After posting a record annual loss and its worst fiscal year ever, Sony offered investors a light at the end of the tunnel, predicting a profitable 2013. Under new president and CEO Kazou Hirai, the company has announced cost-cutting moves including a workforce reduction of 10,000 or 6 percent of its work force. What Sony needs even more than lower overhead is people who can create the kinds of innovations that made it famous decades ago.

Sony announced a $5.7 billion loss for the fiscal year and a $3.2 billion loss for the quarter. Year over year, sales dropped 18.5 percent in its core consumer products and services unit. The company blamed lower prices and unit sales for its TVs and PlayStation game consoles. Sales of digital cameras and PCs suffered because of manufacturing disruptions caused by the earthquake and flooding Japan experienced last year. 

Market Day: Sony posts record annual loss

Natural disasters are the least of the company’s problems, though. Sony was a brilliant hardware company that managed to completely miss a fundamental shift in how people consume media. Its greatest hits — the Walkman, Trinitron TV displays, camcorder, PlayStation — are from an analog era. 

“The basic problem is they missed the Internet,” said Michael Cusumano, a professor at MIT’s Sloan School of Management who has consulted for Sony. “They missed the connectivity of these different devices.” Consumers today want to access digital content — music, movies, video games — across a network of devices and platforms. Sony “created organization of silos around these products,” Cusumano said.

Hirai will have to break down those entrenched silos and get a traditionally hardware-driven company to think of itself as part of the digital ecosystem that now drives consumer electronic spending. 

One place to do this is in television. The company plans to overhaul its money-losing TV business, concentrating on its high-end Bravia line and next-generation technologies beyond LCD. ”The reality is a lot of the market from a volume standpoint is commodity and they don’t play well there,” said Danielle Levitas, senior consumer technology analyst at research company IDC. 

“The strongest part of the TV market is in higher-end, more premium products and that is clearly a segment where they continue to maintain some level of brand loyalty,” Stephen Baker, vice president of industry analysis at research firm The NPD Group, said via email. “Their challenge in TVs is to make great products that are competitive and cutting edge and their failure to keep up there has left them in the position they are currently in.

“I think what’s going to be critical for them long term is really delivering on that premium experience,” said Levitas. 

Analysts say it’s likely that premium experience could be some kind of interconnected media system, with the PlayStation3 — and whatever console will ultimately succeed it — as the hub. Sony alluded to this possibility in a statement last month, saying it plans to “enhance the integration of televisions with Sony’s mobile products, with content such as movies and music, and with other assets across the Sony Group.”

Another channel it can exploit is mobile. “Sony’s focus on tablets and smartphones is entirely logical regardless of the competitive level of the categories,” said Baker. “Great engineering continues to be a key component for successful products in that space.”

Earlier this year, Sony acquired the half of mobile phone company Sony Ericsson it didn’t already own and renamed it Sony Mobile Communications. Analysts predict mobile gaming will grow significantly due to casual gamers who won’t invest the time and money in hours-long multiplayer games but want something to do while in line at the grocery store or waiting for the bus.

“In terms of where mobile gaming has been going and clearly will go… it has to come much closer with the smartphone space,” Levitas said. “That’s an area to keep a hopeful, watchful eye on.”

Creating hardware that lets users play, read, listen and watch wherever and however they want to will be the best — some say the only — way for Sony to differentiate itself as it executes its turnaround.  ”They’ve been making progress on it. It’s just that it takes them too long,” Cusumano said. “Fundamentally they still are a great hardware company.”

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John Kolesidis / Reuters

Greek actress Ino Menegaki, playing the role of high priestess, takes part in the Olympic torch ceremony at the site of ancient Olympia in Greece Thursday. Greece could use some help from above as it struggles to solve deep economic and political problems.

The deepening political turmoil in Greece has begun reverberating throughout the global financial markets as Athens’ failure to form a government last weekend threatens to further undermine the battered European economy and banking system.

Two years after European leaders began engineering a bailout for the debt-laden Greek government in return for deep spending cuts, the grand plan to cement the widening cracks in Europe’s common currency appears to have collapsed. 

There is no Plan B. 

“Greece is an unguided missile launched from the middle of the eurozone,” said Carl Weinberg, chief economist at High Frequency Economics. “How, when and where it will strike cannot be predicted.”

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On Thursday, Greece’s fragmented political leadership failed in another last-ditch effort to form a government, all but assuring another round of elections next month. Voters swept from power the two major parties that had engineered a painful austerity plan with Europe’s wealthier countries, led by Germany, in exchange for an ongoing financial lifeline.

---

 With no government in place to enforce spending cuts, the Europe Union temporarily cut off a portion of that lifeline, raising the likelihood that Greece will be forced to leave the 17-nation compact that shares a common currency. The Athens government is due to run out of cash in June.

Without the financial lifeline or membership in the common currency, Greece faces a grim future. With its economy already contracted at an estimated 6 percent annual rate, an exit from the euro zone would accelerate its economic and financial collapse. But holders of its debt, including Europe’s banking system, would also feel the blow.

The turmoil is already putting pressure on other European governments wrestling with large debts and deep spending cuts.  

No one can predict the outcome. And unlike the sudden financial panic that swept the world in September 2008, some  analysts say, the crisis could stretch on for years. Europe has become “slow motion train wreck,” according to New York University economist Nouriel Roubini,

“Slow motion because it might take three or four years,” he told CNBC. “But three or four years in which all these risks coming from the euro zone – economic, political, fiscal, financial – are going to get gradually worse.”

