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IN THE aftermath of the massacre at Virginia Tech university on April 16th, as the nation mourned a fresh springtime crop of young lives cut short by a psychopath's bullets, President George Bush and those vying for his job offered their prayers and condolences. They spoke eloquently of their shock and sadness and horror at the tragedy (see article). The Democratic speaker of the House of Representatives called for a “moment of silence”. Only two candidates said anything about guns, and that was to support the right to have them.

Cho Seung-hui does not stand for America's students, any more than Dylan Klebold and Eric Harris did when they slaughtered 13 of their fellow high-school students at Columbine in 1999. Such disturbed people exist in every society. The difference, as everyone knows but no one in authority was saying this week, is that in America such individuals have easy access to weapons of terrible destructive power. Cho killed his victims with two guns, one of them a Glock 9mm semi-automatic pistol, a rapid-fire weapon that is available only to police in virtually every other country, but which can legally be bought over the counter in thousands of gun-shops in America. There are estimated to be some 240m guns in America, considerably more than there are adults, and around a third of them are handguns, easy to conceal and use. Had powerful guns not been available to him, the deranged Cho would have killed fewer people, and perhaps none at all.

But the tragedies of Virginia Tech—and Columbine, and Nickel Mines, Pennsylvania, where five girls were shot at an Amish school last year—are not the full measure of the curse of guns. More bleakly terrible is America's annual harvest of gun deaths that are not mass murders: some 14,000 routine killings committed in 2005 with guns, to which must be added 16,000 suicides by firearm and 650 fatal accidents (2004 figures). Many of these, especially the suicides, would have happened anyway: but guns make them much easier. Since the killing of John Kennedy in 1963, more Americans have died by American gunfire than perished on foreign battlefields in the whole of the 20th century. In 2005 more than 400 children were murdered with guns.

The news is not uniformly bad: gun crime fell steadily throughout the 1990s and early 2000s. But it is still at dreadful levels, and it rose sharply again in 2005. Police report that in many cities it rose even faster in 2006. William Bratton, the police chief of Los Angeles (and formerly of New York), speaks of a “gathering storm of crime”. Politicians on both sides, he says, have been “captured” by the vocal National Rifle Association (NRA). The silence over Virginia Tech shows he has a point.

The Democrats have been the most disappointing, because until recently they had been the party of gun control. In 1994 President Bill Clinton approved a bill banning assault weapons (covering semi-automatic rifles plus high-capacity magazines for handguns) and the year before that a bill imposing a requirement for background checks. But Democrats believe they paid a high price for their courage: losing the House of Representatives in 1994 shortly after the assault-weapons ban, and then losing the presidency in 2000. Had Al Gore held Arkansas or West Virginia or his own Tennessee, all strongly pro-gun, he would have won the election. These days, with hopes for a victory in 2008 dependent on the South and the mountain West, it is a brave Democrat who will talk about gun control. Some of them dismiss the very idea as “insensitive”.

Mr Bush however, has done active damage. On his watch the assault-weapons ban was allowed to lapse in 2004. New laws make it much harder to trace illegal weapons and require the destruction after 24 hours of information gathered during checks of would-be gun-buyers. The administration has also reopened debate on the second amendment, which enshrines the right to bear arms. Last month an appeals court in Washington, DC, overturned the capital's prohibition on handguns, declaring that it violates the second amendment. The case will probably go to the newly conservative Supreme Court, which might end most state and local efforts at gun control.

No phrase is bandied around more in the gun debate than “freedom of the individual”. When it comes to most dangerous products—be they drugs, cigarettes or fast cars—this newspaper advocates a more liberal approach than the American government does. But when it comes to handguns, automatic weapons and other things specifically designed to kill people, we believe control is necessary, not least because the failure to deal with such violent devices often means that other freedoms must be curtailed. Instead of a debate about guns, America is now having a debate about campus security.

Americans are in fact queasier about guns than the national debate might suggest. Only a third of households now have guns, down from 54% in 1977. In poll after poll a clear majority has supported tightening controls. Very few Americans support a complete ban, even of handguns—there are too many out there already, and many people reasonably feel that they need to be able to protect themselves. But much could still be done without really infringing that right.

The assault-weapons ban should be renewed, with its egregious loopholes removed. No civilian needs an AK-47 for a legitimate purpose, but you can buy one online for $379.99. Guns could be made much safer, with the mandatory fitting of child-proof locks. A system of registration for guns and gun-owners, as exists in all other rich countries, threatens no one but the criminal. Cooling-off periods, a much more open flow of intelligence, tighter rules on the trading of guns and a wider blacklist of those ineligible to buy them would all help.

Many of these things are being done by cities or states, and have worked fairly well. But jurisdictions with tough rules are undermined by neighbours with weak ones. Only an effort at the federal level will work. Michael Bloomberg, the mayor of New York, has put together a coalition of no fewer than 180 mayors to fight for just that. Good luck to him.

ANOTHER month, another string of victories for Google, the world’s emerging internet superpower. On Tuesday April 17th, in the latest sign that Google has the upper hand over all its rivals, Yahoo! disappointed analysts with its first quarter results: profits were down by 11% to $142m. Google’s share of web searches keeps going up. It now executes more than 64% of all searches, according to Hitwise, a market-research firm. Yahoo!, its main rival, appears stuck at about 21%, and distantly third, Microsoft’s MSN continues its decline, to below 10%. With both the most popular search engine and the most efficient system for placing sponsored text advertisements, Google dominates the lucrative and fast-growing market for so-called “paid search” advertising (where advertisers pay only for actual mouse clicks).

Google’s grip is tightening elsewhere. Last week it said it would pay $3.1 billion for DoubleClick, the web’s largest broker between online publishers and advertisers for “branded” or “display” advertisements (paying for views rather than clicks). This segment is growing as fast as paid search. Google also struck a deal with Clear Channel Communications, America’s largest radio broadcaster, to sell airtime on 675 radio stations to advertisers in Google’s network. Earlier this month Google said it will place advertisements with EchoStar, a satellite-TV operator, and also with traditional newspapers. Google is thus launching an all-out attack on the entire advertising market.

