EUROPEAN BUSINESS DIARY FEBRUARY 2004
Paul Rattle lifts the lid on what’s happening in the business world around Europe. If you have a business story email him directly at rattle@easy.com

APPLE IS SET TO LEAD THE MUSIC DOWNLOAD RACE IN EUROPE with the launch of its iTunes Music Store this spring. The “shop”, which enables customers to buy songs for around 55p over the internet and load them onto portable iPod players, has already proved a phenomenal success in America since it opened last April. By the end of 2003 it was selling more than 1.5m tracks per week and by December 12 had sold its 25 millionth track, twice the number of physical singles sold in the US during that period. Apple is of course hoping to build on the popularity of iPods, which have become must–have technology (celebrities said to own iPods include Victoria and David Beckham and David Bowie). Mind you, this time around it may have been streetwise not to have rushed to buy the latest techno fad - in April, Apple is launching the mini-iPod priced at £199 or less, costing half as much as the £400 some eager trendsetters paid for the original. The mini-iPod, which can store around 1,000 songs, will also be available in five different coloured cases, rather than the standard white design.

Word on the street has it that Arriva, the British Train and Bus Operator, is looking at opportunities to run trains in Germany. German commuters will be hoping that the results are better than its previous excursions into Europe – just ask the Danes. Arriva made history last year when it broke Denmark’s DSB Railway Monopoly by taking over services in the Jutland Peninsular. The British company underestimated the number of drivers it would need and it wasn’t long before there were numerous delays. In short, it was a commuter nightmare – buses replaced trains, while passengers complained that these were uncomfortable, unpunctual and prolonged the journey. and it’s not just the lucky Germans who are in for a taste of the British transport system. Arriva is also understood to be looking at expanding its services in Italy and Portugal.

Starbucks is taking its biggest gamble yet
– it is taking on the café capital of the world, Paris. the famous green and black Starbucks sign that dons 7,225 stores worldwide has just landed in the French Capital over a corner shop on the avenue de l’Opera. The coffee giant’s second French outlet will shortly open at la defense, Paris’s high rise business district. Quite what the parisians will think about this U.S. invasion is anybody’s guess. The French have long dubbed american coffee Jus de Cchausseettes (Sock Juice) and coffee in Starbucks means no smoking and no alcohol. They may also be more than a little bemused by a recent Starbucks’ poster: “Have you ever walked into a Starbucks store, stared at the menu and thought, 'I have no idea what to order?’… with more than 19,000 beverage possibilities and a unique vernacular, it is easy to understand how ordering a Starbucks drink can be overwhelming.” Parisians must be wondering what on earth happened to a simple café noir, a drink that’s easy to understand in anybody’s language.

THE OLYMPIC GAMES OPENS ON AUGUST 13 IN ATHENS, AND IT CAN’T COME SOON ENOUGH FOR THE ADVERTISING INDUSTRY, WHICH HAS SUFFERED one of its worst downturns ever in the past three years. Aegis, the media and market research group, reckons that the 2004 Olympic Games will help increase global advertising spending by 4.7% this year. This forecast is even more optimistic than one made by Sir Martin Sorrell, ad guru of the world's largest agency, WPP. He has been predicting global growth of between 3 and 4% on the back of the Olympics and the presidential race in America later this year. But whether the Games can come soon enough for Greece is another matter entirely. It is facing a real race against time to get its facilities and infrastructure ready for the opening ceremony. With just six months to go, the Greek capital is a giant construction site; the Olympic Stadium is not yet complete; roads are still being dug up: and the skyline is studded with cranes. The Greek authorities are confident of finishing on time though, and are crews working around the clock to meet the deadline.

Plans are afoot for a 24-mile long rail tunnel linking Africa and Europe. Spain and Morocco have entered an agreement to carry out engineering tests that could result in a machine digging under the Strait of Gibraltar within five years. The Spanish transport ministry has set aside €27m over the next three years to undertake geological surveys between Punta Paloma, on the southwestern coast of Spain near Tarifa, and Punta Malabata, near the Moroccan city of Tangier. Early studies suggest that the tunnel could descend up to 300 metres under the sea. Meanwhile SNCF, the French state railway, is planning to expand the lines for its 186mph Train a Grande Vitesse – which recently celebrated its one billionth passenger – to cities in Germany, Italy and Spain.

Orange, the mobile phone group owned by France Telecom, is the first mobile phone operator to launch a “walkie-talkie” style application for customers in Europe. The new push to talk application is aimed at families and groups of friends who want to minimise their phone bills. Mobile phones work by having a dedicated communications channel open all the time. But push to talk means there is only a one-way connection, so that only one person can talk at a time. So just like a walkie-talkie, the user pushes a button to talk once the other user has finished. Vodafone and O2 are also believed to be looking at launching similar technology this year.

Women still hold fewer than 10% of the most senior positions in British businesses, according to a new study from the Equal Opportunities Commission. In its report Sex and Power: Who Runs Britain, it found that, although women make up 45% of the workforce and 30% of managers, fewer than 10% of executive and non-executive directors on the boards of FTSE100 companies are women. Just 13% of small businesses are owned by women in Britain, compared to 28% in the US. Women are also absent at the top level in media companies and of the 26 media companies listed in the FTSE350, only two have women chief executives.

European banks will generate €84bn of surplus capital over the next three years as profits rise across the sector, according to research from Citigroup Smith Barney. This is a 40% increase on the amount of capital generated in the past three years. Citigroup reckons that the extra cash could be used for mergers and acquisitions, with Barclays, BNP, BBVA, Credit Suisse and SocGen all rumoured to be on the hunt for deals.

The European IPO market is expected to continue to recover in 2004. Among the biggest deals expected this year are from Google, the internet search engine, and Motorola, which is planning a $2bn IPO of semi conductor unit SPS Spinco. Europe rounded off last year with 67 IPOs in the final quarter – a 103% increase on the same period in 2002. That helped bring the total IPOs for 2003 to 137, which was down on the 174 IPOs in 2002. However, PriceWaterhouseCoopers, the giant consultancy firm, is not expecting a dramatic increase in the number of IPOs. It said that it is not yet seeing the flood of IPOs across the European markets predicted by the more optimistic commentators, and that so far most of the recent activity had focused only on London.

“Made in the Eu” labels on European goods could soon become a reality. At the moment, shoes made in Italy have the “Made in Italy” tag, but European Union officials appear keen to promote the EU brand in its pursuit of a single European Market. in an internal working document, the Brussels executive body has outlined three possible brand options, from voluntary to one in which all European Union goods would have to carry an EU stamp.