Nokia sales, profit top forecasts

World's No. 1 handset maker preserved handset margins

LONDON (MarketWatch) -- Nokia Corp., the world's largest maker of mobile phones, on Thursday delivered a forecast-beating 19% increase in fourth-quarter profit as it managed to preserve margins in its handset business.

Net income at the Finnish group improved to 1.27 billion euros ($1.65 billion), or 0.32 euros a share, from 1.07 billion euros, or 0.28 euros a share, a year earlier. Excluding one-time items, Nokia would have earned 0.30 euros a share.

Sales climbed 13% to 11.7 billion euros.

Consensus forecasts from analysts were for earnings of 0.28 euros a share on sales of 11.6 billion euros.

Nokia proposed an annual dividend of 0.43 euros a share compared to 0.37 euros a share in 2005.

shares rose 4.7% in Helsinki morning trading.

Margins preserved even as average selling prices slip

Nokia said it shipped 106 million handsets in the quarter, up 19% sequentially and 26% year on the year. Although the average selling price of its handsets slipped to 89 euros from 93 euros in the third quarter, the group's handset operating margin, a closely watched measure of profitability, rose to 17.8% from 17.1% a year ago.

The average selling price of phones has dropped consistently at Nokia and other players as a higher proportion of phones sold are basic models targeted to emerging markets such as India and China.

Nokia's closest rival, last week posted a 48% drop in quarterly profit as its mobile-phone margins and the average selling price of its handsets collapsed. See full story.

Nokia estimated its market share at 36% in the quarter, flat from the third quarter, but up from 34% a year ago. It said it expects to maintain its market share in the first quarter.

"Nokia was able to increase its share of the global-device market significantly in 2006 to an estimated 36%, clearly solidifying our No. 1 position in the industry," Chief Executive Olli-Pekka Kallasvuo said in a statement.

"We achieved this result through the strengths of Nokia's world-class brand, products, cost structure and efficiency, without sacrificing our operating margins or cash flow."

Regarding the industry as a whole, Nokia reiterated its forecast for device volume growth of up to 10% from an estimated 978 million units in 2006. It said it sees some decline in industry average selling price next year.

Goldman Sachs last week upgraded Nokia to buy, saying it believes a perfect storm of negative news, including Motorola's profit warning and the launch of Apple's iPhone, has coincided with the bottom of the Finnish company's profit cycle.

The broker said it expects new products to drive a recovery in sentiment as well as average selling prices and gross margins during the first half of 2007

EBay profit rises 24%; sales up 29%

SAN FRANCISCO (MarketWatch) -- EBay Inc. late Wednesday reported fourth-quarter profit climbed 24% as sales rose more than expected, helped by a surge in its electronic-payments business and higher prices for the items eBay sells online.

The online auctioneer also issued a full-year profit forecast that exceeded Wall Street expectations and announced an extension of its share buyback program, helping send its shares (EBAY :

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EBAY30.00, +1.38, +4.8% ) up 10% in after-hours trading.

The San Jose, Calif.-based company said net income for the period ended Dec. 31 rose to $346 million, or 25 cents a share, from $279 million, or 20 cents, a year earlier.

Excluding the costs of employee stock options and other items, eBay said it would have earned 31 cents a share. In October, eBay forecast it would earn between 27 cents and 28 cents a share on that basis.

Sales rose 29% to $1.72 billion, topping the company's own expectations and the $1.67 billion estimate of analysts polled by Thomson First Call.

The results indicate a strong finish to a mixed year for eBay, which faced a backlash from some of its online sellers after it raised fees, and skepticism from Wall Street after it shut its operations in China after investing heavily there.

"EBay's core business is performing nicely and 2007 looks to bring more margin expansion and more stock buybacks," said Mark Mahaney, a Citigroup analyst who described the results as "unambiguously more positive." Mahaney has a buy rating on the stock.

Revenue from eBay's PayPal payments business rose 37% to $417 million, or a quarter of the company's total, while sales in its online marketplace business rose 24%.

EBay also saw healthy growth in its other businesses, with revenue from its Skype Internet phone division more than doubling from a year ago to $66 million.

While eBay Chief Executive Officer Meg Whitman said Skype's performance was encouraging, yet sales of its premium products are "not yet developing as quickly as we hoped" when it bought the company in late 2005.

EBay will try to goose Skype profits by adding new features, such as text messaging, she added during a conference call after eBay's results were announced.

The San Jose, Calif.-based company is looking to new areas for a boost as growth in its traditional auctions business has slowed in recent years.

"PayPal is a key component of our growth," eBay Chief Financial Officer Bob Swan said in an interview. Swan said of eBay's Skype and Shopping.com units, "they are expanding our breadth and capability."

In eBay's international markets, Swan said the company stabilized previously weakening overseas markets, including Germany and the U.K., and generated a record amount of free cash flow during the quarter.

The overall results were proof, Swan said, of a pay-off for what many saw as a risky move eBay made earlier in the year to raise fees on some of its highest-volume sellers.

In that shift, eBay increased how much it charges to list items in eBay stores, which generate less profit for eBay than its auctions business, to improve the quality of listings and encourage more sellers to use the auction method.

"I think the fundamental difference between expectations and the report was some underestimated our revenue per listing growth," Swan said.

EBay's results were also helped by a slightly lower tax rate, which fell to 28% from 29%.

For 2007, eBay said it expects to post earnings excluding certain items between $1.25 and $1.29 a share, more than the $1.23 a share average estimate of Wall Street analysts.

EBay expects upto $120 million in sales this year from secondary ticket-seller StubHub Inc., which eBay announced on Jan. 10 it is purchasing for $310 million in cash.

The company also announced Wednesday that it authorized the company to repurchase another $2 billion in company stock over the next two years, in addition to the $1.7 billion eBay has spent since July 2006.

