Acer Inc is to open an assembly plant in Finland for personal computers destined for the Commonwealth of Independent States, following the establishment of a Moscow office in early 1994: Finland is being used as the third country in the operation to avoid Acer becoming entangled in the former Soviet Union’s political infrastructure; by using a just-in-time production, Acer says it will be able to deliver its machines faster than any other vendor on the market.
Northern Telecom Ltd says it is near final agreement with Nynex Corp for the deployment and installation of ISDN hardware and software: Northern said the deal will be worth considerably more than $150m over five years; Northern will provide ISDN hardware and software equipment used in Nynex central office and remote switches; Nynex also said it has reached a similar agreement with AT&T Corp.
The Elbit Vision Systems Tel Aviv division of Israeli defence electronics company Elbit Ltd has reached agreement in principle with Stork NV to co-operate on integrating Elbit’s computerised vision technologies in Stork’s industrial systems: the Dutch company owns 85 factories in textiles, paper, food processing, electronics and airconditioning and Elbit makes a computerised fabric inspection system using technology the company developed for military use; the companies have introduced Printex to check the quality of fabric printing in textile factories; Printex will complement Stork’s fabric printing systems; Elbit estimates the market potential for the product at hundreds of millions of dollars; the two companies also intend to integrate Elbit inspection systems with Stork’s other industrial systems.
Australia’s Qantas Airways Ltd has signed a 10-year agreement with a subsidiary of CAE Inc, Toronto for the use of the Dash 8-100 simulator in the Asia-Pacific region: Qantas said the agreement with CAE Electronics would trim training costs, improve pilot skills, release aircraft for revenue-generating purposes and create export opportunities; the financial value of the agreement was not released.
Nippon Telegraph & Telephone Corp and employment agency Pasona Inc are to set up a new company, Home Computing Network to promote use of personal computers at home by providing beginners with guidance on the use of personal computers and ways to connect with networks: it will be capitalised at $1m with Pasona owning 50%, Nippon Telegraph 35%; others, including software developers will hold the other 15%.
Cincinnati Bell Inc will take one-time charges of $61m against current quarter figures on early repayment of $155m debt, will write off goodwill costs and terminate a financing agreement: the steps will contribute about $5m to net profit in 1996 and several years after that, it said; the goodwill to be written off is associated with two telephone marketing businesses it acquired in Paris in 1990; the businesses, now part of Matrixx Marketing Europe, have grown but have not yet become profitable; write-off of goodwill will reduce fourth-quarter net profits by $39m, but is expected to boost profits by about $1m from 1996; it will repay $155m debt securities of Cincinnati Bell Inc and of Cincinnati Bell Telephone and terminate an interest rate and currency swap agreement that was opened to hedge against currency changes on long-term financing for the French takeovers but costs 11% in annual interest payments; the debt restructuring is expected to cut 1995 profit by about $19m, but save $4m in 1996 and for several years thereafter.
Having had some trouble drumming up support for its fibre-optic project for Africa (CI No 2,631), AT&T Corp says it has now won the full support of Africa’s mostly state-owned communications companies for its proposed $2,600m fibre-optic system in the impoverished continent, dubbed Africa One, which it says is critical for the region’s economic, political and social growth: it said the biggest problem was funding, but it was helping to set up an umbrella of funding that included getting the support of the World Bank, African Development Bank, export-import banks and other private investors; Africa One will consist of 19,875 miles of fibre optic cable that will encircle the continent, and will support voice, data, facsimile, video conferencing, computer-aided design, electronic document, interchange telemarketing and electronic mail; it will be run by a company to be incorporated in June in Mauritius, the most advanced market economy in the region, but operational headquarters will be on the African continent; the network is to be finished by 1999.
Paging Network Inc and Sprint Telecommunications Venture reached an agreement enabling Sprint to sell Paging Network Inc’s local, regional and nationwide digital and alphanumeric paging services: initially, the service will be marketed by Sprint to its existing and potential customer base, but Sprint’s marketing effort is expected to begin the first quarter of 1996, with pricing and distribution details to be disclosed at that time; the Sprint Telecommunications partnership between Sprint Corp, Tele-Communications Inc, Comcast Corp and Cox Communications may also offer new Paging Network products.
It’s been a fabulous party, with the US market as a whole up about 35% this year, but all good things must come to an end, and it could be that analysts will be able to give up rationalising the irrational and trying to explain why it is all going to be different this time (it isn’t, and some of the valuations even of mature companies such as Coca Cola Co have been approaching Japanese levels – at the time when the Nikkei Dow was at 38,000 five years ago, not the 19,000 it has seldom struggled above since): a combination of the federal budget stalemate, uncertainty over the direction of interest rates and a big sell-off in technology issues sent the Dow Jones index sharply down yesterday, after it plunged 89 points at the opening: it may have recovered after we closed, but if this isn’t the end, its very close.
Adding to the sour sentiment, Advanced Micro Devices Inc said that it expects fourth-quarter earnings to be lower than last quarter’s because of lower than expected shipments of Am486 microprocessors.
The deep gloom overhanging Apple Computer Inc following its profit warning is caused by the fact that the panic price cuts instituted two or three weeks ago have failed to do much to lift business, which means that the pent-up demand that had been seen for Power Macs was all from existing users desperate for lots more power, and that the efforts to broaden the franchise to new users have largely failed; it is also getting painfully squeezed in Japan, where a price war has erupted as locals try to take back their market from US firms led by Compaq Computer Corp and Dell Computer Corp, which came in with prices that made a nonsense of the previous pricing model; Apple is still number one among US companies in terms of Japanese market share, but faces a painful fight if it is simply to hang on to what it has.
Finance director Rod Olsen, very much in the James Ross and not the Lord Young camp when it came to strategy, has been appointed acting chief executive of Cable & Wireless Plc until a successor is recruited.
The UK Office of Telecommunications yesterday proposed a universal service fund into which phone companies would pay to bring telephones to more people and offer enhanced services to schools and other users, to cut the number of phoneless homes, currently one in 10; it might cost ú50m to ú100m a year.
The newsflash on the Euro 96 World Wide Web site was taken a bit too literally yesterday: the news of the original international football fixture, England versus Scotland, being replayed next June at Wembley in the European Championships was splashed across the screen, with a link back to the home page; unfortunately the link failed to blink, while all around, the text was rendered unreadable as it flashed on and off like lights on a Christmas tree – so that’s why they did it.
