Engineering

Sony’s cuts may not be enough

28 Oct 2003

The headline figure of 20,000 job cuts may look huge. But Sony is being crushed by Korean and Japanese competitors. The electronics giant will find it difficult to more than quadruple operating margins as planned.

ABB bondholders enjoy early Christmas

28 Oct 2003

The engineering group's $5.2bn package of capital raising and disposals should put it on track eventually to recoup investment grade status. ABB shareholders haven't done so well. The $2.5bn rights issue involves massive dilution. But they also benefit from stronger finances.

Nokia may have one eye on succession

26 Sep 2003

The Finnish mobile phone giant is reorganising its businesses to reflect the segmented markets they now compete in. But in rejigging the roles of key board members, Nokia may also be grooming talent ahead of CEO Jorma Ollila's possible departure in 2006.

Alstom D-Day postponed by Brussels and Paris

17 Sep 2003

If Mario Monti hit the rescue plan hard, he might have bankrupted the struggling French engineer. If not, he stood to lose all credibility. So a fiveday ceasefire is hardly surprising. But it merely postpones the inevitable. Either Brussels or Paris is going to lose face.

Alstom refinancing goes down to the wire

12 Sep 2003

The problem is that a state equity injection threatens competition rules but is necessary to keep certain banks on board. France has apparently suggested a staggered rights issue, the EU a convertible loan. Yet stalemate remains. Whither compromise?

Monti gets tough with France over Alstom

9 Sep 2003

About time too. The French state has ridden roughshod over EU state aid rules in its rescues of France Telecom and Bull. If the competition commissioner seeks an injunction against the rescue, how will Alstom s underwriting banks respond?

Nokia tightens Symbian grip as Motorola exits

29 Aug 2003

Battle lines are drawn in smartphone operating systems: Motorola is backing Microsoft/Java while Nokia is closer to acquiring Symbian. Psion is also upping its Symbian stake a smart investment that nevertheless suggests its own shares are overvalued. Psion is also upping its Symbian stake. But the valuation is so low that it raises questions about its own share price.

ABB shores up balance sheet with convertible

28 Aug 2003

It has made big inroads into the first two. With this issue, it is addressing the third. The SwissSwedish group had three big problems: asbestos; feeble operating performance; and an illiquid balance sheet.

S&N limps out of Centerpulse race

6 Aug 2003

But where is S&N going to go from here? By bidding for Centerpulse, it implicitly admitted that it lacked critical mass. With competition from deeppocketed Zimmer, the UK orthopaedics group would have had to overpay to stand a chance of winning.

France bails out Alstom

6 Aug 2003

If EU state aid investigators are rigorous, they will demand big changes to the E2.8bn package. They should not be deceived by any circular logic used to justify the investment.

Alstom locked in financing talks

5 Aug 2003

The French engineer s planned disposals and rights issue won t be enough to make it a good credit. The French state is lending a hand to the company. But the quid pro quo may be that banks forgive part of their loans.

Ifil may be way to play Fiat recovery

1 Aug 2003

The carmaker's parent owns 30% of Fiat, but gets little credit for it. For investors who can handle the corporate governance risk, and the value of its assets, Ifil is one way to place a leveraged bet on Fiat.

Fiat takes first bite out of costs

31 Jul 2003

The group narrowed operating losses at the ailing car business. But cost cutting is going to get harder. It is too soon to conclude Fiat is on the road to recovery.

Siemens shows pressures on European industry

24 Jul 2003

The strong euro is beginning to bite. Working capital is drying up as a source of cash. And there is still no sign of revenues rebounding. This is the reality facing business in a postbubble world of overcapacity. But the share price discounts a far rosier outlook.

Fiat CEO loaded with options

15 Jul 2003

Morchio s options grant is currently worth E25m. He could make much more if he turns Fiat around following the E1.8bn rights issue. But Morchio s interests and those of Fiat s shareholders are only aligned on the upside. If the turnaround fails, he still walks away rich.

France gears up to bail out Alstom

2 Jul 2003

It is hard to portray stateowned Areva's interest in the French engineer's disposal in any other light. The details of Areva's bid will be scrutinised by Brussels and investors alike.

ABB’s asbestos nightmare ends

24 Jun 2003

Court approval for the SwissSwedish engineer's asbestos settlement paves the way for a crucial asset disposal. ABB is now well placed to tap the capital markets.

Rolls-Royce engineers dividend protection

30 May 2003

The UK engineering group has found a way of paying dividends should its pensions deficit annihilate distributable reserves. But RollsRoyce s apparent wheeze shows that the law on paying dividends is only silly if applied to strong companies with big deficits.

Siemens pioneers gimmicky convertible

23 May 2003

The German group won t have to account for how its bond could dilute its earnings per share. The bond contains a socalled contingent conversion right. These are common features of US deals but have not been seen in Europe.

Siemens launches E2.5bn convertible

22 May 2003

The terms of the deal are little short of fantastic for the German conglomerate. But with a doubleA credit rating and no net debt, Siemens does not need the money. It must surely have acquisitions in mind.