Nokia close to buying Alcatel's mobile networks unit

Finland's Nokia Oyj is close to a deal to buy Alcatel-Lucent's mobile networks unit to boost its core business especially in the United States and China, Les Echos newspaper reported on Monday. 

PHOTO: AFP

14 Apr7:50 AM

[PARIS] Finland's Nokia Oyj is close to a deal to buy Alcatel-Lucent's mobile networks unit to boost its core business especially in the United States and China, Les Echos newspaper reported on Monday.

The French business daily said an announcement could come"quickly," citing a source close to the matter. The paper said meetings between managers at the two companies had increased since January.

Alcatel and Nokia declined to comment.

Bloomberg reported later on Monday that the companies had examined a full takeover of Paris-based telecom equipment maker Alcatel, but that Nokia was more likely to buy the wireless business.

The unit generated sales of 4.7 billion euros (S$6.81 billion) last year, or about one-third of the group total, Les Echos said.

The newspaper added that any deal would be closely watched by French politicians, as Alcatel was considered a strategic business.

The French economy ministry declined to comment.

A source familiar with the matter said on Friday that Nokia was considering selling its HERE maps business, which last year had net sales of around 969 million euros.

Analysts have seen little synergy between the unit and Nokia's mainstay network gear business, and Nokia has hired a financial adviser to explore a sale, the source said.

Shares of Nokia and Alcatel rose on Monday as analysts welcomed a possible sale of the Nokia unit as a likely precursor to consolidation of Alcatel's wireless business.

Alcatel and Nokia had held sporadic talks for years before the Finnish company sold its struggling handset business to Microsoft Corp a year ago, leaving Nokia to concentrate on developing the networks business.

Germany's Manager Magazin reported in December that the two companies had revived talks on a possible merger.

Alcatel Chief Executive Michel Combes has voiced confidence in his goal of achieving positive free cash flow by the end of this year.

Mr Combes has pursued an aggressive restructuring plan including layoffs of 10,000 employees, sales of assets worth about 600 million euros, and increasing capital by 1 billion euros to shore up finances.

Alcatel competes with Sweden's Ericsson and China's Huawei in addition to Nokia. It has not achieved regular profit since its creation in 2006 because it is smaller in the mobile sector than rivals and faces tough competition from Chinese vendors.

REUTERS

      

Qualcomm rejects hedge fund call for split

Qualcomm on Monday rejected a call from an activist investment firm to break up the US tech giant into groups focused on chip manufacturing and licensing of its technology. 

PHOTO: REUTERS

14 Apr6:59 AM

[NEW YORK] Qualcomm on Monday rejected a call from an activist investment firm to break up the US tech giant into groups focused on chip manufacturing and licensing of its technology.

The California group known for its big role in smartphone chips said it "welcomes input from our stockholders" including the proposal from Jana Partners made at an investor conference.

But Qualcomm said its board and management "periodically review our corporate structure" and have concluded that "synergies provided by our business model create more value for stockholders than could be created through alternative corporate structures."

According to a report in the Wall Street Journal, Jana had taken a US$2 billion stake in Qualcomm as part of an effort to press the company to break itself up to boost shareholder value.

The report said Jana estimates that a split would "unlock value" for shareholders because Qualcomm earns the bulk of its profits from royalties from its patents and other technologies.

AFP

    
 

IBM teams with Apple on artificial intelligence health programme 

IBM on Monday announced alliances with Apple and others to put artificial intelligence to work drawing potentially life-saving insights from the booming amount of health data generated on personal devices. 

PHOTO: BLOOMBERG

14 Apr8:36 AM

[SAN FRANCISCO] IBM on Monday announced alliances with Apple and others to put artificial intelligence to work drawing potentially life-saving insights from the booming amount of health data generated on personal devices.

IBM is collaborating with Apple, Medtronic, and Johnson & Johnson to use its Watson artificial intelligence system to give users insights and advice from personal health information gathered from fitness trackers, smartphones, implants or other devices.

The initiative is trying to take advantage of medical records increasingly being digitized, allowing quick access for patients and healthcare providers if the information can be stored and shared effectively. IBM wants to create a platform for that sharing.

"All this data can be overwhelming for providers and patients alike, but it also presents an unprecedented opportunity to transform the ways in which we manage our health," IBM senior vice president John Kelly said in a news release.

"We need better ways to tap into and analyze all of this information in real-time to benefit patients and to improve wellness globally." IBM expects more companies to join the health platform, which it envisions growing to a global scale.

In addition, the New York based company said it is acquiring a pair of healthcare technology companies and establishing an IBM health unit.

Watson is a cognitive computing system that bested human competition in a Jeopardy trivia television game show.

