By CHRISTINE HAUGHNEY
The Washington Post, the newspaper whose reporting helped topple a president and inspired a generation of journalists, is being sold for $250 million to the founder of Amazon.com, Jeffrey P. Bezos, in a deal that has shocked the industry.

Donald E. Graham, chairman and chief executive of The Washington Post Company, and the third generation of the Graham family to lead the paper, told the staff about the sale late Monday afternoon. They had gathered together in the newspaper’s auditorium at the behest of the publisher, Katharine Weymouth, his niece.

“I, along with Katharine Weymouth and our board of directors, decided to sell only after years of familiar newspaper-industry challenges made us wonder if there might be another owner who would be better for the Post (after a transaction that would be in the best interest of our shareholders),” Mr. Graham said in a written statement.

In the auditorium, he closed his remarks by saying that nobody in the room should be sad — except, he said, “for me.”

The announcement was greeted by what many staff members described as “shock,” a reaction shared in newsrooms across the country as one of the crown jewels of newspapers was surrendered by one of the industry’s royal families.

In Mr. Bezos, The Post will have a very different owner, a technologist whose fortunes have risen in the last dozen years even as those of The Post and most newspapers have struggled. Through Amazon, the retailing giant, he has helped revolutionize the way people around the world consume — first books, then expanding to all kinds of goods and more recently in online storage, electronic books and online video, including a recent spate of original programming.

In the meeting, Mr. Graham stressed that Mr. Bezos would purchase The Post in a personal capacity and not on behalf of Amazon the company. The $250 million deal includes all of the publishing businesses owned by The Washington Post Company, including the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.

The Washington Post company plans to hold on to Slate magazine, The Root.com and Foreign Policy. According to the release, Mr. Bezos has asked Ms. Weymouth to remain at The Post along with Stephen P. Hills, president and general manager; Martin Baron, executive editor; and Fred Hiatt, editor of the editorial page.

Mr. Bezos, who did not attend the meeting at The Post on Monday, said in a statement that he had known Mr. Graham for the past decade and said about Mr. Graham that “I do not know a finer man.” Ms. Weymouth said that in negotiating this deal, Mr. Bezos made it clear he was not purely focused on profits.

The sale, at a price that would have been unthinkably low even a few years ago, represents the end of eight decades of ownership by the Graham family of The Post since Eugene Meyer bought The Post at auction on June 1, 1933. His son-in-law Phillip L. Graham served as president of the paper from 1947 until his death in 1963. Then Graham’s widow, Katharine Graham, oversaw the paper through the publication of the Pentagon Papers alongside The New York Times and its coverage of Watergate, the political scandal that led to the resignation of Richard Nixon and also a starring role for the newspaper in the film, “All The President’s Men.”

The Post’s daily circulation peaked in 1993 with 832,332 average daily subscribers, according to the Alliance for Audited Media. But like most newspapers, it has suffered greatly from circulation and advertising declines. By March, the newspaper’s daily circulation had dropped to 474,767.

The company became pressed enough for cash that Ms. Weymouth announced in February that it was looking to sell its flagship headquarters. According to a regulatory filing associated with the sale, Mr. Bezos will pay rent to The Post Company on the space for up to three years.

As of 2012, the newsroom, which once had more than 1,000 employees, had fewer than 640. People there on Monday described the mood as “somber” with “a lot of people kind of in disbelief.”
In an interview in July, Mr. Graham was cagey about the family’s future in the business. “I’ll just fall back on the same answer,” he said, adding, “In family companies you have judgments about the family and you have professional judgment. The family control of The Washington Post Company over the years, I think, has been a healthy thing.”

In an e-mail Monday, Ms. Weymouth, who replaced her uncle as publisher in 2008, talked about the effect of the sale on her family: “Yes — we knew the sale was coming. This was a process that was months in the making. It is, of course, sad for the family — we have been incredibly honored to have been a part of The Post for the past 80, but we have always understood that this is a public trust and our focus was on ensuring that it would remain strong for generations of readers to come.”

The Post is not the only newspaper to move to new ownership. The New York Times Company announced early Saturday morning that it had sold its New England Media Group, which includes The Boston Globe, for $70 million, a fraction of the $1.1 billion the Times company paid for just The Globe in 1993. Ken Doctor, an analyst at Outsell, said that the Post sale reflected a broader trend of newspaper ownership returning to local investors rather than large, publicly traded enterprises.

