Weekly Bulletin, February 13, 2012

Top Executive Recruiters Agree There Are Only Three True Job Interview Questions

By George Brandt, Forbes

The only three true job interview questions are:
1. Can you do the job?
2. Will you love the job?
3. Can we tolerate working with you?

That’s it. Those three. Think back, every question you’ve ever posed to others or had asked of you in a job interview is a subset of a deeper in-depth follow-up to one of these three key questions. Each question potentially may be asked using different words, but every question, however it is phrased, is just a variation on one of these topics: Strengths, Motivation, and Fit.

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Siemens, Alstom, Samsung Vie for $21 Billion Russian Rail Link

By Ekaterina Shatalova, Bloomberg, Feb 10, 2012

Companies from Europe, China and South Korea are vying for the right to build and operate a $21 billion rail link between Moscow and St. Petersburg before the 2018 World Cup soccer tournament, the project manager said.

Siemens AG (SIE) of Germany, Alstom SA (ALO) and Bouygues SA (EN) of France, Italy’s Finmeccanica SpA and UniCredit SpA (UCG) and units of South Korea’s Hyundai and Samsung are among the companies that have expressed interest in the high-speed link, said Yelena Shebunina, deputy head of OAO High-Speed Rail Lines, in an interview in Moscow. A Portuguese group led Brazil’s Grupo Andrade Gutierrez SA expressed interest last week, she said.
High-Speed Rail Lines, a unit of state monopoly OAO Russian Railways, plans to name a shortlist of bidders in September or October, followed by more detailed negotiations on the technological, financial and legal aspects of the project before picking a winner, Shebunina said.

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Total Wants to Be ‘Profitable’ Leader in Solar Energy, CEO Says

By Tara Patel, Bloomberg, Feb 10, 2012

Total SA (FP) Chief Executive Officer Christophe de Margerie said solar energy can be profitable even though the industry is “depressed.”

“There is no reason solar can’t be profitable,” de Margerie said at a press conference on 2011 results, adding that the French oil company wants to be a leader in the industry through its SunPower Corp.

Gazprom to Boost 2012 Europe Exports, Cuts Target on Demand

By Anna Shiryaevskaya, Bloomberg, Feb 10, 2012

OAO Gazprom (GAZP), the world’s biggest natural-gas producer, lowered a target for exports to Europe this year after missing forecasts for 2011 on a slower than expected recovery.

Gazprom plans to supply 154 billion cubic meters to Europe this year, said two analysts who saw a company presentation and declined to be identified because it hasn’t been made public yet. That is about 2.7 percent more than last year’s 150 billion cubic meters.

In November, the company cut estimates for 2011 after saying exports may reach 159 billion, while targeting shipments of 164 billion cubic meters in 2012.

Demand in Europe, Gazprom’s biggest market by revenue, is recovering after a two-year slump when buyers turned to the spot market for cheaper supplies than under Russian contracts. Gazprom, facing competition and a persistent gap between its long-term oil-linked gas prices and spot rates, agreed to lower prices to five customers in recent months.

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BMW Fights Mercedes with New 3-Series Sedan

By Tim Higgins, Bloomberg, Feb 10, 2012

While Bayerische Motoren Werke AG (BMW) won the race for the U.S. luxury car market last year, the world’s largest premium automaker is keeping a sharp eye on its rear-view mirror.
 
Facing increased competition from Daimler AG (DAI)’s Mercedes- Benz, General Motors Co. (GM)’s Cadillac and Volkswagen AG (VOW)’s Audi, BMW is determined to hold on to its hard-won top position with the arrival of the new entry-level 3-Series sedan in U.S. showrooms tomorrow.

The stakes are high. The success of the 3-Series, first introduced in 1975, has been a key to BMW’s ability to outsell Mercedes last year and capture the U.S. luxury crown from Toyota Motor Corp. (7203)’s Lexus. That may change as a slew of competing entry-level luxury sedans increases the pressure on the new 3- Series, which features more power yet greater gas mileage than earlier versions.

