Wall Street Journal số ra ngày 25/2/2014

VOL. XXXII NO. 18

TUESDAY, FEBRUARY 25, 2014

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PERSONAL JOURNAL 25

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EUROPE EDITION

WSJ.com

 Not everyone wants the

return of Tymoshenko......... 10

 Opinion: The West must stop

Putin’s interference................ 12

 More coverage of Mobile

World Congress...................18,19

EU, U.S. Scramble to Find Aid for Kiev

Western Officials Say Swift Action

Is Needed to Avoid Financial Crisis

But Face Thicket of Rules, Hurdles

BRUSSELS—Europe and

the U.S. grappled with how to

pull together billions of dol￾lars in financing for Ukraine

to fend off its economic col￾lapse in the aftermath of

weeks of political crisis and

violent street protests.

Talks between Kiev, Brus￾sels and Washington come

amid allegations that the gov￾ernment of former President

Viktor Yanukovych, who fled

Kiev to an unknown location,

raided the government’s cof￾fers before being removed

from power over the week￾end.

“The treasury has been

plundered, the country has

been bankrupted,” Arseniy

Yatsenyuk, one of the opposi￾tion leaders and a former for￾eign minister, said Monday,

according to Interfax news

agency.

Amid Ukraine’s increas￾ingly dire financial situation,

European Union negotiators

are facing a thicket of rules

governing how the 28-nation

bloc can lend money to prop

up its neighbors. The EU and

the U.S. want the Interna￾tional Monetary Fund in￾volved to force long-delayed

reforms from Kiev in ex￾change for cash. But IMF pro￾grams can take weeks to ne￾gotiate, while Ukraine may

not have that long.

“We have to help them

soon—this month, next

month,” said Elmar Brok,

chairman of the European

Parliament’s foreign affairs

committee, who was in Kiev

meeting with Ukrainian offi￾cials. “Hopefully everyone is

flexible to do that.”

The U.S., the U.K. and

some other European officials

said the IMF is best placed to

provide aid to Ukraine. U.S.

Treasury Secretary Jacob Lew

backed IMF aid for Ukraine,

after speaking by phone with

IMF chief Christine Lagarde

and Mr. Yatsenyuk,aU.S.

Treasury official said.

"Such support could be

provided quickly once re￾quested by the new govern￾ment,” U.K. Foreign Secretary

William Hague said.

Meanwhile, Ukraine’s act￾ing finance minister said in a

statement Monday that the

government would seek a loan

from the U.S. and Poland

within one to two weeks. By

the end of 2015, Ukraine

hopes to raise some $35 bil￾lion from the IMF and Europe

to revamp the economy and

repay its foreign debt. But to

get that aid, a yet-to-be￾formed government would

have to carry out unpopular

measures that were shot

down by Mr. Yanukovych and

other Ukrainian authorities.

Those measures include al￾lowing the currency to de￾Please turn to page 11

By Matthew Dalton,

Andrey Ostroukh

and Laurence Norman

A woman studies a wanted poster in Kiev on Monday seeking the whereabouts of Viktor Yanukovych,

the ousted Ukrainian president. He was believed to be in hiding in the southern Crimea province.

Reuters

Zuckerberg:WhatsApp IsWorth It

BARCELONA—Mark Zuck￾erberg has a message for

doubters of Facebook Inc.’s

acquisition of mobile-messag￾ing service WhatsApp Inc.:

$19 billion was cheap.

The Face￾book chief exec￾utive said Mon￾day that the

f iv e- year-old

mobile application was worth

more than Facebook agreed to

pay for it last week, because

the app is a rare platform that

has the potential to reach

over a billion users.

In a question-and-answer

session here at the yearly Mo￾bile World Congress, Mr.

Zuckerberg said that other

messaging apps are already

monetizing their users at $2

to $3 a head. Meanwhile

WhatsApp, with little revenue

so far, is onatrajectory to

grow quickly from 450 million

users to overabillion, Mr.

Zuckerberg said.

“The reality is that there

are very few services that

reach a billion people in the

world. They’re all incredibly

valuable, much more valuable

than that,” Mr. Zuckerberg

said, referring to the price

tag, which included $16 billion

in cash and stock and $3 bil￾lion in restricted stock units.

What’s more, WhatsApp is

soon to offer voice calling to

its users, the startup’s co￾founder and chief executive

said at a separate event in

Barcelona on Monday.

