What’s PNB up to a takeover bid on Setia ? Leave it to the real businessmen!

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A QUESTION OF BUSINESS By P. GUNASEGARAM  p.guna@thestar.com.my

Permodalan Nasional Bhd's surprise bid for SP Setia raises more questions than answers

IT must be great to have so much firepower at your fingertips. But it is also a huge responsibility. How do you get your target and keep it intact at the same time? It's the old question of having your cake and eating it too.

That's a dilemma that not just Permodalan Nasional Bhd (PNB) but many government-linked companies (GLCs) face. They have the money to buy over property companies but if they don't do it right, they stand the risk of losing the people behind these companies.

If the worst happens the staff leave, the company is unable to undertake its projects, quality of houses and other developments drop, launches get less imaginative, public perception deteriorates, and, ultimately, value gets destroyed.

By seeking to own the golden goose body and soul, it is sometimes killed. Occasionally, there is in the corporate world a very thin line between protecting and enhancing your investments and making a wrong move which may send their value plummeting down, if not immediately, in time.

The latest episode (see our cover story this issue) has raised eyebrows not least because of the manner in which PNB has made its bid for one of most respected and admired property companies in Malaysia, SP Setia.

PNB already has about a 33% stake in SP Setia but is seeking to raise this stake to over 50% by offering RM3.90 a share, about an 11% premium over the closing price before the announcement of its notice of takeover. It offered 91 sen per warrant, a premium of nearly 100%.

It has had its stake of just under 33%, the point at which a general takeover offer is triggered under the takeover code, since 2008 but pushed this to just over trigger point on Tuesday and announced its intention for a takeover the following morning.

The offer is conditional upon PNB getting control of SP Setia. PNB also announced its intention of keeping SP Setia listed by ensuring a shareholding spread even if it got more than 90% of the offer shares.



Initial calculations based on 75% control and acquisition of all warrants indicate that the takeover could cost PNB over RM3 billion, a lot of money for most private investors in Malaysia but a mere drop in the ocean for PNB which has over RM150 billion under management.

It's the second largest fund manager in the country after EPF which is twice as big with over RM300 billion in funds. But PNB is probably the largest equity investor in the country because of a much higher proportion of funds invested in equity. There is hardly a major listed company in Malaysia in which PNB does not have a stake.

The big puzzle is why has PNB launched this takeover offer which could potentially affect adversely the value of its quarry? What was PNB fearing? Was it just a matter of increasing its stake in a depressed market which undervalued SP Setia's assets or was there something else? And why did it not consult with senior management and shareholders even after its notice of takeover?

At this stage one can only conjecture on the answers and make educated guesses.

But first, what's wrong if PNB took a majority stake? Previously SP Setia had PNB as a major but not a majority shareholder. PNB did not intervene in management and had two board representatives. If the SP Setia board put up a proposal for shareholder approval, PNB cannot by itself stop it if other shareholders supported it. They include the Employees Provident Fund (EPF) with 13.4%, SP Setia president and CEO Tan Sri Liew Kee Sin with 11.26% and Kumpulan Wang Amanah Persaraan or KWAP with five per cent.

One must still note that the government-linked funds or GLFs already control over 51% of SP Setia. But with PNB alone poised to take over a 50% stake, feathers are being ruffled and questions are being asked as to what that means.

What would have been the ideal situation for SP Setia? Four factors would have contributed. An independent management, a good board which represented all parties, strong minority shareholders, and a diversified institutional base so that no shareholder dominated. The first three are pretty much in place but the fourth was not achieved because PNB had since 2008 been holding a stake of just under 33% and with two other GLFs, the stake came to over 50%. But was there a way of dispersing shareholding?

One deal being negotiated, it was reported, was for Sime Daby, a PNB company, to take a 20% stake through the issue of new shares in exchange for land banks. If it had come through, it would have helped to dilute PNB's shareholding. Still, Sime is related.

The underlying problem is this. GLFs and GLCs have lots of money and not many places to put them in. Good companies attract their attention but if they take control, and especially if they take management control as well, the move can destroy value.

Some of PNB's property purchase and privatisation acts in the past have not been particularly successful, if at all. The major reason is key staff leave after GLCs take control. That's a phenomenon that's happened quite a few times.

So far, PNB's stake in SP Setia had not been a problem. PNB had its two board representatives and it was quite satisfied with its stake. A balance seemed to have been reached with senior management, especially Liew who is also a major shareholder.

But that has been thrown askew with PNB's latest move. Part of the solution will be to convince the market that there will not be management interference unless things go wrong. But the only assurance of that is if stakes are far below 50%, perhaps not more than 30%.

PNB is primarily a passive investor. Thus its motivation should not be to stop dilution of its shareholding or moves to widen shareholding among companies it owns. Control should not be its primary aim.

Instead, it must focus on getting best value for its current stake, which may well be achieved by continuing to be clearly a passive investor. That's better than having a bigger stake in a less valuable company.  Perhaps it could have put its RM3bil in other investments. But it looks like it's a bit too late for that.

l Managing editor P Gunasegaram is plainly perplexed by PNB's bid to take over SP Setia. Any explanations?

Leave it to the real businessmen !

ON THE BEAT WITH WONG CHUN WAI

Questions are being raised as to why Permodalan Nasional Bhd is making a takeover bid on SP Setia, a reputable housing developer.

IT may not have caught the attention of ordinary Malaysians but it is a big story that is now the hottest topic among the business community.

Housing developer SP Setia is a reputable name that many Malaysians are familiar with because of the quality homes it builds.

It has also ventured outside Malaysia and made its presence felt in Vietnam, Australia, Singapore and even Britain.

