Analysis: AMD continues move toward profitability

Advanced Micro Devices hopes for financial stability after years of struggles, but analysts said that a volatile PC market could derail the chip designer’s progress.

Keeping with its projection earlier this year, AMD’s CEO Rory Read said Thursday that the company would deliver a profit in the third fiscal quarter, which will be reported in September. The company is making progress as part of a “three-step strategy to restructure, accelerate and ultimately transform AMD for growth,” Read said in a conference call about earnings.

The return to profitability involves a mix of cost-cutting measures, shipments of new chips and less reliance on PCs, a market that has been slowing. As in past quarters, a majority of third-quarter revenue will be from PC chips, but the company is expecting a larger mix of revenue from chips for non-PC products such as gaming consoles. AMD’s chips will be used in Microsoft’s Xbox One and Sony’s PlayStation 4, which will ship later this year.

AMD is projecting revenue to increase on a sequential basis by 22 percent, plus or minus 3 percent, in the third quarter. AMD this week reported revenue of $1.16 billion for the second quarter, falling from $1.41 billion recorded during the same quarter last year. The company reported a net loss of $65 million for the quarter.

The company has already taken steps to cut costs, including laying off 15 percent of its workforce in October last year, and selling off a campus in Austin, Texas. It also broke off a relationship with GlobalFoundries as its sole chip manufacturers, though AMD paid a penalty for not meeting inventory requirements and breaching the contract.

AMD last quarter formed a new custom-chip business unit to make processors for gaming consoles, embedded devices and other non-PC products. The company expects its custom chip business to account for 20 percent of revenue by the fourth fiscal quarter and Read said the company is on its way to achieving that goal.

Compared to the past, AMD is now not trying to be an Intel clone, and aims to create a unique identity by working directly with companies to create custom and embedded chips, analysts said. AMD has also acquired a license for ARM processors and plans to release server chips with ARM processors next year.
“They’ve made a lot of progress. In particular, they are not trying to play a game against Intel, which is 10 times their size. That’s a pretty good sign,” said Nathan Brookwood, principal analyst at Insight 64.
AMD still competes with Intel on PC and tablet chips. But rather than depending on PCs, AMD wants to diversify their business into new areas and the initial foray into game consoles is a good start, Brookwood said.

The company could ultimately make an impact in tablets, which is a fast-growing market. AMD has announced a tablet chip called Temash, which is for Windows 8. The company has said it will ultimately build chips for Android and Chrome OS devices. AMD has no plans to develop chips for smartphones.
Game consoles will be key in driving AMD’s return to profitability in the third quarter, said Dean McCarron, principal analyst at Mercury Research.

“The game console business is something they can predict as it’s a contract,” McCarron said.
Microsoft and Sony have signed a contract to buy a specific number of chips from AMD, which guarantees a minimum revenue for the chip designer. The revenue will increase if the console makers buy more chips.
AMD will also realize revenue from the new Kabini PC chips it launched during the second quarter, McCarron said. Laptop and desktop shipments with the new chips will pick up in the back-to-school and the holiday seasons, McCarron said.

But AMD’s business still relies on PCs and that market is volatile, McCarron said. Despite AMD’s confidence that the third quarter will be profitable, the fourth quarter is still up in the air, McCarron said.
AMD could stumble if the PC and tablet chips fail, analysts said.

Kabini chips will be driving low-end PC shipments and while initial response to the processors has been excellent, a lot depends on the demand for laptops and desktops, Insight 64’s Brookwood said.
“There’s no guarantee the buyers are going to go for those products,” Brookwood said.

AMD’s turnaround started when Read was appointed the CEO in August 2011, after which he assembled a new management team. The company tore up the old chip road map and established a new product lineup. AMD also introduced a new chip development methodology that made it easier to bring third-party intellectual property to chip designs, and the concept is now at the center of custom chip development.
“The team now is very different than before. The company is now focused on getting it right than in the past,” Brookwood said. 

News Analysis: The Challenge of Creating a Unified Organizational Strategy

To be clear, it is hard to do. The default behavior for human beings is to think in terms of tribes. If you work in a small department in a big company, you’re naturally going to identify most closely with your immediate colleagues. You’ll have lunch or coffee together, and maybe even socialize with them outside the office.

Other colleagues you see in the hallway and on the elevator can seem like total strangers, even though you work for the same company. Divisions fighting for resources and attention can exacerbate the problem.

It’s a theme that has come up often in my interviews with more than 200 leaders for my column, Corner Office, and smart leaders recognize that us-versus-them behavior can ultimately destroy companies.

So what should leaders do? A few tips have emerged from my interviews.

Create a ‘One Company’ Culture

Symbolism is important, in both the language that leaders use and the organizational chart they create.

Here’s how Kathleen L. Flanagan, the chief executive of Abt Associates, tackled the issue.

“We’ve grown from $180 million in annual revenue a few years ago to $425 million today. As the company grew, more business units were created, and so we had more silos in the organization. My objective two years ago in coming into this job was to take down the silos. So I reorganized the company. It used to be organized around lines of business — international, U.S.-based, data collection — and there used to be senior vice presidents who led each of those big businesses. I took those senior V.P. positions away and hired one executive vice president for global business who shared my vision for what I call One Global Abt.

At the heart of that is taking down the walls so people can collaborate more freely, so that we can leverage all of Abt. We now ask people to pick their heads up out of their project work or their division focus and look across the whole company. So I now ask my managers to wear two hats. Everybody’s got their job in the big picture of the company, but they all have to wear an Abt hat. It’s really easy, given the time pressures and the pace of our work, to put blinders on and be very project-focused. It’s harder to take a step back and ask, “How does this apply to the whole company?”

