Domain may hold the key to future gain

Auctioneer Oliver Bruce moving houses. Photo: Paul JeffersReal estate markets, especially in Melbourne and Sydney, are at the cusp of a spring sales boom, thanks to record weekend clearance rates in recent weeks, higher finance approvals and historically low interest rates.
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Nationwide, house prices rose 2.2 per cent in the June quarter and, on the reckonings of the Australian Bureau of Statistics, they are up 5.5 per cent since the recent bottom in the December quarter of 2011.

High clearance rates are typically the harbinger of rising supply and two of the prospective winners from this renewed interest are the real estate websites Realestate苏州美甲学校.au and Domain, the latter owned by the Fairfax Media, owner of this august journal.

If last week’s profit results from Fairfax are any guide – they were a mixed bag, generating both analyst upgrades and downgrades – the fillip to Domain has come at a good time.

The woes of newspaper companies around the world persist, as digital revenues fail to countervail the declines in traditional advertising and circulation.

For Fairfax, the ”Digital Transactions” businesses have been the ”growth story” for a while. But these too – principally holidays website Stayz and dating site RSVP – have plateaued.

It is a good thing for the future of this creaking but critical cornerstone of democracy that Domain is growing. And it has the real estate agents on its side, leery as they are to be subjected to the domination of Realestate苏州美甲学校.au. The latter is 61 per cent owned by Rupert Murdoch’s News Ltd.

But get this: the sharemarket value of Fairfax at $1.4 billion is less than one-third the size of REA, which is capped at $4.6 billion. Either Fairfax is too cheap, REA is too expensive, or a bit of both. But the opportunity surely lies with Domain.

In terms of numbers of property listings, Domain苏州美甲学校 is 60 per cent the size of REA yet it is only one-third the size when it comes to online listing revenue. REA has been more aggressive in rolling out ”depth products” to enhance profit margins. These are value-added display offerings – pay for listing prominence.

In such an emotional market, where the sale is typically one of the largest transactions of a customer’s lifetime, a ”depth product” is an easy sell. It’s growth. And Domain is yet to capitalise on this ”value-add”.

Domain enjoys a strong brand in some of the high-value markets, such as Sydney’s eastern suburbs and north shore, but REA has rolled out nationally. To get its foothold in Perth, for instance, Domain got the agents on board with free listings. That is yet to translate into turnover.

Reflecting the demise of print, Domain revenues actually fell by 9.5 per cent in 2013, and EBITDA dropped 7 per cent, but digital revenues rose 16 per cent (19 per cent in the second half) while EBITDA jumped 31 per cent (37 per cent in the second half).

That compares with REA at 22 per cent and 27 per cent respectively.

A few more key metrics: REA’s EBITDA margin growth was 4 per cent versus 13 per cent for Domain.

Its revenue growth outstripped Domain, 25 per cent to 22 per cent from the roll-out of ”depth products” while agent subscriber growth was zero for REA and Domain was up 21 per cent – a clear indication that the agents want Domain to counterbalance the market power of REA.

Domain’s audience position also continued to improve as the proportion of visits from mobile devices rose.

Actual revenue size is just $127 million in total ($77 million for digital) but it is growing and should buy Fairfax management time while it begins the hard grind of increasing digital subscriptions for the news products.

In its wrap of the profit results last week, UBS reckoned that ascribing a multiple of 20x 2013 EBITDA to Domain Digital (versus REA 26x) and putting RSVP and Stayz on 10-15x left the rump of Fairfax – the struggling newspaper mastheads and the rest, on an EBITDA multiple of 2.5x.

With the debt now under control and costs being ripped out like there’s no tomorrow, Fairfax may be heavily wounded, but reports of its death at the hands of a couple of billionaire scions are premature.

Besides, Fairfax management a decade ago did not need anybody to kill it. They were more than capable.

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Shane Edwards and Heath Hocking face bans

Heath Hocking contacts Chris Yarran. Photo: Channel Seven Heath Hocking’s poor record will cost him. Photo: Channel Seven
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Richmond is set to lose influential small-forward Shane Edwards for its last home-and-away match, while Essendon’s Heath Hocking may have played his last match for the season.

