Sony Reaches Out to PS3 Hacker

Story first appeared in TG Daily.
A new interview with the infamous PS3 hacker reveals that at one point he had a confidential meeting with Sony.

The hacker is the subject of a new expose in the New Yorker, and it's revealed that after he reached a legal settlement with Sony, the company wanted to pick his brain.

He shot to online stardom last year as the center of attention in a highly publicized lawsuit from Sony. The hacker had been publishing information on how to hack the PS3, which Sony said was a violation of the console's terms of use.

Supporters said that Sony was going too far and had no reason to sue him. Attackers took down various Sony websites and servers in protest to the Hotz case.

Not everyone agreed, though. Some said he knowingly broke the rules, facilitated illegal software piracy, and should be tried to the full extent of the law.

In the end, the case was settled for less than a slap on the wrist. He merely had to agree to end his hacking exploits.

But a couple months later, Sony reached out to him and asked him all sorts of questions, hoping to gain insights that it could use to help the company prevent future attacks.

He said he was worried there would be lawyers present, but in fact he really just met with what he described as "respectful" PS3 engineers who wanted to learn from him.

The Sony SVP explained the meeting, saying that the last year had demonstrated how sophisticated cybercriminals can be. Sony is always interested in exploring all avenues to better safeguard our systems and protect consumers. This is a good example of why sophisticated Security Solutions are a must for businesses and corporations.

The hacker went on to land a job that most people would kill for - an engineering position at Facebook. But he ended up quitting because he didn't like the monotony of office life.


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Labor Relations - French Style
Or, Viva La Revolucion!
Story Originally Posted to the Wall Street Journal

PARIS -- Of the 22,000 workers Caterpillar Inc. plans to lay off this year, the French ones have perhaps the most radical tactic for negotiating their severance deals.

In an aggressive, and peculiarly French, negotiating strategy, they held their managers hostage. The workers detained the director of their plant and four other managers for about 24 hours this week. Workers released them only after the company agreed to resume talks with unions and a government mediator on how to improve compensation for workers who are being laid off.

Protest is "inscribed in the genes of French culture," said Maurice Lévy, chairman and CEO of advertising company Publicis Groupe. "In the past peasants protested against their lords. Today the difference is that the lords are chief executives."

Caterpillar declined repeated requests to comment.

The Caterpillar executive-hostage taking is the third in two weeks in France. The incidents, which were all peacefully resolved, revived fears that the economic downturn may fuel violent forms of protest in France by workers who feel they have nothing to lose.

German tire maker Continental AG, which is planning to close a factory in eastern France, this week moved the site of a meeting with unions to a hotel 500 miles away to avoid a repeat of tense protests last month when executives were pelted with eggs. Continental confirmed the move grew out of security concerns, but said it wanted to "stay in dialogue with employees."

The detention of the Caterpillar boss followed incidents at the French plants of Sony Corp. and 3M Co., where managers were held captive by workers angry at being laid off. In those cases, as with Caterpillar, unions and companies resumed talks on severance pay. Sony France's chief executive didn't return calls and emails, and 3M France declined to comment.

Jérôme Pélisse, a sociologist, surveyed 3,000 companies in 2004 and found that 18 of them had experienced an executive detention in the prior three years. "Kidnapping your boss is not legal," says Mr. Pélisse. "But it's a way workers have found to make their voices heard."

French Caterpillar executive Nicolas Polutnik, center,
with workers after his release Wednesday.

Taking the boss hostage is a way to stop the clock and reach out to those who made the decision to cut jobs -- especially when the decision comes from the remote headquarters of a foreign company, Mr. Pélisse said.

In the U.S. and most other countries, abducting a boss wouldn't be tolerated. In France, however, people have sympathy for those who take to the barricades -- as long as no one gets hurt. In the wake of the May 1968 cultural revolution, taking one's boss hostage became a popular form of protest.

