Weekly Bulletin, January 23, 2012

Siemens Pumps $1.3 Billion into Gas Turbines to Fend off GE

Bloomberg Businessweek, Jan 2012

Siemens AG has earmarked more than 1 billion euros ($1.3 billion) to expand production of gas- turbines and fend off General Electric Co. as they jostle for share of the expanding market.

A “genuine boom” is under way in some regions, with the gas-turbine market growing more than 9 percent annually in the Commonwealth of Independent States, Roland Fischer, the head of Munich-based Siemens' Fossil Power Division, said in an interview. The division generated 14 percent of Siemens's total 74 billion euros in revenue last year.

Siemens, which claims the No. 1 spot in larger, flexible turbines, is betting rising U.S. shale-gas output and its focus on gas-turbines will help it outflank GE and Alstom SA, which focused more on steam-turbines. U.S. spending on upgrading power plants to meet tighter emission rules may touch $100 billion, and falling gas prices will likely tempt utilities away from coal, said Peter Reilly, an analyst at Deutsche Bank.
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GE Renames Converteam Efficiency Business

Environmental Leader, Jan 19, 2012

GE has rebranded Converteam, the French process control and automation business it acquired last September, renaming it Power Conversion.
GE said the Power Conversion business will help it maximize its expertise and expand its presence in the energy efficiency, electrification and automation sector, which is valued at $30 billion and growing above global GDP. The industrial giant said the purchase allows it to scale its business and deliver new products to market faster than its competitors.

Converteam’s technologies include high-efficiency power electronics, motors and generators.
According to GE, large industrial companies have got onboard with the “mega-trend” of electrification – replacing mechanical processes with high-efficiency, customized electric alternatives that deliver better reliability, require less maintenance and create lower emissions. The company expects electrification to double over the next 20 years, driven in large part by the oil and gas industry, which is using electrical systems to extract and transport natural gas more efficiently.
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Sony Ericsson Swings to Loss Ahead of JV shift

By Kim Hjelmgaard, MarketWatch, Jan 19, 2012

Mobile-phone maker Sony Ericsson Thursday marked the release of its final quarterly earnings report as a joint venture of Sweden’s L.M. Ericsson Telephone Co. and Japan’s Sony Corp. by reporting a loss.
For the fourth quarter, the handset manufacturer swung to a 207 million euro ($266 million) net loss from an €8 million profit in the year-ago period. On a pre-tax basis, Sony Ericsson posted a €247 million loss against a €35 million profit for the period.

Analysts polled by Reuters were forecasting that the telecom would make a pretax profit of €41.7 million in the fourth quarter.
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Johnson Controls Profit Rises, Firm Warns

By Ben Fox Rubin, MarketWatch, Jan 19, 2012

Johnson Controls Inc.’s fiscal first-quarter earnings rose 9.3% on continued strength in the battery maker’s automotive unit, though the company lowered its full-year guidance amid a temporary plant shutdown in China.

Shares were down 5.9% at $33.50 premarket as the company is now expecting earnings of $2.70 to $2.85 a share. In October, Johnson Controls initiated its 2012 earnings projection at $2.85 to $3 a share.
For the second quarter, Johnson Controls expects to earn 52 cents to 54 cents a share, below estimates of 70 cents by analysts polled by Thomson Reuters.

The company cited lower automotive production in Europe and an assumed indefinite shutdown of a Shanghai battery plant amid discussions with the Chinese government.
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Rockwell Collins 1st-Period Net off 14%

By Tess Stynes, MarketWatch, Jan 19, 2012

Rockwell Collins Inc.'s fiscal first-quarter earnings fell 14% as the company reported lower earnings and revenue at its government segment and a higher effective tax rate.

Rockwell Collins, which has relied heavily on sales of cockpit electronics for U.S. military aircraft, has been looking for new ways to grow amid uncertainty about U.S. defense spending. The company is aiming to boost sales of its aviation electronics and other communications products in the commercial and business jet markets. Like many other U.S. defense companies, it also has been seeking to build up its international business.

Efforts have included shifting investments and engineers from its defense business -- which represents more than half of its revenue -- to its commercial-aircraft projects. Rockwell Collins's avionics play a key role on airliners such as Boeing Co.'s new 787 Dreamliner and 747-8 jumbo jets.
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Kodak Files for Bankruptcy Protection

By Dawn McCarty and Beth Jinks, Bloomberg, Jan 19, 2012

Eastman Kodak Co. (EK), the photography pioneer that introduced its $1 Brownie Camera more than a century ago, filed for bankruptcy protection from creditors after consumers worldwide moved from film to digital technology.