Edwards and Hocking have each been offered one-match bans by the match review panel for striking offences at the weekend, respectively against GWS’ Liam Sumner and and Carlton’s Chris Yarran.

The Tigers’ Edwards was aided by a 25 per cent discount for his good record. His blow to Sumner is set to sideline him for the Tigers’ match against the Bombers on Saturday night.

Hocking’s penalty was inflated by 10 per cent because he has been suspended for three matches in the past two years. Unless challenged, it will be the fourth time the Bombers’ tagger has been suspended since the start of 2011.

If the Bombers are stripped of premiership points, the only way Hocking could play again this year would be to have the charge thrown out at the tribunal.

Gold Coast key-position player Steven May is the only other player facing suspension after round 22, for striking St Kilda’s Stephen Milne. There was, however, still one undisclosed player still being investigated by the panel at the time it sent its preliminary report early on Monday afternoon.

Only Edwards could challenge the decision at the tribunal without the risk of missing an additional match.

Two players have also been offered discounted fines: West Coast’s Darren Glass $900 for wrestling Collingwood’s Ben Kennedy, and $1950 for Hawthorn’s Brad Sewell for reckless contact with an umpire.

MATCH REVIEW PANEL – RD 22Heath Hocking (Ess) striking Chris Yarran (Carl). Intentional, low impact, high contact. 225 points up due to bad record to 247.5 (2 matches); 185.63 with guilty plea (1 match)Steven May (GC) striking Stephen Milne (StK). Reckless, low impact, high contact. 125 points up due to carry-over points to 218.75 (2 matches); 164.04 with guilty plea (1 match)Shane Edwards (Rich) striking Liam Sumner (GWS). Reckless, medium impact, high contact. 225 points down due to good record to 168.75 (1 match); 126.56 with guilty plea (1 match).Darren Glass (WC) first offence wrestling Ben Kennedy (Coll). $1200 fine; $900 with guilty plea.Brad Sewell (Haw) first offence reckless umpire contact to Chris Kamolins. $2600 fine; $1950 with guilty plea.

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Manslaughter guilty plea over Jodie Jurd  

JODIE Jurd’s father initially thought her boyfriend was ‘‘quiet and didn’t say much’’ but as the years passed, Norman Jurd and his family observed a series of strange incidents leading up to Jodie’s death, a Supreme Court jury heard on Monday.
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Robert Bretherton, 38, pleaded not guilty to murder, but guilty to the manslaughter of Ms Jurd on the basis that he was substantially impaired due to an abnormality of the mind.

His barrister, Thomas Corish, told the jury that Mr Bretherton had seemed ‘‘strange’’ and ‘‘different’’ his entire life and that he had since been diagnosed with a major depressive illness and was on the autism spectrum. Mr Corish said the defence of substantial impairment, which reduces murder to manslaughter, was ‘‘not a denial of responsibility’’ or a ‘‘get out of jail free card’’. He said there would be evidence that Mr Bretherton, who wept while Mr Corish made his opening address to the jury, sometimes had tantrums like a two-year-old.

Mr Bretherton was found beside Ms Jurd’s body in the bedroom of her Bellbird home on November 16, 2011.

She suffered 12 stab wounds to her chest, stomach and back.

Norman Jurd told the jury that his daughter introduced Mr Bretherton to the family several years before her death.

Mr Bretherton declined to attend the family’s weekly Sunday dinners and had said that he didn’t think Jodie needed to see her family more than once a month, Mr Jurd said.

The couple separated about three times over the years and Ms Jurd had told her father that Mr Bretherton had pushed her over and kicked her in the back on one occasion and punched her on others, Mr Jurd said.

JODIE JURD

In late 2010 or early 2011, Jodie told her father that Mr Bretherton had burned her home-made Christmas decorations.

Her mother, Muriel, described an incident at the family’s holiday home where Mr Bretherton told the Jurds he hated them and described Jodie as their ‘‘slut daughter’’. Mr Bretherton had said that Jodie was too affectionate towards her brothers and she was spending too much time with other family members, not him, Mrs Jurd said.