In the process, Google is bashing Yahoo!. It, along with Microsoft and Time Warner, owner of AOL, had also bid for DoubleClick and failed. Terry Semel, Yahoo!’s boss, has suffered a string of strategic defeats, having been outbid by Google for a stake in AOL and for YouTube, the leader in online video. Moreover, Mr Semel had recently been trying to defend against Google in display advertising, while hoping to attack it in paid search. Traditionally, Yahoo! has placed text advertisements on its search pages based only on how much an advertiser bids for a given search term (or “keyword”, such as “mountain bikes”); Google takes other variables into consideration and so makes its advertisements more relevant to web searchers, thus earning more revenues.

In February Yahoo! launched a new advertising algorithm, called Panama, that is meant to close this technical gap, but there is scepticism that it can make much difference. Advertising systems do not ride on their algorithm alone but also on their network of advertisers and publishers. Google’s network, in paid search, is now so large that advertisers cannot afford to abandon it. So Panama may only prevent Yahoo! from falling further behind.

Mr Semel’s other defence is to use the growing fear of Google among “old-media” companies to engineer various alliances to contain the enemy. In March Yahoo!, along with MSN and AOL, signed on to a new partnership with NBC and Rupert Murdoch’s News Corporation, which intend to form a joint venture in online video to counter Google’s YouTube. Last week Yahoo! expanded an advertising alliance with Viacom, which is currently suing YouTube. And this week, Yahoo! announced a deal with a consortium of newspaper publishers to run their content on Yahoo!’s websites, and to place advertisements on the sites of the newspapers.

For MSN the picture is even bleaker. Online advertising is still a minuscule part of overall revenues but is still crucial to Microsoft’s growth strategy. So far Microsoft is failing. Sarah Friar, an analyst at Goldman Sachs, estimates that Google will make operating profits of more than $5 billion this year, which will grow by 36% for the next three years and Yahoo! will make $3 billion and grow by 20%. Microsoft’s online businesses will make losses of $2 billion, and more in the next two years. Microsoft’s nightmare scenario, however, is that Google will at some point disrupt its core business of selling shrink-wrapped software. Google recently said that it would add presentation software to the word processing and spreadsheets that it already offers free online.

Google may face a downside to its expansion, as Henry Blodget of Cherry Hill Research, points out. Placing advertisements on its own search pages gives Google profit margins of about 60%; placing advertisements on other web pages, such as blogs, yields margins between 10% and 20%. As Google expands into new segments, such as broadcast, its margins will probably keep declining, especially as new media partners are likely to give Google only “left-over” inventory. So Google is far from becoming a monopolist but it is, for the moment, far ahead of its peers.

LONDON, April 17 — You might be forgiven for thinking that the London Book Fair is about books and authors — and of course in a sense it is. It is just that few books and even fewer authors are seen here.

Rather, with the public excluded from the fair’s site, the hangarlike spaces of Earls Court One in west London, thousands of book editors, agents and scouts are able to indulge in their favorite pastime: schmoozing.

They do so every fall at the Frankfurt Book Fair, but increasingly London is their gathering place in the spring, above all for the lucrative part of the publishing industry that involves selling foreign rights for English-language books.

So no, this three-day book fair, which closes on Wednesday, is not a celebration of literature or high-profile authors in the way that, say, the Salon du Livre in Paris draws crowds of devoted book lovers and ranks as an important event in the city’s cultural calendar.

At the London Book Fair, what is on display is the art of the deal.

The first floor of Earls Court One resembles any industrial fair, with exhibitors’ displays designed to attract attention. Large publishing groups, like Hachette Livres, Random House, Penguin Group and HarperCollins, also use their stands to sell their books — in English for export or for translation — to distributors and publishers from around the globe.

On the hall’s second floor, though, is the industry’s real engine room, the International Rights Center, where in a well-honed ritual, publishers and agents sit at bare tables — no laptops or fixed telephones — and hold a succession of intense 30-minute meetings of sparring and parrying, of pitches and offers.

Think speed dating.

“This book fair is about face time,” said Ed Victor, a long-established London literary agent. But these meetings are also about whether you want to see someone again, said Gaia Banks of Sheil Land Associates, another agency here. “You’re thinking about building long-term relationships,” she added. “It’s all about trust.”

That, in turn, tempers the approach of publishers and agents who come here intent on creating a buzz around an author or a manuscript. “You have to be able to deliver the goods,” said Tracy Fisher, director of international rights at the William Morris Agency. “You have to know your buyers. You can end up with egg on your face if it doesn’t work.”

Still, Ms. Fisher said, it is William Morris’s practice to try to “get the buzz going” on a couple of books at each fair. This spring, she noted, the agency is pushing two manuscripts it received last week: “The White Tiger” by Aravind Adiga, a former journalist from India, and “Atmospheric Disturbances,” a first novel by Rivka Galchen, an American of Israeli extraction.

Nonetheless, the consensus is that no “book of the fair” has emerged so far. Not that this has dampened the generally optimistic mood of the publishing world represented here; it is simply that, no less than an unexpected hit movie at the Cannes film festival, a book that has publishers falling over one another with inflated offers inevitably adds energy and excitement.

“You won’t get a ‘book of the fair’ as you did 10 or 15 years ago,” said Tom Weldon, managing director at Penguin General, one of Penguin’s divisions. “With the Internet and all the other information that is out there, you no longer get huge deals here. The hard work is about foreign rights and exports.”

But the fair is also, as Mr. Victor put it, “a gathering of a tribe,” where friendships are formed, loyalties are tested, gossip is exchanged, grumbling is voiced. And this spring there was even applause that the fair’s organizer, Reed Exhibitions, decided to return the event to its traditional neighborhood of Earls Court after a near-disastrous adventure last year.

For the March 2006 fair, Reed Exhibitions moved to a new exhibition building in Docklands in east London. So furious were publishers and agents at the inconvenience of Docklands that Reed Exhibitions only narrowly avoided finding itself competing with a new London book fair — in Earls Court — organized by the Frankfurt Book Fair.

But now normality has returned, with Reed Exhibitions saying that 23,000 publishing professionals from more than 100 countries have signed up for this year’s fair. The 702 standholders also include national representations — Spain is being called the market focus this time — as well as start-ups, like Public Eye Publications.