The man at the helm of SP Setia is 52-year-old Tan Sri Liew Kee Sin, a down-to-earth bank officer-turned-developer.

Some would even say SP Setia is Liew Kee Sin and Liew Kee Sin is SP Setia.

Fiercely proud of his humble beginnings in Johor – his father was a lorry driver – the Universiti Malaya graduate wanted to study law but was offered economics instead.

SP Setia started off as a construction company – a syarikat pembinaan as conveyed in its initials SP.

Liew turned it into a big-time property developer when he injected two projects – Pusat Bandar Puchong and Bukit Indah Ampang – into the company in 1996.

Liew has faced many challenges but he is now looking at the biggest fight of his career – one that is heavily staked against him.

Permodalan Nasional Bhd (PNB), the country’s largest asset manager and owner of 33% of SP Setia, is making a bid to take over the company.

On Friday, PNB bought an additional 23.5 million shares in the open market for RM3.868 a share, just 3.2 sen shy of its proposed takeover price of RM3.90.

PNB, with a RM150bil cash chest, is seeking to raise its stake to over 50% with its RM3.90 offer, which is about an 11% premium over the closing price before the announcement of its notice of takeover.

Such a takeover bid is not unusual in the corporate world, and more so when Liew only has an 11.3% stake in the company.

Other major shareholders of SP Setia include the Employees Provident Fund (EPF) with 13.4%, Kumpulan Wang Amanah Persaraan with 5% and over 40% are in the hands of minority shareholders.
But the manner in which it was done has led to much unhappiness.

Despite having two PNB directors on the board, there was no courtesy of a verbal notification prior to the takeover move.

The general offer notice only reached the company on Wednesday at 8.30am, just before the market opened.

Some may argue that the element of surprise was for strategic reasons but there was still no call even after news broke out of the takeover bid.

In a nutshell, relations have been strained.

PNB has issued a statement saying it wishes to maintain the management team, which is known to be fiercely loyal to Liew, but no one is sure how events will unfold in the coming days.

However, questions have been raised as to why PNB is wanting to take over a company that is being run competently instead of remaining as a passive investor that is satisfied with good investment returns.

If the Government is actively pushing for the private sector to be the engine of growth, we have the right to ask why the GLCs are competing with the private sector.

Widening its shareholding base is one thing but controlling private companies will lead to speculation over its agenda, cause unnecessary concerns as well as send the wrong signals.

The whole exercise will cost PNB RM3bil, which is chicken feed to them, but there are political and economic ramifications that the country’s leaders should take note of.

It may not be such a grand scheme in the end for PNB if Liew decides to leave SP Setia and set up his own venture, and gets his senior management team to join him.

PNB may then find itself in a spot even after gaining control of the company.

No one would believe that there would not be interference from PNB, so let’s not kid Malaysian investors.

Civil servants who manage public funds should leave the business of running businesses and making money to the real businessmen.

Related articles

• Malaysian Developer SP Setia Gets Takeover Offer From PNB (businessweek.com)
• SP Setia Rises to Two-Month High on Bidding War Prospects (businessweek.com)
• Setia Eco Cascadia New Township Is All Set For Launch In Johor, Malaysia (prweb.com)
• Investing in properties beyond our shores (right-waystan.blogspot.com)
• Current Australia property market (vulcaninternational.wordpress.com)

CEO, the Least Popular Job in Silicon Valley

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Potential CEOs are opting for quicker dollars at startups and investment firms

 

Illustration by Sophia Martineck

By Peter Burrows

Dave DeWalt is known within Silicon Valley for his technical chops, his charisma, and his business accomplishments, which include reinvigorating security software maker McAfee and selling it to Intel (INTC) in 2010 for $7.7 billion. At 47, he now has bigger ambitions. “Running a big-cap company is considered the crowning achievement in many people’s careers, and I feel that way as well,” says DeWalt.

Such talk makes DeWalt an anomaly. In tech circles, the C-suite at a publicly traded company is no longer the be-all and end-all. Just look at the troubles Yahoo! (YHOO) and Hewlett-Packard (HPQ) have recently had finding new leaders. HP canned former SAP (SAP) Chief Executive Officer Léo Apotheker after just 11 months—then faced a barrage of criticism for replacing him with HP director and former EBay (EBAY) CEO Meg Whitman without bothering to look beyond its own boardroom.

Industry consolidation has created a small number of very large technology companies such as HP, Cisco (CSCO), and Microsoft (MSFT). They’ve stumbled in recent years as disruptive developments like the mobile revolution and the dash to the cloud shake the entire sector. As the job of leading these companies gets tougher, there are fewer talented leaders with the skills—and inclination—to do it. Rather than wait for high-profile CEOs such as Cisco’s John Chambers, Microsoft’s Steve Ballmer, and Research In Motion’s (RIMM) Mike Lazaridis and Jim Balsillie to step down, many potential replacements have decamped for more exciting, and potentially more lucrative, gigs at startups or as investors. “This is the first time in tech history that you have this many companies with CEOs approaching 60 that don’t have any obvious successors,” says John Thompson, vice-chairman of recruiting firm Heidrick & Struggles (HSII).



Consider Cisco. With 62-year-old Chambers now in his 16th year as CEO, many of his most capable lieutenants have given up waiting for their chance to succeed him. The list of departures since 2007 includes former Chief Development Officer Charles Giancarlo (now a private equity partner at Silver Lake), longtime general manager Tony Bates (who jumped to Skype just before it was purchased by Microsoft in May), and former head of the data center business Jayshree Ullal (now CEO of Arista Networks). While the accomplishments of Chambers and other longtime CEOs including Ballmer are undeniable, their long tenure has sapped the strength of the back bench, says Heidrick’s Thompson. Now a common belief is that both companies will need to go outside for their next CEO—not an easy task when the competition for talent includes hot pre-IPO companies such as Facebook. “The people who could possibly do these jobs realize it would be easier to create a new company rather than try to get an old stodgy one to adopt new ideas,” says Trip Hawkins, CEO of game developer Digital Chocolate.

