Interview: Standard & Poor's debt ratings
>> more violence in baghdad. ron madison has that story from tokyo.
>> associated press saying today that a suicide bomber has killed three people at the baghdad headquarters of iraq’s biggest shiite political party. the attack comes as iraqi officials step up security measures to prevent violence during the nation’s election there is. according to associated press, the suicide driver blew up his vehicle after security guards stopped it at a checkpoint. iraq says international borders will be closed from the day before the election to the day after. nighttime curfew is also being set in place there. sunni muslim insurgents have promised to disrupt the january 30 vote. many sunnis fear a loss of power to the shiite muslim majority there. chinese government officials say they are doing all they can to secure the release of eight construction workers abducted in iraq. the official chinese news agency says the eight men from southern china vanished last week traveling to jordan. the workers are said to be seen in this videotape released monday by militants. a note delivered with the tape says the abductors will consider releasing the hostages because china did not participate in the iraq war. a catholic archbishop kidnapped in iraq is freed a at a after he was seized near a church in mosul. the archbishop of the syrian catholic church said he was treated well. condoleeza rice promises to work to mend international relations frayed by the war in iraq. the nominee to be u.s. secretary of state says she hopes to strengthen ties with old and new allies. at her confirmation hearing, rice defended u.s. actions following september 11.
>> september 11, 2001, was a defining moment for our nation and for the world. under the vision and leadership of president bush, our nation has risen to meet the challenges of our time, fighting tyranny and terror and securing the blessings of freedom and prosperity for a new generation. the work that america and our allies have undertaken and sacrifices we have made have been difficult and necessary and right. now is the time to build on these achievements to make the world safer and to make the world more free.
>> condoleeza rice is expected to have little trouble being confirmed. still, democrats plan to question her on a variety of issues. that is the latest look at world news. back to you.
>> thank you, ron. ranbaxy’s profit dropped 11% for the fourth quarter. reasons for the declines at india’s biggest drugmaker include competition from the u.s. and a doubling of research costs. shobi pereira is in singapore bringing us details with more on that story. what kind of competition did ranbaxy face from the u.s. market ?
>> good morning. chief executive officer brian tempest told reporters after the earnings announcement pricing pressure began in july and increased in the fourth quarter so that’s the kinds of competition we’re talking about. at the end of december, the company decided to forego some business because of price competition. ranbaxy is facing increased competition in the u.s. generic companies are competing to sell their versions of the drugs losing patent production in the the world’s biggest drug market . cathy?
>> what about for research expenses? why did they double?
>> research expenses in the fourth quarter doubled to $26 million mostly because of the increased number of filings to sell drugs in the u.s. the company filed to sell 26 drugs in the u.s. in the fourth quarter. earnings were also hurt by the strengthening of the indian rupee against the dollar, reducing the value of the country’s exports. the rupee gained 5.3% in the quarter.
>> how much progress is the company making with the sale of lipitor, which is the cholesterol drug in the u.s.?
>> this is the backbone. ranbaxy, challenged in the u.s., pfizer’s patent on the cholesterol treatment lipitor and lipitor is the world’s best selling drug and ranbaxy has started preparing to sell the drug in the u.s. ranbaxy c.e.o. said the company has begun buying the raw materials and expanding capacity, steps, in fact, that will reduce the company’s working capital and generate other expenses going forward. legal trials on lipitor began in a u.s. court on november 30 in delaware. ranbaxy sells more than 80 drugs and their variations in the u.s., including copies of glaxosmithkline’s anti-viral tegmentin and bayer’s cipro. ranbaxy also received approval to sell four u.s. generic drugs, including eli lilly’s antidepressant prozac and bristol-myers hypertension drug, money on pro. that’s what i have for you now.
>> thank you, shobi. malaysia’s inflation rate probably accelerated in november. economists we surveyed expect the consumer price index rose 2.3% from a year ago. malaysia reports december inflation figures this afternoon in kuala lumpur. thailand’s central bank today will probably leave its key rate steady after raising interest rates three straight times. falling oil prices and strengthening local currency are slowing inflation in southeast asia’s number two economy. expect the decision from thailand’s central bank around 1:00 p.m. in bangkok. up next, u.s. stocks with a late start to the week with the biggest gains for the year from major indexes. a detailed report from the new york stock exchange coming up.
