WSJ :Russia's Arrest of Sistema Boss Raises Specter of Yukos Case

Russia's Arrest of Sistema Boss Raises Specter of Yukos Case
Conglomerate's Top Shareholder Charged With Money Laundering

MOSCOW—Shares in Russia's conglomerate AFK Sistema AFKS.MZ -33.99% plunged on Wednesday after its chairman, Vladimir Yevtushenkov, was put under house arrest and charged with money laundering.

The arrest fueled concerns about Russia's business climate, drawing comparisons to the case of Yukos, the oil giant that was dismantled by authorities through a series of tax-evasion charges that were widely considered to have been politically motivated.

"Indeed it all looks very much like Yukos No. 2," said Alexander Shokhin, head of Russia's Union of Industrialists and Entrepreneurs, according to Interfax news agency.

But in the Sistema case, Russian officials said that the detention of one of the country's richest businessmen had no political motivation.

Russia's Investigative Committee said late on Tuesday that Mr. Yevtushenkov was charged with money laundering in a deal involving shares in unnamed energy companies in the Russian region of Bashkortostan, where AFK Sistema owns 78.8% of oil company Bashneft. BANE.MZ -22.30%

Sistema's shares dropped nearly 37% in early trade in Moscow, while Bashneft shares fell 22.6%. The news about Mr. Yevtushenkov's arrest also sent Russia's stock index Micex tumbling more than 2%.

AFK Sistema brushed off the allegations of criminal activity and said in a statement on Wednesday that the acquisition of part of BashTEK group, which included oil company Bashneft, was "legal and transparent."

"The company is fully cooperating with the investigation and intends to use all legal means to defend its position," AFK Sistema said.

Ilnur Salimyanov, a lawyer representing Bashneft's former top manager Ural Rakhimov, said that the arrest of Mr. Yevtushenkov could be a "corporate raid," Interfax reported.

Bashneft has been the subject of prolonged court battles amid prosecutors' allegations of financial wrongdoing during its privatization in the 1990s, as well as when Sistema purchased it in 2009. AFK Sistema has denied any wrongdoing as recently as last month, when Moscow's Basmanny Court seized the controlling stake in Bashneft in the privatization case.

Anatoly Chubais, the champion of the 1990s-era privatization program in Russia and the current chief executive of state-owned company Rusnano, said the arrest of the main shareholder of Sistema will have a strongly negative impact on Russia's business climate at a time when the economy is facing risks of recession.

Former Yukos boss Mikhail Khodorkovsky, who was Russia's richest man before he was jailed in 2003 and who was only released late last year, said that the AFK Sistema case may be linked to OAO Rosneft, the country's largest oil producer. In comments published by Russia's daily Vedomosti, Mr. Khodorkovsky said that he thinks that Igor Ivanovich—a reference to Rosneft's chief executive, Igor Sechin —might be interested in taking over Bashneft.

After Mr. Khodorkovsky was arrested, his company Yukos was forced into bankruptcy and was taken over by state-controlled Rosneft.

Rosneft spokesman Mikhail Leontyev said that the speculation voiced by Mr. Khodorkovsky is "nonsense," state news agency RIA Novosti agency reported.

The Kremlin also dismissed any resemblance with Yukos. President Vladimir Putin's spokesman, Dmitry Peskov, said that it was "wrong and absurd" to attribute the arrest to political motives.

But the arrest of the 65-year-old Mr. Yevtushenkov, which is set to last for two months, may strike a further blow to sentiment toward Russia, which has seen investment fall since the Ukraine crisis.

Sberbank CIB said in a research note that "such a dramatic turn of events comes as a surprise."

"As a result of this event, the risk of a change in the shareholder structure of Bashneft escalates, a risk that now spreads to Sistema's other assets," Sberbank CIB said.

Shares of Mobile TeleSystems, Russia's largest telecom company, in which Sistema is a majority shareholder, were down 8%.