Boards of directors get low marks on recruitment and retention, too. Few give much attention to succession planning until crisis hits, says Jeffrey A. Sonnenfeld, senior associate dean of the Yale University School of Management. New hires such as Bartz and Apotheker are set up for failure as boards prioritize near-term earnings over long-term risk-taking. “We’ve been weeding the qualified people out of the system for the past 15 years,” says Roger McNamee, a longtime technology investor and co-founder of private equity firm Elevation Partners.

Nor have tech companies excelled at developing CEOs. Once executives prove themselves in a given area—say, software engineering—they rarely go through General Electric (GE) -style development programs to get exposure to a business’s full breadth. There are exceptions: Intel and IBM (IBM) are both organized so that top executives get to run multibillion-dollar business units. IBM Senior Vice-President Michael E. Daniels, for instance, runs the $56 billion services business. At Intel, young executives have an apprentice system where they shadow top executives (current CEO Paul S. Otellini spent years carrying Andy Grove’s bags). As a result, both companies have succeeded at finding internal candidates for the top job. But this is not the norm in Silicon Valley, where most companies are organized along strictly functional lines such as marketing. “The tech industry is great at producing technology, but it’s not producing leaders,” says Rosabeth Moss Kanter, a professor of administration at Harvard.

To break the cycle, some tech industry veterans say it’s time for a new approach to choosing CEOs. Forget the old idea of finding an older, well-known operations or sales executive to maximize earnings and soothe nervous shareholders. Too often, those experiments—Dell’s (DELL) Kevin Rollins, Apple’s (AAPL) John Sculley, Yahoo’s Carol Bartz—have failed, says McNamee. Now Old Guard tech companies need to find risk-takers willing to bet big on new visions. That’s hard enough for entrepreneurs such as Amazon.com’s (AMZN) Jeff Bezos. It may be even harder at companies settling into middle age.“Somebody is going to have to take some risks, and bring in younger CEOs for a while,” says McNamee.

To find them, some boards are taking a larger role in succession planning. Egon Zehnder International has been testing a new approach for two years, in which board members use a number of techniques such as mentorship programs to groom internal candidates, says Karena Strella, managing director of the firm’s U.S. unit. The goal is to take some focus off past accomplishments and identify impassioned, adaptable people. Then it’s up to the board to back them, says Thompson. “People forget that it took Steve Jobs seven years to really move the needle at Apple,” he says. “If you used that standard today, he would have been fired long ago.”

The bottom line: Shortsighted boards and the long tenure of some CEOs have led to a succession crisis at big-cap tech companies.

Burrows is a senior writer for Bloomberg Businessweek, based in San Francisco.

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China's Tiangong-1 completes orbit maneuver & the future missions

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Tiangong-1 completes orbit maneuver CCTV News - CNTV English

09-30-2011 08:40 BJT Special Report: Tiangong I - China's first space rendezvous and docking task

Full Video: China´s first space lab module enters space CCTV News - CNTV English 

BEIJING, Sept. 29 (Xinhua) -- China's first space lab module Tiangong-1, or Heavenly Palace-1, blasted off at 9:16 p.m. Beijing Time (1316 GMT) Thursday in a northwest desert area as the nation envisions the coming of its space station era in about ten years.

The unmanned module, carried by the Long March-2FT1 rocket, will test space docking with a spacecraft later this year, paving the way for China to operate a permanent space station around 2020 and making it the world's third country to do so.

A Long March-2FT1 carrier rocket loaded with Tiangong-1 unmanned space lab module blasts off from the launch pad at the Jiuquan Satellite Launch Center in northwest China's Gansu Province, Sept. 29, 2011. (Xinhua/Wang Jianmin)

More than ten minutes after the blastoff, Commander-in-chief of China's manned space program Chang Wanquan announced the launch's success at the control center in Beijing.

The success of the launch, however, is just a beginning, and the real challenge is space docking, said Yang Hong, chief designer of Tiangong module series.

DOCKING TESTS

Unlike previous Chinese space vehicles, the Tiangong-1 has a docking facility which allows it to be connected to multiple space modules in order to assemble an experimental station in low Earth orbit.

The Tiangong-1 will orbit the Earth for about one month, awaiting the arrival of the Shenzhou-8 unmanned spacecraft. Once the two vehicles successfully rendezvous, they will conduct the first space docking at a height of 340 kilometers above the earth's surface.

The Tiangong-1 flies at a speed of 7.8 kilometers per second in orbit, which leaves ground-based staff an error of less than 0.12 meter to control the two vehicles to dock in low gravity. China has never tried such test and could not simulate it on the ground.

After two docking tests with the Shenzhou-8, the Tiangong-1 will await Shenzhou-9, to be followed by Shenzhou-10, which will possibly carry a female astronaut, in the next two years, according to the plan for China's manned space program.

If the astronaut in the Shenzhou-10 mission succeeds with the manual space docking, China will become the third nation after the United States and Russia to master the technology.

President Hu Jintao watched the launch from the Beijing Aerospace Flight Control Center on Thursday, two days before China's National Day, witnessing the latest endeavor of China's manned space program since 1992.

Hu told the engineers, commanders and other workers at the control center to do every job in a "more aborative and meticulous" manner to ensure the success of the country's first space docking mission.

