October 17, 2011 at 7:02pm
UPDATE 1-Canada to support Wheat Board for up to 5 years
By Rod NickelWINNIPEG, Manitoba, Oct 17 (Reuters) - Ottawa will support
the Canadian Wheat Board for up to five years after it
dismantles the board’s 69-year-old grain marketing monopoly, a
senior government source said on Monday.The federal government plans to introduce legislation on
Tuesday to remove the Wheat Board’s monopoly over Western
Canada’s wheat and barley for milling and export.The Conservative government intends to pass the legislation
by the end of 2011 and move to an open market system on Aug. 1,
2012.For the following five years, Ottawa is willing to help the
board survive in an open market, the senior government source
said, adding that the government will outline details of its
plans in the new legislation.”Western Canadian wheat and barley farmers can better drive
our economy and create jobs if they have marketing freedom,
whether that’s through a voluntary Canadian Wheat Board or on
an open market,” according to the source.”To do that, it’s expected that the legislation will allow
the government to support the Wheat Board’s transition for up
to five years, when they will be expected to transition to full
private ownership.”Financial assistance seems likely to be included in the
government’s support plan, and the Wheat Board called earlier
in the day for start-up capital and a reserve fund worth a
total of C$425 million ($417 million).The CWB also wants regulated access to grain-handling
elevators and port terminals, since it owns none, and continued
government guarantees of its borrowings.Viterra Inc , Richardson International Ltd and
Cargill Incown the largest networks of
grain-handling elevators and port terminals in Western Canada.Canada is the world’s biggest exporter of spring wheat,
durum and malting barley.
6:03pm
NEWSMAKER-UPDATE 1-Rich Kinder: Big deals, major philanthropist
* Big donor to education, children
(Adds links to Breakingviews columns, Insider program)By Anna DriverHOUSTON, Oct 17 (Reuters) - Judging by Wall Street’s warm
embrace of Richard Kinder’s $21 billion deal to buy El Paso
Corp, he is still — to borrow the phrase once used to describe
his former Enron colleagues — the smartest guy in the room.With the deal, the Texas billionaire who started his
business in 1997 by buying pipeline assets from Enron for $40
million, will create the largest oil and gas transportation
company in North America with 80,000 miles of pipeline.Analysts applauded the deal, which used Kinder Morgan’s
relatively high stock valuation and relatively low cost of
capital to pick up the nation’s largest natural gas network.”He’s still perceived to be the smart guy out of the old
Enron organization,” said Duane Grubert, an analyst at
Susquehanna Financial Group. “The respect for his creative
dealmaking continues to be really high.”If Kinder, CEO and chairman of Houston-based Kinder Morgan
Inc (KMI.N), manages to sell off El Paso’s (EP.N) exploration
and production assets around the same time the deal closes, he
could almost immediately pay back most of the money his company
is borrowing for the $11.5 billion cash portion of the deal.Kinder Morgan’s shares rose as much as 10 percent on
Monday, the day after the deal was announced. [ID:nN1E79F06X]>^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^For Breakingviews columns on the deal, please click on[ID:nN1E79G0GN] [ID:nN1E79F0BG]For a Reuters Insider program click on:link.reuters.com/xed54s^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>Kinder Morgan was put together through a string of deals,
including some with marquee private equity names including
Carlyle Group [CYL.UL], Goldman Sachs Inc’s (GS.N) buyout arm
Highstar Capital and Riverstone Holdings.”This is not the first rodeo we’ve done,” Kinder reminded
analysts on a conference call with investors on Monday.HEIR APPARENTKinder, a Missouri native, joined Florida Gas in the early
1980s and was reunited with University of Missouri friend
Kenneth Lay when Lay’s Houston Natural Gas acquired the Florida
company.In 1985, Houston Natural Gas merged with Nebraska’s
InterNorth to form Enron Corp, with Lay as CEO.As Enron’s president and chief operating officer, Kinder
was known as the guy who made the trains run on time and kept
spending in check.Unlike Lay, whose extravagant lifestyle included a liking
for Gulfstream jets with catered lunches, Kinder was satisfied
with a cheaper Cessna for quick business trips.Until the mid-1990s, Kinder, now 66, had been considered
Lay’s heir apparent as CEO. But Jeffrey Skilling, whom Enron
had poached from consultancy McKinsey & Co years earlier,
caught Lay’s attention by engineering Enron’s transformation
from a pipeline company into a trading giant and became the
CEO-in-waiting.Kinder left Enron in December 1996, and in February 1997 he
founded Kinder Morgan with longtime friend Bill Morgan, the
pair having spent about $40 million to acquire some Enron
pipeline and associated assets that the energy giant no longer
considered core to its ambitious operations.Enron collapsed in 2001, its demise chronicled in a
best-selling book “The Smartest Guys in the Room,” by Bethany
McLean and Peter Elkind.In December 2006 Kinder, then-retired Morgan and other
members of the board, including Houston financier Fayez
Sarofim, acquired Kinder Morgan for $15 billion and took it
private.STRAIGHT SHOOTERKinder, who ranks 46th on Forbes’ list of richest
Americans, has an estimated worth of $6.4 billion, according to
the magazine.Still, the affable and plain-spoken executive parks in the
same garage as his employees and is often spotted in his office
building lobby sporting short-sleeved shirts, not the dark suit
normally expected of an oil industry billionaire.Kinder, who served as a captain in the U.S. Army in
Vietnam, and wife Nancy are generous donors to a number of
