NEW YORK (Reuters) ? Diageo PLC (DGE.L), the world's largest spirits company, expects sales growth in North America to remain constant despite the challenging economy, fueled by new products and a robust holiday selling season.
The British maker of Smirnoff vodka and Captain Morgan rum said it expects sales growth in this key market to continue at its recent pace, which was 5 percent in the latest quarter and 3 percent in fiscal 2011, which ended in June.
"That range is what we see as pretty sustainable," Diageo North America President Ivan Menezes told reporters ahead of an analyst and investor day in New York on Thursday.
In August, Diageo set new targets to grow overall underlying annual sales by 6 percent, improve margins, and see double-digit percentage earnings growth in the medium term.
"If we have a reasonable state of affairs in the economy ... those goals -- whilst not being a walk in the park -- are very, very doable," Paul Walsh. the company's CEO, said.
"We are definitely operating in a multispeed world but business is going forward," he said.
"In Europe there are some high spots and low spots," Walsh said, citing Germany and Russia as high spots. "We think we will probably hold our business approximately flat there in the near term."
That would be an improvement from the 3 percent decline seen last year, Walsh said.
ORGANIC GROWTH AND ACQUISITIONS
International sales have been fueled by faster-growing markets in Latin America, Africa and the Middle East.
The London-based group expects half of its turnover to come from emerging markets by 2015, up from around 35 percent currently. But Walsh said more emerging market acquisitions could lead the company to exceed the goal.
Diageo is seen by many on Wall Street as a likely suitor for the newly independent Beam Inc (BEAM.N), which makes Jim Beam and Maker's Mark bourbons.
When asked about the possibility, Walsh declined to comment. However, he did remark on the distribution contract Diageo has with the owners of Jose Cuervo tequila, which expires in June 2013.
"I would much prefer to have more of an equity participation than being a pure distributor ... but that's not in my control," Walsh said.
He said he expects to have continuous discussions with the Beckmann family owners about future options, including making the terms of the agreement more attractive.
"I think it's fair to say that the terms and conditions of the current agreement will need some revision from our perspective," Walsh said. "I don't think we make enough money out of the brand."
Diego also owns 34 percent of the Moet Hennessy drinks group and Walsh said he does not foresee any moves there.
"This is something that will not change, really, unless the owner of the 66 percent wants it to change," Walsh said, referring to French luxury goods group LVMH (LVMH.PA).
HOPING FOR A HAPPY HOLIDAY
North America represents one-third of Diageo's overall sales and 40 percent of its profits. Diageo USA is looking at a critical season as year-end holidays typically lift sales.
Larry Schwartz, president of Diageo USA, said in an interview that this year's holiday season should be better than last year, as consumers get used to the current environment.
Schwartz said new products such as peach-flavored Ciroc vodka will drive growth. Diageo also launched "whipped cream" and "fluffed marshmallow" flavored Smirnoff vodkas, on top of other new products like Johnnie Walker Double Black Scotch whisky and Guinness Black Lager.
"There's no reason for me to believe that the holiday won't be on track with what we're projecting," Schwartz said. "And we're projecting right now that it will be a good holiday, a decent holiday."
(Reporting by Martinne Geller, editing by Bernard Orr)
AYUTTHAYA, Thailand?? A huge work force in Thailand was back on the job Tuesday: the elephants famous for carrying tourists through the country's ancient capital.
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Authorities reopened a major elephant park in Ayutthaya, hoping to show tourists the country is beginning to return to normal following historic floods that have left more than 550 people dead nationwide.
Still, the prime minister said some parts of Bangkok could remain flooded into the New Year holiday period even though water is receding.
The pachyderms from the Ayutthaya Elephant Palace stood and sat with their mahouts ? or handlers ? through a prayer ceremony asking for blessings as the park opened for the first time since it was swamped in September.
The park is famous for offering tourists elephant rides through the ancient temple ruins that dot the city, a UNESCO World Heritage site 50 miles north of Bangkok. Experts fear that at least half of the more than 200 waterlogged monasteries, fortresses and other monuments in the one-time royal capital have been damaged by Thailand's worst floods in more than half a century.
Parts of the city were covered in up to 6 feet of water for more than a month. On Tuesday, the major temples were dry, but dead fish and piles of debris and garbage littered the grounds, highlighting the massive cleanup effort that lies ahead.
Shops in the city were reopening, but the streets were largely empty of tourists. Thailand's tourism industry as a whole has been mostly unaffected by the flooding, with visitors simply avoiding the inundated central region and heading to the many mountain and beach areas unaffected by the floods.
