BMW Apple-Like Geniuses Sell Luxury Models with Tablets: Cars

By Chris Reiter - Jun 1, 2012 5:00 AM GMT+0700

Oliver Watkins struggles to explain to car shoppers that his job is to be a genius for Bayerische Motoren Werke AG. (BMW)

“We tell them we work for BMW in a new, exciting role, and we sometimes refer to ourselves as the ‘geeks’ of BMW,” said the 21-year-old, who joined Cooper Norwich, a BMW dealer in eastern England in September as one of the carmaker’s first two geniuses. More are on their way.

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In the new 800-square-meter Paris boutique, the four cars in the showroom are displayed beneath a light screen that can simulate conditions like driving through a forest. Photographer: Balint Porneczi/Bloomberg

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April 5 (Bloomberg) -- Bayerische Motoren Werke AG displays its 2013 BMW 6 Series Gran Sport luxury sedan at the 2012 New York International Auto Show. (Source: Bloomberg)

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April 9 (Bloomberg) -- Bayerische Motoren Werke AG displays its BMW i8 and i3 all-electric concept vehicles at the 2012 New York International Auto Show. (Source: Bloomberg)

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April 4 (Bloomberg) -- Ian Robertson, global head of sales and marketing at Bayerische Motoren Werke AG, talks about the automaker's first-quarter sales record, the importance of the U.S. and emerging markets to the company, the evolution of the BMW 3 Series line of cars, technology to boost vehicle fuel efficiency and customer behavior. He speaks with Bloomberg's Jamie Butters at the 2012 New York International Auto show. (Source: Bloomberg)

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Models stand at the entrance as guests arrive for the opening of the first brand store for Bayerische Motoren Werke AG in Paris. Photographer: Balint Porneczi/Bloomberg

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BMW's head of sales and marketing Ian Robertson said, “We want to bring the car environment into the shopping environment.” Photographer: Balint Porneczi/Bloomberg

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Guests look at a BMW 353i automobile, produced by Bayerische Motoren Werke AG, during the opening of the company's new brand store in Paris. Photographer: Balint Porneczi/Bloomberg

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A set of BMW branded golf balls for Bayerische Motoren Werke AG, are seen on display inside the company's new brand store in Paris. Photographer: Balint Porneczi/Bloomberg

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A BMW M6 convertible, produced by Bayerische Motoren Werke AG, is seen on display inside the company's new store in Paris. Photographer: Balint Porneczi/Bloomberg

Borrowing an idea from Apple Inc. (AAPL)’s stores, BMW plans to add tablet-toting product experts to the staff of its 3,000 dealers worldwide. Watkins and his colleagues will help customers link a car with an iPhone and sort through options like Night Vision and Active Steering without selling pressure.

Seeking to defend its lead in luxury-car sales, BMW will add geniuses to outlets in France, the U.K., China and the Netherlands this year and later in the U.S. The extra showroom staff are part of an overhaul of BMW’s retail approach as competition with Volkswagen AG (VOW)’s Audi and Daimler AG (DAI)’s Mercedes- Benz for wealthy car buyers intensifies.

The strategy kicked off last week when BMW opened a new store near the Champs-Elysees in Paris. The site is the first of a series of shops that focus on showcasing the brand to casual shoppers to broaden its appeal. Audi is joining BMW in introducing less-pushy sales tactics, which include a focus on urban buyers and better integration of showrooms with the web and smartphone presentations. The goal is to win new fans and catch up with Mercedes in retaining customers.

Brand Loyalty

“Loyalty is key because the market is saturated,” said Andy Turton, global development director at consumer-research company TNS in London. “The only way to grow is to take customers from others, but you have to hold on to your own first. Otherwise, it’s like pouring water into a leaky bucket.”

About 47 percent of BMW buyers stuck with the brand last year, compared with an industry-leading 62 percent for Mercedes, according to market research company Strategic Vision in San Diego. Audi’s retention was 37 percent last year.

“The traditional showroom model, where you’ve got a sales hustler closing deals, doesn’t work well in the luxury segment,” TNS’s Turton. “Customers in this space are looking for an experience.”

BMW, which is targeting a 20 percent increase in car sales to 2 million vehicles by 2016, is projected to have its lead over Mercedes tumble 72 percent to 30,400 vehicles in 2013 from 109,500 this year, according to figures from IHS Automotive.

Mercedes in Manhattan

Mercedes, which is seeking to retake the luxury-car sales lead from BMW by the end of the decade, sparked the retail battle after opening a store focused on promoting the brand more than selling cars in March 2009 in central Munich, BMW’s hometown. That was followed in June last year by a $220 million dealership in Manhattan, a few blocks from BMW’s new store.

The Stuttgart-based carmaker also attracted more than 410,000 visitors to a showroom that opened in Tokyo in July. The store, which includes a coffee bar and Mercedes merchandise, marked the first of about 10 urban outlets targeted at boosting the brand’s appeal with younger consumers.

“Mercedes has continued to find increased retention, partially due to a wide range of product choices and consistently better messaging” about the brand’s attributes, said Alexander Edwards, head of the automotive practice at Strategic Vision. “It is easier for customers to be loyal because there are so many opportunities to be loyal.”

Those possibilities will increase as the brand adds more entry-level models like the CLA compact coupe and doubles the variants of the S-Class flagship to six.

Audi is upgrading its store concept to target high-end neighborhoods in large cities, said Moritz Drechsel, a spokesman for the Ingolstadt, Germany-based brand. The focus of the approach is on the combination of web-based services with the personal touch and knowhow of a dealer, he said.

Larger Line-Up

In addition to adapting to changing buying habits, BMW’s retail strategy is also a reaction to a lineup that’s outgrowing most showrooms. Since 1999, when BMW’s range consisted of three sedans and a roadster, the brand has added four sport-utility vehicles, the 6-Series coupe and the 1-Series compact. More models are on their way, including the i8 plug-in hybrid supercar, the X4 SUV and a line of front-wheel-drive vehicles.

In the new 800-square-meter (8,600-square-foot) Paris boutique, the four cars in the showroom are displayed beneath a light screen that can simulate conditions like driving through a forest. The music is computer generated and changes based on the activity in the wood-framed space, while mirrors reflect the two cars in the display windows to passersby. The store is flanked by a Cartier and a Hermes shop and is down the street from Louis Vuitton’s mega store.