Jan Koum said during a

speech at Mobile World Con￾gress that WhatsApp would

first release a version of the

voice service for Apple Inc.’s

iPhone and Google Inc.’s An￾droid platforms, followed by

services for Microsoft Corp.’s

Windows Phone, as well as

some phones by BlackBerry

Ltd. and Nokia Corp.

He also said the WhatsApp

voice product would “focus on

simplicity” as it has with its

text-based messaging service.

With its move into voice

calls, WhatsApp will now

compete more directly with

Microsoft’s Skype service,

which began as a platform for

Please turn to page 18

BY SAM SCHECHNER

AND JONATHAN CHENG

$1.75 (C/V) - KES 250 - NAI 375 - £1.70

Inside

Thinking small: RBS

bankers are making

the tea and loading

the packing cases as

they get down with

the customers

Business & Finance...15

Turkish Finance Minister Mehmet Simsek, in

an article for The Wall Street Journal, says

Turkey will rise above fear

Opinion...............................................................14

FugitiveLeader

Faces Charges

Of ‘MassMurder’

KIEV—Ukraine’s acting

government on Monday is￾sued an arrest warrant for

ousted President Viktor Yanu￾kovych and said it was open￾ing a criminal case into the

“mass murder” of civilians

stemming from violent

clashes in the capital last

week that left dozens dead.

The Interior Ministry’s

acting head, Arsen Avakov,

wrote on his Facebook page

that Mr. Yanukovych is be￾lieved to be in Crimea, a

southern region dominated by

ethnic Russians that serves as

home to Russia’s Black Sea

naval fleet. A ministry official

who declined to be named

verified the post.

“As of this morning, a

criminal case has been

opened based on the mass

murder of civilians. Yanuk￾ovych and some other offi￾cials have been put on the

wanted persons list,” Mr. Ava￾kov wrote.

He said Mr. Yanukovych is

believed to have left his na￾tive Donetsk late Saturday

and arrived in Crimea on Sun￾Please turn to page 10

By Lukas I. Alpert,

Andrey Ostroukh,

Alan Cullison

and James Marson

MOBILE

WORLD

CONGRESS

28 | Tuesday, February 25, 2014 THE WALL STREET JOURNAL.

HEARD ON THE STREET

Email: [email protected] FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard

For China,

A Storm

Brews in

A Teacup

China’s secretive currency

managers certainly know how

to conjure upastorm.

The usually predictable

Chinese yuan took a dive over

the past week, its first sus￾tained weakness against the

dollar since 2012. The Peo￾ple’s Bank of China has guided

the yuan 0.5% weaker by mov￾ing its daily target rate lower.

That is despite pressure from

traders, who work within the

currency’s narrow trading

band, to let it strengthen.

It is a fast and big move

for the tightly controlled cur￾rency. The freely traded Hong

Kong flavor of the yuan, a lev￾eraged reflection of its on￾shore cousin, has fallen a

more dramatic 1.3%.

The most obvious explana￾tion is that China wants to

flush speculators out of a

trade that seemed to go in

one direction: toward yuan

strength. The yuan’s low vola￾tility and steady 3% apprecia￾tion against the dollar last

year made it like catnip for

carry-trade investors burned

by the Indian rupee and Turk￾ish lira.

Beijing has accepted a

long-term strengthening of its

currency, as evidenced by the

yuan’s 20% rise in trade￾weighted terms since 2010,

according to UBS economist

Wang Tao. What it doesn’t

like is speculative cash that

piggybacks on that apprecia￾tion. Such inflows put pres￾sure on the government to ei￾ther allow the currency to

rise more than it desires,

harming the export sector, or

absorb the inflows by accu￾mulating currency reserves.

Reserves grew last year by

$510 billion to $3.8 trillion.

It is likely a chunk of those

inflows didn’t come through

wholly legitimate means. Two

of the biggest inflow genera￾tors—export earnings and for￾eign direct investment—have

in the past been manipulated

by companies that work on

both sides of the border to

sneak in cash to take advan￾tage of higher interest rates

and other investment oppor￾tunities.

A risk is that if investors

sense Beijing wants the ap￾preciation trend to take a pro￾longed breather to boost the

slowing economy, capital

might flow back out. It is

highly unlikely that China’s

reserves-rich, risk-averse cur￾rency managers will let the

currency drop substantially.