Other members of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee, including Wu Bangguo, Jia Qinglin, Li Changchun, Xi Jinping, Li Keqiang and Zhou Yongkang, were also present.

Premier Wen Jiabao went to the Jiuquan Satellite Launch Center to watch the launch process with He Guoqiang, member of the Standing Committee of the Political Bureau of the CPC Central Committee.

Chinese people were inspired by the successful launch.

"The Tiangong-1 has gone into the dark sky! We Chinese are on the way to inhabiting the vast universe," wrote Qichaoxiguanghai on Sina Weibo, China's most popular microblog service provider.

"I heard the news of the Tiangong-1's launch from the radio on a ship to Yangzhou," wrote microblogger Xingfufeiafei. "I am proud to share the pride that shakes the world. The pride of our nation is once again deep in my heart."



THREE PHASES

With a room of 15 cubic meters for two to three astronauts to conduct research and experiments in the future, China's first space lab module is hardly the size of any palace.

But its name Tiangong-1, or "Heavenly Palace-1," speaks of a dream home from Chinese folklore, long envisioned as a secret place where deities reside.

Thanks to an economic boom that has continued since the end of the 1970s, the Chinese government approved and began carrying out its three-phase manned space program in January 1992.

The first phase, to send the first astronaut to space and return safely, was fulfilled by Yang Liwei in the Shenzhou-5 mission in 2003. After another two astronauts made successful extravehicular activities in the Shenzhou-7 mission in 2008, China entered the second phase of its space program: space docking.

If the previous two steps succeed, China plans to develop and launch multiple space modules, with a goal of assembling a 60-tonne manned space station around 2020 in which Chinese astronauts will start more research projects in space.

Premier Wen said at the launch center that the breakthrough in and command of space docking technology marks a significant step forward in China's "three-phase" manned space program.

He encouraged all the participants in the program to do a good job to "win the vital battle of space docking."

The success of Thursday's launch of the Tiangong-1 also eased the pressure on China's space engineers following an unsuccessful lift-off in August when a Long March-2C rocket malfunctioned and failed to send an experimental satellite into orbit.

To acquire a new and bigger rocket capable of loading a future space station's components that will be much heavier than the Tiangong-1, research and development on a carrier rocket that burns more environmentally-friendly liquid-oxygen-kerosene fuels is in progress.

The Long March-5 and -7 carrier rockets with a payload to low Earth orbit of more than 20 tonnes will take test flight as early as 2014, said Song Zhengyu, deputy chief designer of rocket for China's manned space program.

China's progress in space technology is stunning. The Tiangong-1 will dock three spacecraft one after another, which will cost less time and money than docking experiments the U.S. and Russia did.

The space station now still functional is the International Space Station (ISS) initiated by the United States and Russia, which cooperate with other 14 nations at about 360 kilometers above the earth.

However, as the U.S. ended its space shuttle program after the Atlantis' last mission in July, the ISS is scheduled to be plunged into the ocean at the end of its life cycle around 2020, when China is expected to start its era of space station.

INTERNATIONAL COOPERATION PLATFORM

Zhang Shancong, deputy chief designer of the Tiangong-1, told Xinhua that the module carries special cameras which will take hyperspectral images of China's vast farmlands to detect heavy metal pollution and pesticide residue as well as plant disease.

Moreover, scientists on the ground will also conduct experiments on photonic crystal, a new material expected to revolutionize information technology, in the low-gravity environment inside the Tiangong-1 as these experiments would be extremely difficult to conduct on the earth's surface.

"China is clearly becoming a global power and its investments in areas like technology and exploration reflect this," said Peter Singer, a senior fellow at the Washington-based Brookings Institution.

"It is a natural result of the growth in political and economic power and is to be expected," Singer said in an interview with Xinhua conducted via email.

"What remains at question is what kind of presence China will play on the international stage, cooperative, working with international partners, or going it alone?" Singer said.

The scholar, however, can find an answer to his question from the words of Zhou Jianping, chief designer of China's manned space program.

Zhou told Xinhua that China will turn its future space station into an international platform for space research and application to share space achievements with partners.

"The Chinese nation has pursued peace since ancient times," Zhou said. "China's ultimate intention with the space program is to explore space resources and make use of them for mankind's well-being."

According to Wu Ping, a spokesperson with China's manned space program, scientists from China and Germany will jointly carry out experiments on space life science at the Shenzhou-8 spacecraft.

A U.S. astronaut on the Atlantis's final mission has said China's first experimental space station will be a welcome addition to the international brotherhood.

"China being in space I think is a great thing. The more nations that get into space, the better cooperation we'll have with each," astronaut Rex Walheim said during an interview with Reuters.

So far China's Long March rocket series has successfully sent more than 20 satellites into space for the United States, Australia, Pakistan and other countries and regions.

One Chinese scientist and five international peers have also participated in Russia's Mars-500 Program, a ground-based experiment simulating a manned expedition to Mars.

Future missions await Tiangong-1

 Future missions await Tiangong-1 CCTV News - CNTV English

JIUQUAN, Sept. 29 (Xinhua) -- China is working on the development of a new generation of carrier rockets featuring a larger thrust to cater to the demand of building a space station, a chief rocket engineer said Thursday.

"The building of a space station requires carrier rockets with greater thrust as each capsule of the station will weigh about 20 tonnes," said Jing Muchun, chief engineer for the carrier rocket system of China's manned space program.

"We have been preparing for the launch of the space station slated for 2020," Jing told Xinhua.
The Tiangong-1, China's first space lab module, was launched into space by the Long March-2FT1 carrier rocket on Thursday evening, paving the way for a future space station.

