund the purchase price of coupons, known as Groupons, in cases where a customer isn’t satisfied. Still, Groupon has a limited period during which it can seek reimbursement from a merchant for a refund, and its customers may try to get refunds in cases where the company can’t get reimbursed from partners.

“Our inability to seek reimbursement from our merchant partners for refund claims could have an adverse effect on our liquidity and profitability,” Groupon said in its filing.

The higher refunds boosted operating expenses that in turn widened Groupon’s net loss by $22.6 million, or 4 cents a share. The company held to a forecast for first-quarter sales of $510 million to $550 million and income from operations of $15 million to $35 million.

Accountants may have had difficulty tracking changes in refunds because Groupon’s business model is relatively new, said Tom Taulli, an IPO consultant in Newport Beach, California.

‘Little History’

Groupon pioneered the market for daily deals, which offer discounts on restaurant meals, nail-salon packages and other services. Groupon splits the revenue from the offers with merchants.

“There is very little history on return rates,” Taulli said. “Groupon hasn’t been around for a long time and has been expanding so quickly, it’s got to be a nightmare for an auditing firm.”

Groupon also stumbled ahead of its IPO when Chairman Eric Lefkofsky said the company is “going to be wildly profitable” in an interview with Bloomberg News. In July, the company updated its IPO filing, asking investors to disregard those comments because they didn’t accurately or completely reflect his views.

To contact the reporter on this story: Douglas Macmillan in New York at

To contact the editor responsible for this story: Tom Giles at


Apple’s IPad Is No. 1, Even With Heat, Consumer Reports Says

By Sarah Frier and Scott Moritz - Apr 3, 2012 3:45 AM GMT+0700

Apple Inc. (AAPL)’s new iPad was named the best tablet computer in a ranking by Consumer Reports, two weeks after the magazine said the device runs “significantly hotter” than previous models.

The new iPad’s high-resolution screen provides the best detail and color accuracy of all tablets Consumer Reports has seen, the publication said today on its website. Consumer Reports also commended the device’s camera and faster connectivity. The new iPad costs $500 to $830.

A new Apple Inc. iPad in New York on March 16, 2012. Photographer: Scott Eells/Bloomberg

March 15 (Bloomberg) -- Bloomberg's Rich Jaroslovsky reviews Apple Inc.'s new iPad. Jaroslovsky says the new iPad has a vastly improved display and offers an ultra-fast Internet connection -- but otherwise seems more likely to maintain Apple's huge lead in the tablet market than to extend it. (Rich Jaroslovsky is a Bloomberg News columnist. The opinions expressed are his own. Source: Bloomberg)

March 7 (Bloomberg) -- Tim Cook, chief executive officer of Apple Inc., Walter Piecyk, an analyst at BTIG LLC, and Eric Jackson, president and founder of Ironfire Capital LLC, offer their views on Apple's new iPad and the outlook for the company. The device will be called iPad, carry a price tag of $499 to $829 and include an A5X chip that enables better graphics, Apple said today at an event in San Francisco. Kevin Dede, technology analyst at Auriga USA, and Michael Holland, chairman of Holland & Co., also speak. (Source: Bloomberg)

Last month, Consumer Reports said the new iPad reached temperatures of 116 degrees (47 degrees Celsius) when handling processor-intensive tasks such as playing graphics-heavy games. While the iPad can reach 122 degrees in 90-degree weather, when playing a game at maximum brightness, the temperatures don’t pose a health hazard, the reviewers said.

The device’s temperature is close to the 121 degrees that a Samsung Electronics Co. (005930) Galaxy Tab 10.1 can reach in the same conditions, Consumer Reports said. An Asustek Computer Inc. Asus Transformer Prime can reach 117 degrees.

“With use of a laptop, evidence suggests that temperature on the bottom of its case of 120 degrees risks damage to bare skin with prolonged contact,” Consumer Reports said in a statement today. “But we think the same temperature on a tablet is more a potential inconvenience than a concern.”

Satisfaction Ratings

Many customers didn’t wait for the reviews before buying the new tablet. Apple sold more than 3 million iPads during the product’s debut weekend.

The sales enthusiasm carried through to satisfaction ratings, according to survey results released today by ChangeWave Research, a unit of 451 Research LLC. Of the new iPad owners surveyed, 82 percent said they were very satisfied with the device, compared to the 74 percent approval rating of the previous iPad.

The high-resolution “retina” display was ranked the best feature on the iPad by new owners. The biggest dislike of the iPad was the cost, according to the ChangeWave survey.