By November 2011, the couple had decided to try and reconcile with Mr Bretherton finding work at a mine near Narrabri while Ms Jurd, a nurse, was looking for work in the area, Mr Jurd said.

The couple owned a number of properties and it was decided Mr Bretherton would receive the proceeds from a Queensland property while Ms Jurd would receive the proceeds from the sale of the Bellbird property, Crown prosecutor Peter Barnett, SC, said.

The trial continues.

BEREAVED DAD: Norman Jurd leaves court yesterday after giving testimony about the relationship of his daughter Jodie Jurd, and her boyfriend, who was accused of her murder.

UPDATED: Snowden accepts 7-game suspension

Knight Snowden’s jaw-breaking hit
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GALLERY: Match report

KNIGHTS coach Wayne Bennett said Kade Snowden has reluctantly accepted a season-ending seven-game suspension for a shoulder charge that broke Ray Thompson’s jaw.

Snowden’s early guilty plea on Tuesday left him with 730 demerit points – equivalent to seven games on the sidelines plus 30 carry-over points – meaning he will not play again until next year.

The former NSW and Australian prop was sent off by referee Shayne Hayne in the 65th minute of Newcastle’s 26-6 loss to North Queensland in Townsville last Saturday night, and subsequently charged with a grade-four shoulder charge.

Bennett said Snowden considered challenging the charge at the judiciary panel, and possibly having it downgraded and his suspension reduced to five games, but decided not to because he was not prepared to risk sitting out nine matches.

‘‘We’ve taken the early plea. Obviously you’re going to do nine weeks if you lose, so seven weeks is tough enough without putting another two on, and there’s no guarantees,’’ Bennett told the media after the Knights trained at Mayfield.

‘‘It was Kade’s decision in the end. We left it up to him – we totally wanted to support him.’’

Though he expressed sympathy for Thompson, who had surgery for two-and-a-half hours on Sunday and is not expected to play again this season, Bennett said Snowden’s shoulder charge was neither malicious nor intentional.

‘‘We don’t feel it deserved seven weeks,’’ Bennett said.

‘‘It was a collision. They happen in rugby league. It’s a contact game.

‘‘Whilst at the same time we’ve got a young player with a broken jaw, we understand that, but it wasn’t because it was malicious, or intentional.

‘‘But weighing it all up, as I said, it was Kade’s decision in the end and he knew the club was right behind him if he wanted to go the extra two weeks and take that risk.

‘‘He would have finished up with five anyway, so he thought he was better off taking the seven rather than having to do the nine if it doesn’t get up.’’

Thompson had two plates and several screws inserted after his jaw was broken in two places, and there were suggestions he suffered possible nerve damage to his mouth.

Kade Snowden’s shoulder charge that broke Ray Thompson’s jaw in the North Queensland Cowboys v Newcastle Knights game in Townsville on Saturday. Picture GETTY IMAGES

Kade Snowden reacts to being sent off by the referee after a shoulder charge broke Ray Thompson’s jaw in the North Queensland Cowboys v Newcastle Knights game in Townsville on Saturday. Picture GETTY IMAGES

The 23-year-old hooker, who suffered a 1cm displacement of the right side of his jaw as well as a secondary fracture, was due to leave hospital on Tuesday.

Bennett hopes Willie Mason will replace Snowden in the front row for Newcastle’s must-win game against the Broncos at Suncorp Stadium on Friday night.

Mason has missed Newcastle’s past four games recovering from a fractured cheekbone and torn calf muscle suffered in the Knights’ 28-12 loss to the Roosters at Hunter Stadium on July 28.

Lock Jeremy Smith (sternum) and Mason will undergo fitness tests later this week.KNIGHTS chief executive Matt Gidley has accused the NRL of inconsistency in branding Kade Snowden’s jaw-breaking shoulder charge on Ray Thompson as the worst of its kind this season.

EARLIER REPORT:

Snowden faces a seven-game suspension if he pleads guilty, or nine games if found guilty by the judiciary panel after being charged with a grade-four shoulder charge on Thompson in the 26-6 loss to the Cowboys on Saturday night.

