(BFW) *AIR FRANCE-KLM SAID TO STUDY CAPITAL INCREASE BEFORE END 2014

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BN 02/07 09:41 *AIR FRANCE-KLM SAID TO STUDY CAPITAL INCREASE BEFORE END 2014

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*AIR FRANCE-KLM SAID TO STUDY CAPITAL INCREASE BEFORE END 2014 2014-02-07 09:43:02.400 GMT

--BRIAN LYSAGHT

-0- Feb/07/2014 09:43 GMT

(BFW) Telecom Italia, Vivendi in Talks to Merge Tim, GVT: Estado

Telecom Italia, Vivendi in Talks to Merge Tim, GVT: Estado
2014-02-07 09:33:24.342 GMT


By Katerina Petroff
     Feb. 7 (Bloomberg) -- Telecom Italia executive held
preliminary talks with Vivendi’s management on a possible merger
between the cos.’ Brazilian units Tim and GVT, O Estado de S.
Paulo reports, citing an unidentified person involved in the
situation.
  * Idea of merger was well-received by Vivendi
  * Tim, Vivendi declined to comment, O Estado says
  * Deal would generate cost savings and increase Tim’s market
    share, O Estado says, citing Telecommunications Specialist
    Guilherme Ieno and other unidentified people




Link to Company News:{TIT IM <Equity> CN <GO>}
Link to Company News:{TIMP3 BZ <Equity> CN <GO>}
Link to Company News:{VIV FP <Equity> CN <GO>}
Link to Company News:{GVTT3 BZ <Equity> CN <GO>}

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

To contact the reporter on this story:
Katerina Petroff in Sao Paulo at +55-11-3017-4935 or
kpetroff@bloomberg.net

To contact the editor responsible for this story:
Karen Eeuwens at +44-20-3216-4383 or
keeuwens@bloomberg.net

>>> TELE2 : bid rumor from hutchison - see article below


Consolidation talk is buzzing in Scandinavia, where Hong Kong-based Hutchison is advancing talks with Tele2 over an acquisition of Tele2’s Swedish unit, TMT Finance understands.
Sources said Goldman Sachs is advising Hutchison, and Morgan Stanley has been hired by Tele2 to assess the feasibility of a deal which could value Tele2 Sweden at over US$6.3bn and see Hutchison gain a strong foothold in one of the region’s most important markets.
While Tele2 has been vocal about being a buyer and not a seller in Europe, last year Tele2 owner Kinnevik sold Tele2’s Russian unit to VTB for US$3.55bn and could be persuaded to do the same in Sweden, with the investor keen to ramp up its focus on areas such as e-commerce and other technology centred businesses. Kinnevik holds 48.0% of the votes and 30.4% of the capital in Tele2.
A merger between Li Ka-Shing’s Hutchison 3 Sweden and Tele2 Sweden would see the market shrink from four to three – a theme which could also happen in Germany and Ireland pending regulatory approval – and also see the new entity overtake Telenor into second place, putting more pressure on market leader TeliaSonera. The new entity would boast around 5.5 million subscribers. TeliaSonera has over 6.5 million, while Telenor has around 2.4 million.
Hutchison is said to be especially keen on bolstering its position in existing markets across Western Europe and Scandinavia: approval for Telefonica’s Irish unit is within touching distance and talks are also said to be in progress in Italy concerning Vimpelcom’s Wind Italia business. Meanwhile, sources said Hutchison is also hoping to consolidate its position in Denmark, where third-place TeliaSonera could be persuaded to exit given TDC and Telenor’s dominance.

(Citi) US & EU Pharma: Performance; Valuation; Earnings; Catalysts

Pharma Essentials: Chart Pack and Catalysts
US & EU Pharma: Performance; Valuation; Earnings; Catalysts

* Sector Performance — Both EU and US healthcare outperformed broader markets by c.3% and 5% respectively with US
Spec Pharma, Global Biotech and Global Generics the best performing sub-sectors. Absolute performance by subsector (in $): EU large-cap pharma (-2%), US large-cap pharma (-1%), EU specialty pharma (-2%); US specialty pharma (+7%). Best performing stocks: ACT (+12%), TEVA (+11%), FRX (+10%). Worst-performing stocks: MRCG (-11%), ZTS (-7%), BMY (-6%). Pages 11-14.