Authorities hope the reopening of the elephant park will start drawing visitors back.
"Right now the tourists are starting to understand and hear the news that tourism in Ayutthaya is resuming," said Witthaya Piewpong, Ayutthaya's governor. "We are now welcoming all tourists, especially here at the elephant palace."
The camp, which had 98 elephants, closed when the city began to flood and a small group was stranded on an area of dry land where they lived on donated fruit and vegetables. Most of the other elephants swam to safety.
The floods have affected more than a third of the country's provinces and killed 562 people nationwide since they began swamping the central heartland in late July. The water has been inching across parts of Bangkok for several weeks, and officials have often struggled with how to protect the city of 9 million people.
The threat to central Bangkok that had been officials' greatest worry appears to have largely passed and waters in neighborhoods in the city's north have started to recede. In Bangkok's west, the water continues to spread as it makes its slow journey to the Gulf of Thailand to the south.
Prime Minister Yingluck Shinawatra said she hoped the east side of the city will be dry by the New Year holiday period, though she had her doubts about when the water would fully recede in the west.
"I'd like to see people feel happy during the New Year," Yingluck said. "But, there is one area I am not confident about: the west side. It is very difficult to drain water in that area."
On Monday, Thailand's 83-year-old King Bhumibol Adulyadej left his room at Bangkok's Siriraj hospital, where has lived for the past two years, to watch the water level on the Chao Phraya river, which flows alongside the facility. It was the king's first public appearance since he suffered a health problem that caused him to temporarily lose consciousness earlier this month.
The situation is improving in many areas north of the capital, and the main highway from Bangkok to Ayutthaya has reopened to traffic. Though some parts of the roadway have minor flooding, vehicles are able to pass.
Still, while previously swamped cities across the central region drain, large parts of the countryside remain under water, and it is not clear how long it will take for the waters to fully recede.
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
NEW YORK ? The Kindle was always an odd product name. Amazon used a verb to name a thing, raising the question: Kindle what? Now we have the answer: Kindle Fire.
The Kindle Fire is the first full-color, touch-screen Kindle. It's available in the U.S. starting Monday for $199.
A price like that for what's essentially a small iPad is bound to light the flames of desire this holiday season. I want to cool those down a bit, or some of you will buy the Fire and feel burned.
The Fire is the best Kindle yet, no doubt about it. It's amazing that it costs half of what the first Kindle cost, just four years ago, yet does so much more than display books.
It's more of an all-purpose computer than an e-reader. It shows movies, TV shows and Web pages. It does email and lets you play games. You'll be lucky to get any reading done, with so many other things to do.
But it has to be weighed against the competition. When you do that, it becomes apparent just how spare Amazon had to keep the device to limbo under that $200 price level.
The Kindle's design is even starker than the iPad's. It's a black monolith with only one button ? the power switch ? and two jacks, for headphones and power. All the controls are on the screen.
The screen measures 7 inches diagonally, a bit larger than the monochrome Kindles and a bit less than half the size of the iPad's. The smaller size does make the Fire more portable than an iPad; it will fit nicely into a handbag, for instance.
The size of the screen wasn't much of an issue on the monochrome Kindles because they were mainly good for showing text anyway. But the responsive color screen of the Fire opens up a lot of possibilities, such as showing magazine and comic-book pages.
Here, the small size of the screen gets in the way. It's just too far from standard page sizes to do them justice. Magazine pages look tiny. Amazon has to jump through some hoops to make them readable, like including a mode that shows just the text. But flicking through a magazine is still a lot of work ? and that's one thing that should not be like work.
Barnes & Noble's Nook Color, launched last year, has the same problem ? a nice color screen that's too small. The iPad gets it right, for a few hundred dollars more.
While we're on the subject of "too small," let's talk about the Fire's memory. It has 8 gigabytes of storage. That's enough for more books than you'll ever read, but ten movies will eat up the whole thing.
The cheapest iPad, which costs $499, has twice as much memory. The Nook Color, which costs $199, also has 8 gigabytes, but it comes with a slot for memory expansion with cheap cards. I don't understand why the Fire doesn't have a slot like that. The very first Kindle did. There's no step-up model of the Fire with more memory.
Amazon says the Fire doesn't need more memory because the company provides an online storage locker, where you can stuff all your music and other content. That works when you have Wi-Fi coverage, but not otherwise ? the Fire doesn't have the ability to use cellular networks, as some of the monochrome models do.