One of the longest boss kidnappings in recent years took place at the Paris headquarters of bank Crédit Foncier de France in 1997. Even though he was detained for five days, Chairman Jérôme Meyssonier said there was "perfect respect" between him and employees.

With the recent public outcry over bonuses and stock options, executives are even more unpopular than usual in France. This week the government banned companies that get state funding from issuing stock options to top managers and limited some other forms of compensation.

"In the U.S., people accept getting fired on the spot, without complaining," says Michel Laboisseret, a CGT union delegate who took part in the Caterpillar protest. "We are more willing to pick a fight."

Even President Nicolas Sarkozy -- known for his pro-business views and policies -- said he supported the Caterpillar workers. "I will meet with the unions because they asked for my help, and I won't let them down," he said on the radio Wednesday.

Executive hostage-takings are deemed acceptable as long as some informal rules are obeyed. The workers must refrain from outright violence, and the executive must not be detained for more than a couple of days. Workers don't usually face criminal charges.

"Boss-napping falls into a particular category," says French police spokesman Laurent Bischoff. "Technically, it amounts to kidnapping, but it's not regarded as an offense." Police rarely intervene. "Our role is to stay within distance and let negotiations between unions and executives roll out quietly," Mr. Bischoff said. "Sending in troops would only help fan the flames."

Security firms and public-relations experts that help companies deal with these situations usually advise managers not to call the police. "That's the last thing they should do" said Yves Jambu-Merlin, who specializes in crisis communication at advertising firm Euro RSCG SA, because it could touch off violence or cause workers to trash the plant, he explains.

Mr. Jambu-Merlin advised one of the companies where the boss recently was taken hostage but declined to say which one.

Riot police did turn up in Paris on Tuesday when angry employees of luxury-goods company PPR SA besieged a taxi carrying CEO François-Henri Pinault. Police dispersed the workers, but Mr. Bischoff says that was "because they blocked traffic."

Caterpillar in January said it would shed 733 jobs out of 2,800 employees at its two factories in Grenoble in the French Alps. Legally, it must negotiate a "social plan" with the unions, which could include lump-sum payments, training or help finding new jobs.

After talks with unions, Caterpillar increased its package to €47 million ($62 million) from €37 million. But workers felt it still wasn't enough. On Monday they went on strike, and on Tuesday they began holding the executives. "We let them call their families," says Mr. Laboisseret, the union delegate. "We are not beasts."

Nicolas Polutnik, the plant director who was held hostage, didn't return calls seeking comment, but his wife confirmed she got a call from him while he was detained aimed at comforting her and his boys.

Albert Dupuy, the highest government official in Grenoble, said he spent Tuesday juggling phone calls from the Caterpillar union representatives and managers, including those at its European headquarters in Geneva. On Tuesday night, he persuaded the workers to release the human-resources director, who suffers from a heart condition. The other managers spent the night in the offices, sleeping on the floor, according to workers present.

Early Wednesday morning, Mr. Dupuy said both sides agreed to a 10-day schedule of negotiations on severance packages, and Caterpillar also agreed to pay the workers' wages for the three days they had been on strike. Midmorning, the workers let their bosses go.

French Bosses Besieged As Worker Anger Rises
As Originally Posted to The Wall Street Journal

PARIS -- French workers besieged bosses, including luxury and retail tycoon François-Henri Pinault, as anger at proposed layoffs generated more forceful protests.

Mr. Pinault, the son of François Pinault, is chief executive officer of PPR SA, which controls exclusive brands such as Gucci and Yves Saint Laurent. Employees surrounded his car as he left a meeting in Paris early Tuesday evening and refused to let him leave for nearly an hour. Eventually riot police dispersed the protesters.

Separately, workers facing layoffs at a Caterpillar Inc. factory in the French Alps detained four of their bosses Tuesday in a bid to secure better severance packages.

The incidents followed several others in France in recent weeks, and show how social unrest is mounting as the economic downturn deepens.

