TheChek News Flow

2014 is likely to be the second successive year that Nestle fails to deliver the

Nestle model of 5%-6% organic growth owing to weak consumer demand

and adverse category exposure. Staples inputs have fallen 15% since July

and we expect this to further constrain growth without benefiting EBIT

margins. We expect 2015 to be worse than 2014 forcing the company to

recalibrate the Nestle model at a lower level of growth. We reduce our EPS

estimates 9%/13%/16% over 2015/16/17E and are now 3%/3%/6% below

I/B/E/S consensus. Nestle is European Staples in a microcosm: expensive,

slowing and due for a de-rating. We reduce our rating to Sell (from Neutral).

* Catalyst

Further deflation in commodity prices and increased concerns surrounding

a deflationary macro environment across DMs will further increase pressure

on Nestle pricing. Nestle is due to report FY results on February 19, 2015,

when the company is likely to give an update on its commodity basket and

deliver guidance for FY15. In the past this has consisted of repeating the

Nestle growth model of 5%-6% organic sales growth, however we expect

4.2% growth in FY15, and believe that outlook could be lowered to 4%-5%.

* Valuation

Nestle trades on a 2015E P/E of 20.4x, a 6% premium to the Staples sector,

at the same time as offering below average growth: 8% average EPS growth

over 2015-17E vs. European Staples at 10%. Our 12 month price target of

SFr65 (from SFr70) is based on our unchanged P/E methodology applying

16.8x to 2016E, to reflect our organic EBIT growth expectations, consistent

across our Staples universe.

* Key risks

Risks include: an improvement in commodity prices helping to alleviate

deflationary pressures; underlying improvement in one of Nestlé’s key

markets; and favourable M&A.

{http://reut.rs/1HZ8SvJ}

(Reuters) - Employees representatives on the supervisory board of Lufthansa (LHAG.DE) are set to back plans for the airline to set up a new low-cost, long-haul brand despite dissent from pilots, a source familiar with the talks said on Wednesday.

The plans were the subject of heated discussion among labor representatives ahead of Wednesday's board meeting, and despite rejection by the pilots' side, the majority were in favor, the person said.

However, a final decision has not been taken. The board meeting is currently ongoing and comes against the backdrop of pilot strikes.

Lufthansa declined to comment.

--> Lufthansa have more lucky than Air France

{http://bbc.in/1zPCQMV}

He told the BBC:"The development of full artificial intelligence could spell the end of the human race."

His warning came in response to a question about a revamp of the technology he uses to communicate, which involves a basic form of AI.

But others are less gloomy about AI's prospects.

The theoretical physicist, who has the motor neurone disease amyotrophic lateral sclerosis (ALS), is using a new system developed by Intel to speak.

Machine learning experts from the British company Swiftkey were also involved in its creation. Their technology, already employed as a smartphone keyboard app, learns how the professor thinks and suggests the words he might want to use next.

Prof Hawking says the primitive forms of artificial intelligence developed so far have already proved very useful, but he fears the consequences of creating something that can match or surpass humans.

"It would take off on its own, and re-design itself at an ever increasing rate," he said.

Celverbot

Cleverbot is software that is designed to chat like a human would

"Humans, who are limited by slow biological evolution, couldn't compete, and would be superseded."

But others are less pessimistic.

"I believe we will remain in charge of the technology for a decently long time and the potential of it to solve many of the world problems will be realised," said Rollo Carpenter, creator of Cleverbot.

Cleverbot's software learns from its past conversations, and has gained high scores in the Turing test, fooling a high proportion of people into believing they are talking to a human.

Rise of the robots

Mr Carpenter says we are a long way from having the computing power or developing the algorithms needed to achieve full artificial intelligence, but believes it will come in the next few decades.

"We cannot quite know what will happen if a machine exceeds our own intelligence, so we can't know if we'll be infinitely helped by it, or ignored by it and sidelined, or conceivably destroyed by it," he says.

But he is betting that AI is going to be a positive force.

Prof Hawking is not alone in fearing for the future.

In the short term, there are concerns that clever machines capable of undertaking tasks done by humans until now will swiftly destroy millions of jobs.

In the longer term, the technology entrepreneur Elon Musk has warned that AI is "our biggest existential threat".

Robotic voice

In his BBC interview, Prof Hawking also talks of the benefits and dangers of the internet.

He quotes the director of GCHQ's warning about the net becoming the command centre for terrorists: "More must be done by the internet companies to counter the threat, but the difficulty is to do this without sacrificing freedom and privacy."

He has, however, been an enthusiastic early adopter of all kinds of communication technologies and is looking forward to being able to write much faster with his new system.

But one aspect of his own tech - his computer generated voice - has not changed in the latest update.

Prof Hawking concedes that it's slightly robotic, but insists he didn't want a more natural voice.

"It has become my trademark, and I wouldn't change it for a more natural voice with a British accent," he said.

"I'm told that children who need a computer voice, want one like mine."

Although it has yet to come to a final decision on whether to table a counter offer, it was said that it is cautiously watching the situation in light of the recent fall in oil prices.

On 24 November, Ophir made a firm offer under which Salamander shareholders will receive 0.5719 new Ophir shares.

Despite the fall in oil prices, it is understood that there are no indications at this stage that Ophir intends to walk away from the Salamander deal. It would be hard pushed to do so now that it has made a firm offer, it was added.

Now that there is a firm bid for Salamander, Cepsa can launch a counter bid. A 18 November announcement from Cepsa, stating that it did not intend to make an offer, meant that it could not return with a bid under Rule 2.8 of the UK’s Takeover Code for six months, or three months at the target’s invitation.

