http://www.cityam.com/ City A.M. - business and financial news from London sr City A.M. - business and financial news from London http://www.cityam.com/feed.php?type=rss http://www.cityam.com/index.php?news=13248 Fallen US banking giant Citigroup plans to offload around $400bn of assets as it strives to return to profitability. Recently appointed chief executive officer Vikram Pandit told shareholders at a general meeting Friday that the bank would make the disposals over the next three years. The disposals would continue a trend already in place. In April, Citi sold the Diners Club charge card business and the leasing and financing business CitiCapital, while in early May it agreed to divest employee-benefit joint venture CitiStreet LLC. Provided the assets are sold above book value, the sales will boost Citigroup's Tier 1 capital ratio, the core measure of solvency required by regulators. The company has recorded in excess of $40bn of credit losses and write-downs since the start of the sub-prime mortgage lending crisis last year. Pandit told investors that he expects the company to return "over time" to the days when it regularly achieved a return on equity (ROE) of between 18% and 20%. Last year the company's ROE was just 3%. International News 09/05/2008 http://www.cityam.com/index.php?news=13247 Shares in Mylan slumped Friday after the generic drugs maker saw first quarter losses increase massively, thanks to a $385m impairment loss on goodwill. The company's net loss widened to $443.9m in the first quarter of 2008 from a loss of $0.07m a year earlier, on revenues that rose from $483.7m to $1.06bn. The revenue figure was around $63m lower than analysts had been expecting. The goodwill impairment charge was taken because of the accounting requirement to assess the fair value of the company's Specialty Segment. The company is considering selling Dey LP, its specialty pharmaceutical arm focused on the development, manufacturing and marketing of prescription drug products for the treatment of respiratory diseases, respiratory-related allergies, and emergency care medicine. The company said it has made "excellent progress" on the integration of the Merck Generics business, which it bought in 2007 for $6.9bn. "We continue to implement our synergies and other activities which enable us to leverage the power of our core global generics platform," said Mylan vice-chairman and chief executive officer Robert Coury. Mylan experienced a fall in North American revenues to $392.1m compared to $407.9m a year earlier, as the company had to cut prices to head off competition from other generic drugs manufacturers. The company also experienced a decline in orders as customers undertook to reduce stock levels. The company said outlook for the US business remains strong, however, while its Europea, Middle East and Asian region "is performing extremely well". International News 09/05/2008 http://www.cityam.com/index.php?news=13246 Credit crunch concerns returned to haunt US equity markets, sparking a return to favour of government bonds. Yesterday's cash raising plans by US insurance giant AIG to repair its balance sheet after more massive write-downs, and today's announcement by Citigroup that it will run down $400bn of assets suggested that recent optimism that the worst of the liquidity crisis is behind us may have been misplaced. US treasury prices responded by advancing briskly, with two-year notes rising for the fifth day in succession. Yields on two year notes fell 2 basis points to 2.20%, while at the longer end, yields on 10-year notes fell 3 ticks to 3.75%. The US trade deficit contracted more than expected, as US consumers tightened their belts and spurned imported goods, but this had little impact on sentiment. The deficit narrowed to $58.2bn in March from $61.7bn, although it was not all good news, as exports showed a monthly decline for the first time in a year. European government bonds also capped a successful week, rising strongly today. The yield on the benchmark 10-year bund fell below 4%, slipping 7 basis points to 3.99%. In the UK, gilts advanced on expectations that the Bank of England will cut interest rates next week as economic indicators continue to point to signs of a weakening economy. The number of home repossession claims in England and Wales soared by 16% in the first quarter of 2008 from the same time last year, near to levels last seen in the recession of the early nineties. Almost 39,000 mortgage possession claims were issued on a seasonally adjusted basis, that's 7% higher than in the fourth quarter of 2007, said the Ministry of Justice Friday. The yield on the benchmark 10-year bond fell 4 basis points to 4.58%. Yields on bonds fall as the underlying price rises. Bonds 09/05/2008 http://www.cityam.com/index.php?news=13245 