Consumer Reports ranked the new iPad above other new tablets including the Toshiba Corp. (6502) Excite 10LE, the Pantech Co. Element, the Sony Corp. (SNE) Tablet P, and Samsung’s Galaxy Tab 7.7.

The magazine suggested that gamers turn down the brightness of the tablets if the heat bothers them.

When Cupertino, California-based Apple released the iPhone 4, Consumer Reports declined to recommend it, saying it dropped calls when gripped a certain way. After initially playing down the matter, which became known as “Antennagate,” Apple gave out free cases and issued a software update aimed at addressing the glitch.

Apple rose 3.2 percent to $618.63 at the close in New York. The shares have gained 53 percent this year.

To contact the reporters on this story: Sarah Frier in New York at; Scott Moritz in New York at

To contact the editors responsible for this story: Tom Giles at; Ville Heiskanen at


Dow Rises to Highest Level Since 2007 on Manufacturing

By Lu Wang and Inyoung Hwang - Apr 3, 2012 4:09 AM GMT+0700

U.S. stocks rose, sending the Dow Jones Industrial Average to its highest level since December 2007, on stronger-than-forecast growth in manufacturing.

All 10 groups in the Standard & Poor’s 500 Index advanced. Freeport-McMoRan Copper & Gold Inc. (FCX) and Alpha Natural Resources Inc. (ANR) added more than 1.7 percent, pacing gains among commodity shares. Financial companies rose as Bank of America Corp. (BAC) and Morgan Stanley (MS) climbed at least 0.9 percent. Avon Products Inc. (AVP) jumped 17 percent after Coty Inc. sought to acquire the door-to- door cosmetics seller.

April 2 (Bloomberg) -- U.S. stocks gained, with the Standard & Poor’s 500 Index returning to an almost four-year high, and commodities reversed early losses following a report showing stronger-than-forecast growth in American manufacturing. Bloomberg's Adam Johnson reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)

April 2 (Bloomberg) -- Bloomberg’s Trish Regan, Adam Johnson and Matt Miller report on today’s ten most important stocks including Abercrombie & Fitch, Amazon and Avon. (Source: Bloomberg)

April 2 (Bloomberg) -- Jim Bianco, president of Bianco Research LLC, Joseph Tanious, market strategist at JPMorgan Funds, and Lincoln Ellis, managing director at Linn Group, talk about the U.S. stock market and investment strategy. They speak with Trish Regan and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

April 2 (Bloomberg) -- Kyle Harrington, founder and managing partner of Harrington Capital Management, Robert Gelfond, chairman and founder of MQS Asset Management, and Robert Brusca, president of Fact & Opinion Economics, talk about the outlook for U.S. stocks, Federal Reserve monetary policy and their investment strategies. They speak with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

April 2 (Bloomberg) -- Michael Holland, chairman of Holland & Co., talks about the U.S. stock and bond markets. He speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

April 2 (Bloomberg) -- David Kelly, chief market strategist at JPMorgan Funds, talks about investment strategy, the outlook for financial markets and the U.S. economy. Kelly, speaking with Betty Liu, Dominic Chu, Sheila Dharmarajan and Josh Lipton on Bloomberg Television’s “In the Loop,” also discusses Federal Reserve policy. Todd Horwitz, chief strategist at Adam Mesh Trading Group, also speaks. (Source: Bloomberg)

April 2 (Bloomberg) -- Marc Faber, publisher of the Gloom, Boom & Doom report, talks about the outlook for stocks and investment strategy. Faber, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses Federal Reserve policy and the gold market. (Source: Bloomberg)

The S&P 500 rose 0.8 percent to 1,419.04 at 4 p.m. New York time. The index on March 30 completed its biggest first-quarter rally since 1998. The Dow gained 52.45 points, or 0.4 percent, to 13,264.49 today. About 6.6 billion shares changed hands on U.S. exchanges, 3.6 percent below the three-month average.

“We have solid gains that are likely to be sustained, maybe with some slight pullbacks over coming months,” Eric Teal, Raleigh, North Carolina-based chief investment officer at First Citizens Bancshares Inc., which oversees $4.5 billion, said in a telephone interview. “The manufacturing data continue to show signs of improvement. It supports our modest pro- cyclical position.”

Equities gained as manufacturing in the U.S. expanded at a faster pace than forecast in March, a sign that the industry is weathering slower global growth. The Institute for Supply Management’s factory index rose to 53.4 from 52.4 a month earlier, the Tempe, Arizona-based group’s data showed. Fifty is the dividing line between growth and contraction. Economists surveyed by Bloomberg News projected the gauge would climb to 53.