But by guiding the currency

lower in the short term, Bei￾jing hopes to prevent an un￾winding of the yuan trade

from causing real damage.

—Alex Frangos

HSBC Is Running in Place

HSBC is suffering growing

pains. Despitea9% rise in

both the bank’s pretax profit

and dividend for 2013, its

shares fell 2.8% Monday as

results came in below expec￾tations. With worries about

emerging markets clouding

the outlook forabank that

has hitched itself to the mast

of growing global trade,

HSBC has a bit to do to renew

investor excitement.

Sure, the fall in its shares

looks a little overdone. Ana￾lysts may have failed to antic￾ipate the impact of the U.K.’s

bank levy, a $903 million

charge that HSBC takes in the

fourth quarter. And HSBC has

managed steady performance

even while it has been shrink￾ing. Since 2011 the bank has

exited from 63 businesses, ac￾counting for $95 billion of its

risk-weighted assets. Its oper￾ating income has fallen by

only 2.3% in that time, helped

by target-beating annual cost

savings worth $4.9 billion.

Moreover, HSBC’s balance

sheet is in decent shape, with

core Tier 1 equity up to 10.9%

of its risk-weighted assets.

The rising dividend could

eventually be accompanied by

share buybacks. HSBC will

seek shareholder approval for

that this spring.

Still, the problem for

HSBC is that since 2011 it has

effectively been running hard

to stand still. It has promoted

itself as a key beneficiary of

global growth thanks to its

expertise in trade finance.

But with emerging-market

growth increasingly check￾ered, it is getting harder to

judge HSBC’s revenue out￾look.

On the expense side, the

low-hanging fruit of lower

loan provisions, cost savings

and decreasing regulatory

fines can only be plucked so

often.

Slower revenue and di￾minished savings opportuni￾ties could make it hard for

HSBC to significantly raise its

return on equity from the

9.2% it achieved last year.

Certainly, its hopes of achiev￾ing a ROE of 12% to 15%

sometime between 2014 and

2016 look hard to realize. The

absence of firm regulatory

capital requirements makes

that ROE target even more

uncertain, because the equity

side of the equation still is

unclear.

HSBC’s best hope may be

to achieveaROE that at least

beats its roughly 10% cost of

equity. That would mean the

bank at least creating value

for its shareholders. But

given that it already trades at

1.3 times its expected tangi￾ble book value for 2014, that

hardly equates to much for

investors to get excited

about.

—Andrew Peaple

Volkswagen Keeps on Truckin’

Ferdinand Piëch’s empire

building knows no bounds.

The Volkswagen chairman is

offering €6.7 billion ($9.21 bil￾lion) to buy out minority

shareholders in Swedish truck

maker Scania, of which it al￾ready owns 63%. That looks

likeasteep price considering

VW shareholders aren’t likely

to see much for their money

anytime soon.

Scania deserves some pre￾mium to its truck-maker

peers, thanks to its premium

products, efficient manufac￾turing model and the large

portion of sales it derives

from high-margin service con￾tracts.

But VW is paying 50%

more than Scania’s average

price over the past 90 days.

That values the truck maker

at an eye-watering 1.8 times

forecast 2014 sales; Volvo and

VW’s MAN trade at just 0.8

times and one times, respec￾tively.

VW looks unlikely to get

much for its generosity. It al￾ready has an 89% voting in￾terest in Scania, but it argues

legal restrictions designed to

protect the Swedish com￾pany’s minorities prevent it

from realizing the full bene￾fits of cooperation, like shar￾ing technology. With 100% of

Scania, VW reckons that it

can generate an additional

€650 million a year in cost

synergies.

The snag is that long prod￾uct cycles in the trucks busi￾ness mean the new savings

won’t materialize for 10 to 15

years, reducing their value to

just €1.8 billon taxed and cap￾italized today, estimates ISI

Group.

Nor is VW treating its

shareholders equitably. Ordi￾nary shareholders, which in￾clude the Porsche family, ha￾ven’t been asked to

contribute.

But holders of VW’s more

liquid preference shares have

been asked to throw in up to

€2 billion of the Scania pur￾chase price, marking the

fourth cash call since 2009.

The capital increase also

looks unnecessary, unless VW

has bigger designs for its

cash.

It will be left with about

€14 billion in net cash, above

the €10 billion it needs to

maintain its credit rating. VW

expects to generateafurther

€6 billion in free cash flow

from operations this year.