The Rochester, New York-based company, which traces its roots to 1880, listed assets of $5.1 billion and debt of $6.8 billion in Chapter 11 documents filed in U.S. Bankruptcy Court in Manhattan.

“They were a company stuck in time,” said Robert Burley, an associate professor at Toronto’s Ryerson University who has photographed shuttered Kodak facilities in the U.S., Canada and France since 2005. “Their history was so important to them, this rich century-old history when they made a lot of amazing things and a lot of money along the way. Now their history has become a liability.”
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Toyota Prius Wagon Sales in 10 Weeks Top GM Volt’s 2011 Total

By Alan Ohnsman, Bloomberg, Jan 19, 2012

Toyota Motor Corp. (7203) scored a victory in 2011 as U.S. deliveries of its Prius v wagon in 10 weeks topped sales of General Motors Co. (GM)’s Chevrolet Volt plug-in hybrid that was available all year.
Toyota sold 8,399 of the hybrid wagon, which didn’t arrive at U.S. dealerships until the last week of October, said Carly Schaffner, a spokeswoman for the company. GM delivered 7,671 rechargeable Volts in 2011 and 7,997 in the model’s first 13 months on the market. The Japanese automaker hadn’t distinguished Prius v sales from those of the original one.

“Prius v is off to a great start,” Jim Lentz, president of Toyota’s U.S. sales unit, said in an e-mail this week. The hybrid wagon starts at $26,400, Toyota said on its website. The Volt starts at $39,145 and is eligible for as much as $7,500 in federal tax credits.

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CNOOC Targets Assets, Unconventional Energy to Boost Output

By Guo Aibing, Bloomberg, Jan 19, 2012

Cnooc Ltd. (883), China’s biggest offshore oil and gas producer, plans to increase output by starting new deepwater fields, buying overseas assets and accelerating development of unconventional energy resources.

The energy explorer will maintain its goal of boosting production by 6 to 10 percent for the five years ending 2015, Chief Executive Officer Li Fanrong said, after Cnooc reported yesterday that output came in at the low end of a reduced target last year. The company said it will increase capital spending by as much as 63 percent in 2012 as it develops more fields.

Cnooc, which relies on areas off the Chinese coast for 80 percent of its production, slashed its output goal after oil leaks shut the country’s biggest field and it failed to complete an acquisition in Argentina. To boost reserves, it has bid for at least $7.8 billion of overseas assets in the last two years, including shale-gas and oil-sand acreages in North America.
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Boeing Shows Peril of Offering Tax Dollars for Growth

By David Mildenberg, Bloomberg, Jan 19, 2012

Using $43 million in taxpayer money to build a training center for aerospace workers was a good idea for Wichita, Kansas, the self-styled “Aviation Capital of the World,” said Dave Unruh, a Sedgwick County commissioner.

It remains money well-spent, Unruh said, even after Boeing Co. (BA)’s Jan. 4 decision to close its 2,160-employee plant in Wichita, the county seat. Hundreds of those jobs will move to Texas and Oklahoma. He favors putting up as much as $100 million more as a “closing fund” to draw new employers. “We ought to be run out of office if we don’t respond,” said the Republican, a commissioner since 2003.

“We have a community DNA for aviation assets and we’re going to compete.” Still, Unruh didn’t know where the money would come from.
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AMR Risks Losing Control of Bankruptcy Exit as Suitors Circle

By Mary Schlangenstein and David McLaughlin, Bloomberg, Jan 19, 2012

American Airlines parent AMR Corp (AAMRQ). risks losing control of its ability to exit bankruptcy as an independent carrier after three possible suitors emerged within two months of its Chapter 11 filing.

The outside interest means AMR may need to move sooner than planned on steps such as reworking labor contracts to cut costs, said Hunter Keay, a Wolfe Trahan & Co. analyst. The third- largest U.S. airline must craft a restructuring plan that can win over creditors who may receive alternative offers, he said.

