European Business News (EBN), 97-08-06

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

Page last updated Wed, August 06 5:07 PM CET

CONTENTS

[01] Microsoft to buy $150 million stake in Apple Computer Microsoft co- founder sells $871 million fo Microsoft shares

[02] British stock index breaks through 5,000 points barrier

[03] German unemployment rate rises to 11.4% July

[04] Adidas' group first half net profits rises 29%

[05] Electrolux swings to a $32 million loss

[06] Prudential nearly doubles first half profit

[07] Standard Chartered reports an 8% rise in profit to $707 million

[08] Cadbury Schweppes fears strong pound could hit full year profit

[09] Woolwich's first set of results rise 2%, exceeding analysts' expectations

[10] Microsoft co-founder sells $871 million worth of Microsoft shares

[11] World Briefs

[12] Corporate and Economic Briefs

[01] Microsoft to buy $150 million stake in Apple Computer Microsoft co- founder sells $871 million fo Microsoft shares

The two companies' agreement to work closely together shows the depth of Apple's desperation to reverse years of sliding market share, mounting losses and management defections. Apple and Microsoft agreed to put aside a long-running dispute over whether Microsoft infringed on Apple's patents when it created its top-selling Windows operating system.

Microsoft agreed to release versions of its popular Office software for businesses in Macintosh formats. Also, Apple said it would make Microsoft's Internet Explorer browser the easiest choice for accessing the Internet from a Macintosh-based computer.

Microsoft agreed not to sell the $150 million worth of Apple stock for at least three years. Microsoft won't get voting rights with its investment.

The unexpected revelation by Apple co-founder Steve Jobs in a keynote speech at the MacWorld Expo prompted gasps of disbelief and loud boos from the audience of thousands of Mac users and software developers. Jobs, who recently returned to Apple as an adviser, attempting to soothe the audience, saying: 'We have to let go of a few notions here. We have to let go of the notion that for Apple to win, Microsoft needs to lose.'

Jobs was named a board member along with Oracle Chairman Larry Ellison; Jerome York, a former chief financial officer of International Business Machines; and Intuit Chief Executive Bill Campbell. Apple said it won't name a chairman until it finds a chief executive, who will also join the board.

Bill Gates, chief executive of Microsoft, appeared on an overhead screen at the MacWorld convention to praise the new alliance. But his mere appearance spurred another round indignant shouts from a crowd that included some of the world's most passionate users of the Mac.

[02] British stock index breaks through 5,000 points barrier

GKN, Standard Chartered and Commercial Union all posted half-year figures earlier in the session, and are all showing strong market performances.

Meanwhile, economists have been standing down from their previous forecasts on UK interest rates, with some now saying that the economy is coming off the boil and that a rate rise on Thursday after the Bank of England's monetary policy committee meeting is not the certainty it seemed last week. The market also responded positively as a weaker pound boosted prospects for exporters.

'Sterling has turned around against the mark and that has given a lift to everything,' said the head of equity trading at one top investment bank. 'But volumes aren't high and the market feels very 'summery'.'

The pound, which has soared on prospects of higher interest rates, dropped four pfennigs against the mark as sentiment went into reverse and expectations that the Bank of England would this week sanction a further rate rise diminished.

[03] German unemployment rate rises to 11.4% July

In western Germany, the number of people out of work on a seasonally adjusted basis fell to 3.029 million in July.

East German unemployment increased, with the total number of jobless rising to 1.367 million from 1.340 million.

The president of the Labour Office, Bernhard Jagoda, said: 'In the jobs market, growth is divergent. There is an increasing discrepency between west and east German states.'

On an unadjusted basis, the number of Germans out of work rose to 4.354 million in July from 4.222 million.

[04] Adidas' group first half net profits rises 29%

Earnings per share for the first six months were also at 5.24 marks higher compared with 4.06 marks for the same period a year ago.

Group pretax profit and group operating profit were up 41.1% and 41.5% respectively, it said.

Following the data, Adidas shares were traded at 217 marks in electronic trading on the Frankfurt Stock Exchange, up 2.00 marks, or 1.0%, from Tuesday's close.

The weighted 30-share IBIS DAX stock index, which tracks prices in electronic trading, was at 4325.06 points, up 23.36 marks, or 0.5%, from the previous close.

