Tele Norte and Brasil Telecom Takeover Talks Heat Up; Signet Holiday Sales Slump; Tata Launches $2,500 Car; High Ratings Can't Save CanWest Profits
- Brazilian telephone company Tele Norte Leste Participacoes (TNE), also known as Oi, said that its talks to buy rival Brasil Telecom Participacoes (BRP) have intensified. It was reported Thursday by two Brazilian papers that Tele Norte offered to pay $2.71 billion for Brasil Telecom. One source said that Brasil Telecom's board of directors had already accepted the deal. A statement from Oi officials said that any figures mentioned were tentative and that the ultimate price of a transaction, as well as the ownership configuration of the new enterprise, would be subject to negotiation. A merger would create the largest fixed line company in Brazil outside the state-owned Telecomunicacoes de Sao Paulo SA (TSP), which controls 17% of the country's fast growing wireless phone market. Oi shares have been very strong lately, as management has been said to be considering acquisition opportunities, as well as a restructuring of its share class. Both Morgan Stanley (MS) and Merrill Lynch & Co (MER) have upgraded the stock to buy.
- United Kingdom-based jewelry retailer Signet Group PLC (SIG) said yesterday (Thursday) that it suffered a 6.8% drop in comparable sales over the recent Christmas selling season, Reuters News Agency reported. The company also warned that profits for 2007 could be off by as much as 18% due to abysmal sales in the critical November and December months. The company has revised its profit forecast to a range of $338-$364 million down from the previous $400 million level. Signet said that U.K. sales were down 3.1% for the holiday season, and that sales in the United States, where the company trades as Kay Jewelers and Jared the Galleria of Jewelry, were down 8.1%. Chief Executive Officer Terry Burman said that while the results were clearly disappointing, he remains focused on implementing Signet's proven strategies and expanding the company's market share. He also said that so far in January, sales were ahead of the expected pace.
- Tata Motors Ltd. (TTM) announced yesterday (Thursday) that it's planning to offer the world's cheapest automobile - the $2,500 Nano - for sale in India, the Associated Press reported. The car will be manufactured in the company's plant in West Bengal. The plant is capable of 250,000 units ands has the capacity for that to be expanded to 350,000 should the need arise in the future. The basic Nano has minimum features - no radio or passenger side mirror and only one windshield wiper. Air conditioning is extra as well. The basic model unveiled by the company will average 50 mile per gallon in daily usage. Though widely acclaimed, environmentalists have expressed concerns that the introduction of the affordable car will increase traffic and worsen the pollution situation in India. For the first three years, the model will be sold only in India.
- Canada's biggest media company, CanWest Global Communications Corp., announced that its net earnings in the three months ended Nov. 30 were $41 million, down from $66 million for the same period a year ago, Reuters reported. Sales increased 8% to $868 million. The company said in its release that the results were negatively impacted by foreign currency losses, restructuring expenses and increased interest costs. CanWest's publishing division was one of the stronger performers in the quarter, with revenue growth from classifieds growing 6%. Online growth continued for the division as well, particularly Canada.com and localnewspapers.com. Its main television network, Global TV, had five of the top 10 television shows in Toronto, Vancouver and Calgary. CanWest also had the No. 1 show in Canada, the medical drama "House." The company said it expected the rest of fiscal year 2008 to show a continual improvement in overall operating results. CanWest did warn that television operations could be harmed by a lengthy continuation of the writers' strike.