“Newspapers are not really much creatures of the marketplace anymore,” said Mr. Doctor. “They’re not throwing off much in profits. They need shelter from the pressure of quarterly financial statements and reports.”

Newspaper analysts also said that the sale seems to be good news for the future of The Post. Alan D. Mutter, a newspaper consultant who writes the blog Reflections of a Newsosaur, said that for the first time someone with a native digital background was purchasing a major newspaper rather than an old-time businessman who would try to restore The Post to its earlier heyday and treat it “like 1953 Plymouths in Cuba.”

While Mr. Bezos may be purchasing The Post separate from Amazon, Mr. Mutter predicted that there could be collaborations between the brands, like The Post’s content appearing on every Kindle or Post video content appearing on Amazon.

“This is a guy who literally has invested in building rockets because he thinks it’s a good idea. I believe he’s bought the newspaper because he wants to re-envision the enterprise and The Post is an iconic world brand,” said Mr. Mutter about Mr. Bezos. “He knows something about building iconic world brands.”

Shortly after the announcement, Leonard Downie, the Post’s former executive editor, sat down at the Caribou Coffee store down the block from the newsroom he once led and contemplated a future where the Grahams no longer own the newspaper.

Mr. Graham had called Mr. Downie, now a vice president at The Post Company, earlier in the day. “I was completely shocked,” Mr. Downie said. “I could hardly say anything.”

Mr. Downie arrived at the paper nearly 50 years ago, and for all of the time since, the Graham family has been at the center of the newspaper — and more broadly, he said, at the center of journalism in Washington.

“The important thing about the Grahams for me,” he said, referring to Ben Bradlee, his predecessor as executive editor, “is that starting with Ben and with me, and I assume my successors, is that the news decisions were always ours, but the Grahams were always behind us.”

BOSTON | Wed Jul 31, 2013 2:27pm EDT
(Reuters) – Fidelity Contrafund (FCNTX.O) manager Will Danoff cut his stake in Apple Inc (AAPL.O) 28 percent during the first half of the year, citing the iPhone maker’s “slowing growth profile.”

The star stockpicker remained bullish on Google Inc (GOOG.O) and on Tesla Motors Inc’s (TSLA.O) “disruptive technology and superior business model,” according to his latest monthly commentary for investors.

Danoff remains Apple’s largest active shareholder, only passive index and exchange-traded funds have larger stakes. His Contrafund owned 8.3 million shares of Apple at the end of June valued at $3.3 billion, according to Thomson Reuters data. He owned nearly 11.6 million shares at the end of 2012.

“Reflective of the company’s slowing growth profile, Apple moved from the fund’s top position a year ago to the third spot as we reduced our stake in the company,” said Danoff, who runs the $94 billion Contrafund for Fidelity Investments in Boston.

Danoff has been trimming his stake in Apple since last year. Google has become his largest holding at 6 percent of net assets. Danoff said that in the second quarter he increased his position in electric car maker Tesla, “a firm we believed was fundamentally reengineering the automobile for the first time in decades.”

Meanwhile, Apple’s stock is off about 15 percent this year and its $452.50 price on Wednesday is well below the all-time high of $705.07 reached last September.

Apple’s plunge has hurt Danoff’s performance this year. Contrafund’s 2.05 percent return in the second quarter lagged the 2.91 percent advance on the benchmark S&P 500 Index.

But Danoff’s 15-year track record remains stellar. Over that span, Contrafund’s 7.35 percent annual return has beaten the benchmark S&P 500 Index by 3.11 percentage points each year.

Danoff reserved his most glowing remarks for Tesla. Contrafund owned $337 million worth of Tesla stock at the end of June after increasing its position 59 percent from the previous month, according to Thomson Reuters data.

Tesla’s shares have been on a rampage, soaring 387 percent over the past 12 months.

“We increased our position during the quarter, as we believed company’s disruptive technology and superior business model compared to industry peers may help it continue to grow at a fast pace for multiple years,” Danoff said in his commentary.