For the moment, Spain appears to be the most vulnerable to the “contagion” of Greece’s apparently imminent demise.

With Spain’s economy mired in the second recession since 2009 and unemployment at 25 percent, the country’s bankers are struggling with rising loan defaults left behind by a U.S.-style housing bust. Spanish banks, unable to unload bloated inventories of repossessed homes, are stuck with nearly a quarter trillion dollars worth of bad debt.

CNBC’s Michelle Caruso-Cabrera reports on the details of Alexis Tsipras’ plans for Greece’s future.

On Wednesday, the Spanish government took over the latest casualty, Bankia, which holds 10 percent of the Spanish banking system’s deposits. Government officials there are expected to demand as early as Friday that bankers set aside more capital to offset those debts. That would leave them with less cash to lend to businesses and consumers, dampening spending and deepening the recession.

That recession is spreading across Europe. On Thursday, the OECD said in a monthly economic update that France and Italy are showing further signs of weakness.

That leaves Germany, Europe’s largest economy, as the main provider of financial lifelines to its weaker neighbors. Despite growing signs that deep budget cuts are worsening Europe’s economic contraction, German leaders remain publicly steadfast in support of further “austerity” as the ultimate cure.

On Thursday, German Chancellor Angela Merkel insisted, in a newspaper interview, that Greece has to follow through on further cuts due next month under terms of the bailout negotiated by its government. German Finance Minister Wolfgang Schaeuble said Thursday that Europe and the International Monetary Fund stood ready to help Greece, but the country’s fate would be depend on adherence to the existing plan. 

“Whether Greece is ready to do what is necessary – only the Greek people can decide,” he told a news conference. “Greece can rely on the solidarity of Europe, but if Greece does not help itself, there is nothing to be done.”

If the austerity plan fails and Germany withdraws financial support, Greece would almost certainly default on its debt, including loans already extended by the IMF and European Central Bank. The impact of those losses could make it much more difficult for other countries to win support for bailouts of their own.

“If after all this Greece has to be written off after all, it will also add to aid fatigue that is making the round in the countries financing the bailouts,” said Natascha Gewaltig, head of European economics for Action Economics.

Borrowers across Europe already face a tougher time getting credit as banks are apparently hoarding cash to weather an increasingly risky and uncertain future, according to a recent analysis by the Wall Street Journal.  At the end of March, 10 of Europe’s biggest banks had parked nearly $1.2 trillion at central banks around the world. That’s $128 billion, or 12 percent, higher than December and up 66 percent from the end of 2010, the Journal said.

As Europe’s economic and financial crisis drags on, tighter credit conditions could spread worldwide to large companies trying to raise cash by selling bonds. On Thursday, Standard Poor’s issued a report estimating that nonfinancial corporations in the eurozone, U.K., U.S., China, and Japan will need to raise $43 trillion to $46 trillion over the next five years, including $30 trillion of debt to refinance existing bonds and $13 trillion to $16 trillion of new money to fund growth. The report warned of “credit rationing that may occur as banks seek to restructure their balance sheets,” and investors grow jittery about the risks of buying all that debt.

“Combined with the eurozone crisis, the slow U.S. economic recovery, and the prospect of a slowing economy in China, this raises the downside risk of a perfect storm in global corporate credit markets,” said Jayan Dhru, head of global corporate ratings.

Investors are also warily watchingthe looming “fiscal cliff” facing the biggest borrower of all, the U.S. government. Unless Congress and the White House can steer away from it, massive tax hikes and spending cut are scheduled to take effect at year-end. Economists have warned the combined impact could cost the U.S. economy between 2.5 to 5 percent of gross domestic product, stopping the anemic recovery in its tracks.

“The markets are telling Washington, ‘You better get it this in gear; you cannot let this uncertainty overhang the market,’” said Yra Harris, a currency trader at Praxis Trading. “This uncertainty is really making people nervous.”

TOKYO — Sony Corp. racked up a record annual loss of 457 billion yen ($5.7 billion) in its fourth straight year of red ink as the once-glorious maker of the Walkman and PlayStation struggles toward a turnaround under a new president.

The electronics and entertainment company, which also makes “Spider-Man” movies, reported Thursday a loss of 255 billion yen ($3.2 billion) for the January-March period — its fifth straight quarterly net loss to round out a fiscal year that was the worst in its 66-year corporate history.

The latest red ink was worse than 1995, which followed Sony’s ambitious but disastrous purchase of Hollywood studio Columbia Pictures.

Sony shares, valued at around $15 billion or just 3 percent of rival Apple Inc, this week slipped to a quarter century low.

Sony’s recent troubles were worsened by factory and supplier damage in northeastern Japan, ravaged by the earthquake and tsunami last year. Sony also suffered production disruptions from the flooding in Thailand.

Quarterly sales inched up 1.2 percent on-year to 1.6 trillion yen ($20 billion). Annual sales plunged nearly 10 percent to 6.5 trillion yen ($81 billion).

Soaring yen
Sony has bled money for eight straight years in its core TV business, bashed by competition from Samsung Electronics Co. of South Korea and other Asian rivals.

A soaring yen that erodes the overseas earnings of Japanese exporters like Sony has also added to the damage.

