European Business News (EBN), 97-03-14

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated March 14 1520 CET

CONTENTS

[01] Marconi expects to win submarine contract

[02] Heineken profit falls slightly but turnover increases 20%

[03] U.S. economy shows healthy data for first quarter

[04] Nomura chief resigns after fund scandal

[05] NatWest losses widen to $136 million

[06] Bank of Spain cuts key interest rate

[07] CeBIT '97: What's happening at the world's biggest computer and telecoms fair

[01] Marconi expects to win submarine contract

The Trafalgar program is expected to provide a total 7,000 new jobs, with workers at VSEL, Roll-Royce, British Aerospace and Thomson-Marconi all benefiting.

Analysts said final contractual details between the Ministry of Defence and VSEL, the shipyard owned by GEC, are now being settled and an official announcement could be made later today.

'This is clearly very good news for GEC, it's what they bought VSEL for,' said Zafar Khan, analyst at UBS Ltd.

The order for three submarines would be the second major contract for VSEL in a week. The company earlier secured a £200 million order for two oil tankers for the Royal Navy.

The MoD has options on another two Trafalgar-type submarines, although orders for these aren't expected to be given until after the year 2000.

GEC acquired the VSEL shipyard in 1995 for £835 million, following a drawn- out fight with British Aerospace.

[02] Heineken profit falls slightly but turnover increases 20%

Europe's biggest brewer said net profit dipped 1.4% to 655 million guilders ($341.1 million), from a previous 664 million, giving net per share of 13.06 guilders versus 13.24 guilders per share.

Trading profit was little changed at around 1.01 billion guilders, while turnover, boosted by recent acquisitions, grew by 20% to 12.19 billion guilders from 10.14 billion. Heineken maintained its dividend at 3.50 guilders per share.

The results were towards the better end of analysts' forecasts which had been for net of 630-660 million guilders.

'A profit growth is expected for 1997. The amount of the profit growth cannot be predicted at the present moment,' the company said in a statement.

Heineken said that the world beer market grew by 1.4% in 1996.

[03] U.S. economy shows healthy data for first quarter

Factory output in February posted the largest gain in three months, while prices at the producer level fell for the second straight month, reports showed.

Meanwhile, business inventories remained lean in January, the government said, setting the stage for increased production in the months ahead.

Underpinning the economic strength was consumer confidence, which continued its upward climb in early March to the highest level since 1990.

'What you have here is a picture of unbridled good news,' said Robert Dederick, economic consultant for Northern Trust. 'We're on a tight rope that's getting higher and higher and no one knows when we're going to fall off,' he said.

The Federal Reserve said industrial output rose 0.5% in February, led by gains in production of durable consumer goods such as computers and construction supplies.

The Labor Department supplied more good news on the inflation front. Producer prices fell 0.4% in February, following a 0.3% decline in January, the department reported.

The bond market reacted positively to the data, but the big question in the market is how Fed policy makers will interpret them when they meet next on March 25.

'The economy is strong but still not giving evidence of being too strong,' Dederick said. 'That leaves the Federal Reserve with a real question. Do they try to tame this party now or do they wait until someone misbehaves?'

[04] Nomura chief resigns after fund scandal

Hideo Sakamaki said he had stepped down as president of Nomura to atone for the scandal.

'As the head of a company which is responsible for what happens in markets, I thought it was important to (resign) from corporate management,' Sakamaki told a news conference.

Nomura said that upon Mr. Sakamaki's resignation, Chairman Masashi Suzuki will double as president and chairman. Mr. Sakamaki becomes an adviser to the company.

The scandal broke last week when Nomura said two of its directors, who subsequently resigned, had made apparently illegal deals and funnelled funds to a corporate client linked by Japanese media to a former 'sokaiya' corporate racketeer.

Sokaiya, often linked to Japan's 'yakuza' crime syndicates, typically try to extort money from firms by threatening to expose dubious business practices.

The resignation of Nomura's president, which was no surprise, came amid signs that the scandal may be widening as suspicion fell on other prestigious Japanese brokerages.

Finance Minister Hiroshi Mitsuzuka said that regulators would likely probe Japan's other 'Big Four' brokerages after media reports that the corporate client cited in the Nomura scandal as having sokaiya links also holds accounts at other leading securities houses

[05] NatWest losses widen to $136 million

Friday's Wall Street Journal Europe reports the bank also suspended four more executives and submitted their names to the Securities and Futures Authority, the British regulator that oversees the financial industry.

Separately, the Serious Fraud Office, which specialises in investigating major financial crimes, said it is 'in touch' with NatWest, and is 'monitoring' the situation.

The U.K. banking group said the mispricing of interest-rate options at its investment-banking unit, NatWest Markets, would result in a net charge of £77 million against pretax profits for the first half of this year.

Bank officials said related bonuses of £8 million wouldn't be paid. The bank said the losses stemmed from mispricing of option portfolios in late 1994, 1995 and 1996.

In London trading Thursday, NatWest shares dropped five pence to 739 pence. Since news of the options mispricing broke Feb. 28., NatWest's share price has fallen 2.6%. Prior to Thursday's action, NatWest had last month suspended an employee, Neil Dodgson, global head of options at NatWest Markets.

The incident has raised questions among investors and analysts about the banking group's ability to control the risks in derivatives trading. NatWest has been trying to build up its capability in this business, along with its investment-banking operations.

[06] Bank of Spain cuts key interest rate

The Spanish central bank lowered its benchmark interest rate to 5.75% from 6.00% at its regular seven-to-13-day repurchase tender Friday.

