Foster's set to shake up wine division(2)
BHP is playing a silly game trying to wrap itself in the national flag on this deal because it simply lays a trap for its next transaction.
Its Blake Dawson paper, which details the broken promises made by Rio when it became a dual-listed structure, misses a crucial point in that the company was always foreign controlled.
What, then, is wrong with foreign money?
There is very little of concern in this deal to trouble Wayne Swan. Instead, this deal should be defeated on shareholder concerns, of which there are many.
BHP could come to the table with an alternative proposal based on the fact Rio has arguably put itself into play. BHP's moaning to government simply highlights its frustration at being unable to complete its planned takeover.
Far better, then, to offer a commercial solution. This should not be hard given Paul Skinner and Tom Albanese, as the heads of Rio, have just blown up $US8billion of shareholder cash on the Alcan deal.
Dividends a crisis casualty
AMP'S Craig Dunn yesterday managed to do the impossible -- slash dividends by 27 per cent but get a positive share market reaction for the simply reason that the company is just fine and the move was not unexpected.
The good news from Dunn's market briefing yesterday was confirmation that operating earnings increased from $770 million in 2007 to $800 million last year.
The company raised $450 million from investors last year at $5.30 a share and there is little sense in using this capital to top up a dividend when the payout ratio is already a healthy 90 per cent for the planned 16c-a-share second-half payment. Last year's dividend was 46c a share, which represented a 130 per cent payout ratio.
The headline numbers from AMP of course will not look great because the S&P/ASX200 index has fallen 37 per cent over the past year.
It won't affect the AMP result, but the Australian market has held up well this week, rising more than 2per cent against falls in New York and London. Some 36 companies have reported their results this week, representing a stunning 40 per cent of the market's total value.
While the big ones came on in line with expectations, there were disappointments in the quality, with Leighton, for example, better on revenue but worse on margins.
Macquarie Equities has slashed estimates for the year, tipping 2008-09 financial year earnings per share to fall 10.6 per cent against last year's 1.6 per cent fall.
The downgrades have come thick and fast in the past month, and the team is now forecasting a 17 per cent fall in bank earnings, 14 per cent for property companies, 10 per cent for resources and 5 per cent for industrial. On UBS numbers, the market is selling on a 10 times price-earnings ratio -- down from the long-term average of 14 times -- and a massive yield of 6.3 per cent against the average of 4 per cent.
Dividends of course will be the early casualty of this downturn.
The Australian market rallied yesterday afternoon on news the Government's stimulus policy had been approved. But the one-liner doing the rounds yesterday explained government policy well: "We don't know what we are doing, but we are doing a lot of it."