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Sony Seen Restored Using Chips in Market Fighting Disease

By Mariko Yasu, Bloomberg, Feb 10, 2012

Rising rates of cancer, obesity and heart disease may offer a path back to health for Sony Corp. (6758), as the ailing Japanese maker of televisions, cameras and game consoles turns to semiconductors to end unprecedented losses.

Japan’s largest consumer-electronics exporter will speed up a move into health equipment by using the edge its new image- sensors have over rivals, said incoming Chief Executive Officer Kazuo Hirai. Medical has the potential to be one of the main sources of profit, Hirai said, even as Sony cut targets on PlayStation 3 units, Blu-ray disc players and Vaio computers.

“We can leverage our technology base in image-capturing sensors, lenses, 3-D technology, image processing, to mention just a few areas,” Hirai said in an interview in Tokyo yesterday. “Those are areas where we already have in-house technologies that really allow us to differentiate ourselves.”

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Sony Incoming CEO Hirai Vows to Take Painful Decisions to Cut Fixed Costs

By Mariko Yasu and Takashi Amano, Feb 10, 2012

Sony Corp. (6758) incoming Chief Executive Officer Kazuo Hirai said he will make “a hard, painful decision” to cut costs in the TV business and supply chain to turn around a company facing a fourth straight annual loss.

“Pain can come in many ways,” Hirai, 51, told reporters yesterday in Tokyo, where Sony is based. “We have to make some hard decisions on where there are redundancies and reduce the fixed costs in a variety of different areas.”
 
Hirai, who replaces Howard Stringer as president and CEO on April 1, said he was committed to TVs because they are “at the center of every entertainment experience.” Sony, a trendsetter in the 1980s, predicts losing money on TVs for an eighth consecutive year as consumers flock to devices from Samsung Electronics Co. (005930) and Apple Inc. (AAPL) for movies, music and games.

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Acer First Quarter Shipments May Be Better Than Earlier Guidance

By Tim Culpan, Bloomberg, Feb 10, 2012

Acer Inc. (2353)’s shipments this quarter may be better than earlier guidance for a decline of 10 per cent to 15 per cent from the previous quarter with supply of hard disks being a major factor determining the result, Chairman J.T. Wang said today.
Shipments in the second quarter will be slightly better than the current period, he said. Computers using Microsoft Corp. (MSFT)’s new Windows 8 operating system are expected to be delivered in the third quarter, he said.

Motorola Mobility Loses Patent Case against Apple in Germany

By Karin Matussek, Feb 10, 2012

Motorola Mobility Holdings Inc. (MMI), which has won two rulings against Apple Inc. (AAPL) in Germany, failed to win a third in a patent case involving the use of mathematical sequences in mobile telecommunications.

The Regional Court in Mannheim rejected the suit today. Motorola Mobility didn’t show that Apple is violating the patent, Presiding Judge Andreas Voss said when delivering the ruling.
The decision ends a winning streak by Motorola Mobility, which has twice prevailed over Apple in the same court. More cases between the two are pending in German courts, including a bid by Motorola Mobility to enforce its first win from December, which forced Apple to briefly remove some older iPhones and iPad models from its online store in Germany last week.

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Alcatel Sees Higher Margins after Ending Losses

By Marie Mawad, Bloomberg, Feb 10, 2012

Alcatel-Lucent, France’s largest telecommunications-equipment supplier, rose the most in more than three years in Paris trading after forecasting higher profit margins and announcing a plan to boost cash from its trove of 29,000 patents.

Adjusted operating profit as a percentage of sales will increase from the 2011 level of about 3.9 percent, the Paris- based company said today, while announcing full-year net income of 1.1 billion euros ($1.5 billion), the first annual profit in six years. The shares climbed as much as 22 percent and were up 19 percent at 1.79 euros as of 9:09 a.m. in the French capital.

