[华尔街日报亚洲版].WSJA-050511-COMPLETE

VOL. XXXV NO. 172 * * Thursday, May 5, 2011 OPINION: A new wind blows in Singapore Page 13 Emerging-market poster child: China Forestry’s troublesmount BUSINESS& FINANCE Page 19 ASIA As of 12 p.m. ET DJIA 12691.34 g 0.91% FTSE 100 5984.07 g 1.62% Nikkei 225 10004.20 Closed Shanghai Comp. 2866.02 g 2.26% Hang Seng 23315.24 g 1.35% Sensex 18469.36 g 0.35% S&P/ASX 200 4740.12 g 0.93% asia.WSJ.com (India facsimile Vol. 2 No. 233) Australia:A$6.00(InclGST),Brunei:B$7.00,China:RM B25.00,Hong Kong:HK$18.00,India:Rs25.00,Indonesia:Rp18,000(InclPPN),Japan:Yen500(InclJCT),Korea:W on2,500, M alaysia:RM 6.00,Pakistan:Rs140.00,Philippines:Peso80.00,Singapore:S$4.00(InclGST),SriLanka:Slrs180(InclVAT),Taiw an:NT$60.00,Thailand:Baht50.00,Vietnam :US$2.50 KKDN PP 9315/10/2011 (026992) M ICA (P) NO.164/10/2010 SK.M ENPEN R.I.NO:01/SK/M ENPEN/SCJJ/1998 TGL.4 SEPT 1998 AtSony, executive stepsinto thebreach Sony Corp.’s scramble to minimize fallout from its on- line security breach, casts a spotlight on Kazuo Hirai, the head of the company’s video- games division and front-run- ner to become Sony’s next chief executive. Mr. Hirai, 51 years old, is facing the biggest crisis of his career. The games division he helped turn around after four years of losses is grappling with the theft of information from more than 100 million accounts on its online net- works. His handling of the sit- uation will likely affect his po- sition as heir apparent to CEO Howard Stringer. Bilingual and equally at ease in Japan and the U.S., Mr. Hirai has been the point man in dealing with this crisis, people at the company say. He participates in nearly every meeting about the breach: speaking in English with the Please turn to page 23 BY DAISUKEWAKABAYASHI Raid yields huge intelligence haul The minute U.S. troops reached Osama bin Laden’s compound in Pakistan, they set in motion not just the takedown of the world’s most- wanted terrorist, but also the largest potential intelligence coup of the post-9/11 era. Putting into action a spe- cially designed Sensitive-Site Exploitation plan, the Navy Seals who conducted the raid carried off five computers, 10 hard drives and more than 100 storage devices, such as DVDs and removable flash drives, U.S. officials said. The intelligence find is a jolt to bin Laden’s network that could force its terror op- eratives to move into areas or initiate communications that make them more easily de- tectable. A Central Intelligence Agency task force, which has already conducted a prelimi- nary analysis of the material, is hunting for leads on the lo- cation of bin Laden’s second- in-command, Ayman al-Zawa- hiri, who is widely expected to ascend to the top of al Qaeda, as well as information about new plots, names of other ter- rorists and any information about whether members of the Pakistani government helped to conceal bin Laden. “The real benefit to our se- curity from the raid by the Navy Seals is we’ve recovered a treasure trove of intelli- gence that can be used to go after bad guys all over the world,” said Sen. Tom Carper, a Delaware Democrat and member of the Senate’s home- land-security committee. “Our challenge now is to make the most of it and put it to the best use.” If al Qaeda operatives be- gin planning retaliatory at- tacks, their communications could pop them on to the U.S. radar, even if they use couri- ers to avoid more easily de- tected electronic communica- tions, officials say. U.S. intelligence agencies believe Mr. Zawahiri and other al Qaeda leaders may speed up terror plans in the pipeline to prove al Qaeda’s vitality, officials briefed on the matter said. Pakistani authorities, meanwhile, now have about 10 of the bin Laden compound’s residents in custody and have begun to question them. One of the most important leads would be information leading to Mr. Zawahiri, who U.S. officials believe might be on the move as a result of the raid. U.S. officials say they be- lieve he is somewhere in Af- ghanistan or Pakistan. Some intelligence suggests he is hid- ing in the Pakistani regions of North or South Waziristan, along the Afghanistan bor- der—the tribal region sus- pected of sheltering bin Laden until investigations led the U.S. to Abbottabad. It is too early to know the value of information found in bin Laden’s home, and intelli- gence that initially appears Please turn to page 14 BY SIOBHAN GORMAN AND ADAM ENTOUS Glencore cuts value in effort to polish IPO HONG KONG—Glencore International AG has sold an unusually large portion of its shares to so-called corner- stone investors even as it val- ued itself short of its most ambitious target. The initial public offering, which seeks to raise about £6 billion, or about $9.9 billion, comes at a time of booming commodities prices, and some investors were concerned that Glencore was cashing in at the top of the cycle. People close to Chief Exec- utive Ivan Glasenberg said the lower valuation