Archive for December, 2009

Investors seen jumping the gun on airport security (Reuters)

Tuesday, December 29th, 2009 | Finance News

BANGALORE (Reuters) –
Investors' optimism surrounding the shares of airport security systems makers could be premature as interest in the companies' products after the Christmas Day plane scare is not expected to translate into immediate orders.

Shares of explosive-detection equipment makers OSI Systems (OSIS.O), American Science and Engineering (ASEI.O) and ICx Technologies Inc (ICXT.O) rallied for a second day on Tuesday as investors bet on swift government action to improve airport security.

Analysts believe the failed December 25 attempt to blow up a Detroit-bound airliner will accelerate the process of testing new equipment, but any laws requiring its use will depend on Congressional action.

"If this was a successful terrorist attack, the orders would be coming down in January," Brian Ruttenbur of Morgan, Keegan Securities said. "Because it wasn't a successful attack, the government will hold hearings about what broke down."

The companies' shares tend to go up for a couple of days whenever there is a similar incident and then settle back down, he said.

Shares of OSI Systems and ICx Technologies rose in double digits on Monday, the first day of trading after the Detroit incident, while AS&E and baggage screener Analogic Corp (ALOG.O) rose in high single digits.

But the stock action is a knee-jerk reaction, Arnie Ursaner with CJS Securities said, adding that wider testing of the equipment and appropriation of the money to install it in airports could take a year or more.

Ursaner said "backscatter" technology in particular could benefit from the Detroit incident.

AS&E and OSI Systems are leaders in this technology, which can detect explosive materials hidden under a person's clothing -- exactly the kind of situation that occurred over the weekend.

"Even if there is an event, it does not change how contracts are awarded," AS&E Vice President Joseph Reiss told Reuters. "It could be months."

The incident highlights the vulnerability at airports and shows that metal detectors are ineffective against explosives, he said.

Fewer than 20 U.S. airports currently use the backscatter technology, and implementation has been delayed by privacy and health concerns.

Another company that is expected to benefit is ICx Technology, which offers products that can detect chemical, biological, radiological, nuclear and explosive threats.

ICx Executive Chairman Hans Kobler told Reuters the company was talking to relevant agencies about new orders, which it expects to receive within months, not years.

OSI Systems, which makes products for cargo, vehicle and personnel inspection, touched a 16-month high on Tuesday.

Analogic, a maker of advanced explosive-detection equipment for screening checked baggage and checkpoint carry-ons, was trading slightly down.

(Reporting by A.Ananthalakshmi and Amulya Nagaraj in Bangalore; Editing by Mike Miller)

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O2 says iPhone demand strained London network (Reuters)

Tuesday, December 29th, 2009 | Finance News

LONDON (Reuters) –
Apple's (AAPL.O) data-hungry iPhone at times overwhelmed operator O2's network in London during the last six months but additional capacity helped ease the problem by December, O2 said on Tuesday.

O2, which is owned by Spain's Telefonica (TEF.MC), said some customers in the capital had periodically not been able to make or receive calls or transmit data because of pressure on the network from smartphones such as the iPhone.

O2, whose exclusive contract to market the Apple handset in the UK expired in November, had seen an 18-fold increase in data traffic since the start of the year, a spokesman said.

Chief Executive Ronan Dunne told the Financial Times on Tuesday: "Where we haven't met our own high standards then there's no question, we apologize to customers for that fact."

"But it would be wrong to say O2 has failed its customers en masse."

O2's network has suffered a spate of crashes since the summer, when it said it was seeing a huge surge in data traffic.

The company had invested 30 million pounds ($48 million) in its London network to meet demand, the spokesman said, and 200 extra mobile base stations had been installed.

O2 is not alone in finding its network stretched by iPhone users, who have some of the largest appetites for downloading applications, surfing the Internet and using email.

AT&T temporarily stopped selling the iPhone on its website to New York City residents over the weekend, causing speculation that the operator may have been trying to ease congestion on its network.

O2 said it did not encounter any problems over the Christmas period.

Orange, owned by France Telecom (FTE.PA), started selling the phone in the UK in November, while retailer Tesco (TSCO.L) launched an iPhone service earlier this month.

Vodafone (VOD.L), the world's largest mobile operator by revenue, will join the iPhone battle in Britain and Ireland on Jan 14.

(Reporting by Paul Sandle; Editing by Erica Billingham)

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Australia leads Asia stocks as commodities gain (Reuters)

Tuesday, December 29th, 2009 | Finance News

TOKYO (Reuters) –
Australian shares rose on Tuesday, helped by gains in oil and metals and by merger activity, but stock markets elsewhere in Asia lagged as year-end activity dwindled and the dollar's rally ran out of steam.

