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Trying for a Mining Monolith, Banking on a Disney Franchise
February 6, 2008
NEWS AT A GLANCE
BHP antes up in Rio Tinto gamble
Mining giant BHP Billiton formally launched a takeover bid for rival Rio Tinto, and raised its initial offer by 13 percent, to $147.4 billion. (AP in Yahoo! Finance) The all-stock deal would combine the No. 1 and No. 3 mining firms, in the second-largest corporate takeover on record. Rio Tinto urged its shareholders to wait while it considered the offer, which is 6 percent higher than its Feb. 5 closing price. “It’s a lot fairer than the offer we’ve had before,” said Bertie Thomson at Aberdeen Asset Management , but “it’s by no means a knock-out.” (Reuters) BHP, which also reported a 2.4 percent drop in biannual profits, closed down 7.5 percent in Sydney, its biggest drop in 20 years. (Bloomberg)
“Hannah” and Disneyland boost the Mouse
Walt Disney Co reported a better-than-expected quarterly profit of $1.25 billion, as strong cable TV and theme-park sales outpaced flat income at its movie studio division. (Reuters) Disney got a big boost from its Hannah Montana and High School Musical franchises, which sold lots of DVDs, CDs, and related merchandise. The weak dollar helped Disney’s global theme parks, as U.S. tourists stayed in the U.S. and traffic increased at French and Hong Kong parks. Park attendance slumped during the 1991 and 2001 recessions. (Los Angeles Times, free registration) Shares rose in extended trading. “It was just broad outperformance,” said RBC Capital Markets analyst David Bank. (Bloomberg)
Time Warner hits the mark
Time Warner, the world’s largest media company, reported a 41 percent drop in quarterly profits, to $1.03 billion, meeting analysts’ forecasts. Excluding the year-ago quarter’s gains from selling AOL assets in Europe, profits rose this quarter. Strong broadband sales and revenue from movies like Harry Potter helped the company’s bottom line. (Reuters) But incoming CEO Jeffrey Bewkes has to deal with Time Warner’s 29 percent market slide in the last 12 months. Some investors have called for the company to sell off assets, notably AOL. “The company needs to be simplified,” said Matt Kaufler at Clover Capital Management. (Bloomberg)
Small catches on
After years of shunning small cars, U.S. consumers are starting to warm up to compacts like the Toyota Yaris, Chevy Avevo, and the just-arriving, 9-foot-long Smart fortwo. Compact-car sales rose 33 percent last year, even as the wider industry declined. The rising popularity of subcompacts is driven by rising gas prices and a new emphasis on stylish designs. But there are downsides—mini cars seem cramped compared with SUVs, they don’t have much kick, and, importantly, they’re not quite as safe. “All cars have gotten safer, but you can’t get away from the laws of physics,” says Adrian Lund at the Insurance Institute. “There’s just less car there to protect you.” (The Wall Street Journal)
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