A logo of the Blackberry maker's Research in Motion is seen on a building at the RIM Technology Park in Waterloo April 18, 2012. Picture taken April 18, 2012.

TORONTO | Fri Jan 18, 2013 12:06pm EST

TORONTO (Reuters) - Shares of Research In Motion Ltd (RIMM.O)(RIM.TO) rose more than 6 percent after an influential analyst raised his rating on the stock on Friday, saying that RIM's new BlackBerry 10 operating system performed as well or better than rivals in recent tests.

Jefferies & Co analyst Peter Misek, who lifted his stock rating on RIM to "buy" from "hold," believes Wall Street is now underestimating the strength of RIM's financial performance for the coming quarters after the new devices debut on January 30. He also lifted his price target on RIM to $19.50 from $13.

The move pushed RIM shares up 6 percent to $15.80 in morning trading on the Nasdaq, while its Toronto-listed shares rose 7 percent to C$15.72.

RIM hopes that its re-engineered line of touch-screen and keyboard devices will win back market share lost to rivals such as Apple Inc's (AAPL.O) iPhone and devices powered by Google Inc's (GOOG.O) market-leading Android operating system.

Misek, who has been skeptical for some time about RIM's odds of engineering a turnaround, said recent trials of BB10 test devices showed vast improvements over its existing smartphones.

"Recent tests and demos have shown a solid browser, smooth touch interface, and intuitive navigation. We now believe the operating system performance could be better than or equal to Android Jelly Bean and likely on par with iOS 6," said Misek, referring to the latest versions of software powering Android and Apple devices.

Shares of RIM, which fell as low as $6.22 in September, have more than doubled in value over the last four months as the BB10 launch approaches.

CARRIER ORDERS

In November, Misek had upgraded RIM's stock to "hold" from "underperform," arguing that his checks revealed greater carrier support for BB10 than expected.

Misek's last upgrade had propelled RIM's shares into double-digit territory for the first time in five months and his latest upgrade pushed the stock to a new 11-month high.

In his latest note, Misek said: "More recent checks indicate that carriers have also agreed to volume commitments for the first two quarters post-launch."

Earlier this month, some top U.S. mobile carriers including Verizon Communications (VZ.N), AT&T Inc (T.N) and T-Mobile USA (DTEGn.DE) signaled that they would support RIM's BlackBerry 10 products.

And earlier this week media reports indicated that Aircel and Vodafone Group Plc (VOD.L) are gearing up to market the new BB10 devices in India, which has long been a strong growth market for RIM even as it has ceded ground in North America and Europe.

Misek said BB10 global orders have risen to between 1 million and 2 million a month from about 500,000 a month in early December. He now views initial sales of 4 million BB10 devices a quarter as "not a high hurdle."

Additionally, developer support is proving to be stronger than expected, Misek said.

"Our checks indicate that large app developers are going to put resources into developing BB10 apps," he said. "Previously, we had thought they would take more of a wait-and-see approach before committing resources."

RIM has faced criticism in the past for lacking a strong suite of high-quality apps.

RIM has said its new platform will boast business focused apps from Cisco WebEx and SAP among others, along with music, movie and gaming apps.

Social networks LinkedIn, Foursquare, Twitter and Facebook will all have apps for BB10 at launch, according to RIM. It will announce some of its other app partners on the launch date.

(Reporting by Euan Rocha; Editing by Gerald E. McCormick, Jeffrey Benkoe and Leslie Gevirtz)

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Fri Jan 18, 2013 7:07pm EST

n">(Reuters) - What's Jeff Immelt going to do with the money?

General Electric Co shareholders are wondering what the company's chief executive plans to do with a cash windfall that could total tens of billions of dollars over several years as the company sells its remaining stake in NBC Universal and recoups more of the profits earned by finance unit GE Capital.

Last year GE Capital sent $6.4 billion back to the company's headquarters in Fairfield, Connecticut. Analysts estimate that the unit could generate a similar amount of cash this year.