The Fire also lacks a camera and a microphone. Those aren't things you'd expect in an e-reader (the Nook also lacks them). But they are standard features on tablets and are quite useful, particularly for videoconferencing. Their absence is forgivable at $199.
The color screen means, inevitably, that battery life suffers compared with e-readers that use power-sipping monochrome screens. Amazon puts the reading time at eight hours, compared with about 30 hours for the new $99 Kindle Touch, which has a monochrome, touch-sensitive screen and is designed just for reading.
The Fire's software is based on Google Inc.'s Android software, used in smartphones and a bevy of tablets that compete with the iPad. None has really caught on, except to some extent the Nook Color. Amazon CEO Jeff Bezos says this because the other tablets lack an ecosystem of the kind Apple provides in iTunes: an integrated market for books, movies, music and applications.
Amazon has done a good job of setting up its own store. Buying and downloading books and movies is a quick process ? as long as you're buying them from Amazon.
People complain about how Apple dictates the terms of access to the iPhone and iPad, but Amazon's Kindles have always been more restrictive, and the Fire is only a slight departure from that strategy.
You can't buy copy-protected books from anyone but Amazon and expect to read them on the Fire, as you can on the iPad. Even the Nooks allow third-party books. Amazon achieves this control by operating its own app store, separate from the Android Market run by Google. Clever people will figure out a way to bypass this and install any app they want, but most people won't want to bother.
To Amazon's credit, it's allowing the excellent Comixology comics app onto the Fire. That means you don't have to buy your comics from Amazon, and you aren't restricted to the Fire's built-in (and inferior) comics browser. It's also letting the apps for the Netflix and Hulu streaming services onto the device, in competition with Amazon's own streaming service.
So the Fire does justice to fiction and movies, but the iPad does better in almost every way, particularly in the selection of apps, which is about 50 times greater than the Fire's.
If the step up to $499 is too much, you might want to consider the Nook Tablet, which comes out Friday. At $249, it will be the same size as the Fire, but with twice the memory, plus a memory expansion slot. It won't access all of Amazon's goodies and apps, but it will have Netflix and Hulu. Take a look at it before jumping to the Fire.
___
Peter Svensson can be reached at http://twitter.com/petersvensson
Spar’s Zephyr is like a metal-skinned JamBox, with one important twist: if your phone or MP3 player starts to get low on juice, you can hook it up to the Zephyr and borrow some of its battery power. Like the JamBox, the Zephyr is both a Bluetooth speaker and a hands-free speaker-phone with mic. Unlike the [...]
The One Place to Invest for Growth, Income? and Safety
by Alexander Green, Investment U Chief Investment Strategist Monday, November 14, 2011: Issue #1642
Eight weeks ago, I wrote an Investment U column pounding the table for dividend stocks. Since then, they?ve ratcheted higher, but I still see plenty of upside ahead.
Someone who shares my enthusiasm for high-yield stocks right now is my friend and former colleague Rick Pfeifer, Senior Portfolio Manager at Fund Advisors of America, a? Florida-based money management firm.
On a recent trip to the sunshine state, I stopped into his office to hear why he, too, feels this is one of the best places to put your money to work today.
Q: Rick, there?s an awful lot of fear and anxiety about the economy and the stock market right now. Investors are confused and uncertain about what to do with their money. What is your take on things?
A: In a market as volatile as this, you have to spread your bets. But my take is this: If you?re looking for growth, buy dividend-paying stocks.
If you?re looking for income, buy dividend-paying stocks. If you?re looking for safety, buy dividend-paying stocks.
Q: Why?
A: The first question every investor has to ask himself is, ?How should I divide my money among stocks, bonds and cash??
The average money market fund currently pays two one-hundredths of one percent. At that rate, you will double your money in just 3,600 years.
Q: Not terribly attractive.
A: Definitely not.
And Treasury yields won?t make you jump up and click your heels, either. The 10-year guy is yielding two percent, which translates ? at best ? to a zero-percent yield after inflation.
Q: Tough to meet your investment goals that way.
A: Right.
In my view, dividend stocks are a good place to be right now for several reasons. Let?s talk about safety first. When the Dow traded at these levels 11 ? years ago, it sold for 47 times earnings. Today it trades at less than 14 times earnings. Stocks are cheap right now on the basis of sales and earnings.
But even during market declines, dividend-paying stocks hold up better than non-dividend-paying stocks and sometimes fight the broad trend and rise in value. The reason is obvious. These tend to be mature, profitable companies with stable outlooks, plenty of cash and long-term staying power.