“We want to bring the car environment into the shopping environment,” Ian Robertson, head of sales and marketing for the BMW brand, said at the opening, which was attended by Monaco princess Charlotte Casiraghi. “There’s no doubt that the retail experience will play a huge role in being successful. The car industry is about 100 years old and basically hasn’t changed. The future could look very, very different.”

The investment in the retail strategy, which will include about 20 brand stores in major cities such as London, New York and Shanghai as well as the addition of geniuses, is “significant,” Robertson said, declining to provide figures.

For Watkins, the BMW pioneer from Norwich, it gave him a chance to pursue his passions for cars and gadgets after previously working at a PC World computer store.

“I love the interaction with the people and helping them better understand the cars and the technology,” he said. Also, his mom’s “very proud” to have a BMW genius in the family.

To contact the reporter on this story: Chris Reiter in Berlin at creiter2@bloomberg.net.

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net.

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Gold Poised for Worst Monthly Run in 11 Years on Europe

By Debarati Roy and Maria Kolesnikova - Jun 1, 2012 1:33 AM GMT+0700

Gold futures fell in New York, capping the longest monthly slump since 2000, as Europe’s worsening debt crisis and signs of a U.S. economic slowdown crimped demand for the precious metal.

Higher borrowing costs in Spain are putting pressure on Mariano Rajoy’s five month-old government to join Greece, Portugal and Ireland in seeking a rescue that would be the European Union’s biggest. First-time claims for U.S. jobless benefits rose by 10,000 to 383,000 last week, the Labor Department reported today. The Standard & Poor’s GSCI index of 24 raw materials fell as much as 1.5 percent and was headed for its biggest monthly drop since the recession in October 2008.

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“There’s definitely been a flight to the dollar rather than gold as a shelter from the crisis in Europe , which doesn’t look like it will abate soon,” said Wang Xiaoli, chief investment strategist at CITICS Futures Co., a unit of China’s biggest listed brokerage. “We’re encouraged by the gains made by gold yesterday even as the dollar strengthened.” Photographer: Victor J. Blue/ Bloomberg

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May 31 (Bloomberg) -- Dominic Schnider, Singapore-based global head of commodity research at UBS AG's wealth management unit, talks about the outlook for gold prices and demand. Schnider speaks with Zeb Eckert on Bloomberg Television's "On the Move Asia." (Source: Bloomberg)

“Gold is behaving like a classic commodity and declining along with the pack,” Adam Klopfenstein, a market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “It’s like the dead man walking.”

Gold futures for August delivery retreated 0.1 percent to settle at $1,564.20 an ounce at 2 p.m. on the Comex in New York. The precious metal retreated 6 percent this month, the biggest drop this year as the dollar rallied 5.4 percent. Holdings in the bullion-backed exchange-traded products are set for a third monthly decline, data compiled by Bloomberg show.

“Investors don’t have the same strategic approach to gold as before,” Edel Tully, an analyst at UBS AG, said in a report today. “Much of the exposure to gold has been on an intra-day bias of late. The market is too highly correlated with risk for many participants’ liking.”

Silver futures for July delivery fell 0.8 percent to $27.757 an ounce on the Comex, extending the month’s loss to 11 percent. The metal’s third monthly loss is the longest slump since 2008.

On the New York Mercantile Exchange, platinum futures for July delivery jumped 1.2 percent to $1,417.60 an ounce, helping narrow the month’s loss to 9.8 percent. Palladium futures for September delivery rose 1.2 percent to $613.90 an ounce. Still, prices fell 10 percent in May, the biggest monthly drop since September.

To contact the reporters on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net; Debarati Roy in New York at droy5@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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Merkel’s Isolation Deepens as Draghi Criticzes Strategy

By James G. Neuger - Jun 1, 2012 5:01 AM GMT+0700

German Chancellor Angela Merkel was besieged by critics for letting the euro crisis smolder, with the leaders of Italy and the European Central Bank demanding bolder steps to stabilize the 17-nation economy.

Italian Prime Minister Mario Monti and ECB President Mario Draghi pushed Germany to give up its opposition to direct euro- area aid for struggling banks. Monti further antagonized Germany by urging a roadmap to common borrowing.

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German Chancellor Angela Merkel at the 2012 Council of Baltic Sea States Summit. Photographer: Sean Gallup/Getty Images

Calling himself a devotee of German-style budgetary rigor, Monti told a Brussels conference yesterday that Merkel’s vision of a stable economy “risks being undermined because of lack of promptness in setting up the necessary instruments to limit the contagion.”

Financial markets offered a snapshot of Europe’s stresses after more than two years of crisis, with the euro close to its weakest in two years against the dollar. Investors seeking shelter from the market mayhem afflicting Italy and Spain sent yields on French and German debt to record lows.

Draghi told a European Parliament committee in Brussels yesterday that it wasn’t his job to make up for the failures of policy makers. When pressed on whether the ECB can step up action to tame financial turmoil and help cap widening bond spreads, Draghi said that “it’s not our duty, it’s not in our mandate” to “fill the vacuum left by the lack of action by national governments on the fiscal front,” on “the structural front, and on the governance front.”

Bank Aid

His comments came the day after the European Commission proposed European-financed bank recapitalizations and a timetable for euro bonds. Those ideas were rejected by Germany, Europe’s biggest economy and the chief underwriter of 386 billion euros ($477 billion) in aid offered since 2010.

Merkel put some nuance into the German position yesterday. While promising “no taboos” in attacking the crisis, she floated a timeline of “five to 10 years” for fixing flaws in a currency shared by countries with divergent wealth and attitudes toward taxing and spending.

Merkel lost her chief crisis-fighting ally last month when French President Nicolas Sarkozy was defeated by Francois Hollande, a Socialist who challenged the pro-austerity doctrine and called for a more activist central bank.

Monti joined Hollande in cornering Merkel in a conference call this week with U.S. President Barack Obama, who has criticized Europe for failing to get to grips with the crisis. The four-way call focused on “developments in Europe,” the White House said in a statement.

Election Loss

Merkel’s international isolation goes along with a state of political siege at home after her party was routed in elections in Germany’s largest state. In office since 2005, she is one of only five euro-area leaders to hold on to power since the crisis broke out.