Sony is aiming for a comeback under Kazuo Hirai, appointed president last month, who has headed the gaming division and built his career in the U.S.

Sony forecast a return to profit for the fiscal year through March 2013 at 30 billion yen ($375 million), banking on the growing smartphone and tablet business, as well as a recovery from last year’s disasters.

Sony had recorded a 260 billion yen loss the previous fiscal year.

‘Second-tier smartphone market player’
The company said it expects to sell more than 33 million smartphones this year, up from 22.5 million last year.

“In handsets, without big innovations, Sony will still be a second-tier smartphone market player,” SR Kwon, an industry analyst at Dongbu Securities in Seoul, told Reuters. “Will Sony get much better as time goes by? I’m not that optimistic. Currency is not the only problem, the bigger problem is that Sony has failed to catch up with consumer trends in TVs and handsets.”

Sony also sees an 11 percent decline in sales this year of its PlayStation games console, to 16 million. Sales of its new Vita handheld games console should reach 1.8 million this year, Sony said.

The latest results were better than the 520 billion yen ($6.5 billion) annual loss the Tokyo-based company had projected. Analysts surveyed by FactSet had estimated a more optimistic 430 billion yen ($5.3 billion) loss.

Sony said sales improved in its film business, lifted by television and video-on-demand for the “Spider-Man” series, but profits fell slightly, despite the popularity of “The Smurfs” and “Bad Teacher,” offsetting the failure of “Arthur Christmas.”

Since the start of the year, Sony shares have dropped 12 percent, while the benchmark Nikkei 225 index has gained nearly 7 percent.

The Associated Press and Reuters contributed to this report. 

 

TOKYO — Sony Corp. racked up a record annual loss of 457 billion yen ($5.7 billion) in its fourth straight year of red ink as the once-glorious maker of the Walkman and PlayStation struggles toward a turnaround under a new president.

The electronics and entertainment company, which also makes “Spider-Man” movies, reported Thursday a loss of 255 billion yen ($3.2 billion) for the January-March period — its fifth straight quarterly net loss to round out a fiscal year that was the worst in its 66-year corporate history.

The latest red ink was worse than 1995, which followed Sony’s ambitious but disastrous purchase of Hollywood studio Columbia Pictures.

Sony shares, valued at around $15 billion or just 3 percent of rival Apple Inc, this week slipped to a quarter century low.

Sony’s recent troubles were worsened by factory and supplier damage in northeastern Japan, ravaged by the earthquake and tsunami last year. Sony also suffered production disruptions from the flooding in Thailand.

Quarterly sales inched up 1.2 percent on-year to 1.6 trillion yen ($20 billion). Annual sales plunged nearly 10 percent to 6.5 trillion yen ($81 billion).

Soaring yen
Sony has bled money for eight straight years in its core TV business, bashed by competition from Samsung Electronics Co. of South Korea and other Asian rivals.

A soaring yen that erodes the overseas earnings of Japanese exporters like Sony has also added to the damage.

Sony is aiming for a comeback under Kazuo Hirai, appointed president last month, who has headed the gaming division and built his career in the U.S.

Sony forecast a return to profit for the fiscal year through March 2013 at 30 billion yen ($375 million), banking on the growing smartphone and tablet business, as well as a recovery from last year’s disasters.

Sony had recorded a 260 billion yen loss the previous fiscal year.

‘Second-tier smartphone market player’
The company said it expects to sell more than 33 million smartphones this year, up from 22.5 million last year.

“In handsets, without big innovations, Sony will still be a second-tier smartphone market player,” SR Kwon, an industry analyst at Dongbu Securities in Seoul, told Reuters. “Will Sony get much better as time goes by? I’m not that optimistic. Currency is not the only problem, the bigger problem is that Sony has failed to catch up with consumer trends in TVs and handsets.”

Sony also sees an 11 percent decline in sales this year of its PlayStation games console, to 16 million. Sales of its new Vita handheld games console should reach 1.8 million this year, Sony said.

The latest results were better than the 520 billion yen ($6.5 billion) annual loss the Tokyo-based company had projected. Analysts surveyed by FactSet had estimated a more optimistic 430 billion yen ($5.3 billion) loss.

Sony said sales improved in its film business, lifted by television and video-on-demand for the “Spider-Man” series, but profits fell slightly, despite the popularity of “The Smurfs” and “Bad Teacher,” offsetting the failure of “Arthur Christmas.”

Since the start of the year, Sony shares have dropped 12 percent, while the benchmark Nikkei 225 index has gained nearly 7 percent.

The Associated Press and Reuters contributed to this report. 

 

NEW YORK — Russians prefer their Lay’s potato chips dusted in caviar and crab flavors. The Chinese like their Oreos stuffed with mango and orange cream. And in Spain, Kellogg’s All-Bran cereal is served floating in hot coffee instead of cold milk.

Americans might get squeamish at the thought of their favorite snacks being tweaked. But what works in the U.S. doesn’t always work everywhere.

In other words, Lee Linthicum, a market researcher, says: “It can’t be some generic mix of spices that might fool an American.”

Food makers long have tinkered with their products to appeal to regional tastes, but getting the recipe just right is becoming more important than ever. That’s partly because people in developing nations such as China and India are gaining more of an appetite for American-style “on-the-go” foods as they work longer hours and have less time to cook. But it’s mostly because snack makers increasingly are looking for growth in other parts of the world as sales slow at home.

