So why did it issue it in the first place? IBM Corp is digging deep into its $11,000m war chest to cut back the debt that mounted as its woes deepened, and it went first for that 7.5% Series A preference issue because since preference shares count as equity, the dividend on them is not tax-deductible so the issue is equivalent to paying a daunting 11.5% on debt; expected to be next to go is a $500m line of 10-year debt due 1998, paying 9% and first callable in May; at the end of the first quarter, IBM had $10,800m cash and $24,300m of long and short term debt on its balance sheet, down from a peak of $31,700m in third quarter of 1993. – o – So why did IBM Corp issue those preference shares in the first place? The answer is that preference shareholders are right at the top of the pecking order in a liquidation, and IBM was in such a parlous state at the time of the issue that it might have had to pay a very much higher coupon to get a similarly-sized debt issue away.
And the market on Wall Street liked the broad improvement in IBM Corp’s balance sheet so much that the shares hit a new 52-week intrasession high of $77.25 on Tuesday before closing up $1.50 at $77 even. – o – Ing C Olivetti & Co SpA is buying a minority stake in StarPress Multimedia Inc of San Francisco, as part of a partnership that will include a new Olivetti StarPress Europe joint venture to be based in Milan and will be 51%-owned by Olivetti Telemedia: it will publish information and entertainment software for the European market, and will distribute StarPress CD-ROMs in Europe – StarPress will distribute Olivetti multimedia products in the US.
There isn’t even a bid in for Pyramid Technology Corp and already some lawyer-happy shareholder has fired off a suit against the directors: plaintiff shareholder Brian Pohli claims Pyramid directors have breached their fiduciary duties in connection with defendants’ response to an aquisition proposal – all the poor guys did was make a non-commital announcement reporting that Siemens Nixdorf Informationssysteme AG was holding talks that could lead to an offer of $15 a share to buy Pyramid Technology. – o – Northern Telecom Ltd sold its $114m a year cable components business to the Siecor Corp US joint venture of Siemens AG and Corning Inc: terms of the agreement were not given. – o – If telecommunications deregulation does finally make its way onto the US statute book, and the Baby Bells are allowed to get into information publishing, Electronic Information Report newsletter reckons the sky is the limit on prices they will be prepared to pay for on-line services such as America Online Inc; it expects bids to reach $2,000m to $3,000m for each of them, perhaps as early as next year – which might finally bring IBM Corp and Sears Roebuck & Co their big pay-off on their Prodigy Services Co business. – o – If the newsletter is right, Apple Computer Inc probably does not need to bother with a cautious hedging agreement it has just announced on its 1m shares, 6.08%, in America Online Inc: Apple says it intends to hedge investment risks associated with rights under warrants it holds in America Online – it is looking at taking out a matched set of put and call hedge transactions. – o – Texas Instruments Inc’s notebook computer business is widely regarded as being too small to make any impact in the market, but the company is gearing up to surprise its better-placed rivals, the Wall Street Journal reported: the company’s notebooks are currently all high-end, but they are regarded as technically very attractive, the two weaknesses being that the company has no model cheaper than $3,000 and has only very weak marketing: the company now says it is addressing both those weaknesses. – o – Philips Electronics NV confirmed it is part of a consortium that lodged a bid late last year with Amsterdam City Council to buy its KTA cable television network in partnership with US West Inc and Time Warner Inc; the council is planning to sell 90% of KTA which has a total 450,000 subscribers; the partners are keen to add t
elephony to the system when the market is opened.
Coals to Newcastle, Tulips to Amsterdam? Tulip Computers NV says it plans to open a sales and distribution office for Asia in Hong Kong: it told Reuters it wants 4% to 5% of the local market within several years and may one day open a plant.
Once its current plan to eliminate 727 jobs by December 1995 is complete, the management of Digital Equipment France SA has agreed not to cut any further jobs before June 1996 under an accord with its central labour-management committee.
Electronic batons, the people-prod equivalents to cattle-prods, are nasty products, so much so that ICL Plc had to issue a statement yesterday saying that it was unrelated to a company that was due to be named as a supplier of the offensive weapons in a television documentary on Channel 4 last night; the company in question is in Glasgow and called ICL Technical Plastics.
European Community Audiovisual Commissioner Joao de Deus Pinheiro is holding the Commission’s green paper on opening telecommunications markets in 1998 hostage to his pet proposals to limit the amount of American origin material that can be shown on European television, but the greenm paper will come around again when the new Commission is due to assemble on January 23 – Pinheiro must be the only person in Europe who likes those unwatchable European television co-productions.
Australian state-owned telecommunications carrier Telstra Corp has entered into a joint venture with Optus Communications Pty Ltd to lay a $93m fibre optic cable between Australia and Indonesia, the first international infrastructure joint venture between Optus and Telstra. – o – Proteon Inc says it will be able to write back some of the restructuring charges it took earlier, enabling it to report a gain of 30 to 40 cents a share in the fourth quarter ended December 31 1994: the majority of charges will be reversed, but only because a new tenant will assume responsibility for unused office space at its Westborough, Massachusetts headquarters.
MiniStor Peripherals Corp, San Jose is celebrating an order from Hitachi Ltd worth $2m to $3m this year for 130Mb 1.8 PCMCIA disk drives for use in its Flora Pen PC, which was announced last February and set for volume production this month. – o – So your office suite is a conversion – of a warehouse, more than likely – and the loos are an after-thought carved out of a corner of the floor, and the false ceiling of course goes straight across, providing thieves with access to the building with a very simple way around all your elaborate electronic security precautions – but you comfort yourself with the thought that your valuable computers are simply too bulky to be removed easily through the ceiling… think again: today’s thieves are becoming horribly canny and have recognised that there’s not much point in hauling great grey boxes and screens around when at $500 to $1,000 a time for a Pentium, all the value is in the chips – the UK Automobile Association is rueing the removal by thieves of the memory boards from scores of personal computers.
