Ireland's Unemployed Head Back to the Farm

By Louisa Fahy and Finbarr Flynn

At Bank of America (BAC), David Farrell spent his days taking calls from credit-card customers in Ireland. Then came the global financial crisis, and the 40-year-old father of five decided it was time for a career change. In 2008, after five years with the bank, he quit and enrolled at Teagasc, which runs a school at Dublin's National Botanic Gardens college, to study horticulture. It turned out to be a shrewd move: Today the Irish economy is reeling, jobs are scarce in financial services, and one of the few sectors that shows any promise is agriculture. "There's a resurgence in producing food," says Farrell. "It will become something people not only want to do but may have to do."

Plenty of other Irish workers are thinking along the same lines. Farrell's college program in Dublin turned away 250 students seeking places in its agriculture-related courses last month. Enrollment for courses at Teagasc climbed to 1,128 this year, 45 percent more than in 2007, before the economy collapsed. The government agency teaches students such skills as growing organic food at sites across Ireland and supports the country's agribusiness sector.

Promoting food exports is a major priority for Irish Prime Minister Brian Cowen's government. Ireland's gross domestic product doubled in size in the decade through 2007 and has since shrunk about 15 percent after the real estate bubble burst. The government, struggling with bailing out banks and slashing public spending, is counting on food exporters, including Kerry Group and Glanbia, to help spark an economic revival. "Farming and agrifood were totally lost during the boom. It just wasn't seen as sexy compared with property and financial services," says Jim Power, chief economist at Friends First, a Dublin financial-services firm. "That's changing: High-value export industries like food are the future for us now."

After falling 12 percent in 2009, Irish food and animal exports are up 5.4 percent during the first half of 2010, according to Ireland's Central Statistics Office. About 150,000 people work in farming, still the country's biggest indigenous industry after 20 years of decline. Agriculture now accounts for about 2 percent of the Irish economy, compared with about 16 percent in the late 1970s.

Global investors have warmed up to Irish food stocks. The share price of Kerry Group, Ireland's largest food company, has risen 47 percent in the past two years. Dairy food company Glanbia has seen its stock price increase 13 percent over the same period. Unemployment has more than doubled to 13.8 percent since the peak of the "Celtic Tiger" years in 2007 and has reached 18 percent in the country's rural southeast, according to the latest government numbers.

During the boom years, construction, which accounted for about a quarter of the economy in 2006, drew agricultural workers off the land, says John Bryan, president of the Irish Farmers' Assn., Ireland's largest farmers' lobby. (Bryan is a beef farmer who oversees 230 acres in Kilkenny in southeast Ireland.) No more. "This year is the first I'd say in about 14 or 15 years that you'd have people calling to the farm to see if there is any seasonal work going," says Paul Kehoe, 34, who farms about 380 acres in Country Wexford with about 120 cows and 200 sheep.

Another factor working in agriculture's favor is the decline in land prices. Developers pushed up prices to more than €58,400 ($81,140) a hectare in 2006, the highest in Europe, according to the National Institute for Regional and Spatial Analysis, citing data from property agent Savills. Last year, farmland prices around Dublin fell 57 percent, while the average price paid in the rest of the country declined 43 percent.

Ireland's tough economic circumstances have changed perceptions about the country's agricultural sector. "Farmers have become a respected profession again," says Power, the economist. "And there's nothing else out there."

Smartphone Apps Go (Truly) Viral

By Olga Kharif

In early 2009, Citigroup (C) launched a new mobile banking application for the iPhone. It let customers check their account balances and pay bills while on the go. Thanks to a bit of sloppy code, it also could have let hackers access the banking information for 118,000 customers who downloaded the app.

This story has a happy ending—Citi discovered the security flaw in June, before hackers could exploit it, and the bank says no customer lost money. However, experts say hackers may be quicker to exploit shoddy coding the next time around. "The bad guys follow the money," says Charlie Miller, principal analyst at Independent Security Evaluators, a consultancy based in Baltimore. "Criminals are going to start focusing on phones."

The number of attacks is still low. Although security experts discover hundreds of new strains of malicious code targeted at PCs every day, they've detected only 67 directed at smartphones in all of 2010, says Sean Sullivan, security adviser for the North American labs of F-Secure, a Finnish security software developer. Still, that's nearly double last year's total, and mobile devices become a larger target all the time. Morgan Stanley (MS) analyst Mary Meeker predicts that smartphones will outsell laptops and netbooks this year and will eclipse sales of all PCs, including desktops, by 2012.

