Welcome to today’s round-up of business news from The Times: what we’re saying, what they’re saying, what you should be thinking from Paul Larter
Top of the home pages
The Wall Street Journal: Motorola, under pressure from the activist shareholder Carl Icahn, said it was considering spinning off or selling its flagship handset division.
The Times: Royal Dutch Shell reported annual profits of $27.6 billion (£13.9 billion), smashing European company records and prompting calls for a windfall tax on “obscene” oil profits.
The Daily Telegraph: Google sparked fears that the US slowdown is trickling into new media when it disappointed investors with profits and sales below expectations.
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From the commentators
Patrick Hosking in The Times: Researchers say insurers could fail and not spark a cataclysm. But big banks would bear the brunt of an additional $40 billion in writedowns. It isn’t yet time to doff the hard hats.
Jeremy Warner in The Independent : Many people don’t approve of what oil companies do, yet these are not organisations that thrust their product on a reluctant world. Shell needs all the profits it can get.
Lex in Financial Times: Many who gobbled up stakes in companies during the credit boom financed these purchases using loans collateralised against the targets’ shares. Some could now be forced to sell.
Good day
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The Times: Oil production in Iraq is at its highest level since the US-led invasion of 2003, reaching 2.4 million barrels a day, thanks largely to improved security measures in the north.
The Daily Telegraph: Nissan, the UK’s biggest car manufacturer, is recruiting a further 800 workers at its Sunderland plant to cope with demand for the Qashqai range.
The Guardian: GCap Media, the owner of Classic FM and the London station Capital, said revenues in the last three months of 2007 were up 4 per cent and it expected revenues for this month to be up 7 per cent.
Bad day
The Times: AXA became the latest victim of the crisis in the commercial property market when it imposed a six-month ban on investors withdrawing funds from its 2.1 billion portfolio.
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Financial Times: Eurozone inflation has surged to a 14-year high of 3.2 per cent, strengthening the European Central Bank’s case for resisting interest rate cuts even as growth slows.
The Times: HSBC and Standard Chartered are preparing to transfer billions of dollars of sub-prime-related investments on to their balance sheets, as investors remain reluctant to buy complex credit products.
Mergers and shakers
The Times: TPG, CVC Capital Partners and Cinven are among the suitors that have approached Mitchells & Butlers, operator of All Bar One and Vintage Inns.
Financial Times: The chances of Friends Provident, the life assurer, falling into the hands of a predator rose after the conclusions of a strategic review and the announcement of 400 million of charges.
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The Times: Jon Wood, the rebel shareholder in Northern Rock, has taken a 5.19 per cent holding in Countrywide, America’s biggest mortgage lender, to try to block an agreed takeover by Bank of America.
Around Asia
South China Morning Post: Shares in China Coal Energy rose 30 per cent during morning trade in their Shanghai debut but fell short of analysts’ expectations for its 1.8 billion IPO.
The New York Times: Soaring energy and raw material costs and a falling dollar could result in a 10 per cent increase in the prices of Chinese exports this year.
The Daily Telegraph: HSBC has reaffirmed its commitment to Asia by appointing its regional chairman, Vincent Cheng, to the executive board.
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Coming up
The Times: Dennis Spurgeon, assistant secretary for nuclear energy in the US Department of Energy, is being considered as chairman of the Nuclear Decommissioning Authority.
The New York Times: Senate Republicans said that they would block a $157 billion economic stimulus package championed by Senate Democrats.
Financial Times: The three bidders vying to take over Northern Rock are to submit risk-averse business plans that could lead to job losses at the stricken Newcastle bank, which employs 6,500.
MARKETS
FTSE 100 5,879.80 up 0.7% (Thursday close)
Dow 12,650.36 up 1.7% (close)
S&P 500 1,378.55 up 1.7% (close)
Nasdaq 2,389.86 up 1.7% (close)
Nikkei 13,524.87 down 0.5% (latest)
Hang Seng 23,653.00 up 0.8% (latest)
Sterling $1.9896 (latest)
West Texas crude $91.07 down 68 cents (latest)
Gold $930.30 up $2.30 (latest)
New York
Reuters: US stocks ended higher after MBIA, a major bond insurer, reassured investors about its stability, fueling a rebound by financial shares. Even so, the S&P 500 - up 1.7 per cent on the day - capped its worst January performance since 1990 on fears that the US economy is at the edge of a recession. The Nasdaq - down 0.5 per cent - had its weakest start to a year ever. The Dow Jones industrial average rose 1.7 per cent.
Asia
Bloomberg: BHP Billiton and Zinifex led a rise in Asian mining stocks after the worst snowstorms in decades in China halted production and drove up prices of coal and zinc. Sony fell, dragging Japan’s Nikkei 0.5 per cent lower, after the second-largest maker of consumer electronics cut an earnings target. The MSCI Asia Pacific Index was little changed in intraday trading but has fallen 1.6 per cent this week.
London
Growing fears about the health of American monoline insurers and further credit rating downgrades of the world’s subprime mortgage bonds sparked another big sell-off of London financial stocks yesterday, with banks and mortgage banks feeling the pain. It took comments from Gary Dunton, chief executive of MBIA, the world’s largest insurer, who told investors in a US conference call that the business of packaging debt will bounce, to help the FTSE 100 stage a late rally.
Barclays, HBOS and Royal Bank of Scotland (RBS) were all heavy fallers during a morning that saw Friends Provident, the insurer, lose more than 10 per cent of its value with a warning that profits would almost evaporate this year. Barclays closed 8.5p lower at 470p, HBOS finished 8.5p down at 694.5p, while RBS ended 3.25p down at 382p.
Panmure Gordon, reiterated its sell advice on Barclays, RBS, HSBC, Standard Chartered, Bradford & Bingley and Northern Rock and said even massive rate cuts would not help matters as the falls in house prices in the UK and US were leading to growing bad debt.
Standard Chartered worried investors by announcing it was taking the $7 billion of securitised credit card and student loan debt in its structured investment vehicle Whistlejacket capital onto its balance sheet. The bank stressed that the sum was only 2 per cent of its balance sheet and ended 13p higher at 16.65.
Mr Dunton’s comments sparked a rally on Wall Street and in London. Having lost almost 150 points at one stage, the FTSE 100 closed 42.5 higher at 5,879.8.
Miles Costello
Insurance, Investment and Pensions Correspondent
Agenda
INTERIMS
British Airways (Q3)
FINALS
None scheduled
AGMs
None scheduled
EGMs
None scheduled
TRADING STATEMENTS
Cranswick
Fuller, Smith & Turner
Greene King
Mitie
ECONOMICS
NIESR economic review (0001 GMT)
UK January manufacturing PMI (0930 GMT)
UK Q4 personal,company insolvencies (0930 GMT)