All this comes as VW’s

core business is generating

diminishing returns. This year

is expected to mark the fourth

in a row of flat earnings de￾spite sales being 24% higher

than in 2011, Bernstein Re￾search notes. Pressure on VW

to prove the merits of its ex￾panding empire is only likely

to grow.

—Renée Schultes

Fender Bender

Volkswagen’s preferred shares

The Wall Street Journal

Source: FactSet

€225

100

125

150

175

200

2013 ’14

Assembly line at the Scania

truck plant in Angers, France

Monetary policy is a lot

like weather forecasting: It is

cloaked in scientific method

but often turns out to be

more art.

The Federal Reserve tran￾scripts of 2008 meetings,

released Friday, give some

illustrations of this. During

the board’s Sept. 16 meeting,

a day after the collapse of

Lehman Brothers, there was

discussion of how other

countries were reacting to

market turmoil.

Nathan Sheets, then the

Fed’s director of the division

of international finance,

noted the People’s Bank of

China the day before cut its

main policy rate by 0.27 per￾centage point, or 27 basis

points. He said, “I guess they

felt that 26 would not have

been enough and 28 would

have been too much.”

Fed Chairman Ben Ber￾nanke added that “three is a

lucky number in China,” and

that Vice Chairman Donald

Kohn was about to point out

that, “three cubed is 27.” To

which Mr. Kohn said he also

was going to wonder

“whether we needed to har￾ness the mystical powers.”

The transcript reflects

the back and forth was

marked by laughter. Mr.

Sheets summed it up: “The

science of monetary policy.”

OVERHEARD

Industries Feel

Burn From Chill

Investors in America’s

steelmakers and fertilizer

producers can smell gas.

Front-month natural-gas

prices rose back above $6 a

million British thermal units

last week. Steelmakers burn

gas to fuel their blast fur￾naces. Credit Suisse esti￾mates that before adjusting

for hedging,a$1 increase in

the gas price knocks $1.60 a

share off U.S. Steel’s value

and 74 cents off AK Steel

Holding’s—6.5% and 11.5% of

their current share prices, re￾spectively.

CF Industries Holdings,

meanwhile, uses gas to make

nitrogen-rich plant food. But

the company shielded itself

against swings in natural-gas

prices by locking in 75% of its

first-quarter natural-gas

needs at $3.66 MMBtu via

hedges. It has also hedged

half of its second-quarter ex￾posure.

Still, analysts at brokerage

Feltl say CF’s earnings could

face pressure if strength in

gas prices persists. They ex￾pect earnings of $18.38 a

share in the second half of

the year if gas prices average

$3.75 MMBtu, but that drops

to $17.72 if gas hovers at

$4.25. So far this year, gas

has averaged $5.31.

But while traders thrill to

daily swings in front-month

futures, corporate profits are

affected by how gas prices

perform over time. Front￾month futures were back be￾low $6 Monday. The futures

curve suggests prices will

drop markedly as winter

weather eases. Prices for gas

to be delivered in April have

risen only about 8% over the

past month and are below $5.

That offers some hope for

the steelmakers especially,

whose stocks have slipped by

double-digit percentages this

year. But with gas inventories

possibly hitting a 10-year sea￾sonal low by the end of this

harsh winter, there is another

risk to negotiate: a hot sum￾mer. All that air conditioning

would take a lot of electric￾ity—and the gas to produce

it. —Tatyana Shumsky

With emerging-market growth becoming

increasingly checkered, it is getting harder

to judge the bank’s revenue outlook.

Back of the Pack

Share performance

Source: FactSet The Wall Street Journal

60

–20

0

20

40

%

2013 ’14

HSBC

Citigroup

Bank of America

Barclays

Stuart Gulliver,

CEO of HSBC

Bloomberg News

The futures curve

suggests gas prices

will drop markedly.

Agence France-Presse

2 | Tuesday, February 25, 2014 AM IM UK SW FR IT SP TK BR PL IS AE GR THE WALL STREET JOURNAL.

PAGE TWO

Rep. Eric

Cantor wants

Republicans to

stop thinking of

themselves as

simply the

opposition party, and to start

acting more like the alternative

party.

Such a distinction is important,

but difficult to realize. As is often

the case when a party doesn’t

occupy the White House,

Republicans have become far

more comfortable simply being

against what President Barack

Obama is for, rather than doing

the tougher work of agreeing on

precisely what they would do

differently.