philanthropies benefiting education and children.They are a fixture on Houston’s social circuit, often
appearing in photos in magazines and websites that chronicle
the city’s glitterati.”Both of them are some of the most highly philanthropic
people in this city,” said Shelby Hodge, editor-at-large for
Houston’s dominant social and entertainment website,
culturemap.com. “They are straight shooters and very careful
stewards of that money.”Kinder’s mother was a schoolteacher and in her memory, the
couple has lavished on millions on the cause of furthering
education, Hodge said.Through a foundation, the Kinders have already given
millions to fund an urban research institute at Rice University
in Houston, a program to award teachers, and a research effort
to screen middle-school students with difficult-to-detect heart
abnormalities.Kinder and his wife have also joined the Giving Pledge
movement, launched by Warren Buffett and Bill Gates, by
committing to give the majority of their wealth to charity.Kinder Morgan shares closed 4.8 percent higher at $28.19 on
a day that the S&P 500 index fell 2 percent.
3:48pm
UPDATE 6-Investors unexcited by BlackBerry’s free apps offer
* Shares of RIM drop 5 pct in morning Nasdaq trade* Carl Icahn says RIM not on his radar screen - CNBCTORONTO, Oct 17 (Reuters) - An offer of free games,
translation software or other apps to compensate BlackBerry
users for last week’s prolonged outage left Research In Motion investors cool on Monday, and the shares fell
6 percent.RIM declined to say if it would need to amend its earnings
forecasts to account for the cost of its promise to give $100
of free apps to every BlackBerry smartphone user.RIM is also offering a period of free technical support to
businesses that use the gadget, which has steadily lost market
share to Apple’s sleeker, sexier iPhone . RIM’s stock
has dropped 60 percent over the past year.”RIM has responded swiftly but this won’t undo the damage
done to its reputation,” analyst Geoff Blaber at CCS Insight
told Reuters earlier on Monday. “This may go some way to
appeasing customers but what’s critical is that the problem
does not repeat itself.”Highlighting the challenges, Apple said it sold 4 million
of its new iPhone 4S in the three days after its launch last
week.Tens of millions of BlackBerry users were left without
mobile email and other messaging for up to four days last week
after a failure at a RIM data center in England triggered a
service disruption across five continents.DEVELOPERS CONFERENCERIM may reveal more about its strategy for countering the
competitive challenge at a conference for application
developers in San Francisco that begins Tuesday.RIM executives there are expected to unveil a major
software upgrade for the PlayBook tablet computer. RIM may also
provide a glimpse at next-generation smartphones using its QNX
software, which already powers the PlayBook.Long before last week’s disruption, investor
dissatisfaction with the management of co-chief executives Mike
Lazaridis and Jim Balsillie had led a wave of speculation about
the future of the company.Activist investor Carl Icahn squelched one of those rumors
on Monday when he told broadcaster CNBC that RIM is not on his
radar screen. Last month RIM’s shares rose on speculation Icahn
would buy into RIM and agitate for change.Even so, a smaller activist firm, Jaguar Financial Corp , has said it is gathering the support of large RIM
shareholders to push the board to look at strategic options,
including a sale or split-up of RIM.”DEEPLY GRATEFUL”Last week’s outage intensified criticism of the chief
executives, who were accused of responding slowly to the crisis
and communicating poorly.On Monday Balsillie told Reuters the company wanted to make
amends with customers.”This is our way of expressing appreciation for their
patience during the recent service disruptions and a tangible
way of telling them how deeply grateful we are for their
continued business,” he said in a phone interview.Balsillie declined to estimate how much the offer would
cost RIM and said he was unable to say whether RIM might have
to revise its earnings forecast for the current quarter, which
ends in late November.The financial impact could prove sizable if a sizable
number of RIM’s more than 70 million subscribers take up the
offers.Analysts have said compensation costs could reach into the
hundreds of millions of dollars. If RIM were to pay back all
carriers and customers for lost service it could knock between
3 and 5 cents off earnings per share in the quarter, according
to BMO Capital Markets analyst Tim Long. That would reduce
profit by $15 million to $26 million.”CLEVER MOVE”Even so, Richard Levick, who runs a U.S. consultancy that
specializes in crisis management, praised the free-app offer
but said RIM should have made the announcement last week.”I think it’s a good start, but they are always late,” he
said. “They are always behind the curve.”Francisco Jeronimo, an analyst at IDC, said the offer was a
clever move by RIM because it would help customers to discover
the app service. He said the company was likely to have struck
a deal with app developers to keep the cost down.”For RIM, this is an interesting way to attract users to
the App World and incentivise them to search and download
apps,” he said.The free apps on offer include games such as Bejeweled, and
premium versions of a translation service and the music
discovery tool Shazam. Users can download them from BlackBerry
App World beginning Wednesday, with more to be added in the
next four weeks. The offer runs until the end of the year.”More important than the offer itself, is that RIM is
showing goodwill and being humble,” Jeronimo said. “They
recognized the problem, apologized and now they are
compensating their users.”By early afternoon the stock dropped about 6 percent at
$22.54 on the Nasdaq.