Simplify the Scoreboard

A big part of a leader’s job is to establish a simple set of performance metrics so that everyone in the company can feel as if they’re part of a broader team, and can understand how the work they do contributes to the broader goals. Chief executives have to choose those metrics carefully because, as the saying goes, what gets measured gets managed.

A powerful example of this came from Shivan S. Subramaniam, the chief executive of FM Global, a commercial and industrial property insurer, who shared with me how his team worked hard to develop very simple goals.

“We call them key result areas, or K.R.A.’s. We’re multinational — we’ve got 5,100 people, 1,800 of whom are engineers. We’re very analytical. But we have three K.R.A.’s, nothing terribly fancy. And everybody focuses on them. One is on profitability. One is on retention of existing clients. And one is on attracting new clients. That’s it.

You can talk to people in San Francisco, Sydney or Singapore, and they’ll know what the three K.R.A.’s are. All of our incentive plans are designed around our K.R.A.’s, and every one of those K.R.A.’s is very transparent. Our employees know how we’re doing. And, most importantly, they understand them, whether they’re the most senior manager or a file clerk, so they know that ‘If I do this, it helps this K.R.A. in this manner.’”

Communicate Relentlessly to the Entire Staff

There’s a reason that so many companies hold regular all-hands meetings (and with technology, it’s possible to do them in large and sprawling companies now). Again, it’s about tribal behavior. You have to bring everybody together and speak to everyone as a group for people to identify themselves with the broadest group. Leaders then have to take their simple plan and hammer it home, again and again, even if they feel like everybody has heard it before a hundred times.

It’s a lesson that Christopher J. Nassetta, the Hilton Worldwide chief, told me that he learned over time.

“You have to be careful as a leader, particularly of a big organization. You can find yourself communicating the same thing so many times that you get tired of hearing it. And so you might alter how you say it, or shorthand it, because you have literally said it so many times that you think nobody else on earth could want to hear this. But you can’t stop. In my case, there are 300,000 people who need to hear it, and I can’t say it enough. So what might sound mundane and like old news to me isn’t for a lot of other people. That is an important lesson I learned as I worked in bigger organizations.”

Steve Ballmer’s challenge as the chief executive of Microsoft is not unlike the challenge that it faces with technology: how to take something very complicated — be it a software program or a sprawling organizational chart — and make it simple to operate. This may be the toughest task of his career.

The 'Butler' Fight: Harvey Weinstein's Mixed Track Record in His MPAA Feuds (Analysis

When it comes to battling the MPAA, Harvey Weinstein’s default position is to go into all-out attack mode. While other movie companies usually sort out their differences with the Motion Picture Association of America behind the scenes, Weinstein stages major public relations campaigns like the one he is currently conducting to attempt to win the right to call Lee Daniels’ upcoming movie The Butler.

But do they actually work?

Typically, Weinstein, one of the toughest moguls in Hollywood, portrays himself as the scrappy underdog standing up for some higher principle. While the current dispute revolves around whether The Weinstein Co. and Warner Bros. have played by the rules of the MPAA’s Title Registration Bureau, to which both companies subscribe, Weinstein is making every effort to turn the business dispute between movie companies into a major civil rights fight. “I’ve gone through this all my life,” Weinstein said Tuesday morning during an appearance on CBS This Morning. “My dad taught me to fight injustice. This is unjust.”

STORY: Harvey Weinstein Talks 'Butler' Dispute at 'Fruitvale Station' Screening

Over the years, Weinstein’s scorched-earth tactics have resulted in a mixed record of success. Sometimes he wins, managing to overturn NC-17 ratings in favor of less restrictive R ratings on movies ranging from 1994’s Clerks to 2010’s Blue Valentine. And sometimes he loses, failing to convince the ratings appeals board to downgrade its original NC-17 designations on films like 1995’s Kids or soften the R rating it gave to 2010’s The King’s Speech and 2012’s Bully.

Win or lose, though, the very public disputes almost always result in a torrent of publicity, which Weinstein’s critics say is his real objective. (Among Weinstein and the show’s hosts, the CBS Morning News appearance included three reminders that The Butler is scheduled for release Aug. 16, while also including a clip from the film.) But all that free press doesn’t necessarily translate into big bucks at the box office.

VIDEO: Harvey Weinstein Claims 'The Hobbit' Is Behind 'The Butler' Title Fight

Director Kevin Smith’s Clerks, for example, grossed $3.2 million domestically back in 1994, and that meant the low-budget, black-and-white indie was a solid success but not a runaway phenomenon. Blue Valentine, despite earning an Oscar nomination for its star Michelle Williams, grossed just $12.4 million worldwide. On the other hand, Michael Moore’s 2004 documentary Fahrenheit 9/11, which unsuccessfully appealed an R rating "for violent and disturbing images," went on to become the top grossing documentary of all time, collecting $222 million worldwide.

Sometimes, Weinstein has even used a ratings dispute as part of a movie’s awards campaign. While going head-to-head with the MPAA over Fahrenheit 9/11’s rating, the expert campaigner also took out ads inviting Academy members to screenings with the come-on, “Before the MPAA makes their decision, MAKE YOURS.”

Most of Weinstein’s MPAA battles have revolved around the Classification & Ratings Administration. But he’s also had previous run-ins with the Title Registration Bureau as well.

STORY: 'The Butler' Fight: David Boies Claims WB Extortion in New Letter

In 1995, Warner Bros. objected when Weinstein sought to release Michael Radford’s Italian-language film stateside under the title The Postman, a title Warners had registered for an upcoming Kevin Costner movie of its own. Weinstein backed off, releasing the movie as Il Postino (The Postman). The following year, Sony objected when the Weinstein brothers released Wes Craven’s horror spoof, Scream, because Sony had released a movie called Screamers earlier that year. Despite TRB sanctions, reported at the time to amount to $1,500 per day per screen on which the movie was playing, the Weinsteins stuck to their guns. And Disney, which was then the parent company of the Weinsteins’ Miramax Films, ultimately came to an undisclosed private resolution with Sony.