A Long March-2FT1 carrier rocket loaded with Tiangong-1 unmanned space lab module blasts off from the launch pad at the Jiuquan Satellite Launch Center in northwest China's Gansu Province, Sept. 29, 2011. (Xinhua/Wang Jianmin)

Jing's deputy, Song Zhengyu, said the new generation of carrier rockets, represented by the digital and poison- and pollution-free Long March-5 and Long March-7, are expected to make their first lift-offs around 2014.

Song said the technologies applied to the new generation of carrier rockets will mature by 2021 and the existing Long March-2, -3 and -4 series will be replaced sequentially.

China started developing modern carrier rockets in 1956, and the Long March rocket series has become the mainstream carriers for launching China's satellites.

The Long March rockets currently fall into four categories, namely Long March-1, -2, -3 and -4.

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China Successfully Launches 1st Space Lab Module Into Orbit for Docking Tests

• Tiangong-1 space module blasts off 2011-09-30
• President Hu watches launch of Tiangong-1 at control center 2011-09-29
• Chinese leaders applaud successful launch of Tiangong-1 2011-09-29
• Tiangong-1 opens its solar panels 2011-09-29
• China announces launch of Tiangong-1 successful     

China Successfully Launches 1st Space Lab Module Into Orbit for Docking Tests

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China Launches 1st Space Lab Module Into Orbit for Docking Tests

by Denise Chow, SPACE.com Staff Writer

China launches the Tiangong-1 space lab module Sept. 29, 2011 atop a Chinese Long March 2F rocket from the Gobi desert. CREDIT: CCTV  View full size image

China successfully launched its first space lab module into orbit in an impressive nighttime display today (Sept. 29).

Full Video: China´s first space lab module enters space CCTV News - CNTV English

The unmanned Tiangong 1 module lifted off on a Chinese Long March 2F rocket at 9:16 p.m. Local Time (1316 GMT/9:16 a.m. EDT) from the Jiuquan Satellite Launch Center in northwest China. The spacecraft launched just days before China's National Day holiday, which occurs Saturday (Oct. 1).

"It’s absolutely an accomplishment," said Victoria Samson of the Secure World Foundation, an organization dedicated to the peaceful use of outer space. However, Samson, director of the foundation's Washington office, added that the launch of Tiangong 1 represents an achievement that other countries, including the United States, managed decades ago. [Photos: China Launches First Space Lab, Tiangong 1]

"They're doing their version of Spacelab, but that's something we did back in the '70s," she said.

The Tiangong 1 module, which is expected to remain in orbit for two years, is considered an important steppingstone in the country's effort to construct its own crewed space station. The prototype space lab measures 34 feet (10.4 meters) long and 11 feet (3.35 meters) wide and weighed about 8.5 metric tons on Earth.

This artist's illustration from a China space agency video shows the Tiangong 1 space laboratory, a prototype module for the country's planned space station.
CREDIT: China Manned Space Engineering Office

View full size image

"The main tasks of [the] Tiangong 1 spaceflight include: to provide a target vehicle for space rendezvous and docking experiment; to primarily establish a manned space test platform capable of long-term unmanned operation in space with temporary human attendance, and thus accumulate experiences for the development of the space station; to carry out space science experiments, space medical experiments and space technology experiments," China's Manned Space Engineering office spokeswoman Wu Ping told reporters yesterday (Sept. 28) at the launch site, according to a translation provided by the office. [Gallery: Tiangong 1, China's First Space Laboratory]



Tiangong 1, which translates to "Heavenly Palace," will test docking technology in conjunction with three spacecraft — Shenzhou 8, Shenzhou 9 and Shenzhou 10 — that will be launched at a later date, according to state media reports. These planned robotic maneuvers will be China's first dockings in orbit.

The Shenzhou 8 spacecraft will launch in early November, with Shenzhou 9 to follow in 2012. Both flights will be unmanned docking trials. The Shenzhou 10 mission, also in 2012, may carry a crew to Tiangong 1, a team that could also include China's first female astronaut, Chinese space officials said.

A Chinese Shenzhou spacecraft closes in on the country's Tiangong 1 space lab in this still from a mission profile video.
CREDIT: China Manned Space Engineering Office

View full size image

Tiangong 1 is also carrying medical and engineering experiments into space, according to state media. It is packed with 300 flags from the International Astronautical Federation, to commemorate the mission.

While Chinese space officials have indicated that the launch of Shenzhou 8 could occur in early November, but it's possible the unmanned mission could lift off sooner, said Dean Cheng, a research fellow on Chinese political and security affairs at the Heritage Foundation, a conservative public policy think tank.

"The Chinese have put up launches within days of each other," Cheng told SPACE.com. "But we don’t have a good indication as to exactly when it will go up."

The launch of Tiangong 1 is considered a milestone for China and its burgeoning space program. It is particularly important for China's space program after last month's failure of a Long March 2C rocket, which malfunctioned shortly after liftoff and did not reach orbit. [Related: US & China: Space Race or Cosmic Cooperation?]

"It’s probably going to be a big deal in China, with lots of news coverage," Cheng said. "You’d probably have to make an effort to avoid it. Once this is launched, you are going to have just a huge amount of hoopla from the state-run media to remind the people of what is going on."

An investigation into the Long March 2C malfunction delayed plans to launch Tiangong 1. Today's successful launch using a similar booster, the Long March 2F, marks an important step toward fulfilling the country's goal of building a 60-ton manned space station by the year 2020. [Infographic: How China's First Space Station Will Work]

China is only the third nation, after the United States and Russia, to independently launch humans into orbit. China's first manned mission, Shenzhou 5, was piloted by Yang Liwei on Oct. 15, 2003. Two more manned missions followed, in 2005 and 2008.