Monti, Draghi and Bank of Italy Governor Ignazio Visco prodded Germany to back the proposal by the Brussels-based commission, the EU’s executive branch, to allow the euro-area bailout fund to support banks directly instead of channelling the money via governments. The permanent fund, the European Stability Mechanism, is due to come on line in July.

“People are actually working on finding ways that the ESM could be used to recapitalize banks,” Draghi said. “The issue is not so much the use of ESM money to recapitalize banks but whether this could be done directly without having to go to governments.”

‘Big Pot’

With creditor countries including Germany and Finland insisting they must be consulted before such funds are deployed, Draghi said there is a risk that “we have a big pot of money but nobody can touch it.”

A former economics professor who fought against Italy’s culture of spending and inflation in the 1980s and served for a decade on the commission in Brussels, Monti said it is in Germany’s own interest to shed its crisis-fighting inhibitions.

“Maybe I’m too German” in economic and fiscal policy, Monti said. That credo and the imposition of budget cuts that will put Italy in structural surplus next year give the non- partisan Monti -- heading a technocratic government that will expire in 2013 -- leverage in dealing with Merkel.

Italy’s extra 10-year borrowing costs over German levels reached 470 basis points yesterday, the highest since January. Monti said Italy is being punished for mistakes made elsewhere - - and by prior Italian leaders that left him with debt of 123.5 percent of gross domestic product to work off.

“Countries that are at the core of the system and which have had the huge merit of instilling the culture of stability to the European Union in the first place, most notably Germany, should really reflect deeply but quickly,” Monti said via video link to the Brussels conference. “Europe should really accelerate the efforts, as the European Commission is doing, in order to limit the contagion.”

To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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S&P 500 Caps Worst Monthly Drop Since September on Data

By Rita Nazareth - Jun 1, 2012 4:01 AM GMT+0700

U.S. stocks fell, capping the biggest monthly decline for the Standard & Poor’s 500 Index since September, as disappointment with American economic reports overshadowed optimism that Greece will stay in the euro.

Energy (S5ENRS) shares dropped the most among 10 groups in the S&P 500, while the Bloomberg U.S. Airlines Index (BUSAIRL) jumped 3.1 percent as oil had the biggest monthly decline in more than three years. Joy Global Inc. (JOY) sank 5.4 percent as the maker of mining equipment cut forecasts. Bank of America Corp. (BAC) rallied 2.1 percent to pace gains in financial shares. Facebook Inc. (FB) climbed 5 percent, rebounding from an earlier slump of 4.8 percent.

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Traders work at the New York Stock Exchange (NYSE) on May 30, 2012. Photographer: Scott Eells/Bloomberg

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May 31 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks fell, capping the biggest monthly decline for the Standard & Poor’s 500 Index since September, as disappointment with American economic reports overshadowed optimism that Greece will stay in the euro. (Source: Bloomberg)

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May 31 (Bloomberg) -- Bloomberg’s Trish Regan, Adam Johnson and Matt Miller report on today’s ten most important stocks including Caterpillar, Tivo and the CBOE Volatility Index or VIX. (Source: Bloomberg)

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May 31 (Bloomberg) -- Michael Holland, chairman of Holland & Co., talks about the U.S. stock market, and the U.S. and Chinese economies. He speaks with Trish Regan and Adam Johnson on Bloomberg Television's "Street Smart." (Source: Bloomberg)

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June 1 (Bloomberg) -- E. William "Bill" Stone, chief investment strategist at PNC Wealth Management in Philadelphia, talks about the impact of Europe's debt crisis on stock markets, the U.S. economic outlook and his investment strategy. Stone speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

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May 31 (Bloomberg) -- The number of Americans applying for unemployment insurance payments rose last week to a one-month high, a sign that progress in reducing joblessness may be stalling. First-time claims for jobless benefits increased by 10,000 to 383,000 in the week ended May 26 from a revised 373,000 the prior week, the Labor Department said today. Betty Liu, Dominic Chu and Michael McKee report on Bloomberg Television's "In the Loop." (Source: Bloomberg)

The S&P 500 decreased 0.2 percent to 1,310.33 at 4 p.m. New York time, after falling below 1,300 earlier today. The benchmark gauge has dropped 6.3 percent in May. The Dow Jones Industrial Average retreated 26.41 points, or 0.2 percent, to 12,393.45. About 8 billion shares changed hands on U.S. exchanges today, or 21 percent above the three-month average.

“There’s less of a growth backstop to the global economy,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. “The U.S. has held the position of stabilizing factor amid all the concern about Europe’s crisis. To the extent that the latest numbers suggest that momentum in the U.S. is slowing, that will make investors more nervous.”

Equities fell as data showed the U.S. economy grew more slowly in the first quarter than previously estimated and business activity expanded in May at the slowest pace in more than two years. The number of Americans applying for unemployment benefits rose. A Labor Department report due tomorrow is projected to show unemployment held at 8.1 percent.

Greek Polls

Benchmark gauges briefly rose today as two polls showed that the anti-austerity Greek Syriza party is likely to win second place. An inconclusive election on May 6 has stoked concern that Greece will be unable to form a government willing to implement austerity measures reached with the European Union as part of an international bailout. MSCI Inc. and Standard & Poor’s announced contingency plans for calculating their equity indexes should Greece leave the euro currency union.

“This is a chokepoint for Greece,” said Peter Sorrentino, who helps oversee $14.7 billion at Huntington Asset Advisors in Cincinnati. “The question gets pushed to a resolution. It would be expensive for the rest of Europe to have Greece exit.”

Stocks also rebounded after the Wall Street Journal reported that the International Monetary Fund’s European department started contingency plans for a rescue loan to Spain should the country fail to find funds to bail out Bankia group. The IMF said it is not preparing financial aid for Spain and the country denied any talks about a bailout.

Biggest Losses

Concern about Europe’s debt crisis sent the S&P 500 (SPX) lower for a second month, following the best first-quarter gain since 1998. Commodity, financial and technology companies fell at least 7.8 percent in May.

Energy shares in the S&P 500 dropped 0.9 percent today, the most among 10 groups, as oil sank after the U.S. Energy Department said stockpiles increased to a 22-year high.

Options traders are paying the most ever to protect against losses in Exxon Mobil Corp. (XOM), spurred by concern expanding U.S. stockpiles and slowing economic growth will drive down the largest energy producer by market value. Exxon retreated 1.5 percent to $78.63, the lowest level since November.