Growth in the snack food industry has been virtually flat in the U.S. for the past two years, according to market research firm Euromonitor. Meanwhile, combined sales in China, Brazil and Russia — three major developing markets — rose 15 percent in 2010 and 11 percent last year to $17 billion. That’s half the size of the U.S. market but it’s growing.

The challenge for snack makers is that people in other countries have different tastes. Consider the Oreo, which Kraft Food Inc. introduced in China in 1996. Sales of the vanilla cream-filled chocolate cookie sandwich were respectable there, but the Chinese didn’t completely take to it.

So Kraft decided to tweak the Oreo. But executives of the Northfield, Ill.-based company knew that they had to proceed with caution. “When you have a brand that’s 100 years old, you don’t mess with the recipe thoughtlessly,” says Lorna Davis, head of the company’s global biscuit and cookies business.

In 2006, Kraft began offering the Oreo as a wafer, a popular cookie throughout Asia. It is made up of cream sandwiched between crispy wafers. The plan was to help familiarize more Chinese customers with the brand. Three years later, the company decided to go a step further.

Mark Lennihan
 / 
AP

Kraft worked with a panel of consumer taste experts from around the world to identify the characteristics of the Oreo — including color, crunchiness, bitterness, color — that were likely to appeal to Chinese tastes. Executives learned through research that the Chinese don’t like their treats as big or as sweet as Americans do. So the company rejiggered the recipe to create a cookie that was a tad smaller and a touch less sweet.

To test the new recipe, hundreds of Chinese consumers tasted the new Oreo. It was a hit. “It made us realize the smallest of details make a big difference,” Davis says.

But the company wasn’t finished. After noticing sales of Oreos were lagging in China during the summer, Kraft added a green tea ice cream flavor. The cookie combined a popular local flavor with the cooling imagery of ice cream. The green tea version sold well, and a year later, Kraft rolled out Oreos in flavors that are popular in Asians desserts — raspberry-and-blueberry and mango-and-orange.

The result? Over the past five years, Kraft said sales have grown an average of 60 percent a year, although it declined to give revenue amounts. The Oreo now is the top-selling cookie in China with a market share of 13 percent. The previous top cookie was a biscuit by a Chinese company.

1. 1. 
      

      
      Satisfy your craving
      
      

      
      Look for more exciting eats and foodie trends on the Bites blog
      

Kraft, which operates in more than 80 countries, is taking a similar approach with other snacks. In Saudi Arabia, Kraft offers its Tang powder drink in a lemon-pepper flavor. In Mexico, it comes in tropical fruit flavors like tamarind and mandarin, and a hibiscus version fashioned after the flower. Sales have nearly doubled to $1 billion worldwide since Kraft rolled out the localized versions in 2006.

Kraft’s ability to adapt to local tastes is increasingly important as it looks for growth overseas. The rise in international revenue at Kraft was more than double the increase in North America last year.

Kraft also plans to split into two separate units by the end of the year. The largest will be a global snacks company called Mondelez International, pronounced “mohn-dah-leez,” to sell its Trident gum and Cadbury chocolates in fast-growing countries worldwide.

Kellogg Co., the world’s largest cereal maker, also has intensified its focus on catering to local tastes as it attempts to grow its snack business overseas.

Last year, the company’s revenue in Latin America topped $1 billion for the first time. And in February, Kellogg said it agreed to buy Pringles chip brand from Procter Gamble for $2.7 billion. The deal will nearly triple its international snack business, making it the world’s second-largest snack maker behind PepsiCo Inc.

The company, based in Battle Creek, Mich., already sells products in more than 180 countries. It’s learning that on-the-ground insights can pay off. In Europe, for instance, Kellogg for many years had marketed its cereals there just as it did in the U.S. But it failed to take into account that many in the region don’t drink cold milk in the morning.

Now, an American traveling in Spain might find it surreal to see TV ads showing All-Bran cereal floating in a steaming cup of coffee. Kellogg, which makes Keebler, Cheez-It and Kashi bars, declined to give details on how well the cereal is selling there, but it said the marketing has resulted in “great results.”

A similar story played out for PepsiCo. For the first time last year, revenue from the company’s international snacks division surpassed revenue in North America. To achieve that, PepsiCo has had to adjust its recipes.

In 2005, PepsiCo’s food division began a quest to make its Lay’s potato chips more appealing to local tastes in Russia. It wasn’t easy. Russians still like packaged versions of a Soviet-era snack — stale bread slathered in oil and baked to a crisp.

“Potato chips were not big in the Communist time, so it’s something we’re gradually building,” says Marc Schroeder, who heads PepsiCo’s food division in Russia.

To get a better sense of what Russians like, employees traveled around the country to visit people in their homes and talk about what they eat day-to-day. That was a big task. Russia has nine time zones and spans 7,000 miles, with eating habits that vary by region.

The findings were invaluable for executives at the company’s Purchase, N.Y. headquarters. In the eastern part of the country, PepsiCo found that fish is a big part of the diet. So it introduced “Crab” chips in 2006. It’s now the third most popular flavor in the country.

A “Red Caviar” flavor does best in Moscow, where caviar is particularly popular. “Pickled Cucumber,” which piggybacks off of a traditional appetizer throughout Russia, was introduced last year and is already the fourth most popular flavor. Other favorites include onion, bacon and “sour cream and herbs,” which is a bit sweeter than the American version.