The Cepsa consortium had previously proposed a 121p per share cash offer, plus a contingent value right of up to 24p per share in cash. One of the reasons it reportedly withdrew the offer was because it was not content with Salamander making public the details of the proposal. The Salamander board's reluctance to engage Cepsa was also believed to have been a contributing factor to the withdrawal.

Following OPEC’s decision not to cut production last week, the price of oil tumbled to a four-year low, causing oil and gas-related stock to fall across the board. West Texas Intermediate crude for January delivery was trading at USD 66.87 on Tuesday. At the time Salamander conducted an auction in May, futures were hovering above USD 110 a barrel.

The steep dive in oil prices also was a factor for another oil and gas group Dragon Oil [LON:DGO] withdrawing its bid for Petroceltic [LON:PCI], citing unfavourable market conditions.

If Cepsa were to return with a counter offer, it would have to overcome irrevocable undertakings and letters of intent in favour of the Ophir offer from Salamander management and some of its shareholders. Given the fall in the implied offer consideration, however, the undertakings are not seen as an insurmountable hurdle to overcome, it was noted.

Salamander’s share price has fallen from just under 90p per share last week – the day of OPEC’s meeting – to 76.75p on Tuesday. Based on Ophir’s share price today the implied offer price is GBP 0.82 per share.

Salamander directors, who together own 2.02% of the company, have given irrevocable undertakings to vote in favour of the transaction. SailingStone Capital Partners and Artemis Investment Management, which own 17.7% of Salamander, have also given irrevocable undertakings in favour of the deal subject to the absence of a counter bid that exceeds Ophir’s offer by 10%. Funds controlled by T. Rowe Price, which together accounts for 8.2% of shares, have given non-binding letters of intent in favour of the Ophir offer.

The deal is conditional on no material adverse change that is reasonably expected to result in “adverse change or deterioration in the business, assets, value, financial or trading position, profits, prospects or operational performance” of Salamander.

When questioned on a 21 November conference call about whether Ophir would seek to renegotiate the terms if the oil price continued to fall, the group’s CEO Nicholas Cooper said that he did not expect to revise terms. Even if the oil price fell a lot further “the break-even oil price on the assets we're looking to acquire is a long, long way below where we're currently seeing trading” so Ophir was not particularly bothered, he said.

Salamander, Ophir and Cepsa declined to comment.

Local reports said that executives from Sona Petroleum [KLSE:SONA] would meet with Salamander management to discuss their options in light of the Ophir bid, which is conditional on the Sona deal being voted down.

(Reuters) - Ukrainian Prime Minister Arseny Yatseniuk said on Wednesday an accident had occurred at the Zaporizhye nuclear power plant (NPP) in south-east Ukraine and called on the energy minister to hold a news conference.

"I know that an accident has occurred at the Zaporizhye NPP," Yatseniuk said, asking new energy minister Volodymyr Demchyshyn to make clear when the problem would be resolved and what steps would be taken to restore normal power supply across Ukraine.

News agency Interfax Ukraine said the problem had occurred at bloc No 3 - a 1,000-megawatt reactor - and the resulting lack of output had worsened the power crisis in the country. Interfax added that the bloc was expected to come back on stream on Dec. 5.

{http://www.reuters.com/article/2014/12/03/us-ukraine-crisis-power-idUSKCN0JH0ZV20141203}

The hedge fund giant, which is suing the Swiss bank in Dallas federal court over the Lake Las Vegas deal, argues Credit Suisse inflated appraisals in a questionable refinancing that ended up costing one of its funds $250 million when the owners defaulted in 2008.

Highland, led by James Dondero, said the bank knew all along the loan was “crap,” as one Credit Suisse banker wrote in an e-mail.

“Where are you guys finding all this crap?” Credit Suisse’s Grant Pothast asked his colleagues in an e-mail regarding plans to sell the original loan in September of 2004. “You must have the deepest dredge known to mankind.”

“I will go anywhere I can find a fee,” colleague David Miller shot back, pointing out that Credit Suisse was the sole manager of the Lake Las Vegas financing and so would make $9 million.

Highland, which runs both private equity and hedge funds and has $20 billion under management, alleges that the bank used inflated appraisals to boost those fees.

Miller, who designed the methodology used to value the property, which Highland contends is fraudulent, is referred to as “Dr. Frank­enstein” in another e-mail.

Within months of appraising Lake Las Vegas, its value went to $1.1 billion from $450 million.

The e-mails, which are part of the discovery in the lawsuit, are being unveiled during a federal trial that started Tuesday.

The Lake Las Vegas deal was one of several new loan products that Credit Suisse introduced in 2004 that allowed developers to take out loans and then immediately give themselves a big dividend from the proceeds, Highland lawyers alleged in court papers.

All of those “eventually soured and either went into bankruptcy or restructuring,” they wrote.

And by 2007, when the bank was trying to refinance the deal, it was talking about “getting out” without a loss, the e-mails show.

But Highland may have trouble convincing a jury, as a similar case brought against Credit Suisse in Manhattan Supreme court was rejected by Justice Charles Ramos.

Credit Suisse has denied any wrongdoing and says Highland is simply looking for a scapegoat.

It also pointed out that the refinancing allowed some other Highland funds to recoup their investments, which would lower the damages to the Highland to $82 million.

A former Highland executive, Patrick Daugherty, is expected to testify for the bank and say that Highland didn’t rely on appraisals from other parties.