But GE could get an even bigger infusion in mid-2014, when it is set to cash in on its option of selling the rest of its stake in NBC Universal to Comcast Corp. The stake is currently valued at roughly $17 billion, but the final price and timing of the deal could vary.

Immelt spoke with investors on Friday in a conference call after GE posted earnings that rose 7.5 percent from a year earlier, beating expectations.

During the call, the CEO of the largest U.S. conglomerate was cagey about his spending plans. He did not venture far beyond his often-repeated mantra that GE's priorities were balanced between raising its dividend, buying back shares and doing some small takeovers.

"This company is going to have a ton of cash over the next three years, right?" Immelt said. "I don't really want to make any other pronouncements other than disciplined and balanced capital allocation. We'll go over the other bridges as we get there but let's start with that."

GE shares were up 3 percent on a day that major U.S. stock indexes barely budged.

In January 2011, GE sold a majority stake in NBC to Comcast back. About that time, GE embarked on a $12 billion wave of acquisitions of smaller makers of energy equipment. That is a pattern that could repeat itself, suggested Jeff Sprague, analyst with Vertical Research Partners.

"They do need to redeploy that cash in a way that, at a minimum, preserves and ideally enhances the earnings profile," Sprague said. The company might consider deals to build up its newly created $7.4 billion Energy Management division, which makes equipment used to transmit electricity.

The company would do well to stick with Immelt's stated goal of aiming for targets worth about $1 billion to $3 billion, Sprague added.

"If they can keep it in that smaller range, smaller for them at least, you just lower risk," he said. "It's more digestible."

DECEMBER DIVIDEND

Immelt's plans for the money also include continuing to raise its dividend and buy back shares.

Investors suggested that Friday's better-than-expected fourth-quarter earnings report could prompt the company to again boost its dividend, which it raised by 12 percent in December.

"Are they going to be in a position in the second quarter, perhaps if they perform so strongly again, to raise their dividend?" asked Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York.

Chief Financial Officer Keith Sherin said the company did not plan to boost its payout quite so often.

"Our historical pattern was to do dividend increases at the end of the year by reviewing capital allocation plans with the board of directors and I would think that would continue to be our practice," he said in an interview.

The company's four increases from July 2010 through December 2011 were a special case, intended to make up for a sharp cut to the payout during the financial crisis.

Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, suggested that GE should not try to reinvest all the money it gets when it sells the remainder of NBC to Comcast. Instead, he said the company should consider paying more out in dividends and buybacks.

"Let's benefit shareholders who've stayed the course over a long period of time," Sorrentino said. "Better to be lean and focused. Target new growth markets, but let's not continue to carry the size of the enterprise just because that's what we've always done."

The long languor of GE's shares stands as one of shareholders' main complaints about Immelt's tenure. While GE's 12 percent rise over the past year outpaced the 9 percent rise of the Dow Jones industrial average, it trades well below the $42 mark reached in 2007 before the financial crisis. The broader U.S. stock market also remains below its pre-crisis highs.

RECORD BACKLOG

GE, the world's biggest maker of jet engines and electric turbines, reported that its order backlog -- a closely watched indicator of future sales -- hit a record high $210 billion in the fourth quarter, up from $203 billion in the third quarter.

"The backlog was a really good number. I didn't expect to see a $7 billion, 3.5 percent rise in the backlog," said Jack De Gan, chief investment officer at Harbor Advisory Corp, which holds GE shares. "Orders in the fourth quarter must have been really good for the industrial side."

Orders were up 2 percent, and would have been up 7 percent factoring out a sharp drop in demand for wind turbines related to the expected expiration of a tax credit, as well as exchange-rate fluctuations.

GE shares were up 3 percent to $21.94 in early Friday afternoon trading on the New York Stock Exchange. The Dow Jones industrial average and the S&P 500 were up slightly.

Fourth-quarter earnings rose to $4.01 billion, or 38 cents per share, from $3.73 billion, or 35 cents per share, a year earlier.

Factoring out one-time items, profit came to 44 cents per share, a penny ahead of analysts' estimates, according to Thomson Reuters I/B/E/S.

Revenue rose 3.6 percent to $39.33 billion from $37.97 billion a year earlier.