That means more potential victims of malware—as in malicious software—and more customers for the security companies that protect against it. Jeff Wilson, a principal analyst at consultancy Infonetics Research, expects global revenues from smartphone security software to rise from $219 million last year to nearly $1.4 billion by 2013. Securing a foothold in the growing mobile security market was a key motivation behind chipmaker Intel's (INTC) $7.7 billion purchase of McAfee (MFE) in August and Juniper Networks' (JNPR) $70 million acquisition of SMobile Systems one month prior.

Much of the security companies' attention will likely be focused on Google's (GOOG) Android software. It's the fastest-growing mobile operating system, and may also be the most vulnerable to hackers, says David Goldschlag, vice-president for mobile at McAfee. Unlike Apple (AAPL), which vets applications before allowing users to download them to their iPhones, Google doesn't check the apps posted to its Android Market, says Miller. (Google didn't return repeated requests for comment.)

That makes it easier for hackers to create applications that surreptitiously spy on users or access phone functions without permission. In July, a Chinese security company, NetQin, found an Android app that posed as a restaurant tip calculator but also forwarded users' text messages to hackers. Such text messages can contain sensitive financial information, especially as more smartphone users engage in mobile banking.

Other hackers have built apps that automatically call expensive, premium-rate phone numbers, racking up big bills for users. SMobile Systems, which develops antivirus software for phones, estimates that 2 percent of the apps in Android Market are able to send text messages without a user's knowledge, while 5 percent can dial a number without permission.

Despite such statistics, many consumers don't consider security software as essential on a phone as it is on a PC. They're willing to pay for other security-related services, including data backup or software to locate a lost phone, but the market for such convenience products is becoming highly competitive. To differentiate their offerings, the security companies bundle their antivirus software with those popular features. In July, McAfee purchased a startup, tenCube, which runs a service that helps locate missing phones using the device's GPS. On Oct. 5, Symantec (SYMC) updated its anti-virus software for iPhone and Android with tools to remotely erase data on lost handsets. SMobile Systems also includes data-wiping controls with its antivirus software.

Lookout, a startup in San Francisco, has compiled a database of more than 1 million smartphone apps. It uses that information to detect new threats and block potentially malicious applications. The company's apps also include data backup and the ability to remotely wipe data, and are used by more than 2 million people. John Hering, the chief executive officer of Lookout, which raised $11 million in venture capital in May, says the established companies like Symantec and McAfee don't yet have a lock on the field. "The next great security company will be built in the mobile space," he says.

America's Best Young Entrepreneurs 2010

By John Tozzi

It's not an easy time for young entrepreneurs. Most people in their teens or early 20s trying to start businesses today were not yet out of college when the Great Recession began in December 2007. Unlike their dot-com-era predecessors, today's startups aren't sloshing in venture capital, and business credit is tight. People under age 35 started businesses at a lower rate in 2009 than in the year before, even as the rate of entrepreneurship in the broader population is increasing, according to data from the Kauffman Foundation.

The finalists in Businessweek.com's sixth annual search for America's best young entrepreneurs reflect the times: Most of their companies are lean and focused on getting profitable before expanding. Take LiveProud, a group of clothing brands for sailors, hikers, and yoga enthusiasts that two Babson College seniors started in 2007. Founders Phil Tepfer and Charles Bogoian, both 24, keep costs down by sewing their apparel at contract manufacturers in the U.S. and Canada as orders come in. "We work on very low inventory numbers," Tepfer says. LiveProud, which gets its fabric from recycled landfill materials like plastic bottles and corn husks, became profitable within a year, and expects revenue of $375,000 this year, he says.

Others have built recession-friendly business models. Onetime Georgetown roommates Ben McKean and Dan Leahy got their idea for a service that would help high-end restaurants fill empty tables in 2009. McKean, then an analyst at Merrill Lynch, was covering the initial public offering for restaurant reservation service OpenTable (OPEN). By last September, he and Leahy had quit their Wall Street jobs to start VillageVines. Subscribers to their e-mail newsletter can pay $10 for discounts of 10 percent to 30 percent at restaurants in New York and five other cities. The service launched in May and now has more than 500,000 subscribers, McKean says. VillageVines raised $500,000 in angel investment and its New York operation became cash-flow positive in three months, and it's now investing in other cities such as San Francisco, Chicago, and Boston, he says.

