TheChek News Flow

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Nokia 3Q Sales EU5.7 Bln vs Est. EU5.87 Bln; Shares Climb 2013-10-29 11:02:21.50 GMT

By Kasper Viita Oct. 29 (Bloomberg) -- Nokia shares rise 2.1% to EU5.10 in Helsinki after 3Q earnings vs down 0.8% before report. * See preview: focus on networks after devices unit sale

For Related News and Information: First Word scrolling panel: FIRST<GO> First Word newswire: NH BFW<GO>

--Editor: Kati Pohjanpalo

To contact the reporter on this story: Kasper Viita in Helsinki at +358-9-2512-3738 or kviita1@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at +45-33-457-121 or cwienberg@bloomberg.net

Goldman also names Unicredit a top pick, cuts EPS ests for Erste, Unicredit, BNP

• Splits European banks coverage into four regions, U.K., Nordics, Emerging Markets and Eurozone. • Sees provisioning leverage accounting for ~60% net operating profit growth in eurozone, ~30% in EM • Says provisioning leverage now fully played out in Nordics, U.K., operating leverage now accounts for all NOP growth • Raises BBVA 2013 and 2015 ests 4% and 1% to 76c and EU1.02; says 2014 cut 1% to 75c • Leaves Erste Bank PT at EU30 • Cuts Erste EPS ests: 2013 -3% to EU1.65, 2014 -4% to EU2.65, 2015 -3% to EU3.40 • Raises Unicredit PT 23% to EU7.50 - Cuts Unicredit EPS ests: 2013 -9% to 26c, 2014 unch at 47c, 2015 -2% at 73c • Raises BNP PT 3% to EU70 - Cuts BNP EPS ests: 2013 -4% to EU4.50, 2014 -2% to EU6.11, 2015 -1% to €6.75 • Raises ING PT 4% to EU12.30 - Leaves ING EPS ests unch: 2013 at 89c, 2014 at EU1.14, 2015 at EU1.33 • Cuts HSBC PT 5% to 900p - Leaves HSBC EPS ests unch. 2013 at $0.94, 2014 at $1.12, 2015 at $1.27 NOTE: Morgan Stanley said Oct. 23 European Bank Capital Raises Will Be Significant

{http://bit.ly/1dHok2q}

MILAN — The luxury goods sector is expected to log only a 2 percent gain in 2013 revenues to 217 billion euros, or $299.5 billion at current exchange, hurt by second- and third-quarter results that are “close to stagnation” and by currency headwinds, according to the most recent study by Bain & Co. and Fondazione Altagamma, the Italian luxury goods association, presented on Monday morning here.

“The super-growth of the past few years was destined to calm down,” said Claudia D’Arpizio, a partner at Bain & Co. “The positive aspect for luxury brands is that now they can shift their attention from keeping up with the present to planning the future.”

At constant exchange rates, revenues of the luxury goods industry would have grown 6 percent, compared with 5 percent the previous year. The devaluation of the yen is responsible for more than half of this impact.

Upturning a recent trend in the past few years, the Americas grew faster than Mainland China, showing a 4 percent gain, compared with the latter’s 2.5 percent increase. This reflects the increasing number of Chinese tourists visiting cities such as Las Vegas and Los Angeles. A number of stores that opened in secondary U.S. cities also helped drive the growth. In 2013, the Americas are expected to post sales of 69 billion euros, or $95.2 billion, in 2013.

Bain and Altagamma dubbed Southeast Asia the new “emerging Asia,” climbing 11 percent, boosted not only by the historic Singapore hub, but also by Malaysia, Vietnam and Thailand.

In terms of categories, accessories are expected to show the biggest growth — up 4 percent — accounting for 28 percent of business, compared with apparel, up 1 percent, and accounting for 25 percent of total business.

Greater China is expected to register a 4 percent increase in sales in 2013. D’Arpizio took pains to dismantle “a widespread hysteria,” concerning China. “There is no China bust, it is one of the most important markets, even just in terms of demographics, and it’s still growing, it still has an enormous potential. Luxury brands have passed from a strong expansion phase to the consolidation of positions and maintaining their network,” she explained. D’Arpizio conceded Mainland China is becoming more challenging as consumers become more sophisticated, and that the government crackdown on public officials’ spending on luxury and anticorruption campaigns are still negatively affecting gifting. However, Chinese consumers are increasingly buying luxury goods abroad, and new channels are rapidly emerging such as e-commerce, multibrand formats and premium outlet centers.