Q: U.S. companies are sitting on a record amount of cash now, too, right?
A: Correct.
U.S. companies currently hold more than $2 trillion in cash, a record. Thanks to this economy and the current Administration (don?t get me started), companies aren?t hiring and they?re not boosting spending. So a lot of this cash is rightfully going back to shareholders.
The Dow currently yields more than bonds. And dividend growth among U.S. companies has averaged 10 percent per year over the last two years, more than double the long-term dividend growth rate.
Q: Okay. Dividend stocks are less risky than non-dividend payers and currently pay more than cash or bonds. But how do you think this group will perform in the years ahead?
A: We can only use long-term historical performance as a guide, but the numbers are pretty darn encouraging. Over the last 50 years, for instance, the highest 20 percent yielding stocks in the S&P 500 returned 14.2 percent annually.
That?s good enough to double your money every five years ? or quadruple it in 10. And if you were even more selective, say investing only in the 10 highest yielding stocks of the 100 largest companies in the S&P 500, your annual return would have been even better, 15.7 percent.
Q: We should add the standard caveat here about past performance and point out that there are risks with dividend stocks, too, right?
A: Indeed. You have to be selective. An investor would be foolish to plunk for a stock just because the dividend is large. The market is full of ?dividend traps,? troubled companies that pay hefty dividends to keep investors from bailing out.
Q: How does an investor avoid those?
A: Mainly, by doing his or her homework. You need to look at prospective sales and earnings growth. You have to examine the balance sheet and make sure that the company isn?t too highly leveraged.
You have to note cash balances. And, perhaps most importantly, you need to analyze whether the payout ratio is sustainable.
Q: So can you give us a few examples of high-yielders that have you been buying in your managed accounts lately?
A: I?ve been nibbling at Windstream Corp. (Nasdaq: WIN), a well-run communications and networking company with an 8.3-percent current yield. I like oil and gas producer Enerplus (NYSE: ERF), with its high operating margins and 7.7-percent dividend.
And ? this one is a bit different ? I?ve been picking up a 10.3-percent yield with the Gabelli Global Gold Trust (AMEX: GGN). There are plenty of other attractive high-yield situations out there, too. They should be owned, of course, as part of a more broadly diversified portfolio.
Q: I agree, Rick. Thanks for your time. Let?s chat about this sector again in a few weeks.
Good investing,
Alexander Green
[Editor's Note: Fund Advisors offers Investment U subscribers a complimentary portfolio review. For more information, feel free to call Rick - or his partner Greg Galloway - at 800.438.3040 or 407.667.4729.]
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Current Apple board member and Genentech CEO Arthur D. Levinson has been named non-executive Chairman of Apple's board. Levinson, a PhD, has served on Apple's board since 2005. Disney CEO Bob Iger will also be joining and serving on the board's audit committee. These are the first board changes since the death of Apple Co-founder and former CEO Steve Jobs.
While the last few years has seen a number of great ?bromances? on movie screens, I think my favorite was the love affair between Robert Downey Jr. and Jude Law in Guy Ritchie?s Sherlock Holmes.? Not only did they successfully reboot Sir Arthur Conan Doyle?s characters to a new generation of moviegoers, they looked like they were having a blast in the process and their great chemistry made everything more believable.
So when I got to visit the set of Sherlock Holmes: A Game of Shadows earlier this year outside of London, I got to see their working relationship first hand.? However, if you think the sequel is just going to be more of the same, Downey Jr. told us that the bromance is not front and center as ?this time we are attempting to transcend that a little bit by making these two guys go up against something that is bigger than both of them.?? During the on set interview Downey and Law also talked about the darker tone, the new characters, Watson?s gambling problem, their filming process, and a lot more.? Hit the jump for what they said.
Before going any further, if you missed the recent trailer, I?d watch that first.
Here?s a few of the highlights from the interview:
They were both excited to come back because they had such a good time working on the first film.
On the first film, they had come up with a lot of ideas that couldn?t fit into the movie, but they were able to use some of those when it came time to make the sequel.
The tone is a bit darker.
A Game of Shadows is closer to one of Doyle?s books (The Final Problem) than the first film was, but it also hints at other works.
Noomi Rapace?s character becomes a kind of partner to Holmes and Watson. She?s emotionally involved in what the two are trying to work out, and they have a common goal.
They wanted the characters to grow in the sequel. They wanted to use what worked from the first film, but didn?t want to just repeat what they did the last time.
They expand upon Watson?s gambling problems this time around.