* Valuation — EU large-caps are on 15.0x and US large-caps on 17.1x 2014E PE (13.5x and 16.4x respectively for 2015E
PE), trading at 7% and 11% premium to broader market. Current share prices imply terminal declines post-‘20E for all
stocks except MRK, BMY, PFE & GSK. Given sector outperformance, the majority of stocks are trading near the top of
their average 5-year PE range. Pages 15-28.

* Earnings Momentum — Consensus ‘14E and ‘15E EPS momentum is positive at ACT, AGN, ENDO, FRX, HIK, MRCG,
SHP and MYL. Both EU and US large-cap pharma have seen modest EPS downgrades thus far in 1Q14. Pages 29-37

* Revenue and Earnings Growth —EM pharma sales growth for the global group declined from 7% in 1Q13 to 4.6% in
2Q13 and 3.6% in 3Q13 on an FX-adjusted basis. Excluding the impact of SASY’s issues in Brazil in 2Q and GSK’s China
issues in 3Q would raise this to c.5% for both quarters. EM growth rates remain above Europe (+1%), which continues to
be impacted by austerity measures, but in line with the US (+4%), which has seen a strong rebound after significant
patent expiries. Citi EU large-cap group weighted average revenue growth forecasts are 3% / 5% / 4% in ’14E / ’15E /
‘16E; the US group lags at -4% / 0% / +3%. EU earnings growth is 8% / 11% / 10% with the US group at -1% / +6% /+11%
in ’14E / ’15E / ‘16E. Pages 38-42.

* Summary Catalyst Calendar and Full Company Newsflow Tables — Full year results for majority of companies are
already behind (SHP and BAYG exceptions). CHMP opinions: MRK vintafolide ovarian cancer, LLY empagliflozin. Clinical:
BMY nivolumab Ph2 lung (1Q), LLY ramucirumab lung (1Q), NOVN LCZ696 hypertension (1Q), NOVN Potential Diovan
mono generics entry, NovoB/LLY AWARD-6 (early 2014), PFE Prevnar CAPITA (1Q), ROG gantenerumab and
crenezumab (1Q), SASY further Ph3 data readouts for alirocumab. Pages 43-60.

Special Sits / RV: APR Energy (APR LN): BUY - Transformational deal: 860p/sh

Special Situations/RV: APR Energy (APR LN)

Transformational deal and emerging markets play: BUY

www.aprenergy.com<http://www.aprenergy.com>
APR LN: GBP 8.59; initial target: GBP 12.00

APR Energy delivers temporary electrical power via mobile turbines at short notice to anywhere in the world. The company handles everything from transporting the equipment to installing, operating, and maintaining it. Whether it's an emergency, seasonal, or longer-term electricity need, APR offers an immediate solution for a premium fee, instead of the large capital investment of a power plant. The temporary nature of this business requires developing the scale, the relationships, and the capability needed to maintain high utilization rates. These high barriers to entry, combined with the company's differentiated equipment offering, have allowed APR to generate a mid-teens return on capital which we hope will rise with increasing capacity utilization. APR has a solid long-term growth opportunity. The emerging markets, and even some developed ones, face serious shortfalls in their electric-generating power infrastructures for the foreseeable future. These deficits are the result of local governments' inability to plan for or finance their countries long-term electricity needs. Temporary power fills just a small portion of that overall deficit today. APR uses mobile, aero-derivative turbines which are more reliable, fuel efficient, environmentally friendly, and compact than diesel generators or industrial turbines. Only GE and Pratt & Whitney can currently produce this kind of dual-fuel turbine. The latter doesn't have much capacity dedicated to this business, and APR recently formed an exclusive supply agreement with GE. As a result of that strategic deal, GE now owns roughly 16.5% of APR. The ability of GE to provide not only scarce equipment but also sales leads is a potentially transformational partnership for APR.
Last October, APR acquired GE's power rental business for $314m. The deal will be earnings enhancing particularly if APR can improve the margins on the GE fleet and benefit from the marketing agreement it has with GE. The main attraction of the deal is the endorsement that GE brings to APR, given that 80% of the purchase price was financed by issuing shares to GE, with GE now holding a 16.5% equity stake in APR.
Valuations for APR are undemanding given the considerable potential for temporary power and the expected growth for APR. At less than 11x 2015 earnings and 5x 2015 ebitda, the stock is significantly undervalued. Our short-term target is GBP 12.00, ie. slightly above the GE deal of last October
FULL REPORT ATTACHED

>>> SIA : 2013 global semiconductor sales rose +4.8% to $305.6B; Record high

Semiconductor Industry Association (SIA): 2013 global semiconductor sales rose +4.8% to $305.6B; Record high - DigiTimes
- President: "The global semiconductor industry exceeded US$300 billion in sales for the first time ever in 2013, spurred by consistent, steady growth across nearly all regions and product categories... The industry finished the year on a strong note with its best December on record, indicating that recent momentum is likely to carry over into 2014."