Last year marked the end of Chief Executive Officer Ben Verwaayen’s three-year strategy to return the company -- formed by the 2006 merger of Alcatel SA and Lucent Technologies -- to a profit. Alcatel-Lucent’s plan to license its patents, including fixed-line and wireless technologies, mimicks a strategy rival Ericsson AB adopted as spending by phone operators on gear orders slows and competition with Chinese makers such as Huawei Technologies Co. intensifies.

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Why Baker Hughes May Fly 44%, Outperforming Schlumberger

By SeekingAlpha, Feb 9, 2012

While Baker Hughes (BHI) has struggled recently, near-term visibility is improving and will drive multiples expansion. The Street currently rates shares a "buy" versus a "strong buy" for Schlumberger (SLB). While Schlumberger is preferred on the Street, I prefer Baker Hughes due to the bar being set low despite strong fundamentals and low valuation ratios compared to historical levels.

From a multiples perspective, Baker Hughes is by far the cheaper of the two. It trades at a respective 12.6x and 8.6x past and forward earnings while Schlumberger trades at a respective 22.3x and 13.7x past and forward earnings. Baker Hughes' current PE ratio is 69% of the 5-year average despite a strong ROIC of 9.1%. Both firms are highly volatile with betas of 1.4 or greater.

At the fourth quarter earnings call, Baker Hughes' CEO, Martin Craighead, addressed particularly weak domestic performance:…

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20% Upside for Honeywell, United Technologies

By SeekingAlpha, Feb 9, 2012

With fears looming over cuts for the Department of Defense (DOD), investors should expect elevated volatility among aerospace firms. Based on my DCF model, I find a meaningful amount of upside for high risk-adjusted returns in Honeywell (HON) and United Technologies (UTX). In addition, the firms are more stable than what the market is acknowledging due to customer loyalty. Accordingly, the Street rates both firms favourably.

From a multiples perspective, United Technologies is the cheaper of the two. It trades at a respective 14.9x and 12.1x past and forward earnings while Honeywell trades at a respective 25.7x and 12x past and forward earnings. While the firms also have low free cash flow yield - 5.4% for United Technologies and 2% for Honeywell - the management at both companies are committed to returning extra cash to shareholders.

On the fourth quarter earnings call, Honeywell's CEO, Dave Cote, noted stellar performance:
"We had another great quarter marked by terrific execution with continued growth in most of our end markets. And then yielded earnings per share above the high end of the previous range.

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Apple iPhone Success Strangles Profits at Sprint, AT&T, Verizon

By Nigam Arora, Forbes, Feb 9, 2012

Apple’s iPhone is selling like hotcakes.
This should be good news for Sprint (S), AT&T (T), and Verizon (VZ). The reality is far different; Apple is killing phone carriers.
Sprint just reported quarterly earnings and says it sold 1.8 million iPhones. However, the earnings report showed that iPhone is killing profits at Sprint. Sprint said that 40% of iPhone sales in the fourth quarter were to new customers.

The iPhone is certainly bringing in new business to Sprint, but Sprint has to subsidize iPhones heavily. Sprint wanted the iPhone so bad that it guaranteed Apple $15.5 billion for the ability to sell Apple products over the next four years.

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VIDEO: Kodak to Shutter Camera Operation

By MarketWatch, Feb 9, 2012

Eastman Kodak, which began making cameras more than a century ago, said it plans to stop supplying digital cameras and pocket video cameras as it focuses its consumer business on photo printing. Dana Mattioli has details on The News Hub.

Watch the video here

Media CEOs anticipate strategic changes: PwC

By David B. Wilkerson, MarketWatch, Feb 9, 2012

Media and entertainment company chief executives are scrambling to adapt to changing consumer habits, according to a new report released Thursday by accounting and business advisory firm PwC. Some 74% of those surveyed said they were either "somewhat" or "extremely" concerned about such changes, compared to just 50% across all business sectors, PwC said.