Solid demand in China and oil-producing countries helped GE to offset unsteady economies at home and in Europe, Immelt said.

"We saw real strength in the emerging markets and the developed regions stabilized," Immelt told investors.

GE kicks off a wave of earnings reports from the nation's largest manufacturers, with United Technologies Corp, 3M Co and Honeywell International Inc all due next week.

(Reporting by Scott Malone; Additional reporting by Ernest Scheyder in New York; Editing by Jeffrey Benkoe, Tim Dobbyn and David Gregorio)

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Fri Jan 18, 2013 4:06pm EST

n">(Reuters) - Morgan Stanley Chief Executive James Gorman said the bank has turned itself around and can meet its goals for profitability, his boldest pronouncement yet about the near-term potential for a company that has long lagged its peers.

The investment bank and wealth manager on Friday posted fourth-quarter earnings that beat analysts' average estimate by a wide margin, helped by a big jump in trading revenue and stronger performance in its wealth management group.

Morgan Stanley's fixed-income trading business performed worse than its rivals, and its overall return on equity, a measure of how efficiently the bank wrings profit from shareholder money, was less than half that of Goldman Sachs Group Inc. But Gorman told investors the bank was "working aggressively" to improve its return on equity.

In current market conditions, the bank's return on equity can reach 10 percent, Gorman said on a conference call. Analysts said the figure is the bare minimum that many investors demand, but it is far above Morgan Stanley's recent performance, and Gorman's statement marks the first time Morgan Stanley has said it can meet that goal even if business doesn't pick up.

"After a year of significant challenges, Morgan Stanley has reached a pivot point," Gorman said in a statement. "Our firm is now poised to reach the returns of which it is capable on behalf of our shareholders."

Morgan Stanley's stock climbed as much as 8.2 percent on Friday, to $22.46, the highest price since August 2011 and marking the biggest intraday jump since June, before closing at $22.38.

"I think Morgan Stanley has turned the corner," said Joe Terril, president of St. Louis-based money manager Terril & Co, which invests in bank stocks. "I believe they'll gradually improve quarter after quarter -- it's not a one-time event."

Morgan Stanley said its wealth management division delivered a 17 percent pretax profit margin in the quarter, exceeding an internal target months ahead of schedule.

The wealth management division is closely watched by investors because Gorman is staking the future of the bank on it, arguing that more stable returns there will help offset volatility from trading and investment banking.

Morgan Stanley is one of several Wall Street banks using layoffs and compensation cuts to help boost its bottom line. The firm paid out 44 percent of adjusted revenue to employees in its securities and investment banking business last year, down from 53 percent in 2011, Chief Financial Officer Ruth Porat said in an interview.

Across the entire company, compensation costs fell by $711 million, or 4 percent, in 2012 as Morgan Stanley cut nearly 5,000 employees from its payroll.

One senior employee might decide to leave. The Obama administration is considering Porat for a position as Treasury deputy secretary, a source familiar with the matter told Reuters, which could leave Morgan Stanley shuffling the decks in top management. Porat would not comment.

Overall, the bank reported fourth-quarter income from continuing operations of $573 million, or 28 cents per share, compared with a loss of $222 million, or 13 cents per share, in the year-ago period, when it took a big one-time charge.

Excluding a charge related to changes in the value of Morgan Stanley's debt, the bank earned $894 million, or 45 cents per share. On that basis, analysts' average forecast was 27 cents per share, according to Thomson Reuters I/B/E/S.

In sales and trading, adjusted revenue more than doubled from a year earlier, to $2 billion from $867 million. Fixed-income, currency and commodities trading revenue was $811 million, adjusted for accounting charges, compared with a loss of $493 million a year earlier.

Glenn Schorr, an analyst at Nomura, said Morgan Stanley's fixed-income currency and commodities trading business posted an increase of 26 percent in adjusted revenue, while peers reported an average gain of 43 percent.

The division suffered because of historically weak revenue in commodities trading, which faced unexpected price movements related to weather and lower prices in its storage business. The unit reported its worst results since 1995, Gorman said on CNBC.