reflects his desire to ensure that Glen- core’s shares rise after listing. That is why the Baar, Switzer- land-based firm was valued at about $61 billion, in the mid- dle of a range of analysts’ es- timates, rather than at the top, they said. Earlier figures released by Glencore implied a market valuation of up to $73 billion. The company, which has a dominant position in zinc, copper and lead trading, still must overcome investor ques- tions about what is a compli- cated and hard-to-penetrate company in a tough global market environment, and some investors said the price range was still too high. In a move aimed at reas- suring investors, the corner- stones, big investors who re- ceive large allocations in return for holding their shares for at least six months, are purchasing $3.1 billion out of a nearly $10 billion offer- ing—a larger percentage than is normal in Hong Kong IPOs. Bankers originally sought to have cornerstones take up 20 to 30% of the deal, people fa- miliar with the matter said. Glencore’s Mr. Glasenberg said in a statement he was pleased by the “strong inves- tor interest” shown in the company, which he attributed to a decade of relationship building with clients and fi- Please turn to page 18 BY ALISON TUDOR Masataka Shimizu, president of Tokyo Electric Power, center, apologizes to evacuees at a shelter in Fukushima prefecture, near the utility’s crippled nuclear plant. Tepco is aiming improve conditions for workers even as it lobbies to ease its financial burden resulting from the crisis. Articles on page 4 Debate rages in Japan over disaster liabilities Agence France-Presse/Getty Images dingbat Heard on the Street: IPO still needs a big discount ... 32 dingbat Sony says intruder left a taunting message................... 23 After bin Laden dingbat Taliban’s muted response gains attention..................... 14 dingbat Abbottabad on Pakistani radar since 2003................. 15 dingbat U.S. is on alert for hastened plots...................... 15 2 THE WALL STREET JOURNAL. Thursday, May 5, 2011 THE WALL STREET JOURNAL ASIA Dow Jones Publishing Company (Asia) 25/F, Central Plaza, 18 Harbour Road, Hong Kong Tel 852-2573 7121 Fax 852-2834 5291 www.wsj-asia.com SUBSCRIPTIONS and Address Changes, please telephone our local customer service hotline, Hong Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090; Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592; Japan: 81-3 6269-2760; Korea: 82-2 756 1695; Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873; Singapore: 65-6415 4000; Thailand: 66-2 690 4222 to 7; India: 91-11 6462 0215. Or email: service@wsj-asia.com ADVERTISING SALES worldwide through Dow Jones International. Hong Kong: 852-2831 2504; Singapore: 65-6415 4300; Tokyo: 81-3 6269-2701; Frankfurt: 49 69 29725390; London: 44 207 842 9600; Paris: 33 1 40 17 17 01; New York: 1-212 659 2176. Or email: wsja.publisher@dowjones.com Trademarks appearing herein are used under license from Dow Jones & Company. USPS 337-350ISSN 0377-9920 PAGE TWO ONLINE TODAY Most read in Asia 1. Fugitive’s House in a ‘Very Peaceful Area’ 2. Osama bin Laden Is Dead 3. Spies Comb bin Laden Intelligence Haul 4. The Fight of the Physical Outlier Most emailed in Asia 1. Joy of Researching Health Benefits of Sex 2. Opinion: Pakistan as Terror Sanctuary 3. ‘Aussie Gang Didn’t Hate Indians’ 4. Why Chinese Mothers Are Superior China Real Time blogs.wsj.com/chinarealtime Chinese regulators plan to curb TV networks’ ability to broadcast shows ‘aimed at nothing but entertainment.’ Sports The NBA finals, Champ- ions League and more: blogs.wsj.com/dailyfix Speakeasy blogs.wsj.com/speakeasy A conversation with Bill James, author of ‘Popular Crime,’ on the most sensational crimes from the 1600s to present day. i i i Business & Finance n Intel will use a new breed of three-dimensional transistors in its next generation of chips in what it calls a radical shift in semiconductor technology. 21 n Samsonite is accelerating plans to list in Hong Kong, while Yuanda China cut the size of an offering in a sign that conditions for IPOs may be weakening. 20 n Portugal’s $115.5 billion bailout package imposes new austerity measures on the debt-burdened country but offers gentler terms than earlier financial rescues for Greece and Ireland. 6 n Applied Materials agreed to acquire Varian Semiconductor Equipment for $4.9 billion, bet- ting that demand for gadgets will help drive growth. 21 n Seoul is mulling investing part of its foreign-exchange reserves in yuan-denominated Chinese securi- ties to diversify its portfolio. 5 n ZTE stepped up a legal battle with telecom rival Huawei, filing motions to invalidate a Huawei trademark and various patents. 22 n BNP Paribas reported a 15% in- crease in first-quarter net profit, aided by a sharp decline in provi- sions for bad loans. 25 n BMW’s first-quarter profit more than tripled amid booming demand in China and a recovery of the U.S. luxury-car market. 