To some in the party’s more

conservative quarters, in fact,

even calls for targeted

government action are reflexively

being read as unwanted calls for

big-government action, and an

unnecessary distraction from

attacks on the health law

championed by the president. But

in an election year in which

Republicans are asking voters to

give them full control of Congress,

the need to be for something and

not simply against lots of things

becomes crucial.

“Our members are going to get

very excited if we can provide

alternatives, not just be a party

that’s against whatever the

president is for,” Mr. Cantor, the

House majority leader, said in an

interview. “It doesn’t mean we’re

not going to prosecute the case

against the president’s agenda in

the form of a public debate.”

This quest has taken the form

of a series of speeches and

writings in recent weeks in which

the Mr. Cantor has sought to

define what Republicans—at least

House Republicans—ought to

stand for. The effort started a year

ago, when he delivered a speech

at the American Enterprise

Institute that laid out arguments

for, among other things, charter

schools and school choice, and a

federal law that would enable

working parents to convert

overtime into comp time.

Last month, at a retreat of

House Republicans, Mr. Cantor

presented a broad agenda that he

described as “An America That

Works.” In it, he urged

Republicans to embrace reforms

in federal job-training programs,

while also pushing more

predictable ideas for easing

regulations on energy and

manufacturing, and tax reductions

on the middle class. He again

made a push for more charter

schools, but also urged the GOP to

generate ideas for reducing the

cost of college education.

And then, this month, he gave

a speech at the Virginia Military

Institute on national-security

issues in which he called for more

aid for Syria’s rebels, more

economic sanctions on Iran, a

reversal of some planned defense￾spending cuts and completion of a

free-trade pact in Asia.

In some ways, though, the

question hanging over all this is

the giant, complicated question of

health care. Like virtually every

Republican in sight, Mr. Cantor

has called for repealing the

Affordable Care Act.

But the harder part for

Republicans is spelling out how

they would replace it.

“Honestly,Ithink Obamacare is

on borrowed time,” Mr. Cantor

says. “We may have an

opportunity for an alternative to

be put in place.” But there isn’t

agreement among congressional

Republicans on whether to

participate in attempts to modify

the law or on any single

alternative to take its place.

House Republicans presented a

plan back in 2009 that would

allow insurance companies to sell

policies across state lines and

expand use of state-based high￾risk insurance pools to help

people with pre-existing

conditions find insurance. More

recently, the conservative House

Republican Study Committee

offered its own plan, using tax

deductions to help individuals buy

health insurance, and last month

three Republican senators

released their own. All have

similarities, but aren’t identical.

Mr. Cantor says simply: “Our

conference is working on that.”

His bigger problem is that, to

get to this kind of agenda, House

Republican leaders have been

trying to move past the

arguments about spending and

debt that have left Congress tied

in knots for the last two years and

sent perceptions of Republican

leadership sliding downward.

Yet many in the party’s tea￾party and conservative wings

seem more interested in

remaining focused on opposition.

Look at the website of Heritage

Action, the new political-action

arm of the Heritage Foundation

think tank, and you get a visual

image of this impulse.

On the group’s list of

recommended votes on key

congressional issues, the first

seven items are all calls for votes

against something. The group

urged ‘no’ votes on raising the

debt ceiling, on passing the farm

bill, on reforming flood insurance,

on a new federal spending plan,

on extending unemployment

benefits for the long-term

unemployed, on a new budget

outline and on the confirmation of

Janet Yellen as chairwoman of the

Federal Reserve.

Mr. Cantor clearly doesn’t want

that to be the totality of the GOP

message: “It’s really important to

us to assert conservative

solutions, because so many people

are hurting.”