By now, the Weinstein battle plan is familiar -- and so when the current controversy over The Butler broke into the open last week, insiders at both Warners and the MPAA shook their heads and claimed the dispute was “just Harvey being Harvey.” Both sides, pending an appeal, have dug in. Warners believes it has the MPAA rules on its side, but the Weinstein forces are convinced that they can embarrass Warners and the MPAA into making concessions by arguing that the studio is trying to stand in the way of a racially uplifting film.

As familiar as his tactics have become, there is no underestimating them.

One of Weinstein’s first moves is always to call in high-powered lawyers, although the clashes rarely result in any actual litigation. In the cases of both Clerks and Kids, Weinstein enlisted Alan Dershowitz, famous for defending Claus von Bulow, a case that became the basis for the movie Reversal of Fortune. To appeal an NC-17 rating given a now-obscure 1994 movie called The Advocate, Weinstein drafted the late William Kunstler, who defended the Chicago Seven in the late ‘60s. David Boies, who is representing Weinstein Co. in The Butler case, also, working alongside Hollywood attorney Bert Fields, handled the unsuccessful appeal on The King’s Speech rating. Both Boies and Fields can command hourly fees in excess of $1,000.

Second, Weinstein and his allies ratchet up the rhetoric. “This rating for The King’s Speech is arbitrary and irrational. In my view, it violates The Weinstein Company’s right to freedom of speech under the state and U.S. constitution. It should strike fear in the heart of every director and producer,” Fields said during The King’s Speech dust-up. Boies has called Warners refusal to grant Weinstein Co. the right to call its movie The Butler “a transparent attempt to hold a major civil rights film hostage to extort unrelated concessions from TWC” -- a charge that Warners called “deeply offensive and untrue.” Weinstein said Tuesday that two Warners executives had asked him to give up his share of profits from The Hobbit movies to settle the matter. (The Weinsteins are entitled to back-end money from the first Hobbit movie and are locked in a dispute with Warners over whether they can share in the proceeds from the second and third installments.) Warners also called that assertion untrue.

But Weinstein -- whether he wins or loses -- generally gets away with such tactics because he usually has the press on his side, especially when he is tilting with the MPAA’s ratings regulations. Historically, the MPAA has often been slow to articulate its rationales, which to much of the media often look overly restrictive, penalizing language and sexual imagery while letting violence run wild.

Plus, Weinstein also has cultivated various media outlets over the years to be sure his views will have a ready platform. Pro-Weinstein items have often appeared on Page Six of the New York Post. And at May’s Cannes Film Festival, he enlisted Deadline.com’s Michael Fleming and Pete Hammond to moderate buyer presentations for upcoming Weinstein Co. movies. When Weinstein was ready to take The Butler dispute public, his camp leaked to Fleming the private letters to Warners and the MPAA.

But as heated as the battles often become, Weinstein also has shown himself to be a pragmatic businessman once the dust settles. In a number of cases when the MPAA has ruled against him on ratings, he’s simply gotten out the scissors for which he is famous and edited down the films to get a less restrictive rating.

When the 2012 documentary Bully got stuck with an R rating for six uses of the F-word, Weinstein Co. agreed to edit out three instances of the word and the MPAA then agreed to rerate it PG-13. And in the case of the Oscar-winning The King’s Speech, after the movie had played 12 weeks in theaters, during which it earned the bulk of its business, Weinstein decided to mute two uses of the F-word, and the MPAA agreed to a new PG-13 rating.

Few Options for Weinstein Co. in Wake of MPAA 'Butler' Ruling (Analysis)

Forest Whitaker on the set of 'The Butler'
Tuesday’s ruling in an MPAA title registration arbitration puts the Weinstein Company in a quandary. As The Hollywood Reporter reported, the arbitrators held that the Weinstein Company could not use the title “The Butler” on its upcoming film because that previously served as the title of a 1916 short film that now belongs to the Warner Bros. library.

In response, the Weinstein Company issued a statement from veteran Supreme Court litigator David Boies that said, “The suggestion that there is a danger of confusion between TWC’s 2013 feature movie and a 1917 [sic] short that has not been shown in theaters, television, DVDs, or in any other way for almost a century makes no sense. The award has no purpose except to restrict competition and is contrary to public policy.”

We don’t know if Boies is quoting from the arbitration ruling – those documents aren’t public and neither Warner Bros. nor the Weinstein Company would supply a copy to THR – but “danger of confusion” isn’t the test under the MPAA system: identicality is (or, in some cases, similarity). Here, the titles are identical. Protection is generally perpetual; in some cases, the duration is only four years, but that doesn’t seem to be at issue here. The TRB does have an appeal process, but the rules for challenged titles are the same on appeal as in the initial process.

PHOTOS: Jason Bateman to Jennifer Lopez: The Actors of the Academy's 2013 Class

None of that bodes well for the Weinstein Company. But what about Boies’ comment that the award restricts competition? That’s an antitrust argument, and at first glance it has some allure. Surely federal antitrust law – passed by Congress and enforced by agencies and judges – places some limits on what a mere industry association can do?

Actually, not so much, it seems. That’s because another law, the Federal Arbitration Act, requires judges to defer to arbitration agreements, such as the agreement that companies agree to when they sign up with the MPAA’s Title Registration Bureau (TRB). Says the 1925 statute, “A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

In recent decades, the Supreme Court has interpreted the FAA expansively, with the conservative majority on the Court using the statute to allow large companies to divert claims out of the court system and into arbitration. In many instances, that’s favored companies at the expense of consumers and employees, since it keep cases out of the hands of sympathetic juries, and frequently bars class actions as well.

