Executive Business Briefing

April 17, 2002 at 7:28 AM
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Here is a look at Wednesday's top business stories:

Stocks rise in Asia

TOKYO, April 17 (UPI) -- Stock prices on the Tokyo Stock Exchange ended higher Wednesday for the third consecutive session, lifted by Tuesday's buying binge on Wall Street and strength in the technology sector.

Stocks also rose in Hong Kong, in Seoul, South Korea; Taipei, Taiwan; and Sydney, Australia.

Japan's blue-chip Nikkei Stock Average of 225 selective issues, which rose 209.36 points Tuesday, gained another 197.05 points, or 1.7 percent, to 11,543.71 -- its first close above the 11,500 level since March 20. The broader Topix index gained 11.45 points, or 1.1 percent, to 1,089.60.

Advances outpaced declines 770 to 569.

Volume rose to an estimated 788 million shares from the 654.82 million shares changing hands on Tuesday.

Analysts said buying in automotive and chip shares pushed the market higher, sparked by the rally on Wall Street and positive earnings reports by Intel and General Motors.

But, gains were tempered by caution ahead of the release of earnings by Japanese retail and electronics companies through the end of next week.

These companies are generally expected to release disappointing earnings numbers, analysts said.

In trading, among some of the active issues, Isuzu Motors jumped 7 percent and Nissan Motors added 3.5 percent.

Furukawa Electric jumped 7.2 percent, Kyocera rose 2.7 percent and Toshiba, Japan's second largest chip maker, rose 2.5 percent.

In the communications sector, NTT DoCoMo added 1.5 percent and Japan Telecom gained 3.7 percent.

Meanwhile, Softbank plunged 9.2 percent on renewed concerns about its financial health.

Elsewhere in Asia, prices ended sharply higher in moderate trading on the Hong Kong Stock Exchange, posting their biggest one-day gain since Feb. 11 on speculation that the government's second quarter sale of Tracker Fund units were completed. The blue-chip Hang Seng Index jumped 302.05 points, or 2.8 percent, to 11,090.58.

Analysts said the market was also supported by the hefty Wall Street gains and strength in telecommunication and property issues.

The Tracker Fund units consist of blue chips' shares accumulated by the government in its stock market intervention at the height of the Asian financial crisis in 1998. The government released 530 million units for sale in the second quarter but 205 million of them were still outstanding by the end of Tuesday.

The fund is an open-end investment trust that gives investors exposure to a basket of 33 stocks that form part of the Hang Seng Index. It was designed to closely mimic the performance of the Hang Seng Index, so that when the index is up 1 percent, the fund is also up 1 percent give or take a few basis points.

The government announced after the market closed that all the units outstanding had been sold.

In trading, Hutchison Whampoa jumped 4.21 percent, China Mobile rose 3.62 percent and China Unicom gained 4.08 percent.

Banking heavyweight HSBC Holdings rose 2.27 percent and Hang Seng Bank rose 3 percent.

The property sector rose on speculation that favorable housing policy changes will be unveiled shortly following the government's announcement Monday to introduce an accountability system for principal officials.

Cheung Kong, the largest developer by market capitalization, surged 4.36 percent, Sun Hung Kai gained 4.22 percent and Henderson Land rose 3.74 percent.

Meanwhile, prices rose to their highest level in 26 months on the South Korean Stock Exchange, lifted by strength in technology issues. The Korea Composite Stock Price Index, or Kospi, jumped 29.22 points, or 3.24 percent, to 930.51 -- its highest closing level since it hit 953.22 on Feb. 11, 2000.

South Korea's gains were mainly due to Samsung Electronics Co.'s strong performance. Samsung, which has the largest market capitalization on the Kospi, surged 4.4 percent.

Samsung SDI soared 11.6 percent after the country's leading display maker said it expected first quarter earnings before taxes be up more than 25 percent year on year.

Meanwhile, prices rose to their highest level in more than 2 years on the Taiwan Stock Exchange. The Weighted Index jumped 132.95 points, or 2.12 percent, to 6,390.68 -- its highest closing level since Sept. 29, 2000.