Under the partnership it will be able to handle data collected using health applications from Apple mobile devices, according to IBM.

"Now IBM's secure cloud and analytics capabilities provide additional tools to help accelerate discoveries across a wide variety of health issues," Apple senior vice president of operations Jeff Williams said in a release.

AFP

      

Tencent slumps most in a year after billionaire Ma cuts stake

Tencent Holdings slumped for the first time in 10 days after billionaire Chairman Ma Huateng cut his stake in the operator of Asia's most-popular message services. 

PHOTO: BLOOMBERG

14 Apr10:41 AM

[HONG KONG] Tencent Holdings slumped for the first time in 10 days after billionaire Chairman Ma Huateng cut his stake in the operator of Asia's most-popular message services.

The stock fell 4.9 per cent to HK$162.10 as of 10:26 am in Hong Kong trading, the most in almost a year. The benchmark Hang Seng index declined 0.9 per cent.

Mr Ma, China's third-richest person, cut his stake to 9.65 per cent from 9.86 per cent and raised a combined HK$3.22 billion (S$566 million), according to filings to the Hong Kong stock exchange Monday. Selling shares sent a signal to investors to withdraw from the stock after a 62 per cent surge in the 12 months through Monday, Louis Tse, a Hong Kong-based director of VC Brokerage, said Tuesday.

"If the chairman of a company starts selling, it probably means the market could start taking a beating," Mr Tse said. "The market has risen so much, it was expected to come down at some point."

Hong Kong's benchmark Hang Seng index has surged 18 per cent this year, reaching the highest level since December 2007. An unexpected drop in Chinese exports spurred speculation that authorities will increase stimulus to support economic growth.

Mr Ma sold 10 million Tencent shares on Thursday at an average of HK$162.26 each and another 10 million shares on Friday at an average of HK$159.81 each, according to two disclosure filings to the Hong Kong stock exchange.

Tencent reported a jump in online advertising revenue during the fourth quarter, buoying the outlook for higher earnings from its WeChat and QQ messaging services. Net income for the three months ended December rose 50 percent as Tencent develops its advertising, payment services, online games and content streaming businesses.

BLOOMBERG

    
 

ISS says Iceberg's allegations do not warrant an against vote on Noble's resolutions

By

Mindy Tantanmindy@sph.com.sg@MindyTanBT

13 Apr11:31 PM

Leading up to Noble Group's Annual General Meeting on April 17, ISS Proxy Advisory Services (ISS) has issued a report stating that Iceberg Research's allegations do not warrant an against vote on any of the resolutions at the meeting.

With regard to the adoption of the financial statements and directors' and auditors' reports, ISS said a "For" vote is warranted.

It said in its report: "Iceberg's allegations are serious, and concerns remain regarding the significant gap between the market and carrying values of Yancoal stake; however, the company has provided reasonable responses and clarifications on many of claims made by Iceberg.

"Further, the auditor's report remains unqualified, Moody's has stated that the company's results are consistent with its current Baa3 rating with stable outlook, and Standard & Poor's found Noble's accounting practice to be in line with market standards and reaffirmed the BBB- rating. As such, despite the concerns raised by Iceberg, a vote FOR this resolution is warranted."

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However, the report also noted that Richard Elman, the company's founder, executive chairman, and largest shareholder, serves on the audit committee, which is chaired by a director who serves on a total of seven public companies' boards and chairs a number of audit committees.

"In light of Iceberg's accusations, the company's audit committee should be comprised entirely of non-executive chairman, chaired by a director who is not overcommitted so as to help restore investor confidence in the company's auditing and financial reporting practices," it said in its report.

It advised a vote against the following proposals:

• Item 7 in which the board seeks to issue shares with pre-emptive rights (to an issuance limit of 50 per cent) and shares without pre-emptive rights (issuance limit of 20 per cent) given that the issuance request without pre-emptive rights exceeds the recommended limit.
• Items 9,11, and 12 to approve grant of options/awards and issuance of shares under the Noble Group Share Option Scheme 2014, Noble Group Performance Share Plan and Noble Group Restricted Share Plan 2014, given the potential dilution concerns and lack of disclosed performance conditions under the plans.

    
 

Temasek is single-largest foreign investor in Chinese banks: report

By

Jamie Lee leejamie@sph.com.sg@JamieLeeBT

Singapore's Temasek Holdings is the single-largest foreign investor in Chinese banks, data from SNL Financial on Tuesday showed. 

PHOTO: SPH

14 Apr9:33 AM

SINGAPORE's Temasek Holdings is the single-largest foreign investor in Chinese banks, data from SNL Financial on Tuesday showed.

The data includes all classes of publicly traded common shares, but excludes investments reported before Jan 1, 2014. The market value of each investor's stake in a company was calculated based on the March 31 closing price.