Further, 78% of media CEOs said they intend to change their company's strategy over the next 12 months, with about one in five saying those changes will be "fundamental." PwC also found that 43% of those top executives said they anticipate "a major change" to their technology investments over the next year. Among other findings, the report said that the pressure to cut jobs has eased off, with 25% of the CEOs saying their headcount has "stayed the same" over the past year.

They also indicated a degree of worry about finding personnel with certain vital skills, with 65% saying they are either "somewhat" or "extremely" concerned there is a lack of workers with key abilities. Some 35% of media CEOs said they had to cancel or delay a major initiative because they couldn't find the talent to make the move work.

PepsiCo to Cut 8,700 Jobs Even as It Spends $600 Million More on Marketing

By Duane D. Stanford, Bloomberg, Feb 9, 2012

PepsiCo Inc. (PEP) plans to cut 8,700 jobs and boost marketing spending for its brands by as much as $600 million as Chief Executive Officer Indra Nooyi works to speed up profit growth at the world’s largest snack-food maker.
 
The job cuts, which represent about 3 per cent of PepsiCo’s global workforce, and other measures may save about $1.5 billion by 2014, the Purchase, New York-based company said today in a statement. Nooyi is working to boost U.S. beverage sales and regain market share from Coca-Cola Co. (KO), the world’s largest soft-drink maker. Profit this year will decline about 5 per cent on a constant-currency basis and then increase at a high single-digit percentage rate starting in 2013, PepsiCo said.

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Ford’s Mulally Says Not Retiring as Two Executives Depart from Automaker

By Keith Naughton, Bloomberg, Feb 9, 2012

Ford Motor Co. CFO Alan Mulally, saying he has no plans to retire, said his top finance executive and product-development chief will depart.

Chief Financial Officer Lewis Booth and Derrick Kuzak, group vice president of global product development, will retire April 1, Mulally said today on a conference call with reporters. Booth, 63, will be replaced by Bob Shanks, 59, the company’s controller. Kuzak, 60, is being succeeded by Raj Nair, 47, vice president of engineering and global product development.

Mulally, 66, denied speculation that he is planning to retire by the end of next year. He has overseen three consecutive years of profits at Ford by focusing on improving quality and adding fuel-efficient models like the Fiesta subcompact. He came to Ford from Boeing Co. in 2006, as the Dearborn, Michigan-based automaker was beginning three years of losses that would total $30.1 billion

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Technip Wins $2.1 Billion Five-Year Flexible-Pipe Contract from Petrobras

By Tara Patel, Bloomberg, Feb 8, 2012

Technip SA (TEC), Europe’s second-largest oilfield-services provider, won a five-year order from Petroleo Brasileiro SA (PETR4) to supply $2.1 billion of flexible pipes for offshore oil projects.
The contract is for 1,400 kilometers (870 miles) of equipment to be made at two sites in Brazil using a “high level” of locally produced content, the Paris-based company said today in a statement.
The “good news for Technip” will raise visibility in the subsea division, Bertand Hodee, an analyst at Kepler Capital Markets, wrote in a note today. The shares rose as much as 2.9 percent and traded 1.7 percent higher at 74.87 euros at 10:05 a.m. Paris time.
 
Technip has said the market for flexible pipelines for offshore oil exploration and production is growing at a faster- than-expected pace. The company unveiled a plan a year ago to increase pipe-manufacturing in Brazil, where development of offshore hydrocarbon reserves is set to expand. The Angra dos Reis plant is located near Brazil’s pre-salt basins.

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Roche in 2011: Strong Results and Positive Outlook

World Pharma News, Feb 8, 2012

The Roche Group posted strong operating results in a challenging market in 2011. Core operating profit grew faster than sales, and Core Earnings per Share increased by 11% at constant exchange rates (-4% in Swiss francs). The strengthening of the Swiss franc against major currencies, notably against the US dollar and the euro, had a significant negative impact on the results expressed in Swiss francs. However the underlying currency translation exposure arising from non-Swiss franc revenues is significantly mitigated by the majority of the Group’s cost base (80%) being located outside Switzerland.

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