China Mobile Hangs Up on Apple; United Arab Emirates Go Nuclear; LG Phillips Posts Crystal-Clear Profits; M&T Bank 4Q Earnings Dive 70%.
- China Mobile Ltd. (CHL) and Apple Inc. (AAPL) have ended talks about a possible partnership to sell the popular Apple iPhone in China. Apple had hoped to take advantage of China Mobile’s 350 million subscribers to introduce the phone in the fast growing Chinese consumer marketplace. Investors were excited about the possibility as well, with Apple stock rising nearly 10.5% when negotiations were fist announced back in November. According to the Associated Press, Chinese Internet Portal Sina.com, citing anonymous sources, reported the talks broke down over revenue sharing arrangements between the two companies. The individual speculated that China Mobile was unwilling to pay Apple 20% to 30% of its user fees from iPhone users. Rainie Lei, a spokesperson for China Mobile, stated that the company had been in talks with Apple and those talks were now ended without elaborating. Apple is currently in talks at this time with NTT DoCoMo, Inc. (DCM) and Softbank Corp. to introduce the multimedia portable phone in Japan.
- France-based oil company, Total SA (TOT), announced yesterday (Monday) that in conjunction with utility company Suez SA (SZEZY) and nuclear engineering firm Areva (PINK: ARVCF), it would be developing plans to build a nuclear power plant in the United Arab Emirates. The proposal will include two third generation nuclear power plants using European pressurized reactors. The plant will feature Areva’s 1600-megawatt reactor design. Total and Suez are already active in the energy industry in the UAE. Both firms participated in the Taweelah-based desalinization and power plant that currently provides approximately 20% of the nation’s electricity. The announcement comes after French president Nicolas Sarkozy toured the Gulf Arab States to discuss sharing France’s nuclear technology and expertise to help meet rising energy demand in the region. He is expected to be back in Abu Dhabi today (Tuesday) to sign a formal agreement to work together to promote civilian nuclear energy. Financial terms of the proposal were not released.
- Korea-based LG Phillips LCD Co. (LPL) announced yesterday [Monday] it posted record fourth-quarter numbers: sales soared 41% to $4.64 billion; profits were $812 million, the highest quarterly profit for the company. The liquid-crystal-display panel manufacturer attributed results to the growing demand for flat-panel screens for television sets, computers and cell phones. Company officials are confident that results would continue to be strong in 2008. Chief Executive Officer Young Soo Kwon said that he expected strong demand for flat-screen televisions would cause a supply shortage in 2008. He also predicted that the Beijing Olympics would be a strong demand driver, but 2009 will see an oversupply of flat screens as manufactures increased production to meet demand. The company now has cash reserves totaling approximately $2 billion and is considering paying a dividend of around 30% of profits. The final amount of the dividend will be decided at a board of directors meeting later this week. Shares of Phillips rose almost 7% during Monday trading, closing at $24.99.
- Earnings season got off to a shaky start for U.S. financial institutions yesterday (Monday). M&T Bank Corporation (MTB) reported fourth-quarter income dropped 70%, down to $64.9 million compared to $213.3 million in the same period a year ago. The bank wrote off almost all of its collateralized debt obligations in the fourth quarter. Chief Financial Officer Rene Jones said that the bank had eliminated all but $4.4 million of its exposure to volatile mortgage-backed securities. In addition to the poor report from M&T Bank, Sovereign Bancorp Inc. (SOV) warned that its upcoming fourth-quarter report would reflect a $1.6 billion write-down of assets due to weakening consumer credit markets. Sovereign will be boosting its loan losses provisions to $738 million from $650 million in the third quarter of 2007. Investors will be watching fourth-quarter results of financial institutions carefully in the weeks ahead to see if there is any sign of a bottom in the beleaguered sector. Key upcoming reports include Citigroup Inc. (C) today [Tuesday], JP Morgan Chase & Co. (JPM) on Wednesday and Merrill Lynch & Co. Inc. (MER) on Thursday. Next weeks’ reports will include Wachovia Corp. (WB) as well as Bank of America Corp. (BAC).