Business

Mon Aug 25 18:52:33 PDT 2008

(Adds analyst quote, details on Broadcom opportunity)

By Sinead Carew

NEW YORK, Aug 25 (Reuters) - Chip maker Broadcom Corp said it would buy Advanced Micro Devices Inc’s digital television chip business for $192.8 million in cash to enter the market for cheaper television sets.

AMD shares rose 4.5 percent after the news but Broadcom shares fell 3.5 percent after it said the deal would hurt earnings in the first year.

However, Stifel Nicolaus analyst Cody Acree applauded the agreement, saying it opens high-volume, high-growth consumer markets for Broadcom’s TV chip unit.

"If Broadcom gets into a lower end DTV box, it allows them to target markets like China, India and Brazil," said Acree, adding that sales of cheaper televisions could be lifted by economic uncertainty among consumers.

After the deal, Broadcom would be selling chips for television sets with screens of up to 20 inches priced around $200 to $300. Broadcom, which makes chips for a range of consumer electronics including cell phones and set-top boxes, had previously focused on chips for more expensive TVs.

The deal is expected to close in the fourth quarter and is forecast to cut Broadcom’s full year 2009 net earnings per share by a range of 4 cents to 5 cents, including 2 cents of stock-based compensation, the company said. It expects the impact on earnings to lessen and "approach neutrality" by the fourth quarter of 2009.

Broadcom said the deal would not change its long-term, gross margin target range of 49.5 percent to 51.5 percent.

Acree said the purchase price was "relatively cheap" for Broadcom as it is less than the unit generated in revenue for the last year, according to his estimates. Acree said it made sense for AMD, which needs to focus on its main business of graphics chips and computer chips.

AMD, which trails behind far-larger rival Intel Corp in the computer microprocessor market, has reported seven straight quarterly net losses and is developing a new strategy for manufacturing.

Broadcom said it planned to offer jobs to 530 AMD employees, about 90 percent of whom are engineers.

It said the boards of each company had approved the deal, which does not require a shareholder vote but does need regulatory approval.

Broadcom also said it may record a one-time charge for purchased in-process research-and-development expenses related to the acquisition in the quarter in which the transaction closes but said the amount, if any, had yet to be determined.

Broadcom shares were down 95 cents at $26.47 in late morning trading on Nasdaq. Shares in AMD were up 26 cents to $6.07 on the New York Stock Exchange. Its shares were still about 21 percent lower than mid-June levels.

(Additional reporting by Euan Rocha; Editing by Brian Moss and Derek Caney)

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Wed Aug 27 19:43:47 PDT 2008

LOS ANGELES, Aug 27 (Reuters) - Digital video recorder maker TiVo Inc returned to profit in the second quarter but forecast a wider-than expected third-quarter loss, sending shares down 5.4 percent and roughly erasing the day’s gains.

The company said on Wednesday net income for the quarter ended July 31 was $2.9 million, or 3 cents per share, compared with a loss of $17.7 million or 18 cent per share in the year-ago quarter.

Adjusted earnings of 2 cents a share beat analysts’ average estimate of a loss of 2 cents a share, according to Reuters Estimates.

Revenues rose to $65.2 million from $62.7 million.

For the third quarter, TiVo anticipates service and technology revenues in the range of $49 million to $51 million, as well as a net loss in the range of $7 million to $9 million. Wall Street on average expected a loss of $4.2 million.

Shares fell by 5.4 percent to $7.53 in after-hours trading.

(Reporting by Alex Dobuzinskis)

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Thu Aug 28 00:44:31 PDT 2008

(Adds comment, detail)

By Chang-Ran Kim, Asia autos correspondent

TOKYO, Aug 28 (Reuters) - Toyota Motor Corp, the world’s most profitable carmaker, cut its 2009 vehicle sales forecast by nearly 7 percent due to a severe downturn in Western markets driven by high fuel prices and a credit crunch.

The weaker outlook highlights an increasingly difficult environment for global automakers faced with softening demand in the United States and Western Europe, especially for higher-margin, gas-thirsty vehicles.