In addition to a “logo fatigue,” aspirational consumers are shifting to more accessible luxury-premium brands, benefiting from the rise of a new middle class. Chinese consumers are the number-one luxury audience, reaching almost 30 percent of the global market, between local and touristic spending.

In 2013, tourists are expected to help lift sales in Europe by 2 percent. Tourists account for half of the business in Italy, 55 percent in the U.K. and 60 percent in France.

Sales in Japan are seen to drop 12 percent, although in real terms Japanese spending is expected to increase 9 percent after many years of stagnation, affected by the strong devaluation of the yen.

The Middle East is expected to grow 5 percent, with Dubai the most important shopping destination in the area, while Saudi Arabia is the second-biggest market for luxury in the region.

Africa is “emerging with high attractiveness with high potential spending,” showing an 11 percent growth with new markets such as Angola and Nigeria, in addition to the more consolidated Morocco and South Africa.

D’Arpizio identified retail as “the sole growth driver,” despite a decelerating organic growth, especially in emerging markets, with the focus shifting on store renovations, relocations or expansion in mature markets. She also noted an increasing leverage of flexible temporary formats, such as pop-ups.

“The unstoppable run of online luxury determined a tenfold growth in 10 years, and luxury brands are working on aggressively entering the online arena, leveraging Internet for both sales and communication,” said D’Arpizio, although she highlighted the fact that 40 percent of brands still do not sell online. The online luxury goods market is expected to total 9.8 billion euros, or $13.5 billion, up 28 percent from the previous year, and accounting for 5 percent of total luxury goods sales.

M-commerce represents almost one-third of traffic and more than 10 percent of sales for some brands, and the off-price segment still represents around 30 percent of the market, pushed by “blossoming flash-sale sites and in-season promotions by department stores,” said the study. The online luxury market is “enormously skewed to the U.S.,” where department stores are segment leaders. Accessories have the highest online penetration, with shoes above 10 percent.

The industry is dynamic and is being reshaped by new rules, said D’Arpizio. “Women are buying more complex watches, while men’s purses are a new overwhelming phenomenon in leather goods. Women are ever more empowered in emerging markets, while men in mature markets are approaching luxury goods more and more.”

The priority for companies, she concluded, is to increasingly get to know their customers. “It’s all about the consumers and much less about the markets. The Chinese are confirmed as the top and fastest-growing nationality despite a significant deceleration of domestic consumption. They are headed to becoming nearly one-third of the luxury market consumers, accounting for 29 percent of total.” Also, she said luxury companies have been too focused on emerging markets, and should return to eye more mature ones.

Looking ahead, there are “healthy expectations” for the medium term. The study forecasts 3 to 5 percent growth at constant exchange rates in the 2013-16 period, reaching sales of 245 billion to 255 billion euros, or $338.2 billion to $352 billion, in 2016.

In addition to personal luxury goods, the study also researches the cars, wine and spirits, hotels, gourmet food, design furniture and yacht sectors, which are all expected to show gains in 2013. Cars, wine and spirits and hotels are expected to overtake spending on personal luxury goods, contributing to a total business of 800 billion euros, or $1.1 trillion, up almost 6 percent compared with the previous year.

According to the Altagamma Consensus study, also presented on Monday, vice chairman Armando Branchini said average 2013 earnings before interest, taxes, depreciation and amortization of luxury goods companies are expected to climb 8 percent.   The study expects positive signals from all product categories in 2014. Apparel is forecast to gain 5 percent; jewelry and watches 6 percent; shoes and accessories 7 percent, and fragrances and cosmetics 4 percent.

North and Latin America are expected to increase 5 and 7 percent, respectively; Asia and the Middle East, 10 percent each; Europe, 4 percent, and Japan, 2 percent.

The conference was held as the industry is gearing up for Milan’s international 2015 Expo, and Andrea Illy, president of Fondazione Altagamma, noted that the association, with other industry associations and the city, are working on marketing initiatives and re-branding Milan.