It turns out that the Court’s latest case in this line of precedent was decided less than two weeks ago – and it involved an antitrust claim.

In the case, American Express Co. v. Italian Colors Restaurant, the plaintiff restaurant alleged that “American Express used its monopoly power in the market for charge cards to force merchants to accept credit cards at rates approximately 30% higher than the fees for competing credit cards.” The restaurant asserted that this was a violation of a key antitrust law, the Sherman Act, and brought a class action.

PHOTOS: 26 of Summer's Most Anticipated Movies: 'Man of Steel,' 'Wolverine,' 'The Lone Ranger'

Citing the FAA, Amex sought to enforce the arbitration clause in its merchant agreements, which also included a prohibition on class actions in arbitration. The restaurant countered that enforcing this prohibition would effectively strip it of its rights, because the case would be too expensive to bring on an individual, plaintiff by plaintiff basis. Expert witness fees alone would be in the hundreds of thousands of dollars at a minimum, whereas the most the restaurant stood to recover if it won a non-class action case was about $38,000.

By a 5-3 vote (with one Justice not participating), the Supreme Court turned away the restaurant’s objection. As a result of the FAA, said Justice Scalia for the majority, “courts must ‘rigorously enforce’ arbitration agreements according to their terms. . . . That holds true for claims that allege a violation of a federal statute, unless the FAA’s mandate has been ‘overridden by a contrary congressional command.’”

The decision then found no such contrary command in the antitrust laws as regarding class actions. Regarding the underlying substantive issue – the alleged antitrust violation – the decision said, “so long as the prospective litigant effectively may vindicate its statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function.”

That may give Boies an opening, because the TRB rules don’t provide a mechanism for challenging the system itself on antitrust grounds (or any grounds at all). But the Supreme Court decision includes a dissent (by Justice Kagan) that, ironically, works against such an argument: “If the arbitration clause is enforceable, Amex has insulated itself from antitrust liability – even if it has in fact violated the law.”

STORY: The Butler' Battle Escalates Weinstein Co. Hints Lawsuit, Raises Antitrust Warning

In other words, even an arbitration clause that snuffs out an antitrust claim will be upheld by the conservative majority on the Court.

As THR reported, Boies also argued in a letter to Warner Bros. on Wednesday that Warners had agreed to allow the Weinstein Company to use the title “in return for certain contributions that TWC agreed to make.” A source familiar with the dispute rejects the notion that there was any deal. That’s the sort of he-said she-said that a court is likely to say the Weinstein Company should have raised with the arbitrator. Perhaps it did so – in which case it evidently lost the argument. A court is unlikely to revisit the issue.

That all would seem to make a suit by the Weinstein Company against Warners a long shot at best. What about suing the MPAA? Boies wrote them on Wednesday too, saying “To the extent that the MPAA in concert with its members seeks to ‘permanently protect’ titles where there is no plausible claim of possible confusion, and no claim of actual damages, such an attempt would be a naked restraint on trade in violation of the anti-trust laws.”

But there are problems here. The TRB rules include a waiver of damages against the MPAA, TRB and related entities. That doesn’t preclude seeking an injunction against the rules, of course.

Even an injunction seems unlikely, though, because the Weinstein Company voluntarily and knowingly agreed to the arbitration process when it signed onto the TRB. And the Weinstein Company received a benefit – its own titles are protected from reuse by other TRB signatories and by MPAA members.

In essence, a suit against the MPAA is an attempt to make an end run around an unfavorable arbitration award. That’s exactly the sort of thing courts disfavor, as the 9th Circuit (the federal Court of Appeals that includes California) pointed out in a case involving a challenge to WGA credit arbitration, Marino v. Writers Guild of America.

Stepping back for a moment, it’s not even clear that an antitrust claim would have legs. After all, the arbitration award doesn’t prohibit the Weinstein Company from releasing its film; it just has to do so under a different name. That’s a restriction, of course, but intellectual property laws – and IP-related contracts – always impose restrictions. They provide monopolies of various sorts to the IP owner.

Boies and the Weinstein Company may have arguments to counter this point, but whether they’ll be able to get a court to even consider those arguments seems like a long shot. Arbitration may sometimes be a bed of nails, but under Supreme Court precedent, if those are the accommodations you agreed to, the courts won’t provide a mattress later.

Clooney, Bullock's 'Gravity' to Open Venice: Is It a Major Awards Contender? (Analysis)

Alfonso Cuaron's Gravity, a 3D sci-fi drama that stars Oscar winners George Clooney and Sandra Bullock as astronauts lost in space, will kick off the 70th Venice International Film, the fest announced Friday morning. (The festival runs from Aug. 28 through Sept. 7, and, as always, will overlap with North America's Telluride and Toronto film festivals.)

Based on the talent involved and the way that Warner Bros. is positioning the film -- the studio is giving it an Oct. 4 release date, which is just a week earlier on the fall calendar than the slot Warners used to launch Oscar-winner Argo last year -- I am inclined to think that the long-gestating film is going to be a major player this awards season. But, one must note, the folks who schedule the opening-night slot at Venice have, in recent years, had a hit-or-miss track record of picking films that also appeal to Oscar and Golden Globe voters.

PHOTOS: Jason Bateman to Jennifer Lopez: The Actors of the Academy's 2013 Class

Gravity, which will open the fest but will not be in competition for its various awards (as was the case for The Great Gatsby at May's Cannes Film Festival), will follow in some considerable footsteps:

Julie Taymor's Frida (2002) went on to Oscar wins for makeup and original score and noms for actress, art direction, costume design and original song, plus a Golden Globe win for original score and nom for actress (drama); Joe Wright's Atonement (2007) went on to an Oscar win for original score and noms for picture, supporting actress, adapted screenplay, art direction, cinematography and costume design; Ethan and Joel Coen's Burn After Reading (2008) went on to Golden Globe noms for picture (musical or comedy) and actress (musical or comedy); Darren Aronofsky's Black Swan (2010) went on to an Oscar win for actress and noms for picture, director, cinematography and film editing, plus a Golden Globe win for actress (drama) and Golden Globe noms for picture (drama), director and supporting actress; and Clooney's The Ides of March (2011) went on to an Oscar nom for adapted screenplay and Golden Globe noms for picture (drama), director, actor (drama) and screenplay.