Toyota said on Thursday it expects to sell about 9.7 million vehicles next year including its Daihatsu Motor Co and Hino Motors Ltd units. It had previously forecast sales of 10.4 million vehicles. No car maker has yet passed the 10 million annual unit sales milestone.

“We are looking at the current shift towards fuel-efficient cars (in the United States) as a structural change in demand,” Toyota President Katsuaki Watanabe told a news conference. “We intend to respond quickly and flexibly to this environment.”

The revised forecast was slightly lower than the 9.8 million analysts had expected. Toyota last month trimmed its 2008 sales projection, seeing growth of just 1 percent to 9.5 million units.

Toyota lowered its 2009 sales forecast for North America, the world’s biggest auto market, to 2.7 million vehicles from 3 million. Toyota has dropped Mexico from its definition of North America.

Toyota shares eased 0.2 percent in a virtually flat Nikkei average The stock has fallen about 21 percent so far this year, in line with Tokyo’s transport equipment subindex ITEQP.

“For the last few months the company began to say its previous target was impossible and they’ve scaled back gradually, so everybody’s used to the idea,” said Nagayuki Yamagishi, strategist at Mitsubishi UFJ Securities.

“Everyone just thinks ‘it can’t be helped’”

A year ago, at its previous business strategy briefing, Toyota declared a successful entry into the full-sized pickup truck segment in the United States with the Titan — a model it had billed its most important ever in the world’s top market.

But rocketing fuel prices have scared consumers away, forcing automakers to idle or slow production of pickups and sports utility vehicles (SUVs) in North America.

Toyota is suspending U.S. production of light trucks for three months to prevent inventory from ballooning.

Tougher times at U.S. rivals, however, are likely to keep Toyota ahead of General Motors Corp as the world’s biggest automaker this year.

To respond to changing consumer needs, Toyota outlined plans last month to build the hot-selling Prius gasoline-electric hybrid at a factory under construction in Mississippi instead of the planned Highlander SUV from 2010.

Toyota will also hope to bounce back next year with the launch of a third-generation Prius and a new hybrid model to meet growing demand for fuel-efficient vehicles.

Industry watchers are also eagerly awaiting a low-cost car, expected to sell for under 1 million yen ($9,000), that Toyota is developing to compete in emerging markets such as India and Brazil. Production in India is set to begin in 2010, and in Brazil a year later. ($1=109.42 Yen)

(Additional reporting by Elaine Lies; Editing by Lincoln Feast & Ian Geoghegan)

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Thu Aug 28 00:43:27 PDT 2008

TOKYO, Aug 28 (Reuters) - Sony Corp said on Thursday it would launch the world’s thinnest liquid crystal display (LCD) TVs this year, broadening its product line-up ahead of the critical year-end shopping season.

The new 40-inch model, which is 9.9 mm thick, is estimated to sell for 490,000 yen ($4,478) in Japan, Sony said.

The Japanese electronics and entertainment conglomerate will also offer the world’s first LCD TVs that display 240 frames per second, compared with 120 frames for Sony’s existing models.

More frames in a given time make fast-moving images in sports programmes and action movies look seamless.

Sony, the world’s second-largest LCD TV maker behind Samsung Electronics Co Ltd expects a 46-inch model with the 240 frame function to sell for around 400,000 yen.

Both models will go on sale in Japan on Nov. 10, closely followed by overseas launches.

Sony said a slowing economy has had little effect on its LCD TV sales, and that the maker of Bravia brand flat TVs is on track to hit its target to sell 17 million LCD TVs in the year to March 2009.

Sony shares were down 0.7 percent at 4,140 yen, outperforming the Tokyo stock market’s electrical machinery index IELEC. which fell 1.1 percent.

(Repoting by Kiyoshi Takenaka)

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Wed Aug 27 20:03:57 PDT 2008

VOLVO AB, the world’s second-biggest truck maker, said yesterday that deliveries by its four brands rose 2 percent in July, with growth held back by declines in western Europe and the United States.