In France, companies can't lay off workers as easily as in the U.S. When a firm wants to cut workers, it must negotiate what is known as a "social plan" with local unions, often including a lump-sum payment, trainingand help in finding new jobs.

Trying to negotiate better severance packages, workers at a 3M Co. factory south of Paris held their boss captive last week, as did employees at Sony Corp.'s France unit earlier in March. Top managers at bank Société Générale SA awarded themselves stock-option packages two weeks ago, but then renounced them due to public anger.

And unions staged nationwide protests in January and March to demand concessions from high-earning business leaders and help for victims of the recession.

France isn't suffering more than other big economies. But the country's tradition of egalitarianism triggers strong reactions when people think they are being mistreated, or when better-off people appear to flaunt their wealth at a time of general hardship. Demonstrations have been peaceful, with the executives being held largely as a symbolic protest. There haven't been any flare-ups in the rough neighborhoods on the outskirts of major French cities, which exploded in riots in 2005 after an accidental police shooting of two young people.

Mr. Pinault, 46, has long been a symbol of France's monied elite. He attended one of France's top business schools and in 2005 inherited control of his father's fashion and retail empire.

The employees who surrounded him Tuesday work for two retailers in the PPR group: Fnac, which sells books and music, and Conforama, which sells furniture. Mr. Pinault announced a restructuring plan for these in February that could lead to 1,200 job losses in France. Protesters blocked a car Mr. Pinault was riding in as it was trying to leave the company's head office, said Boucherit Aziz, a Conforama union representative.

"Mr. Pinault squeezed all the cash he could from Conforama and now he wants to throw us away," said Mr. Aziz, who participated in the protest.

Through the window of his car, Mr. Pinault told workers that the company was doing its best to avoid abrupt layoffs, according to Mr. Aziz. Police didn't arrest any of the protesters, he said.

Mr. Pinault wasn't immediately available to comment.

The problems at Caterpillar followed a recently announced plan to lay off about 730 people from its factory near Grenoble, which employs about 2,700. The company had been negotiating with the unions for several weeks, but workers went on strike on Monday to protest what they saw as poor terms.

On Tuesday employees occupied the management offices and wouldn't allow four executives to leave, according to union representative Bernard Patrick. It wasn't clear when the executives would be allowed to leave.

Caterpillar said it hoped to resolve the matter quickly. "The actions that are taking place today, led by a small minority of individuals, are not helping as we work for a positive resolution of this situation," said Chris Schena, vice president for European and Asian manufacturing, in a statement. "The best way to resolve this matter is to continue the negotiations."

Sony to Lift Prices in Europe Due to Yen

As posted by: Wall Street Journal

TOKYO -- Even as the electronics industry wages a price war in the U.S. to drum up sales, Sony Corp. is heading in a different direction in Europe.

In an industry where prices for televisions and digital cameras have consistently declined, Sony says it will next month start raising prices of a range of products sold in Europe. The reason: It needs to recoup some of its foreign-exchange losses after the yen has soared more than 25% against the euro since July. A stronger yen cuts into overseas revenue when brought back as yen.

The price increase, likely to be followed by other Japanese makers, shows how vulnerable Japanese companies still are to sharp currency fluctuations. Making matters worse, some of their fiercest competitors, South Korea's Samsung Electronics Inc. and LG Electronics Inc., have seen the Korean won fall 30% in value against the dollar and 25% against the euro this year. The companies haven't announced price changes in Europe. But at the very least, the weak won allows the Korean rivals to hold prices flat in Europe while absorbing some of the price cuts in North America. Sony plans to raise prices on sony laptops.

A price increase could also slow Europe's emergence in recent years as a critical market for Japanese electronics makers, which already face stagnating sales at home and cutthroat pricing in North America. In the past few years, the euro's strength against the yen and a surge in consumer spending from emerging markets in Eastern Europe helped spur revenue growth.