20 nWestpac Banking’s net rose to a record, but the lender said growth in lending is likely to be “moderate.” 25 n U.S. stocks fell as news on the economy and corporate earnings discouraged investors. Weaker commodity prices hurt stocks both in the U.S. and Asia. 27 i i i World-Wide n Gary Locke warned that China is backtracking on pledges of more openness to foreign compa- nies, some of the harshest criti- cism yet from the U.S. commerce secretary who is tapped to be the next ambassador to China. 5 n China announced a potentially powerful new agency to supervise the Internet, underscoring the country’s evolving regulatory en- vironment just as investors’ inter- est in Chinese Web companies is soaring. 3 n Palestinian leaders formally ended a four-year rift between the secular Fatah and Islamist Hamas groups at a ceremony in Egypt. nWorkers toiling to fix the stricken Fukushima Daiichi nu- clear-power plant have something to look forward to—fresh meals and more showers. 4 n North Korea confirmed that it has detained two Japanese men since March and will charge them with drug-trafficking violations. 5 n The EU opened the door to possibly allowing countries to re- introduce national border con- trols, in response to concerns about an influx of North African migrants. 8 Renren shares surged 42% early on their first day of public trading in the U.S. The gain came even though the head of the auditing committee at the Chinese social-networking company resigned on Tuesday, following allegations of fraud at his own company. Above, Renren’s Chairman and CEO Joseph Chen, center, attended Wednesday’s opening bell ceremony at the NYSE with other executives and guests. Page 24 A ss oc ia te d Pr es s What’s News— Inside Capital: The decline of the dollar warrants attention, not panic. 6 Business & Finance: Galleon deliberations to start anew. 19 Technology: Baidu launches test of licensed-music site. 20 Heard on the Street: China’s deposit-hungry banks feel squeeze. 32 Thursday, May 5, 2011 THE WALL STREET JOURNAL. 3 WORLD NEWS China creates new Internet overseer BEIJING—China announced a potentially powerful new agency to supervise the Internet, underscor- ing the evolving regulatory envi- ronment in the country just as in- terest in Chinese Web companies is soaring among global investors. A string of public offerings is in the pipeline. The debut of social- networking site operator Renren Inc. Wednesday on the New York Stock Exchange raised $743.4 mil- lion, even though the company posted a loss for 2010. Analysts say it is unclear whether the new office will streamline the bureaucracy or add another layer. The new State Internet Informa- tion Office will be headed by offi- cials from at least three agencies that regulate different aspects of the Internet, the state-run Xinhua news agency reported Wednesday. These include the State Council In- formation Office, which is respon- sible for content; the Ministry of Industry and Information Technol- ogy, which regulates the technol- ogy and telecommunications sec- tors, and the Ministry of Public Security, the law-enforcement body. The new agency will “direct, co- ordinate and supervise online con- tent management and handle ad- ministrative approval of businesses related to online news reporting,” Xinhua said. Web companies in China face daunting regulatory obstacles that reflect the government’s conflicted approach to the Internet, which presents both a huge economic op- portunity and, in a country where speech critical of the government is tightly controlled, a political threat. All Internet companies need an Internet content provider license from MIIT, while online video web- sites need a separate license from the State Administration of Radio, Film and Television and online game companies need approvals from both the General Administra- tion of Press and Publication and the Ministry of Culture. Sometimes, orders from the various agencies clash, such as in 2009 when conflicting orders from GAPP and the Ministry of Culture caused the costly suspension of the Chinese version of Activision Bliz- zard Inc.’s popular massive-multi- player online game “World of War- craft,” operated by Netease.com Inc. Both agencies claimed supervi- sory roles over online games. All companies must filter their own content to eliminate so-called unhealthy content—ranging from pornography and violence to politi- cally sensitive material—and cen- sorship orders pour in from all lev- els of government. Enforcement of censorship rules, and technical measures to limit access to some websites, were stepped up early this year after up- risings in the Middle East and North Africa, organized partly through social-networking sites, spooked Chinese authorities. Adding to the risk is the corpo- rate structure that Chinese Inter- net companies have adopted in or- der to list in overseas markets. Key Internet licenses in China can be issued only to local companies, so overseas-listed