This small British publisher, set up last year by Steve Brookes and his wife, Anne, to publish a book of garden tips, had the bright idea of copyrighting the phrase “the greatest in the world” in Britain and the United States. And eager to be noticed, it used the fair to release its newest book, “The Greatest in the World Sex Tips,” by the British actress Julie Peasegood.

Then there are those visitors who have come fishing for business. In one crowded passageway, for instance, Chen Xiaolian, the president of Jin Hua Guang Hua Printing and Clothing Company of Suchou, China, was hovering with two assistants whose job it was to stop passers-by. “Would you like printing?” one assistant asked. “We do good printing of books in China. Very cheap.”

In contrast, few authors were on hand to pitch their books, if only because their readers were not inside this building. But the Brazilian novelist Paulo Coelho, now promoting his latest book, “The Witch of Portobello,” had no trouble filling a large room with fans of his popular spiritual self-improvement books.

The fair also organizes scores of small seminars for professionals, covering everything from “The eBook Challenge” to copyright issues. One that seemed particularly pertinent to British publishing, with its endless stream of biographies and memoirs by soap opera stars and soccer heroes, was “The Cult of Celebrity: Commercial Reality and Legal Pitfalls.”

For many British editors, this boom has damaged more traditional literary publishing because even mainstream bookshops now promote celebrity books to the detriment of others. John Blake, whose company, John Blake Publishing, frequently puts out celebrity-focused books, went further, noting that Internet and supermarket sales were making bookshops “sadly irrelevant.”

However, Eddie Bell, a literary agent who also specializes in celebrity books, insisted that such books are “not dumbing down but creating a vast new class of readers.”

And he added, “The cult of celebrity is throwing a lifeline to publishing.”

Some highbrow editors and agents in the International Rights Center may find this a tad distasteful. On the other hand, the fair’s daily newspaper headlined its edition on Tuesday with news that HarperCollins had bought Andre Agassi’s memoirs for Britain. And as with every such book sale, the question that interests most publishers is simple enough: Will the book earn back its advance and make a decent profit?

FIRST there were boutique hotels — small, private, luxurious and impressive. They were expensive, but that was not an issue for the people frequenting them.

Now they are settings for boutique business meetings, where executives are cosseted, achievers are rewarded and group identity encouraged. These hotels are also meant for no more than a few dozen people, often those doing the most important work.

In such exclusive settings, these people are likely to feel appreciated and worthy of more than a PowerPoint presentation, a lunch of chicken and cheesecake, a nondescript room and the anonymity of a large hotel.

The day might start with a multicourse breakfast of fresh fruit and omelets at the Mill House Inn in East Hampton, N.Y., where guests can brainstorm in a living room with a fireplace, do some quiet thinking nearby while gazing at the Atlantic Ocean, relax in a whirlpool bath and sleep on feather beds.

Guests have “the feeling that they’re important, they’re valuable and that we splurged on you,” said Christina Wilkes, who oversees business-travel consulting at American Express Business Travel Advisory Services.

A small hotel or inn is ideal for a group of 50 to 60 people when their host “wants to leave the attendee with a great impact, make it memorable, make it different, make it stand out,” she said.

At a big hotel, that size group might rattle around in a room far too big or sterile. Even more worrisome, a competitor could get wind of the meeting, eavesdrop outside the door or buttonhole a participant in a corridor.

“When you start looking at a boutique hotel, you’re purposely doing it to avoid the big-hotel feeling,” said Kurt Paben, vice president for business development at Carlson Marketing, an international conference planner.

At boutique hotels, meetings can be almost as much of an adventure as a vacation.

To get to the Harrison House Suites, in the San Juan Islands off the coast of Washington, guests can take a ferry or a seaplane. At Porches, a small hotel in North Adams, Mass., tours are set up for corporate guests to visit the Massachusetts Museum of Contemporary Art across the street. Elsewhere, guests wind up a day’s work with a trip to a vineyard followed by a gourmet dinner, cooked by the guests themselves.

Companies choose boutique properties because of their reputations for attracting the rich and famous. That is especially true in vacation spots like the Hamptons or New England.

The idea that their site has been mentioned in gossip columns and celebrity Web pages can help excite employees about having a meeting there, Mr. Paben said. “They get to stay at a hotel that X Y Z celebrity stayed at,” he said, adding that such excitement leads to “buzz, pride, bragging rights, that kind of thing.”

Boutique hotels are marketing themselves as ideal for small meetings within big companies, like board meetings, Mr. Paben said; they are also courting entrepreneurs who need alternatives if their companies have outgrown the office conference room.

When a company is planning a meeting that might draw attention from the news media, elegance and an air of exclusivity can be helpful, say, for introducing a new car.

In that case, Mr. Paben said, his clients are looking for a place that “supports the lifestyle of the owner and ties it all together.”

But sometimes the goal is not to be seen by competitors or the public. That is attractive for remote spots like the Harrison House Suites on San Juan Island.

“A more intimate setting is a bit more desirable than milling around hundreds of other people,” said Sallyan Zenko, global head of marketing for UBS, the investment firm. UBS likes to take over all the rooms in a hotel to ensure that managers do not encounter other guests, especially those that might be interested in UBS business.

“It makes everyone feel like they are getting V.I.P. treatment,” Ms. Zenko said.

Small hotels, inns and bed-and-breakfasts don’t have the space for the hundreds of people who might have to attend conferences and other big business meetings.

As a result, the small lodgings offer little direct competition for chains like Marriott and Ritz-Carlton, which can provide large meeting spaces and serve meals in a short time to big groups.

But when it comes to smaller gatherings, boutique hotels are eager to take customers away from their big counterparts, and meeting planners are taking heed, forming alliances with small hotels, said Anna Maria de Freitas, general manager of the Harrison House Suites. The planners want something special for their clients, and the small properties want to fill their rooms during the week and the off-season. Business events “keep us going and keep my staff employed during the winter,” Ms. de Freitas said of her inn, where Microsoft, the Bill and Melinda Gates Foundation and the Kellogg Graduate School of Business at Northwestern University have held events.

Meeting planners say such mutual needs give companies a chance to try places they might consider too costly in high season — and which might not want their business when they can attract vacation guests.

“That’s the perception that these properties leave you with, the sense that it’s ritzy and it’s expensive,” Ms. Wilkes of American Express said.