PHOTOS: Oscars Time Capsule: The Infamous 1989 Academy Awards

But it will also, however, follow in some less distinguished footsteps:

Clint Eastwood's Space Cowboys (2000) went on to only a sound editing Oscar nom; Brian De Palma's The Black Dahlia (2006) went on to only a cinematography Oscar nom; and Milcho Manchevski's Dust (2001), Woody Allen's Anything Else (2003), Steven Spielberg's The Terminal (2004), Tsui Hark's Seven Swords (2005), Giuseppe Tornatore's Baaria (2009) and, last year, Mira Nair's The Reluctant Fundamentalist (2012) all received no major awards recognition.

Gravity could conceivably show up in Toronto, as well, but most films play either at Telluride and Toronto or at Venice, not at some combination thereof. In recent years, far more future Oscar and Golden Globe nominees and winners have passed through the former route than the latter -- perhaps because a larger contingent of the North American press covers the former events.

Indeed, seven of the past 13 best picture Oscar winners (Crash, No Country for Old Men, Slumdog Millionaire, The Hurt Locker, The King's Speech, The Artist and Argo) and 10 of the 26 best picture Golden Globe winners (Almost Famous, Lost in Translation, Sideways, Brokeback Mountain, Walk the Line, Babel, Atonement, Slumdog Millionaire, The Descendants and Argo) screened at one or both of those fests, whereas only one future best picture Oscar winner (The Hurt Locker) and two best picture Golden Globe winners (Lost in Translation and Brokeback Mountain) screened at Venice.

Scott Feinberg: Why This Year's Academy Invitations Give Me Hope (Analysis)

The Academy has been harshly criticized in recent years for being predominately composed of white male senior citizens. (A 2012 Los Angeles Times investigation found the average age of an Oscar voter was 62 -- and that the Academy was 94 percent white, and 77 percent male.) But the only ways for the Academy to quickly change that makeup would be for it to eliminate from its roster some of its older members who are no longer active in the industry, or add a considerable number of newer and more demographically diverse members to the rolls.

Last October, the Academy's Board of Governors met and seemed to endorse the latter idea by eliminating a 2004 rule capping the number of new members that each of the Academy's 16 branches could add each year. The rule had kept the number of overall Academy membership around 6,000. Today the Academy announced its invitation of 276 new members, 100 more than last year. (178 were invited in 2011; 135 in 2010; 134 in 2009; and 105 in 2008.) The selections clearly indicate that the Academy of the future will not look anything like the Academy of the past.

As has always been the case, a chunk of the newly invited members are probably on the list this year largely because they were nominated for -- and in some cases won -- Oscars last year. They include best actress nominee Emmanuelle Riva (Amour), the oldest woman ever nominated in that category, who probably should have been invited decades ago; best director and best adapted screenplay nominee Benh Zeitlin (Beasts of the Southern Wild); the directors of three best foreign language film nominees, Nikolaj Arcel (A Royal Affair), Pablo Larrain (No), and Joachim Ronning and Espen Sandberg (Kon-Tiki); Chris Terrio (Argo), scribe of best adapted screenplay winner Argo; John Gatins, scribe of best original screenplay nominee Flight; and Rich Moore, director of best animated feature nominee Wreck-It Ralph, among others.

And -- again -- as has always been the case, this year's invitation list includes a number of veterans who clearly should have been invited in years past, but were overlooked. This year, many of those names come from the documentary branch, which invited 42 new members  -- more than any other. That represents about a quarter of its current membership. Last year the branch invited only 10, presumably due to the Academy's since-abolished quotas. This year's newcomers include 87-year-old Claude Lanzmann, best known for the epic Holocaust documentary Shoah (1985), which the Academy famously overlooked; 85-year-old Marcel Ophuls, director of the classic best documentary feature nominee The Sorrow and the Pity (1969) and best documentary feature winner Hotel Terminus (1988); and 85-year-old Agnes Varda, who has been making narrative and documentary features since 1955, was a staple of the French New Wave and continues to work to this day. (Granted, the Academy was far less international when those filmmakers were in their primes, and the same goes for Riva.)

But this year's list is also younger, and much more diverse -- not just in terms of ethnicity, but also in terms of their work in genres that the Academy has not historically embraced: comedy, action and sci-fi. Consider the following, who will be familiar to most moviegoers: actors Jason Bateman (Juno), Rosario Dawson, Lucy Liu (the Kill Bill films), Paula Patton (Precious), Michael Pena (End of Watch), Jason Schwartzman (Moonrise Kingdom), Chris Tucker (Silver Linings Playbook); directors Paul Feig (Bridesmaids) and Todd Phillips (the Hangover films); and writers Lena Dunham (Tiny Furniture), Ava Duvernay (Middle of Nowhere) and Rian Johnson (Looper).

Some will look at these choices and claim that the Academy is pandering to the masses -- who don't watch the Oscars anyway, and who would, if they had their way, turn Hollywood's most iconic night into the MTV Movie Awards, and elevate films like Twilight instead of films like Argo. I think that's hyperbolic nonsense. The Academy doesn't have to, shouldn't, and, I believe, won't abandon its demand for greatness in order to reconnect more with the public. It just needs to expand its notion of what greatness means.