The chip translations are paying off; sales of Lay’s have more than doubled in the past five years. As for the classic Lay’s — an American favorite — Russians still aren’t biting.

“They find it a very boring flavor,” Schroeder said.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

NEW YORK — Russians prefer their Lay’s potato chips dusted in caviar and crab flavors. The Chinese like their Oreos stuffed with mango and orange cream. And in Spain, Kellogg’s All-Bran cereal is served floating in hot coffee instead of cold milk.

Americans might get squeamish at the thought of their favorite snacks being tweaked. But what works in the U.S. doesn’t always work everywhere.

In other words, Lee Linthicum, a market researcher, says: “It can’t be some generic mix of spices that might fool an American.”

Food makers long have tinkered with their products to appeal to regional tastes, but getting the recipe just right is becoming more important than ever. That’s partly because people in developing nations such as China and India are gaining more of an appetite for American-style “on-the-go” foods as they work longer hours and have less time to cook. But it’s mostly because snack makers increasingly are looking for growth in other parts of the world as sales slow at home.

Growth in the snack food industry has been virtually flat in the U.S. for the past two years, according to market research firm Euromonitor. Meanwhile, combined sales in China, Brazil and Russia — three major developing markets — rose 15 percent in 2010 and 11 percent last year to $17 billion. That’s half the size of the U.S. market but it’s growing.

The challenge for snack makers is that people in other countries have different tastes. Consider the Oreo, which Kraft Food Inc. introduced in China in 1996. Sales of the vanilla cream-filled chocolate cookie sandwich were respectable there, but the Chinese didn’t completely take to it.

So Kraft decided to tweak the Oreo. But executives of the Northfield, Ill.-based company knew that they had to proceed with caution. “When you have a brand that’s 100 years old, you don’t mess with the recipe thoughtlessly,” says Lorna Davis, head of the company’s global biscuit and cookies business.

In 2006, Kraft began offering the Oreo as a wafer, a popular cookie throughout Asia. It is made up of cream sandwiched between crispy wafers. The plan was to help familiarize more Chinese customers with the brand. Three years later, the company decided to go a step further.

Mark Lennihan
 / 
AP

Kraft worked with a panel of consumer taste experts from around the world to identify the characteristics of the Oreo — including color, crunchiness, bitterness, color — that were likely to appeal to Chinese tastes. Executives learned through research that the Chinese don’t like their treats as big or as sweet as Americans do. So the company rejiggered the recipe to create a cookie that was a tad smaller and a touch less sweet.

To test the new recipe, hundreds of Chinese consumers tasted the new Oreo. It was a hit. “It made us realize the smallest of details make a big difference,” Davis says.

But the company wasn’t finished. After noticing sales of Oreos were lagging in China during the summer, Kraft added a green tea ice cream flavor. The cookie combined a popular local flavor with the cooling imagery of ice cream. The green tea version sold well, and a year later, Kraft rolled out Oreos in flavors that are popular in Asians desserts — raspberry-and-blueberry and mango-and-orange.

The result? Over the past five years, Kraft said sales have grown an average of 60 percent a year, although it declined to give revenue amounts. The Oreo now is the top-selling cookie in China with a market share of 13 percent. The previous top cookie was a biscuit by a Chinese company.

1. 1. 
      

      
      Satisfy your craving
      
      

      
      Look for more exciting eats and foodie trends on the Bites blog
      

Kraft, which operates in more than 80 countries, is taking a similar approach with other snacks. In Saudi Arabia, Kraft offers its Tang powder drink in a lemon-pepper flavor. In Mexico, it comes in tropical fruit flavors like tamarind and mandarin, and a hibiscus version fashioned after the flower. Sales have nearly doubled to $1 billion worldwide since Kraft rolled out the localized versions in 2006.

Kraft’s ability to adapt to local tastes is increasingly important as it looks for growth overseas. The rise in international revenue at Kraft was more than double the increase in North America last year.

Kraft also plans to split into two separate units by the end of the year. The largest will be a global snacks company called Mondelez International, pronounced “mohn-dah-leez,” to sell its Trident gum and Cadbury chocolates in fast-growing countries worldwide.

Kellogg Co., the world’s largest cereal maker, also has intensified its focus on catering to local tastes as it attempts to grow its snack business overseas.

Last year, the company’s revenue in Latin America topped $1 billion for the first time. And in February, Kellogg said it agreed to buy Pringles chip brand from Procter Gamble for $2.7 billion. The deal will nearly triple its international snack business, making it the world’s second-largest snack maker behind PepsiCo Inc.

The company, based in Battle Creek, Mich., already sells products in more than 180 countries. It’s learning that on-the-ground insights can pay off. In Europe, for instance, Kellogg for many years had marketed its cereals there just as it did in the U.S. But it failed to take into account that many in the region don’t drink cold milk in the morning.

Now, an American traveling in Spain might find it surreal to see TV ads showing All-Bran cereal floating in a steaming cup of coffee. Kellogg, which makes Keebler, Cheez-It and Kashi bars, declined to give details on how well the cereal is selling there, but it said the marketing has resulted in “great results.”

A similar story played out for PepsiCo. For the first time last year, revenue from the company’s international snacks division surpassed revenue in North America. To achieve that, PepsiCo has had to adjust its recipes.