(ZH) Hilsenrath Backs Away From His "Considerable Time" Prediction

Yesterday's exuberant equity market reaction has been largely defined by the mainstream media as driven by WSJ Hilsenrath's 'confirmation' that Yellen will keep the uber-dovish phrase "considerable time" in the FOMC statement today. So, we wonder, why did the Fed-whisperer, after markets had closed last night, issue a quasi-retraction of his prediction explaining that instead of some prohetical "I just know" statement, it was a "best guess," as he concluded, "will the Fed take these steps? Only the people in the room know that. The rest of us will see Wednesday afternoon." It appears the sell-side disagrees with him on the language...
In a webcast Tuesday, I explained why I thought the Federal Reserve would stick with, but qualify, an important phrase in its policy statement Wednesday which assures near-zero interest rates for a “considerable time.” This was simply my best analysis of where I think the Fed is going based on what we have been reporting and what officials have said in the past.
...
Here’s my analysis: Janet Yellen is a methodical individual and the Fed, in normal times, is a slow-moving institution. It takes time for debates to play out. Ms. Yellen is seeking consensus, as we reported earlier this week. The considerable time debate doesn’t feel ripened or fully aired. When Ms. Yellen has used the phrase in recent months she has qualified it, but not suggested changing it. Meantime the Fed has other business on its plate. The exit plan has been in the works for months, as has the plan to end bond buying. Changing the “considerable time” guidance now, while also announcing an exit plan, could be viewed by market participants as a surprising move toward raising rates.
Fed officials haven’t forgotten last year’s “taper tantrum,” when long-term interest rates shot up as they commenced discussions about winding down the bond program.
We reported earlier this week that Ms. Yellen, as Fed chairwoman, hasn’t behaved as the easy-money policy “dove” that many market participants expected. That doesn’t mean she’s suddenly a hawk. It just means she’s not a dove.
Ms. Yellen’s most logical next step, to my mind, would be to stick for the time being to what she’s been saying, which is that rates will stay low for a “considerable time” with the strong qualification that this could change if the job market keeps improving quickly. Staying on message this month could entail signaling an end to the bond program and a more formal exit strategy. The Fed would then have time to air out a change in the “considerable time” formulation for a later date, giving Ms. Yellen time to get all of her colleagues on board.
* * *
He concludes: "Will the Fed take these steps? Only the people in the room know that. The rest of us will see Wednesday afternoon."

>>> NUE - Guides Q3 $0.70-0.75 v $0.63e

Guides Q3 $0.70-0.75 v $0.63e 

Included in the projected third quarter results is an estimated $12.0 million charge ($0.02 per diluted share) related to the partial write down of assets within the steel mills segment. Earnings in the third quarter of 2013 included a net $14.0 million ($0.03 per diluted share) partial write down of inventory and fixed asset balances associated with the collapse of a storage dome at Nucor Steel Louisiana.

Overall operating performance at our steel mills segment for the third quarter is expected to be much improved compared to the second quarter of 2014, as we expect increased profitability in sheet, structural, bar and plate steel. Structural steel had no major outages in the third quarter, as compared to the planned three week outage at Nucor-Yamato Steel in the second quarter associated with our $115 million sheet piling capital project. The strongest markets for the steel mills continue to be manufactured goods, including energy and automotive. Though third quarter results are expected to be much improved from the second quarter, imports remain at high levels, applying downward pressure on pricing.

The performance of our fabricated construction products businesses (rebar fabrication, joist and decking and pre-engineered metal buildings) is expected to improve compared to the second quarter of 2014, reflecting improving conditions in the nonresidential construction markets. Although nonresidential construction markets are at historically low levels, they are improving.

The performance of our raw materials segment includes an anticipated operating loss of $27 million ($0.05 per diluted share) at our new direct reduced iron (DRI) plant in St. James Parish, Louisiana. The Louisiana DRI facility has continued to achieve excellent quality and volume levels. Outages in June and July were necessary to implement changes intended to improve process yield performance. An additional factor affecting the performance of Nucor Steel Louisiana is the impact of consuming higher cost iron ore purchased early in the year under a quarterly lag pricing mechanism. As a result of the process improvements and lower iron ore costs, combined with a steady run-rate, we continue to anticipate profitable performance at the Louisiana DRI facility by the end of the year.

>>> DD : Comments on shareholder Trian proposal to break-up company: remain comm

Comments on shareholder Trian proposal to break-up company: remain committed to executing on our strategic plan to drive growth and profitability 

The recently announced first phase of our redesign initiative to drive down costs by $1 billion and embed greater efficiencies, together with the separation of Performance Chemicals and our $5 billion share repurchase program, reflect our board and management's commitment to enhance value for all DuPont shareholders.

DuPont welcomes open communications with shareholders and values input toward our common goal of enhancing shareholder value. We speak and meet with shareholders frequently, and while it is our policy not to comment on discussions with specific shareholders, we have had a constructive dialogue with Trian.

WWD : François-Henri Pinault Talks Empower Talents Program

MILAN — Kering and Vogue Italia have renewed their partnership for the internship Empower Talents, and will mark the second installment with an event tonight here during Milan Fashion Week.

The magazine’s editor in chief, Franca Sozzani, described the project as an “innovative and concrete model that will surely allow many young individuals to win the challenge of the future with commitment and creativity. It is a project that continues and is renewed to encourage the development of a new generation of talents.”

Vogue Italia and its Web site spearhead the selection process and the partnership offers posts in areas such as design, merchandising, visual display, digital and communications.

Here, Kering chairman and chief executive officer François-Henri Pinault discusses with WWD the progress of the program and its future prospects.


WWD: A year has passed since the announcement of the Empower Talents program. Do you believe the initiative has progressed as you envisioned? What are the main reasons for renewing the partnership? How do you see the collaboration with Vogue Italia progressing? Are there any specifics you would like to share?

François-Henri Pinault: The Empower Talents program has proven to be very successful, one obvious reason that made us decide to renew the partnership this year. We also love working with Vogue Italy and Franca Sozzani, for their precious commitment to the project. Our collaboration went very well as we share the same objective: Find the new and most promising talents of the fashion industry and offer them training opportunities within our brands.