Cantor Pushes the GOP

To Spell Out Its Agenda

[ Capital Journal. ]

BY GERALD F. SEIB

iii

Business & Finance

n State-controlled Royal Bank

of Scotland is going to exten￾sive pains to appease its own￾ers and customers after six

years of withering criticism. 15

n Novartis is distancing itself

from the era of Daniel Vasella,

the former chairman whose

controversial exit package

blemished the Swiss pharma￾ceutical company’s image. 15

n China’s yuan hit a four￾month low, sparking expecta￾tions that years of gains may

be nearing an end. 15

n Samsung unveiled an up￾dated flagship smartphone that

reflects an attempt to eschew

flashy features—and to keep

the price competitive. 18

n Mining in the Arctic has

proved a quixotic quest for all

but a few tenacious miners like

Agnico Eagle-Mines. 17

n HSBC said flat revenue and

higher operating costs weighed

on profits last year, adding to

concerns about the bank’s

prospects. 20

n Sony Corp. is rolling out a

new smartphone loaded with

its most advanced camera and

audio technologies. 19

n Jewelers and traders in In￾dia are exploiting a legal loop￾hole and using Indians who are

coming home after working in

other countries to ferry the

gold into India. 22

iii

World-Wide

n Italy’s new prime minister,

Matteo Renzi, was expected to

win two confidence votes this

week and begin implementing

his coalition’s ambitious

agenda. 4

n Ugandan President Yoweri

Museveni signed into law an

antigay bill, setting the stage

forashowdown with Western

donors and rights activists op￾posed to the legislation. 8

n China’s property market is

showing its strongest signs of

a cool-down, as price growth

eases, credit for many develop￾ers dries up, and some cut

prices at new projects. 7

n A Russian court sentenced

seven activists to prison terms

ranging from 30 months to

four years after they were con￾victed of being involved in a

“mass riot” during an anti￾Kremlin protest in 2012.

n Thai Prime Minister Ying￾luck Shinawatra vowed not to

resign amid continuing anti￾government street protests. 8

n Afghans mourned 21 sol￾diers killed in a Taliban attack

as details emerged about an in￾cident that sparked a wave of

outrage in the country. 8

n U.S. Rep. John Dingell, a

Democrat who is dean of the

House and the longest-serving

member of Congress in history,

is retiring after serving more

than 58 years in the House. 6

What’s News—

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Very Handy: Samsung Gear2 on show Monday

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Breaking news and analysis from the MWC: WSJ.com/mobileworld

Getty Images

‘It’s really important to us to assert conservative solutions, because so many people are hurting,’ Rep. Eric Cantor says.

Agence France-Presse/Getty Images

THE WALL STREET JOURNAL. Tuesday, February 25, 2014 | 27

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Musician and ‘Subway Geek’ Is on a Quest to Jazz Up Turnstile Tones; a Swipe at the Ugly Beep

M

usician James Murphy

thinks New York’s “under￾ground music” scene

leavesalot to be desired. He

wants to change the underlying

sound: the cacophony produced by

the subway turnstiles.

“They make this unpleasant

beep and are all slightly out of

tune from one another,” said Mr.

Murphy, 44 years old, over break￾fast recently in the trendy Wil￾liamsburg neighborhood here.

For the past 15 years, Mr. Mur￾phy has been crafting what he

says is a low-cost musical solu￾tion: He has worked out a unique

set of notes for every station, one

of which would sound each time a

passenger swipes his or her Met￾roCard to catch a train. The busier

a station becomes, the richer the

harmonies would be. The same

notes would also play inaset se￾quence when the subway arrives

at that stop. Each of the city’s 468

subway stations would have note

sets in different keys.

Now, he believes his plan fi￾nally has a chance, as the state’s

Metropolitan Transportation Au￾thority embarks on a $900,000-a￾year project to improve passenger

flow at some stations by reposi￾tioning turnstiles, furniture and

emergency exits.

A separate project in the works

will preserve the old turnstiles but

eventually eliminate the need to

swipe MetroCards through them.

By 2019, according to the plan,

subway riders will enter using de￾vices such as a smartphone, card

or key, embedded

with an electronic

chip.

The reason for

the tones in the

first place is sim￾ply to accommo￾date the blind: A

single tone means

“go,” a double

tone means ”swipe again” and a

triple tone indicates insufficient

fare.

The dissonance among ma￾chines is due to “natural technical

variation and we really don’t

care,” said MTA spokesman Adam

Lisberg. Many New Yorkers are

probably completely oblivious to

the tones and their meaning.

Mr. Lisberg said Mr. Murphy’s

plan “isavery cool idea,” one that

several people have independently

proposed over the years. But it

might be hard to put into practice,

he said: It’s likely to requirealot

of time and money, and probably

means temporarily taking each of

the city’s 3,289 turnstiles out of

service, something the authority is

not inclined to do “for an art proj￾ect.”