Variety of Revenue Profiles

LiveProud and VillageVines are among the hundreds of young companies nominated by readers this summer and vetted by Businessweek.com reporters. Some are multimillion-dollar operations: 23-year-old Ray Land built a fleet of 40 charter buses in northern Florida that brought in $3 million last year. Others, like Bethlehem (Pa.)-based LifeServe Innovations, have no revenue yet. LifeServe's prototype, developed from the founders' university research and now in preclinical testing, is a medical device meant to help minimally trained care providers open patients' airways in emergency situations.

Each of the 25 companies in our roundup share a few qualities: Their founders were no older than 25 at the nomination cut-off date, and they appeared to hold promise based on business model, founders' experience, outside capital, and revenue. Now it's your turn to weigh in. Flip through this slide show of our 25 finalists and vote for your favorite by Oct. 21. We'll announce readers' top picks on Oct. 28.

Also in this year's report: We profile an effort at the University of Utah to nurture student startups; Smart Answers columnist Karen E. Klein evaluates funding options for aspiring business owners; and a 25-year-old New Jersey native who recently launched a Mandarin-language teaching business in Beijing describes her journey. You can find each of these features in the Related Items box at the upper right side of this overview.

Apple’s Data Needs Mean $1.7 Million, Jacuzzi for Carolina Pair

By Adam Satariano

Oct. 5 (Bloomberg) -- Apple Inc. needed land owned by Donnie and Kathy Fulbright for a $1 billion data center in rural North Carolina. The couple showed no interest in moving out of their home of 34 years in the town of Maiden.

The Fulbrights say they spurned one offer, then a second. Finally, they agreed to sell for $1.7 million, county records show, opting to leave the single-story house on the less than one acre of land they purchased for $6,000.

“They told us to put a price on it and we did,” said Kathy Fulbright, 62, seated on a brown leather sofa in the living room of the home she and her husband built with the proceeds. The 49-acre property boasts a 4,200-square-foot house with a Jacuzzi in the master bathroom, as well as a manmade pond stocked with bass and catfish.

Apple was willing to pay up to get the land in its drive to improve digital entertainment services that fuel demand for iPods, iPhones and iPads. The plot is adjacent to the site where Apple is building a 500,000-square-foot warehouse-like structure that analysts say will brim with servers, generators and other gear that make it easier to deliver songs, TV episodes and movies via the iTunes online store.

“Apple’s growth has been pretty dramatic and they have probably exceeded their capacity,” said David Cappuccio, Stamford, Connecticut-based chief of research at Gartner Inc., which advises companies on the use of data centers like the one Apple is building. “Between iTunes and the video store they are going to have, you’re talking about massive amounts of data and millions of people trying to access that at the same time.”

Streaming Music, Video

The center is due to be completed by year’s end. It will help Apple customers stream and store music and videos remotely, via the so-called cloud, rather than having to download files to a hard drive, said Gene Munster, an analyst at Piper Jaffray in Minneapolis. Apple announced plans for the facility in June 2009 and began construction in August.

Apple may also use the center to help stream video to a newly revamped Apple TV set-top box, said Richard Doherty, director of the consulting firm Envisioneering Group in Seaford, New York. Cappuccio of Gartner said Apple may use the Maiden facility for initiatives the company has yet to unveil or discuss in detail, including social networking and Web search.

Apple, based in Cupertino, California, hasn’t disclosed its plans for the project. Steve Dowling, a spokesman, declined to comment.

The data center is already making a mark on Maiden, a town with a population of 3,200 located about 45 miles west of Charlotte.

‘Project Dolphin’

In its pitch for approval and tax breaks, Apple said it may employ 50 people at the center and expects to generate 250 more jobs in areas such as maintenance and security, according to a state website and records compiled by the city and surrounding Catawba County. North Carolina projected the creation of an additional 3,000 jobs related to construction of the center.

Maiden and Catawba County may receive $9.3 million in taxes and other revenue over 10 years, according to the documents. That includes $5.1 million for Maiden, which has an annual budget of $13.1 million, and $4.2 million for Catawba, which has an annual $202.2 million budget.

Locals aim for added payoff from “Project Dolphin,” as officials have dubbed the center: that Apple will lure other companies. Google Inc., owner of the world’s largest search engine, already has a facility in a neighboring county.

Microsoft, Google Centers

“Names like Google and Apple indicate you’re in the 21st century and open for business, so we hope to propel this to something greater,” said Kitty Barnes, chairman of the Catawba County Board of Commissioners.

U.S. technology companies increasingly are setting up shop in small-town America. Microsoft Corp., Facebook Inc. and Twitter Inc. all are placing data centers in sparsely populated regions, drawn by tax incentives, inexpensive labor, cheap electricity and abundant space.