You can follow SPACE.com staff writer Denise Chow on Twitter @denisechow. SPACE.com senior writer Clara Moskowitz (@ClaraMoskowitz) contributed to this report. Follow SPACE.com for the latest in space science and exploration news on Twitter @Spacedotcom and on Facebook.

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China's Tiangong 1 Space Lab: Questions & Answers

by Tariq Malik, SPACE.com Managing Editor

This artist's illustration from a China space agency video shows the Tiangong 1 space laboratory, a prototype module for the country's planned space station. CREDIT: China Manned Space Engineering Office View full size image

China is launching its first space laboratory module Tiangong 1 today (Sept. 29) on a critical test flight to demonstrate the vital docking technology required for a future space station.

The Tiangong 1 space lab will serve as a space station module prototype for China, which is the third country (after Russia and the United States) to develop the capability to launch astronauts into space and return them safely to Earth.

Here are some basic questions and answers about China's first space laboratory:

What is China's Tiangong 1?

The Tiangong 1 module is China's first spacecraft designed for orbital docking tests and space research. It's name translates to "Heavenly Palace" in English. The module is a prototype for a planned space station, which China plans to build in orbit as part of its human spaceflight program. China's plan currently is to build a 60-ton space station by 2020. [Gallery: Tiangong 1, China's First Space Laboratory]

Why is the Tiangong 1 mission important for China?

China has been taking a stepping stone approach to human spaceflight that began with the 2003 launch of Yang Liwei, China's first astronaut. In 2005, China launched its second human spaceflight, a two-person mission, in 2005. A three-person flight followed in 2008, a mission that included China's first spacewalk.

The Tiangong 1 mission will mark China's first attempt to dock two spacecraft together, a vital skill that will be needed to build a large space station in orbit.

This image depicts a full crew of three astronauts inside China's first space laboratory, the Tiangong 1.
CREDIT: China Manned Space Engineering Office

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How large is the Tiangong 1 space lab?

Tiangong 1 is a cylindrical spacecraft that is about 34 feet (10.4 meters) long and 11 feet (3.4 m) wide. The space laboratory weighs about 8.5 metric tons, or about 9.4 short tons (U.S.).

The Chinese space station prototype consists of two major segments: the experiment module and a resource module.

The experiment module is the primary work and living area for visiting astronauts. It is powered by two solar arrays and serves as the docking point for arriving Shenzhou spacecraft. According to a mission overview video, the laboratory can be left unmanned or host visiting crews of up to three astronauts.

The solar arrays are attached to the Tiangong 1 resource module, which also contains the propellant tanks and rocket engines for the spacecraft.

China's Tiangong 1 spacecraft and Long March 2F rocket is pictured at the launch site after being transferred from a facility at the Jiuquan Satellite Launching Center.
CREDIT: China Manned Space Engineering

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How will China launch Tiangong 1?

China will use a special version of its Long March 2F rocket to launch the space laboratory. The rocket, called a Long March 2F T1, is a modified version of the booster China uses to launch its crewed Shenzhou spacecraft. It does not have a launch escape system (since Tiangong 1 is launching unmanned) and includes a custom fairing and an improved rocket booster structure in order to increase its lift capacity, Chinese space officials said.

The Long March 2F T1 rocket is about 170 feet (52 meters) tall and can launch payloads of up to 8.6 metric tons into space. It weighs about 493 metric tons at liftoff. It will launch from the Jiuquan Satellite Launch Center in Northwest China.

When will the first docking at Tiangong 1 occur?

China currently plans to launch its first Shenzhou spacecraft to Tiangong 1 in early November. That mission, Shenzhou 8, will be unmanned. The mission is expected to last at least 12 days and include two docking demonstrations. [Infographic: How China's First Space Station Will Work]

 If that first mission is successful, at least two more flights (Shenzhou 9 and Shenzhou 10) are planned in 2012. The Shenzhou 10 mission may carry the first crew to the Tiangong 1, and may include China's first female astronaut, according to state media reports.

A Chinese Shenzhou spacecraft closes in on the country's Tiangong 1 space lab in this still from a mission profile video.
CREDIT: China Manned Space Engineering Office

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How high will the Tiangong 1 fly?

The Tiangong 1 module will initially launch into a 217-mile (350-kilometer) orbit around Earth, which will require two maneuvers by the spacecraft after liftoff in order to reach the planned flight path. While in this orbit, the spacecraft will be put through several systems tests.

If all goes well, the Tiangong 1 will be lowered to an orbit of about 213 miles (343 km) in order to meet the Shenzhou 8 spacecraft in November. At the end of that mission, the space lab will return to the higher orbit to await the next visiting Shenzhou spacecraft.

Where is the Tiangong 1 space laboratory controlled from?

The Tiangong 1 mission will be controlled by flight controllers at the Beijing Aerospace Flight Control Center, the Mission Control for China's human spaceflight program.

China plans to dispose of the Tiangong 1 space laboratory by commanding it to burn up in Earth's atmosphere at the end of a two-year mission.
CREDIT: China Manned Space Engineering Office

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How long can the Tiangong 1 spacecraft stay in space?

Currently, China plans to keep the Tiangong 1 module in orbit for about two years, after which the spacecraft will be commanded to destroy itself by burning up in Earth's atmosphere, according to a mission profile video.

You can follow SPACE.com Managing Editor Tariq Malik on Twitter @tariqjmalik. Follow SPACE.com for the latest in space science and exploration news on Twitter @Spacedotcom and on Facebook.