(DiGitimes) Global AP shipments to see slower growth in 2014 on maturing smartph

Digitimes Research: Global AP shipments to see slower growth in 2014 on maturing smartphone market
{http://www.digitimes.com/news/a20140207VL200.html}

After experiencing annual growth of 43% in 2013 on shipments of 1.32 billion, the global application processor (AP) market is forecast to see decelerated growth in 2014, with shipments increasing 23% on year, according to a new Digitimes Research Special Report.

The report, titled "2014 Global Mobile Application Processor Market Forecast," explains that a maturing smartphone market, especially in China are the primary reasons for the slower growth rate.

Worldwide, shipments will reach 1.53 billion, but while China accounted for 38% of shipments in 2013, its share will drop slightly to 36% in 2014, Digitimes Research stated.

While market drivers will still include the usual suspects of Apple and Samsung in 2014, demand from local China players will not see the robust growth that it experienced in 2013. Annual shipment growth in China topped 60% in 2013 but will slow to 17% in 2014, as China's local brand and white-box companies shift their target market abroad, Digitimes Research forecast.

In terms of products in the market, with its Cortex-A12 being widely adopted, ARM will see its market share for APs in smartphones climb substantially in 2014. Meanwhile, with support from Apple and Samsung, the ARM 64-bit architecture will stand a chance of grabbing more than 30% of the market in 2014, according to Digitimes Research.

The research arm of Digitimes added that except for Samsung, Qualcomm and Apple, other vendors are unlikely to adopt 64-bit architecture in their chip designs until 2015.

(BofA-ML) Flow Show - Stampeding Bears - $28,3b Equity Outflow!!!

- The bottom-line: big capitulation out of stocks into US Treasuries…marks end of Jan/Feb correction
- The big numbers: largest weekly equity fund outflow since Aug’11 ($28bn); largest equity ETF outflow since Feb’09 ($26bn); largest bond fund inflow since Apr’10 ($15bn)
- The caveat: our trading rules not yet flashing “strong buy”… Bull & Bear index now down to 4.2 (hit 1.8 late-June – Chart 1); Global Breadth index now up to 44% (hit 96% late-June – Chart 3) and…
- …EM Flow Trading Rule: another $7-8bn outflow next week triggers contrarian buy-signal (last buy-signal on 6/27/13 followed by 14% rally in EEM next 3 months)
- Feb rally: in stocks/higher bond yields thus requires better US/China macro (e.g. payroll >250K) or dovish Yellen testimony (Tuesday 830am)

>>> Asset Class Flows
- Equities: $28.3bn outflows ($26bn via ETF’s)
- Bonds: $14.8bn inflows (Table 1)
- Commodities: 13 straight weeks of redemptions

>>> Equity Flows
- $6.5bn outflows from EM equity funds (15 straight weeks of outflows = longest outflow streak on record
- 4-week outflows from EM equities = 2.1% of AUM; another $7-8bn outflows next week would trigger contrarian “buy” signal from our EM Flow Trading Rule (3.0% is threshold)
- Huge $24bn outflows from US equity funds (almost all via ETF’s SPY, IVV, IJH – but see above for caveat on Good Harbor)
- Business as usual for Europe (32 straight weeks of inflows) and Japan (7 straight weeks of inflows)

>>> Fixed Income Flows
- Monster $13.2bn inflows to Govt/Tsy funds (caveat: $10bn inflows likely due to Good Harbor rebalancing from SPY to SHY, IEI & UST)
- 19 straight weeks of outflows from EM debt funds ($2.0bn)
- Largest outflows from HY bond funds since Aug’13 ($1.2bn)
- Largest inflows to IG bond funds since May’13 ($4.2bn)
- First MBS inflows in 38 weeks!
- 85 straight weeks of inflows to floating-rate debt (Table 2)
- 3 straight weeks of Muni inflows