“This could expedite some of the more difficult decisions,” Keay said in an interview from New York. “AMR is going to have to prove to its creditors that its stand-alone exit plan adds more value than a bid by a competitor, and that is likely to be difficult.”
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LG Electronics Targets to Raise TV Sales 20% This Year, Helped by 3-D Sets

By Jun Yang, Bloomberg, Jan 19, 2012

LG Electronics Inc. (066570), the world’s second-largest maker of televisions, said it aims to boost TV sales 20 percent this year, helped by models showing 3-D images.

LG targets to sell about 30 million liquid-crystal display TVs this year, compared with about 25 million sets sold in 2011, Lee Kwan Sup, a vice president at the TV business, said in Seoul today. LG aims to become the largest seller of 3-D TVs this year and capture about 25 percent of the global market for such products, according to a company statement.

The Seoul-based company and its bigger competitor Samsung Electronics Co. (005930) are turning to 3-D and Internet technologies to lure buyers. Global shipments of LCD TVs may have reached 206 million units last year, falling short of an earlier projection of 211 million units, researcher DisplaySearch said in October.
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ABB, Nissan to Explore a Second Life for EV Batteries: Energy Storage

Smart Grid Technology, Jan 18, 2012

Unlike standard car batteries, lithium-ion batteries used to power EVs have a lot of life left in them after they're retired from service in a vehicle. Automation technology group ABB, Nissan North America, 4R Energy and Sumitomo Corporation of America have teamed up to evaluate and test the all-electric Nissan Leaf battery for residential and commercial use as energy storage systems.

Lithium-ion batteries have up to 70% of their capacity remaining after 10 years of service as a car battery. The partners plan to create a Leaf battery storage prototype capable of providing at least 50 kilowatt hours of power, the amount needed to keep the lights on in 15 average homes for two hours.

"The agreement will allow us to evaluate the commercial viability of a grid storage solution and develop a prototype to effective reuse Nissan Leaf batteries," said Bruno Melles, head of ABB's Medium Voltage Power products business.
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Saudi Aramco to Invest $200 Billion in Refining, Exploration

By Wael Mahdi, Bloomberg, Jan 17, 2012

Saudi Arabian Oil Co. plans to build refineries in China and Indonesia as part of a $200 billion spending program to double refining capacity and explore for oil and natural gas during the next decade.

Saudi Aramco, as the state-run company is known, is preparing for talks about “final terms” for a Chinese refinery and is still waiting for “good terms to be put on the table” for a processing plant in Indonesia, Chief Executive Officer Khalid al-Falih said in an interview. Aramco will probably decide soon whether to invest in expanding a plant it operates with Japan’s Sumitomo Chemical Co., he said on Jan. 14.

Aramco, the world’s largest crude exporter, is expanding refining and petrochemical production to meet domestic demand and export refined products that can fetch higher prices than oil. The company plans to boost its global refining capacity to 8 million barrels a day in 10 years, including projects yet to be announced, al-Falih said.
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Nothing bugs Cubist CEO Michael Bonney

By Val Brickates Kennedy, MarketWatch, Jan 17, 2012

By anyone’s standard, Michael Bonney’s first few days at Cubist Pharmaceuticals Inc. didn’t go well.
It was 2002. Bonney had just come on board from Biogen, where he had helped launch one of the most successful drugs in biotechnology history, Avonex. Cubist had high hopes that he could work the same magic on a promising new antibiotic it was developing called daptomycin. But, with Bonney on the job just a week, the company announced the drug had failed a key clinical trial.

Predictably, Cubist’s stock tanked on the announcement — not exactly an auspicious beginning for a man who would go on to become the company’s chief executive the following year and help build Cubist into a $2.5 billion rising star.
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Novartis to Restructure US Business to Strengthen Competitive Position

WorldPharma News, Jan 16, 2012

Novartis Pharmaceuticals plans to strengthen its long-term competitive position in anticipation of the Diovan (valsartan) patent expiration and an expected reduction in demand for Rasilez/Tekturna (aliskiren) following termination of the ALTITUDE clinical study. The company will reduce its cost base with the current restructuring focused on the US market.

"We recognize that the next two years will be challenging in the Pharmaceuticals Division and we are proactively making these changes to further focus our pipeline on the best opportunities and align our market position on our growth brands," said David Epstein, Division Head of Novartis Pharmaceuticals. "These are difficult but necessary decisions that will free up resources to invest in the future of our business which we view as well suited to bring new valuable therapies to patients and payors."
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