Construction Spending

A separate report showed construction spending decreased 1.1 percent in February, compared with the median economist forecast for growth of 0.6 percent.

The S&P 500 rose 12 percent in the first quarter as economic data surpassed estimates and investors speculated that the euro area would contain its sovereign-debt crisis. The benchmark measure advanced 3.1 percent in March, its fourth- straight monthly increase for the gauge’s longest streak of monthly gains since 2009, as Federal Reserve Chairman Ben S. Bernanke said he will keep stimulating the economy and Europe agreed to increase rescue funds.

“We don’t see any big negatives that would cause people to run for the hills,” Joseph Keating, who helps oversee $1 billion as chief investment officer at CenterState Wealth Management in Birmingham, Alabama, said in a telephone interview. “Easy monetary policies are in place around the globe. Investor sentiment has picked up.”

Commodity Producers, Banks

Commodity shares rose the most among 10 groups in the S&P 500 after a gauge of manufacturing in China signaled stronger demand. A Purchasing Managers’ Index touched a one-year high of 53.1 last month, China’s logistics federation and the National Bureau of Statistics said. Readings above 50 signal growth.

Freeport-McMoRan jumped 2.8 percent to $39.11. Alpha Natural, a coal producer, rallied 1.7 percent to $15.47. Alcoa Inc. (AA) added 1.5 percent, the most in the Dow, to $10.17, while Chevron Corp. (CVX) increased 1 percent to $108.30.

Investors snapped up shares of companies most tied to the economy. The Morgan Stanley Cyclical Index (CYC) rallied 0.8 percent. The Dow Jones Transportation Average, a proxy for economic growth, climbed 1 percent.

Financial shares advanced 0.8 percent as a group in the S&P 500. Bank of America added 1.2 percent to $9.68, while Morgan Stanley increased 0.9 percent to $19.81.

Non-Binding Proposal

Avon surged 17 percent, the most since July 2008, to $22.70. Coty said it has submitted a non-binding proposal to acquire the door-to-door cosmetics seller for $23.25 a share in cash. The purchase price represents a premium of about 27 percent over the three-month average weighted price for Avon shares, Coty said.

Apple Inc. (AAPL) advanced 3.2 percent to $618.63 after its new iPad was named the best tablet computer in a ranking. Consumer Reports said on its website that the new iPad’s high-resolution screen provides the best detail and color accuracy of all tablets it has seen, two weeks after the magazine said the device runs “significantly hotter” than previous models.

Hartford Financial Services Group Inc. (HIG) rose 4.1 percent, the third-biggest gain in the S&P 500, to $21.95. The insurer being pressured by investor John Paulson to break up said it will pay about $2.43 billion to buy back debt and warrants issued to Allianz SE.

Abercrombie & Fitch Co. (ANF) climbed 4.1 percent to $51.62, the most since Feb. 15. The teen-clothing retailer was raised to buy from hold at Brean Murray Carret & Co.

‘Material Weakness’

Groupon Inc. tumbled 17 percent to $15.28 after the largest provider of daily deals online reported a “material weakness” in its financial controls and said fourth-quarter revenue was lower than it had stated because of higher refunds to merchants.

The S&P’s first-quarter rally sent U.S. stocks above gold by the most in more than a decade, a sign of growing investor confidence in corporate profits as analysts raise earnings estimates for the first time this year.

The S&P 500’s rise of 12 percent was 5.3 percentage points more than gold for the widest gap to start a year since 1999, according to data compiled by Bloomberg. The S&P GSCI Total Return Index (SPGSCITR) of 24 commodities gained 5.9 percent over the three months, while Treasuries slipped 1.3 percent, trailing equities by the most since 2009. Corporate bonds increased 2.4 percent and the dollar fell 1.6 percent.

Gaining Traction

Stocks are diverging from defensive investments such as gold as appetite for risk increases. While bulls see it as a sign profits and the economy are gaining traction, bears point to Federal Reserve Chairman Ben S. Bernanke’s warnings that more stimulus may be needed as evidence that the rally has gone too far. To money manager Laszlo Birinyi, slower gains in precious metals signal pessimism is starting to fade.

“The problem with gold now is that people are starting to accept the economy recovery,” Birinyi, president of Westport, Connecticut-based Birinyi Associates Inc., said in a March 29 phone interview. Even as confidence builds, “people are still too focused on the concerns and the fact that this looks similar to last year, where everyone said sell in May and go away,” he said. “That’s exactly the kind of thing we look for.”