But in the off-season, she said, inns are willing to make deals to win corporate guests. For example, the Inn at Union Pier, in southwestern Michigan east of Chicago, offers a deeply discounted rate, just $95 a night a person, for company groups.

“The rates can be quite good, because they are looking to bring in this type of business,” Ms. Wilkes said.

But boutique hotels do not have a monopoly on the small-meeting business. Big hotels are pitching themselves for smaller gatherings, especially in areas where the economy is weak, Ms. Wilkes said.

“Some of the chains are starting to try and cash in, and see this as a successful area of hotel growth and management,” she said.

In some cases, the large hotels have the advantage of location for companies that do not want a hard-to-reach resort.

Ms. Zenko of UBS said that her company preferred to hold meetings within 20 minutes of an international airport, which can rule out hotels in farther-flung areas like the Hamptons or the Berkshires.

“So, if there’s a really exclusive, wonderful property at a location,” but it requires changing planes and driving for an hour, Ms. Zenko said, “it might be tough for us to consider that in the final running.”

Still, far-flung and unusual places are appealing, and have become the norm for meetings at Mentice, a company based in Sweden that develops computer software for virtual reality surgery.

Carleen Theisen, the United States financial manager for Mentice in Evanston, Ill., said she went to a meeting last year for 60 managers from around the world at a spa in northern Sweden.

Since then, Ms. Theisen arranged a management meeting in the United States at the Inn at Union Pier, which is on Lake Michigan. It features Scandinavian décor, and most guest rooms have vintage wood-burning fireplaces, called kakelugns, which were imported from homes in Sweden.

“Going to the Marriott within the city is normal,” Ms. Theisen said. “To go outside and experience a new type of environment and enhance your team building, that’s something that our company does. You see your employees in an entirely different way.”

At the Michigan event, meetings with Jonas Ohlsson, the chief executive of Mentice, and managers were enhanced with fresh-baked cookies and lemonade, as well as a go-kart race.

Ms. Theisen, who arranged the race, admitted that she had been a little intimidated.

“I was the only female, and I basically had to leave the track,” she said. “The go-karts go about 65 miles per hour, and it was a very intense competition.”

Afterward, Mr. Ohlsson had to catch a train from nearby New Buffalo, Mich., to Chicago for his flight home.

He missed the train — by minutes — so an inn employee drove him to O’Hare International Airport, about two hours away, Ms. Theisen recalled. “I thought to myself, What other hotel would do that?”

Reuters

AT THE height of the dotcom mania seven years ago, Softbank's stockmarket value hit almost $200 billion, making it very nearly the highest-priced company in Asia—not bad for a former software distributor floated only six years earlier. At the time the company had grown to oversee a vast and chaotic spread of internet investments in America and Japan. Its founder and head, Masayoshi Son (pictured above), who owned 38% of the company, looked as though he might overtake Bill Gates as the world's richest man. For young Japanese entrepreneurs, “Son-san” was more than just an adversary to Japan's buttoned-up corporate world; he was the messiah for a new age.

Times change. Mr Son's early investment in Yahoo! was a masterstroke. However, though Softbank still has a controlling stake in the valuable Yahoo! Japan, the country's biggest internet portal, most of its other investments have proved duds. Softbank's shares change hands at just under ¥3,000 ($25) compared with ¥198,000 at their peak. Foreign hedge funds think that this still values Softbank too richly, given its huge debt and complex corporate structure; they have borrowed Softbank shares to sell, in the hope of picking them up more cheaply after a plunge. The contrast with Japan's retail investors could not be starker. Mr Son is their hero. Thanks to them, Softbank is still the stockmarket's most heavily traded company. Some analysts who have issued critical reports on the firm have had to resort to bodyguards to protect themselves against angry shareholders.

Since the bubble burst, Softbank has reinvented itself at least twice, first as a fixed-line telecoms and broadband firm, and now that scheme has lost its shine, as a mobile-phone operator. A year ago it bought Vodafone's struggling mobile network in Japan. Rebranded Softbank, it is the smallest of Japan's big three mobile operators, with 16m out of 100m-odd mobile customers. At long last, Softbank has a business with scale and a sizeable customer base.

The business that Softbank acquired, for ¥1.8 trillion, was in awful shape, as a result of Vodafone's misreading of Japan's mobile market, one of the world's most sophisticated and a pioneer of third-generation (3G) services. In particular, Vodafone attempted to exploit economies of scale by offering the clunky 3G handsets it was selling in Europe to Japanese consumers too. To make matters worse, Vodafone underinvested in its Japanese 3G network, so coverage was poor.

Soon after the takeover, Softbank dramatically wrote down the value of Vodafone's fixed assets—raising the question of why it had paid so much for them in the first place. Undaunted, the new management began spending anew in the hope of setting things to rights. To improve coverage, it promised to increase the number of base stations from 25,000 to 46,000 by March this year. Since last autumn it has rolled out 30 new handsets.

Last October, new rules allowed people to keep their mobile-phone number when they change operators. In response, Softbank offered a series of cut-price tariff packages, including the offer of free calls to other Softbank subscribers. And it gave its customers the chance to pay for their handsets in instalments—an especially alluring innovation, since mobile firms in Japan do not offer customers subsidised handsets, unlike their counterparts in Europe. Executives at NTT DoCoMo, Japan's dominant mobile company, admit that the industry was caught off-balance by such promotions.

Whether they have benefited Softbank is another matter. Such tactics work best in markets with high rates of churn, where customers jump readily from one operator to the next. But fewer than 5% of users have switched so far—a fraction of the churn-rate of Europe. That is partly because e-mail via mobile phone is hugely popular in Japan, and e-mail addresses linked to phones are not portable. And it is partly because each Japanese network has its own standard, so customers must buy new handsets when they switch.

Softbank has managed to reverse Vodafone's steady loss of subscribers—but at a cost. Revenue per subscriber is falling faster than subscriptions are growing, a problem that afflicts all operators save the second biggest, KDDI. That should spell lower revenues overall.

It is remarkable, therefore, that Softbank is reporting improved profitability at its mobile business. For instance, where profit margins under Vodafone were just 3.2%, they more than tripled to 11.7% during the new management's first two months last summer. They have since slipped a bit, but the leap has rekindled awe at Softbank's aggressive accounting.