By Greg Roumeliotis
NEW YORK | Wed Jul 31, 2013 4:37pm EDT
(Reuters) – Michael Dell’s and Silver Lake’s $24.4 billion bid to take Dell Inc private suffered a blow on Wednesday after the company’s special committee rejected their request to change the voting rules in exchange for them offering $150 million more.

Dell shares fell more than 4 percent to as low as $12.28, their lowest level since news of the takeover broke on January 14, highlighting uncertainty among shareholders about the deal’s prospects. They closed down $1.6 percent at $12.66.

Michael Dell, who founded the eponymous company in 1984 from his college dorm-room, has been arguing since February that Dell needs to restructure as a private company to respond to the challenges posed to its computers by smart phones and tablets.

The special committee, set up by Dell’s board to assess whether shareholders were getting the best deal, refused on Wednesday to change the voting rules on the deal but said it would be willing to move the vote’s record date forward.

A person familiar with the matter later said Dell’s chief executive and Silver Lake expect their deal to collapse unless there is a change in how shareholder votes are counted.

At present, the buyout must be approved by a majority of all Dell shares, excluding the 15.7 percent stake held by Michael Dell and his affiliates. The buyout group last week raised its offer by 10 cents per share on the condition that the deal goes through if approved by a majority of the shares that are actually voted.

This followed two adjournments of shareholder meetings, on July 18 and July 24, after it became apparent the buyout group did not have enough votes supporting the deal.

The consortium estimated that in the latest tally, about 27 percent of Dell’s shares had not been voted and were therefore counted as “no” votes under the current voting standard.

Alex Mandl, the special committee’s chairman, wrote in a letter to the buyout group, “The committee is not prepared to accept your (voting rules) proposal. We are, however, willing to establish a new record date for a vote on a $13.75 per share transaction under the existing voting standard.”

The record date determines which Dell shareholders are entitled to vote on the deal. A second person familiar with the matter said the special committee would be willing to push the record date to August 10 for the vote to be held on September 10.

MOVING THE RECORD DATE

A shareholder meeting to vote under the current system on Michael Dell’s and Silver Lake’s original offer of $13.65 per share is scheduled for Friday.

“I would prefer to see an up or down vote than to see this be dragged out. I won’t try to predict what will happen on Friday because they are so unpredictable,” said Gautam Dhingra, chief executive of High Pointe Capital Management LLC, one of the several small Dell shareholders that oppose the deal at $13.75 per share.

The first source familiar with the matter said the buyout consortium believes that changing the record date is not good enough. Unless the voting standard changes, this is the end of the road for the deal, the source said.

The current record date is June 3 and market experts believe moving it forward benefits Michael Dell and Silver Lake because it gives them the backing of hedge funds that have bought Dell’s stock more recently with a view to earning just a few cents per share when the deal goes through.

It is however far from clear that the support of such investors would compensate for not changing the voting system.

“The question with moving the record date of course is, are there going to be enough votes for them to meet the threshold,” said Andy Levine, a mergers and acquisitions lawyer at Jones Day.

Activist investor Carl Icahn, who has amassed an 8.7 percent stake in Dell and is leading a charge with Southeastern Asset Management Inc against the buyout with an offer of their own, wrote in a letter to Dell shareholders on Wednesday it was time “to let the proposed freeze-out merger die”.

“Take the vote on Friday. Be at peace with the outcome. Immediately set the record date for the annual meeting and give stockholders the choice they deserve after all these months of uncertainty,” Icahn and Southeastern wrote.

If the record date is reset and Friday’s vote is postponed once again, then the annual meeting of shareholders should be held on the same date as the vote so that Dell shareholders are offered an alternative option, the two investors wrote.

If the buyout is rejected, Dell’s board should prevent Michael Dell from increasing his stake in the company and therefore strengthen his hand in a proxy fight, they added.

By Charlie Zhu
HONG KONG | Wed Jul 31, 2013 5:07pm EDT
(Reuters) – Three quarters of China’s solar-grade polysilicon producers face closure as Beijing looks to overhaul a bloated and inefficient industry, resulting in fewer but better companies to compete against Germany’s Wacker Chemie AG and South Korea’s OCI Co Ltd.