This year, internships will be concentrated in Italy, where a lot of our brands were born, and Switzerland. Bottega Veneta, Brioni, Dodo, Girard-Perregaux, Gucci, JeanRichard, Kering headquarters, Pomellato and Sergio Rossi will offer internships to the best young talents in some of Kering’s key fields of expertise: marketing, public relations, communications and merchandising.

WWD: As the project has been taking shape, what do you see as the biggest challenges and what are the most promising aspects of the initiative?

F.H.P.: The development and management of talents is key for us at Kering. The luxury fashion industry is not only very attractive for young professionals; it is also a growing one, one that is constantly evolving. This implies very high recruitment needs that we need to address, and in parallel, the necessity to be able to find the best talents, to welcome them within the group and support their professional and creative development. It is a daily challenge to find these professionals, but also an opportunity for us because they are crucial to the group’s success. We need to make sure we identify them and do our best to retain them within the group.

This is why it is important for us to support the development of initiatives such as this partnership with Vogue Italy through Empower Talents. The combination of Vogue’s visibility and the attractiveness of our brands for people who love fashion is ideal to spot the best talents and help them grow.

WWD: What has been the reaction to the project so far?

F.H.P.: Last year, our h.r. department received a very consistent number of applications and the selection process has been very competitive. Within the brands, all managers involved showed remarkable participation and enthusiasm. They embraced the challenge to go further and deeper in the search for talents to sustain the development of key business functions. The project has also been warmly welcome by the candidates. We had several very positive experiences with the students who joined the group and today we are evaluating some of them for long-term positions within our brands.

WWD: Do you think similar collaborations to support students and young talents in their career development could take shape in the future?

F.H.P.: As you know, Kering’s motto is “empowering imagination.” We feel that as a major player of the fashion industry, it is our duty to encourage talent development and help young professionals start their career. We have already developed other collaborations to help students and young talents. But as we wish to accompany them on a long-term basis and really pave their way to success, we are not looking into multiplying such collaborations just for the sake of it. They have to make sense and bring true value to young professionals and to us. For instance, it is the case in the U.S., with the “Empowering Imagination” contest at Parsons The New School for Design, which similarly has been offering prestigious internships within our brands for two years now. [It’s] also [the case] in China, where Kering has formed a strategic partnership with Tsinghua University to establish a long-term commitment to an education and training program to promote new talent in the arts and design.

>>> FedEx beats by $0.15, beats on revs; reaffirms FY15 EPS guidance

FedEx beats by $0.15, beats on revs; reaffirms FY15 EPS guidance (154.66)
Reports Q1 (Aug) earnings of $2.10 per share, excluding non-recurring items, $0.15 better than the Capital IQ Consensus Estimate of $1.95; revenues rose 6.4% year/year to $11.7 bln vs the $11.46 bln consensus.

Co reaffirms guidance for FY15, sees EPS of $8.50-9.00, excluding non-recurring items, vs. $8.92 Capital IQ Consensus Estimate.
  • FedEx Express Segment: Revenue of $6.86 billion, up 4% y/y; Operating income of $369 million, up 35% y/y; Operating margin of 5.4%, up from 4.1%.
    • U.S. domestic package volume grew 5%; International Priority volume grew 1%, while FedEx International Economy volume increased 3%.
  • FedEx Ground Segment: Revenue of $2.96 billion, up 8% y/y; Operating income of $545 million, up 13% y/y; Operating margin of 18.4%, up from 17.7%.
  • FedEx Freight Segment: Revenue of $1.61 billion, up 13% y/y; Operating income of $168 million, up 70% y/y; Operating margin of 10.4%, up from 7.0%.
    • Less-than-truckload (LTL) average daily shipments increased 11%, including a 13% increase in demand for Priority service.
Increasing Shipping Rates
  • As previously announced, FedEx Express, FedEx Ground and FedEx Freight will increase shipping rates effective January 5, 2015. FedEx Express will increase shipping rates by an average of 4.9% for U.S. domestic, U.S. export and U.S. import services.

>>> US Early premarket gappers

Early premarket gappers

Gapping up: AUXL +41.4%, NSPR +19%, CTIC +12%, YRCW +9.6%, YRCW +9.6%, AKS +7.4%, PERI +7.3%, APOG +6.8%, LEN +5.3%, ENDP +4.3%, PT +4%, DD +3.6%, SLXP +1.4%, MT +1.4%, SDRL +1.3%, NVAX +1.1%, CLF +0.9%, BA +0.8%

Gapping down: RAX -18.1%, SNE -10.6%, PETX -8.8%, RTRX -7.5%, PDLI -5.7%, ADBE -4.6%, GIS -4.5%, SXL -4.3%, SSLT -2.5%, AT -2.3%, UN -1.6%, WYNN -1%, RIO -0.7%, BHP -0.5%