They continued the unique filming process that they began on the first film, wherein they will get together with Ritchie, the producers, and whoever else is in the day?s scene, and dismantle it and talk about how they can improve the scene and improvise.
Law says Jared Harris has fantastic range and can terrify, amuse, entertain, and threaten all in a convincible manner.
Here?s the full on set interview.? You can also click here to listen to the audio.
Question: Everyone knows how much you loved playing Sherlock Holmes and how you wanted to do this.? Could you both talk about how happy both of you are to be back in character doing a sequel so soon?
Robert Downey Jr.:?Well, ever since Mr. Law and I met, the chuckles, and the fun, and the happiness come.? But we are really quite about the business very much, I believe, as Holmes and Watson are.? So if it?s 99% perspiration.? Oh, you are going to love this ? we like getting sweaty together.? I mean, we like working our asses off.? We like to work.
Jude Law:?We like to work and we find fun in the work.
Downey Jr.: Yes, we do.
Law: I think also it?s a very happy?.every so often you get to play wonderful characters maybe at the wrong time in your life.? Sometimes, you get to play terrible characters at a really great time in your life.?? Sometimes, the right character comes along at the right time.? I think we both felt that happened.?? So it wasn?t just happening individually.? It was also watching someone else have that experience.?So, like Robert said, we are working hard, but we are also enjoying it tremendously.? It?s a perfect balance.
Downey Jr.:?It?s so nice to have an opportunity to?to me, Sherlock being as successful as it was and being received as well as it was by people is probably the single greatest feeling I?ve ever had about something because you know?
Because you weren?t expecting it to be received so well?
Downey Jr.:? No.? Half of my problem ? if I do have a problem that I can speak about half of ? I would say is that every time I swing, I think it?s going out of the park.? I still try to keep that attitude, but I knew that we had a real winning combination.? I knew that just something clicked with us.?? I never had someone say, ?Oh my god. You have such great screen chemistry?with him!? [everybody laughs] It?s what made the movie work.? Everything else is kind of ancillary and tributary to that and then us triangulating and the synergy we found with Guy?it?s a tough thing. How do you recreate having caught lightning in a bottle?? I?m not used to?well, maybe a little more lately than before.? I?m not used to studios being ecstatic about we did and saying, ?Please go do that again.?
Law:?It was a relief too, right?? I remember on the first one, we were coming up with so many ideas or digging out little details from the books.? It was part of that process where we were riffing.? We would come up with stuff that we just knew couldn?t fit into the first one.? That carried on throughout the whole press tour.? We would go, ?Wouldn?t it be great if???? So when it was a success and when we knew that it was pretty likely that the second one was going to happen ? it was also like a relief.? It was like, ?Oh! We can use all of that stuff!? Thank Goodness! Thank you!?? It felt like something that was going to be a home for all of this other creative outpouring that had already occurred.
Downey Jr.:?Yeah, and reintroducing it to an audience?well, introducing it to certain audiences for the first time.?? Their initial context of Sherlock Holmes was seeing Jude and I do this movie.? The nice thing this time around is that we are able to honor Doyle even more by pretty much making this a story.? A very thrilling story.? Not unlike one of the Conan Doyle stories that Watson is retelling.? So you get back to the subjectivity of ?here is this normal person, an ordinary, if you would, person in these extraordinary circumstances with his friend?
Some time has elapsed since the first film.? So what is different for the two characters this time around?
Law:? Not a lot of time has elapsed.? I am nearly married.? I?m a couple of days away from getting married.? I?ve moved out and I?m living very comfortably with Mary.? I?m surprised she?s not here.
Downey Jr.: I arranged it.? As indicated by the end of the last film, Holmes is definitively obsessed with the first super-villain in literature, Moriarty, for whom we have the astonishingly fantastic Jared Harris.
Sequels tend to go darker.? That seems to be the new trend.? You?re almost very light.? Is the follow-up going to keep that?
Law:?I don?t know about you, but I find it kind of hard.? I don?t know yet.? We all said, ?It?s going to be darker this time. ?It?s going to be really nasty and gritty.? I don?t know why there is that trend, but you?re right.? It does seem to be so.? We went in with that in mind.? Certainly the threat of Moriarty and the presence of such an evil mind certainly leads it that way, but we tend to have been coming up with more lighter stuff.? Don?t you think, the two of us?
Downey Jr.:?Yeah.? I honestly think that it?s both a little tiny bit broader and it?s a little bit darker just because of the fellow and the situation we are up against.? He reaches out and touches us quite a bit, so to speak.? We are in pretty bad shape almost all of the time.