Joy Global tumbled 5.4 percent to $55.86, driving industrial shares lower. The maker of P&H and Joy mining equipment cut forecasts for full-year earnings and revenue as mining companies ease capital expenditure amid concern over the slowdown in China. Caterpillar Inc. (CAT), the largest maker of construction and mining equipment, slid 2.8 percent to $87.62.

Wider Loss

TiVo Inc. (TIVO) retreated 4.7 percent to $8.54. The company reported a first-quarter loss, citing hardware costs, and said legal expenses in the current period would lead to a wider loss than analysts expected.

Kohl’s Corp. (KSS) dropped 6.2 percent to $45.82 after the retailer said May same-store sales decreased 4.2 percent. That compares with the average estimate for a 1.1 percent decline.

Banks had the biggest gain in the S&P 500 among 24 groups, adding 1 percent. The KBW Bank Index added 1.1 percent, reversing a loss of 1 percent. Bank of America gained 2.1 percent, the most in the Dow, to $7.35.

Facebook, which this week fell below $30 for the first time, rallied 5 percent to $29.60. The shares dropped earlier today amid concern that the world’s largest social-networking service will struggle to wring profit from its 901 million users.

Ciena’s Results

Ciena (CIEN) Corp. climbed 14 percent, the most since September, to $13.55. The maker of networking equipment rose after second- quarter sales and earnings topped analysts’ estimates. Ciena is capitalizing on demand for speedy fiber-optic networks, which transmit data in the form of light over fiber strands.

Talbots Inc. (TLB) soared 89 percent, the most ever, to $2.44. The women’s clothing retailer trying to reverse falling sales agreed to be bought by private-equity firm Sycamore Partners for a reduced price of $369 million, including debt.

TJX Cos. (TJX) rose 2.7 percent to $42.46. The owner of the T.J. Maxx and Marshalls retail chains posted an 8 percent increase in May same-store sales, topping analysts’ estimates of 5.1 percent as warm weather and lower gasoline prices boosted consumer spending. Target Corp. (TGT), which also beat estimates, added 0.2 percent to $57.91.

“Traffic trends have picked up as hot summer weather spread over the majority of the nation,” Adrienne Tennant, an analyst at Janney Montgomery Scott LLC in Washington, wrote.

The S&P 500 may rebound almost 3 percent in June based on the average size of moves following past May declines of 4 percent or more, Bespoke Investment Group said.

Historical Moves

The benchmark gauge has fallen 4 percent or more in May on 15 occasions since 1928, followed by an average June increase of 2.8 percent, according to data compiled by Bespoke. The index rose in June 60 percent of the time following such moves.

The last time the S&P 500 slid more than 4 percent during May of a U.S. presidential election year was in 1984, when it tumbled 5.9 percent before rebounding 1.8 percent in June. This year’s slide may also mark a bottom for the market followed by a June rally, Justin Walters, Bespoke’s co-founder, said in a phone interview yesterday.

“The data certainly leans positive,” Walters said. “Along with the election analysis and the big down Mays, the risk-reward favors the market going positive here.”

The S&P 500 has averaged a gain of 0.51 percent in June following an increase in May, the Bespoke report showed, and the index has risen 0.96 percent in June after May declines. Its performance next month ultimately will be determined by Europe’s handling of the government-debt crisis, according to Walters.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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Chinatown Bus Companies Shut Down in Federal Safety Sweep

By Jeff Plungis - Jun 1, 2012 12:52 AM GMT+0700

The U.S. Transportation Department shut down 26 bus companies as imminent safety hazards, closing dozens of routes out of New York’s Chinatown in the government’s largest safety sweep of the motor-coach industry.

The Federal Motor Carrier Safety Administration’s enforcement action primarily targeted three Chinatown operations in New York and Philadelphia: Apex Bus Inc., I-95 Coach Inc. and New Century Travel Inc. The government ordered 10 bus company owners, managers and employees to cease all passenger transportation business, including selling tickets, according to a Transportation Department statement.

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A pedestrian walks past a sign that reads "No Buses" on the shuttered offices of Apex Bus Inc. in New York. Photographer: Scott Eells/Bloomberg

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Preparing to board a bus leaving Manhattan for Boston in New York's Chinatown. Photographer: Chris Hondros/Getty Images

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Signs informing customers that today's buses are canceled hang in the front window of the I-95 Coach Inc. bus stop at 87 Chrystie Street in New York, on May 31, 2012. Photographer: Esme E. Deprez/Bloomberg

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“If you put passengers’ safety at risk, we will shut you down," Transportation Secretary Ray LaHood said. Photographer: Andrew Harrer/Bloomberg

“By ignoring safety rules, these operators put passengers and other motorists at risk,” Transportation Secretary Ray LaHood said in a phone news conference today. “This is a notice to every bus company out there. Follow the rules and keep people safe, or we will shut you down.”

The bus crackdown follows a yearlong investigation that began shortly after a series of fatal crashes last year, Federal Motor Carrier Administration chief Anne Ferro said today.

Fatal crashes surged last year as intercity bus travel became the fastest-growing U.S. mode of commercial transportation. In 2011, at least 28 people died in eight fatal crashes, including three in an 11-week period involving carriers operating out of, or carrying passengers between, Chinatown neighborhoods in East Coast cities.

Curbside Operators

Curbside bus operators, which typically sell tickets online and pick up and discharge passengers on the sidewalk, have a fatal crash rate seven times higher than terminal-based operations, the U.S. National Transportation Safety Board reported in October.

The three primary targets in the U.S. crackdown controlled a network of other companies, leading to the 26 separate shutdown orders, the transportation department said. The companies’ networks included one ticket seller, nine active bus companies, 13 companies already ordered out of service that were continuing to operate and three companies applying for permission to operate.

East Coast

The department’s actions cover companies operating in New York, Pennsylvania, North Carolina, Georgia, Maryland and Indiana. Besides New York and Philadelphia, there are affected routes in Washington; Atlanta; Richmond, Virginia; Charlotte, North Carolina; Orlando, Florida and more than 20 other locations, according to a Transportation Department fact sheet.

The carriers involved had multiple safety violations, including drivers without valid commercial licenses and drivers violating federal driving-time limits; failure to test for drugs and alcohol; and vehicles that hadn’t been regularly inspected or repaired.

