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News Corp. Buys Into German PPV Market; Indiabulls Beefs Up Consumer Lending; Nokia-Siemens Joins Moves Into the Mid-East; Schnitzer Quarterly Earnings Lackluster
- News Corp. (NWS), the news and media conglomerate controlled by billionaire Rupert Murdoch, has purchased 15% of Premier PREGn.DE, the largest pay-TV broadcaster in Germany. According to Reuters, News Corp. is paying $421.6 million for its stake. Announcing the transaction, Murdoch said that he thought the time was right to invest in Germany. Premier's main attraction in the crowded marketplace is its rights to show soccer games in Germany's prestigious Bundesliga league on a pay basis. It has access to the games through an agreement with its competitor, Unitymedia. Unitymedia was the seller in this transaction and Chief Executive Parm Sandu was said to be very happy with the price the company received for the stake. While some analysts are anticipating a takeover, a News Corp. spokesperson said that the company has no interest in increasing its stake beyond 15% at this time. Shares or Premier rose 20% after the announcement.
- Indiabulls Financial Services Ltd. (PINK: IBLFY), India's second largest consumer finance company, hopes to raise $1 billion dollars to take advantage of rising demand from borrowers in that nation. The company will seek shareholder approval to issue international securities such as foreign currency convertible bonds and global depository receipts. As reported by Bloomberg News, the company plans to focus more on providing consumer lending as India's middle class is expected to increase tenfold between now and 2025. The Indian economy has experienced 9% growth for three straight years and consumer loan demand is growing at a rapid pace. Indiabulls has already spun off its real estate business and plans to do the same with its securities business. U.S. investment firms Merrill Lynch & Co. Inc. (MER), Goldman Sachs Group Inc. (GS), and Citigroup Inc. (C) hold stakes in the financial service company.
- Nokia Siemens Network, a joint venture between Nokia Corp. (NOK) and Siemens AG (SI), signed a contract yesterday (Monday) with Zain Corp. valued at $935 million for a turnkey 2G/3G mobile telephone network located in the Kingdom of Saudi Arabia. The deal also includes a five-year managed service contract. Zain, currently Kuwait's largest mobile operator, paid $6.1 billion for the third mobile license in Saudi Arabia last year. Zain plans to issue shares to help pay for the costs of developing the new network and expects to invest as much as $2 billion into the venture over the next five years. The contract was a key win for Nokia because business in Western Europe and the United States has slowed dramatically as a result of market saturation and weakening economies in those regions. Motorola, Inc. (MOT) also received a contract to provide some of the radio services in the network, but Zain declined to mention the contract's value. Nokia Siemens and Motorola outbid Telefonaktiebolaget LM Ericsson (ERIC) and China-based Huawei Technologies Co. Ltd. for the contracts.
- The continuing impact of higher shipping costs took a toll on U.S.-based metal recycler Schnitzer Steel Industries, Inc. (SCHN). Although revenues rose 18% for the quarter and profits rose 23% compared to fiscal year 2007, earnings fell well short of analysts expectations due to the cost of shipping its products. Analysts had expected Schnitzer to report earnings of $1.07 per share, but the results were just $.85 per share for the three-month period. Company President John Carter said that tight availability for shipping had an impact on the quarterly results as well. He said the company had to delay shipments due to unavailability. He expects that revenue to show up in the second quarter of the company's fiscal year, which ends Feb. 29. As demand continues to push scrap prices higher, a reduction in shipping prices – which have been falling since October – should have a positive impact on the company's results in the current quarter. The company also announced that it continued its share-buyback program and had purchased 300,000 shares during the quarter at an average share price of $62. An additional 1.9 million shares are still authorized for purchase under the buyback program. In late trading, shares of Schnitzer Steel were down 3.9% to $61.12.