So no drugs then for Holmes?
Downey Jr.:? Oh, you mean like he had to sober up so that he could have a chance?
Yeah.
Downey Jr.:? No, of course not.? He?s high.? It?s not like Watson dried him out in a bath or something.? He still struggles.
You said that you went back to Doyle for this film.? With the introduction of Moriarty, would that suggest that this is a little bit more like ?The Final Problem??
Law:? It is a little more like ?The Final Problem.?? But having said that, as with the other one, there are other hints at other books that are laced in.? There are also areas that are completely original.? But it?s closer to a book, meaning ?The Final Problem,? than the first.
Downey Jr.:? Again, just to be clear, thematically, as opposed to last time, it was an origin story with these two guys.? You?re kind of meeting both of them and by the end he is saying, ?What are those??? and he goes, ?Oh, just scribbles.?? This time, he is living and recanting a story to an audience after the fact?kind of.
So is it your narration?? Will you be narrating parts?
Downey Jr.:? I think so far it?s without narration.? Who knows how it?s going to wind up?? Christ, what am I editing it, too? [everybody laughs]
Law:? But tonally it?s interesting answering that question when you are in the middle of making it, because you are only aware of what you want it to be like and what the energy wants it to be like.? Then, you are also aware of what you shot.? So it?s quite hard.? What is clear is there are huge scenes.? There is much more a sense of?there is us fleeing, this time. There?s us hunting down, there are a lot more riddles.? I don?t know whether you know this, but a lot of it is not in London.? We?re fleeing London. ?There is a real sense, in a way, of living out of a bag, hence I?m wearing my tweeds at the moment.
Downey Jr.: That?s right.? They?re not as loose as I thought they?d be. [everybody laughs]
Are you being chased out of London?
Downey Jr.: No.
Law:? Chased out? No.
I?m interested in your relationship with Stephen Fry.? Do you have a brotherly contact with him?? What is your relationship like with him?
Law:? I don?t have any contact with him.? Seriously, we?re not allowed to touch him.? [everybody laughs]
Downey Jr.:? No one?s allowed to touch Mycroft.? Stephen, we?ve all had our way.? [everybody laughs] His character is arguably the most enigmatic of all the characters in the lexicon, and so what better person?? It?s so funny, too, that he?s literally just hitting this super stride.? Just as we are here we went to go see him at Albert Hall and then he is at a rehearsal with us just basically thinking and phrasing circles around us.? We were just kind of left wondering what happened when he left, but he has to go because he has some other hip thing that he has to do.
Law:? He was the youngest member of the Sherlock Holmes Appreciation Society when he was a boy.
Downey Jr.:? Baker Street Irregulars or the Appreciation Society?
Law:? Yeah, The Irregulars.
Downey Jr.: The Irregulars?
Law:? You?re right.? There is a difference.? I don?t know.? He was the youngest in one of them.
Downey Jr.:? I guarantee you he knows. [everybody laughs]
What about your character?s relationship with Noomi [Rapace?s] character?
Law:? Where does she come in?
Yeah.
Law:? She comes on board because she is a link early on that Holmes picks up on.
Downey Jr.: She?s a lead, exactly.
Law:? She then becomes a kind of partner because she is incredibly handy in different ways, I won?t let too much go.? She is also emotionally involved.? By the time we meet her on her home turf, she is emotionally involved in what we are trying to work out. ??So she kind of comes along for the whole journey.
Downey Jr.:? We have a common goal.
What are you most careful about when you play the same character in a franchise like this?
Law:? You just want it to grow.
Downey Jr.:? Yeah.
Law:? You are aware that you don?t want to repeat stuff, but you want to use what has worked.? But you don?t want to be accused of just going over the old thing, you know?? You want it to start growing a little bit more.
Downey Jr.: Yeah.
What do you think Sir Arthur Conan Doyle would have thought of Sherlock and Watson?
Downey Jr.:? Well, I?m sure he might have had a complaint or two.? I can?t speak to the strength of transcripts of stage productions, but we?ve definitely put the most of his words in our mouths.? If anything, he might be happy that we brought Watson back to how he was originally described.? There is something about it.? Last time around, there was, for some reason or other, that wave of ?bromance? in the air.? I think this time we are attempting to transcend that a little bit by making these two guys go up against something that is bigger than both of them.
If I have learned anything it is that comparison is a dangerous place to go because nothing is ever like anything else.? So I always think that a sequel you assume is a logical continuation of something that you already understand, but I don?t understand how we did it the first time.? So going into comparison I would just confuse myself.