Sales at the Mack, Nissan Diesel, Renault and Volvo divisions rose to 19,243 vehicles last month from 18,824 a year earlier, the Sweden-based company said. Seven-month sales rose 27 percent to 154,888 trucks.

The economy of the 15 nations sharing the euro contracted 0.2 percent in the second quarter from the first, led by drops in Germany, France and Italy. "The sales data look relatively weak," said Carl Holmquist, an analyst at Danske Markets Equities in Stockholm.

At the same time, "Volvo is very broadly based. That’s still helping the company in a deteriorating market," he said.

Volvo fell as much as 3 percent to 73.75 kronor (US$11.60) yesterday, the lowest price in more than three weeks, Bloomberg News said.

Source: Shanghai Daily

Tue Aug 26 21:56:53 PDT 2008

RIO DE JANEIRO, Aug 26 (Reuters) - Japan’s Mitsui Ocean Development and Engineering (MODEC) said on Tuesday it signed an agreement with Brazil’s Petrobras to supply an oil platform to drill at its Tupi sub-salt field off the coast of Rio de Janeiro.

According to MODEC, the memorandum of understanding involves the construction, charter and operation of the rig that will be used in the pilot project at the Santos Basin’s Tupi field, which has estimated recoverable reserves of between 5 billion and 8 billion barrels.

The floating, production, storage, and offloading (FPSO) platform with a capacity of 100,000 barrels a day and 150 million cubic feet a day should arrive in Brazil at the end of 2010, it said.

The FPSO will initially be linked with five wells and possibly with four more, said MODEC, which already operates five FPSOs in Brazil. Petrobras expects to install a total of 11 wells at the field.

Other sub-salt reserves thought to exist in the area, which some analysts say could total between 50 billion and 70 billion barrels, could vault Brazil from 17th to 10th among global oil producers.

(Reporting by Denise Luna; writing by Stuart Grudgings)

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Fri Aug 29 01:43:33 PDT 2008

HONG KONG, Aug 29 (Reuters) - TCL Communication Technology Holdings <2618.HK>, the handset-making arm of Chinese electronics giant TCL Corp <000100.SZ>, aims to nearly double its unit sales and revenue by 2010 on robust demand in the emerging markets.

"2005-2007 for me is turnaround and recover. Starting 2008, I want to grow the company at 25 percent a year in both revenue and unit sales for three years," Chief Executive Liu Fei told Reuters in an interview.

TCL Communication — which acquired the troubled handset business of French telecoms equipment maker Alcatel — plans to sell 16 million handsets this year against 12.5 million in 2007.

Unit shipments jumped 60 percent to 6.7 million in the January-June period, 90 percent of that went abroad.

Liu said he is confident about the target because first half unit sales had already exceeded the company’s expectation.

The company vies with the top two Chinese telecom equipment makers, Huawei Technologies [HWT.UL] and ZTE Corp <0763.HK>, and global handset giants Nokia <NOK1V.HE> and LG Electronics <066570.KS> in the overseas markets and many local vendors in China.

"We see a clear competition. But we should be able to compete with foreign players as we are more cost-efficient and able to compete with Chinese players, and they (Huawei and ZTE) are pure ODMs (original design manufacturing) while we are a brand company," he said.

The company, which uses the Alcatel brand for overseas markets and the TCL brand for China, plans to launch 34 new handset models in the second half of this year and another 32 in 2009.

Its revenue rose 13 percent from a year earlier to HK$2.34 billion ($300 million) in the first six months of this year. But Liu said growth will be much higher in the second half due to seasonal factors. ($1= HK$7.8)

(Reporting by Judy Hua; Editing by Ken Wills)

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Thu Aug 28 23:37:33 PDT 2008

BEIJING, Aug 29 (Reuters) - Dell Inc, the world’s No. 2 personal computer maker, said on Friday its Asia Pacific business was holding up even as corporations turned cautious about spending on technology because of slowing global growth.

Dell managed to maintain sound margins and balanced profitability in the region with total revenue growing by 25 percent in the latest quarter from a year earlier, said Steve Felice, president of Dell Asia-Pacific and Japan.

