European Business News (EBN), 96-10-22

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

Page last updated October 22 0915 CET

CONTENTS

[01] Former Sumitomo trader is arrested in Tokyo

[02] Ciba-Geigy and Sandoz show single-digit sales gains

[03] Gazprom offering is oversubscribed and priced at $15.75

[04] Microsoft shows 23% earnings gain

[01] Former Sumitomo trader is arrested in Tokyo

Prosecutors also entered Hamanaka's house in a Tokyo suburb and searched it, witnesses said.

In a statement, the Tokyo District Prosecutor's Office said it acted after receiving a criminal complaint against Hamanaka from Sumitomo, but it didn't say where Hamanaka was arrested or what was found in the house.

Prosecutors also entered Hamanaka's house in a Tokyo suburb and searched it, witnesses said.

In a statement, the Tokyo District Prosecutor's Office said it acted after receiving a criminal complaint against Hamanaka from Sumitomo, but it didn't say where Hamanaka was arrested or what was found in the house.

Deputy chief district prosecutor Tatsuo Kainaka told a news briefing that his office had arrested Hamanaka on two counts of forging documents which the suspect used in trading non-ferrous metals.

According to the prosecutors, Hamanaka forged a letter that claimed he was authorized to conduct metals trading with Merrill Lynch Commodity Financing on behalf of Sumitomo. The letter, which was sent to another Merrill Lynch unit in January 1994, allegedly carried the forged signature of Hamanaka's superior at that time.

Hamanaka sent another letter to the unit, Merrill Lynch, Pierce, Fenner & Smith (Brokers and Dealers), in September of that year, trying to arrange to receive money from his dealings, the prosecutors said.

In that letter, he allegedly again used his superior's name and falsely stated he was authorized to name recipients of Sumitomo funds deposited with Merrill Lynch group companies in regard to their commodities dealings.

Hamanaka, once dubbed 'Mr Five Percent' due to his rumoured control of a huge five percent share of the global copper market, was fired in mid-June when Sumitomo first announced it had discovered the trading losses.

Sumitomo said it planned to file another formal legal complaint against Hamanaka for breach of trust. The company also said it had learned through an in-house investigation that Hamanaka was not acting for personal gain when he carried out unauthorised copper trades.

[02] Ciba-Geigy and Sandoz show single-digit sales gains

Ciba said its sales rose 2% from the same 1995 period, or slightly below some analysts' forecasts. Sandoz's 8% rise in sales in the same period approximated expectations.

Meanwhile, the two companies reiterated that the U.S. Federal Trade Commission is expected to rule on their merger by late autumn.

Ciba's sales rise of 2% brought its nine-month total to 16.26 billion Swiss francs ($12.9 billion). Sales also rose 2% expressed in the local currencies of its markets, the company said.

Sandoz said its nine-month sales rise of 8% to 11.275 billion Swiss francs excluded businesses. In local currencies, the rise also came in at 8%.

Ciba said that without taking into account the costs of the merger with Sandoz and the spinoff of the specialty chemicals business, Ciba ‘still expects an increased profit for the current year.'

For its part, Sandoz said its 1996 consolidated net income should rise 'substantially' excluding merger-related special factors and any unforeseen developments in the financial markets.

[03] Gazprom offering is oversubscribed and priced at $15.75

Each of the company's 23.7 million American Depositary Shares was priced at $15.75. That was at the top end of the $14-$16 range underwriter Morgan Stanley had been offering. One ADS represents ten underlying shares, making the implicit per share price $1.575 - more than triple the $0.505 close in local trading Monday.

There was no immediate word on whether the 15% overallotment option in the deal was exercised, according to brokers.

Market participants said the strong demand for Gazprom - coming amid continuing jitters about Russian President Boris Yeltsin's health and persistent reports Gazprom is in financial trouble - bodes well for investment in Russian stocks.

'It looks like a blowout,' said Martin Diggle, a trader at Brunswick Brokerage. 'It should be very positive for the rest of the market.'

Traders said the market is likely to rise strongly Tuesday as the unsatisfied demand from the Gazprom sale flows into other stocks.

Diggle noted, however, that some light selling might appear as those who bought Gazprom trimmed other holdings to raise cash.

[04] Microsoft shows 23% earnings gain

In the quarter ended Sept. 30, Microsoft earned net income of $614 million, or 95 cents a share. Analusts had been expected to see per-share net of 95 cents.

Revenue rose 14% to $2.30 billion. That growth was slower than the 43% gain Microsoft showed in the year-earlier quarter when it launched its Windows 95 system. 'That's not exactly blowing the cover off the ball,' Greg Maffei, Microsoft's vice president of corporate development and treasurer, said in an interview, 'but it's a tough comparison because we did blow the cover off the ball in that (year-earlier) quarter.'

A measure of Microsoft's continued strength was its level of deferred revenue, which rose $91 million from a year earlier and now totals $651 million. If Microsoft had reported that additional revenue in the latest quarter, it would have added between five cents a share and nine cents a share to its earnings, Readerman said.

As the rate of growth slows in Microsoft's core product line of desktop computer operating systems, the company's fastest growth is coming from corporate networking software. During the quarter, Microsoft successfully launched a new version of its Windows NT operating system for both servers and workstations on corporate networks.

Microsoft also responded to the challenge from Netscape Communications Corp. by aggressively marketing its Internet Explorer web browser during the quarter.

Analysts said Microsoft's next target is the market for corporate database software now dominated by Oracle, the second-largest sofware company in the U.S.

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

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