French utility company EDF is going it alone in its bid for the UK government's 35% stake in nuclear power station operator British Energy, newswire Reuters reported sources as saying. Recent reports suggested EDF and RWE were interested in teaming up with British Gas owner Centrica to bid for the company, but RWE lost interest according to German newspaper Handelsblatt. Reuters quoted the sources as saying that the EDF bid would be "substantially less" than 700p a share. The Times newspaper last month said the French utility would be willing to pay more than 700p. Spain's Iberdrola, which owns Scottish Power, is also reportedly interested in British Energy, but did not step forward with a bid Friday, the day on which the government's bid deadline expires. The absence of a bidding war will disappoint the UK government, but it does still have the option of asking for a third round of bids which would allow other bidders to enter; today's bid deadline was for a second round of bids that had to include financing details. UK company Centrica reportedly made an indicative bid of 700p in the first round of bidding and is not prepared to increase it, Reuters reported an industry source as saying. Company News 09/05/2008 http://www.cityam.com/index.php?news=13244 The Dow Jones index is now showing a triple digit fall as US stocks continue yesterday's slide. Sentiment is soured by AIG's announcement of plans to raise $12.5bn to repair its balance sheet after taking substantial write-downs in the first quarter. Insurance giant AIG posted first-quarter losses of $7.81bn late yesterday and said in a conference call that it could offer "no assurance" that further write-offs are not around the corner. The stock is one of today's biggest fallers. On the upside, the US trade deficit contracted more than expected, as US consumers tightened their belts and spurned imported goods. The deficit narrowed to $58.2bn in March from $61.7bn, although it was not all good news, as exports showed a monthly decline for the first time in a year. The Dow Jones 30 is down 112 at 12,753 and the S&P 500 is 11 points easier at 1,386. The tech-heavy NASDAQ Composite is outperforming the other two major indices but is still down 11 at 2,439. Soaring oil prices, which are currently well past $125 a barrel as the weaker dollar pushes investors to buy commodities, do no favours to big fuel users such as Delta Air Lines and cruise company Carnival. Oil refiners are also on the skids, with Tesoro and Valero Energy leading the way down, after Goldman Sachs said refiners are facing liquidity issues. Generic drug company Mylan is friendless after it reported increased first quarter losses of $443.9m, compared with losses of $71.3m in the first quarter of the previous year. Citigroup eased after announcing plans to run down about $400bn of assets as it seeks to claw its way back to profitability. Computer graphics chip designer Nvidia races ahead after yesterday's announcement of a 34% rise in first quarter profits. Circuit City Stores has agreed to open its books to DVD-rental company Blockbuster and billionaire financier Carl Icahn, effectively putting itself up for sale. Fellow consumer electronics retailer Radio Shack gravitates higher in sympathy. In other company news, General Motors said in a regulatory filing that it would give financial support to end the strike at auto parts supplier American Axle and Manufacturing Holdings. International News 09/05/2008 http://www.cityam.com/index.php?news=13240 <p>Copper miner Kazakhmys has rejected an indicative &pound;7.05bn bid approach from fellow Kazakh miner Eurasian Natural Resources (ENRC). </p><p>ENRC, which was last month given a &quot;put up or shut up&quot; deadline of 16 May by the Takeover Panel, sent Kazakhmys a non-binding indicative proposal that valued each Kazakhmys share at about 1,550p. Under the terms of the proposal ENRC would offer 1,022p in cash 0.413 ENRC shares per Kazakhmys, with the equity element representing Kazakmys&#39;s current holding in ENRC. </p><p>The board of Kazakhmys unanimously rejected the proposal from ENRC, noting that the offer value of 1,550p per share is well below the current Kazakhmys share price. </p><p>ENRC is the world&#39;s biggest producer of ferrochrome and a major iron ore exporter. It is worth about &pound;16.8bn, while Kazakmys is valued at around &pound;8.1bn at Friday&#39;s closing prices. </p> Company News 09/05/2008 http://www.cityam.com/index.php?news=13241 London ended the week on a dull note, giving up all of the gains seen earlier this week, with fallers today outnumbering risers by three to one among Footsie constituents. ENRC's rejected bid approach for Kazakhmys came after the bell and too late to affect proceedings. Royal Bank of