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Rocket Fueled for China's 1st Space Lab Module Launch Thursday

by Denise Chow, SPACE.com Staff Writer

China's Tiangong 1 space lab and its Chinese Long March 2F rocket is transferred to the launch site. CREDIT: China Manned Space Engineering View full size image

China is readying the rocket that will carry the country's first prototype space laboratory into orbit Thursday (Sept. 29).

Officials at the Jiuquan Satellite Launch Center in Northwest China have fueled the Chinese Long March 2FT1 rocket that will blast the unmanned Tiangong 1 module into space. The launch is slated to occur between 9:16 p.m. and 9:31 p.m. local time at the launch site (Thursday morning in the United States), according to state media reports.

Tiangong 1, which means "Heavenly Palace" in Chinese, will test docking technology with the country's Shenzhou spacecraft during a series of test flights over the next two years. [Photos: China's First Space Station]

The space lab module is 8.5 metric tons (9.4 short tons), and is 34 feet (10.4 meters) long and 11 feet (3.35 m) wide. Tiangong 1 is designed to spend two years in space before its mission is complete, Chinese space officials said.

"All the preparatory works before launching are finished," China's Manned Space Engineering office spokeswomanWu Ping told reporters at the launch site, according to a translation provided by the office.
The prototype was originally set to liftoff earlier this week, but a forecasted cold weather front forced mission controllers to push the targeted launch date, according to state media reports.


China's Tiangong 1 spacecraft and Long March 2F rocket is pictured at the launch site after being transferred from a facility at the Jiuquan Satellite Launching Center.
CREDIT: China Manned Space Engineering View full size image

China's space launch rally

China is expected to launch three additional spacecraft at a later time to connect with Tiangong 1 in space. The unmanned Shenzhou 8 mission is due to launch in early November to conduct the first docking tests between two Chinese spacecraft. The country then plans to launch the Shenzhou 9 and Shenzhou 10 to robotically attach to the Tiangong 1 module.

"The main tasks of [the] Tiangong 1 spaceflight include: to provide a target vehicle for space rendezvous and docking experiment; to primarily establish a manned space test platform capable of long-term unmanned operation in space with temporary human attendance, and thus accumulate experiences for the development of the space station; to carry out space science experiments, space medical experiments and space technology experiments," Wu said.

Tiangong-1 space module to launch Thursday CCTV News - CNTV English

"It’s a big deal at several levels," said Dean Cheng, a research fellow on Chinese political and security affairs at the Heritage Foundation, a conservative public policy think tank. "If all goes according to plan this will be China's initial effort at docking, and of course docking is one of those sin qua nons for more prolonged exploration of space. They have to get this skill set down."

China had originally planned to launch the space lab module earlier, but last month, a Long March 2C rocket, which is similar to Tiangong 1's Long March 2F booster, malfunctioned shortly after liftoff and failed to reach orbit. Chinese officials temporarily halted plans for Tiangong 1 as they investigated the accident, which resulted in the loss of an experimental satellite.


Take a look at how China's first space station, called Tiangong ("Heavenly Palace") will be assembled in orbit in this SPACE.com infographic.
CREDIT: Karl Tate/SPACE.com View full size image

China's growing space program

The launch of China's first space lab test module is considered an important milestone for the country and its growing space program. Chinese officials have voiced their intent to build a 60-ton manned space station by the year 2020. [Infographic: How China's First Space Station Will Work]

In addition to acting as an important test bed for these space station aspirations, Tiangong 1 will also carry medical and engineering experiments into space.

The module is expected to remain in orbit for two years, reported state news agency Xinhua.

China is only the third nation to independently launch humans into orbit, after the United States and Russia. The nation's first manned mission, Shenzhou 5, was piloted by Yang Liwei on Oct. 15, 2003. Liwei's 21-hour mission was followed by two more manned missions in 2005 and 2008.

You can follow SPACE.com staff writer Denise Chow on Twitter @denisechow. SPACE.com senior writer Clara Moskowitz (@ClaraMoskowitz) contributed to this report. Follow SPACE.com for the latest in space science and exploration news on Twitter @Spacedotcom and on Facebook.

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Global data center building booms

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Three Googleplexes coming to Asia/Pacific

Image via CrunchBase

By Timothy Prickett Morgan • Get more from this author

The Great Recession didn't just throw cold water on server spending, it also slammed the brakes on data center buildouts. While server spending picked up in late 2009 and shipments recovered in 2011 to their pre-recession levels, it takes a bit longer to fund data center projects. But it looks like brick-and-mortar – and sometimes container-and–prefab module – construction for glass houses is starting to pick up.

Google, which doesn't quite have as much money or power as God – yet – is one of the largest data center operators in the world, and the company told the Wall Street Journal yesterday that it would be spending more than $200m to open three data centers to bring its search engines and myriad other services closer to Internet users (the raw material at Google) in that part of the world.

The Chocolate Factory told the Journal that it planned to plunk data centers in Singapore, Taiwan, and Hong Kong, with the data centers being operational within a year or two of the beginning of construction. The data centers will be located on facilities that have a combined acreage of around 20 hectares, with the actual glass houses (or containerized data centers or whatever Google does) ultimately taking up only a fraction of that space. Google has just opened up a chillerless, air-cooled data center in Belgium and another one that is located in an old paper mill and cooled by seawater in Finland. Google has six separate data centers in the United States with varying vintages of server and data center designs, located in Oregon, Iowa, Georgia, North Carolina, South Carolina, and Oklahoma – and never too far from cheap electricity and fat phone lines.

As El Reg has previously reported, after a three-year hiatus, the data center construction is coming back to its pre-recession levels, with construction worldwide expected to reach $45bn in 2011, by some estimates.