“If you screw something up,”

Mr. Lisberg continued, you risk

breaking the turnstile. Given the

5.5 million passengers who use the

system on an average weekday, he

said the transit authority was “not

inclined to mess with anything

that could get in their way.”

Mr. Murphy, though, argues

that his plan would cost very lit￾tle, and labor could be saved if

tone generators were installed or

reprogrammed during the reposi￾tioning or along with the new

mechanism that will detect pas￾sengers’ microchips.

Mr. Murphy, the well-known

creator and lead singer of the

now-defunct electronic-dance￾punk band LCD Soundsystem,

failed to land a meeting with for￾mer Mayor Michael Bloomberg.

He’s more hopeful about his pros￾pects with Mr. Bloomberg’s suc￾cessor, Bill de Blasio: “If the mayor

wanted this to happen, I know

there’s someone who could make

this work.”

Howard Wolfson, who served

as deputy mayor under Mr.

Bloomberg and writes a popular

music blog, said he was ap￾proached about the idea but

couldn’t help because the MTA is a

state agency, not part of New York

City government.

Mr. Murphy

isn’t the only one

lobbying for more

euphonic turn￾stiles. In July,

James Kogan,

freshly graduated

from New York’s

selective Stuyve￾sant High School, emailed the

MTA’s arts department with a

nearly identical proposal that

would substitute “soothing

chords” for the current sound of a

turnstile, which he lamented was

“a cold, dismissive beep.”

He said he could write the code

himself that would tell turnstiles

to generate notes at random from

a given harmonic set. All he would

need, he said, is one computer sci￾entist familiar with turnstile lan￾guage to help with the installation.

“This is not so difficult—I took

some very basic computer pro￾gramming,” said Mr. Kogan, a self￾taught guitarist who is now a

freshman at the University of Chi￾cago. He said he got the idea while

plucking chords on an African

thumb piano called a kalimba.

Mr. Murphy, a subway geek

whose smartphone is loaded with

apps that suggest the most strate￾gic train car and door to stand

near in order to exit a station

most efficiently, has lived in New

York since the 1980s and is gener￾ally happy with the subway ser￾vice. He said he gets “very angry

when I see people jump fare.”

He said his subway-sound ob￾session began in the 1990s when

he first rode the Tokyo metro and

was blown away by the system’s

friendly voices and “incredibly

gentle beeps.” He was further in￾spired by trips through the Barce￾lona airport, which he said fea￾turedasignature four-note

sequence before loudspeaker an￾nouncements. Mr. Murphy said the

ditty reminded him of the opening

notes of the group Chicago’s song

“Colour My World.”

“In New York at the time, you

had all this indistinguishable yell￾ing and horrible ‘you’ve done

something wrong’ sounds,” he

said. “I became kind of obsessed

with this idea that instead of just

unpleasant, with almost no change

at all, it could be beautiful.”

Unique harmonic sequences

could also help cut down on riders

missing their stops, Mr. Murphy

added, while boosting their emo￾tional connections to their neigh￾borhoods.

So around 2001, the same year

he started LCD Soundsystem and

founded his record label, DFA Re￾cords, Mr. Murphy and his man￾agement team started approaching

arts-funding organizations and

city and state officials. They made

little headway.

“An art project that integrates

in with the turnstile—that’s like

three different departments and

no one’s going to agree,” Mr. Mur￾phy said he was told repeatedly.

Still, Mr. Murphy forged ahead

in his spare time, composing the

note sequences for various subway

lines in his head—the same way he

writes songs.

Mr. Murphy played his last

show with LCD Soundsystem in

2011. He is doing a lot of different

things now. In addition to frequent

solo DJ gigs, he produced Cana￾dian indie-rock band Arcade Fire’s

fourth studio album, “Reflektor,”

and composed music forarevival

of the play “Betrayal.”

He also created his own

espresso blend in conjunction with

Blue Bottle,ahigh-end coffee com￾pany, and is building a new studio

in Williamsburg.

While his subway oeuvre is

only partially complete, he is pre￾pared to drop everything if the

MTA gives his plan a green light.

“If it doesn’t happen I’ll be bro￾ken hearted,” he said.

BY HANNAH KARP

Brooklyn, N.Y.

Online>>

Watchavideo about James

Murphy’s subway audio project at

WSJ.com/OffTheWall.

James Murphy, pictured in a New York subway station, thinks turnstiles should emit more pleasing sounds.

Araby Williams/The Wall Street Journal

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