EU's Barroso: Sees reasons for cautious optimism on economy; reiterates view that region not out of crisis just yet - comments at conference in Brussels

Early premarket gappers

Gapping up: NTRI +12.5%, DATA +8.4%, LCC +5%, IBN +5%, BP +4.9%, MAS +4.7%, KORS +4.3%, AMKR +3.5%, BTH +3.2%, ALU +3.1%, PRE +2.5%, HIG +2.4%, ALLT +2.3%, LINE +1.8%, STM +1.6%, DDD +1.4%, TLM +1%, DAL +1%, RDS.A +1%, MIC +1%

Gapping down: CLSN -14.5%, PMCS -10.4%, PSMI -6.9%, ECOM -6.5%, UBS -5.5%, EROC -4.8%, ARR -4.8%, STX -4.7%, ICAD -3.8%, AGNC -3.6%, SHO -3.5%, CLNY -2.9%, RBS -2.6%, VOLC -2.3%, FNB -2.2%, X -1.8%, DB -1.7%, PCL -1.3%, AET -1.3%, SLG -1.2%, HLF -1%, CRUS -0.9%, RIO -0.9%, RCL -0.9%

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CVSL Said to Offer $268 Million to Acquire Direct Seller Blyth 2013-10-29 04:01:00.5 GMT

By Lauren Coleman-Lochner Oct. 29 (Bloomberg) -- CVSL Inc., a direct-selling company run by Mary Kay Inc.’s former chairman, has offered to buy Blyth Inc. for about $268 million, two people with knowledge of the matter said. CVSL offered to pay $16.75 a share for Blyth, which sells candles, fragrances and ViSalus weight-loss products, said the people, who asked not to be identified because the information is private. The offer, which was extended last week in a letter to Blyth, could be made public by CVSL as soon as today, one of the people said. Blyth rose 21 percent to close at $15.50 yesterday, giving it a market value of $248.2 million. CVSL is run by John Rochon, who was chairman of Mary Kay -- the cosmetics seller known for giving pink Cadillacs to top sales representatives -- until 2001. Last year he took over Computer Vision Systems Laboratories Corp. to create a new direct-selling company. The Plano, Texas-based company’s other acquisitions this year include Tomboy Tools Inc. and Agel Enterprises LLC, which makes nutritional and skin-care products. Jane F. Casey, Blyth’s vice president of investor relations, didn’t return calls seeking comment on the offer. John Rochon Jr., chairman of CVSL’s investment committee, declined to comment. Blyth, based in Greenwich, Connecticut, reported revenue of $211.7 million for the second quarter, down from $309.5 million a year earlier, because of slumping sales of ViSalus, and the company cut its full-year earnings outlook in August. Ahead of yesterday’s gains, the shares had fallen 18 percent this year. Rochon, 62, oversaw a sixfold increase in revenue at Mary Kay from the time he led its leveraged buyout in 1985 to about $3 billion when he left in 2001. As the founder and chairman of Dallas-based Richmont Holdings Inc., he also mounted takeover attempts for competitor Avon Products Inc. in the late 1980s and early 1990s.

For Related News and Information: Rochon Plans to Acquire Direct-Selling Brands Run on LVMH Model NSN ME5K706S972H <GO> Richmont Said Still Interested in Bid for All or Part of Avon NSN M4309M6K50YU <GO> Top Stories: TOP<GO> For top deal stories: DTOP <GO> Top Retail and Consumer Stories: RTOP <GO> Bloomberg Industries: Household Products Mfg: BI HHCP <GO>

--Editors: Kevin Orland, John Lear

To contact the reporter on this story: Lauren Coleman-Lochner in New York at +1-212-617-4673 or llochner@bloomberg.net

To contact the editor responsible for this story: Kevin Orland at +1-312-443-5946 or korland@bloomberg.net

Air Products and Chemicals Inc Reports Q4 $1.47 v $1.47e, R$2.6B v $2.68Be - Guides Q4 $1.30-1.35 v $1.46e - Guides FY13 higher $5.70-5.90 v $5.50e (prior $5.47-5.53 on 23rd July) - Guides FY13 Capex $B (prior $1.9-2.1B)

China National Petroleum Corp CNPET.UL is close to a deal to buy Petróleo Brasileiro's assets in Peru for more than $2 billion (1.2 billion pounds), Bloomberg reported, citing three people with knowledge of the matter.

China's largest oil and gas company's proposed deal may be announced as soon as next month, the report said. (link.reuters.com/myd34v)

Petrobras, as the Rio de Janeiro-based company is known, has been looking to shed non-core assets and protect cash.

The sale of oil fields, exploration rights, refineries and other assets are being made to help finance a $237 billion, five-year investment plan, the world's largest corporate spending program.

However, selling assets has been harder than expected. In March, Brazilian state-controlled Petrobras lowered its forecast for the value of asset sales by nearly 40 percent to $9 billion from $14.8 billion.

Petrobras and CNPC could not immediately be reached for comment by Reuters.

It was mere months ago when headlines were blaring news of the return of merger mania.