The latest innovation seems to involve the handsets Softbank is selling on instalment. Analysts reckon it is booking all the revenues from the sale of each handset up front, even though the cash is to be received in instalments over up to two years. Softbank, in effect, has created a leasing business. Over the long term, that should have no impact on the company's cash flow, but in the accounts it could boost operating profit in the short term. The publication in a few weeks of Softbank's annual accounts for the year to April may cast more light on the matter.

In the previous financial year Softbank put an end to years of operating losses and has since seen operating profit grow each quarter. Indeed, over the past seven quarters, Softbank has reported a cumulative operating profit of ¥260 billion. But it is cash that services debt, and Softbank has a lot of debt—a net ¥2.4 trillion at the latest count, over eight times more than equity. Much of its cash is being swallowed by investments in Softbank's broadband, fixed-line and mobile businesses—including all those extra base stations that Softbank promised last year, but had not yet completed by its March deadline. As a result, free cash flow (net income adjusted for things like depreciation and capital expenditure) is estimated to have fallen ¥80 billion into the red over the same period.

Softbank is still bleeding cash, in other words, which it must back up either with fresh injections of equity or debt or by selling something. Since Softbank's flotation in 1994, its ability to destroy value has been prodigious. In all, it has received more than ¥3.2 trillion from investors and has spent about ¥2.8 trillion of that in operating losses, investment losses and capital expenditure. Although Mr Son's machine is remarkable for sucking cash in at one end, it is also remarkable for spitting very little of it out at the other.

Reuters

FRANÇOIS-HENRI PINAULT is defying predictions. As the son of François Pinault, one of France's richest and most controversial businessmen, he was generally assumed to be a fils à papa, the son of a powerful father whose main qualification was his surname. But since 2005, when he took over as boss of PPR, the conglomerate in which his family owns a 32% stake, he has proved more hands-on than expected: he replaced most of the senior staff and sold a chunk of Fnac, a media group, as well as Orcanta, a lingerie brand, and Printemps, a chain of department stores that had been the second ‘P’ in PPR.

On April 10th Pinault fils announced the biggest deal of his career so far. PPR has bought 27% of Puma, a German sportswear firm, and is offering to purchase the rest. The offer, which values Puma at €5.3 billion ($7.1 billion), will be financed entirely by debt. Jochen Zeitz, boss of Puma, endorsed the bid to shareholders at Puma's general meeting on April 11th in Nuremberg. At the same meeting, PPR won three seats on Puma's board.

PPR's pounce for Puma came as a surprise. Last year Mr Pinault had eyed Bulgari, an Italian luxury-goods company (see article) and other jewellers and fashion designers in Italy and France to beef up the luxury arm of his retail-cum-luxury empire. At the time he said he would like the group to focus more on lucrative luxury goods.

Yet after an unprecedented boom in the industry, makers of luxury goods are much in demand. Bulgari would have been very expensive. Chanel, Hermès and Armani are not for sale. So Mr Pinault set his sights eastwards. He has known Mr Zeitz since 2004, when he tried to lure him away from Puma to become chief executive of Gucci group, which owns most of PPR's luxury brands. Mr Zeitz is one of corporate Germany's shooting stars. After becoming the youngest boss of a publicly listed German company when he took over Puma in 1993, he transformed the firm from a near-bankrupt plimsoll-maker into a trendy high-street brand.

Mr Pinault and Mr Zeitz, who are both the same age, get along well. Mr Pinault wants Mr Zeitz and his team to keep their jobs. The headquarters of the company will remain in Herzogenaurach, a tiny town in southern Germany. Alexander McQueen, one of the Gucci group's acclaimed designers, has been making shoes for Puma since 2005. Other designers in the Gucci stable may also lend a hand to Puma. Price was the main sticking point during the talks, and PPR seems to have secured a good deal. Analysts say it will need to increase its offer to buy the entire company. Nike, an American sportswear firm, could launch a rival bid, though PPR's stake is a strong deterrent.

“It is a good deal for PPR financially and in terms of strategy,” says Marc Festa, an analyst at Exane, a French broker. It adds a third strand to the group's business, somewhere between its profitable but volatile luxury interests and its steadier but less lucrative retail division. Puma stands to benefit too: PPR will bring know-how in retail, brand management and e-commerce. Only 16% of Puma's kit was sold in its own shops last year. Mr Pinault wants to help Puma raise this figure by building more “concept” stores.

Mr Pinault will probably sell more of his retail businesses to pay off the debt PPR is about to raise to buy Puma. More of Fnac or Conforama, a household-furnishing retailer, could be put up for sale. YSL Beauté, the poorly performing perfume and cosmetics subsidiary of Yves Saint Laurent, one of Gucci's fashion brands, is likely to be on the block soon. At present, the group's debt stands at €2.9 billion, which would increase to more than €8 billion after a takeover of Puma. Standard & Poor's, a rating agency, said it was reviewing PPR's creditworthiness after the announcement of the Puma deal. PPR will be keen to avoid a downgrade. So in the course of the year Mr Pinault is likely to shake up the group his father founded quite a bit more—and perhaps replace the missing ‘P’.

JENA, Germany — For those seeking the elixir that has given new life to Germany’s economy, a visit to this ancient university town in the eastern part of the country would be a good place to start.

Jena is booming these days, as local companies like Jenoptik, which makes lasers and sensors, rack up orders from China, Russia, Europe and the United States. Even the surging euro, which is near record levels against the dollar and the yen — making German exports more expensive in many foreign markets — has not yet dented demand.

“There’s no better proof that our products are superior than to have an indirect price increase of 30 percent without losing any sales,” said Alexander von Witzleben, the self-confident chief of Jenoptik.

Germany’s transformation from Europe’s sick man to its most stalwart performer is by now well entrenched. So sanguine are German executives about their future that many brush aside fears that a slowdown in the United States could knock their export-led recovery off track.

The American consumer may still be the main engine that drives the global economy, but Germany’s advance — it has been the world’s largest exporter of goods for the last four years — is propelled by other sources. It is one more sign that the rest of the world does not depend as much on the American economy as it once did.

Mr. von Witzleben said that Germany now exports more to Russia and the former Soviet satellites than it does to the United States. It ships nearly as much to Britain as to America, and its total exports within Europe are five times its shipments to the United States.