Transportation Department officials handed out summaries of their shutdown orders to company officials in English and Chinese. Passengers received notices advising them to follow instructions from law enforcement officers and providing directions on how to apply for refunds. The notices were printed in English, Chinese, Korean, Vietnamese and Spanish.

“The U.S. Transportation Department’s Federal Motor Carrier Safety Administration is placing this bus out of service,” the passenger notice says. “We understand this is an inconvenience, but your safety is our top priority.”

Newspaper Pictures

Sophia Xu, who sells tickets at I-95 Coach in New York’s Chinatown at 87 Chrystie Street, said Transportation Department officials came to the shop yesterday and said the company needed to close, without explaining why.

Signs posted on the glass outside and inside at the ticket counter give a phone number to call for online ticket refunds and say people who paid cash can get refunds at the counter.

Chen Chen, a fellow ticket seller, said Chinatown buses are being unfairly targeted.

“This doesn’t happen to Greyhound,” he said, holding a Chinese-language newspaper with pictures from the shop of police he said were rude.

The buses are safe, the two workers said.

A few people wandered to the New Century’s Washington office on H Street to find a handwritten sign taped to the front gate, “Don’t go upstairs -- Close.”

For Link Wolford, 46, the shutdown delays the start of his summer caring for his sister’s three daughters in Philadelphia. He called his mother to see if she could find him another ticket online. Wolford said he doesn’t expect he will ever see the $9 paid online for the ticket.

“This is an example of government agencies shutting down small businesses on a whim,” Wolford said. “We need to start up businesses.”

Yearlong Investigation

If New Century gets back in business, Oliver Oree said he wouldn’t hesitate to use the line again. The 56-year-old retired plumber bought tickets twice a month for trips from Washington to New York, preferring the $20 one-way fare to $70 on Greyhound.

“I don’t know what their problem is with safety,” Oree said. “I take my grandkids on it all the time. I’ve never had any difficulties.”

The FMCSA shut down some curbside bus companies last summer. Follow-up investigations found safety defects with other carriers operating on the Interstate 95 corridor, and agency investigators worked to establish links between bus networks.

Rule Change

An agency rule change that took effect May 29 enabled officials to expand their sweep in an unprecedented way, Ferro said. The FMCSA built a more extensive legal case against each company and is acting on all known affiliates simultaneously.

“We’ve closed each gap where entities may have been able to reincarnate in the past,” Ferro said. “All of this will be followed by continuous enforcement action.”

Retired naval serviceman Derrick Overbey, 50, had been planning to take an I-95 bus from New York to Hampton, Virginia for $35 today. On an earlier trip in March, government inspectors took a coach out of service, causing a 2.5-hour delay, he said.

“There could have been something wrong with that bus,” Oberbey said. “That’s something you think about.”

The American Bus Association, whose members include FirstGroup Plc’s Greyhound Lines Inc. and Stagecoach Group Plc (SGC)’s Megabus, has been calling for a crackdown on unsafe bus operators and strongly supports the Transportation Department’s effort, said Dan Ronan, a spokesman for the Washington-based group.

‘Whac-a-Mole’

“It’s almost been a game of ‘whac-a-mole,’” Ronan said. “The federal and state government go in, try to shut these carriers down. The owners transfer the DOT numbers, repaint the buses, and in a few hours they’re back on the road.”

The NTSB, in a separate investigation of the March 12, 2011 crash that killed 15 people in the Bronx, found the driver had been hired even though his license had been suspended 18 times and he’d been fired from two previous transportation jobs, according to documents released earlier this month. The board is holding a hearing to discuss its investigation of that crash June 5.

“With these actions today, the DOT and its state partners are telling bus operators to put safety first or get put out of business,” NTSB Chairman Deborah Hersman said today. “We’ve seen the tragic results of rogue operators too many time in our investigations.”

In its report last year, the safety board found that curbside operators, which offer fares as low as $1, outnumbered traditional terminal-based companies like FirstGroup Plc (FGP)’s Greyhound Lines Inc., 71 to 51.

The FMCSA, which regulates the trucking and bus industries, doesn’t have enough people to do adequate oversight, the NTSB said in its October report. The 878 FMCSA and state inspectors are responsible for 765,000 motor carriers, a ratio of 1.15 investigators for every 1,000 companies, it said.

“Today is a watershed day for America’s bus passengers,” Ferro said. “Passengers expect and deserve to arrive safely at their destinations, every trip, every time.”

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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EU Weighs Direct Aid to Banks as Antidote to Crisis

By James G. Neuger - May 31, 2012 5:00 AM GMT+0700

The European Commission challenged Germany’s remedies for the financial crisis, calling for direct euro-area aid for troubled banks and demanding a path to common bond issuance.

The commission, the European Union’s central regulator, sided with Spain in proposing that the planned permanent rescue fund, the European Stability Mechanism, inject cash to banks instead of channeling the money via national governments.

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Spain, the 17-nation euro area’s fourth-largest economy, is trying to simultaneously plug holes in regional budgets and detoxify its banks, all while struggling to lift the economy out of a recession. Photographer: Angel Navarrete/Bloomberg

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May 30 (Bloomberg) -- European Commission President Jose Barroso speaks about the need for closer financial integration among member states. Economic and Monetary Affairs Commissioner Olli Rehn discusses Spain's deficit-cutting timetable. They speak at a news conference in Brussels. (Excerpts. Source: Europe by Satellite)

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May 30 (Bloomberg) -- Bloomberg's Erik Schatzker reports that the European Commission called for direct euro-area aid for troubled banks and touted common bond issuance as an antidote to the debt crisis now threatening to overwhelm Spain. He speaks on Bloomberg Television's "Inside Track." (Source: Bloomberg)

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May 30 (Bloomberg) -- Bryan Marsal, co-founder of Alvarez & Marsal Inc., talks about the outlook for the U.S. banking industry and implementation of the Dodd-Frank Act. Marsal, speaking with Erik Schatzker and Stephanie Ruhle on Bloomberg Television's "InsideTrack," also discusses his tenure as Chief Executive Officer of Lehman Brothers Holdings Inc. and the European debt crisis. (Source: Bloomberg)

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May 30 (Bloomberg) -- Luke Spajic, head of European credit portfolio management at Pacific Investment Management Co., talks about the role of the European Central Bank in stemming the sovereign debt crisis, Greece's euro prospects and his investment strategy. He speaks with Caroline Hyde on Bloomberg Television's "The Pulse." (Source: Bloomberg)

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May 30 (Bloomberg) -- Simon Derrick, chief currency strategist at Bank of New York Mellon Corp., discusses the euro, yen and dollar. He speaks with Owen Thomas on Bloomberg Television's "First Look." (Source: Bloomberg)

“Flexibility and speed of action will be of the essence,” Jose Barroso, the commission’s president, said in Brussels yesterday. He sought “not only flexibility in terms of instruments, but also in terms of speed of reaction of the so- called firewalls, in this case of the ESM.”