Curbs on banks trading with their own money and the impact of fracking lowering prices for certain commodities have eaten into banks' profits in commodities, a once-lucrative trading business for Wall Street.

Merger advisory revenue rose 12 percent to $454 million, while stock and bond underwriting revenue rose 62 percent to $771 million.

Morgan Stanley is the last big U.S. bank to report earnings this week. Rival Goldman Sachs on Wednesday said it cut compensation costs 11 percent in the fourth quarter, helping boost returns to shareholders.

(Additional reporting by Anil D'Silva in Bangalore and Rachelle Younglai in Washington; Editing by Supriya Kurane, John Wallace and Leslie Adler)

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Showgoers visit the Intel booth on the first day of the Consumer Electronics Show (CES) in Las Vegas in this January 8, 2013, file photo.

SAN FRANCISCO | Thu Jan 17, 2013 7:43pm EST

SAN FRANCISCO (Reuters) - Intel Corp forecast quarterly revenue that disappointed Wall Street and a sharp increase in capital spending it plans for 2013 unnerved investors already concerned about slow demand for personal computers.

Shares of the world's leading chipmaker slid more than 5 percent in after-hours trade on Thursday after it projected this year's capital spending at $13 billion, plus or minus $500 million, exceeding many analysts' estimates for about $10 billion.

Intel said $2 billion of its increased expenditures would go toward expanding a facility for researching future manufacturing technology. Some analysts worried that with PC sales already slow, expanding too quickly may create excess capacity that could hurt the bottom line.

"People are starting to freak out about the capex," said Sanford C. Bernstein analyst Stacy Rasgon. "The concern is that if I spend a lot of money and I build up my factories, I don't have enough demand to fill them. They have very high fixed costs, and it pulls your margins down."

Outgoing Chief Executive Paul Otellini, who plans to retire in May after a successor is identified, said the investment in manufacturing would lower costs in the long run.

"The leading edge capacity is the lowest cost for us on a per unit basis," Otellini told analysts on a conference call. "Regardless of what you think the size of the market is, the leading edge fabs are the single greatest asset that we have."

Otellini said the higher capex is not intended to bankroll a foundry or contract chipmaking business, but he did not rule out manufacturing semiconductors for other chip companies as long as that did not empower a rival.

Intel has agreed to manufacture custom chips on behalf of networking equipment company Cisco Systems Inc, Bloomberg reported on Thursday. An Intel spokesman declined to comment.

In the fourth quarter, Intel's revenue was $13.5 billion, compared with $13.9 billion a year earlier. Analysts had expected $13.53 billion.

It estimated first-quarter revenue of $12.7 billion, plus or minus $500 million. Analysts expected $12.91 billion.

STRUGGLING IN MOBILE

Intel is used to being king of the personal computer market, particularly through its historic Wintel alliance with Microsoft Corp, which has led to breathtakingly high profit margins and an 80 percent market share.

But it has struggled to adapt its technology for smartphones and tablets, a market dominated by Qualcomm Inc, Samsung Electronics Co Ltd and Nvidia Corp. PC makers are struggling to stop a decline in sales as consumers hold off on buying new laptops in favor of more nimble mobile gadgets.

Microsoft's long-awaited launch of Windows 8 in October brought touchscreen features to laptops but failed to spark a resurgence in sales that Intel and many PC manufacturers had hoped for.

Intel's hefty investment plans reflect its confidence in the future, even as Wall Street worries about the chipmaker's struggle to gain traction in the mobile market.

"Our core advantage really is our manufacturing leadership," Chief Financial Officer Stacy Smith told Reuters. "450 will give us a significant cost advantage relative to others."

Intel is expanding its research fab in Hillsboro, Oregon, to develop technology for manufacturing chips on 450 mm silicon wafers, a complicated step up from the current 300 mm wafer standard.

Larger wafers can translate into big savings because more chips can be etched onto each of them. But building 450 mm plants is expected to be so expensive that only a few industry leaders, including Intel, Samsung Electronics and TSMC, are expected to have the necessary scale.