Scotland, Lloyds TSB, HBOS, HBSC and Barclays were the major sufferers in the banking sector, with the latter suffering the additional blow of a downgrade to "underweight" from "equal weight" by Morgan Stanley. Insurers reacted badly to the cash call from US insurance giant AIG. Old Mutual, Royal & Sun Alliance and Legal & General were prominent among fallers. Carphone Warehouse was friendless after analysts get their teeth into the fine detail of the company's deal with Best Buy. Citigroup reiterated its "sell" advice today as it awaits further news on the company's deteriorating cash position. Business software group Sage Group also suffered broker-inspired losses after Investec Securities downgraded the stock to "hold" from "buy" following yesterday's results. Shares in music and games retailer HMV fell despite upbeat earnings. The group reported a 10.1% rise in like-for-like sales in the 16 weeks ended 26 April and said it expects full-year profits before tax and exceptional costs to be towards the upper end of market expectations. Electronic component group Laird reported a strong start to 2008. In the three months to March, revenue from continuing operations grew by 35% compared with the same period in 2007. Sub-prime lender Cattles also saw a strong start to the year. "Trading conditions for our business have been favourable." Cattles launched a &#163;200m cash call last month. Magners cider group C&C's operating profits fell by 37% last year to February on sales down to &#8364;679m from &#8364;738m. The group said its performance in both Ireland and Great Britain reflects weak market conditions related to the combination of low consumer confidence and poor spring weather. For the full year C&C expects modest overall revenue growth and some improvement in operating margins. Engineer IMI said its end markets generally remain firm with no discernible change in order momentum in recent months. Prospects for the oil and gas and power markets look positive for its Severe Service business. British Energy was in focus as the latest deadline for potential bidders looms. French power giant EDF has reportedly tabled an independent takeover offer today but German group RWE is not interested any more according to German paper reports. Talks regarding BG Group's &#163;6.2bn (A$12.9bn) bid approach for Australia's Origin Energy are ongoing, but have been inconclusive, the UK oil and gas giant said. Private equity firm Vitruvian Partners has launched a recommended 45p a share cash offer for AIM listed TV production company Tinopolis worth &#163;44.7m. Vitruvian, whose bid represents a 32% premium to Thursday night's closing price, has received irrevocable undertakings to back the offer representing 55.6% of the shares. Flomerics has rejected a 104p per share cash offer from Mentor Graphics, saying it undervalues the simulation software specialist. Shares in AIM-listed mobile banking and payments firm Monitise powered ahead after it said it is joining forces with Carphone Warehouse to start a mobile money scheme using a pre-pay card. Investors soured on cooker and kitchen equipment maker Aga Foodservice after it said trading is mixed as sector data indicates the value of cooker sales has fallen in most international markets this year. Psion said order intake in the first four months of 2008 has been strong and the mobile computing solutions firm expects that results for the first half will be in line with expectations. FTSE 100 - Risers Experian Group (EXPN) 421.25p +3.50% Whitbread (WTB) 1,395.00p +1.68% Eurasian Natural Resources (ENRC) 1,307.00p +1.48% Unilever (ULVR) 1,775.00p +1.31% BAE Systems (BA.) 478.00p +1.27% Diageo (DGE) 1,041.00p +1.26% Thomas Cook Group (TCG) 276.50p +1.19% TUI Travel (TT.) 257.25p +1.08% Thomson Reuters (TRIL) 1,577.00p +0.90% Sainsbury (J) (SBRY) 398.75p +0.89% FTSE 100 - Fallers Carphone Warehouse Group (CPW) 268.00p -7.27% Sage Group (SGE) 213.75p -5.63% Persimmon (PSN) 604.50p -5.55% Home Retail Group (HOME) 265.50p -5.43% British Airways (BAY) 228.25p -4.30% Antofagasta (ANTO) 777.00p -4.01% Vedanta Resources (VED) 2,400.00p -3.88% Hammerson (HMSO) 964.00p -3.70% Old Mutual (OML) 120.60p -3.37% Royal & Sun Alliance Insurance Group (RSA) 139.40p -3.13% FTSE 250 - Risers IMI (IMI) 504.50p +5.49% Dairy Crest Group (DCG) 472.75p +5.17% Marston's (MARS) 232.00p +3.23% Imperial Energy Corporation (IEC) 975.00p +3.12% Rank Group (RNK) 92.50p +3.06% Hardy Oil & Gas (HDY) 823.00p +3.00% Taylor Nelson Sofres (TNS) 250.75p +2.56% Aricom (ORE) 84.75p +2.11% Hochschild Mining (HOC) 387.75p +2.04% Yell Group (YELL) 196.00p +1.95% FTSE 250 - Fallers Assura Group (AGR) 95.00p -6.40% Barratt Developments (BDEV) 274.75p -6.31% Spirent Communications (SPT) 69.75p -5.74% HMV Group (HMV) 140.75p -5.70% Aberdeen Asset Management (ADN) 137.25p -5.67% Melrose Resources (MRS) 379.50p -5.60% Ashtead Group (AHT) 68.00p -5.23% easyJet (EZJ) 285.00p -5.00% Aga Foodservice Group (AGA) 292.00p -4.73% Berkeley Group Holdings Units (BKG) 959.00p -4.48% FTSE TechMARK - Risers NXT (NTX) 16.00p +28.00% Torotrak (TRK) 25.50p +7.37% Psion (PON) 113.00p +7.11% Axis-Shield (ASD) 315.00p +3.28% Elan (ELA) &#8364; 17.94 +3.10% Vectura Group (VEC) 50.25p +2.03% Oxford Instruments (OXIG) 212.00p +1.92% Alphameric (ALM) 18.50p +1.37% Filtronic (FTC) 170.75p +1.19% ARC International (ARK) 23.00p +1.10% FTSE TechMARK - Fallers Oxford Biomedica (OXB) 24.50p -5.77% Computacenter (CCC) 195.50p -5.56% Vislink (VLK) 32.75p -5.07% Imagination Technologies (IMG) 71.25p -5.00% Intec Telecom (ITL) 54.50p -4.80% Skyepharma (SKP) 10.00p -4.76% Kofax (KFX) 210.00p -4.55% AEA Technology (AAT) 67.25p -3.93% Morse (MOR) 52.00p -3.70% Detica Group (DCA) 307.00p -3.46% Markets 09/05/2008 http://www.cityam.com/index.php?news=13243 Directors at Ludorum, the media investment company that owns licensing rights to children's characters such as Dennis the Menace, spent a combined total of more than &#163;60,000 on shares Thursday, the company said. Chief executive Rob Lawes, chief operating officer Charlie Caminada, non-executive chairman Dick Rothkopf and non-executive director David Maloney each bought 14,736 shares at 104p each. Lawes now has 565,736 shares in Ludorum, which is just under 7% of the company. Caminada's purchase brings his holding to 356,736 shares, while Rothkopf now has 284,736 shares Maloney has 34,736 shares. Speaking late last month as the company delivered its 2007 results, Lawes said: "We are delighted with the progress we have made in 2007 and are on track for revenue generation in fiscal year 2008." Recent successes included an agreement with DC Thomson, publisher of The Beano comic, to represent all rights excluding publishing for its character Marvo the Wonder Chicken. Top Director Buys Wolfson Microelectronics (WLF) Director name: Mr Michael Ruettgers Amount purchased: 100,000 @ 140.00p Value: &#163;140,000 North Atlantic Smaller Trust (NAS) Director name: Mr Christopher H B Mills Amount purchased: 10,000 @ 1,002.00p Value: &#163;100,200 CLS Holdings (CLI) Director name: Mr James F Dean Amount purchased: 20,000 @ 348.50p Value: &#163;69,700 SVM Global Fund (SVG) Director name: Mr Senator Shane P N Ross Amount purchased: 15,000 @ 445.00p Value: &#163;66,750 Fiberweb (FWEB) Director name: Mr Richard Stillwell Amount purchased: 60,000 @ 40.50p Value: &#163;24,300 Ludorum (LUD) Director name: Mr Robert I Lawes Amount purchased: 14,736 @ 104.00p Value: &#163;15,325 Ludorum (LUD) Director name: Mr Richard E Rothkopf Amount purchased: 14,736 @ 104.00p Value: &#163;15,325 Ludorum (LUD) Director name: Mr David Maloney Amount purchased: 14,736 @ 104.00p Value: &#163;15,325 Ludorum (LUD) Director name: Mr Charles J Caminada Amount purchased: 14,736 @ 104.00p Value: &#163;15,325 Top Director Sells Carnival (CCL) Director name: Mr Richard G Capen Jr Amount sold: 6,000 @ 2,074.97p Value: &#163;124,498 Director Dealings 09/05/2008 http://www.cityam.com/index.php?news=13239 Auctioneer Sotheby's saw its shares knocked down after falling into loss in the first quarter. A net loss of $12.4m was suffered on revenue of $129.3m in the first quarter, compared to a profit of $24.3m on revenue of $147.4m in the first quarter of 2007. Loss per share was 19 cents, versus expectations of positive earnings per share of 10 cents. The company attributed the shortfall to lower commissions, which were reduced in an attempt to win new business. The company has announced plans to introduce higher commission charges with effect from 1 June. Salaries and other expenses also took their toll, rising 12% to $61.2m, while overall costs jumped 9.7% to $147.7m. International News 09/05/2008 http://www.cityam.com/index.php?news=13238 Shares in Caza Oil and Gas gained more than 20% Friday after it reported hydrocarbon finds at two of its Texas wells. The first sales of natural gas from the Eland property, in which it has a 35% stake, are expected to begin on May 20, while completion operations at the Puku property, also 35% owned by Caza, will begin around May 16. "Of five exploration wells drilled by Caza this year so far we have encountered hydrocarbons in four, and following well completion and tie-in operations expect to have production from at least three of them in the very near future," chief executive Mike Ford said. "I am especially pleased that our recent drilling results have proven that our geophysical understanding and the utilization of advanced analysis in direct hydrocarbon indicators is working." Caza explores for and produces oil in Texas, Louisiana and New Mexico. Small Cap News 09/05/2008