Proposals for more liberal use of European bailout money face resistance in creditor countries such as Germany, Finland and the Netherlands, the scenes of growing taxpayer opposition to adding to the 386 billion euros ($479 billion) already pledged to fight the crisis.

Germany showed no signs of easing its stance, as Steffen Seibert, Chancellor Angela Merkel’s chief spokesman, told reporters in Berlin that “the German position on the direct recapitalization of banks out of the European rescue funds is known.”

Signs of stress multiplied in financial markets. Investors relinquished returns for security, sending the yield on German two-year notes to zero. Italy’s 10-year yield rose above 6 percent for the first time since January and Spain’s 10-year yields approached 7 percent.

The euro tumbled to as low as $1.2386, the lowest in almost two years.

Bank Aid

The commission packaged the bank-aid ideas along with a call for a European deposit-insurance program, designed to break the spiral of faltering governments and failing banks. It said it will make concrete proposals for common bond issuance -- also opposed by northern European donor countries -- and singled Spain out as the only country entitled to more time to cut its budget deficit.

Spain, the 17-nation euro area’s fourth-largest economy, is trying to simultaneously plug holes in regional budgets and detoxify its banks, all while struggling to lift the economy out of a recession.

‘Sever the Link’

Current EU plans call for the 500 billion-euro ESM to funnel bank-aid money through national governments and, ultimately, require those governments to pay it back. Direct recapitalizations by the fund “might be envisaged” and would “sever the link between banks and the sovereigns,” the commission said in a staff working paper.

Any discussion of creating that power would come once the permanent fund gets going in July, the commission said. A makeover of the fund’s aid tools requires a unanimous vote of the euro area’s 17 finance ministers, though ratification by national parliaments wouldn’t be needed.

Germany is spearheading resistance to direct European financing for banks because that would let governments bypass the conditions set for full aid programs, such as deeper budget cuts and more European intrusion into economic management. Finland is in Germany’s camp, Martti Salmi, a Finance Ministry official, said in a telephone interview.

Banking Union

The commission appealed for a “banking union” that would more tightly integrate supervision and create a pool of European funds to clean up banks with cross-border exposure and segregate their underperforming assets.

“It’s hard enough to bail out local banks let alone non- domestic banks,” said Harvinder Sian, a London-based fixed- income strategist at Royal Bank of Scotland Group Plc. (RBS) “A crisis lesson so far is that big ideas coming from Brussels or the guys taking the money are noise up until the point that the Germans get on the same page.”

Part of the solution lies in “correct and transparent risk recognition” instead of putting off the reckoning, the commission said. In the wake of the European Central Bank’s unprecedented 1 trillion euros in long-term loans, some banks are still using the funds to buy sovereign bonds, binding them more closely to financially shaky governments, the commission said.

Watchful ECB

The central bank’s “accommodative” monetary policy with interest rates at 1 percent limits its scope for spurring the economy, the commission said. It estimated on May 11 that the euro economy will contract 0.3 percent in 2012.

In an assessment by staff economists, the commission said there is little room for deficit-plagued countries to push back planned savings to a later date. Such an easing-up would be punished by markets, it said.

“Member states which face high and potentially rising risk premia do not have much room for maneuver to deviate from their nominal fiscal targets, even if macroeconomic conditions turn out worse than expected,” according to the document.

Still, Economic and Monetary Commissioner Olli Rehn said Spain might be granted an extra year, until 2014, to bring its deficit down to the limit of 3 percent of gross domestic product.

Spain deserves that mercy -- denied to France and the Netherlands -- because it is the only euro-area country likely to still be in recession in 2013, Rehn said. The concession will only come if Spanish Prime Minister Mariano Rajoy’s government delivers a “solid, two-year budget plan for 2013 and 2014,” he said.

The commission, which gained new powers to police national budgets in response to the crisis, is trying to crack down on deficits without imposing policies that crimp the economy.

“Credibility of consolidation is one of the key factors,” the staff paper said.

Euro Bonds

The commission kept alive the debate over common borrowing by euro-area governments, already rejected by Merkel as at best a goal for the long term and not a way out of the current turmoil.

Debate over euro bonds flared at last week’s summit of European leaders, the first for French President Francois Hollande after he took office vowing to challenge the German- dominated budget-cutting creed that has marked the crisis response.

Ideas include a debt-redemption fund proposed by Germany’s council of economic advisers and different types of “stability bonds” sketched out by the commission last year. The commission is now working on more concrete proposals.

Passage of a deficit-limitation treaty and the adoption of two laws that further enhance central oversight of national budgets will help pave the way toward common bond sales, the commission said.

The commission is only asking for “a roadmap and a timetable, but an early confirmation of the steps to be taken will underscore the irreversibility and the solidity of the euro,” Barroso said.

To contact the reporter on this story: James G. Neuger in Brussels at jneuger@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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Pending Sales of U.S. Homes Decrease by Most in a Year

By Shobhana Chandra - May 31, 2012 4:14 AM GMT+0700

The number of Americans signing contracts to buy previously owned homes fell in April by the most in a year, indicating the U.S. housing recovery remains uneven.

The index of pending home resales dropped 5.5 percent following a revised 3.8 percent gain the prior month, figures from the National Association of Realtors showed today in Washington. The median forecast of 42 economists surveyed by Bloomberg News called for no change in the measure.