Yes, a comic book adaptation (The Dark Knight) actually can, in the right hands, be more worthy of a nomination than a Holocaust drama (The Reader), to cite the famous 2009 example of Academy close-mindedness, which provoked the rule changes and category contractions and expansions of the past few years. Members need to be open to all sorts of films and evaluate them based on how well they achieved what they set out to achieve. A more diverse membership makes that more likely.

Sure, one can quibble with the merits of a few of this year's invitees -- to be perfectly candid, I'm not sure about Milla Jovovich (the Resident Evil films) or Jennifer Lopez, who stopped pushing herself as an actress sometime back in the 20th century -- but that's true of any year. And I, for one, am far happier with an Academy that embraces excellence and diversity of all sorts, like this one did today by inviting the other aforementioned folks -- plus Julie Delpy (the Before films), Steve McQueen (Hunger, Shame and Twelve Years a Slave), Emily Mortimer (an indie queen), Sarah Polley (Away from Her and Stories We Tell) and so many others -- than I was with the old white man's club that used to reign supreme.

Follow me on Twitter @sajilpl

Analysis: Snowden's options appear to narrow in bid to evade U.S. arrest

A television screen shows former U.S. spy agency contractor Edward Snowden during a news bulletin at a cafe at Moscow's Sheremetyevo airport June 26, 2013.

WASHINGTON/MOSCOW - Nearly a month after Edward Snowden exposed top secret U.S. surveillance programs, the former spy agency contractor looks no closer to winning asylum to evade prosecution at home - and his options appear to be narrowing.

Stuck in legal limbo in a Moscow airport transit area and facing uncertainty over whether any of the destinations he is said to be contemplating - Ecuador, Venezuela and Cuba - will let him in, Snowden seems to be at the mercy of geopolitical forces beyond his control.

Unseen in public since arriving in Moscow last weekend, much remains unclear about Snowden's overtures to various countries and how they have responded behind the scenes.

Russia may no longer have sufficient reason to continue harboring Snowden if, as is widely believed, its intelligence services have already questioned him about the classified documents that he has admitted to taking from the National Security Agency.

The leftist government of Ecuador, already sheltering WikiLeaks founder Julian Assange at its London embassy, is reviewing Snowden's asylum request, though officials have sent mixed signals, suggesting the process could drag on for weeks.

Venezuela's new president, Nicolas Maduro, has spoken favorably of granting refuge to Snowden but has taken no action, and he may think twice about risking a setback in tentative steps toward post-Chavez rapprochement with Washington.

And even if Ecuador or Venezuela decide to take Snowden, there is no guarantee that communist Cuba, the likely transit point for any flight from Moscow to those South American countries, would let him pass through and further complicate its own thorny relations with the United States.

Adding to Snowden's troubles, the Obama administration, embarrassed by his disclosures on U.S. surveillance programs and his ability to dodge extradition when he fled Hong Kong last Sunday, is bringing heavy pressure to bear on any country that might consider accepting him, diplomats say.

"Thus far, he has chosen his destinations carefully," said Carl Meacham, a foreign policy expert at the Center for Strategic and International Studies in Washington. "His time, even in those countries, however, may be running out."

Another potential complication is the role of anti-secrecy group WikiLeaks, whose alliance with Snowden further politicizes his case. British legal researcher Sarah Harrison, a top WikiLeaks lieutenant and Assange confidante, escorted Snowden on the flight from Hong Kong to Moscow and is believed to have remained with him.

FOCUS ON RUSSIA

Russia remains the chief focus of the diplomatic scramble, and while President Vladimir Putin has clearly delighted in the chance to tweak Washington, there are questions whether he wants a prolonged saga that threatens deeper damage to already-chilly U.S.-Russia relations.

The former NSA contractor's trek took him to Moscow because he had little choice of any other route that would keep him relatively safe from his American pursuers, former Russian intelligence officers and political and security analysts said.

"He has almost nowhere to go. He does not have much of a choice," said Fyodor Lukyanov, editor of the journal Russia in Global Affairs and a member of an influential foreign policy council.

"Considering that he came out with a serious statement that is seen by the United States as treasonous, he needs to lay out an itinerary through countries where he can feel more or less certain that he will not be handed over."

Despite Putin's insistence that Russian intelligence agencies had not been "working with" Snowden, a Russian security service source said they would certainly have interviewed him.

U.S. authorities are already operating on a "worst case" assumption that all of the classified material in Snowden's possession has made its way to one or more adversary intelligence services, U.S. national security sources said.

While top U.S. officials have warned of serious damage to national security interests from Snowden's leaks, Lukyanov suggested that in intelligence terms he was probably not a very valuable prize. "He is not some kind of special agent," he said.

Putin has built his return to the presidency on strident nationalism. If he hands Snowden back to the United States, he could face a backlash from Russians who see the American as a whistle-blowing hero.

"No matter what, we should not give him back. Let him go somewhere, or even stay in Russia - we are a big country and we have room for him as well as (French actor Gerard) Depardieu," said Viktor, a pensioner who was at Sheremetyevo airport on Friday for a vacation flight to Ukraine.

CONFUSION OVER ECUADOR

However, Snowden's protracted stay at the Moscow airport may have more to do with his problems reaching a deal with Ecuador than with any Russian desire to keep the American fugitive from moving on, the Russian security source said.

Ecuadorean President Rafael Correa has inserted his small Andean nation into the saga by offering asylum to Snowden, whom he has praised for exposing U.S. espionage efforts. However, he may also be trying to fill the void left by the death of Venezuelan socialist President Hugo Chavez - for a decade Washington's most vocal adversary in the region.

While Ecuador seems like Snowden's best bet as a place of refuge, its intentions are unclear.

Assange said earlier that Ecuadorean diplomats in London had issued a temporary travel document intended for Snowden, whose U.S. passport had been revoked. But the Quito government denied this.