“Germany is projecting itself into the global economy, using its historic strengths of good quality and strong brands,” said Nicolas Sobczak, senior European economist at Goldman Sachs in Paris. “The simple fact that the German labor market is turning, that you have genuine job creation, shows that this is a genuine German renaissance, one that is independent of the U.S.,” he continued.

The numbers tell the story. Unemployment is dropping rapidly — at 9.8 percent, it has fallen below double-digits for the first time since 2002 — while investor confidence is soaring. An increase in the value-added tax in January, which economists once warned would torpedo the recovery, caused scarcely a ripple.

Germany’s rise has set it apart from its European neighbors. While Italy struggles to regain its export momentum and France waits for a presidential election that could reshape its political and economic landscape, Germany has doggedly molded itself into a globally competitive player.

The therapy was often brutal: waves of layoffs and cost-cutting during the lean years from 2002 to 2005. But having fended off steep wage increases at home and moved some manufacturing to lower-cost markets abroad, many German companies are reaping profits.

The crucial factor in Germany’s success, Mr. von Witzleben of Jenoptik said, is that it churns out what he calls global niche products: sophisticated high-technology tools that have worldwide but narrow markets. Fast-growing developing economies, like China’s, are keener to buy such rarefied products than to make them.

Only Japan currently competes in many of these areas — and perhaps not coincidentally, the Japanese economy is also humming.

“We are protected because the big Asian gorillas are not interested,” Mr. von Witzleben said. “If I were in the business of flat-panel television screens, it would be a different story.”

Jenoptik, which was built on the ruins of an East German state enterprise, concentrates on making lasers used in medical devices and chip factories. It also builds sensors that steer satellites.

Of its $645 million in sales, 57 percent comes from exports. Its order book is running well ahead of last year, when it recorded a 7 percent gain over 2005. Germany has hundreds of medium-size companies like Jenoptik, and many of them are making similar inroads overseas. This success is proving difficult for other major European countries to replicate — for reasons of politics, economic policy or the structure of their industries.

“Germany is pretty much out of sync with the rest of Europe, which is muddling through,” Mr. Sobczak of Goldman Sachs said.

Europe, of course, benefits from a resurgent Germany simply because of its size. It accounts for a fifth of the economic activity of the European Union, and its trade within Europe is booming.

Last year, German exports to Poland rose 29 percent, while imports from Poland rose 23 percent. Such numbers have fueled the euro, which is trading at the highest levels against the dollar since March 2005.

All told, the German economy should grow about 2 percent this year, according to public and private projections. That is less than the 2.7 percent it grew last year, when the world economy was more robust. But it is more than respectable, economists say, given that the European Central Bank has raised interest rates seven times since late 2005.

There are, of course, caveats. Germany’s consumers, rattled by layoffs, have yet to reopen their wallets and purses. Unless they start spending, economists say, the recovery could peter out.

The euro’s relentless rise will eventually start to bite. And a sharp slowdown in the United States would reverberate here, regardless of Germany’s modest dependence on trans-Atlantic trade.

“If the U.S. consumer were to collapse because of the housing market, the Fed would cut rates and the dollar-euro rate would shoot up,” Mr. Sobczak said. “That could be a killer for Europe.”

Still, Germany may be more insulated from the United States than other major European countries, like France and Spain. Those economies are being lubricated mainly by domestic consumption, which hinges on the vibrant housing market in both countries.

A sharp decline in the American real estate market, economists say, would have an echo effect on France and Spain. In Germany, by contrast, housing prices are already depressed.

Germany’s renaissance is challenging other preconceptions about this economy — Europe’s largest and the third biggest in the world, behind the United States and Japan. While previous economic upturns have bypassed the depressed eastern part of the country, there is evidence that in pockets, at least, eastern Germany is also catching the favorable winds of trade and export.

In Jena, for example, the unemployment rate declined to 11.1 percent in 2006, from 16.3 percent in 1998.

In a recent ranking of the most competitive and economically promising regions of Germany, 3 of the top 20 cities are in the east: Dresden, Potsdam and Jena. The most competitive city is a longtime winner, Munich, according to the study by a Swiss consulting firm, Prognos.

Eastern Germany’s three southernmost states — Saxony, Thuringia and Saxony-Anhalt — are growing faster than Germany as a whole, while the northern states in the east are languishing.

As it regains its edge nationally, analysts say, Germany is becoming marked by ever sharper disparities between vibrant and struggling regions. While Jena’s population is growing, rural regions not far from the city continue to lose people, particularly young women, to the West.

In Jena, which was settled in the ninth century and was the site of one of Napoleon’s famous battles in 1806, few people have the time to fret about troubles elsewhere. With two universities, a clutch of scientific research institutes and a park for high-tech start-ups, Jena bustles like a transplanted Silicon Valley.

“It’s better to have successful cities, which can then reflect their success on to the rural areas,” said Albrecht Schröter, a Protestant minister who is the mayor of Jena.

For Mr. von Witzleben, these differences are not only inevitable but commercially advantageous. Salaries for engineers, he said, are 35 percent lower here than in Baden-Württemberg, where the main city, Stuttgart, is the prosperous home of DaimlerChrysler.

“This is our big chance,” said Mr. von Witzleben, 43, who speaks in rapid and idiomatic English.

While Jenoptik has a union, it is not subject to the kind of industrywide contracts that cover workers at big companies like DaimlerChrysler. That gives it the flexibility, for example, to ask for overtime without making costly payments. Employees take part in a profit-sharing plan.

Jenoptik has kept the vast majority of its production in Germany. While Mr. von Witzleben has contemplated opening a factory in China, he concluded it would not generate enough savings to justify the investment.

Jena was the home of Carl Zeiss, the celebrated optical firm that moved its headquarters to West Germany after World War II. With its roots in the old Zeiss, Jenoptik has a tradition of precision engineering and technology that allows it to compete in elite fields.

The company, for example, makes “star sensors” that navigate satellites in orbit. Boeing has installed Jenoptik sensors in its satellites that beam television signals to American homes.

“If I told you 15 years ago that this former Communist combine would become a preferred supplier to Boeing,” Mr. von Witzleben said, “you would have told me to stop drinking wine.”