Some Wall Street analysts gave Intel high marks for expected operating efficiency this year.

"The revenue isn't going to be there, but the margin and expense control is going to stabilize the bottom line," said Cody Acree, an analyst at Williams Financial. "I think it's probably a success if you can be flat in an industry that most people expect to be flat to down."

Intel foresees first-quarter gross margins of 58 percent, plus or minus two percentage points. Analysts on average expected gross margins of about 56 percent for the current quarter, according to Thomson Reuters I/B/E/S.

It estimated a 2013 gross margin of 60 percent, plus or minus a few percentage points. Analysts on average had expected 59 percent.

Net earnings in the December quarter were $2.5 billion, or 48 cents a share, compared with $3.4 billion, or 64 cents a share, year-ago period.

Analysts had expected 45 cents, and said the surprisingly strong performance was partly due to a lower effective tax rate of 23 percent. This was below Intel's forecast of about 27 percent.

Still, shares of Intel fell 5.6 percent in after-hours trade to $21.43, after closing up 2.58 percent at $22.68 on the Nasdaq.

"This is a company that is continuing to spend money to participate in the market. That may concern some investors," said Doug Freedman, an analyst at RBC Capital.

(Reporting by Noel Randewich; Editing by Richard Chang and Steve Orlofsky)

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NEW YORK | Fri Jan 18, 2013 6:01pm EST

NEW YORK (Reuters) - Life Technologies Corp (LIFE.O) is exploring a potential sale and has retained banks to advise on the process, the biotechnology company said on Friday, sending its shares more than 10 percent higher to an all-time record.

Life Technologies, whose market value surged to roughly $10.5 billion, said its board has hired Deutsche Bank Securities (DBKGn.DE) and Moelis & Company to assist in its "annual strategic review."

The Carlsbad, California-based company, which makes genetic testing equipment and products used in biotechnology development, has drawn initial interest from several large private equity firms, people familiar with the matter said.

Buyout firms Blackstone Group LP (BX.N), Bain Capital LLC and TPG Capital LP are among the several interested parties, said the people, who asked not to be named as details of the auction are not public. Life Technologies said its board of directors has not decided on any specific course of action.

Given the sheer size of a potential leveraged buyout, private equity firms are expected to team up as the sale process advances, the people said, adding that the auction is still at an early stage and bidders have yet to conduct due diligence.

Representatives of Blackstone were not immediately available for comment, while TPG and Bain declined to comment.

News of the potential sale adds to expectations that robust debt financing markets could lead to a return of the mega leveraged buyouts, which have remained elusive since the 2008 financial crisis.

In another potential deal that would mark the largest private equity deal since the global financial crisis, buyout firm Silver Lake Partners is in discussions to take Dell Inc (DELL.O) private, people familiar with the matter have said.

Gene-sequencing companies such as Life Technologies have become takeover targets over the last year by potential buyers seeking to acquire the technology that can be used to analyze a person's DNA and help provide personalized medicine.

Last year, Roche Holding AG (ROG.VX) made a hostile attempt, unsuccessfully, to buy San Diego-based gene sequencing company Illumina Inc (ILMN.O). Shares of Illumina fell 1 percent to $51.03 on Friday, valuing the company at nearly $6.4 billion.

Shares of Life Technologies rose 10.6 percent to $60.79 on the Nasdaq stock market, after reaching an all-time high of $62 during the session.

Canadian newspaper Financial Post, which earlier reported the sale process, said a potential deal for Life Technologies could come in the $65-$75 per share range.

"While price talk is reported to be in the $65 to $75 range, our initial analysis suggests an LBO transaction valuing Life's equity in the $50 to $60 range is at present more realistic," Jefferies & Co analyst Jon Wood said in a note.

While the company's strong revenue, scalable operating model and capital efficiency may support a higher sale price, buyers had less appetite for risk following the 2008 financial crisis, Wood added.

(Reporting by Soyoung Kim in New York, additional reporting by Esha Dey in Bangalore,; Editing by Saumyadeb Chakrabarty, M.D. Golan, Gunna Dickson and David Gregorio)

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