Taiwan Semiconductor Manufacturing Co., the world's largest foundry, rose 3.8 percent. Rival United Microelectronics rallied 4.6 percent.

Elsewhere around the Pacific region, prices ended higher on the Australian Stock Exchange, lifted by Tuesday's rally on Wall Street. The blue-chip All Ordinaries Index rose 13.70 points, or 0.41 percent, to 3,350.60.

In trading, News Corp. gained 0.9 percent, Harvey Norman Holdings, the country's biggest furniture and electronics retailer, lost 1.1 despite posting a 9.3 percent rise in sales for the third quarter.

Earnings jump 69 percent at Office Depot

DELRAY BEACH, Fla., April 17 (UPI) -- Office Depot Inc., the giant office products retailer, said its first-quarter net income jumped 69 percent to $102.7 million, or 32 cents a share, from $56.3 million, or 19 cents a share during the same period a year earlier.

Analysts on Wall Street had expected the retailer to post a net income of 31 cents a share, according to Thomson Financial/First Call.

The retailer said the increase was primarily driven by higher gross margins in the company's North American retail and delivery businesses and lower operating costs in the Business Services Group.

Sales rose 1 percent to $3.04 billion from $3.02 billion a year ago, the company said. Sales at stores open at least a year fell 1 percent.

Bruce Nelson, chairman and chief executive officer, said, "In spite of continued softness in sales, our results this quarter reflect strong operating performance across all of our business units and continued progress with our initiatives to improve efficiency and relentlessly pursue market share and new growth strategies.

"Comparable sales in desktop and laptop computers dropped 18 percent, while overall technology products declined 13 percent in the first quarter, continuing to overshadow growth in some core office supply categories," Nelson said.

"Our Business Services Group had its best first-quarter performance ever, with operating profit reaching 9.9 percent of sales. This was achieved in spite of the continued impact of a weak domestic economy that resulted in negative 2.6 percent comparable sales growth," he added.

Looking ahead, Nelson said, "We believe the profit improvements we have made are sustainable and will ensure solid earnings growth for 2002 even without a dramatic improvement in the economy. While we are aggressively focusing on driving efficiency and productivity throughout our businesses, we are highly focused on finding new ways to grow. So at this point in time, we are confident that our earnings per share can grow in excess of 30 percent this year without any significant improvement in the domestic economy."

Office Depot operates 857 office supply stores in the United States and Canada.

Knight Trading Group posts loss

JERSEY CITY, N.J., April 17 (UPI) -- Knight Trading Group Inc. said it posted a first-quarter loss as the weak stock market dragged down the top dealer of Nasdaq stocks.

Knight Trading said it posted a first-quarter loss of $12.7 million, or 10 cents a share, compared with a net income of $26.9 million, or 21 cents a share during the same period a year earlier.

Revenues fell to $133.5 million from $225.6 million a year ago.

Analysts on Wall Street were expecting Knight to post a loss of 8 cents a share, according to Thomson Financial/First Call.

Earlier this month, Knight, still reeling from the year-old switch to trading stocks in pennies rather than fractions, warned it would report a first-quarter loss.

The firm said the institution of a one-penny Minimum Price Variation has introduced new challenges for participants in the securities marketplace.

The one-penny MPV was instituted concurrently with the full implementation of decimalization for Nasdaq issues on April 9, 2001, and for NYSE and Amex listed issues on Jan. 29, 2001.

The one-penny MPV, instituted by the exchanges and the Nasdaq market, is a separate issue from decimalization, which was an SEC-mandated change.

"We are tailoring Knight to fit the one-cent MPV market structure and challenging market conditions that continue to affect our financial results," said Anthony M. Sanfilippo, interim chief executive officer.

"First, Knight is exploring every means of increasing revenue capture per trade. We are expanding our product offerings and developing human capital to attract more higher-margin business from institutions who select Knight for capital commitment, deep liquidity, scale, and market-making that's independent of investment banking and research," he said.

"Second, Knight is working to decrease costs even more, particularly costs associated with an infrastructure that was built for the explosion in individual investing and that's now too heavy with overcapacity to be supported by anemic revenue streams during a down market and a changed market structure," Sanfilippo added.

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