Global Investing Roundup

Optibase Narrows Loss; Manulife Profits Jump 10% Profits; Biggest Takeover Ever Down Under; ING Sidesteps Subprime Pains - Maybe

  • Optibase Ltd. (OBAS), an advanced digital-video solutions based in Israel, announced that third-quarter revenue soared 21% to $5.2 million - up from $4.3 million in 2006. The company reported that losses for the quarter narrowed by $1.6 million from last year's shortfall of  $5.9 million. At the end of the quarter, Optibase reported it had cash and securities of $20 million and total shareholders equity in excess of $40 million. The company said it won several key contracts, including installations at Fort Leavenworth, Kansas, and one at the Vancouver International Airport. Amir Phillips, the chief financial officer of Optibase, said the company has"continued to make progress toward our primary financial and strategic goals. Our revenues increased 19.75% for the quarter and 37.7% for the first nine months and our gross margins are back to historical levels following last quarter's product-mix related decline." Optibase shares were down 18 cents each to close at $3.40 yesterday (Wednesday).
  • Toronto-based Manulife Financial Corp. (MFC) also released third-quarter earnings yesterday. Net income increased 10% from last year, despite a $56 million hit from the strengthening of the Canadian dollar against the U.S. dollar. Premiums and deposits also grew 10% to $16.8 billion, while funds under management grew 55% to reach $18.1 billion. Chief Executive Dominic D'Alessandro said sales were strong across all the company's business lines, with several divisions reaching record levels. Insurance sales rose 23% and wealth-management revenue was up by 26% year over year.  Manulife's Canadian division was very strong, as was revenue from both Japan and the rest of Asia. However, the company's U.S. insurance business declined. Manulife shares dropped $1.95 each, or 4.26%, to close at $43.84 yesterday.
  • In what will be the largest corporate takeover in Australian history, supermarket chain Coles Group Ltd. shareholders voted to allow the company to be acquired by Wesfarmers Ltd. Wesfarmers had put itself up on the auction block back in February 2006, but had then twice spurned takeover offers, including one from the privately held buyout firm Kohlberg & Co. L.L.C. Coles group has struggled in the past few years with slowing sales and a loss of market share to its main competitor, Woolworths Ltd. Its core food and liquor business has fallen off 9.5% so far in 2007, while Woolworths' sales have grown by more than 8%. The total price tag for the acquisition is $18.4 billion, with 75 % in equity with the rest in cash. According to a report in the Financial Times, half of the equity to be issued to Coles shareholders will be price-protected shares that trade separately from regular shares of Wesfarmers, and that limit the downside if the stock price should decline in the future. Once the two supermarket firms have combined forces, it will represent the largest private sector employer in all of Australia, with more than 200,000 employees and estimated annual sales of $41 billion. Executives of Wesfarmers said they think it will take from three years to five years to execute the turnaround of the Coles business unit. Retailing expert Archie Norman, who previously oversaw the turnaround of supermarket chain Asda Group Ltd., has been hired as a consultant to assist in the turnaround. The deal is scheduled to close Nov. 23.
  • Bucking what had been a trend of poor earnings and asset write-downs among European banks and insurance companies, Dutch financial services ING Groep N.V. (ING) yesterday announced that earnings had jumped 47% to $1.57 billion. That was helped in large part by a $311 million gain from the takeover deal involving ABN Amro Holding N.V. (ABN). However, other divisions reported losses. ING Direct, the Internet banking division, posted 32% drop in profits. Wholesale banking profits fell by 23%. And financial markets posted a profit drop-off of 79.5%. However, company officials did say they had no large impairments on its $2.12 billion portfolio of investments in subprime securities, and no revaluations in its debt portfolio."Our risk management and strong balance sheet has protected us from market turmoil," Chief Executive Michel Tilmant said. However, Arindam Nag, a columnist for the Dow Jones Newswires, pointed out that while subprime exposure was small, the portfolio of Alt-A mortgages (regarded as only slightly better than subprime) stood at $18.4 billion, and were being carried on the books at 98% of face value. Nag thought this was"optimistic, given the write-downs at U.S. banks."