Temasek emerged top with a combined stake valued at US$18 billion, driven by holdings in three Chinese banks. It has a 6 per cent stake in China Construction Bank Corp, worth US$12 billion as at March 31. It is also invested in Industrial & Commercial Bank of China, holding US$5.76 billion of shares.

Collectively, US institutions hold the largest stake in Chinese banks. The 10 US companies that made it to the top-25 list of foreign investors in Chinese banks held a combined US$20.1 billion of shares in Chinese lenders.

The only other Singaporean company on the list is Eastspring Investments (Singapore) Ltd, which had investments totalling US$810 million in four Chinese banks as at March 31. Eastspring Investments is a unit of Prudential.

    
 

China walks US$264 billion tightrope as margin debt powers stocks

14 Apr8:10 AM

[BEIJING] Confident that China's stock market rally still has legs, Jiang Lin recently began borrowing money from her brokerage to buy more shares.

Her newly-opened margin finance account with state-owned China Investment Securities has allowed Jiang, a 29-year-old marketing executive in Beijing, to double up her bets on the vertigo-inducing rally in Chinese share prices.

"It's worth the risk," said MS Jiang, while admitting she doesn't fully understand how margin finance works because she hasn't had her broker explain it to her.

Investors such as Jiang are part of a US$264 billion dilemma facing the country's securities regulator, the China Securities Regulatory Commission, after the Shanghai Composite Index climbed on Monday to a seven-year high. Should it tighten its rules governing margin finance and risk triggering a crash, or continue tinkering with regulations and see stock purchases on credit rise to potentially perilous levels?

Traders are betting that the regulator will shy away from any serious steps to curb an explosion of margin finance, which fueled a 93 per cent one-year surge in Shanghai's benchmark gauge. Securities firms' outstanding loans to investors for stock purchases were a record 1.64 trillion yuan (S$362 billion) as of April 10, up 50 per cent in less than three months, despite bans imposed by the CSRC in January and April on lending to new clients by four Chinese brokerages.

China's margin finance now stands at about double the amount outstanding on the New York Stock Exchange, after adjusting for the relative size of the two markets.

"Regulators are aware of the risk of rising margin debt but they can't afford to puncture the equities bubble with very draconian measures," said Lu Wenjie, a Shanghai-based analyst at UBS Securities. "They want to pelt the mice without smashing the china."

With growth faltering and real estate prices heading lower, China is wary of adding a stock market crash to its economic problems, according to Mole Hau, a Hong Kong-based economist with BNP Paribas.

There's also a political dimension because equity markets are dominated by small retail investors, some of whom may face ruin if a market slump prompts brokers to call in loans. Individual investors make up about 90 per cent of equity trading in China, according to the CSRC.

The stock market's upward march was delayed by only a few weeks in January by the CSRC's three-month bans on Citic Securities, Haitong Securities and Guotai Junan Securities for letting customers delay repaying financing. This month's news that another six brokerages faced penalties for their margin lending was also brushed aside by investors.

Sterner measures could include tightening capital requirements for brokerages and raising the asset threshold for investors seeking margin finance, said Castor Pang, Core Pacific-Yamaichi Hong Kong's head of research. For now, clients must have at least 500,000 yuan of assets.

The CSRC indicated it could be considering tougher action when its chairman Xiao Gang was quoted by China National Radio last month as saying it's planning revisions to regulations on margin finance and securities lending to prevent systemic risk. Mr Xiao didn't give details of the possible measures.

Regulatory interventions such as stamp duty hikes and curbs on day-trading mechanisms have triggered three market slumps since the 1990s, according to UBS's Mr Lu.

The authorities may also be tempted to hold off because stock valuations remain lower than levels before past market collapses. The Shanghai Composite is at about 20 times reported earnings, or less than half of the level it reached during a 2007 rally.

In the absence of tougher measures, the regulator is likely to continue brokerage inspections and impose temporary bans or fines for specific infractions, said Core Pacific-Yamaichi's Mr Pang. The CSRC this month added Great Wall Securities to the suspension list while warning another five brokerages including Huatai Securities for violations of margin finance rules.

The bans on Citic, the nation's biggest brokerage, Haitong and Guotai Junan expire on Thursday, leaving the firms free to seek new clients again. They have the capacity to do so, said Zheng Chunming, a Shanghai-based analyst at Capital Securities. He calculates that Chinese brokerages can boost margin loans to as much as 2 trillion yuan if they raise their capital and leverage ratios to regulatory ceilings.

"The return of three large brokerages will definitely add to the rapid growth in margin debt," said Mr Zheng. "A lot has to do with market sentiment, which is irrational at the moment."

BLOOMBERG