The NRL match review committee considered a medical report and the horrific nature of Thompson’s facial injuries when handing Snowden the highest grade for a shoulder charge this season.

But Gidley, who spent much of yesterday afternoon studying video of other tackles charged as shoulder charges, is convinced Snowden’s hit was not the worst he has seen.

The Knights have until noon today to decide whether to contest or accept the charge.

‘‘We’re still considering our options and we want to gather some further evidence before we determine what our position will be in relation to this charge,’’ said Gidley, who will meet with Snowden, coach Wayne Bennett and football operations manager Warren Smiles this morning.

‘‘But I must say I’m very frustrated by the inconsistency in the gradings of shoulder charges.

‘‘If Kade’s tackle is a grade four – far and away the worst shoulder charge of the year, and that’s what they’re telling us with this grading – I don’t know if that’s accurate compared to other shoulder charges we’ve seen.

‘‘That inconsistency is the most frustrating thing from our perspective.’’

Gidley said Snowden was upset Thompson had suffered such a serious injury and was just as disappointed to have been sent off for an unintentional ‘‘unfortunate collision’’.

Ray Thompson recovering after surgery on his jaw. Picture from Twitter.

‘‘He’s shattered that a kid broke his jaw, and he’s shattered that he got sent off for something that wasn’t a deliberate act. There was no intent in it. It was just an unfortunate collision that has resulted in a kid sustaining this injury,’’ Gidley said.

Knights lock Jeremy Smith, who served a six-game suspension earlier this season for a grade-three head-slam tackle, responded to Snowden’s charge by tweeting: ‘‘What a #JOKE’’.

The Knights are considering pleading guilty but contesting the grading, hoping for a reduction to a grade-three charge which would reduce the suspension to five games. The risk, however, is if the original grading stands, Snowden would be suspended for nine matches.

The NRL has changed the rules so that players can no longer count officially sanctioned pre-season trials among games served in a suspension.

If the Knights miss the finals, Snowden can only count their last two games against Brisbane and Parramatta, and he would serve the rest of his suspension at the beginning of next season.

Snowden had planned to play for Italy at the World Cup in October and November.

Italy are scheduled to play games against Scotland, Tonga and Wales, and the Knights are within their rights to apply to the NRL have those games counted in any suspension.

Roosters second-rower Sonny Bill Williams’s hit on Knights prop Willie Mason at Hunter Stadium on July28 was one of the tackles Gidley reviewed.

Williams was charged with a grade-two careless high tackle, not a shoulder charge, and served a two-game suspension after pleading guilty. Mason is still out with a fractured cheekbone and a torn calf muscle sustained in that game.

Two prior non-similar incidents this season added a 40per cent loading to Snowden’s base penalty, effectively adding three games to the suspension.

The game against the Cowboys was Snowden’s third since serving a two-match suspension for grade-two dangerous contact (raised knee) on Penrith’s Adam Docker on July21.

Snowden had 63 carry-over points heading into the Cowboys game, but those were reduced by one point per minute after he was sent off, leaving him with 48.

Pleading guilty to a grade-two careless high tackle on Gold Coast utility Luke O’Dwyer on April28, Snowden avoided suspension but incurred 93 demerit points. O’Dwyer suffered a broken jaw.

Without those two prior incidents, an early guilty plea would have reduced Snowden’s suspension to four games.

Thompson had surgery lasting two-and-a-half hours in Townsville on Sunday, having two plates and several screws inserted after breaking his jaw in two places.

There were suggestions he suffered possible nerve damage to his mouth. Thompson, who suffered a 1centimetre displacement of the right side of his jaw as well as a secondary fracture, is due to leave hospital today but is likely to be sidelined for the remainder of the season.

NRL match reviewers are able to use their discretion when considering grading, according to the judiciary code of procedure, and factored in the seriousness of Thompson’s injuries when grading Snowden’s shoulder charge as a grade four.