Law:? I think when you got source material, whether it?s a play or a book ? a great writer often appreciates being adapted and developed.? It?s like when you go see a production of a great play and they are always different.? There is always room for interpretation, and this is our interpretation.? I don?t think we drifted as far away from the source material as people expected, but equally I think that we were original enough to keep it fresh and our own.? So I think he would have been very appreciative.
In the first movie there are a few allusions to Watson?s gambling problems, but we don?t really see too much about it.? Do you guys expand upon it this time around?
Law:? Oh, yeah.
Downey Jr.:?? I promise.
Law:? We tackle that in the first ten minutes I think.
Downey Jr.:? It?s a problem.? I don?t think we went far enough.? I would like to see you not be able to afford the wedding or anything.? Oh, well.? There is always next time.
Law:? Yeah, there is next time.? We do.? We tackle all of those kind of seedlings that were planted and looked at I think pretty much.
Are we to assume that Mary isn?t too thrilled about the gambling?
Downey Jr.:? That?s the least of her problems.
Law:? It?s true. [laughs]
When you make a great first film how careful are you? Are either of you superstitious about the way you rehearse when making the sequel and trying to recapture that magic?? Could you talk about the process of making the sequel versus the first film?
Law:? I always worried about that process.? When we started the first one we evolved this process.
Downey Jr.:? Yeah, we didn?t know what we were going to lock into.
Law:? And really that process didn?t find its left feet until we were about a month in; maybe a little bit later, maybe 6 weeks in.? By the end, we were just loving it.? I?m talking about how we would dismantle a scene, improvise it a little bit, and then go back to the source material and use Conan Doyle.? Then, we would have a scene that was great scene, but maybe nine pages long that has to be one page long.? It?s a long process and Guy is very heavily involved and any of the actors of the day are very involved.
Downey Jr.: And the producers and writers.? Last time, we finished basically in Baker Street and then a bunch of stuff on the bridge.? But we finished our journey by shooting the beginning of our journey.? This time, we began our journey at Baker Street.? I think some of it was really daunting, but it?s like we can kind of only do it one way.? We do it full steam ahead and we do it the entire time that we?re working.? We don?t have a lunch break and we work when we are eating.? My wife, our producer, Lionel [Wigram], and the other people in our little pit crew ? none of us can help ourselves.? We?re always talking about something that is 3 weeks away or 3 minutes away.? It?s kind of like, in a way everybody is an honorary associate producer.
Law:? That process was weird.? I?m not superstitious, but it was that process that I was nervous about recreating.? I kind of thought, ?Maybe that just worked on the first one.?? How do you step in and start that up again?? But like anything, you have to drop into it.? So starting on this one, we started a little earlier than day one.? We started writing a good few weeks before and it just happened.
Downey Jr.:? We already want to pitch you Sherlock 3 by the way.? That one is going to be fantastic!
Can you tell us about today?s scene?
Law:? I haven?t done anything yet.
Downey Jr.:? But he still had something to say about it.? Today?? Honestly, I?m in the phase?we?re two weeks out and by the time I?m slapping wigs and mustaches on, running down hallways, and all of that, I call myself the ?Man of a Thousand Crabby Faces.? [laughs] We still have a little bit of action to shoot.? Crazy.? Last time, we basically met, shot a scene or two, and then started kicking ass together for weeks.? In some way, I feel like I got to know you better doing that than anything else.? I would be shooting and they would have two cameras coming down two sides.? I would look over and I would be like, ?He?s keeping up. He likes to scrap.?
What does Jared bring to the role of Moriarty? What should we expect from his performance?
Law:? Jared is a fantastically experienced and quality actor, which was the most important thing.? You wanted someone who could pull the job off.? What I got immediately when they mentioned his name is that this guy has got a fantastic range.? He can in equal proportions terrify and amuse, entertain and threaten.? You just need all of those on your palette if you are going to play this guy who is meant to be as brilliant and as evil and as mysterious as Moriarty is.
Downey:? Yeah, and he asked all of the right questions. He really put us to task, too.? He?s built a sort of reputation for himself and it would be a shame to expose him to a vast audience in not the best possible light.? So he really put it to us about how ?Hey, let?s not make this mistake.? I think we can do better than this.?? We were like, ?Absolutely.? That?s how we feel.? He basically lead the charge on this particular incarnation of Moriarty.? It?s even better than ?we hoped it would?ve been.? I think people are going to be, not surprised, but I think a lot of people are going to really recognize him for who he is for maybe the first time in a big scenario like this.? We are proud, but we earned it for sure.? He also likes to work.