companies such as Web portal Sina Corp. and search firm Baidu Inc. are actually hold- ing companies based outside of China that own the Chinese compa- nies holding the licenses needed to operate their businesses. This structure, which has been used in China for more than a de- cade, may be disrupted if officials decide it conflicts with the law. Chinese officials didn’t immedi- ately respond to requests for com- ment, and the SCIO said it would release more details Thursday. China has more than 450 mil- lion Internet users, more than any other nation, with online video, e- commerce websites and Twitter- like microblogging services taking off in popularity in recent years. Investor interest in Chinese Web companies both old and new remains high in part because some of the older generation of Chinese Internet companies to go pub- lic—such as Tencent Holdings Ltd. and Nasdaq-listed Baidu—are now among the largest Internet compa- nies in the world by market capi- talization, though with far less rev- enue than comparable U.S. Internet companies. “The sheer commercial scale of the Internet now” with such high valuations “invites intervention from ambitious agencies keen to validate their own importance in the sector,” said Duncan Clark, chairman of Beijing-based consult- ing firm BDA China Ltd. —Helen Qu contributed to this article. BY LORETTA CHAO Note: Youku’s performance since its listing on the New York Stock Exchange December 8 Sources: Thomson Reuters; Reuters (photo) Sina.com Baidu Sohu.com Youku Tencent 233% 97 96 66 27 On fire One-year performance of selected Chinese technology stocks: In China, where speech critical of the government is tightly controlled, the Internet presents both a huge economic opportunity and a political threat. 4 THE WALL STREET JOURNAL. Thursday, May 5, 2011 WORLD NEWS: JAPAN Japan confronts crisis liabilities TOKYO—Japan is embroiled in a contentious new debate over who should pay Tokyo Electric Power Co.’s growing liabilities from its nu- clear accident—a bill estimated to be tens of billions of dollars. The argument pits numerous stakeholders against each other, in- cluding executives at the utility hop- ing to reduce the company’s liabil- ity, bankers and investors wanting to protect their balance sheets, and politicians worried about reactions from voters who may be hit with higher tax and electricity rates. Some policy makers want the coun- try’s 11 power companies to shoul- der a big part of the burden as the cost of maintaining a nuclear-power industry. That proposal, when floated, pushed utility stocks down. “Tepco right now is very unpop- ular among the Japanese people,” said Akihisa Nagashima, a lawmaker with the ruling Democratic Party of Japan. “The big problem is it is too big to fail.” He said letting the company go under isn’t a viable option, given its role as a regional monopoly supply- ing power to a huge swath of the Japanese economic center, including all of the Tokyo metropolitan area. As a first step, the government will unveil as soon as next week the initial draft outlining a plan for dis- bursing compensation for people displaced from homes and farmers affected by radiation-related sales cuts. Many such victims seek imme- diate cash payments. The plan, according to the Japa- nese media, will feature the estab- lishment of a new organization that will prop up the finances of Tepco with loans and issuance of preferred shares, to be covered with public funds, bank loans and insurance premiums contributed from other power companies. Tepco will report- edly raise money by selling down its huge portfolio of assets, mostly real estate and stockholdings. The cost of the continuing disas- ter at the Fukushima Daiichi nuclear plant is growing daily, with the final price tag far from clear. The elec- tric-utility company is likely to face demands to pay trillions of yen in compensation to victims. Beyond that, the cost of decommissioning the reactors could hit $6 billion, an- alysts say. Tepco has huge assets. The util- ity supplies one-third of Japan’s electricity demand, and earned ¥134 billion—about $1.7 billion—in net income on revenue of $60 billion in the year ended March 31, 2010. Its total assets were valued at about $162 billion at the end of that year. But analysts believe its liabilities will far exceed its assets after ac- counting for the compensation and other costs of dealing with the cri- sis. As Tepco Chairman Tsunehisa Katsumata told a news conference in March: “No matter how much money we have, it will not be enough.” Policy makers and analysts say taxpayers will inevitably be asked to chip in. But that move is seen as limited, because of the existing pub- lic anger against Tepco and the gov- ernment over the worst nuclear ac- cident since Chernobyl. In addition, the government’s debts are already outsize—at 200% of the economy, the largest among advanced econo- mies—and its ability to spend more is limited. St