Under the direction of chairman Robert Louis-Dreyfus, Adidas has made a strong turnaround in recent years. In 1993, Louis-Dreyfus, together with allied investors, purchased Bernard Tapie Finance's 78% stake in Adidas International Holding GmbH - which held 95% of Adidas AG.

Adidas' new majority owners floated a majority of their capital stock Nov. 17, 1995, raising around 1.9 billion marks in capital.

In April 1997, a main shareholder Sogedim sold off a 13% stake of Adidas shares. An additional 13% stake was retained by management. The company hasn't publicized the names of the buyers.

[05] Electrolux swings to a $32 million loss

The loss came in slightly lower than analysts expectations of 339 million kronor.

Excluding the charges for Electrolux' restructuring program, announced in June, the company posted a pretax profit of 1.59 billion kronor, up slightly from 1.55 billion for the corresponding year-earlier period.

The figures for the first six months of 1996 are pro forma excluding Graenges AB. In January this year Electrolux said it will distribute its aluminum subsidiary to the shareholders.

In the first half of 1997 sales grew modestly to 57.27 billion kronor from 52.84 billion kronor.

For Electrolux' U.S. operations the results improved while operations in Europe and Brazil saw earnings dropping.

[06] Prudential nearly doubles first half profit

The UK insurer's operating profit rose to £442 million from £421 million; the underlying operating profit on continuing operations rose to £442 million from £389 million. The dividend, which rose to 6.4 pence from 5.8 pence, will be paid as a foreign income dividend.

Prudential also said it had increased provisions for its UK life fund to £450 million from £240 million to compensate customers who may have lost out as a result of the pension mis-selling scandal of the late 1980s and early 1990s. The figure also covers the cancellation of advanced corporate tax credits for pension funds announced in the last UK budget.

Chief executive Peter Davis said investment spreads earned in the first half were 'slightly ahead of target.' The company expects spreads to return to 'more normal levels' in the second half.

Operating profit at Prudential UK rose 16% to £197 million. Operating profit from Jackson National, the US operation, grew by 15% to £176 million, which Prudential said was 'subdued' because of the strength of sterling. In local currency terms, Jackson's profit rose 23%. Prudential Asia's operating profit was flat at £4 million, while profit at other international operations doubled to £14 million.

[07] Standard Chartered reports an 8% rise in profit to $707 million

The bank said its result was helped by currency turmoil in Asia, where Standard Chartered has a long-standing lending presence.

'The major currency adjustments of some countries in the region benefited our profits,' Chairman Patrick Gillam said. 'We believe, however, the economic health of our principal markets remains sound.'

Pretax profit, meanwhile, dipped 2.9% in the latest half to £435 million, but that reflected mainly a £42-million gain last year from business sales.

The result was slightly above analysts forecasts of about £432 million. In early trading, the shares were up 34.5 pence to 1035 pence on volume of 1.35 million shares.

The group said customer lending and deposits both showed strong underlying growth.

The bank said it had been hit by the strength of sterling, and provided a duplicate set of results based on constant 1997 exchange rates.

Bad debt provisions were unchanged at £44 million, but the bank noted that on an enlarged loan book, the steady provision reflected the quality of the loans.

[08] Cadbury Schweppes fears strong pound could hit full year profit

The first-half sterling hit - revealed mistakenly to Australia's stock exchange in the early hours - was £16 million, a little below analysts' expectations. The figures also showed continued growth from Dr Pepper in the US, but a decline in the performance of 7Up.

Chairman Sir Dominic Cadbury noted that 'the greenfield investments in Poland, Russia and China started to come through in the first half' and that momentum is continuing. He added, 'After a somewhat slow start in confectionery, the business has picked up,' helped by a strong Easter performance. He said this business 'has come through well.'

Looking ahead, the company said most of the major orders for the busy Christmas period are already taken.

Chief Executive John Sunderland said: 'It's very early obviously, but we have had a fairly encouraging start and we also get a pretty clear picture about Christmas now because most of the major Christmas orders are already taken. So we feel confident about the outcome of our seasonal Christmas business.' The company makes about 60% of its profits in the second half of the year as confectionery sales surge in winter and at Christmas.

Sunderland expected the company to make two or three acquisitions in the confectionery area over the next year for between £100 and £200 million each. Cadbury sold its 51% stake in Coca-Cola Schweppes Beverages in June for £623 million, reducing its borrowings by 45% to £880 million at the half-year stage, providing it with more room to make acquisitions.