It was the third rate cut in just over three months. The central bank last altered its key rate Jan. 16, cutting it to 6.00% from 6.25%. Prior to that the Bank of Spain lowered its key rate Dec. 13, easing it to 6.25% from 6.75%.

The benchmark, or key, rate is Spain's main monetary policy instrument. 'It was expected after yesterday's inflation figures,' said Juan Mielgo, an analyst at Bank of America in Madrid.

Yesterday the Spanish national statistics institute announced that Spain's consumer price index was down 0.1% in February from January, lowering the year-on-year rate to 2.5% from 2.9% in January. More important was the performance of underlying inflation, which was sharply lower in February, said Mielgo.

Underlying inflation, a measure of consumer prices excluding fresh food and energy prices, increased 0.1% in February, lowering the year-on-year underlying rate to 2.3%, down from 2.8% in January.

'These figures signify that the Bank (Of Spain) could have sharply lowered its rate,' said Mielgo. 'I think the Bank took the more correct response, more of a neutral one,' admitting that a cut was needed but still keeping an eye on the peseta on the backdrop of continued turbulence in foreign exchange markets.

[07] CeBIT '97: What's happening at the world's biggest computer and telecoms fair

Debis T&M, the Japan-based unit of Germany's Daimler-Benz Interservices, is planning a telematics, or transportation information technology, joint venture with the Tokyo police force and and Japan's largest telecommunications company Nippon Telegraph & Telephone Corp. The joint venture will offer 'dynamic' auto navigation systems and personal traffic information. 'All system participants will be directed to the quickest route through the greater Tokyo area based on the traffic situation at the time,' Debis said at the CeBit electronics trade fair in Hanover.

Nokia, the giant Finnish maker of telecommunications gear, has unveiled a 2.1-ounce 'cellular card phone' that essentially transforms a laptop computer into a traveling office. With it, a laptop-wielding user can make phone calls, zap faxes, check electronic mail or even download files stored in distant computers.

Siemens said it continued to post 'solid growth' in its telecommunications businesses in the first five months of its fiscal year ending Sept. 31, 1997. It attributed the projected growth to its broad range of telecommunications products offered in a market that is showing strong growth.

Siemens Nixdorf Informationssysteme, the computer division of Germany's Siemens, said its unadjusted sales rose 11% to DM5.7 billion in the first five months of the current fiscal year ending Sept. 31. Adjusted for changes in the company's consolidation, sales rose 13% in the first five months, the company said. Over the five months, new orders rose an unadjusted 13% to DM6.0 billion, the company said. On an adjusted basis, new orders were up 14%.

Mannesmann Mobilfunk said it signed an agreement with Omnipoint Communications that will allow its D2 mobile phone network customers to telephone from parts of the U.S. The Omnipoint network is in operation in the greater New York area, and will soon expand to cover New Jersey, Vermont, Connecticut and other states in its license area, the Mannesmann Mobilfunk mobile telecommunications unit of industrial company Mannesmann said at a press conference. Separately, Mannesmann Mobilfunk said it will introduce six-month tryout tariffs for first-time customers in April. First- time D2 users won't have to pay a connection or basic monthly fee for a six- month period, as long as the monthly telephone bill totals at least DM29.95.

Mannesmann management board member and Mannesmann Arcor Chairman Peter Mihatsch Wednesday called on the German government to speed up its appointment of a telecommunications market regulatory body for when the market is liberalized on Jan. 1, 1998. 'The names of those responsible for regulation have not yet been finally decided,' he said, adding that the body should acutally be up and running by now. 'We're active in the market, we have invested and will invest a lot more - we expect encouragement from the policy-makers not handicaps,' he said.

Thyssen Telecom said its corporate network unit PLUSNET has signed a cooperation agreement with Danish carrier Tele Danmark. The agreement is aimed at expanding the companies' international telephone operations, in preparation for the liberalization of the German telecommunications market on Jan. 1, 1998, said Stefan Baustert, a member of Thyssen Telecom management board. In addition, Baustert announced new measures for Thyssen Telecom's fixed network operations which will make the company less dependent on national carrier Deutsche Telekom.

Start-up losses at Viag's telecommunications operations last year weren't as high as market speculation, but will surge in coming years, a company official said. Viag management board member Maximilian Adelt said ''In response to rumors about our startup losses in the telecommunications business, Viag Interkom and Bayernwerk Netkom posted a start-up loss of just DM100 million in 1996.'' That was between 40% and 50% lower than planned, Adelt said, adding that the cost will ''jump considerably'' this year to above DM300 million.

Microsoft and Intel released the NetPC reference specification for broad industry review. Intel said the NetPC is a new class of personal computers for business designed to reduce ownership costs by delivering new manageability advances. NetPC product announcements from many personal- computer manufacturers are expected over the next 90 days, the company said. NetPC systems will offer the performance and flexibility of traditional personal computers and will be compatible with existing investments in hardware, software and training. Compaq Computer, Dell Computer Corp., and Hewlett-Packard Co. helped develop the reference specification for the NetPC.

Deutsche Telekom announced details of its strategic Internet cooperation with Microsoft. 'The two companies have agreed on common marketing strategies for T-Online and the Microsoft Network, as well as cooperation on security solutions for online banking and the marketing of Microsoft's Internet and Intranet solutions,' Telekom said. T-Online is Telekom's Internet access service.

Sales at Siemens' three communciations units will rise by about 10% in the fiscal year ending Sept. 31, and earnings will rise 'at about the same rate,' a member of the company's management board. Volker Jung, who is responsible for Public Network Communications Systems, Private Network Communications Systems, and Defense Electronics, said the divisions' sales rose by a total of 18% in the first five months of the fiscal year, which was a greater increase than planned.

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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