Rio Rejects Revised Bid, BSkyB Rises 7%

123jump.com Staff
06 Feb, 2008
New York City

Nationwide Building Society''s index of consumer confidence in January fell indicating rising anxities among consumers. In London trading FTSE 100 rose 0.13% or 7.4 to 5, 875.40. Of the FTSE 100 stocks traded, 66 gained, 34 declined, and 2 were unchanged. British Sky Broadcasting led advancers with a rise of 7% after the company reported full-year profit will be at

[R]2:00PM New York, 7:00PM London – Stocks in the UK traded in a tight range after consumer confidence report showed a decline. British Sky Broadcasting reported 11% rise in revenue in the first half of fiscal 2008 and increased dividend.[/R]

Market Sentiment

Stocks in London closed up on stronger earnings report from British Sky Broadcasting, which helped offset a negative report on the jobs market.

In London trading FTSE 100 rose 0.13% or 7.4 to 5, 875.40.

Of the FTSE 100 stocks traded, 66 gained, 34 declined, and 2 were unchanged. British Sky Broadcasting led advancers with a rise of 7% after the company reported full-year profit will be at £740 million and maintained its target of 10 million pay TV customers by 2010.

Economic Data

The Recruitment and Employment Confederation reported today on its web site in its January’s Report on Jobs, that the UK labour market continued to slow in January 2008.

The report noted that slow growth of demand for staff resulted in moderate rises in permanent placements and temp billings and pay growth weakened as skills shortages eased.

Nationwide Building Society said in a statement an index gauging sentiment fell 4 to 81 on inflationary pressures, a weaker currency and declining share prices, to the lowest level on record since 2004. The Expectations index fell 4 to 79 on the worries related to future job market in the next six months.

The Present Situation Index (how consumers feel about the current economic and employment situation) fell five points to 83 (from 88 in December), reflecting consumers increased gloom about the current state of the economy. In spite of this, the Spending Index (consumers’ willingness to spend) remained stable in January. However, at 68, it’s still considerably lower than the same time last year (90 in January 2007).

Gainers and Losers

British Sky Broadcasting led advancers of the 102 FTSE 100 index shares with a rise of 7.05% followed by rises in Reckitt Benckise of 4.39%, in British Energy of 4.16%, in WM Morrison of 3.75%, and in Cadbury Schweppes of 3.72%.

British Sky Broadcasting rose the most in five years after forecasting that full-year operating profit will be at £740 million.

BHP Billiton Plc led decliners of the 102 FTSE 100 with a drop of 4.82%, in Cairn Energy of 2.68%, in Taylor Wimpey of 2.65%, in Vedanta Resources of 2.54%, in Legal & General Group Plc

BHP declined after recording the first profit decline in five years. The company reported today that first half profit fell 2.8% to $6 billion from $6.1 billion a year ago.

British Sky Broadcasting Earnings

BSkyB reported revenue rise in the first half of 11% to £2.5 billion and adjusted profit of £307 million. The basic loss per share increased to 6.4 pence including £282 million and adjusted earnings per share declined to 9.7 pence from 11.3 pence in fiscal 2007.

The media company added 167,000 in the quarter to 8.832 million and added 385,000 in the first half of fiscal 2008. Churn rate in the half was recorded at 10 and average revenue per customer rose 7% to 421 pounds for the year.

Sky+ added 434,000 subscribers with a reach of 3.1 million households and 260,000 customers added broadband internet subscriptions.

The company said that revenue increased by 11% to £2,458 million with operating profit of £295 million was stated after £103 million of investment in Sky Broadband, Sky Talk and Easynet Enterprise, as well as exceptional legal costs of £12 million. Excluding these items, operating profit was £410 million.

Sky+ households exceeded three million with a record 434,000 net additions in the quarter to reach 35% penetration of the base, up four percentage points on the previous quarter. Multiroom households grew by 120,000 in the quarter, now 17% of the base; and Sky HD also showed good growth, increasing by 18% to 422,000, 5% of the base.

[R]1:00PM New York – Rio Tinto rejects revised offer from BHP as inadequate.[/R]

Rio Tinto ((RTP)) board rejected a revised offer from BHP Billiton after saying that it significantly undervalues the underlying assets.

The revised offer from BHP Billiton values Rio Tinto at $147 billion and it offered to exchange 3.4 stocks of BHP for 1 stock of Rio Tinto. The offer, though revised 15% higher, failed to convince management and board to take action.

The BHP ((BHP)) takeover attempt of Rio Tinto was complicated after Chinalco and Alcoa together acquired 9% stake of the whole company and 12% in the London listed stock. Chinalco and Alcoa are significant customers of iron ore and other minerals mined by Rio. If BHP and Rio merge, customers like Alcoa and Chinalco may face higher prices and a significant dependency on one company for its raw materials.

BHP revised its offer today to meet takeover regulation in the UK.BHP may be forced to revise its offer again or carry out a hostile offer directly to its shareholders.

In New York trading Rio Tinto fell 2% or $9 to $411.76 and BHP fell 4% or $2.83 to close at $66.60.