European consumers, who tend to put an emphasis on design, have been more willing to pay a premium for high-end products compared with U.S. consumers.

Last year, for the first time in the company's 62-year history, Europe became the largest consumer of Sony products, surpassing the domestic market and even the U.S. It is now targeting European consumers by creating new products specifically for the region, such as the Bravia EX1 LCD television, which has a built-in high-speed wireless link to allow it to double as a large-screen digital picture frame.

Earnings revisions from the biggest names in Japan's electronics industry have been rolling in over the past few weeks, and all have placed some blame on the yen's rise. Toshiba Corp. lowered its earnings forecast in September, followed by Canon Inc., Hitachi Corp. and Panasonic. Sony, which already issued a profit warning in October, said last week it would shutter as many as six factories and cut its electronics division work force by 16,000 workers.

Even though most Japanese companies hedge a lot of their yen foreign-currency exposure and lock in an exchange rate at three-month intervals, a sudden move by the yen often wreaks havoc on an exporter's earnings estimates.

Sony has plants in Slovakia, Spain, Hungary and Wales to supply the European market, but many of its parts come from outside the euro zone, leaving the company's production costs vulnerable to currency shifts.

Weaker Euro Takes a Toll on Sony's Bottom Line

Sony Corp. has worked for years to protect itself against a fluctuating dollar. But it's the weaker euro that has dealt an unexpected blow to the Japanese electronics company.

Net profit for the July-September quarter slumped 72% to 20.8 billion yen ($213 million) from a year earlier, hurt by the strong yen and a slowing world economy, the company said.

If the yen stays at current high levels, Sony may book less than half of its operating profit forecast of 150 billion yen for the year ending March 2009, Chief Financial Officer Nobuyuki Oneda said.

"Year-end sales will be extremely tough for us," Mr. Oneda said, adding he expected tough conditions to continue into next fiscal year.

A strong yen hurts exporters like Sony because it undermines overseas earnings. In the past three months, the yen has risen 26% against the euro and 10% against the dollar. As of 4 p.m. Wednesday in New York, the dollar was trading at 97.18 yen. The euro was trading at 125.76 yen.

Sony's troubles come just as the Welsh-born American Chief Executive Howard Stringer appeared to be turning around the company's core electronics business. Under Mr. Stringer, the first non-Japanese to head the Tokyo-based company, Sony climbed back to a record profit for the fiscal year ended March 31.

Sony has been successful in reducing its sensitivity to fluctuations in the yen-dollar exchange rate by moves such as sourcing liquid-crystal display panels in dollars from Taiwanese manufacturers. But similar efforts are just beginning against the euro.

"For the past several years, we have been working to neutralize our exposure to the yen-dollar exchange rate," Mr. Oneda said. "The problem is the euro. That will be a long-term challenge."

Mr. Oneda said that procuring parts in Europe remained particularly difficult. Although Sony plants in Slovakia, Spain, Hungary and Wales already supply the European market, many of the parts they use come from outside the region, leaving production costs exposed to exchange-rate swings.

Europe has become critical to Sony because its growth on the continent outpaces that in the U.S. and Japan. In the three months ending Sept. 30, the company's sales in Europe rose 5.6% to 519 billion yen, compared with declines of 19.2% in Japan and 2.7% in the U.S.

Sony loses 7.5 billion yen in operating profit for each 1 yen gain against the euro, Mr. Oneda said. It loses 4 billion yen for each 1 yen gain against the dollar.

Meanwhile, Sony's Bravia LCD-TV business is meeting stiff competition from South Korean rival Samsung Electronics Co., which stood to benefit from a weaker won to lower prices and grow market share.

By product segment, Sony said operating profit from its core electronics business, including TVs and Cybershot cameras, fell 41% to 75.6 billion yen in the latest quarter. The games business, which made a small operating profit in the fiscal first quarter of the year, dove back into the red because of the weak euro.