Shares in Europe were expected to be mixed with the UK market seen rising, playing catch-up with Wall Street after a four-day Christmas break, while U.S. stock futures edged higher.

Oil held below $79 a barrel after setting a five-week high on Monday on expectations that colder weather in the United States and signs of economic recovery would help energy demand, while copper prices surged.

In Tokyo, the Nikkei average (.N225) squeaked to a positive close after briefly touching a four-month high, while the MSCI index for Asia excluding Japan (.MIAPJ0000PUS) edged up 0.3 percent but was still some way off matching November's 2009 peak.

The MSCI Asia ex-Japan index looks set to post a gain of well over 60 percent for 2009, but is still about 30 percent off its late 2007 peak before the global financial crisis erupted.

"Investors seem to be using the last days of this year to search for theme stocks -- companies connected to emerging markets, which are likely to remain strong next year, as well as resource-linked shares," said Noritsugu Hirakawa, a strategist at Okasan Securities in Tokyo.

Shares in Australia outperformed, rising 1.1 percent (.AXJO) to a nine-week closing peak as farm chemicals group Nufarm (NUF.AX) agreed to sell a stake of up to 20 percent to Japan's Sumitomo Chemical Corp (4005.T) for around $590 million.

BHP Billiton Ltd (BHP.AX), the world's biggest miner, gained about 1.1 percent to its highest in nearly 18 months and Newcrest Mining Ltd. (NCM.AX), Australia's largest gold miner, rose 0.4 percent as metals prices rose.

Copper prices rose to their highest since September 2008 as trading in London Metal Exchange contracts resumed after a four-day holiday, chasing gains made in Shanghai over the break.

The gains came as strike votes at two large Chilean copper operations threatened output disruptions, supporting prices.

After gaining on Monday, spot gold stood at $1,105.20 an ounce against New York's notional close of $1,105.60.

Asian shares have risen substantially from March when stock markets began their recovery from the financial crisis, with Japan's Nikkei (.N225) up 50 percent.

But there are plenty of uncertainties for the year ahead, including the tricky task for policymakers of withdrawing emergency stimulus measures. Unwinding stimulus strategies too soon could send the global economy back into a slump, while keeping them in place too long could fuel inflation.

Investors will also be looking at whether the U.S. dollar can make a sustained recovery after rising in recent weeks on optimism that its economic recovery was on more solid footing.

Analysts say investors should be more discerning in 2010 in terms of both sectors and countries, with fiscal policies under the spotlight, and while equity markets are expected to rise further they are not seen climbing at the same pace as this year.

"Caution will be necessary as we head into the new year. It's hard to think the market will just keep rising as there's still a chance it could very well test another trough," said Yutaka Miura, a senior technical analyst at Mizuho Securities.

In Japan, shares of exporters that had led recent gains ran out of steam, while trading houses such as Mitsui & Co (8031.T) climbed as commodity prices rose.

Twenty years ago this month, around the peak of Japan's asset price bubble, the Nikkei marked a record high of 38,915.87, nearly four times the current level.

Japan Airlines (9205.T) fell over 10 percent at one point to a record low after media reports that a state-backed turnaround fund now weighing whether to support JAL with loans and investments was considering a bankruptcy filing as one component of its restructuring plan.

Shares in Seoul fell 0.8 percent, while in Shanghai the key stock index (.SSEC) gained late in the day.

Shares in Chinese train maker CNR Corp (601299.SS), which raised $2 billion this month in China's fourth-largest initial public share offering this year, rose 2.2 percent in a weaker-than-expected debut.

"The weak debut is actually good for the market, as it sends a warning for future IPOs, forcing companies to think twice before they set sky-high IPO prices," said Chen Huiqin, a senior stock analyst at Huatai Securities in Nanjing.

Shares on Wall Street edged up to 2009 closing highs, with retailers lifted by improved consumer spending. The Dow Jones industrial average (.DJI) rose 0.3 percent while the Standard & Poor's 500 (.SPX) rose 0.1 percent.

The dollar held firm at 91.72 yen and $1.4384 per euro but failed to push on with its rally of the past few weeks after hitting a 14-year low against the yen in November.

Traders said upward pressure on long-term U.S. Treasury yields was providing it with support, after the benchmark 10-year note yield rose to its highest in nearly five months.

(Additional reporting by Nick Trevethan in Singapore, Lu Jianxin and Ed Klamann in Shanghai and Elaine Lies in Tokyo)

(Editing by Kim Coghill)

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