Thursday, July 12, 2007

BlackBerry 8800 is now available across 10 prominent retailers across the UAE


BlackBerry 8800 now available, Etisalat today announced (from ameinfo.com)

Customers can now purchase their BlackBerry 8800 handset from any branch of Jumbo Electronics, CellUCom, Sharaf DG, i2, Radio Shack, Alltronix, Telefonika, Jacky's, Plug Ins and Carrefour. Etisalat currently offers three different models in the UAE - the latest BlackBerry 8800, the 8100 (pearl) as well as the BlackBerry 8700.

Etisalat is currently running a series of promotions which will conclude on the 15th July. This promotion offers new subscribers one month of subscription free of charge and attractive discounts on the corporate Blackberry Enterprise server software.

BlackBerry provides high speed mobile Internet access, messaging services and push email for a monthly subscription fee. Its email options allow subscribers to access email from their corporate email accounts using a server located within the organisation's premises, and their personal POP email accounts.

Moto says hello to disappointment with Q2 warning

By Austin Modine in Mountain View (The Register)

Motorola is forecasting another dreary quarter, citing poor sales in Asia and Europe for its lower-than-expected outlook.

Meanwhile, Motorola shares have risen almost 3 per cent on speculation that CEO Ed Zander may be ousted under the heat of a new campaign by an activist investor.
The company's profit warning today declared it now expects second quarter sales between $8.6bn to $8.7bn. The company had previously forecast sales would be flat with Q1 '07 results of $9.4bn. The company has also changed its outlook on the mobile market from the first quarter, and no longer expects the business to be profitable for the full year 2007.

This week, Motorola investor Eric Jackson published a statement entitled "Motorola Plan B" that called for Zander's head.

"What has been Ed Zander's mark on Motorola?" Jackson asked in his statement. "He came with a Silicon Valley background, but how has that experience or those past ties translated into tangible results for the Schaumburg, IL-based Motorola?

"What has he brought to Motorola that is really unique in the last 3 1/2 years? If it's difficult to answer that question, we find it hard to image what he'll bring moving forward, which is why we suggest a change is needed now."

Jackson had previously stirred up dissatisfied stockholders at Yahoo! by asking then-CEO Terry Semel to apologize to shareholders during the company's annual meeting. Semel was replaced one week later.

This year, Motorola has replaced its CFO and acquired an operations chief to help with company restructuring. The company slashed 3,500 jobs in January, followed by an additional 4,000 layoffs in May.

In addition to the forecast, Motorola announced that Stu Reed, head of integrated supply chain operations, would become the company's new executive VP of mobile devices. Reed takes the job vacated by Ron Garriques, who left the company in February to become an executive at Dell.

'Sell' Signal Favors RBS


Royal Bank of Scotland so far has benefited from activist investors targeting other banks involved in the battle for ABN Amro. But maybe the Scottish bank itself should be the focus of shareholders. RBS chief Fred Goodwin could increase the bank's stock market value more by selling Citizens Financial -- its retail banking franchise based in Providence, R.I. -- than by buying another rival.

RBS potentially is in a position to carve up Amsterdam's ABN because hedge funds agitated for the bank to be broken up. Meanwhile, its main rival as a suitor for ABN, the United Kingdom's Barclays, has been told by another activist that it shouldn't bid because to do so would hurt its shareholders. But RBS hasn't made a watertight case that its shareholders will benefit from its own bid for parts of ABN, including its Chicago-based LaSalle.

Citizens should earn about £1.1 billion ($2.2 billion) next year, less than 15% of the bank's total, according to J.P. Morgan. But assume it could be sold for the same 19 times 2008 earnings that Bank of America -- another bank involved in the complex battle over ABN -- has offered for LaSalle.

On that basis, Citizens would fetch nearly £21 billion. That would amount to a third of RBS's £60 billion market cap. If Mr. Goodwin handed that to shareholders, the remainder of RBS (mainly British retail and corporate banking and insurance) would be worth £39 billion -- or only about six times earnings.

That's cheap. Investors would be more likely to value those earnings on a multiple of some 8.9 times, in line with U.K. peers. That would value the business at about £57 billion -- or an extra £18 billion -- equal to 30% of the group's current market value.

Sure, there would be some negative consequences. Selling Citizens might trigger a capital-gains tax bill. RBS's strategy of building a trans-Atlantic business would be in tatters. Finally, Citizens is particularly well capitalized, so some of the sale proceeds might be needed to shore up the rest of the group's capital.

Even so, the value creation would still be substantial. Hedge funds searching for another target for bank activism might want to turn their attention to Edinburgh.

BRICs of Steel

Why do steel producers in the so-called BRIC countries (Brazil, Russia, India and China) seem to go crazy when shopping abroad? Gerdau, a Brazilian steelmaker, joins India's Tata Steel and Hindalco and Russia's Evraz, in forking over big bucks for a developed-world rival. It is paying $4.22 billion to acquire Chaparral Steel.

As with Hindalco's takeover of Canada's Novelis earlier this year, or indeed Tata Steel's takeover of Britain's Corus, the strategy looks sensible enough. With Chaparral, Gerdau vaults to the fourth-largest U.S. steel player, by tonnage, from No. 5. It also diversifies away from its South American base.

And the deal confers more than bragging rights. Gerdau hopes to squeeze $55 million of costs from Chaparral, based in Midlothian, Texas. Unfortunately for Gerdau shareholders, just like Tata and Hindalco before it, the finances of the transaction don't stack up.

Consider the value of the synergies today to shareholders of Gerdau Ameristeel, the U.S. listed subsidiary making the purchase. After taxes -- and once discounted back to reflect that the cost savings won't arrive until 2008 -- they are probably worth about $350 million to shareholders. The trouble is that Gerdau is paying about $1.04 billion more than Chaparral was valued at before it put itself up for sale in April.