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Real estate agents with a prospective buyer in Miami. Photographer: Joe Raedle/Getty Images

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May 29 (Bloomberg) -- Robert Shiller, an economics professor at Yale University and co-creator of the S&P/Case-Shiller index of property values in 20 U.S. cities, talks about the housing market. The index fell 2.6 percent from a year earlier after a 3.5 percent drop in February, the group reported today in New York. Shiller, speaking with Tom Keene on Bloomberg Television's "Surveillance Midday," also talks about Facebook Inc. (Source: Bloomberg)

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May 24 (Bloomberg) -- Douglas Yearley, chief executive officer of Toll Brothers Inc., talks about the luxury-home builder's second-quarter profit and outlook for the U.S. housing market. Net income was $16.9 million, or 10 cents a share, for the three months through April, compared with a loss of $20.8 million, or 12 cents, a year earlier, the company said. Yearley speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

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A PulteGroup Inc. sign advertises homes for sale in the Lyon's Gate neighborhood of Gilbert, Arizona. Photographer: Joshua Lott/Bloomberg

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Mortgage rates at record lows failed to sustain the pace of demand as some buyers may have waited for home prices to decline further. Limited access to credit and persistent foreclosures still weigh on housing, adding to concern it will remain a source of weakness for the world’s largest economy.

“The pattern of demand is sluggish and volatile,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, who projected a decline. “Until the supply issue is resolved, we could see further declines in prices and the housing market will continue to hover around the bottom. It’ll be a gradual improvement, we don’t expect anything stronger than that.”

Estimates in the Bloomberg survey ranged from a drop of 4.3 percent to a rise of 3.1 percent. The Realtors group revised March data from a previously reported gain of 4.1 percent.

Stocks fell after the figures and on concern Greece will leave the euro. The Standard & Poor’s 500 Index (SPX) declined 1.4 percent to 1,313.32 at 4 p.m. in New York. The yield on the benchmark 10-year Treasury note tumbled 12 basis points to 1.62 percent at 5 p.m. after touching 1.6085 percent, the lowest in Federal Reserve figures going back to 1953.

Three Regions Decline

Three of four regions saw a decrease, today’s report showed. That included a 12 percent slump in the West and a 6.8 percent decline in the South. Pending purchases rose in the Northeast.

Compared with a year earlier, the index climbed 14.7 percent after a 10.5 percent gain in the prior 12-month period.

Pending home sales provide insight into actual contract closings a month or two later. Purchases of existing homes, which made up about 93 percent of the housing market last year, are tabulated when the contract closes.

Other figures signal demand is improving. New-home purchases, also logged when contracts are signed, climbed 3.3 percent to a 343,000 annual rate in April, a Commerce Department report showed May 23.

April Sales

Data the previous day showed sales of existing homes increased 3.4 percent to a 4.62 million annual rate, with gains in all four regions.

The Realtors group revised this year’s forecast to 4.66 million previously owned home sales, up from 4.26 million in 2011. It projects 4.92 million purchases in 2013.

Toll Brothers Inc. (TOL) is among the builders reporting growth in orders. Second-quarter profit at the Horsham, Pennsylvania- based company exceeded analysts’ estimates as orders surged 47 percent from a year earlier.

“We are feeling better than we have at any time in the past five years,” Chairman Robert Toll said on a May 23 earnings call. “We would like to say we’re back, but we need a little more confirmation. Nonetheless, it sure feels good compared to the desert we’ve just crossed.”

Borrowing costs remain attractive. The average rate on a 30-year fixed mortgage fell to an all-time low of 3.78 percent in the week ended May 24, according to Freddie Mac data going back to 1971. The average 15-year rate held at 3.04 percent, also a record low, the McLean, Virginia-based mortgage-finance company said.

A real estate agents group’s affordability index, which is based on a combination of resale prices, household income and mortgage rates, reached a record high in the first quarter, a report showed this month.

To contact the reporter on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Zuckerberg Drops Off Billionaires Index as Facebook Falls

By David de Jong - May 31, 2012 3:33 AM GMT+0700

Mark Zuckerberg, Facebook (FB) Inc.’s co- founder and chief executive officer, is no longer one of the world’s 40 richest people.

The 28-year-old’s fortune fell to $14.7 billion yesterday from $16.2 billion on May 25, as shares of the world’s largest social-networking company dropped 9.6 percent. They slipped another 2.3 percent today to $28.19. That extended the stock’s losses to 26 percent from the worst-performing large initial public offering in the past decade and cut Zuckerberg’s net worth to $14.4 billion.

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Mark Zuckerberg, chief executive officer and founder of Facebook Inc. Photographer: David Paul Morris/Bloomberg

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May 30 (Bloomberg) -- Mark Zuckerberg, Facebook Inc.'s co-founder and chief executive officer, is no longer one of the world's 40 richest people, according to the Bloomberg Billionaires Index. Linzie Janis and Mark Barton report on Bloomberg Television's "Countdown." (Source: Bloomberg)

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May 29 (Bloomberg) -- Brian Wieser, a senior analyst at Pivotal Research Group LLC, talks about the outlook for Facebook Inc. He speaks with Emily Chang on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

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May 29 (Bloomberg) -- Bobby Heller, an options trader at On Point Executions LLC, talks about options trading in Facebook Inc. shares. Facebook fell to a new low, extending losses from the worst-performing large initial public offering during the past decade to more than 23 percent. Heller speaks with Matt Miller on Bloomberg Television's "Bottom Line." (Source: Bloomberg)

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May 29 (Bloomberg) -- Tom Forte, director and senior research analyst at Telsey Advisory Group, talks about the outlook for Facebook Inc. and ways the social networking company can increase its mobile advertising revenue. Forte speaks with Adam Johnson on Bloomberg Television's "InBusiness." (Source: Bloomberg)

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May 29 (Bloomberg) -- Walter Isaacson, biographer of late Apple Inc. co-founder Steve Jobs and chief executive officer of the Aspen Institute, talks about Mark Zuckerberg, chief executive officer of Facebook Inc., and the social networking company's stock performance. Isaacson speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

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May 30 (Bloomberg) -- Bloomberg's Betty Liu reports that Mark Zuckerberg, Facebook Inc.’s co-founder and chief executive officer, is no longer one of the world’s 40 richest people on the Bloomberg Billionaires Index. The 28-year-old’s fortune fell to $14.7 billion yesterday from $16.2 billion on May 25, as shares of the world’s largest social-networking company dropped 9.6 percent to $28.84. She speaks on Bloomberg Television's "In The Loop." (Source: Bloomberg)

“It seems to be a clear reflection that there was just too much stock issued, that the valuation was aggressive and that a lot of people who lined up to buy it really had no intention of holding it,” Jack Ablin, chief investment officer of BMO Harris Private Bank in Chicago, said yesterday in a telephone interview. The bank oversees about $60 billion of assets.