In 2005, PepsiCo’s food division began a quest to make its Lay’s potato chips more appealing to local tastes in Russia. It wasn’t easy. Russians still like packaged versions of a Soviet-era snack — stale bread slathered in oil and baked to a crisp.

“Potato chips were not big in the Communist time, so it’s something we’re gradually building,” says Marc Schroeder, who heads PepsiCo’s food division in Russia.

To get a better sense of what Russians like, employees traveled around the country to visit people in their homes and talk about what they eat day-to-day. That was a big task. Russia has nine time zones and spans 7,000 miles, with eating habits that vary by region.

The findings were invaluable for executives at the company’s Purchase, N.Y. headquarters. In the eastern part of the country, PepsiCo found that fish is a big part of the diet. So it introduced “Crab” chips in 2006. It’s now the third most popular flavor in the country.

A “Red Caviar” flavor does best in Moscow, where caviar is particularly popular. “Pickled Cucumber,” which piggybacks off of a traditional appetizer throughout Russia, was introduced last year and is already the fourth most popular flavor. Other favorites include onion, bacon and “sour cream and herbs,” which is a bit sweeter than the American version.

The chip translations are paying off; sales of Lay’s have more than doubled in the past five years. As for the classic Lay’s — an American favorite — Russians still aren’t biting.

“They find it a very boring flavor,” Schroeder said.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

MIAMI — Disgraced former press baron Conrad Black was released from a Florida prison on Friday after ending his sentence but he was immediately taken into custody by U.S. immigration officials.

“He is in ICE custody,” said Nestor Yglesias, a spokesman for U.S. Immigration and Customs Enforcement.

Yglesias declined to elaborate but spoke after a vehicle believed to be carrying the 67-year-old Black was spotted by photographers at about 8:20 a.m. EDT leaving the low security Federal Correctional Institution in Miami, where he was serving his sentence.

His release from the facility Friday morning had been widely expected but authorities had previously indicated he would also face deportation from the United States after he was freed.

A U.S. judge in June re-sentenced Black, a Canadian-born British citizen and member of Britain’s House of Lords, to another 13 months in prison on top of the 29 months he had already served for his 2007 conviction for fraud and obstruction of justice.

A federal jury had found Black guilty of scheming with partner David Radler and other executives to siphon off millions of dollars in proceeds from the sale of newspapers as they unwound Hollinger International, once the world’s third-largest publisher of English-language newspapers.

It operated the Chicago Sun-Times, the Jerusalem Post, London’s Daily Telegraph and dozens of other newspapers.

Black was released from prison in July 2010 while his case was under appeal, which resulted in two of his three fraud convictions being voided and a shortening of his original 78-month sentence. After the appeal, he returned to prison in September 2011.

(c) Copyright Thomson Reuters 2012. Check for restrictions at: http://about.reuters.com/fulllegal.asp

The second largest U.S. public pension fund on Thursday said that allegations of bribery in Mexico and a cover up by top management at Wal-Mart raises the question of whether top leadership should remain in place at the company.

But officials with the California State Teachers’ Retirement System, which sued Wal-Mart current and former executives on Thursday, stopped short of calling for CEO Mike Duke to step down.

“The leadership question is on the table,” Jack Ehnes, CEO of CalSTRS, which holds more than 5.3 million Wal-Mart shares, said during a conference call with reporters on Friday when asked whether Duke, a defendant in the lawsuit, should step down.

But he also said that the purpose of the lawsuit was to determine whether the alleged actions occurred and declined to say specifically whether Duke should leave the CEO post.

The lawsuit stems from a New York Times article last month that reported Wal-Mart de Mexico , which is 69 percent owned by Wal-Mart, orchestrated a widespread bribery campaign to win market dominance in the last decade

The article alleged senior Wal-Mart executives knew about the matter and tried to cover it up. Duke was head of Wal-Mart’s international business during part of the time covered by the article.

A Wal-Mart spokesman declined to comment on Ehnes statement about Wal-Mart’s leadership.

Copyright 2011 Thomson Reuters. Click for restrictions.

This time, government leaders have said the reforms are not temporary.

“We are not applying patches or improvising, but looking for permanent solutions to old problems,” 81-year-old Vice President Jose Ramon Machado Ventura said in a speech in central Ciego de Avila last July.

“It’s deeper, the scope is much bigger, and the objective is larger,” says Philip Peters, a Cuba expert at the Lexington Institute in Virginia. “In the 1990s the goal was to make a few adjustments to the model to get their heads back above water. … This time they are making changes to the model.”

Cuba’s new entrepreneurs face challenges common everywhere, as well as some peculiar to a country where private enterprise has been largely prohibited for a half century. Many lack startup capital and experience, and their customers have limited purchasing power.

A vice minister in Cuba’s Labor Ministry recently said the self-employed are heavily concentrated in the making and selling of food, transporting cargo and passengers, and working as contract laborers.

Two-thirds were not working when they started their businesses, he said. A state television report said 16 percent are pensioners.

Former agriculture worker Oscar Oquendo is 78 years old. A tall man with wispy gray hair and a withered face, he walks along a crumbling central Havana street selling pastries he makes at home.

Like many of his generation, he says he is loyal to the Castros and communism, but needs money to supplement his monthly pension, equivalent to $10.

4 cents apiece

Oquendo, 78, sells his pastries for one Cuban peso, or 4 cents, apiece. Without a word, he pulls a pastry from his bag, holds it up to a potential customer’s startled face, looks him in the eye and waits for a response.