The decline of e-empires

Relentless salesman Steve Ballmer calls it quitsArchive: The bizarre behaviour of Steve BallmerVideo: Is Microsoft’s CEO a loony?
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Steve Ballmer’s surprise announcement that he will be resigning as Microsoft’s chief executive has set off a huge flood of commentary. Being neither a tech geek nor a management guru, I can’t add much on those fronts. I do, however, think I know a bit about economics, and I also read a lot of history.

So the Ballmer announcement has me thinking about network externalities and Ibn Khaldun. And thinking about these things, I’d argue, can help ensure that we draw the right lessons from this particular corporate upheaval.

First, about network externalities: Consider the state of the computer industry circa 2000, when Microsoft’s share price hit its peak and the company seemed utterly dominant.

Remember the T-shirts depicting Bill Gates as a Borg (part of the hive mind from “Star Trek”), with the legend, “Resistance is futile. Prepare to be assimilated”? Remember when Microsoft was at the centre of concerns about antitrust enforcement?

The odd thing was that nobody seemed to like Microsoft’s products. By all accounts, Apple computers were better than PCs using Windows as their operating system. Yet the vast majority of desktop and laptop computers ran Windows. Why?

The answer, basically, is that everyone used Windows because everyone used Windows. If you had a Windows PC and wanted help, you could ask the guy in the next cubicle, or the tech people downstairs, and have a very good chance of getting the answer you needed. Software was designed to run on PCs; peripheral devices were designed to work with PCs.

That’s network externalities in action, and it made Microsoft a monopolist.

The story of how that state of affairs arose is tangled, but I don’t think it’s too unfair to say that Apple mistakenly believed that ordinary buyers would value its superior quality as much as its own people did. So it charged premium prices, and by the time it realised how many people were choosing cheaper machines that weren’t insanely great but did the job, Microsoft’s dominance was locked in.

Now, any such discussion brings out the Apple faithful, who insist that anything Windows can do Apple can do better and that only idiots buy PCs. They may be right. But it doesn’t matter, because there are many such idiots, myself included. And Windows still dominates the personal computer market.

The trouble for Microsoft came with the rise of new devices whose importance it famously failed to grasp. “There’s no chance,” declared Ballmer in 2007, “that the iPhone is going to get any significant market share.”

How could Microsoft have been so blind? Here’s where Ibn Khaldun comes in. He was a 14th-century Islamic philosopher who basically invented what we would now call the social sciences. And one insight he had, based on the history of his native North Africa, was that there was a rhythm to the rise and fall of dynasties.

Desert tribesmen, he argued, always have more courage and social cohesion than settled, civilised folk, so every once in a while they will sweep in and conquer lands whose rulers have become corrupt and complacent. They create a new dynasty — and, over time, become corrupt and complacent themselves, ready to be overrun by a new set of barbarians.

I don’t think it’s much of a stretch to apply this story to Microsoft, a company that did so well with its operating-system monopoly that it lost focus, while Apple — still wandering in the wilderness after all those years — was alert to new opportunities. And so the barbarians swept in from the desert.

Sometimes, by the way, barbarians are invited in by a domestic faction seeking a shake-up. This may be what’s happening at Yahoo: Marissa Mayer doesn’t look much like a fierce Bedouin chieftain, but she’s arguably filling the same functional role.

Anyway, the funny thing is that Apple’s position in mobile devices now bears a strong resemblance to Microsoft’s former position in operating systems. True, Apple produces high-quality products. But they are, by most accounts, little if any better than those of rivals, while selling at premium prices.

So why do people buy them? Network externalities: lots of other people use iWhatevers, there are more apps for iOS than for other systems, so Apple becomes the safe and easy choice. Meet the new boss, same as the old boss.

Is there a policy moral here? Let me make at least a negative case: Even though Microsoft did not, in fact, end up taking over the world, those antitrust concerns weren’t misplaced. Microsoft was a monopolist, it did extract a lot of monopoly rents, and it did inhibit innovation.

Creative destruction means that monopolies aren’t forever, but it doesn’t mean that they’re harmless while they last. This was true for Microsoft yesterday; it may be true for Apple, or Google, or someone not yet on our radar, tomorrow.

The New York Times

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