Dubai fund not in talks to sell Barneys

By Ahmed Jadallah

DJIBOUTI (Reuters) - Dubai government investment agency Istithmar World is not in talks to sell luxury retailer Barneys New York Inc, its parent firm said.

"We have not announced nor (sought) anybody regarding Barneys," Sultan Ahmed bin Sulayem, chairman of Dubai World, told reporters at the opening of port container operator DP World's DPW.DI new terminal in Djibouti on Saturday.

Last month, Bloomberg reported Istithmar World may sell Barneys, less than two years after buying it as the fund struggles with losses and the luxury market slows.

Bloomberg said Istithmar did not want to sell the business for less than the $942 million it paid for it in 2007, and that the state-owned fund had had calls from potential buyers and would sell its entire stake.

Istithmar World is a unit of state-owned Dubai World and one of the investment agencies established by Dubai's ruler to invest the emirate's wealth abroad.

Dubai World owns of DP World, one of the world's largest container operators, whose new Doraleh terminal in Djibouti has a capacity of 1.2 million TEU (twenty foot equivalent container units) per year.

This was expected to rise to 3 million TEU "over time," DP World said in a statement.

DP World said last month it was reviewing all expansion projects, cutting costs and freezing recruitment as growth slows in 2009.

Last week, Moody's Investor Service said it was considering downgrading the debt rating of DP World along with five other Dubai firms due to the escalating global financial crisis.

But DP World's refinancing pressure was low in the near term as its debt -- most of which consists of $1.5 billion worth of Islamic bonds, sukuk, and $1.75 billion worth of bonds -- was mostly long term in nature, Standard Chartered said in a note published on Thursday.

The note also said DP World, although vulnerable to the global downturn, was expecting to post a profit of $675 million, a 33 percent increase from 2007.

DP World declined to give reporters an earnings forecast in a conference call on January 26 in which its chief financial officer gave an update on its business.

DP World DPW.DI shares have lost more than 80 percent of their value since an IPO in 2007 on NASDAQ Dubai, formerly Dubai International Financial Exchange, when it listed at $1.30 per share.

Shares closed up 5.26 percent at $0.20 per share on Sunday.

(Writing by Raissa Kasolowsky; editing by Elaine Hardcastle)

Source : Reuters

The Strategy Owning the Right Risks

By Kevin Buehler, Andrew Freeman, and Ron Hulme

In the 1970 a revolution occurred in the field of corporate strategy. A boom in mergers and acquisitions launched new professions in M & A banking, M & A law, and strategy consulting, and companies started to focus on owning businesses in which they had a competitive advantage. At the same time, another revolution occurred in how financial services companies understood, bought, and sold risk – described in the authors’ compaion article in the issue, “The New Arsenal of Risk Management.” Now these two revolutions are coming together to trigger e third in the corporate approach to risk management.

Engineering and dynamically managing a company’s risk portfolio has become the organizing principle for strategic choice. When companies focus on the risks for which they are naturally advantaged, they can typically support higher debt levels and save on operating cocts. McKinsey’s Buehler, Freeman, and Hulme describe five steps to help corporate managers adjust to the third revolution: 1) dentify and ubderstand your major risks; 2) decide which risks are natural; 3) determine your capacity and appetite for risk; 4) embed risk in all decisions and processes, including investment, commercial, financial, and operational, and 5) align govermance and organization around risk.

TXU is one company that has already successfully adapted. Following the 2002 deregulation of wholesale and retail electricity markets in the U.S. state of Texas, TXU embarked on an ambitious risk-return restructuring program that relied on sophisticated risk-management tools to quantify its risk capacity. The program led to share price increases that created more than $32 billion in value before the company was taken private in the largest leveraged buyout in history

Source : Harvard Business Review

Cisco profit beats expectations

NEW YORK (Reuters) - Cisco Systems Inc posted higher-than-expected quarterly earnings as the network equipment maker managed to contain costs, even as revenue fell for the first quarter in more than five years.

Shares of Cisco rose nearly 2 percent in cautious trade ahead of the company's earnings conference call, where Chief Executive John Chambers is expected to outline his outlook.

Chambers said in a statement that Cisco intends to "accelerate the alignment of our resources" and gradually decrease operating expenses.

Net profit for the fiscal second quarter ended January 24 fell to $1.5 billion, or 26 cents per share, from $2.1 billion, or 33 cents a share.

Profit excluding items fell to 32 cents a share from 38 cents, exceeding the market's average forecast of 30 cents a share according to Reuters Estimates.

"The numbers look pretty good, all things considered in the tough environment. The EPS beat shows strong cost containment in an environment of reduced demand," said Mark Sue, analyst at RBC Capital.

Revenue fell 7.5 percent to $9.1 billion, the first year-on-year decline since 2003, as the economic downturn forced companies to cut back on technology spending.

Wall Street analysts on average had expected revenue of $9.0 billion, according to Reuters Estimates. In November, Cisco forecast a 5 to 10 percent year-on-year decline.

The results and outlook are closely watched as an early indicator of changes in technology spending. Cisco is one of the first high-tech companies to report results that include most of January.

Tighter credit and a hazy economic outlook has made it harder for companies to invest in big-ticket technology items such as Cisco's routers. A Cisco CRS-1, for example, costs around $500,000 to $1 million.

Cisco and other network equipment makers have said until recently that growing use of the Internet, particularly online video, would help shelter them from the recession.

Some vendors had hoped that network upgrades by phone companies would help buffer the impact of declining corporate spending, but tight credit and sluggish consumer spending has hit U.S. phone and cable service providers much harder than many expected.

Top U.S. phone companies AT&T Inc and Verizon Communications Inc have said they are trimming capital spending in 2009. AT&T expects to cut spending by 10 to 15 percent from 2008.

Cisco shares rose to around $16.20 in after-hours trade, after closing up 1.41 percent at $15.84.

(Reporting by Ritsuko Ando; editing by Richard Chang)

Source : Reuters