It works – he says he is earning $33 a month.

“I’m very happy with that. I’m helping myself and my country,” Oquendo said as he prepared to confront another passerby.

Success has been more elusive for Rafael Barrios, who sells plumbing items from a stand on 10 de Octubre Avenue, where dust swirls past century-old buildings.

At 42, he wonders if he should have left his job at a state warehouse. The insecurity and the long hours needed to earn a little more money are wearing on him.

“At least there I didn’t have to work very hard and I got paid every month,” he grumbles from behind a table he set up in between abandoned buildings.

But with the government cutting jobs, there is no turning back for him. He is scouting new locations.

Leather goods salesman Arle Toro Perez, 58, faced the same dilemma as Barrios, glumly sitting on a folding chair in a gravel-strewn driveway with few customers to buy the few belts, key chains and wallets he hung from a stand.

He was making about three times more than the $13 a month he earned at the state job he had quit, but still just scraping by. Taxes were high and business slower than he hoped. Some days he sold nothing at all.

He later moved to a new location across from the Havana Libre hotel, which opened in 1958 as the Havana Hilton, and things picked up. There were more tourists and more sales. Today he has a much bigger inventory and a smile on his face.

“Some days I’m making twice as much as I did at the old location. I can take better care of my family,” he said.

Some of the new entrepreneurs are stretching the limits set out by the government and doing well.

Alex, who spoke on condition that his last name not be used, was an architect before he discovered the profitability of “pirateria.” Today he sells counterfeit DVDs from a dingy, makeshift storefront in central Havana.

He moves between shoppers examining his movie selection, heavy on the latest Hollywood features. One customer looks over a copy of “Killer Elite,” starring Robert De Niro and Clive Owen, then hands it back.

Alex has had the business for years, but before the reforms the store was illegal, though not the copyright violations. In Cuba, copyright laws are ignored and state television and movie theaters routinely show pirated movies.

Now, his feel for capitalism unleashed, Alex is diversifying, expanding and, by Cuban standards, making a bundle of money – about $80 a day.

“I have two other stands like this one, and with the money I’ve accumulated I’m getting into the food business,” he said. “I’ve got a big house with four bedrooms and I’ve got two cars.”

Tourism trove

Much of the entrepreneurship is aimed at the lucrative tourist trade. In the colonial city of Trinidad, 175 miles southeast of Havana, Osmary and Alberto jumped into the business out of necessity.

In late 2010, shortly after Raul Castro announced the opening for the self-employed, the restaurant where Alberto worked closed. They painted their home bright orange and turned it into a guest house, renting rooms to tourists.

One of the first guests praised it on the travel website TripAdvisor.com, and it has been mostly full ever since. The couple began with two rooms, expanded to four and now want to add another and perhaps a pool. A chef now cooks for guests.

“We are more comfortable,” Alberto says, declining to divulge numbers. He praised the reforms for giving Cubans a chance to do better. “The people have many ideas.”

As a group, the splashiest new businesses are home-grown restaurants, or “paladares” as they are known in Cuba, which have exploded in number in the past year. (“Paladar” means “palate” in English and was the name given to a chain of restaurants opened by a small-time vendor in a popular Brazilian soap opera.)

Expatriates and visitors used to complain that there were too few good places to eat in Havana. Now they have trouble keeping track of all the new ones.

An Internet list showed 93 paladares in Havana districts where foreign residents and tourists are centered. Some date back to the 1990s, but the latest have popped up so quickly they are not yet cited.

The eastern province of Santiago de Cuba had four such eateries before the reforms; now there are 104. In the same period, the total number of self-employed in the province jumped from 8,000 to 25,800.

Many of the new paladares are upscale, with names like Le Chansonnier, El Partenon and Cafe Laurent. They are usually in nicely renovated homes, with fancy decor and hefty prices. Filet mignon with pepper sauce, grilled lobster, roast duck, and fish with white wine replace the usual Cuban fare of rice, beans and pork.

Some owners complain that business has not lived up to expectations and taxes are high. The self-employed must pay 10 percent sales tax every month, a monthly license fee that varies according to profession, and a yearly income tax that also varies but is 50 percent for paladares.

The government says it keeps taxes high because it needs money and doesn’t want its reforms to lead to wide class differences, with some people accumulating great wealth.

Rampant real estate deals

But the housing market, which the government has opened, could be a major source of capital for Cubans, with the potential to boost living standards and infuse money into the economy. Cuba has billions of dollars worth of real estate that could be turned into liquid assets, and prices are already rising.

“Home ownership is very high in Cuba, about 85-90 percent,” says Antonio Zamora, a Cuban-American lawyer who visits Cuba regularly and has studied its investment laws.

Cubans who stayed after the revolution were allowed to keep their homes. Over the years, through laws designed to do away with the for-profit real estate market, renters were also able to earn title to the places where they live. Selling homes was not permitted, and instead a home-exchange system was introduced.

“The net value of Cubans and the country as a whole is going to go through the roof,” Zamora said.

Interest in buying and selling homes is running high. A recent check showed 11,025 listings on revolico.com, an Internet marketplace for Cubans, with prices ranging from a few thousand dollars for cramped apartments to several hundred thousand for spacious homes built before the revolution.