Microsoft, based in Redmond, Washington, weighs more than 35 different issues when selecting a site, said Kevin Timmons, general manager of the company’s data center operations. The company plans to build a $500 million data facility in Virginia, Governor Bob McDonnell’s office said in August.

“Topping the list were factors such as its close proximity to our customers, fiber-optic networks, a large pool of skilled labor and an affordable energy source,” Timmons said.

Apple Tax Breaks

Data centers have helped bring 3,100 jobs and more than $3.6 billion in capital investments to Virginia since 2006, said Rob McClintock, director of research at the Virginia Economic Development Partnership.

“Everybody understands these projects by themselves aren’t a panacea, but it’s the window of what the future can be,” McClintock said.

To land its Apple facility, North Carolina’s legislature approved $46 million in tax breaks for the company. Local governments also trimmed Apple’s real property taxes by half and slashed personal property taxes by 85 percent, records show.

Some local officials say companies, not communities, benefit most as big providers locate operations in rural areas.

“I have a problem with government giving large multinational corporations millions of dollars in handouts,” said T.J. Rohr, a city councilman in Lenoir, North Carolina, site of a $600 million Google data center lured by incentives.

While Google has been a “good corporate neighbor,” funding Wi-Fi downtown and donating computers to local schools, tax breaks are “a lazy way to recruit business,” said Rohr, who is a member of the Libertarian party.

Combating Joblessness

Google has hired more than 80 employees at the site, said spokeswoman Emily Wood.

“We’ve had an excellent experience in Lenoir,” Wood wrote in an e-mailed statement.

Scott Millar, president of the Catawba County Economic Development Corp, who led the county’s discussions to attract Apple to North Carolina, says companies are unlikely to choose a location without a financial incentive package. Millar also acted as the liaison between the Fulbrights and Apple.

Catawba County’s August unemployment rate was 12.3 percent, compared with 9.7 percent in the state, according to the North Carolina Employment Security Commission. For much of the 1990s, the county had an unemployment rate of less than 5 percent, fueled by jobs making furniture, fiber-optic cables and textiles such as socks and pantyhose, Millar said.

“We’re trying to turn our ship around,” he said.

BMW, Hyundai Cars Get Top Score on U.S. Crash Tests

By Angela Greiling Keane

(Updates with LaHood, NHTSA and auto industry comment starting in fourth paragraph.)

Oct. 5 (Bloomberg) -- Bayerische Motoren Werke AG’s 5 Series and Hyundai Motor Co.’s Sonata received the highest rating among passenger cars and trucks tested for crashes under a new U.S. rating system.

Female crash-test dummies were added to the male figures for the first time as the U.S. National Highway Traffic Safety Administration rated 34 models under a redesigned testing regime, the regulatory agency said today in a statement.

BMW’s four-door, rear-wheel-drive 5 Series and the latest model of Hyundai’s Sonata were the only vehicles in the first batch rated to receive five stars, the top overall safety score. Both cars scored five stars on side-crashes and rollovers and four stars in frontal crashes.

“We are raising the bar on safety,” Transportation Secretary Ray LaHood said at a press conference in Washington amid crash-tested cars. “We are subjecting cars to more safety tests, addressing grade inflation.”

Nissan Motor Co.’s Versa received the lowest overall rating of two stars, scoring four stars in rollovers, three in frontal crashes and two in side crashes.

Smarter Dummies

The new crash tests include dummies representing women, who tend to be smaller than the male figures used exclusively in the past and may be harmed differently in an accident, according to NHTSA. The new dummies also collect data about injuries to the chest, head, neck and legs, while the old ones measured only chest damage.

NHTSA has also begun compiling an overall rating for each model for the first time rather than reporting only the front, side and rollover collision results.

Automakers had questioned the redesigned safety ratings because they aren’t directly comparable to the ratings they replaced, potentially creating confusion.

“The new ‘Stars on Cars’ rating system will now reflect our advancements even better,” Alliance of Automobile Manufacturers Chief Executive Officer Dave McCurdy said in a statement. “But, since the tests are getting more challenging, many ratings may go down at first -- even when a model hasn’t changed.””

NHTSA plans to test 55 model year 2011 vehicles and will test more models under the new procedures next year, the agency’s Administrator David Strickland said at the press conference. The overall rating won’t be displayed on window stickers at dealer lots for 2011 models to give automakers time to redesign the labels, he said, adding that the agency decided to release ratings for models as they become available.

“It’s better for us to get this information out to the public right now so they can make better choices about cars,” he said.

The agency said it is continuing to test cars and trucks and plans to add the results as they are complete to its website at www.safercar.gov.