Deals were back! Confidence had returned! Warren Buffett was buying Heinz! Dell was going private! American Airlines was merging with US Airways!

Well, take a look around. Prognostications of a return to deal-making have turned out to be wrong, very wrong.

So wrong, in fact, that merger activity, measured by dollar value, looks as if it is on track to be down 3.4 percent globally from last year, according to Thomson Reuters. By number of deals, it’s the lowest year-to-date period since 2005.

And deal-making may not be coming back anytime soon.

“It’s pretty grim, even with Verizon-Vodafone padding the numbers,” said Scott A. Barshay, the head of the corporate department at the law firm Cravath, Swaine & Moore, referring to Verizon’s recent $130 billion deal to buy out Vodafone’s share of the joint venture in Verizon Wireless. If you exclude that deal from the count measured by total dollars, we’ve returned to 2009.

“There has not been confidence in the strength of the recovery since the financial crisis, which makes C.E.O.’s and boards reticent to pursue major transactions,” he said.

Some blame the debt ceiling fights in Washington, the government shutdown or the introduction of Obamacare for creating uncertainty in the economy and thus the slowdown in deal-making.

“It reflects the broad-based loss of confidence in the business community and their inability to make significant capital investment, be it M.&A. or capital spending, in large measure because of the uncertainty of tax and regulatory policy from Washington, D.C.,” said Doug Kass, founder of Seabreeze Partners Management. “Until Washington, D.C., grows more proactive, less inert in policy, this is likely to continue.”

But that may only be part of it.

What if the slowdown in merger activity isn’t cyclical, but secular? What if corporations have learned the lessons of so many companies before them that the odds of a successful merger are no better than 50-50 and probably less? Is it possible that the biggest deals have already been done?

Big deals are drawing significant antitrust and regulatory scrutiny. The United States government blocked AT&T’s acquisition of T-Mobile and is in the middle of trying to block American Airline’s merger with US Airways. Can you even imagine the outcry if a big bank merger were announced in this postcrisis world?

The stars were supposed to have been aligned for mergers and acquisitions — a barometer of confidence in the boardroom from the people who can actually see the health of their own business up close.

Corporations are sitting on record cash, some $1 trillion. The debt market is back open for business. Activism by large shareholders is pushing companies to rethink their structures. Economic and corporate growth are slowing.

And of the deals that have been announced, shareholders have rewarded acquirers by bidding their shares up. All of those ingredients had led many experts to suggest that companies would seek to buy rivals at a record pace.

“It feels like we have seen the beginning of the return of the strategic deal. We just need to see more of that across more sectors to call it a recovery,” said Gregg R. Lemkau, a co-head of global mergers and acquisitions at Goldman Sachs.

Predicting, of course, is a dangerous game. Now that I’ve speculated that deal flow will continue to be slow, fate may have it that a spate of big mergers will be announced in the coming weeks. But there would have to be an awful lot of deals before Christmas to make up for the slowness.

By deal value, it should be noted that deal volume in the United States is up 29 percent. But for Wall Street, the lower number of total deals is a meaningful problem. Most banks had been staffed in expectation of the return of merger advisory work, which is some of the most lucrative business a bank conducts. And while most bankers will say they are busy, and they are, many are working on answering shareholder activists, who typically prod companies to find ways to unlock corporate value.

There’s not nearly the same kind of payday in helping a company defend itself against an activist as there is in working on a deal. More often than not, helping a client defend itself against an activist is a relationship-building exercise, undertaken in hopes of getting hired for a transaction down the road. Goldman Sachs reported its third-quarter net revenue for advisory work was down 17 percent compared with the same period a year earlier.

Come bonus and management review season, some Wall Street banks may have to rethink their staffing needs.

However “grim” Mr. Barshay sees the current deal activity, however, he disagrees with the assertion that deal-making is on the wane for good.

“I do not believe the slowdown is secular. For the last 50 years, M.&A. activity has been cyclical, waxing and waning with confidence in the economy,” he said. “It isn’t that C.E.O.’s won’t do a deal, but they have to believe it will be a triple or a home run before they’ll pull the trigger. That’s why you’ve had this strange phenomenon in 2013 of fewer M.&A. deals.”

And while mergers may be a good barometer of boardroom confidence, Mr. Kass says it is a poor indicator of the economy and the market.

“Never lose sight that business leaders are much like retail investors,” he said in an email. “They buy (invest and take over) high and sell low! As such, and based on history, they are very lagging indicators.”