Citigroup has long carried the mantle as the world’s biggest bank in the world’s financial capital — big deals, big ambitions and in the last few years, big costs.

Now, with expenses growing nearly twice as fast as revenue, Citigroup is intent on cutting those costs down to size. Yesterday, the bank said that it would shed 17,000 jobs and move 9,500 others.

It will be something of a cultural revolution for a company that has long emphasized expansion over efficiency. With shareholders impatient with Citigroup’s sluggish stock price, the job cuts will put its chief executive, Charles O. Prince III, to the test.

If his effort fails to make the bank more nimble to compete with the likes of Bank of America, Goldman Sachs and others, broader strategic changes may be next.

Some of the biggest body blows in the cost-cutting effort will be felt In New York, where Citigroup is the largest private employer. About 1,600 jobs will be eliminated in the city, where Citigroup has 27,000 employees and its headquarters.

An additional 200 jobs will be lost in New York State, about 75 jobs will be cut in Connecticut, and a handful will be shed in New Jersey. The first pink slips have already been handed out.

Over all, roughly 8 percent of Citigroup’s 327,000 workers worldwide, from entry-level consumer bankers to senior executives in the investment bank, will be affected.

The 17,000 jobs will be eliminated this year. About 9,500 positions will be moved to locations overseas, like India or Poland, or smaller American cities like Buffalo, where the cost of doing business is lower. Two-thirds of those jobs will be lost through attrition. And another round of cost-cutting may still be in the offing.

“We are initiating a change in how we run the business,” Mr. Prince said yesterday. “You will see a more efficient, more tightly managed, and more tough-minded Citigroup than you have in the past.

Citigroup said it would take a $1.38 billion charge before taxes in the first quarter of 2007 and another $200 million over subsequent quarters the rest of the year.

The plan outlined yesterday is Citigroup’s first major overhaul since a merger forged the banking giant nearly a decade ago. The plan had been eagerly awaited by Wall Street for the last three months.

Amid a slump in financial shares, Citigroup’s stock fell 1.15 percent yesterday, to $51.80, giving back some of Tuesday’s gains. Since Mr. Prince took over as chief executive in October 2003, the company’s share price has barely budged.

Investors and analysts had been expecting the project to reduce operating expenses by at least $2 billion, including $400 million of previously announced expense reductions from technology improvements. But even with cost savings of $2.6 billion by next year, some investors question whether it is enough.

“It was very, very typical and trademark Chuck Prince — he promised a lot and didn’t deliver much,” said William Smith, president of SAM Advisors, a small asset management firm. “The problem Prince has right now is he painted himself into a corner with a financial conglomerate that doesn’t work. On the one hand, he has to invest in his businesses. On the other, he has to cut costs.”

Some investors question whether the overhaul can stimulate growth. Even though Citigroup did not adjust its 2007 forecasts, Mr. Prince argued that the cost savings would eventually free money to better “grow organically and fewer layers of management approvals should make the company more nimble.”

But not only have Citigroup’s expenses been high, revenue growth, particularly in the United States consumer division, has been sluggish.

Mr. Prince appears to still have the support of Citigroup’s board, but the question is whether investors will grant him — and his plan — enough time to turn the company around.

Jason Goldberg, a banking analyst with Lehman Brothers, said that “2007 is a pivotal year; it just takes a long time to turn an oil tanker.”

With the cost-cutting effort set into motion, an examination of Citigroup’s business portfolio will now move to the top of the agenda.

The bank’s newly hired financial chief, Gary L. Crittenden, is conducting a comprehensive review of its portfolio of businesses in advance of a summer board meeting, according to a person close to the situation. Working with Citigroup’s senior management team, Mr. Crittenden is seeking to identify underperforming businesses and improve the way capital is deployed.

While Citigroup officials suggest that there are no plans to shed any of the core business units, some people close to the bank suggested that the financial review could lead to underperforming parts being sold off.

Mr. Prince played down the evaluation yesterday, saying that it involved simply getting a “fresh perspective on Citigroup and its businesses” from a “fresh set of eyes.”

Ever since Sanford I. Weill orchestrated the 1998 merger of Travelers and Citicorp to form the company, Citigroup had managed expenses in an episodic and decentralized manner. Big acquisitions fueled its growth. Managers ran each business group independently. Cost-cutting was done one deal at a time.

Now, Mr. Prince is calling for a continuous approach to cost management that he hopes foreshadows a “cultural change.”

Several staff functions, like the legal and human resources departments, will be centralized to take better advantage of Citigroup’s size. Management layers will be stripped away; several headquarters will be consolidated. And expense management, Mr. Prince said, will no longer be a “one-time effort” but continuously under review.

“We have had too many instances where people could opt out of things,” said Robert Druskin, Citigroup’s chief operating officer, who oversaw the cost review and will now be responsible for putting those plans to work. “There was not the hammer behind them.”

“Without being dictatorial, we are going to take away some of those choices that didn’t produce good results,” he added. “Quite frankly, too many people have their own chief of staff, their own financial person and head of H.R.”

Mr. Druskin has been working with consultants from Mercer Oliver Wyman, a firm specializing in the financial services industry, to conduct a broad-based “structural expense review.” Their mission was to flush out big expenses that have bogged down the company as it has bulked up.

Underscoring the bureaucracy, as recently as last fall, Citigroup had three separate cost-cutting initiatives — reviewing technology, compliance and corporate staff — with no single person directly responsible for companywide cost-cutting. Only last December were they folded into the single overhaul project supervised by Mr. Druskin.

Citigroup officials would not give details on where and in what business units the jobs would be cut. Of the 17,000 layoffs, about 9,700 positions, or about 57 percent, are expected to be outside the United States.

Affected workers will receive severance packages, the company said.

(Citigroup has also completed a severance agreement with Todd S. Thomson, the former head of its brokerage and private bank whom Mr. Prince dismissed in January over concerns that he abused his executive privileges.)

Citigroup expects to move more than 9,500 positions, from back-office and call center positions to corporate staff, to lower-cost locations. In Tokyo, some will be moved to Okinawa. Some in London could be headed to Poland. Over all, many back-office jobs could wind up in India, where the company is hiring at a rapid pace.