The polysilicon sector, which has around 40 companies employing 30,000 people and has received investment of 100 billion yuan ($16 billion), suffers from low quality and chronic over-capacity as local governments poured in money to feed a fast-growing solar panel industry, for which polysilicon is a key feedstock.

Demand for solar panels has eased since the global financial crisis, forcing governments worldwide to slash solar power subsidies, and leaving China sitting on idle capacity and mounting losses. To help prop up the solar industry, Beijing plans to more than quadruple solar power generating capacity to 35 gigawatts (GW) by 2015 to use up some of the huge domestic panel glut. It has also said it will accelerate technological upgrades in polysilicon to weed out inefficient producers and “nurture a batch of internationally competitive producers.”

People in the polysilicon industry say the moves will halve China’s production capacity to 100,000 metric tons (110231 tons) a year, leaving around 10 relatively strong firms with better technology and cost efficiency.

“Most producers will be eliminated rather than acquired. This may sound cruel, but is the reality as they are technologically uncompetitive,” Lu Jinbiao, a senior official at China’s top polysilicon producer GCL-Poly Energy, told Reuters.

The challenges mirror those faced by much of China’s manufacturing sector, from cement and steel to shipbuilding – local governments chasing jobs and economic growth over-invested in often high-cost, low-tech capacity in the mid-2000s when demand for solar panels was booming. That boom is now over.

“Large amounts of ineffective, high-cost production capacity will exit the market,” said Ma Haitian, deputy secretary general of the Silicon Industry of China Nonferrous Metals Industry Association, a Beijing-based industry lobby.

PRICE SLUMP

As smaller polysilicon producers, with average annual capacity of a few thousand metric tons, are pushed out, the likely winners will be larger producers such as GCL Poly, TBEA Co Ltd, China Silicon Corp and Daqo New Energy Corp. The shake-out is already underway as polysilicon prices have plunged to below $20 per kg from a 2008 peak of almost $400, forcing some producers in the northwestern province of Ningxia and eastern China’s Zhejiang province to file for bankruptcy.

Their plight is made worse by cheaper, and better quality, imports from producers such as MEMC Pasadena Inc and Michigan-based Hemlock Semiconductor Group – a venture of Dow Corning, Shin-Etsu Handotai and Mitsubishi Materials Corp – and Norway’s Renewable Energy.

Of the 69,000 metric tons of solar-grade polysilicon China consumed in January-June, 41,000 metric tons were imported, according to industry data. China’s solar panel makers prefer imported polysilicon, which has a higher purity that helps in energy conversion, company executives say.

Foreign polysilicon producers can break even at prices of around $20/kg, while break-even for Chinese firms with capacity of 10,000 metric tons or more is $20-$25, say industry specialists, who noted that most smaller Chinese producers had begun to lose money when prices slipped to $30-$40.

“Restructuring is a must. Most Chinese polysilicon enterprises will disappear and only about 10 will survive,” said Glenn Gu, senior solar analyst at consultant IHS in Shanghai.

NEW DAWN?

In an apparent bid to protect its domestic industry, Beijing this month imposed preliminary anti-dumping duties on U.S. and South Korean polysilicon imports, [ID:nL4N0FV1QI] but has yet to decide whether to do the same for European suppliers like Wacker Chemie. Analysts said that idea could be dropped after China and the European Union struck a solar panel trade deal last weekend. [ID:nL6N0FX04U]

“Such a settlement could mark the start of another global photovoltaics (solar technology) upturn,” Wacker Chemie said in announcing better-than-expected quarterly earnings on Tuesday, [ID:nL6N0G00GD] adding polysilicon prices may have bottomed.

Many of China’s leading solar cell and module manufacturers – such as LDK Solar Co Ltd, Yingli Green Energy Holding Co Ltd, Suntech Power Holdings Co Ltd and JA Solar Holdings Co Ltd – are sitting on long-term take-or-pay contracts with foreign polysilicon producers, under which they import set amounts at fixed prices of around $40-$50/kg, people in the industry said.

By some estimates, 30 percent of the $2.1 billion worth of polysilicon that China imported last year came from those contracts. Those deals looked good before the financial crisis, and some Chinese panel makers – who regularly mix imported polysilicon with local materials to control costs – also invested in their own polysilicon production.

Much of that investment has since been written off.