"We don't believe the long-term value of the company was adequately reflected in the stock price," Swan said.

EBay shares rose as high as $33.15, or 10.5%, in late trading after the results were announced.

Market Forces Worked to Cool Oil Prices, API Says

[19-Jan-2007] U.S. oil demand dipped last year as mild winter weather and high fuel prices led airlines and other industries to find ways to cut fuel use, according to the American Petroleum Institute (API). During a media briefing Friday, API Chief Economist John Felmy and Ron Planting, head of statistical analysis, said 2006 presented challenges to energy producers and consumers but the market responded as rising supplies of gasoline and other fuels helped cool prices during the second half of the year. API officials also talked about challenges facing the oil and natural gas industry in 2007.

Indiabulls realty arm ties up with Man-based co

New Delhi: Indiabulls Financial Services Ltd said its realty arm will enter into a tie up with Dev Property Development Plc, incorporated in the Isle of Man.

As per the agreement, Dev shall subscribe to new shares and also acquire a minority shareholding from Indiabulls Real Estate Ltd in its three project companies -- Indiabulls Properties Pvt Ltd, Indiabulls Real Estate Company Pvt Ltd and Indiabulls Infrastructure Development Ltd.

The company expects that an application will be made to list the Dev shares on the London Stock Exchange's AIM market.

While Indiabulls Properties Pvt Ltd is developing Jupiter Mills, Indiabulls Real Estate Company Pvt Ltd is engaged in the company's Elphinstone Mills project.

The Indiabulls Infrastructure Development Ltd is developing the Raigad Special Economic Zone.

Japan fund Nikko to set up joint venture

Thursday, 11 January , 2007, 08:16

Mumbai: Nikko Asset Management Company Ltd of Japan plans to invest an initial amount of $5 million to set up a joint venture asset management company with Ambit RSM, a Mumbai-based financial services provider. The two companies will apply for the licence this quarter, and the fund house should be operational by the end of this year, said Timothy F. McCarthy, Chairman and CEO, Nikko AM. Nikko AM will provide 74.9 per cent of the ordinary stock of the new entity and the rest by Ambit. Ambit will utilise funds from its own resources for the investment, having sufficient net worth for this, said Ashok Wadhwa, Managing Director, Ambit RSM Pvt Ltd. The new asset management company will recruit most of its sales and fund management team from India, while Nikko AM will bring the investment expertise from Japan. Apart from the obvious line of equity and debt funds, the fund house will focus on multi-asset class products with investment in multi-countries, said McCarthy. The fund house will offer global funds, as Nikko AM already has a presence in many countries. "Our main strength lies in playing the role of a `training bank' to provide deep knowledge to all our fund distributors, which will be the most important concern and focus in India," said McCarthy. Nikko AM sees big growth in the retail investor segment in India. It maintains a neutral-to-overweight rating for the country.

LONDON (MarketWatch) -- BP didn't provide the leadership, resources or structure needed for effective safety at its five U.S. refineries, leading to "material" problems at all of them, a committee led by former Secretary of State James Baker said Tuesday.

The report, commissioned after an explosion killed 15 people at a Texas City refinery in 2005, singled out Chief Executive John Browne for paying too much attention to environmental issues and not enough to safety at his own refineries.

"In hindsight, the panel believes that if Browne had demonstrated comparable leadership on and commitment to process safety, that leadership and commitment would likely have resulted in a higher level of process-safety performance in BP's U.S. refineries," the Baker panel wrote in a 374-page report.

Browne last week brought forward his retirement date by nearly a year and a half, agreeing to turn the reigns in August over to Tony Hayward, head of exploration and production at the company. See full story on Browne's surprise resignation.

The panel charged that the oil giant wrongly concluded that fewer personal mishaps -- such as slips, falls and vehicle accidents -- were a sign that the company's safety culture was sound, when the company process-safety culture was lacking.

"The panel found that BP has not implemented an integrated, comprehensive, and effective process-safety-management system for its five U.S. refineries," the company said.

BP has agreed to implement the panel's recommendations. These include making an integrated and comprehensive process-safety-management system, having an audit system for process safety, and monitoring process safety at the board level. See external link to the Baker report.

BP will spend $200 million to pay for 300 external experts to conduct audits and redesigns. It's also set aside $1.6 billion to compensate victims of the Texas City explosion, which also injured 170 people.

BP has previously committed to spend more on maintenance, inspections and training at its refineries, on average $1.7 billion a year from 2007 to 2010.

"Browne's recent presentations within BP appear to acknowledge the previous underinvestment and to suggest that it was largely the result of an inability on the part of refining-line management to see the need to spend more money," the committee wrote.

'[T]he panel believes that if Browne had demonstrated comparable leadership on and commitment to process safety, that leadership and commitment would likely have resulted in a higher level of process-safety performance.' — Excerpt of committee report

Workers at three of the five U.S. refineries -- in Texas City; Toledo, Ohio; and Whiting, Ind. -- complained about the lack of funding, the panel found.

That said, the Baker panel didn't find evidence that management deliberately withheld funding.

BP management also "overloaded" refinery at its personnel with so many company-wide initiatives that employees couldn't keep up, the report charged. Turnover of managers at the plants -- again, notably in Texas City, Toledo and Whiting -- also contributed to process-safety weakness.

The Baker report wasn't as critical of BP's two other refineries, in Cherry Point, Wash., and Carson, Calif. The Cherry Point refinery has a "very positive, open and trusting environment," while Carson's environment was "generally" positive. The panel pointed out that the culture at these refineries was established before BP bought them from Arco.

U.S.-listed BP shares fell 1.8% in late morning trade, though the broader sector also saw pressure on further oil-price weakness.