In the meantime, Correa has said Ecuador cannot move forward with the asylum request until Snowden is in the country or makes his way to one of its embassies. Correa has indicated he is not planning to arrange transit for Snowden.

Returning to Quito on Friday from a tour of Asia, Ecuadorean Foreign Minister Ricardo Patino said his government had been involved in talks with the Russian government about Snowden's fate, but without any result.

For now, Venezuela also was not looking promising for Snowden. Maduro has made clear several times that he would take a positive view of an asylum request, though he said on Thursday that "no one has asked us for humanitarian refuge."

Since taking office in April, Maduro has at times used thunderous, Chavez-style, anti-U.S. rhetoric but he has also expressed interest in better relations with Washington.

Without help from a sympathetic government, Snowden's ability to travel is limited. The increasingly grim predicament may explain why his father on Friday said he is reasonably confident the 30-year-old Snowden would return if certain conditions were met.

Those conditions include not detaining Snowden before trial, not subjecting him to a gag order and letting him choose the location of his trial, according to a letter that Lonnie Snowden's lawyer, Bruce Fein, sent to U.S. Attorney General Eric Holder.

Analysis: Brazil's mass protests peak, ball in politicians' court

BRASILIA - The massive protests that paralyzed Brazil last week appear to have peaked after sending the country's shaken political establishment a loud message that it needs to change its ways.

It's now up to the politicians to deliver improvements to the country's deficient public services and more transparent and accountable government demanded by frustrated Brazilians, or the crescendo of angry protests could suddenly return.

While smaller protests continue on a daily basis, the number of demonstrators this week was much lower than the one million people who took to the streets a week ago, due to a mix of protest fatigue and achievement of the protesters' initial aim of drawing attention to their grievances.

Tens of thousands may still protest around Sunday's Confederations Cup final soccer match between Brazil and Spain in Rio de Janeiro, the locus of violence so far, but the end of the soccer tournament will deprive protesters of a high-profile stage on which to air their grievances.

"The streets are saying to the politicians: you have heard our voices, now let's see what you will do with this," said Marcos Nobre, a political philosophy professor at the University of Campinas and author of a new e-book on the popular revolt.

"The protests have peaked but they are not over. This is a truce as Brazilians wait to see how the political system responds," Nobre added.

Politicians in Brasilia are rushing to clean up their act to appease the anger directed at them by the protesters. Congress is fast-tracking measures against corruption. One of its members, convicted of embezzling public funds, on Friday became the first federal lawmaker to go to jail in 25 years.

But analysts say deeper reforms will be needed to restore public credibility in a political class viewed as self-serving, overpaid and corrupt.

The civil unrest, something rarely seen in recent decades in South America's economic powerhouse, was sparked by a small protest against higher public transportation fares in Sao Paulo.

The ensuing police crackdown, which touched a nerve in a country with a history of violent political repression under a military dictatorship that ended in 1985, fanned demonstrations nationwide even after cities agreed to roll back the fare increases.

The protests were fueled by widespread frustration with Brazil's deplorable education, health and transportation services, rising crime and cost of living, as well as over-spending on stadiums that will host next year's World Cup soccer tournament.

Six people died in the protests, including a young man who fell from an overpass in Belo Horizonte on Wednesday as riot police fired tear gas and rubber bullets into marchers to stop them from reaching a stadium where a Confederations Cup game was underway.

The Confederations Cup is a warm-up for the 2014 World Cup, which Brazil will host in 12 cities.

The protesters used the Confederations Cup to tell the world that Brazil is not just a land of soccer and that their priorities are improved education, healthcare and public transportation rather than costly mega-events like the World Cup and the Olympic Games set for 2016 in Rio de Janeiro.

TAKEN BY SURPRISE

The protests took Brazilian politicians by surprise and showed how out of touch they were with an increasingly middle-class nation that is more informed and unwilling to tolerate a political system long plagued by patronage and corruption.

The leaderless protests expressed a wide array of demands, but one common target, Nobre said, was "a corrupt political system that does not represent this new democratic political culture that has arisen mainly through social networks."

The protests sent shockwaves through Brazil's Congress and prompted frenetic activity by lawmakers who have rushed to pass legislation that had been sitting around for years, notably a bill toughening sentences for corruption.

"The political class fears the consequences of this popular revolt. Politicians are keenly aware that if we do not change the way we do things we are going to be trampled on in next year's elections," Alvaro Dias, leader of the opposition PSDB party in the Senate, told Reuters. "Congress is making up for lost time by rushing through bills."

PRESIDENT SCRAMBLING

President Dilma Rousseff has received scant praise for her response, even within her own party, and elections are coming.

Brazil's first female president is expected to run for a second term next year and her popularity had already begun to slip before the protests on concerns about rising inflation and slow growth in the world's seventh-largest economy.

Rousseff surprised Brazil on Monday by announcing plans to convene a constituent assembly to adopt political reforms. Within less than 24 hours, she had withdrawn the idea in the face of strong criticism even from within her ruling coalition.

Her Workers' Party government is now working with its allies to hold a quick plebiscite this year that will ask Brazilians what political reforms they want, a plan that is seen as overhasty damage control by opposition leaders such as Dias.

Even members of her unwieldy 16-party coalition would rather Congress draw up the reforms first and then seek the nation's approval in a yes-or-no referendum that could be added to the ballot in the general election slated for October 2014.

If the response to the protests is unsatisfactory for Brazilians, the protests would re-ignite, Nobre said. And if they continue into 2014 they could endanger the holding of the 32-nation World Cup - an ideal occasion for new demonstrations - and disrupt campaigns of politicians seeking re-election.

Socialist lawmaker Chico Alencar says the survival instinct of Brazil's politicians has made them react quickly to the loud criticism from the streets, but changes modernizing Brazil's democratic system will come only if popular pressure continues.