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in store for today in a live report from sydney. earnings from tech companies dominate after-the-bell earnings in the u.s. i.b.m.’s sam palmisano leads i.b.m. to a 12% profit gain but it wasn’t p.c.’s that drove the growth. demands for consulting and computer maintenance services helped boost profit. shares rise in extended trading. motorola shares head the other way. higher phone prices helped the cell phone maker boost profits to 27 cents a share on $8.8 billion in sales. yahoo shares rise in extended trading. net income jumped almost five-fold to $372 million or 25 cents a share. revenue grew 62% to more than $1 billion. international business machines says fourth-quarter profit climbed 12%. i.b.m. says net income rose to 3.04 billion or $1.81 a share. a year earlier, the world’s largest computer maker earned $2.71 billion. with a market capitalization of $142 billion, i.b.m. is the world’s second largest technology company behind microsoft. for more, i’m joined by john jacobs, president of jacobs and company in new york, helping to manage i.b.m. shares, joining us from charleston. it’s good to see you again, john. what do you make of i.b.m.’s earnings and outlook?
>> initial review of the report looks really good. not only do we have better profit numbers but revenue numbers were―we were thinking they would come in softer. what excites me the most are the gross margins where they continue to move higher quarter to quarter. i think the plan of palmisano is working well and when we look at i.b.m. as a company offering total packages this is where we see the consulting side help us with the surprise this quarter.
>> i.b.m. can generate earnings growth of more than 10% going forward?
>> i think going forward, it’s very possible. i think as i.t. spending comes back globally, i think they’re very well positioned to take advantage of this. when you look the gross margins when we look, you’ll see across the board larger gross profit margins under all segments and more cost cutting coming into play. it’s not so much focused on the revenues but the dollars they’re getting, they’re very strong and are sistered in the new core businessed where more than half of their business now comes from services. we’re not seeing the gigantic contracts but lots of smaller contracts starting to build up, helping move these numbers.
>> will you be adding more i.b.m. shares to your portfolio after today’s results and outlook?
>> after today’s outlook, i think we probably will. we’ll definitely take a hard look. we’ve had more of a moderate position. we wanted to see comments. we’ve seen they’ve also talked about raising for the rest of the year, the 44 cents on top of earnings. i think right now, as we look at the final comments and the conference call, we will be very positive on this because i do think i.b.m. is where they are, they’re trading a little below the s&p 500, now, in terms of the p.e. and i think you can see shares move as they’r indicated early in aftermarket trading. i think we’ll take a hard look and probably add especially over the next quarter, cathy.
>> i.b.m. is seeing a lot of competition from hewlett-packard. h.p. has just started selling new computers based on intel’s itanium processors to replace machines made by i.b.m. and sun microsystems. how are you seeing h.p.’s move affecting i.b.m. server sales?
>> at one time i think h.p. had a closer chance to take more market share from i.b.m. i think the key here is you have to look at the intellectual side in terms of those particular properties. when you get into the companies and you’re able to work with a team effort with all the consulting and all the sides, i think h.p. has a small disadvantage as they’ve begun to lessen their head count from the intellectual side after the compaq merger whereas i think i.b.m. has strengthened the core services and have begun to focus in on them. when you look at the p.c. side going to len ovo these five years, this has always been a drag on i.b.m. and they’re pretty much saying we’ll give the commodity back to the commodity players and let them fight the turf war and we’ll come to the higher margin business and i think over the long term, i.b.m. will be more successful and also gain market share.
>> john, thank you very much for joining us, john jacobs, president of jacobs and company in charleston, west virginia. australian mining companies may be active in today’s trading as u.b.s. raised share price targets for b.h.p. billiton. let’s go straight to stuart kelly, our sydney reporter. another broker upgrade for b.h.p. billiton and rio tinto.
>> yes, there is. there’s been a spate of broker upgrades for b.h.p. billiton and rio tinto, positive broker reports from morgan stanley, credit suisse and deutsche bank mainly on expectations that both of those companies will be able to secure price hikes of iron ore as much as 30%. a.g. raised their price forecasts for both of those companies’ london-based shares. the american depository receipts of rio tinto rose in new york last night, closing higher .8%. it’s difficult to say today which way those two shares will move on the australian market as it opens a short time from now although the benchmark index futures contracts is up .4%.
>> any other movers to watch today?
>> keep an eye on miller’s retail shares. the shares rose 11% yesterday. there is speculation in the press this morning in several newspapers that it may be the subject of a takeover perhaps some time in the near future. miller’s on friday plunged 13%. that’s after it reported disappointing first-half earnings. the shares, then, rose 13% on monday and again as i said, another 11% yesterday. so that’s what’s got some of the tongues here wagging and certainly amongst traders although none of the newspapers specified a source of the speculation. that’s all from me, catherine.
>> thank you, stuart. coming up, india’s biggest drugmaker says fourth-quarter profit fell 11%. learn what’s happening at ranbaxy laboratories.