For New York , the significance of Citigroup’s decision may lie more in the underlying trend than in the absolute number of jobs lost, mostly from the back-office and corporate staff ranks. In recent years, Citigroup has sent a steady stream of employees to lower-cost areas in New Jersey, Long Island and elsewhere.

Deutsche Bank is in the process of moving 1,300 employees to Jersey City, and the Royal Bank of Scotland is moving its headquarters to Stamford, Conn., where it is building a $400 million trading complex and adding 1,300 jobs. And with rents rising in Manhattan, others may follow.

Despite the Citigroup job cuts, Mayor Michael R. Bloomberg said yesterday that he was optimistic. “The businesses they are emphasizing are businesses that probably will have most of their employees here in New York City,” he said.

Citigroup’s consumer and credit card operations are expected to experience the brunt of the job cuts. Customer service employees and back-office workers will probably be among the groups most affected.

Employees within the investment bank and brokerage and private banking divisions also face layoffs. But across the company, many of the reductions are expected to come from eliminating overlapping or duplicative staff jobs.

“We found, in many instances, that we had simply too many layers,” Mr. Druskin said.

BACAU, Romania — To get around the chronic labor shortages hampering this traditional textile center and in other industries across Romania, Sorin Nicolescu, who runs a clothing factory, came up with an original solution: import 800 workers from China.

“The explanation is very simple,” said Mr. Nicolescu, general manager of a Swiss concern, the Wear Company. “We don’t have any Romanian workers because they have all left to work” in Western and Central Europe.

Foreign investors have been attracted to Romania, a poor Balkan country, because of its low wages and, since Jan. 1, its membership in the European Union. At the same time, those low wages and freedom of movement through Europe, which is now easier, have been fueling a wave of emigration that threatens to slow an economic boom in recent years in Romania.

“This was happening before we joined the E.U.,” said Ana Murariu, a production manager at Wear. “Now it’s even worse.”

Romania, a nation of 21.6 million (and declining 0.2 percent annually), received 9 billion euros, or about $12 billion, in foreign direct investment last year. That helped the economy grow last year as much as 7 percent, with an unemployment rate in January of 5.4 percent — well below the European Union average.

But with monthly wages averaging around $375 after taxes, roughly two million people, or more than 8 percent of the population, have left since the Stalinist government of President Nicolae V. Ceausescu fell in 1989, according to analysts’ estimates.

Italy and Spain are the most popular destinations for Romanian workers, where they usually perform manual labor, legally and illegally, and generally for lower wages than local people.

Mr. Nicolescu said he decided to look for workers in China because he had contracts there, and those companies had put him in touch with an employment agency. Those who are hired pay about $2,000 for transportation and the employment agency’s fee, according to one worker.

Once they reach Bacau, a drab industrial city of 181,000 some 150 miles northeast of the capital, Bucharest, they go to work in a large, inconspicuous warehouse on the outskirts of town.

Inside, about 170 Chinese women operate sewing machines attached to tables stacked with finished and unfinished garments. Most of the tables, arranged in long rows, are empty. The plant expects 500 more Chinese workers by the end of May.

The factory is clean, freshly painted and well lighted. The only sound is the rapid, repetitive thud of the sewing machines as the workers stitch together previously tailored pieces of garments. They make mostly sportswear for a range of brands, including Prada and Carrefour. All the production is for export.

Mr. Nicolescu said he paid the women about $347 a month after taxes. The legal minimum wage is 132 euros a month ($176) after taxes.

The company operated with Romanian workers until 2003, when operations were suspended because the work force had dwindled to 200. Mr. Nicolescu said the company had posted hundreds of job offers at a local agency, but they had gone unanswered.

“It’s very difficult work, and it’s not well paid,” Mr. Nicolescu acknowledged. He said the industry found it hard to attract young workers to replace the current ones, most of whom are nearing retirement.

“I’m not very pleased about working with foreign workers because I have to provide them food and housing” on top of their salaries, Mr. Nicolescu said. That amounts to $130 a month for each employee, he said, in addition to more than $500,000 he has spent building worker dormitories.

Critics say the company would find Romanian workers if it offered better wages. But Mr. Nicolescu replied that higher wages would make his products uncompetitive internationally, pointing out that textile manufacturers had already left much of Europe in search of lower costs in regions like China.

Cornelia Barbu, deputy director of the Bacau County employment agency, said inspectors had thoroughly inspected conditions for the Chinese workers. “They are treated very well,” she said. “They have a social club and a kitchen. They live much better than most of the Romanians living abroad.”

Xiu Xian Hong, from Fujian Province, who came here last July, described life as better than in China.

“It is quiet here, and the air is much cleaner,” she said through a translator who worked at the plant. “The work is the same, but the pay is more.” But she said she missed her 3-year-old daughter and her husband back home.

Ms. Xiu said she had come to Romania because it was the only place being offered when she sought work at an agency in China. She said she planned to stay at least three years, hoping to save enough money to start a business, perhaps a shop, when she returned.

Although the city center is easily accessible by public transportation, the workers spend most of their free time in five-bed dormitory rooms in the factory complex, playing cards, reading books and watching Chinese satellite television.

Few local residents have seen the workers in town. People in a city park one recent afternoon said that they had learned about their new neighbors from newspapers and television.

“Our people have gone to the West and all over the world, so we need others to replace them,” said Dumitru Padure, a retired aircraft factory technician.

Andrea Grigoras, a translator, sitting with her toddler daughter, expressed the view that the Chinese workers received better pay than Romanians and would probably be more focused than Romanian workers. “I know a lot of Romanians who would do the work for less,” she said, adding: “I’m not worried. But I’d get worried if there were many foreign workers coming here.”

A variety of intra-European transportation links here illustrates the scale of emigration. A discount Romanian-based airline, Blue Air, offers six direct flights a week from Bacau to Italy — two to Turin and four to Rome. A bus company, Atlassib, one of many, runs 10 buses daily to Italy from Bacau.

The population of Romania is projected to fall by 29 percent, below 15.5 million, by 2050, according to the Population Reference Bureau in Washington. Villages and towns outside Bucharest have been hit especially hard.

Ms. Barbu of the Bacau employment agency suggested that wages would need to reach levels about three-quarters of those in the West for Romanian workers to return.

“We have to get used to it because the E.U. means greater mobility,” she said. “Just as we have left, others will come here.”