"If the protests fizzle out, conservative forces that want to maintain the status quo will regain control of the political agenda," he said.

Analysis: Clashing visions weigh on U.S. drive for Taliban talks

ISLAMABAD - As the United States makes a fresh attempt to start talks with the Taliban, competing visions in Afghanistan and neighboring Pakistan over what an eventual peace process might look like have emerged as one of the biggest hurdles.

Washington's hopes of negotiating with the insurgents to stabilize Afghanistan before most foreign troops leave by the end of 2014 had appeared to achieve a breakthrough last week when the Taliban opened an office in the Qatari capital Doha.

But the process was plunged into uncertainty when Afghan President Hamid Karzai refused to send negotiators to the Gulf state after the Taliban raised a flag at its new premises, infuriating the Afghan government and prompting frantic attempts by U.S. officials to resuscitate the planned dialogue.

While global attention has focused on the debacle in Doha, tensions between Afghanistan and Pakistan - whose cooperation will be vital to any deal - have made the prospects of meaningful progress towards a settlement even less sure.

Since the Doha office was opened, Pakistani officials have made a series of comments suggesting that Karzai, who is due to step down at elections in April, 2014, is already irrelevant to what should be wide-ranging talks on Afghanistan's future.

"His expiry date has come," said a Pakistani government official, who is close to Pakistan's discussions with the U.S. and other allies on Afghanistan. "The principle is a fundamental overhaul."

Pakistan is in a position to influence the talks because its security forces backed the Taliban's rise to power in Afghanistan in the mid-1990s and continue to serve as gatekeepers to insurgent commanders living on its territory.

While the government official's view does not reflect the public position of Pakistan, which has pledged to support the Afghan government's reconciliation drive on the basis of the existing Afghan constitution, it does provide a window into a strand of thinking within Islamabad's ruling establishment.

However, it is unusual for senior officials in the government to discuss Afghan policy in detail.

The view that Karzai is a hindrance to talks was reflected in comments made to Reuters by three senior Pakistani officials occupying key positions in the foreign ministry and the army, which holds sway over relations with Afghanistan, in recent months. Karzai was installed as president after U.S.-backed troops overthrew the Taliban government in 2001.

"Right now, Karzai is the biggest impediment to the peace process," a top Pakistani Foreign Ministry official told Reuters in March. "In trying to look like a savior, he is taking Afghanistan straight to hell."

The thrust of Pakistan's criticism is that Karzai is too erratic to handle negotiations. Pakistani officials also argue that the most important protagonists for any peace process are the United States, the Taliban, and the Northern Alliance, a group of Afghan ex-warlords who fought the Taliban in the 1990s and now wield significant influence in Kabul.

This view was laid out in detail in a front-page story published in Pakistan's privately owned Express Tribune newspaper after the Taliban office opened, quoting Pakistani military and diplomatic sources as saying Karzai had no place in any deal.

The sources described the Afghan president as "unstable" and a "poisonous roadblock."

"HOSTILE AND EVIL"

Afghan officials and commentators suspect that Pakistan's frustration with Karzai stems from its desire to ensure that any future government in Kabul overturns the Afghan president's policy of cultivating warmer ties with India, Pakistan's nuclear rival. They also maintain that Pakistan has backed the Taliban through the 12 years of war against U.S.-backed troops.

"We pleaded with Pakistan for peace, but Pakistan's policy and intentions towards Afghanistan have always been hostile and evil," said Bashir Bezhan, a Kabul-based political analyst.

Washington praised Pakistan last week for helping to nudge insurgents towards the negotiating table in Doha, a contrast with acrimonious exchanges in previous years over allegations that Pakistan continued to covertly support the Taliban.

Against this backdrop of suspicions of Pakistan, an attack by the Taliban on the presidential palace in Kabul on Tuesday cast fresh doubt on whether Karzai would be prepared to participate in peace talks.

U.S. President Barack Obama later called Karzai and the two agreed on the need for an Afghan-led peace process and to support the presence of the Taliban office in Doha, the White House said. But no date has been set for any negotiations.

Pakistan foreign ministry spokesman Aizaz Chaudhry said Islamabad remained committed to supporting reconciliation in Afghanistan. "The official position of the government is to support an all inclusive, inter-Afghan dialogue," he said.

BONN 2

The Pakistani government official who is close to Islamabad's thinking on Afghanistan, said one possible way forward at Doha would be far-reaching talks akin to the conference held in the German city of Bonn in December, 2001, which laid the foundations of Karzai's administration.

The key players would be the United States, the Taliban and members of the Northern Alliance, who Pakistan has been carefully courting for more than a year - but not Karzai.

"It would be in a real sense a Bonn 2," the government official said. "Pakistan will have a ringside view...In the ring you'll have Americans and Afghans."

Such a view cuts a complete contrast with the position of Karzai's government, which believes the insurgents must lay down their arms, accept the constitution and find a role within the new Afghanistan that grew from the ashes of the Taliban theocracy toppled by U.S.-led forces in 2001.

The "Bonn 2" proposal may, however, just be wishful thinking within Pakistan's military, which might see such a conference as a chance to promote its preferred factions.

There would also seem to be little appetite among Karzai's Western allies to go back to the drawing board in Afghanistan at a time when NATO countries are seeking to scale back their engagement.

The Afghan government declined to comment on any "Bonn 2" kind of meeting. Washington has repeatedly said the Taliban must accept the Afghan constitution and U.S. officials said they were unaware of any proposal for a new Bonn-style conference.

For now, the United States is sticking to its plan to coax Karzai's government and the Taliban together in Qatar, even as the tensions between Afghanistan and Pakistan remain unresolved.

"In the Pakistani military's eyes, Karzai is a lame duck, irrelevant," said Cyril Almeida, a columnist with Pakistan' Dawn newspaper. "The problem is that his is the only Afghan government there is."