[09] Woolwich's first set of results rise 2%, exceeding analysts' expectations

Woolwich reported pre-tax profits for the first half of the year of £187.8 million ($299 million), compared with £183.1 million for the same period in 1996. The headline figure, excluding the exceptional cost of conversion, was up 13% at £215 million.

Chief Executive John Stewart said he would like to expand into Europe by linking up with a European-based grocery supermarket chain.

Commenting after the Woolwich reported its first-ever six months results as a listed bank, Stewart said most of the U.K. supermarket chain deals had already been done, although he was still keen if local opportunities came up.

As a former mutually owned building society, Woolwich must avoid taking over a U.K. financial institution or else lose its five-year takeover protection granted by the Building Societies Act 1997.

But the legislation doesn't prevent takeover of non-financial institutions, financial institutions based overseas, nor discourage joint ventures within the financial services industry.

'We have no firm plans to go into non-financial ventures, but we would consider working with supermarkets in France or Italy,' Stewart said.

Woolwich already operates banking subsidiaries in France and Italy.

Stewart quashed recent speculation that Woolwich was in talks with U.K. insurance giant Prudential Corp. about a takeover by the Pru.

'We haven't had any talks. But if we're convinced that an offer is good, we would consult our shareholders. At the moment we have good sets of results and no need to be acquired,' he added.

[10] Microsoft co-founder sells $871 million worth of Microsoft shares

Allen, who recently agreed to pay $200 million to buy the Seattle Seahawks and an additional $100 million toward the cost of a new football stadium, has filed papers with regulators indicating he plans to sell 5.45 million shares, The Seattle Times reported Tuesday.

Microsoft closed Tuesday at $143.31 a share on the Nasdaq Stock Market.

Allen, listed by Forbes magazine as the world's sixth-richest person, would still hold about 94 million shares of Microsoft, worth about $13.5 billion.

Allen declined to say what he'll do with the extra cash. He routinely sells Microsoft stock, often to finance his many business ventures.

'Mr. Allen will periodically divest some of his Microsoft shares to diversify his portfolio,' said Susan Pierson, spokeswoman for Allen's Vulcan Ventures.

She said Allen is not planning to spend a particularly significant amount of the money on any one business.

In addition to the Seahawks, Allen is the owner of the NBA's Portland Trail Blazers.

Microsoft buys stake in Apple

[11] World Briefs

Israeli soldiers have arrested some 20 Palestinians in Hebron as Israel continues its crackdown on Islamic militants, spurred by last week's bombing of a Jerusalem market. Just hours before todays meeting with Jordanian leaders aimed at restarting peace talks with Palestinians, Israel's Prime Minister visited the market where two suicide bombs killed 15 people last week. This morning, Benjamin Netanyahu lit a candle for the dead, prayed and spoke of his determination to fight terrorism.

Montserrat's deadly volcano has erupted for the second straight day, forcing hundreds to flee homes in parts of the Caribbean island previously considered beyond the volcano's reach. The Soufriere Hills volcano hurled a dense column of rocks and ash into the air just before dawn Tuesday, hours after the government took the precaution of evacuating villages in the heavily populated west-central portion of Montserrat. It erupted again in the afternoon.

[12] Corporate and Economic Briefs

Jobless claims in Spain fell to 12.50% of the active population in July from 13.06% in June, the Labor Ministry said in an advance release. At the end of July around 2.01 million people had filed for unemployment insurance, down 82,694 from June, the Labor Ministry said. The decrease of 82,694 is well above the average drop of 30,133 registered unemployed for the month of July in the past fifteen years, the Ministry said. July's 12.50% rate marks the first time jobless claims have fallen below 13% since 1981, the Labor Ministry said.

In Norway Christiania Bank's net interest income in the six months to June 30 reached 1.737 billion kroner compared with 1.704 million kroner in the like year-earlier period. The bank blamed tough competition among lenders for the modest rise in income from lending. 'Strong competition has put further pressure on interest rate margins. We will put priority on profitability rather than volumes and focus on maintaining healthy margins, ' Christiania Bank's President and Chief Executive Officer Tom Ruud said. Meanwhile, Christiania Bank's non-interest income showed a positive trend, with profit on securities surging 83% to 108 million kroner, while gains from foreign exchange and financial instruments rose an impressive 72% to 206 million kroner.

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

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