To contact the reporters on this story: Lu Wang in New York at; Inyoung Hwang in New York at

To contact the editor responsible for this story: Nick Baker at


Egypt’s Secularists Criticize Brotherhood Presidency Run

By Tarek El-Tablawy - Apr 3, 2012 12:34 AM GMT+0700

Egyptian secular groups and politicians accused the Muslim Brotherhood of seeking to monopolize power after the Islamist group reversed course and nominated a candidate for the presidential vote.

The nomination of Khairat el-Shater, a millionaire businessman who supports free-market policies, comes at a time when disputes between the ruling military, the Brotherhood and other groups vying to shape the country’s future are stymieing efforts to revive the economy.

Khairat el-Shater of the Muslim Brotherhood waves as he arrives to al-Galaa court in Cairo on Dec. 10, 2007. El-Shater is a leader in the Brotherhood’s Guidance Council, its main decision-making body. Photographer: Khaled Desouki/AFP/Getty Images

Khairat el-Shater of the Muslim Brotherhood waves as he arrives to al-Galaa court in Cairo on Dec. 10, 2007. El-Shater is a leader in the Brotherhood’s Guidance Council, its main decision-making body. Photographer: Khaled Desouki/AFP/Getty Images

Net international reserves fell to $15.1 billion at the end of March, down over 50 percent since the start of the uprising that toppled Hosni Mubarak, according to central bank data released today. A $3.2 billion International Monetary Fund loan is also still pending amid criticism from the Brotherhood and others over the government’s economic program.

The presidential race in May will be the first since Mubarak’s ouster from power last year, and the entry of el- Shater makes him a frontrunner among a wide group of candidates, including two other Islamist candidates.

El-Shater’s nomination, announced on March 31, “was not surprising” after the Brotherhood indicated it would “follow in the footsteps” of the former ruling National Democratic Party in seeking to control decision-making, Ahmed Saeed, the head of the secular Free Egyptians Party, said in an e-mailed statement today.

“Who will truly govern Egypt if el-Shater takes on the post of head of state? Would he govern in the name of the people or under orders from the Muslim Brotherhood,” Saeed said.

The Wafd Party said the Egyptian people “would pay a hefty price” for the decision, the official Middle East News Agency reported, citing the party’s head.

‘Threats to the Revolution’

The Brotherhood, whose Freedom and Justice political party holds 47 percent of the seats in the parliament’s lower house, said it was putting forward a candidate because of “threats to the revolution.”

Group officials said nominating a candidate was a step taken to preserve the momentum of the uprising after the government failed to address the needs of Egyptians, including the economy.

The Freedom and Justice party head, Mohamed Morsi, said concerns that the group was trying “to control all leadership positions in the state” were unfounded, according to a statement e-mailed late yesterday. The group, along with the Salafist Al-Nour Party, commands a majority in both houses of parliament.

‘Never Happened’

A Facebook page opposing el-Shater’s candidacy, created after the decision was announced, has garnered over 89,000 “likes,” while his official Facebook campaign page, has received a 10th of the interest.

Presidential contender Amre Moussa, a former foreign minister and Arab League head under Mubarak, said a win by el- Shater, coupled with the Brotherhood’s dominance in parliament and on the committee charged with drafting the country’s new constitution, would make it seem as though “the revolution had never happened,” MENA quoted him as saying.

If el-Shater, who served as the deputy to the Brotherhood’s leader Mohamed Badie were elected, would Badie then “be the president of the president of Egypt?” MENA quoted Moussa as asking.

El-Shater spent years in and out of Mubarak’s jails amid a crackdown on the group. He was released early in March 2011 following his latest conviction, less than a month after Mubarak’s ouster. To run for office, he would need a pardon from the military.

Brotherhood lawyer Abdel Monem Abdel Maqsoud said in a phone interview yesterday that the military judiciary had expunged the candidate’s convictions and that el-Shater now “has the right to fully exercise all his political rights.”

The nomination marked a clear determination by the Brotherhood that it is “ready to assume sole responsibility for governing Egypt, and that in its power struggle with SCAF, it enjoys a slight edge,” said Hani Sabra, Mideast analyst with the New York-based Eurasia Group, in an e-mailed note that referred to the ruling military council by its acronym.

To contact the reporter on this story: Digby Lidstone in Cairo at

To contact the editor responsible for this story: Louis Meixler at