You had a very successful first movie and I?m assuming this is going to be a very successful second movie.? How much are you guys dropping in Easter eggs and laying the foundation for what will hopefully be a third film?
Law:? I don?t understand the Easter egg term.
Downey Jr.:? Let me help you.? Like in the Marvel world, right?? We will have Captain America?s shield.? They will go, ?Is that?? I?ll go, ?Yeah.?? Then, I use it.? We do something silly with it.
Law:? I see.? It pops up, but not referred to, necessarily.
Downey Jr.:? Exactly. The fans call those ?Easter eggs?.? I didn?t know what it was on Iron Man 2. I heard it twenty times. I was like, ?Why are you talking about Easter eggs? It?s fucking July!?
Law: That?s cool, I like that. I get it.
Downey Jr.: We don?t have a one yet.
Law:? That?s another terminology I don?t understand.? What is a ?one??
Downey Jr.:? We don?t have any.
Law:? What do you mean?
Downey Jr.:? We don?t have a one Easter egg.
Law:? Sorry.? I?m catching up on these Easter egg references. [everybody laughs]
Downey Jr:? There are none that I am aware of yet, but we might do some additional photography.
Law:? I can?t think of any Easter eggs.
You mentioned the term ?bromance,? but I think the major success in the first film was the chemistry between you two guys.? ?How does it play in the second film?? Will you be downplaying it?
Law: Hell, no. [laughs]
Downey Jr.:? I don?t think when you see this, you?ll feel that we?ve restrained ourselves at all.? Truth be told, the bottom line with these stories, it?s about this one man?s observation of this other man who tells him that he is the only true friend he has and him realizing that he is the only person that he is actually very, very close to besides his wife.? I think that that?s just a great theme.? The bottom line is that we are in this love together.
Law:? The brother theme is really strong in this one actually.? That?s when Noomi gets involved, too.? There is a theme or a demand later on in this film where it questions one?s reliance on someone else and can you really trust someone?
Downey Jr.:? Is anybody ever really what they put themselves forth to be?? Including us, including our nemesis, including pretty much every character in this movie.? That?s what I think is so interesting.? It really is a lot about the shadow elements of everybody.? I just thought I would end on that dour note.
Sherlock Holmes: A Game of Shadows opens December 16th.
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Question: Everyone knows how much you loved playing Sherlock Holmes and how you wanted to do this.? Could you both talk about how happy both of you are to be back in character doing a sequel so soon?
Downey Jr.:? No.? Half of my problem ? if I do have a problem that I can speak about half of ? I would say is that every time I swing, I think it?s going out of the park.? I still try to keep that attitude, but I knew that we had a real winning combination.? I knew that just something clicked with us.?? I never had someone say, ?Oh my god. You have such great screen chemistry?with him!? [everybody laughs] It?s what made the movie work.? Everything else is kind of ancillary and tributary to that and then us triangulating and the synergy we found with Guy?it?s a tough thing. How do you recreate having caught lightning in a bottle?? I?m not used to?well, maybe a little more lately than before.? I?m not used to studios being ecstatic about we did and saying, ?Please go do that again.? 
Law:? Not a lot of time has elapsed.? I am nearly married.? I?m a couple of days away from getting married.? I?ve moved out and I?m living very comfortably with Mary.? I?m surprised she?s not here.
Downey Jr.:? No, of course not.? He?s high.? It?s not like Watson dried him out in a bath or something.? He still struggles.
Downey Jr.: That?s right.? They?re not as loose as I thought they?d be. [everybody laughs]
What about your character?s relationship with Noomi [Rapace?s] character?
What do you think Sir Arthur Conan Doyle would have thought of Sherlock and Watson?
In the first movie there are a few allusions to Watson?s gambling problems, but we don?t really see too much about it.? Do you guys expand upon it this time around?
Law:? That process was weird.? I?m not superstitious, but it was that process that I was nervous about recreating.? I kind of thought, ?Maybe that just worked on the first one.?? How do you step in and start that up again?? But like anything, you have to drop into it.? So starting on this one, we started a little earlier than day one.? We started writing a good few weeks before and it just happened.
You had a very successful first movie and I?m assuming this is going to be a very successful second movie.? How much are you guys dropping in Easter eggs and laying the foundation for what will hopefully be a third film?
You mentioned the term ?bromance,? but I think the major success in the first film was the chemistry between you two guys.? ?How does it play in the second film?? Will you be downplaying it?