3:47pm
UPDATE 6-Investors unexcited by BlackBerry’s free apps offer
* Shares of RIM drop 5 pct in morning Nasdaq trade* Carl Icahn says RIM not on his radar screen - CNBCTORONTO, Oct 17 (Reuters) - An offer of free games,
translation software or other apps to compensate BlackBerry
users for last week’s prolonged outage left Research In Motion investors cool on Monday, and the shares fell
6 percent.RIM declined to say if it would need to amend its earnings
forecasts to account for the cost of its promise to give $100
of free apps to every BlackBerry smartphone user.RIM is also offering a period of free technical support to
businesses that use the gadget, which has steadily lost market
share to Apple’s sleeker, sexier iPhone . RIM’s stock
has dropped 60 percent over the past year.”RIM has responded swiftly but this won’t undo the damage
done to its reputation,” analyst Geoff Blaber at CCS Insight
told Reuters earlier on Monday. “This may go some way to
appeasing customers but what’s critical is that the problem
does not repeat itself.”Highlighting the challenges, Apple said it sold 4 million
of its new iPhone 4S in the three days after its launch last
week.Tens of millions of BlackBerry users were left without
mobile email and other messaging for up to four days last week
after a failure at a RIM data center in England triggered a
service disruption across five continents.DEVELOPERS CONFERENCERIM may reveal more about its strategy for countering the
competitive challenge at a conference for application
developers in San Francisco that begins Tuesday.RIM executives there are expected to unveil a major
software upgrade for the PlayBook tablet computer. RIM may also
provide a glimpse at next-generation smartphones using its QNX
software, which already powers the PlayBook.Long before last week’s disruption, investor
dissatisfaction with the management of co-chief executives Mike
Lazaridis and Jim Balsillie had led a wave of speculation about
the future of the company.Activist investor Carl Icahn squelched one of those rumors
on Monday when he told broadcaster CNBC that RIM is not on his
radar screen. Last month RIM’s shares rose on speculation Icahn
would buy into RIM and agitate for change.Even so, a smaller activist firm, Jaguar Financial Corp , has said it is gathering the support of large RIM
shareholders to push the board to look at strategic options,
including a sale or split-up of RIM.”DEEPLY GRATEFUL”Last week’s outage intensified criticism of the chief
executives, who were accused of responding slowly to the crisis
and communicating poorly.On Monday Balsillie told Reuters the company wanted to make
amends with customers.”This is our way of expressing appreciation for their
patience during the recent service disruptions and a tangible
way of telling them how deeply grateful we are for their
continued business,” he said in a phone interview.Balsillie declined to estimate how much the offer would
cost RIM and said he was unable to say whether RIM might have
to revise its earnings forecast for the current quarter, which
ends in late November.The financial impact could prove sizable if a sizable
number of RIM’s more than 70 million subscribers take up the
offers.Analysts have said compensation costs could reach into the
hundreds of millions of dollars. If RIM were to pay back all
carriers and customers for lost service it could knock between
3 and 5 cents off earnings per share in the quarter, according
to BMO Capital Markets analyst Tim Long. That would reduce
profit by $15 million to $26 million.”CLEVER MOVE”Even so, Richard Levick, who runs a U.S. consultancy that
specializes in crisis management, praised the free-app offer
but said RIM should have made the announcement last week.”I think it’s a good start, but they are always late,” he
said. “They are always behind the curve.”Francisco Jeronimo, an analyst at IDC, said the offer was a
clever move by RIM because it would help customers to discover
the app service. He said the company was likely to have struck
a deal with app developers to keep the cost down.”For RIM, this is an interesting way to attract users to
the App World and incentivise them to search and download
apps,” he said.The free apps on offer include games such as Bejeweled, and
premium versions of a translation service and the music
discovery tool Shazam. Users can download them from BlackBerry
App World beginning Wednesday, with more to be added in the
next four weeks. The offer runs until the end of the year.”More important than the offer itself, is that RIM is
showing goodwill and being humble,” Jeronimo said. “They
recognized the problem, apologized and now they are
compensating their users.”By early afternoon the stock dropped about 6 percent at
$22.54 on the Nasdaq.