Subtract from that premium the implied worth of the promised cost cuts and it looks like Ameristeel has overpaid to the tune of a whopping $700 million. Lucky for Gerdau, its investors have not punished the company so viciously. They generously marked down Ameristeel's market capitalization by only about $360 million, or 7.5%.

--Mike Verdin and Rob Cox (Wall Street Journal)

US blue chips in record territory


By Michael Mackenzie in New York (Financial Times)

Wall Street was sharply higher at mid-morning on Thursday and blue chips were in record territory, boosted by a big deal in the mining sector and better-than-expected sales at Wal-Mart in June.

In deal news, Rio Tinto announced an agreed $38.1bn cash bid for Alcan, the Canadian aluminium producer. The deal values Alcan at $101 a share, and trumps a hostile $28.7bn bid from Alcoa that Alcan had rejected.

Alcan surged 9.4 per cent to $97.99, and has now doubled in value so far this year. Meanwhile, Alcoa was 6.9 per cent higher at $45.37 and earlier set a 52-week high of $46.15.

"It is unlikely that Alcoa will be able to top Rio Tinto's offer given RT's stronger finances," said Leo Larkin, aluminium industry analyst at Standard & Poor's Equity Research.

Same-store sales figures for June were released by retailers on Thursday. With 47 retailers having reported, sales were up 2.4 per cent, above a forecast rise of 1.8 per cent year-over-year according to Thomson Financial. The June number is less than a 2.9 per cent rise in May. In June 2006, sales rose 3 per cent.

Among the better performing retailers, Wal-Mart posted sales growth of 2.4 per cent versus an expected 0.8 per cent. Wal-Mart was up 2.2 per cent at $48.74.

American Eagle Outfitters said June same-store sales rose 5.7 per cent and its stock was up 6.5 per cent at $27.73 at midmorning.

In contrast, Macy's reported weaker-than-expected sales and also lowered its fiscal second-quarter earnings outlook. The stock was down 3.5 per cent at $39.01.

Less than an hour after the opening bell, the S&P 500 index was up 0.7 per cent at 1,529.38. Among the major industry groups, materials led gains, boosted by Alcoa, followed by financials, as credit markets stabilised, and energy stocks. Crude oil prices were trading above $73 a barrel at mid-morning on Thursday. Health care and telecoms were the main lagging S&P sectors.

Meanwhile, equity volatility, as measured by the Chicago Board Options Exchange's Vix index, continued to fall after a 16 per cent surge earlier this week.

Analysts at Deutsche Bank said: "The recent spike in implied equity volatility is likely a temporary risk aversion phenomena, as the commencement of the US reporting season is likely to shift investor focus back towards solid corporate fundamentals and away from financial risks."

At mid-morning, the Nasdaq Composite was 0.7 per cent higher at 2,670.04.

Alcoa and Wal Mart were a boost for bluechips and the Dow Jones Industrial Average was 0.8 per cent firmer at 13,687.85 and had set a new record high of 13,697.77 in early trade.

Among stocks in the news was General Electric. The conglomerate and Abbott Laboratories said late on Wednesday they were unable to agree on "final terms and conditions" of GE's proposed $8.13bn deal to buy Abbott's primary in-vitro and point-of-care diagnostics units. Shares in Abbott were down 0.4 per cent at $52.98.

Citigroup said: "GE's ability to walk from the diagnostics deal is a setback for Abbott." The bank said Abbott faces the prospect of low earnings quality and "even with the recent sell off and today's expected decline, we still believe the stock is overvalued."

Shares in GE, which reports second-quarter results on Friday, were up 0.4 per cent at $38.35.

Another deal in the news involved Sallie Mae. Some members in the group behind the planned $25bn buy-out of the student lender said on Wednesday that they might back out of the deal due to proposed legislation regulating student loans. Sallie Mae was up 3.1 per cent at $53.75, after the stock closed 9.8 per cent lower at $52.15 on Wednesday.

In earnings news, Motorola issued an warning for 2007 results and said it no longer expected its mobile phone business to be profitable this year. Its stock was down 1.4 per cent at $17.70.

Meanwhile, Genentech, the biotechnology company, said late on Wednesday that second-quarter earnings rose 41 per cent . It also raised its full-year outlook. The shares were down 1.8 per cent at $74.60 as analysts said the company has met expectations among investors.

Also after the closing bell on Wednesday, Yum Brands, the operator of fast-food brands, said its second-quarter earnings rose 15 per cent. The stock was down 0.8 per cent at $34.15, as analysts noted flat domestic sales. Yum rose 4.9 per cent to $34.41 in regular trade on Wednesday, after UBS upgraded it from "neutral" to "buy".

In economic news, weekly jobless claims fell 12,000 to 308,000 for the week ended July 7. It was the lowest claims level in nearly two months and the four-week average declined 1,500 to 317,750.

Meanwhile, the US deficit in international trade of goods and services expanded 2.3 per cent in May to $60.04bn, up from a revised gap of $58.67bn for April. Economists had forecast a $60.00bn trade gap in May.

After a cautious start, stocks rose on Wednesday as safe haven buying in Treasury bonds lost steam and reversed.

At the close, the S&P 500 index was up 0.6 per cent at 1,518.76. Among major sectors, materials, telecoms and industrials led gains. The Nasdaq Composite rose 0.5 per cent to 2,651.79 and the Dow Jones Industrial Average rallied 0.6 per cent to close at 13,577.87.

Equity volatility, as measured by the Chicago Board Options Exchange's Vix index, fell 4.8 per cent on Wednesday after a surge of 15.9 per cent on Tuesday.