On Paseo del Prado, a main Havana avenue, unlicensed sales agents say the market for less expensive properties in better neighborhoods has been so brisk that stock is running low. The Cuban government says the country needs another 600,000 homes. Foreigners are still largely barred from buying Cuban property.

Retired government worker Jose Leon said he turned down an offer equal to $100,000 from a European buyer with a Cuban wife for his 1950s three-bedroom apartment in Havana’s once-exclusive Miramar neighborhood. He did not want to pay the 10 percent fee the agents charge and thinks prices will go up.

Many believe that as long as keeping communism afloat is Castro’s goal, he will not go far enough to make much of a difference to their lives. Others think he will, but slowly. Castro has said his reforms will take five years to implement because the leadership wants to avoid making mistakes.

Skeptics point out that the government still tells people how many homes they can own and how many chairs they can have in their restaurants. It has set out 181 jobs in which self-employment is allowed – but everyone must be licensed for their jobs.

Alex, the seller of pirated DVDs, nonetheless argues that the changes have put Cuba on an irreversible path. “Three years ago we didn’t even think about having cell phones, now we have cell phones,” he says. “For years we couldn’t sell houses, now we can sell houses. For years, we couldn’t buy a car, now we can buy a car.

“And now we can have a business. They are small, they are micro-businesses. But it’s yours, and it depends on your ability, your effort, your tenacity.”

(c) Copyright Thomson Reuters 2012. Check for restrictions at: http://about.reuters.com/fulllegal.asp

GRINDAVIK, Iceland  — In this small Icelandic village, sailors are making double their pre-crisis pay, haddock sales to places like Boston and Brussels are booming and unemployment is almost zero – signs of this island’s surprisingly rapid rise from the ashes of banking ruin.

While much of Europe wallows in recession, the economy of this volcanic island in the mid Atlantic is growing at a clip that has surprised many people, thanks to a currency fall – in which the crown lost almost half its value to the euro – an export and tourism boom as well as growing consumer confidence.

“This is probably one of our best years,” said Arnthor Einarsson, a fisherman readying his boat for his next catch as seagulls circle huge piles of fishing nets on a rocky peninsula about one hour south of the capital Reykjavik.

Only a few years ago, a banking boom in which the sector’s assets grew to 10 times the country’s GDP lured many of Iceland’s 320,000 population from traditional industries into the world of finance. Fisherman got into banking and sailors speculated on booming real estate.

Those heady days have gone. Gas-guzzling Land Rovers have been replaced with fuel-efficient Volkswagens, a sign perhaps of a more sober consumer mood in which economic growth is based on a steady expansion of exports rather than flash-in-the-pan speculation.

The wounds that sparked massive street protests against the financial elite are slowly healing. Even the then prime minister has been tried by a special court, closing one chapter.

Granted, there is still a long way to go, but many see Iceland as offering a lesson particularly to European countries such as Greece and Spain, stuck with shrinking economies and lacking the option of devaluing to boost their international competitiveness.

Iceland’s GDP growth estimated at some 2.6 percent this year will outshine even powerhouses like Sweden.

“These are among the highest numbers in Europe,” said Finance Minister Steingrimur Sigfusson. “Sometimes it is easier to turn a small boat around than a big ship.”

Currency depreciation though is only part of the picture.

Capital controls, progressive taxes and a careful phasing-in of austerity measures were also key to getting the country back on track, bringing a more than 10 percent fiscal deficit back to a near balance.

Iceland also did what other parts of Europe haven’t dared to do – let its banks go under. It took some of the cost itself but forced foreign creditors to take the biggest hit.

Lauded by some economists for taking unorthodox measures to fix its broken economy, others see it as a one-off example that would be hard to replicate.

“The lessons don’t transfer directly because of the relative size of the old banks in relation to the economy. What we were left with was quite manageable,” said Jon Bentsson, senior economist at Islandsbanki.

Back to basics

Three years after its near meltdown, Iceland looks healthy on many measures. It successfully finished an IMF bailout program and has already made one early repayment. It expects the sale of assets from failed bank Landsbanki to cover its $5 billion in debts to Britain and the Netherlands.

In February, Iceland recovered its investment-grade rating from Fitch, which praised the country for restoring macroeconomic stability, adding to investment-grade ratings from Standard and Poor’s and Moody’s Investors Service.

Icelanders are getting work, going shopping and their house prices are rising again.

And while the penthouse of a gleaming new skyscraper in downtown Reykjavik sits empty, Icelanders are piling into a hip new restaurant on the ground floor called the Hamburger Factory.

Car sales doubled in the first quarter. Jon Olafsson, who runs an auto dealership on the outskirts of Reykjavik, expects to sell almost 1,000 cars this year, having sold less than 100 cars in 2009.

“This is a high volume day for us,” he says, pointing at a shiny row of cars just rolled out on his lot. His customers are back en masse, hunting for leaner, greener cars, and he is recruiting staff to meet demand.

While signs point to recovery, many remain cautious about the future and bitter over the past.

Household debt exceeds 200 percent of GDP. The government must deal with the issue of capital controls, imposed after the crisis but which are seen by some economists as denting foreign investment confidence.

There is little trust in government three years after the fall of ex-Prime Minister Geir Haarde. Parliament has the support of only 10 percent of the public, polls show.

Pall Matthiasson, chief executive of mental health services at the National University Hospital of Iceland, flips through slides on his iPad showing the five stages of grief.

He says Icelanders remain in a state of depression.