Felice was briefing reporters on a teleconference a day after the firm reported a surprisingly steep drop in quarterly earnings as companies around the world cut back on technology spending in response to a global economic slowdown

"I haven’t changed my level of optimism around our business and demand levels and our ability to grow," he said.

Overall economic growth in most countries in the region is still healthy and companies still view information technology as an important productivity tool, Felice said.

"The industry is still projecting double-digit growth. I still want to grow faster than the industry," Felice said.

Revenues in the quarter grew 33 percent in China, 59 percent in India and by 30 percent on average in the members of the Association of South East Asian Nations.

Felice expressed concern that high inflation in Asia could trigger interest rate rises that would then crimp spending, but he said the outlook for growth in the region remained "extremely healthy.’

"I am more on a watch mode than drawing any conclusions at this point of time," Felice said.

(Reporting by Michael Wei; Editing by Alan Wheatley and Jonathan Hopfner)

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Thu Aug 28 18:50:18 PDT 2008

TWO Chinese white goods giants reported positive financial results for the first half of this year despite of the tough export environment and rising material costs.

Zhuhai-based Gree Electric Appliance Inc, China’s biggest household air conditioner maker, said its net income jumped 104.67 percent to 1 billion yuan (US$146 million), or 1.20 yuan a share, compared with last year, the company said in a statement to the Shenzhen Stock Exchange yesterday. Its revenue grew 24.7 percent to 25 billion yuan, the statement said.

"The company’s sales growth was slower than our expectation as its second-quarter revenue only gained 9 percent, but its profit kept a robust growth powered by advantages in channel resources," said Fu Juan, an analyst of Shenyin & Wanguo Securities Co.

Despite the climbing steel price, Gree’s gross profit margin gained 0.1 percentage points in the second quarter from the first quarter thanks to its optimized product structure.

"The company’s new products enjoyed high gross profit margin, which secured a stable profitability," Fu said.

"Gree’s domestic sales rose 30 percent in the first half, outweighing the 15-percent export growth because of the slowdown in overseas markets."

The company has invested US$625,000 in a production base in Vietnam for a 20-percent stake, and the base, capable of producing 200,000 air conditioners annually, was put into use in April, it said in the statement.

Guangdong Midea Electric Appliances Co jumped 6.94 percent yesterday to 8.78 yuan a share after disclosing that its first-half profit gained 39.42 percent on a yearly basis.

Midea’s net income rose to 991 million yuan, or 0.52 yuan apiece, and sales gained 43.5 percent to 27.5 billion yuan, the company said in a statement to the Shenzhen bourse.

Its sales of refrigerators and washing machines accounted for 15 percent of its total revenue, compensating for the slower growth of air conditioners.

Midea’s domestic sales grew 53.47 percent to 17.8 billion yuan and sales in overseas markets rose 28.22 percent to 9.68 billion yuan.

"The slowed growth of European and United States economy decreased export demand, which is a major challenge Midea would meet in future development," Greatwall Securities Co analyst He Qifeng said.

The yuan has accelerated about 6.5 percent in the first half of this year, triggering widespread worries among exporters and partly caused the bankruptcy of 67,000 domestic companies in the first half. Export growth in the first half of this year slowed to 21.9 percent from 27.6 percent a year earlier.

Source: Shanghai Daily

Thu Aug 28 22:22:56 PDT 2008

SAN FRANCISCO, Aug 28 (Reuters) - Dell Inc <DELL.O> reported a surprise 17 percent decline in quarterly profit on Thursday as the company suffered from tighter corporate spending in United States, sending its shares down 8 percent.

Net income for the fiscal second quarter ended August 1 fell to $616 million, or 31 cents per diluted share, from the restated year-ago net income of $746 million, or 33 cents per diluted share.

Revenue rose 11 percent to $16.43 billion.

Dell shares tumbled to $23.20 in extended trade following the quarterly report, after closing down 42 cents at $25.21 on Nasdaq.

(Reporting by Eric Auchard, editing by Richard Chang)

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