2:32pm
Jamie Dimon puts brave face on tough quarter
By Antony Currie
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
JPMorgan started the banking sector’s third-quarter earnings season with a thud. Chief Executive Jamie Dimon was confronted by a triple whammy of falling revenue, lower releases from loan loss reserves and fallout from his own increasingly incendiary comments on regulation. But Dimon still managed to put on a brave face.
He did have some decent material. JPMorgan has extended $12.6 billion of credit to small businesses this year, up significantly from the same period in 2010. Loans to middle-market firms grew 18 percent. And Dimon’s latest comments seem tailored to mollify critics of his rabble-rousing by outlining the benefits of banking to the U.S. economy.
A case in point was JPMorgan’s hiring of 13,000 people this year. The 2,200 veterans among them also proved a reasonable riposte to the lambasting suffered by the bank for foreclosing on homes owned by military personnel posted overseas.
Dimon also saw fit to note the retail bank earned more money from debit card fees — because people like the convenience of using them. The thinly veiled dig at the Durbin Amendment sets the stage for Dimon to start spouting data showing how the rule that capped swipe fees has crimped debit card usage — as banks start charging retail customers for them, of course.
He even lauded the investment bank’s compensation ratio of 29 percent — lower than at most news publishers, as he was keen to impart (including Thomson Reuters, parent company of Breakingviews). But since journalists won’t be bailed out by taxpayers, it’s hardly a suitable comparison. What’s more, after stripping out the net $1.2 billion accounting gain from marking its own liabilities and those of its counterparties to market, JPMorgan actually earmarked 36 percent of its sharply lower revenue for dealmakers.
The bank’s lending data at least implies a middling economy instead of a reeling one. But the decline in pre-tax, pre-provision earnings from the second quarter bodes poorly for rival banks with big capital markets operations. And the slowing pace of releasing loan loss reserves means commercial banks may find it harder to hit their numbers.
Dimon did his best to accentuate the positive. With a return on equity of just 7 percent after allowing for accounting gains, however, it’s no surprise shareholders were not reassured.
October 12, 2011 at 9:17am
TEXT-Fitch:O2 internet call plan underlines operators’ challenges
The Financial Times reported that Telefonica (BBB+/Stable) will
trial an internet-calling product called ‘O2 Connect’ in the UK, which may
become a commercial service in 2012. This will initially be a downloadable
application available on Apple and Android smartphones. The application could
potentially allow a Skype-type account - and phone number - to be accessed from
a number of devices.”A key barrier to free voice at present is mobile termination rates which
remain high compared to land line rates,” says Damien Chew, Senior Director in
Fitch’s TMT team in London. “However, regulatory pressure has and will continue
to drive these rates down. The lower they go, the more attractive free voice as
a loss leader becomes to a variety of market players, beyond just internet call
companies. This will translate into more downward pressure on voice prices.”The potential danger of this development for the operators is that they
could become utility-like, providing undifferentiated data-only tariffs subject
to intense price competition, with profit being siphoned off by application
providers. However, mobile operators could combat this by using their knowledge
of their networks - and possibly their ability to manage data flows through
these applications - to claim a share of the application revenues to reinforce
both profits and brand image.Overall, Fitch expects no negative revenue implications for O2 from the
move. The product, if successful, could be a significant brand differentiator,
attracting customers to O2’s data offering rather than competitors’. Any
potential negative price implications will be further mitigated by the
widespread practice of bundling voice, SMS and data for the UK’s post-paid
customers.This application has network implications also, in that it could allow calls
to be routed through WiFi connections rather than through mobile networks. This,
if competitors follow suit, may remove one of the few remaining differentiators
between networks - domestic signal coverage.
4:56am
BP gets upper hand in Russian court battle
BP itself still faces a $5 bln complaint in a separate
hearing on a parallel suit to be held on the next day, in Tyumen
arbitration court, he said.Lukoyanov said the arbitration court, in TNK-BP’s West
Siberian base of Tyumen, told the plaintiff, Andrey Prokhorov,
he could not proceed with attempts to bring in enough
shareholders to the complaint over BP’s failed deal with
Russia’s top crude producer, Rosneft .The hearing must still be held under Russian law and is set
for Nov. 10.