Facebook shares closed at $38.23 on May 18, the first day they began trading, giving Zuckerberg a net worth of $19.4 billion. The Menlo Park, California-based company ended the day with a price-earnings ratio of 83.1, making it more expensive than 99 percent of Standard & Poor’s 500 Index (SPX) stocks. The company went public as the equity index was heading for its biggest monthly decline since September.

Facebook options trading began yesterday, with volume for puts exceeding calls by 1.2 to 1, data compiled by Bloomberg show. More than 200,000 puts were traded yesterday, giving the holder the right to sell the shares at a specified price. June $30 calls were the most active contracts today, with volume at 22,896. They were followed by June $28 puts and June $29 puts.

To contact the reporter on this story: David De Jong in New York at ddejong3@bloomberg.net

To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net

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Apple CEO Says TV Is ‘Intense Focus,’ Sees Closer Facebook Ties

By Douglas MacMillan - May 30, 2012 12:32 PM GMT+0700

Apple Inc. (AAPL) Chief Executive Officer Tim Cook said that television is an area of “intense focus” for the company as it seeks to add products that can build on the success of Macs, iPhones and iPads.

“This is an area of intense focus for us,” Cook said of TV in an on-stage interview yesterday at the D10 conference in Rancho Palos Verdes, California. “We’re going to keep pulling this string and see where it takes us.”

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Apple CEO Tim Cook. Photographer: Kevork Djansezian/Getty Images

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May 29 (Bloomberg) -- Bloomberg’s Emily Chang reports on Tim Cook’s performance at Apple. She speaks on Bloomberg Television’s “Bloomberg West.” (Source: Bloomberg)

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May 30 (Bloomberg) -- Shaw Wu, an analyst at Sterne Agee & Leach Inc., talks about Apple Inc. Chief Executive Officer Tim Cook's remarks about television yesterday at the D10 conference in Rancho Palos Verdes, California, and the outlook for the company. Wu speaks with Adam Johnson on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

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May 30 (Bloomberg) -- Sandy Shen, an analyst at Gartner Inc. in Shanghai, talks about Samsung Electronics Co.'s new Galaxy S III smartphone and how it compares to Apple Inc.'s iPhone 4S. Shen speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

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May 30 (Bloomberg) -- In today's "Movers & Shakers", Bloomberg's Erik Schatzker reports that during an appearance Tuesday night at the D10 Conference, Apple CEO Tim Cook hinted at `incredible' new products amid speculation that Apple TV will be available later this year. He speaks on Bloomberg Television's "Inside Track." (Source: Bloomberg)

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May 30 (Bloomberg) -- Bloomberg's Doug MacMillan reports that Apple CEO Tim Cook hinted at great things in the company’s future at last night's D10 Conference. Cook comments referred to television, Facebook and possible U.S. production of the iPhone. He speaks on Bloomberg Television's "Inside Track." (Source: Bloomberg)

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Apple co-founder Steve Jobs, before he died last year, told his biographer that he had “finally cracked” how to build a TV with a simple user interface that would wirelessly synchronize content with Apple’s other devices. The company is working on a television that may be unveiled this year and released in 2013, according to Gene Munster, an analyst at Piper Jaffray Cos.

Apple turned to Jeff Robin, the software engineer who built the iTunes media store and helped create the iPod, to lead its development of a TV set, people with knowledge of the product said last year.

The company sells a set-top box called Apple TV that lets customers stream video from Apple products or the Internet to their TVs. Still, that device has yet to gain wide acceptance, and Apple executives have called it a “hobby.”

During the conference, put on by the AllThingsD technology blog, Cook said that Apple has “great appreciation” for Facebook Inc. (FB), the largest social-networking service.

“The relationship is very solid,” he said. “We have great respect for them. I think we can do more with them. Stay tuned on this one.”

Takeovers, Transparency

In the wide-ranging interview, Cook also said that Apple remains on the lookout for acquisitions, though it’s not currently seeking a large-sized deal. He also said that it’s possible that more manufacturing of his company’s products will happen in the U.S. The iPhone, Apple’s best-selling device, might one day be assembled in the U.S., he said.

Much of the manufacturing and assembly of Apple products takes place in factories in Asia, which have come under criticism for treatment of workers. Cook said yesterday that the company is moving toward greater transparency in areas such as supplier responsibility and environmental sustainability.

Even as the company discloses more in those areas, it will redouble efforts to keep products under wraps while they are still under development, Cook said.

Responding to criticism that Apple’s Siri voice- recognition service has functioned improperly for some users, Cook said Apple is working to improve the technology.

Siri, IAd

“There’s more that it can do, and we have a lot of people working on this, and I think you’ll be really pleased with some of the things that you’ll see over the coming months,” Cook said.

Cook also said that the company’s iAd online advertising effort wasn’t essential to Apple’s future, which would remain centered on hardware.

“When I was talking about the things at Apple that make up the four legs of the stool, I didn’t mention that one,” Cook said, referring to Macs, iPods, iPhones and iPads.

Before becoming CEO last year, Cook was Apple’s chief operating officer, leading the company’s vast supply chain. He joined the company in 1998 from Compaq Computer Corp. and was instrumental in managing the operational side of Apple’s business while long-time CEO Jobs concentrated on product development and marketing.

The company’s gross margins of 47 percent last quarter are more than double those of rivals Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL)

Jobs Woos Cook

The interview comes ahead of Apple’s annual Worldwide Developers Conference. The company is slated to unveil a new line-up of Mac laptops, as well as show off new features for the latest mobile operating system that powers the iPad and iPhone, people with knowledge of the matter have said.

A new iPhone, which accounts for more than half the company’s sales, is expected to be unveiled by October, according to analysts, includingMunster.

Cook also spent part of the interview reflecting on Jobs, who recruited him from Compaq when he had no intention of leaving the rival computer maker. After ignoring numerous calls from executive recruiters working on behalf of Apple, Cook agreed to meet with Jobs on a Saturday morning, he said.

Jobs discussed his vision for iMac computers and sold him on the company’s ambitious plans to sell to consumers, he said.

“Five minutes into the conversation, I wanted to join Apple,” Cook said. “He painted a story, a strategy, that he was taking Apple deep into consumer at a time when I knew that other people were doing the exact opposite. And I’ve never thought following the herd was a good strategy.”

“I went back and resigned immediately,” he said.

To contact the reporters on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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