To get a sense of what was going on out there in the glass houses, containers, and prefabbed units that are used to give protection from weather and people to servers, storage, and networks, London-based Datacenter Dynamics did a survey of data center operators who collective manage 100,000 faciliites worldwide with an aggregate of 7.7 million racks of gear. The survey was done in June and July of this year, and according to a report based on the survey, data center operators say they expect to add 7 per cent more to their facility count (or around 7,000 new data centers), boost racks by 15 per cent (or around 1.2 million new racks), and draw 19 per cent more juice for running this gear (or around 37 gigawatts all told). Data center investment in 2011 is estimated at around $30bn globally based on this sample, and will grow to $35bn next year.

Ranking the investment in data centers is a bit tricky. In terms of incremental growth in capacity, Turkey is the big grower, with an increase of 60 per cent in data center capacity from 2011 to 2012, followed by Brazil (up 45 per cent), Columbia (up 40 per cent), Argentina (up 36 per cent), Russia (up 29 per cent), and China (up 28 per cent). The eastern US is expected to grow by only 13 per cent, the central US by 12 per cent, and the western US by 3 per cent, according to estimates made by Datacenter Dynamics based on its survey data. The United Kingdom ranked 21st, with 5 per cent growth.

Source: Datacenter Dynamics, Industry Census 2011

But if you look at it by the amount of money that will be spent in 2012 based on what survey respondents told Datacenter Dynamics, then you get a completely different picture. The US rules, with $9.3bn in data center construction investment, followed by the UK, with $3.35bn, China ranked third, with $3.1bn in spending expected in 2012, followed by Germany, with $2.6bn, Australia with $2.45bn, and Brazil with $2.15bn. France, Italy, and Canada are close behind. ®

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Big Four auditors under pressure

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Big Four auditors under legal, EU pressure

 Authorities considering rules to break them up!

By Dena Aubin and Huw Jones NEW YORK/LONDON | Wed Sep 28, 2011

 

(Reuters) - The "Big Four" auditors face possibly their biggest shakeup since the Enron scandal as European authorities consider rules that could force them to break up, while the firms also are confronting multibillion dollar suits emerging from the subprime crisis.

The European Commission, according to a draft law seen by Reuters on Tuesday, is proposing that auditors be banned from providing consulting services to companies they audit, or even be banned altogether from consulting, a fast-growing business.

EU Internal Market Commissioner Michel Barnier is due to publish the draft in November, targeting what he sees as a conflict of interest when auditors check the books of the same companies from which they reap lucrative consultancy fees.

Leading potentially to break-ups, a ban on consulting would be the most punitive measure yet taken by regulators against the world's largest auditors -- Deloitte DLTE.UL, PwC PWC.UL, Ernst & Young ERNY.UL and KPMG KPMG.UL.

On another front, Deloitte was sued on Monday by a trust overseeing the bankruptcy of Taylor, Bean & Whitaker Mortgage Corp and one of its units claiming a combined $7.6 billion in damages. It is one of the largest lawsuits stemming from the 2007-2009 credit crisis.

Though auditors have been successful at winning dismissals of several crisis-related lawsuits, legal experts said some legal defences used by auditors in the past may have some holes when applied to the Deloitte case.

Deloitte has said the legal claims are "utterly without merit."

The Big Four review the financial books and records of most of the world's large corporations. The firms dodged a bullet during the era of the Enron and WorldCom frauds when U.S. regulators stopped short of an outright ban on consulting.

The 2002 Sarbanes-Oxley audit industry reform laws limited the types of consulting services that auditors can provide to companies they audit, but the post-Enron laws left auditors free to pursue one another's clients for consulting work.



STRICTER MEASURES

The EU has been considering stricter measures since auditors gave clean bills of health to many banks that suffered debilitating losses during the credit crunch.

Auditors, which are privately held, do not disclose their insurance coverage or reserves held for legal awards, though most have been able so far to absorb the legal penalties stemming from the financial crisis.

According to Audit Analytics, the Big Four auditors have been named as defendants in at least two dozen class action cases stemming from the credit crisis through July 2011.

"There is a point at which the reputational damage combined with large judgments can do significant damage to their operations," said Andrea Kim, partner at Diamond McCarthy law firm in Houston.

It is unlikely, however, that any of the Big Four firms would be allowed to fail, given their role in auditing most of the largest companies in key markets, she said.

MONEY-MAKING ENTERPRISE

"You can safely assume that before we reach that level, what you're more likely to see is some legislative action," she said.

Sarbanes-Oxley was enacted after the disastrous meltdown of Enron auditor Arthur Andersen, which had been the fifth of the Big Five audit firms. Sarbanes-Oxley actually helped the remaining four firms by creating more rigid requirements and auditing work for them.

"The biggest beneficiary of Sarbanes-Oxley was the Big Four," Kim said. "It's just a giant money-making enterprise."

The measure being considered in the European Union would be far more stringent. In addition to potentially forcing auditors to split off their consulting businesses, it might include a requirement that auditors be "rotated," or changed, every nine years, forcing them to give up some of their best clients.

Another element of the draft includes the introduction of "joint audits," so the Big Four would share auditing work with smaller rivals.

A ban on consulting would be especially damaging now, as the auditors have been furiously expanding their consulting business to offset slower growth in their core audit area.

"Breaking up the Big Four audit firms would make them more susceptible to be taken over by emerging Chinese firms," a UK audit official said on Tuesday on condition of anonymity due to the sensitivities involved.

Barnier's spokeswoman said he had made it clear that the audit sector displayed clear failings during the crisis, giving banks a clean bill of health just before they were rescued.